Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 15. Income Taxes

U.S and foreign components of consolidated loss before income taxes for the years ended December 31, 2023, 2022 and 2021, was as follows (in thousands):

	2023			2022			2021
Loss before income taxes:
U.S.	$	(38,281	)	$	(43,096	)	$	(54,757	)
Foreign		959			759			700
Loss before income taxes	$	(37,322	)	$	(42,337	)	$	(54,057	)

The provision for income taxes for the years ended December 31, 2023, 2022 and 2021, was as follows (in thousands):

	2023		2022			2021
Provision for income taxes:
Current:
Foreign	$	285	$	520		$	274
Federal		—		—			—
State		36		5			—
Total current		321		525			274
Deferred:
Foreign		—		—			—
Federal		2		(18	)		23
State		2		(19	)		22
Total deferred		4		(37	)		45
Provision for income taxes	$	325	$	488		$	319

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, 2023, 2022 and 2021, was as follows (in thousands):

	2023			2022			2021
Federal statutory tax	$	(7,838	)	$	(8,891	)	$	(11,352	)
Federal research credits		(1,065	)		(1,874	)		(2,159	)
State research credits		(642	)		(822	)		(767	)
Expiration of federal carryovers		7,284			4,858			4,651
Change in valuation allowance		1,361			6,379			10,482
Compensation related items		3,257			1,794			460
State taxes		(1,710	)		(1,127	)		(1,294	)
Revision to prior year items		(664	)		—			—
Other		342			171			298
Provision for income taxes	$	325		$	488		$	319

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, 2023, 2022 and 2021, were as follows (in thousands):

	December 31,
	2023			2022
Deferred tax assets:
Net operating loss carryforwards	$	133,476		$	136,632
Research and development credit carryforwards		28,567			29,242
Capitalized research and development		33,571			27,916
Compensation related items		10,306			12,014
Operating leases		3,462			3,786
Other		9,823			9,056
Total deferred tax assets		219,205			218,646
Valuation allowance		(216,888	)		(215,903	)
Net deferred tax assets	$	2,317		$	2,743
Deferred tax liabilities:
Right-of-use assets	$	2,173		$	2,610
Other		209			194
Total deferred tax liabilities	$	2,382		$	2,804

The valuation allowance increased by $1.0 million for the year ended December 31, 2023, compared to the increase of $6.4 million and $10.5 million for the years ended December 31, 2022 and 2021, 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, 2023, 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		2024-2026		2027-2033		2034-2043		Expiration
Federal losses carryovers	$	590,870	$	60,190	$	191,075	$	148,686	$	190,919
California loss carryovers		104,900		—		67,161		37,739		—
Other state loss carryovers		44,257		115		1,685		31,503		10,954
Federal research credits		16,758		1,403		1,808		13,547		—
California research credits		14,948		—		—		—		14,948
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 primarily 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. There are additional unrecognized tax benefits related to foreign activities.

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

	December 31,			December 31,
	2023			2022
Unrecognized tax benefits at beginning of period	$	8,652		$	9,366
Decreases related to expired carryforwards		(1,126	)		(1,481	)
Increases related to prior year tax positions		100			258
Increases related to current year tax positions		298			509
Unrecognized tax benefits at end of period	$	7,924		$	8,652

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. During the next twelve months, it is reasonably possible that the Company’s unrecognized tax benefit may decrease by as much as $0.3 million due to settlements in foreign tax jurisdictions. However, this may change as the Company continues to have ongoing negotiations with foreign taxing authorities throughout the year.