Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes [Abstract]

Income Taxes

9. Income Taxes

Loss before income taxes is comprised of (in thousands):

	Year Ended December 31,
	2024			2023			2022
United States	$	(460,712	)	$	(334,707	)	$	(258,493	)
Foreign		644			742			508
Loss before income taxes	$	(460,068	)	$	(333,965	)	$	(257,985	)

Our income tax expense (benefit) was as follows (in thousands):

	Year Ended December 31,
	2024			2023			2022
Current:
Federal	$	(5,492	)	$	35,861		$	10,522
State		(848	)		(3,687	)		1,129
Foreign		169			147			86
Total current income tax expense (benefit)		(6,171	)		32,321			11,737
Deferred:
Federal		—			—			—
State		—			—			—
Total deferred income tax benefit		—			—			—
Total income tax expense (benefit)	$	(6,171	)	$	32,321		$	11,737

Our expense (benefit) for income taxes differs from the amount computed by applying the U.S. federal statutory rate to loss before income taxes. The sources and tax effects of the differences are as follows (in thousands):

	Year Ended December 31,
	2024					2023					2022
Pre-tax loss	$	(460,068	)			$	(333,965	)			$	(257,985	)
Statutory rate		(96,614	)	21.0	%		(70,133	)	21.0	%		(54,177	)	21.0	%
State income tax net of federal benefit		(11,889	)	2.6	%		(22,597	)	6.8	%		(13,622	)	5.3	%
Foreign		15		0.0	%		(22	)	0.0	%		(49	)	0.0	%
Net change in valuation allowance		152,590		(33.2	)%		175,388		(52.5	)%		104,951		(40.7	)%
Tax credits		(53,497	)	11.6	%		(67,131	)	20.1	%		(39,729	)	15.4	%
Tax rate change		10,815		(2.4	)%		1,023		(0.3	)%		(3,091	)	1.2	%
Non-deductible compensation		1,895		(0.4	)%		3,814		(1.1	)%		3,023		(1.2	)%
Other non-deductible items		188		0.0	%		327		(0.1	)%		57		0.0	%
Foreign-derived intangible income benefit		(21,071	)	4.6	%		(7,493	)	2.2	%		—		—
Stock-based compensation		10,732		(2.3	)%		19,546		(5.9	)%		14,030		(5.4	)%
Other		665		(0.2	)%		(401	)	0.1	%		344		(0.1	)%
Effective rate	$	(6,171	)	1.3	%	$	32,321		(9.7	)%	$	11,737		(4.5	)%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of our deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows (in thousands):

	Year Ended December 31,
	2024			2023
Deferred Tax Assets:
Net operating loss carryovers	$	95,851		$	77,964
Tax credits		310,703			239,962
Deferred revenue		54,063			71,683
Stock-based compensation		82,660			77,468
Intangible and capital assets		93,541			104,380
Convertible debt		9,310			16,849
Capitalized research and development expenses		323,560			238,738
Long-term lease liabilities		41,481			43,718
Sale of future royalties		148,918			144,608
Other		14,024			10,343
Total deferred tax assets	$	1,174,111		$	1,025,713
Deferred Tax Liabilities:
Fixed assets		(5,719	)		(4,166	)
Right-of-use assets		(36,788	)		(42,007	)
Other		(1,896	)		(1,910	)
Net deferred tax asset	$	1,129,708		$	977,630
Valuation allowance		(1,129,708	)		(977,630	)
Total net deferred tax assets and liabilities	$	—		$	—

As of December 31, 2024, we maintained a full valuation allowance on our net deferred tax assets. We determined the valuation allowance in accordance with the provisions of ASC 740, Accounting for Income Taxes, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are realizable. Our recent history of cumulative losses and expected near-term future losses require us to record a full valuation allowance against all net deferred tax assets. We will maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

Our valuation allowance increased by $152 million from December 31, 2023 to December 31, 2024. The increase was primarily related to increases in our deferred tax assets for capitalized research and development expenses and tax credits.

At December 31, 2024, we had federal and state, primarily California, tax net operating loss carryforwards of $290.2 million and $526.9 million, respectively. Our federal tax loss carryforwards are available indefinitely. Our California tax loss carryforwards will begin to expire in 2032. At December 31, 2024, we also had federal and California research and development tax credit carryforwards of $234.2 million and $137.6 million, respectively. Our federal research and development tax credit carryforwards will begin to expire in 2037. Our California research and development tax credit carryforwards are available indefinitely.

Utilization of the net operating loss and tax credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.

We analyze filing positions in all U.S. federal, state and foreign jurisdictions where we file income tax returns, and all open tax years in these jurisdictions to determine if we have any uncertain tax positions on any of our income tax returns. We recognize the impact of an uncertain tax position on an income tax return at the largest amount that the relevant taxing authority is more-likely-than not to sustain upon audit. We do not recognize uncertain income tax positions if they have less than 50 percent likelihood of the applicable tax authority sustaining our position.

The following table summarizes our gross unrecognized tax benefits (in thousands):

	Year Ended December 31,
	2024			2023			2022
Beginning balance of unrecognized tax benefits	$	43,298		$	56,567		$	55,085
Decrease for lapse of statute of limitations		(7,579	)		(14,993	)		—
Decrease for prior period tax positions		(110	)		(737	)		(267	)
Increase for prior period tax positions		1,902			429			259
Increase for current period tax positions		3,650			2,032			1,490
Ending balance of unrecognized tax benefits	$	41,161		$	43,298		$	56,567

Included in the balance of unrecognized tax benefits at December 31, 2024, 2023 and 2022 was $0.3 million, $0.3 million and $6.2 million respectively, that if we recognized, could impact our effective tax rate, subject to our remaining valuation allowance.

We do not expect any material changes to our gross unrecognized tax benefits within the next 12 months.

We recognize interest and/or penalties related to income tax matters in income tax expense. During the years ended December 31, 2024, 2023 and 2022, we recognized $0.1 million, $0.1 million and $0.8 million, respectively, of accrued interest and penalties related to gross unrecognized tax benefits.

We are subject to taxation in the U.S. and various state and foreign jurisdictions. U.S. tax years 2021 through 2023 remain open to examination and tax years 2020 through 2023 remain open to examination by major state taxing jurisdictions, primarily California, although net operating loss and credit carryforwards generated prior to these periods may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have been used in an open period or are used in a future period.