Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table summarizes the components of our income tax (benefit) expense (in thousands):

	Year ended December 31,
	2021		2020
Current:
Federal	$	—	$	(13)
State	1		1
	1		(12)
Deferred:
Federal	—		12
State	—		—
	—		12
Income tax expense	$	1	$	—

The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision (in thousands):

	Year ended December 31,
	2021		2020
Expected income tax benefit at federal statutory tax rate	$	(5,840)	$	(3,309)
State income taxes, net of federal benefit	1		(927)
Tax credits	(1,180)		(1,216)
Change in valuation allowance	6,659		2,606
Return to provision adjustments	80		(14)
Stock compensation	243		1,644
Reserve for uncertain tax positions	176		1,179
Other	(138)		37
Income tax expense	$	1	$	—

The following table summarizes the significant components of our deferred tax assets and liabilities (in thousands):

	December 31,
	2021		2020
Deferred tax assets:
Net operating loss carryovers	$	87,877	$	82,747
Research and development and other tax credits	35,344		34,337
Intangibles and property and equipment basis difference	607		715
Stock compensation expense	587		283
Lease liability	631		88
Other	564		281
Total deferred tax assets	125,610		118,451
Total deferred tax liabilities	(782)		(282)
Net deferred tax asset	124,828		118,169
Valuation allowance	(124,828)		(118,169)
Net deferred tax asset	$	—	$	—

For all periods presented, we have determined that it is more likely than not that our deferred tax asset will not be realized, with the exception of the refundable AMT tax credit. Accordingly, we have recorded a valuation allowance to offset the net deferred tax asset of $124.8 million.

As of December 31, 2021, we had NOL carryforwards for U.S. federal and California state tax purposes of $366.8 million and $276.0 million, respectively, portions of which begin to expire in 2030 and 2031, respectively. Our federal NOL carryforwards generated in tax years beginning after December 31, 2017 of $103.4 million will carry forward indefinitely, but may only offset 80% of our taxable income.

As of December 31, 2021, we also had federal and California research and development tax credit carryforwards of $33.0 million and $9.7 million, respectively. The federal research and development tax credit carryforwards will begin to expire in 2029. The California research and development tax credit carryforwards are available indefinitely.

Pursuant to Sections 382 and 383, use of the Company’s net operating loss and credit carryforwards may be limited if a cumulative change in ownership of more than 50% (by value) occurs within a three-year period. The Company has not performed an analysis through December 31, 2021 to determine whether its net operating loss and research and development credit carryforwards are subject to annual limitation under Sections 382 or 383 of the Code, and these financial statements do not contain any adjustment relating to such potential limitations. However, if the Company experienced an ownership change that resulted in an annual limitation on the Company’s net operating loss carryforwards under Section 382 of the Code there would be no material impact to the Company’s financial statements.

The following table summarizes the changes in the amount of our unrecognized tax benefits (in thousands):

	Year Ended December 31,
	2021		2020
Beginning balance of unrecognized tax benefits	$	17,939	$	16,573
Decrease for prior year tax positions	(1,174)		(1)
Increase for current year tax positions	188		1,367
Total	$	16,953	$	17,939

Included in unrecognized tax benefits of $17.0 million at December 31, 2021 was $13.7 million of tax benefits that, if recognized, would reduce our annual effective tax rate, subject to valuation allowance. We do not expect that there will be a significant change in the unrecognized tax benefits over the next 12 months.

We are subject to taxation in the United States and state jurisdictions where applicable. Our tax years for 2010 and forward are subject to examination by the U.S. tax authorities and our tax years for 2011 and forward are subject to examination by the California tax authorities due to carryforward of unutilized net operating losses and research and development credits.

It is our practice to recognize interest and/or penalties related to income tax matters in income tax expense. For the years ended December 31, 2021 and 2020, we have not recognized any interest or penalties related to income taxes.