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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
During the years ended December 31, 2021 and 2020, the Company recorded no income tax benefits for the net deferred tax assets comprised primarily of net operating losses incurred and research and development tax credits generated in each year, due to its uncertainty of realizing a benefit from these items.
All of the Company’s operating losses since inception have been generated in the United States.
A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate was as follows:
Year Ended December 31,
20212020
Federal statutory income tax rate(21.0)%(21.0)%
State taxes, net of federal benefit
(5.8)(6.4)
Federal and state research and development tax credits
(4.4)(3.7)
Other
0.8 (0.5)
Change in deferred tax asset valuation allowance
30.4 31.6 
Effective income tax rate0.0 %0.0 %
Net deferred tax assets consisted of the following (in thousands):
December 31,
20212020
Deferred tax assets:
Net operating loss carryforwards
$61,083 $39,289 
Research and development tax credit carryforwards
9,367 4,955 
Capitalized start-up costs157 174 
Accrued expenses
5,300 1,010 
Stock-based compensation
1,403 436 
Operating lease liabilities
15,952 17,032 
Total deferred tax assets
93,262 62,896 
Deferred tax liabilities:
Depreciation
(3,551)(2,819)
Operating lease right-of-use assets(10,566)(11,694)
Total deferred tax liabilities
(14,117)(14,513)
Valuation allowance79,145 48,383 
Net deferred tax assets
$— $— 
As of December 31, 2021, the Company had U.S. federal and state net operating loss carryforwards of $228.9 million and $206.0 million, respectively, which may be available to offset future taxable income. The federal net operating loss carryforwards include $12.5 million which expire at various dates beginning in 2035 and $216.4 million which carryforward indefinitely but in some circumstances may be limited to offset 80% of annual taxable income. The state net operating loss carryforwards expire at various dates beginning in 2036. As of December 31, 2021, the Company also had U.S. federal and state research and development tax credit carryforwards of $6.1 million and $4.1 million, respectively, which may be available to offset future tax liabilities and expire at various dates beginning in 2036 and 2031, respectively.
Utilization of the U.S. federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income or tax liabilities. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, no amounts are being recorded as an uncertain tax position.
The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products that would generate revenue from product sales and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the net deferred tax assets as of December 31, 2021 and 2020. Management reevaluates the positive and negative evidence at each reporting period.
The valuation allowance increased by $30.8 million and $21.8 million during the years ended December 31, 2021 and 2020, respectively, primarily as a result of the increase in net operating loss carryforwards.
As of December 31, 2021 and 2020, the Company had not recorded any amounts for unrecognized tax benefits. The Company files income tax returns in the U.S. and Massachusetts, as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. Since the Company is in a loss carryforward position, it is generally subject to
examination by the U.S. federal, state, and local income tax authorities for all tax years in which a loss carryforward is available.