XML 41 R18.htm IDEA: XBRL DOCUMENT v3.24.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents domestic and foreign components of loss before provision for income taxes:
Years ended December 31,
20232022
(In thousands)
U.S.$(118,089)$(154,002)
Foreign(154)(460)
Loss before income taxes$(118,243)$(154,462)
The components of the Company’s income tax (benefit) provision were as follows:
Years ended December 31,
20232022
(In thousands)
Current:
Foreign$(1,078)$74 
Total current tax (benefit) provision(1,078)74 
Deferred
Foreign— — 
Total deferred tax provision— — 
Total income tax (benefit) provision$(1,078)$74 
The income tax provision for the years ended December 31, 2023 and 2022 differed from the amounts computed by applying the statutory federal income tax rate of 21% to pretax loss as a result of the following:
Years ended December 31,
20232022
(In thousands)
Federal income tax benefit at statutory rate$(24,831)$(32,437)
Stock compensation6,001 3,414 
Non-deductible expenses21 52 
Research and development tax credits(1,810)(2,529)
Change in valuation allowance18,479 31,542 
Foreign rate differential(14)(46)
Impact of internal reorganization1,323 103 
Uncertain tax positions(1,078)— 
Other831 (25)
Total tax (benefit) provision$(1,078)$74 
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. The following table presents significant components of the Company’s deferred tax assets and liabilities:
As of December 31,
20232022
(In thousands)
Deferred tax assets:
Net operating loss carryforwards$127,961 $111,709 
Accruals, reserve and other1,760 2,053 
Tax credit carryforwards24,702 21,439 
Stock-based compensation7,305 10,705 
Property and equipment— 279 
Intangibles11 1,562 
Lease obligation17,708 26,241 
Capital losses9,850 9,850 
Section 174 R&D capitalization29,455 23,697 
Total deferred tax assets before valuation allowance218,752 207,535 
Valuation allowance(205,103)(188,141)
Total deferred tax assets13,649 19,394 
Deferred tax liabilities:
Right-of-use assets(12,335)(19,394)
Property and equipment(1,314)— 
Total deferred tax liabilities$(13,649)$(19,394)
Net deferred tax assets$— $— 
The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of operating losses, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2023 and 2022. The valuation allowance increased approximately $17.0 million and $39.7 million during the years ended December 31, 2023 and 2022, respectively mainly driven by net operating losses (“NOLs”).
As of December 31, 2023, the Company had U.S. federal NOLs carryforwards of approximately $493.0 million to offset any future federal income. Approximately $57.3 million of NOLs expire at various years beginning with 2036. As of December 31, 2023, the Company also had U.S. state NOL carryforwards of approximately $300.8 million to offset any future state income. U.S. state NOLs expire at various years beginning with 2037. At December 31, 2023, the Company also had approximately $49.3 million of foreign net operating loss carryforwards which may be available to offset future foreign income; these carryforwards do not expire.
As of December 31, 2023, the Company had federal research and development tax credit carryforwards of approximately $20.3 million available to reduce future tax liabilities which expire at various years beginning with 2036. As of December 31, 2023, the Company had state credit carryforwards of approximately $17.6 million available to reduce future tax liabilities which do not expire.
Effective January 1, 2022, the Tax Cuts and Jobs Act (“TCJA”) 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 Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the TCJA, deferred tax assets related to capitalized research expenses increased to $29.5 million, net of amortization on research expenses capitalized as of December 31, 2023.
Under Section 382 and 383 of the Code, our ability to utilize NOL carryforwards or other tax attributes such as research tax credits, in any taxable year may be limited if we have experienced an “ownership change.” Generally, a Section 382 ownership change occurs if there is a cumulative increase of more than 50 percentage points in the stock ownership of one or more stockholders or groups of stockholders who own at least 5% of a corporation’s stock within a specified testing period. Similar rules may apply under state tax laws. Due to a June 30, 2020 ownership change, we determined that certain NOLs and research and development tax credits for both federal and state purposes are subject to the 382 limitation; however, it was determined that there should be no material impact to the ability of the utilization before expiration.
The Company files income tax returns in the U.S. federal, state, and foreign jurisdictions. The federal, state and foreign income tax returns are open under the statute of limitations subject to tax examinations for the tax years ended December 31, 2017 through December 31, 2022. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.
The Company has total unrecognized tax benefits as of December 31, 2023 and 2022 of approximately $24.6 million and $24.7 million, respectively. If the unrecognized tax benefits for uncertain tax positions as of December 31, 2023, is recognized, there will be no impact to the effective tax rate as the tax benefit would increase the net deferred tax assets, which is currently offset with a full valuation allowance. A reconciliation of the unrecognized tax benefits is as follows:
Years ended December 31,
20232022
(In thousands)
Unrecognized tax benefits as of the beginning of the year$24,745 $21,944 
Increase related to tax positions taken during the prior year43 274 
Increase related to tax position take during the current year3,301 2,527 
Decrease related to tax position taken during the current year(3,475)— 
Unrecognized tax benefits as of the end of the year$24,614 $24,745 
As of December 31, 2023 and 2022, the Company accrued interest and penalties related to uncertain tax positions of nil and $0.3 million, respectively. There are no ongoing examinations by taxing authorities at this time.