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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES
9. INCOME TAXES
Income tax expense
The following table presents domestic and foreign components of loss before income taxes for the years ended December 31, 2024 and 2023 (in thousands):
Years ended December 31,
20242023
Domestic$(113,553)$(42,502)
Foreign(30,326)(40,213)
Total net loss before income taxes$(143,879)$(82,715)
Significant components of the Company’s deferred income tax assets and liabilities as of December 31, 2024 and 2023 are as follows:
Years ended December 31,
20242023
Deferred tax assets:
Net operating loss carryforwards$64,583 $54,625 
Research and development credit carryforward18,53115,468
Scientific research and experimental development deductions36,15533,321
Depreciation and amortization6,6846,349
Start-up costs809873
Stock-based compensation1,939498
Other accruals and reserves1,431654
Total deferred tax assets130,132111,788
Valuation Allowance(129,107)(110,981)
Total deferred tax assets, net$1,025 $807 
Deferred tax liabilities:
Marketable securities(695)(315)
Loan payable(330)(492)
Total deferred tax liabilities(1,025)(807)
Net deferred tax assets (liabilities)$— $— 
The effective tax rate differs from the statutory rate, primarily due to the Company’s history of incurring losses, which have not been utilized, the foreign rate differential related to subsidiary earnings, and other permanent differences.
A summary reconciliation of the effective tax rate calculated at the US federal rate for 2024 and 2023 is as follows:
Years ended December 31,
20242023
US federal tax rate21 %21 %
Foreign losses taxed at different rates1 %3 %
Return to provision adjustments1 %(16)%
Stock-based compensation(2)%(6)%
Research and development credits2 %5 %
Permanent differences(11)%(2)%
Change in valuation allowance(12)%(5)%
Effective tax rate— %— %
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and the amount of which are uncertain.
As of December 31, 2024, the Company maintained a valuation allowance with respect to its subsidiaries’ net operating losses that it believes is more likely than not that the deferred tax asset will not be realized. The Company will continue to reassess the valuation allowance annually and if future evidence allows for a partial or full release of the valuation allowance, a tax benefit will be recorded accordingly.
As of December 31, 2024, the Company has Canadian tax loss carryforwards of approximately $115.7 million expiring between 2033 and 2044 as well as Scientific Research and Experimental Development expenditures of approximately $134.0 million that can be carried forward indefinitely, which are available to be applied against future taxable income. In addition, the Company has investment tax credits of approximately $19.4 million expiring between 2028 and 2044 that are available to be applied against future Canadian federal income taxes payable. The Company has provincial investment tax credits of approximately $4.2 million expiring between 2032 and 2034 that are available to be applied against future Canadian provincial income taxes payable.
The Company also has US tax loss carryforwards of approximately $98.4 million which may be applied against future taxable income, of which $15.6 million will expire between 2033 and 2037, while $82.8 million can be carried forward indefinitely. Future utilization of US tax loss carryforwards is subject to certain limitations under the Internal Revenue Code ("IRC"), including limitations under IRC section 382. The Company's US tax loss carryforwards may be limited by IRC section 382. However, those limitations do not have a significant impact to the financial statements since there is no utilization of the tax loss carryforwards and a full valuation allowance exists against the net operating losses.
The Company files income tax returns in the US, Canada, and various foreign and state jurisdictions. The 2013 to 2024 tax years remain subject to examination by the US federal and state tax authorities. The 2020 to 2024 tax years remain subject to examination by Canadian tax authorities.
The Company has unrecognized tax benefits of 0.7 million as of December 31, 2024. No amount of the unrecognized tax benefits would affect the effective tax rate because any tax benefits would result in adjustments to a related deferred tax asset that are offset by a valuation allowance. The Company has not accrued for any interest or penalties as of December 31, 2024.
The total gross unrecognized tax benefits remained unchanged throughout the year ended December 31, 2024.