Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company has reported pre-tax operating losses for all periods presented. The Company’s net losses are derived solely from within the U.S. The Company has not reflected any benefit for corresponding tax net operating loss carryforwards in the accompanying consolidated financial statements. The Company has established a full valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets.

As of December 31, 2021 and 2020, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $271.0 million and $116.1 million, respectively, which were available to reduce future taxable income and do not expire. The Company also had U.S. state NOL carryforwards of $199.4 million that begin to expire in 2038. The Company had gross U.S. federal and state tax credits of $9.8 million and $5.7 million as of December 31, 2021 and 2020, respectively, which may be used to offset future tax liabilities. The federal NOL carryforward period is indefinite, while the tax credits will begin to expire in 2039. The attributed carryforwards may become subject to annual limitations in the event of certain cumulative changes in the ownership interest of significant stockholders. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities.

A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:

	Year Ended December 31,
	2021		2020		2019
Federal statutory tax	21.00	%	21.00	%	21.00	%
State tax, net of federal benefit	6.39		4.71		0.52
Valuation allowance	(22.43)		(24.60)		(15.27)
Convertible preferred stock tranche liabilities	—		—		(5.75)
Stock-based compensation	(5.92)		(1.77)		(1.69)
Tax credits	0.99		0.95		1.24
Other	(0.03)		(0.29)		(0.05)
Effective income tax rate	0.00	%	0.00	%	0.00	%

The principal components of the Company’s net deferred tax assets were as follows (in thousands):

	Year Ended December 31,
	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	70,855	$	28,692
Tax credit carryforwards	8,338		4,980
Accrued liabilities & allowances	3,879		3,518
Deferred revenue	8,224		8,997
Amortization	15,961		14,375
Investment basis difference	13,587		3,334
Lease liability	18,429		13,421
Stock-based compensation	2,872		5,175
Other	2,613		1,454
Gross deferred tax assets	144,758		83,946
Valuation allowance	(127,226)		(71,093)
Deferred tax assets, net of valuation allowance	17,532		12,853
Deferred tax liabilities:
Operating lease right-of-use assets	(12,647)		(11,221)
Property and equipment	(4,885)		(1,632)
Deferred tax liabilities	(17,532)		(12,853)
Net deferred tax assets	$	—	$	—

The Company maintains a full valuation allowance on its net U.S. deferred tax assets. The assessment regarding whether a valuation allowance is required considers the evaluation of both positive and negative evidence when concluding whether it is more likely than not that deferred tax assets are realizable. In making this assessment, significant weight is given to evidence that can be objectively verified. In its evaluation, the Company considered its cumulative loss in recent years and its forecasted losses in the near-term as significant negative evidence. Based upon a review of the four sources of income identified within ASC 740, Accounting for Income Taxes (“ASC 740”), the Company determined that the negative evidence outweighed the positive evidence and a full valuation allowance on its U.S. net deferred tax assets will be maintained. The valuation allowance relates primarily to net U.S. deferred tax assets from net operating loss carryforwards, research and development tax credit carryforwards, research and development expenses capitalized and amortized for tax but deducted for GAAP and stock-based compensation.

The Company will continue to assess the realizability of its deferred tax assets and adjust the valuation allowance as required by ASC 740. The increase in the valuation allowance was $56.1 million and $50.4 million for the years ended December 31, 2021 and 2020, respectively.

The Company evaluates its uncertain tax positions based on a determination of whether it is more likely than not such position will be sustained based upon its technical merits and upon examination by the relevant income tax authorities with all facts known. The Company applies judgment in its measurement of an uncertain tax position recorded in its consolidated financial statements and tax return. As of December 31, 2021 and 2020, there are no penalties or accrued interest recorded in the consolidated financial statements.

The Company is generally subject to examination by the U.S. federal and local income tax authorities for all tax years in which a loss carryforward is available. The Company is currently not under examination by the Internal Revenue Service or other jurisdictions for any tax years.

The following table summarized changes to the Company’s unrecognized tax benefits (in thousands):

	Year Ended December 31,
	2021		2020
Beginning balance	$	—	$	—
Additions based on tax position related to the current year	396		—
Additions based on prior year tax positions	400		—
Ending balance	$	796	$	—