Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

11.Income Taxes

Losses before provision for income taxes were as follows in each period presented:

	Year Ended December 31,
	2024			2023
	(in thousands)
United States	$	(85,311	)	$	(276,360	)
Foreign		(104	)		249
Total loss before provision for income taxes	$	(85,415	)	$	(276,111	)

The components of provision for income taxes were as follows in each period presented:

	Year Ended December 31,
	2024			2023
	(in thousands)
Current provision for income taxes:
State	$	—		$	1
Foreign		(12	)		14
Total current provision for income taxes	$	(12	)	$	15

A reconciliation of statutory tax rates to effective tax rates were as follows in each of the periods presented:

	Year Ended December 31,
	2024			2023
Federal income taxes at statutory rate		21.0	%		21.0	%
Research tax credits		(26.8	%)		4.3	%
Stock-based compensation		(16.2	%)		(4.5	%)
Other		(1.3	%)		(0.4	%)
Change in valuation allowance		23.3	%		(20.4	%)
Effective tax rate		0.0	%		0.0	%

Deferred tax assets and liabilities reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (b) operating loss and tax credit carryforwards. Significant components of our deferred tax assets and liabilities were as follows for each of the dates presented:

	As of December 31,
	2024			2023
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	259,376		$	323,581
Capitalized research expenses		61,113			72,229
Tax credit carryforwards		8,216			30,580
Stock-based compensation		5,789			14,033
Deferred revenue		14,709			17,018
Operating lease liabilities		9,403			12,035
License fees		4,794			5,926
Other		13,748			11,187
Total deferred tax assets		377,148			486,589
Valuation allowance		(368,401	)		(474,982	)
Total deferred tax assets		8,747			11,607
Deferred tax liabilities:
Operating lease assets		(8,747	)		(11,607	)
Total deferred tax liabilities		(8,747	)		(11,607	)
Net deferred tax assets (liabilities)	$	—		$	—

Under IRC Section 382, as amended, substantial restrictions exist on the utilization of net operating loss and tax credit carryforwards in the event a corporation experienced an “ownership change.” Generally, a Section 382 “ownership change” occurs if one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Similar rules may apply under state tax laws. Accordingly, our ability to utilize net operating loss and tax credit carryforwards may be limited as a result of such ownership changes, and such a limitation could result in the expiration of carryforwards before they are utilized.

We have completed a Section 382 study of transactions in our stock through December 31, 2024. The study concluded that we have experienced ownership changes since inception with the most recent being on September 5, 2024. As a result of the ownership changes and imposed annual limitations on the amount of our tax attributes that may be utilized in a given period, should we generate taxable income, we have determined that we will have net operating losses and tax credits that will expire unutilized. We have reduced our net operating loss carryforwards and tax credit carryforwards in the above table as a result.

Beginning January 1, 2022, the Tax Cuts and Jobs Act (the Tax Act) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code (IRC) Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the Tax Act, deferred tax assets related to capitalized research expenses pursuant to IRC Section 174 decreased by $11.1 million for the year ended December 31, 2024 and increased by $21.7 million for the year ended December 31,2023, respectively. The current year decrease is a result of more amortization than the amount capitalized in the current year whereas the prior year increase was partially offset by amortization on research expenses capitalized in prior years.

Our tax credit carryforwards decreased by $22.4 million, as compared to 2023, due the Section 382 study limiting our ability to utilize attributes as a result of our ownership changes.

We regularly evaluate the positive and negative evidence in determining the realizability of our deferred tax assets. Based upon the weight of available evidence, which includes our historical operating performance and reported cumulative net losses since inception, we maintained a full valuation allowance on the net deferred tax assets as of December 31, 2024 and 2023. We intend to maintain a full valuation allowance on our deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance. The valuation allowance decreased by $106.6 million for the year ended December 31, 2024 due to the decrease in our net deferred tax assets.

The American Rescue Plan Act (ARA) was signed into law on March 11, 2021. We do not expect the ARA to have a material impact on our financial statements, however, given the potential changes to IRC Section 162(m) effective in 2027 as a result of the ARA, we will continue to monitor and assess. No changes have been made to our financial statements as of December 31, 2024.

Under the Tax Act, federal NOLs generated in tax years beginning on or after January 1, 2018 may be carried forward indefinitely, but the utilization of such federal NOLs is limited to 80% of taxable income in future years. Since enactment, the IRS and Treasury have issued final and proposed regulations including clarifying guidance on several topics addressed by the Tax Act. Not all states conform to the Tax Act or and other states have varying conformity to the Tax Act.

As of December 31, 2024, for federal income tax purposes, we had net operating loss carryforwards of approximately $1.2 billion of which $15.4 million begin to expire in 2036 and the remaining may be carried forward indefinitely, and research & development tax credits of $1.1 million which begin to expire in 2044. For state income tax purposes, we had net operating loss carryforwards of approximately $53.9 million which begin to expire in 2030, and research & development tax credits of $45.8 million which may be carried forward indefinitely.

The changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for the years ended December 31, 2023 and 2024 are as follows:

	(In thousands)
Balance as of January 1, 2023		150,965
Gross increases for tax positions related to current year		5,538
Gross increases for tax positions related to prior year		3,843
Gross decreases for tax positions related to prior year		—
Balance as of December 31, 2023		160,346
Gross increases for tax positions related to current year		1,011
Gross increases for tax positions related to prior year		647
Gross decreases for tax positions related to prior year		(124,071	)
Balance as of December 31, 2024	$	37,933

We currently have a full valuation allowance against our U.S. net deferred tax assets, which would impact the timing of the effective tax rate benefit should any uncertain tax position be favorably settled in the future. The reversal of unrecognized tax benefits would not affect our effective tax rate to the extent we continue to maintain a full valuation allowance against our deferred tax assets.

Our policy is to account for interest and penalties related to uncertain tax positions as a component of the income tax provision. We have no accrued interest and penalties as of December 31, 2024 and 2023 due to available tax losses.

Our significant jurisdictions are the U.S. federal jurisdiction and the California state jurisdiction. All of our tax years remain open to examination by the U.S. federal and California tax authorities. We also file in other state, local and foreign jurisdictions in which we operate, and such tax years remain open to examination.

As of December 31, 2024, we are not permanently reinvested with respect to its foreign earnings and have not recorded deferred income taxes and withholding taxes as these taxes are immaterial to the financial statements.