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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Tax
For the year ended December 31, 2024, the Company is in a taxable income position due to the Tax Cuts and Jobs Act of 2017 (the Tax Act) limitation on utilization of Net Operating Losses to 80% of taxable income as well as the limitation on utilization of income tax credits, while the company remains in a full valuation allowance position. For the years ended December 31, 2023, and 2022 there was no provision for income taxes due to taxable losses generated, fully offset by a valuation allowance.
Income tax expense consists of the following for the year ended December 31, 2024 (in thousands):
Current income tax expense
Federal$707 
State237 
Total$944 

The reconciliation of the reported estimated income tax expense to the amount that would result by applying the U.S. federal statutory tax rate to the net income is as follows (in thousands):
Year Ended December 31,
202420232022
United States federal tax at statutory rate$(13,866)$(1,902)$(25,149)
State taxes (net of federal benefit)(4,183)(163)(7,385)
Deferred income tax adjustments(7,299)5,024 308 
Deferred state blended rate adjustments(2,663)1,841 — 
Research credit, net(12,082)(3,168)(4,569)
Orphan drug credit, net(1,308)2,374 (10,846)
Other permanent items388 1,301 1,362 
Equity-based compensation5,594 1,950 1,604 
Change in valuation allowance36,287 (7,257)44,675 
Other
76 — — 
Income tax expense/(benefit)$944 $— $— 
The significant components of the Company's deferred income tax assets (liabilities) were as follows (in thousands):
December 31,
20242023
Deferred income tax assets:
Federal U.S. net operating loss carryforward$116,341 $140,706 
State net operating loss carryforward31,758 33,350 
Research and development credit, net79,108 68,251 
Orphan drug credit, net33,834 33,330 
Operating lease liabilities10,308 9,078 
Deferred revenue18,795 17,442 
Section 174 deferred tax asset98,810 48,421 
Equity based compensation
16,272 16,217 
Other4,971 6,617 
Gross deferred income tax assets410,197 373,412 
Valuation allowance(401,297)(365,010)
Net deferred income tax assets8,900 8,402 
Deferred income tax liabilities:
Operating lease ROU assets(6,745)(6,372)
Prepaid expenditures(2,155)(2,030)
Gross deferred income tax liabilities(8,900)(8,402)
Net deferred income tax asset/(liability)$— $— 
The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management considers (i) future reversals of existing taxable temporary
differences; (ii) future taxable income exclusive of reversing temporary difference and carryforwards; (iii) taxable income in prior carryback years if carryback is permitted under applicable tax law; and (iv) tax planning strategies. The Company's net deferred income tax asset is not more likely than not to be utilized due to the lack of sufficient sources of future taxable income and cumulative book losses which have resulted over the years.
The activity in the valuation allowance on deferred tax assets was as follows (in thousands):
Balance at Beginning of YearAdditionsDeductionsBalance at End of Year
Year Ended December 31, 2024$365,010 $36,287 — $401,297 
Year Ended December 31, 2023372,267 — (7,257)365,010 
Year Ended December 31, 2022327,592 44,675 — 372,267 


As of December 31, 2024, the Company has U.S. federal and state net operating loss (NOL) carryforwards of approximately $554.0 million. Of these NOLs, $2.1 million will expire beginning in 2027 through 2028. $551.9 million of NOLs were generated post December 31, 2017 and carryforward indefinitely. In addition, the Company has U.S. federal tax credits of $109.0 million, which will expire in various years beginning in 2027 through 2044.
The use of the Company's U.S. federal NOL and tax credit carryforwards in future years are restricted due to changes in the Company's ownership and tax attributes acquired through the Company's acquisitions. As of December 31, 2024, $2.1 million of the Company's U.S. Federal NOLs are limited for use over 2027 through 2028, in which a range of such amounts could be utilized on an annual basis of $0.2 million. The remaining $551.9 million of NOLs is not limited and can be offset against future taxable income, subject to certain limitations for newly enacted tax legislation.
Beginning January 1, 2022, the Tax Act eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code (IRC) Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
Year Ended December 31,
202420232022
Beginning balance$7,821 $7,376 $7,197 
Increases for current year tax positions1,001 449 548 
Increases/(decreases) for prior year tax positions512 (4)(369)
Ending balance$9,334 $7,821 $7,376 
As of December 31, 2024 and 2023, of the total gross unrecognized tax benefits, approximately $9.3 million and $7.8 million would favorably impact the Company's effective income tax rate, respectively. Although, due to the Company's determination that the deferred income tax asset would not more likely than not be realized, a valuation allowance would be recorded, therefore, zero net impact would result within the Company's effective income tax rate. The Company's uncertain income tax position liability has been recorded to deferred income taxes to offset the tax attribute carryforward amounts.
For the years ended December 31, 2024, 2023 and 2022, the Company has not recognized any interest or penalties related to the uncertain income tax positions due to the fact such position is related to tax attribute carryforwards which have not yet been utilized. The Company does not expect its unrecognized income tax position to significantly decrease within the next twelve months.
The Company's U.S. Federal and state income tax returns from 2007 forward remain open to examination due to the carryover of unused income tax credits, and from 2007 forward due to the carryover of unused net operating losses.