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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes |
11. | Income Taxes
The Company operated as a nontaxable partnership until its conversion on March 31, 2019. The Company had deferred tax assets in existence on March 31, 2019 when the Company became a taxable entity. Deferred tax assets were not recognized due to the uncertainty that such assets will be realized. The Company retained the valuation allowance on the deferred tax assets at December 31, 2019. No provision for income taxes was recorded for the years ended December 31, 2021, 2020 and 2019. A reconciliation of income taxes to the amount computed by applying the statutory federal income tax rate to the net loss is summarized as follows (in thousands):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Income tax expense (benefit) at statutory rates |  | $ | (24,784 | ) |  | $ | (9,315 | ) |  | $ | (5,194 | )
State income tax, net of federal benefit |  |  | (7,868 | ) |  |  | (3,004 | ) |  |  | (1,057 | )
Permanent items |  |  | 210 |  |  |  | 1 |  |  |  | 14 |
Book income for pre-conversion period |  |  | — |  |  |  | — |  |  |  | 527 |
Interest on convertible notes |  |  | — |  |  |  | — |  |  |  | 445 |
Realized gain on conversion of convertible notes |  |  | — |  |  |  | — |  |  |  | 958 |
Reserve for uncertain tax positions |  |  | 1,170 |  |  |  | 398 |  |  |  | 140 |
Research and development tax credits |  |  | (4,792 | ) |  |  | (1,639 | ) |  |  | (584 | )
Deferred taxes recognized upon conversion |  |  | — |  |  |  | — |  |  |  | (3,076 | )
Valuation allowance |  |  | 35,326 |  |  |  | 13,488 |  |  |  | 7,827 |
Other |  |  | 738 |  |  |  | 71 |  |  |  | — |
Income tax expense (benefit) |  | $ | — |  |  | $ | — |  |  | $ | — |
Significant components of the Company’s deferred tax assets as of December 31, 2021 and 2020 are shown below (in thousands):
|  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 41,443 |  |  | $ | 11,277 |
Research and development tax credits |  |  | 5,586 |  |  |  | 1,855 |
Deferred revenue |  |  | 3,117 |  |  |  | 4,443 |
Accrued expenses |  |  | 477 |  |  |  | 153 |
Intangibles and fixed assets |  |  | 2,137 |  |  |  | 2,483 |
Lease liability |  |  | 3,291 |  |  |  | 263 |
Stock-based compensation |  |  | 3,668 |  |  |  | 969 |
Total deferred tax assets |  |  | 59,719 |  |  |  | 21,443 |
Less valuation allowance |  |  | (56,693 | ) |  |  | (21,316 | )
Net deferred tax assets |  |  | 3,026 |  |  |  | 127 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Right-of-use asset |  |  | (3,026 | ) |  |  | (127 | )
Total deferred tax liabilities |  |  | (3,026 | ) |  |  | (127 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
The Company has established a full valuation allowance against its net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that the deferred tax assets will be realizable, the valuation allowance will be released. The change in the valuation allowance was an increase of $35.4 million and $13.5 million for the years ended December 31, 2021 and 2020, respectively. At December 31, 2021, the Company had federal and state net operating loss (NOL) carryforwards of $147.9 million and $147.7 million, respectively. On March 27, 2020, the CARES Act was signed into law in response to the economic challenges facing U.S. businesses. Under the CARES Act, the Internal Revenue Code of 1986, as amended (IRC) was amended to allow for federal NOLs to be carried back for five years to offset previous years’ income or carried forward indefinitely to offset 100% of taxable income for the tax year 2020 and 80% of taxable income for tax years 2021 and thereafter. The state NOLs begin to expire in 2039 unless previously utilized. At December 31, 2021, the Company had federal and state research and development tax credits of $4.7 million and $2.6 million, respectively. The federal research and development tax credits begin to expire in 2039 unless previously utilized, and the state credits carry forward indefinitely. At December 31, 2021, the Company had federal orphan drug tax credits of $0.7 million, which begin to expire in 2041. Pursuant to IRC Section 382 and Section 383, the Company’s ability to use NOL and R&D tax credit carryforwards (tax attribute carryforwards) to offset future taxable income is limited if the Company experiences a cumulative change in ownership of more than 50% within a three-year testing period. The Company has not completed an ownership change analysis pursuant to IRC Section 382. If ownership changes within the meaning of IRC Section 382 have occurred, the amount of remaining tax attribute carryforwards available to offset future taxable income and income taxes in future years may be significantly restricted or eliminated. Further, the Company’s deferred tax assets, along with the corresponding valuation allowance, associated with such tax attributes could be significantly reduced upon an ownership change within the meaning of IRC Section 382. Due to the existence of the valuation allowance, changes in the Company’s deferred tax assets from any such limitation will not impact the Company’s effective tax rate. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits for the years ended December 31, 2021 and 2020 (in thousands):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |
Gross unrecognized tax benefits at the beginning of the year |  | $ | 671 |  |  | $ | 156 |
Increases related to current year positions |  |  | 1,283 |  |  |  | 446 |
Increases related to prior year positions |  |  | 42 |  |  |  | 62 |
Other true up |  |  | — |  |  |  | 7 |
Gross unrecognized tax benefits at the end of the year |  | $ | 1,996 |  |  | $ | 671 |
The unrecognized tax benefit amounts are reflected in the determination of the Company’s deferred tax assets. If recognized, none of these amounts would affect the Company’s effective tax rate, since it would be offset by a corresponding adjustment to the deferred tax asset valuation allowance. The Company does not foresee material changes to its liability for uncertain tax benefits within the next twelve months. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties as of December 31, 2021 or 2020. As of December 31, 2021, the Company’s tax years since conversion to a corporation in 2019 are subject to examination by U.S. federal and various state taxing authorities.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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