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Income Taxes
 12 Months Ended
Dec. 31, 2023
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, 2023 and 2022, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $455.2 million and $383.3 million, respectively, which were available to reduce future taxable income and do not expire. The Company also had U.S. state NOL carryforwards of $537.2 million that begin to expire in 2038. The Company had gross U.S. federal and state tax credits of $24.2 million and $15.8 million as of December 31, 2023 and
2022, 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. As of December 31, 2023, the Company had a capital loss carryforward of $52.5 million, which will expire in 2028.
A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:
Year Ended December 31,
202320222021
Federal statutory tax
21.00 %21.00 %21.00 %
State tax, net of federal benefit
7.45 5.10 6.39 
Valuation allowance
(29.10)(28.89)(22.43)
Collaboration revenue
— 6.72 — 
Stock-based compensation
(2.25)(6.11)(5.92)
Tax credits
2.96 2.33 0.99 
Other
(0.06)(0.15)(0.03)
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,
20232022
Deferred tax assets:
Net operating loss carryforwards
$133,141 $106,530 
Tax credit carryforwards
22,409 14,317 
Capital loss carryforward
14,368 — 
Accrued liabilities and allowances
3,143 3,692 
Deferred revenue
793 904 
Amortization
5,243 4,585 
Capitalized research and development51,159 26,199 
Investment basis difference
4,104 14,235 
Lease liability
17,284 17,656 
Stock-based compensation
11,244 7,471 
Other
470 1,171 
Gross deferred tax assets
263,358 196,760 
Valuation allowance
(248,420)(180,132)
Deferred tax assets, net of valuation allowance
14,938 16,628 
Deferred tax liabilities:
Operating lease right-of-use assets
(10,853)(11,277)
Property and equipment
(4,085)(5,351)
Deferred tax liabilities
(14,938)(16,628)
Net deferred tax assets
$— $— 
The Tax Cuts and Jobs Act contained a provision that requires the capitalization of Section 174 costs incurred in years beginning on or after January 1, 2022. Section 174 costs are expenditures that represent research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software or technique. This provision changes the treatment of Section 174 costs such that the expenditures are no longer allowed as an immediate deduction but rather must be capitalized and amortized over five years for domestic research and development and fifteen years for foreign research and development. The Company has included the impact of this provision, which results in a deferred tax asset of approximately $51.2 million as of December 31, 2023.
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 $68.3 million and $52.9 million for the years ended December 31, 2023 and 2022, 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, 2023 and 2022, 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,
20232022
Beginning balance$400 $796 
Additions based on tax position related to the current year— — 
Adjustments based on prior year tax positions— (396)
Ending balance$400 $400 
The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.