Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	2022		2021		2020
Domestic	$	(160,542)	$	(116,178)	$	(111,101)
Foreign	1,316		1,091		1,276
Loss before income taxes	$	(159,226)	$	(115,087)	$	(109,825)

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

	2022		2021		2020
Current:
Domestic	$	—	$	—	$	—
Foreign	317		167		253
Total provision for income taxes	$	317	$	167	$	253

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):

	2022		2021		2020
Income tax provision at federal statutory rate	$	(33,706)	$	(24,168)	$	(23,063)
Tax on repatriated foreign earnings and other nondeductible items	284		580		348
Section 162(m) limitations	1,265		5,824		5,044
Change in tax credits	(3,501)		(2,514)		3,123
Change in valuation allowance	36,163		36,550		21,766
Changes in federal and state tax rates	2		(110)		586
Stock option exercise windfall	1,758		(9,761)		(7,683)
RTP and other true-ups	1,665		(2,823)		2,461
State and foreign tax, and other	(3,613)		(3,411)		(2,329)
Total provision for income taxes	$	317	$	167	$	253

At December 31, 2022, for income tax return purposes the Company has gross federal and state NOL carryforwards totaling $860.1 million and tax credit carryforwards of $16.2 million. The gross federal NOL carryforwards generated during and after fiscal 2018 totaling $389.3 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):

	2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	146,108	$	131,971
Research and development tax credit carryforwards	15,529		12,028
Section 174 capitalized costs	17,076		—
Operating lease liability	5,736		6,423
Stock-based compensation	6,561		6,287
Foreign tax credit carryforwards	659		659
Accruals and other	12,603		10,139
Total deferred tax assets before allowance	204,272		167,507
Less: Valuation allowance	(198,980)		(162,817)
Deferred tax assets, net	5,292		4,690
Deferred tax liabilities:
Right of use asset and other	(4,329)		(4,690)
State net operating loss adjustments	(963)		—
Deferred tax liability	(5,292)		(4,690)
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):

	2022		2021		2020
Balance at beginning of year	$	162,817	$	114,335	$	106,438
Impact of adoption of ASU 2020-06 on debt discount (equity component) deferred tax liability	—		11,932		—
Charged to costs and expenses	36,165		36,440		8,483
Impact of change in tax rate	(2)		110		(586)
Balance at end of year	$	198,980	$	162,817	$	114,335

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):

	2022		2021		2020
Unrecognized tax benefits at beginning of year	$	10,009	$	9,171	$	4,212
Additions based on current year tax positions	1,167		838		4,959
Unrecognized tax benefits at end of year	$	11,176	$	10,009	$	9,171

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 2022, 2021 or 2020 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.