Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company did not record any income tax expense for the year ended December 31, 2023 and recorded a small amount of income tax expense related to state minimum taxes for the year ended December 31, 2022. The Company has incurred net operating losses for all the periods presented and has not reflected any benefit of such net operating loss carryforwards in the accompanying financial statements. The Company has recorded a full valuation allowance against all of its deferred tax assets as it is not more likely than not that such assets will be realized in the near future.

Reconciliation of the income tax expense calculated at the statutory rate to our zero expense for income taxes for the years ended December 31, 2023 and December 31, 2022 were as follows (in thousands):

	Year Ended December 31,
	2023		2022
Tax benefit at federal statutory rate	$	(23,603)	$	(27,973)
State taxes	(4,425)		(5,017)
Research tax credits	(5,454)		(15,012)
Change in valuation allowance	22,310		42,664
Stock based compensation	4,950		5,181
Change in rate	6,165		—
Other	57		157
Expense/(Benefit) for income taxes	$	—	$	—

The Company’s deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets or liabilities for financial reporting purposes and the amounts used for income tax purposes as of December 31, 2023 and December 31, 2022. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	Year Ended December 31,
	2023		2022
Deferred tax assets:
Lease liabilities	$	5,860	$	7,948
Stock-based compensation	3,894		4,755
Accrued compensation	928		1,093
Net operating loss carryforwards	68,304		58,628
Tax credit carryforwards	21,462		15,963
Capitalized Research and Development Cost	26,031		18,857
Fixed assets and intangibles	29		—
Other	20		17
Total deferred tax assets	126,528		107,261
Valuation allowance	(122,966)		(100,656)
Net deferred tax assets	3,562		6,605
Deferred tax liabilities:
Right-of-use assets	(3,562)		(6,316)
Fixed assets and intangibles	—		(289)
Total deferred tax liabilities	(3,562)		(6,605)
Net deferred tax assets	$	—	$	—

The Company records a valuation allowance for certain temporary differences for which it is more likely than not that it will not receive future tax benefits. The Company assesses its past earnings history, income tax planning and projections of future net income when determining whether it is more likely than not future tax benefits will be realized. Based on the Company’s history of losses, the Company has maintained a full valuation allowance of approximately $123.0 million and $100.7 million for the years ended December 31, 2023 and December 31, 2022, respectively. The change in valuation allowance of $22.3 million is due to increases in net operating losses and other deferred tax assets due to current year activity.

The following table sets forth the Company’s federal and state net operating loss and research credit carryforwards as of December 31, 2023 (in thousands)

	Amount		Expiration
Net operating losses, federal	$	268,618	Indefinite
Net operating losses, federal	$	601	2037
Net operating losses, state	$	186,045	2037-2043
Tax credits, federal	$	18,958	2037-2043
Tax credits, state	$	8,322	2038-2043

Current federal and state tax laws include substantial restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an ownership change as defined under Section 382 of the Internal Revenue Code of 1986, as amended. Accordingly, the Company’s ability to use these carryforward attributes may be limited as a result of such ownership change.

The Company applies the provisions of ASC Topic 740 to account for uncertain income tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows (in thousands):

	Year Ended December 31,
	2023		2022
Balance at beginning of the year	$	3,035	$	246
Additions based on tax positions related to the current year	944		1,993
Additions to tax positions of prior years	388		796
Balance at the end of the year	$	4,367	$	3,035

It is the Company’s policy to record penalties and interest related to income taxes as a component of income tax expense. The Company has not recorded any interest or penalties related to income taxes during the years ended December 31, 2023 and December 31, 2022. Unrecognized tax benefits are not expected to change during the next 12 months. The reversal of the unrecognized tax benefits would not affect the effective tax rate. The Company is subject to examination by U.S. federal and state tax authorities for all years since its inception.

The following table shows the change in the deferred tax valuation allowance as follows (in thousands):

	Year Ended December 31,
	2023		2022
Beginning Balance, January 1	$	100,656	$	58,713
Change charged to expense	22,310		41,943
Ending Balance, December 31	$	122,966	$	100,656