Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 13. Income Taxes

U.S and foreign components of consolidated loss before income taxes for the years ended December 31, 2021, 2020 and 2019, was as follows (in thousands):

	2021			2020			2019
Loss before income taxes:
U.S.	$	(54,757	)	$	(61,246	)	$	(71,946	)
Foreign		700			1,673			965
Loss before income taxes	$	(54,057	)	$	(59,573	)	$	(70,981	)

The provision for income taxes for the years ended December 31, 2021, 2020 and 2019, was as follows (in thousands):

	2021		2020		2019
Provision for income taxes:
Current:
Foreign	$	274	$	274	$	255
Federal		—		—		—
State		—		—		2
Total current		274		274		257
Deferred:
Foreign		—		—		—
Federal		23		6		4
State		22		4		2
Total deferred		45		10		6
Provision for income taxes	$	319	$	284	$	263

The difference between the provision for income taxes and the amount computed by applying the federal statutory income tax rate to loss before taxes for the years ended December 31, 2021, 2020 and 2019, was as follows (in thousands):

	2021			2020			2019
Federal statutory tax	$	(11,352	)	$	(12,510	)	$	(14,906	)
Federal research credits		(2,159	)		(1,630	)		(1,857	)
State research credits		(767	)		(749	)		(821	)
Expiration of federal carryovers		4,651			9,200			5,472
Change in valuation allowance		10,482			6,738			13,059
Compensation related items		460			978			158
State taxes		(1,294	)		(1,921	)		(1,111	)
Other		298			178			269
Provision for income taxes	$	319		$	284		$	263

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at the enacted rates. The significant components of the Company’s deferred tax assets and liabilities at December 31, 2021, 2020 and 2019, were as follows (in thousands):

	December 31,
	2021			2020
Deferred tax assets:
Net operating loss carryforwards	$	150,523		$	141,176
Research and development credit carryforwards		29,411			28,892
Capitalized research and development		8,406			10,756
Compensation related items		11,951			10,957
Operating leases		4,125			4,214
Other		8,218			6,051
Total deferred tax assets		212,634			202,046
Valuation allowance		(209,524	)		(199,042	)
Net deferred tax assets	$	3,110		$	3,004
Deferred tax liabilities:
Right-of-use assets	$	2,895		$	2,892
Other		313			163
Total deferred tax liabilities	$	3,208		$	3,055

The valuation allowance increased by $10.5 million for the year ended December 31, 2021, compared to the increase of $6.7 million and $13.1 million for the years ended December 31, 2020 and 2019, respectively. The Company believes that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a valuation allowance has been recorded. These factors include the Company’s history of net losses since its inception, the need for

regulatory approval of the Company’s products prior to commercialization and expected near-term future losses. The Company expects to maintain a valuation allowance until circumstances change.

For the year ended December 31, 2021, the Company reported pretax net losses on its consolidated statement of operations and calculated taxable losses for both federal and state taxes. The difference between reported net loss and taxable loss are due to differences between book accounting and the respective tax laws.

The Company's tax losses and credits are subject to varying carryforward periods. The gross amounts and dates of expiration of the significant carryforwards are as follows:

			Expires		Expires		Expires		No
	Total		2022-2024		2025-2031		2032-2041		Expiration
Federal losses carryovers	$	676,762	$	76,223	$	183,062	$	185,571	$	231,906
California loss carryovers		80,227		—		41,407		38,820		—
Other state loss carryovers		53,967		620		870		52,477
Federal research credits		19,001		6,180		1,539		11,282		—
California research credits		13,178		—		—		—		13,178
Federal foreign tax credits		610		—		610		—		—

The Company’s ability to utilize net operating loss and research and development credit carryforwards is limited by (a) its ability to generate future taxable income, (b) varying apportionment and allocation rules, and (c) limitations pursuant to the ownership change rules in accordance with Section 382 of the Internal Revenue Code of 1986 and with Section 383 of the Internal Revenue Code of 1986, as well as similar state provisions.

The Company’s unrecognized tax benefits relate to federal and California research tax credits. These tax credits have not been utilized on any tax return and currently have no impact on the Company’s tax expense due to the Company’s operating losses and the related valuation allowances.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

	December 31,			December 31,
	2021			2020
Unrecognized tax benefits at beginning of period	$	10,110		$	10,842
Decreases related to expired carryforwards		(1,296	)		(1,171	)
Increases related to prior year tax positions		112
Increases related to current year tax positions		440			439
Unrecognized tax benefits at end of period	$	9,366		$	10,110

The Company will recognize accrued interest and penalties related to unrecognized tax benefits in its income tax expense. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties.