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Income taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income taxes Income taxes
The components of loss before income taxes were as follows (in thousands):
Year ended December 31,
20232022
(As Restated)
U.S.$(213,306)$(230,160)
Foreign1,267 (65)
Total$(212,039)$(230,225)
The provision for (benefit from) income taxes were as follows (in thousands):
Year ended December 31,
20232022
(As Restated)
Current:
Federal$— $— 
State— — 
Foreign(126)117 
Deferred:
Federal— — 
State— — 
Foreign— — 
Total income tax expense (benefit)$(126)$117 
A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to the Company’s effective income tax rate as reflected in the financial statements is as follows:
Year ended December 31,
20232022
(As Restated)
Federal income tax expense at statutory rate21.0 %21.0 %
State income tax, net of federal benefit7.3 %5.2 %
Permanent differences0.6 %(0.1)%
Stock-based compensation(3.6)%(9.3)%
Research and development credit5.8 %8.3 %
Leases
5.4 %34.4 %
Right-of-use assets
— %(26.1)%
Fixed assets
(2.7)%(7.2)%
Foreign differential— %0.3 %
Other0.9 %(0.6)%
Change in valuation allowance(34.6)%(26.0)%
Effective income tax rate (expense) benefit0.1 %(0.1)%
For the years ended December 31, 2023 and 2022, the Company recognized an income tax expense (benefit) of $(0.1) million or 0.1% and $0.1 million or (0.1)%, respectively.  The Company did not recognize any significant tax expense for the years ended December 31, 2023 or 2022 as the Company was subject to a full valuation allowance. Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.
The significant components of the Company’s deferred tax assets and liabilities are composed of the following (in thousands):
Year ended December 31,
20232022
(As Restated)
Deferred tax assets:
U.S. net operating loss carryforwards (federal and state)$726,021 $713,557 
Tax credit carryforwards (federal and state)313,963 300,236 
Capitalized license fees and research and development expenses2,079 1,831 
Capitalized research and development expenses under Section 17491,306 54,885 
Stock-based compensation9,847 11,686 
Lease liabilities100,288 98,296 
Accruals and other20,336 17,325 
Total deferred tax assets1,263,840 1,197,816 
Right-of-use assets(54,976)(61,388)
Fixed assets(16,701)(17,536)
Less valuation allowance(1,192,163)(1,118,892)
Net deferred taxes$— $— 
A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized. Due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns, the Company has recorded a full valuation allowance against the Company’s otherwise recognizable net deferred tax assets. The valuation allowance increased on a net basis by approximately $73.3 million during the year ended December 31, 2023 due primarily to the capitalization of research and development credits that became effective in the 2022 tax year under the Tax Cuts and Jobs Act, net operating losses, and tax credit carryforwards. Effective January 1, 2021, the Company adopted ASU 2019-12, which simplifies accounting for income taxes. There was no material impact on the Company's financial position or results of operations upon adoption.
As of December 31, 2023 and 2022, the Company had U.S. federal net operating loss carryforwards of approximately $2.7 billion and $2.7 billion, respectively, which may be available to offset future income tax liabilities. Of the amount as of December 31, 2023, $2.0 billion will carryforward indefinitely while $0.7 billion will expire at various dates through 2037. As of December 31, 2023 and 2022, the Company also had U.S. state net operating loss carryforwards of approximately $2.5 billion and $2.5 billion, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2043.
As of December 31, 2023 and 2022, the Company had federal research and development and orphan drug tax credit carryforwards of approximately $299.5 million and $285.6 million, respectively, available to reduce future tax liabilities which expire at various dates through 2043. As of December 31, 2023 and 2022, the Company had state credit carryforwards of approximately $18.3 million and $18.5 million, respectively, available to reduce future tax liabilities which expire at various dates through 2037. During the fourth quarter of 2018, the Company completed an analysis of prior year estimates of U.S. research and development and orphan drug tax credits for the years 2013 through 2017. The analysis resulted in an immaterial adjustment to the Company's income tax benefit, which was offset by an adjustment to the valuation allowance. An analysis of the U.S. research and development and orphan drug credits has not yet been completed for years 2018 through 2023. As of December 31, 2023 and 2022, the Company had capital loss carryforwards of approximately $4.2 million and $4.2 million, respectively, which may be available to offset future capital gains and will begin to expire in 2027.
In March 2021, the American Rescue Plan Act ("ARPA") was enacted and contained extenders to the refundable employee retention credit and provided further limitations to executive compensation effective for tax years beginning after 2026. In August 2022, the Inflation Reduction Act (“IRA”) was enacted and introduced a 15% corporate alternative minimum tax (“CAMT”) for corporations with average annual adjusted financial statement income for any three-year tax period ending after December 31, 2021 and preceding tax year exceeding $1 billion, effective for tax years beginning after December 31, 2021, as well as a 1% excise tax on stock repurchases made by public companies, climate and energy provisions, and extensions to the Affordable Care Act subsidies. The Company has concluded that the provisions in the ARPA and IRA have an immaterial impact on the Company’s income tax expense due to its cumulative losses and full valuation allowance position.
Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception and prior to its initial public offering in 2013, which it believes has resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code. The Company completed a study through December 2023 confirming no ownership changes have occurred since the Company's initial public offering in 2013; any ownership shifts occurring after December 2023 could result in an ownership change under Section 382. There is a significant likelihood that the Company may experience an ownership change as a result of future equity offerings, including any sales under the ATM program, although whether the Company experiences an ownership change will depend on the specific facts that apply at the time of any offering.
The Company files Federal income tax returns in the United States, and various state and foreign jurisdictions. The federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2020 through December 31, 2022. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, or state or foreign tax authorities to the extent utilized in a future period.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Unrecognized tax benefits
Balance as of December 31, 2021 (As Restated)
$21,956 
Increases (decreases) for tax positions related to current period1,582 
Increases (decreases) for tax positions related to prior periods(45)
Balance as of December 31, 2022 (As Restated)
23,493 
Increases (decreases) for tax positions related to current period944 
Increases (decreases) for tax positions related to prior periods101 
Balance as of December 31, 202324,538 
The unrecognized tax benefits at December 31, 2023, if recognized, would not affect the Company’s effective tax rate due to its full valuation allowance position. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. The Company has elected to include interest and penalties related to uncertain tax positions as a component of its provision for income taxes. For the years ended December 31, 2023 and 2022, the Company’s accrued interest and penalties related to uncertain tax positions were not material.