Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

16.Income Taxes

The components of loss before income taxes are as follows (in thousands):

	Year Ended			Year Ended
	December 31,			December 31,
	2022			2021
U.S. operations	$	(102,354	)	$	(58,517	)
Non-U.S. operations		100			100
Loss before income taxes	$	(102,254	)	$	(58,417	)

The difference between the Company’s expected income tax benefit, as computed by applying the blended statutory U.S. federal tax rate of 21% for the year ended December 31, 2022 and 21% for the year ended December 31, 2021, to loss before income taxes, and actual income tax benefit is reconciled in the following table (in thousands):

	Year Ended			Year Ended
	December 31,			December 31,
	2022			2021
Income tax benefit at statutory rate	$	(21,473	)	$	(12,268	)
State income taxes, net of federal benefit		(5,932	)		(2,890	)
Non-U.S. income tax rate differential		—			—
Change in fair value of derivative		—			—
Change in federal tax rate		—			—
Research and development tax credits		(1,034	)		(693	)
Permanent items		1,514			729
Changes in valuation allowance		26,083			15,748
Other, net		842			(626	)
Income tax benefit	$	—		$	—

The significant components of deferred income taxes are as follows (in thousands):

	December 31,		December 31,
	2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	88,584	$	84,026
Capitalized R&D		12,226		—
Deferred revenue		4,033		4,270
Lease liability		1,793		722
Stock-based compensation		9,461		7,822
Tax credits		6,916		5,446
Other		3,433		3,005
Total deferred tax assets		126,446		105,291
Deferred tax liabilities:
Intangible assets		—		5,963
Right-of-use assets		1,650		615
Total deferred tax liabilities		1,650		6,578
Deferred tax assets, net		124,796		98,713
Valuation allowance		124,796		98,713
Total deferred tax liability	$	—	$	—

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to amortize them over five or fifteen years pursuant to IRC Section 174. During 2022, the Company capitalized approximately $49.6 million of research and development expenditures.

The valuation allowance generally reflects limitations on the Company’s ability to use the tax attributes and reduces the value of such attributes to the more-likely-than-not realizable amount. Management assessed the available positive and negative evidence to estimate if sufficient taxable income will be generated to use the existing net deferred tax assets. Based on a weighting of the objectively verifiable negative evidence in the form of cumulative operating losses over the three-year period ended December 31, 2020, management believes that it is not more likely than not that the deferred tax assets will be realized and, accordingly, a full valuation allowance has been established. The valuation allowance increased $26.1 million and $15.7 million for the years ended December 31, 2022 and 2021, respectively, with such increases attributed to the re-measurement of the net deferred tax assets at the year-end dates.

The Company has tax net operating loss and tax credit carry forwards in its individual tax jurisdictions. Including approximately $49.3 million related to the Icon Acquisition at December 31, 2022, the Company had U.S. federal net operating loss carry forwards of approximately $321.6 million. The net operating losses consist of $151.8 million, which expire at various dates between calendar years 2023 and 2038. The utilization of certain of these loss and tax credit carry forwards may be limited by Sections 382 and 383 of the Internal Revenue Code as a result of historical or future changes in the Company’s ownership. At December 31, 2022, the Company had state net operating loss carry forwards of approximately $264.2 million, which expire between 2033 and 2039, as well as U.S. federal and state research and development tax credit carry forwards of approximately $7.2 million, which expire at various dates between calendar years 2022 and 2039. In addition, at December 31, 2022, the Company had net operating loss carry forwards in the UK of £20.9 million (approximately $25.3 million), which are not subject to any expiration dates.

The Company’s U.S. federal income tax returns for calendar years 2003 through 2021 remain subject to examination by the Internal Revenue Service. The Company’s UK tax returns for fiscal years 2006 through 2021 remain subject to examination.

Through December 31, 2022, the Company had no unrecognized tax benefits in its consolidated statements of comprehensive loss and no unrecognized tax benefits in its consolidated balance sheets as of December 31, 2022 and 2021, respectively.

As of December 31, 2022 and 2021, the Company had no accrued penalties or interest related to uncertain tax positions.