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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

14. Income taxes

A reconciliation of the income tax expense computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows:

 

 

As of December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Federal statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

State income taxes, net of federal benefit

 

 

7.0

 

 

 

13.3

 

 

 

7.4

 

Research and development tax credits

 

 

4.7

 

 

 

18.0

 

 

 

4.2

 

Nondeductible/ nontaxable permanent items

 

 

(1.6

)

 

 

(2.5

)

 

 

(1.8

)

Change in valuation allowance

 

 

(31.1

)

 

 

(50.9

)

 

 

(32.0

)

Total

 

 

0.0

%

 

 

-1.1

%

 

 

-1.2

%

The components of the Company’s deferred taxes are as follows (in thousands):

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforwards

 

$

48,954

 

 

$

3,959

 

Research and development tax credits

 

 

87,554

 

 

 

56,759

 

Accrued expenses and other

 

 

12,868

 

 

 

17,386

 

Deferred revenue

 

 

38,815

 

 

 

48,792

 

Derivative liabilities

 

 

3,771

 

 

 

2,951

 

Equity compensation

 

 

21,218

 

 

 

20,587

 

Amortization

 

 

30,508

 

 

 

30,917

 

Capitalized Research

 

 

180,954

 

 

 

137,721

 

Lease liability

 

 

44,096

 

 

 

47,179

 

Total deferred tax assets

 

 

468,738

 

 

 

366,251

 

ROU asset

 

 

(28,649

)

 

 

(30,830

)

Property and equipment

 

 

(267

)

 

 

(649

)

Other

 

 

(1,563

)

 

 

(5,415

)

Less: valuation allowance

 

 

(438,259

)

 

 

(329,357

)

Total

 

$

—

 

 

$

—

 

 

For the years ended December 31, 2024, 2023 and 2022, the Company recorded a current tax provision of less than $0.1 million, $1.4 million and $3.4 million of income tax expense, respectively, which reflects that Company generated taxable income that was not fully offset by the use of net operating loss carryforwards and tax credits. Management has evaluated the positive and negative evidence bearing upon the realizability of the Company’s deferred tax assets and has determined that it is not more likely than not that the Company will recognize the benefits of the deferred tax assets. As a result, the Company has recorded a full valuation allowance at December 31, 2024 and 2023. The valuation allowance increased by $108.9 million in 2024 due to the increase in deferred tax assets, primarily due to increased capitalization of research and development expenditures in 2024. The valuation allowance increased by $75.0 million in 2023.

Additionally, Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, limit a corporation’s ability to utilize tax attributes to the extent the corporation experiences an “ownership change,” generally defined as a greater than 50 percentage point change in ownership, measured by value, among 5% or greater shareholders over a rolling three-year testing period. To the extent a corporation experiences an ownership change, utilization of pre-ownership change tax attributes (e.g., net operating losses and general business tax credits) to offset post-ownership change taxable income or taxes, is subject to an annual limitation, generally calculated as the pre-ownership change equity value of the corporation, subject to certain prescribed adjustments, multiplied by the long-term tax exempt rate published monthly by the Internal Revenue Service. The Company completed a Section 382 study as of December 31, 2024, and determined that no historical ownership changes occurred since December 2021. The Company may experience ownership changes in the future as a result of shifts in stock ownership.

As of December 31, 2024 and 2023, the Company had $181.5 million of federal net operating loss carryforwards compared to $16.6 million as of December 31, 2023. Additionally, as of December 31, 2024, the Company had $61.7 million of federal and $32.7 million of Massachusetts tax credits that expire starting in 2043 and 2038, respectively. As of December 31, 2023, the Company had $41.3 million of federal and $19.5 million of Massachusetts tax credits that expire starting in 2042 and 2037.

As of December 31, 2024, and 2023, the Company had no uncertain tax positions. The Company recognizes both interest and penalties associated with unrecognized tax benefits as a component of income tax expense. The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception.

The Company filed income tax returns in the United States and the Commonwealth of Massachusetts in all tax years since inception. Tax years beginning in 2021 remain open to examination in these jurisdictions, as carryforward attributes generated in past years may be adjusted in a future period. The IRS has not made any assessments as of December 31, 2024.