Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Loss before income taxes for the years ended December 31 consisted of the following (in thousands):

	2021		2020		2019
Domestic	$	(116,178)	$	(111,101)	$	(41,720)
Foreign	1,091		1,276		1,293
Loss before income taxes	$	(115,087)	$	(109,825)	$	(40,427)

Significant components of our provision for income taxes for the years ended December 31 are as follows (in thousands):

	2021		2020		2019
Current:
Domestic	$	—	$	—	$	—
Foreign	167		253		269
Total provision for income taxes	$	167	$	253	$	269

A reconciliation of the federal statutory income tax rate to the effective income tax rate for the years ended December 31 are as follows (in thousands):

	2021		2020		2019
Income tax provision at federal statutory rate	$	(24,168)	$	(23,063)	$	(8,490)
Tax on repatriated foreign earnings and other nondeductible items	580		348		403
Section 162(m) limitations	5,824		5,044		1,438
Change in tax credits	(2,514)		3,123		(3,738)
Change in valuation allowance	36,550		21,766		17,842
Changes in federal and state tax rates	(110)		586		(4,058)
Stock option exercise windfall	(9,761)		(7,683)		(1,763)
RTP and other true-ups	(2,823)		2,461		(485)
State and foreign tax, and other	(3,411)		(2,329)		(880)
Total provision for income taxes	$	167	$	253	$	269

At December 31, 2021, for income tax return purposes the Company has gross federal and state NOL carryforwards totaling $749.6 million and tax credit carryforwards of $12.7 million. The gross federal NOL carryforwards generated during and after fiscal 2018 totaling $320.1 million are carried forward indefinitely, while all others, if not utilized, will expire beginning in 2025 through 2037. The research and development credit carryforwards generated prior to 2018 will expire beginning in 2028. The carryforwards may be subject to limitations under the Internal Revenue Code and applicable state tax law.

The Company does not expect to utilize any of its net operating loss and tax credit carryforwards in the near term. The Company may have already experienced one or more ownership changes. Depending on the timing of any future utilization of its carryforwards, the Company may be limited as to the amount that can be utilized each year as a result of such previous ownership changes. However, the Company does not believe such limitations will cause its carryforwards to expire unutilized.

Future changes in the Company’s stock ownership as well as other changes that may be outside the Company’s control could potentially result in further limitations on the Company’s ability to utilize its net operating loss and tax credit carryforwards.

The effect of temporary differences and carryforwards that give rise to deferred tax assets and liabilities for the years ended December 31 were as follows (in thousands):

	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	131,971	$	100,927
Research and development tax credit carryforwards	12,028		9,513
Operating lease liability	6,423		6,962
Stock-based compensation	6,287		5,221
Foreign tax credit carryforwards	659		648
Accruals and other	10,139		8,138
Total deferred tax assets before allowance	167,507		131,409
Less: Valuation allowance	(162,817)		(114,335)
Deferred tax assets, net	4,690		17,074
Deferred tax liabilities:
Right of use asset and other	(4,690)		(5,029)
Debt discount (equity component)	—		(12,045)
Deferred tax liability	(4,690)		(17,074)
Net deferred tax assets and liabilities	$	—	$	—

Certain of the amounts in the income tax rate table and deferred tax assets tables above reflect reclassifications of prior year items to conform to the current year presentation.

The Company has recorded a full valuation allowance related to its deferred tax assets due to the uncertainty of the ultimate realization of the future benefits from those assets. The table below summarizes changes in the deferred tax asset valuation allowance for the years ended December 31 (in thousands):

	2021		2020		2019
Balance at beginning of year	$	114,335	$	106,438	$	88,596
Impact of adoption of ASU 2020-06 on debt discount (equity component) deferred tax liability	11,932		—		—
Charged to costs and expenses	36,440		8,483		13,784
Impact of change in tax rate	110		(586)		4,058
Balance at end of year	$	162,817	$	114,335	$	106,438

The total balance of unrecognized gross tax benefits for the years ended December 31, resulting from research and development tax credits claimed on the Company’s annual tax return was as follows (in thousands):

	2021		2020		2019
Unrecognized tax benefits at beginning of year	$	9,171	$	4,212	$	2,830
Additions based on current year tax positions	838		4,959		1,382
Unrecognized tax benefits at end of year	$	10,009	$	9,171	$	4,212

The Company classifies applicable interest and penalties on amounts due to tax authorities as a component of the provision for income taxes. The amount of accrued interest and penalties recorded in 2021, 2020 or 2019 was not significant. The Company does not anticipate that the amount of its existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. Due to the presence of net operating loss carryforwards in most jurisdictions, the Company’s tax years remain open for examination by U.S. taxing authorities back to 2004.