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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company has reported pre-tax operating losses for all periods presented. The Company generated losses in the U.S. and had a minimal amount of income in Israel. 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, 2024 and 2023, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $599.2 million and $455.2 million, respectively, which were available to reduce future taxable income and do not expire. The Company also had U.S. state NOL carryforwards of $702.9 million that begin to expire in 2038 and foreign carryforwards of $5.8 million that do not expire. The Company had gross U.S. federal and state tax credits of $43.6 million and $24.2 million as of December 31, 2024 and 2023, 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, 2024, 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,
202420232022
Federal statutory tax
21.00 %21.00 %21.00 %
State tax, net of federal benefit
4.61 7.45 5.10 
Valuation allowance
(20.39)(29.10)(28.89)
Stock-based compensation
(2.17)(2.25)(6.11)
Tax credits
2.23 2.96 2.33 
IPR&D
(5.34)— — 
Other
0.06 (0.06)(0.15)
Collaboration revenue
— — 6.72 
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,
20242023
Deferred tax assets:
Net operating loss carryforward
$176,298 $133,141 
Tax credit carryforward
37,611 22,409 
Capital loss carryforward
14,705 14,368 
Accrued liabilities and allowances
3,818 3,143 
Deferred revenue
936 793 
Property and equipment
10,551 — 
Amortization
5,582 5,243 
Capitalized research and development82,389 51,159 
Investment basis difference
7,820 4,104 
Lease liability
16,486 17,284 
Stock-based compensation
10,036 11,244 
Other
125 470 
Gross deferred tax assets
366,357 263,358 
Valuation allowance
(359,440)(248,420)
Deferred tax assets, net of valuation allowance
6,917 14,938 
Deferred tax liabilities:
Operating lease right-of-use assets
(6,917)(10,853)
Property and equipment
— (4,085)
Deferred tax liabilities
(6,917)(14,938)
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 $82.4 million as of December 31, 2024.
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.
In connection with the October 2024 acquisition of ImmPACT stock, the Company recorded U.S. deferred tax assets of $39.6 million, which are mainly related to capitalized research costs and tax attribute carryforwards. The deferred tax assets are considered not more likely than not to be realized and therefore are fully offset by a valuation allowance of $39.6 million.
ImmPACT has an Israeli subsidiary with deferred tax assets of $1.4 million, which are mainly related to tax attribute carryforwards. These deferred tax assets are also fully offset by a valuation allowance of $1.4 million.
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 $111.0 million and $68.3 million for the years ended December 31, 2024 and 2023, 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, 2024 and 2023, 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,
20242023
Beginning balance$400 $400 
Additions based on tax position related to the current year1,625 — 
Adjustments based on prior year tax positions1,634 — 
Ending balance$3,659 $400 
The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.