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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes consisted of the following (in thousands):
Year Ended December 31,
202520242023
Current:
U.S. Federal$— $— $— 
U.S. State— — — 
Foreign102 68 30 
Total Current$102 $68 $30 
Deferred:
U.S. Federal$— $— $— 
U.S. State— — — 
Foreign— — — 
Total deferred$— $— $— 
Total provision for income taxes
$102 $68 $30 
The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows:
Year Ended December 31,
202520242023
(In thousands, except percentages)
AmountRateAmountRateAmountRate
Taxes at the U.S. statutory tax rate of 21%
$(107,612)21.0 %$(88,531)21.0 %$(30,490)21.0 %
State income taxes, net of federal tax benefit
1,516 (0.3)— — — — 
Foreign tax effects
51 — 15 — 27 — 
Effective of cross-border tax laws
80 — 70 — 908 (0.6)
Change in valuation allowance
124,243 (24.2)106,498 (25.3)37,886 (26.1)
Tax Credits
Research Tax Credit
(21,990)4.3 (24,660)5.9 (23,011)15.9 
Effect of changes in tax laws or rates enacted in the current period
— — — — — — 
Nontaxable or Nondeductible items
Stock-based compensation
6,286 (1.2)9,579 (2.3)5,777 (4.0)
Nondeductible acquisition - related costs
— — — — 5,040 (3.5)
Other
261 (0.1)(2,930)0.7 220 (0.2)
Changes in UTB
(1,573)0.3 173 — 401 (0.3)
Other
(1,160)0.2 (146)— 3,273 (2.3)
Total provision for income taxes
$102 — %$68 — %$30 — %
On July 4, 2025, the U.S. enacted tax reform legislation through the One Big Beautiful Bill Act (“OBBBA”). Included in this legislation are provisions that allow for the immediate expensing of domestic research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. The legislation has multiple effective dates, with certain provisions effective in the current fiscal period and others in the fiscal year ending December 31, 2026. OBBBA did not have a material impact to the Company’s consolidated financial statements for the year ended December 31, 2025.
Deferred Income Taxes
The components of the Company’s net deferred tax assets are as follows (in thousands):
December 31,
20252024
Deferred tax assets:
Net operating loss carryforwards$229,535 $113,397 
Tax credit carryforwards155,334 124,922 
Research expense capitalization161,588 176,094 
Lease liabilities
9,819 11,760 
Stock-based compensation67,511 57,766 
Fixed assets
8,588 6,671 
Accruals and other14,111 13,447 
Gross deferred tax assets646,486 504,057 
Valuation allowance(630,806)(487,714)
Net deferred tax assets15,681 16,343 
Deferred tax liabilities:
Lease right-of-use assets
(15,681)(16,343)
Net deferred tax assets$— $— 
Recognition of deferred tax assets is appropriate when realization of such assets is more likely than not. Based upon the weight of available evidence, especially the uncertainties surrounding the realization of deferred tax assets through future taxable income, the Company believes it is not more likely than not that the deferred tax assets will be fully realizable. Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024. There was an increase in the net valuation allowance of $143.1 million during the year ended December 31, 2025.
As of December 31, 2025, the Company has federal net operating loss (“NOL”) carryforwards of approximately $964.9 million, which are available to reduce future taxable income, and has federal R&D and orphan drug tax credits of approximately $73.8 million and $75.0 million respectively, both of which may be used to offset future tax liabilities. The federal NOL and federal tax credit carryforwards will begin to expire in 2034. The Company also has state NOL carryforwards of approximately $398.4 million, which are available to reduce future taxable income, and has state tax credits of approximately $55.1 million which may be used to offset future tax liabilities. The state NOL will begin to expire in 2031 and the state tax credit carryforwards will be carried forward indefinitely.
The NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service (“IRS”) and state tax authorities and may become subject to an annual limitation in the event of certain future cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. Annual limitations may result in expiration of net operating loss and tax credit carryforwards before some or all of such amounts have been utilized.
The Company follows the provisions of ASC 740, Accounting for Income Taxes, and the accounting guidance related to accounting for uncertainty in income taxes. The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings is more likely than not to be sustained upon examination by the relevant income tax authorities.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
December 31,
202520242023
Unrecognized tax benefits at January 1
$33,761 $26,175 $19,371 
Additions for tax positions taken in a prior year
169 162 168 
Additions for tax positions taken in the current year
7,475 7,424 6,636 
Reductions for tax positions taken in the prior year
(2,100)— — 
Audit settlements
(53)$— $— 
Unrecognized tax benefits at December 31
$39,252 $33,761 $26,175 
If recognized, none of the unrecognized tax benefits would reduce the effective tax rate for the year ended December 31, 2025. The Company will recognize both accrued interest and penalties related to unrecognized benefits in income tax expense. As of December 31, 2025, no liability has been recorded for potential interest or penalties. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.
The Company’s 2015 to 2025 tax years remain subject to examination in the United States and California due to tax attributes and statutes of limitations. The Company remains subject to possible examination in various other jurisdictions that are not expected to result in material tax adjustments.