Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

. Income Taxes

For the years ended December 31, 2022 and 2021, the Company did not record a provision for income taxes due to a full valuation against its deferred taxes. A reconciliation between the provision for income taxes and income taxes computed using the U.S. federal statutory corporate tax rate is as follows (in thousands):

	Years Ended December 31,
	2022			2021
Income taxes computed at the statutory rate	$	(41,522	)	$	(30,216	)
Permanent items		2,713			1,387
Research and development credit		(2,453	)		(2,950	)
Change in valuation allowance		41,137			31,783
Other		125			(4	)
Provision (benefit) for income taxes	$	—		$	—

Significant components of the Company’s net deferred tax assets are as follows (in thousands):

	Years Ended December 31,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	85,918		$	60,936
Research credits		8,897			6,694
Intangible assets		25,319			13,809
Other		6,517			3,996
Gross deferred tax assets		126,651			85,435
Less valuation allowance		(126,170	)		(85,033	)
Deferred tax assets, net of valuation allowance		481			402
Deferred tax liabilities:
Other		(481	)		(402	)
Net deferred tax assets	$	—		$	—

Based upon the Company’s history of operating losses, the Company is unable to conclude that it is more likely than not that the benefit of its deferred tax assets will be realized. Accordingly, the Company has provided a full valuation allowance for its deferred tax assets as of December 31, 2022 and 2021.

As of December 31, 2022 and 2021, the Company had federal net operating loss carryforwards of approximately $408.7 million and $290.1 million, respectively, which are carried over indefinitely.

As of December 31, 2022, the Company had approximately $1.7 million of state net operating loss carryforwards that begins to expire in 2036.

As of December 31, 2022, the Company has available federal research and development credits of $10.5 million which begin to expire in 2038. The Company has $0.9 million of state research and development credits, some of which, begin to expire in 2025.

The Company has not completed a formal analysis of the potential impact of Section 382 on its deferred tax assets as of December 31, 2022. Until this analysis has been completed, the Company has not adjusted any of its deferred tax assets, including net operating losses or research and development credits. The Company will reassess the amount of net operating losses and credits subject to limitation under Section 382 when a study is complete.

Due to the existence of the valuation allowance, future changes in the deferred tax assets related to these tax attributes will not impact the Company’s effective tax rate.

The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes that it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcome of examinations by tax authorities in determining the adequacy of its provision for income taxes.

The following table summarizes the activity related to the Company's gross unrecognized tax benefits:

	Years Ended December 31,
	2022		2021
Beginning balance	$	1,704	$	938
Increases related to prior year tax positions		-		64
Increases related to current year tax positions		623		702
Ending balance	$	2,327	$	1,704

As of December 31, 2022, the Company has gross unrecognized tax benefits of $2,327, none of which would affect the effective tax rate due to a full valuation allowance. The Company does not anticipate any significant changes in its unrecognized tax benefits over the next 12 months. The Company's policy is to recognize the interest expense and/or penalties related to income tax matters as a component of income tax expense. The Company has no accrual for interest or penalties on its balance sheet at December 31, 2022, and has not recognized interest and/or penalties in its statement of operations for the year ended December 31, 2022.

The Company is subject to taxation in the United States and various states. The Company is not currently under examination by any taxing authorities. Due to the carryover of tax attributes, the statute of limitations is currently open for tax years since inception.