Income taxes

12 Months Ended

Dec. 31, 2024

Income taxes

Income taxes

14. Income taxes

The provision for incomes taxes is as follows:

	Year ended December 31,
	2024		2023		2022
	(in thousands)
Current
Federal	$	443	$	1,248	$	—
State		222		160		16
Total current		665		1,408		16
Deferred
Federal		—		—		—
State		—		—		—
Total deferred		—		—		—
Total tax provision	$	665	$	1,408	$	16

A reconciliation of the expected income tax provision computed using the federal statutory income tax rate at the Company’s effective tax rate is as follows:

	Year ended December 31,
	2024			2023			2022
Income tax computed at federal statutory tax rate		21.0	%		21.0	%		21.0	%
State taxes, net of federal benefit		9.3	%		5.4	%		5.2	%
General business credits		8.3	%		(0.4)	%		(3.5)	%
Provision to return		0.1	%		0.9	%		3.2	%
Non-deductible expenses		(1.1)	%		0.5	%		(4.6)	%
Other		(3.4)	%		(0.4)	%		—	%
Change in valuation allowance		(35.0)	%		(26.0)	%		(21.3)	%
Total		(0.8)	%		1.00	%		—	%

The Company has historically incurred net operating losses (“NOLs”). As of December 31, 2024, the Company had federal and state net operating loss carryforwards of $20.0 million and $0.8 million, respectively. As of December 31, 2024, the Company had federal and state research and development tax credit carryforwards of $23.6 million and $13.73 million, respectively, which expire beginning in 2033. As of December 31, 2024, the Company had $0.4 million of state investment credits.

The significant components of the Company’s deferred tax assets and (liabilities) are as follows:

	As of December 31,
	2024		2023
	(in thousands)
Deferred tax assets:
Net operating loss carryforward	$	4,244	$	13,724
Tax credit carryforwards		34,424		28,427
Lease liability		11,946		5,544
Deferred revenue		7,867		1,675
Stock-based compensation		5,328		5,157
Non-deductible accruals and reserves		2,435		2,613
Capitalized research expenses		50,974		31,347
Intangibles		499		554
Total deferred tax assets		117,717		89,041
Less valuation allowance		(105,854)		(82,612)
Net deferred tax assets		11,863		6,429
Deferred tax liabilities
Right of use assets		(9,111)		(3,691)
Depreciation and amortization		(2,752)		(2,738)
Net deferred taxes	$	—	$	—

As required by ASC 740, management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which principally comprise NOL carryforwards, tax credit carryforwards, and capitalized research expenses. Management has determined that it is more likely than not that the Company will not recognize the benefits of its federal and state deferred tax assets, and as a result, a valuation allowance of $105.9 million and $82.6 million has been established at December 31, 2024 and 2023, respectively. The state NOLs will expire beginning in 2041 while the federal NOLs do not expire. The valuation allowance decreased by $23.3 million for the year ended December 31, 2024. The primary reason for the difference between the income tax provision recorded by the Company and the amount of income tax provision at statutory income tax rates was the change in the valuation allowance.

At December 31, 2024 and 2023, the Company had no unrecognized tax benefits. The Company completed a study of its research and development credit carryforwards in 2024. The Company has recorded an adjustment in the current year to reflect the preliminary results of the research and development study. The completion of the study may result in an additional adjustment to the Company’s research and development credit carryforwards; however, until a study is completed, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits, and if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheets or statements of operations and comprehensive (loss) income if an adjustment were required.

Sections 382 and 383 of the U.S. Internal Revenue Code (“IRC”) impose substantial restrictions on the utilization of net operating losses and other tax attributes in the event of a cumulative “ownership change”. In general, a company would undergo an ownership change if its “5-percent shareholders” (determined under Section 382) increased their collective ownership of the company’s stock by more than 50% over a rolling three-year period. Accordingly, if the Company generates taxable income in the future, changes in our stock ownership, including equity offerings and share repurchase programs, as well as other changes that may be outside its control, could potentially result in material limitations on the Company’s ability to use its net operating loss and research tax credit carryforwards. Similar rules may

apply under state tax laws. The Company has not conducted a Section 382 or Section 383 study to determine whether the use of its net operating losses and research tax credits is limited. The Company may have experienced ownership changes in the past, and it may experience ownership changes in the future, some of which are outside of its control. This could limit the amount of net operating losses and research tax credits that the Company can utilize annually to offset future taxable income or tax liabilities. Subsequent statutory or regulatory changes in respect to the utilization of net operating losses and research tax credits for federal or state purposes, such as suspensions or  limitations on the use of net operating losses and research tax credits carried forward, or other unforeseen reasons, may result in the Company’s existing net operating losses and research tax credits expiring or otherwise being unavailable to offset future income tax liabilities.

Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as income tax expense in the accompanying statements of operations. As of December 31, 2024, and 2023, the Company has no accrued interest related to uncertain tax positions. Since the Company is in a loss carryforward position, it is generally subject to examination by the U.S. federal, state, and local income tax authorities for all tax years in which a loss carryforward is available.