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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
As part of the restatement, the Company adjusted the 2023 California research and development tax credit amounts as a result of a research and development credit study performed during 2024. This resulted in a net decrease of $3.4 million in the deferred tax asset balance related to the California research and development tax credit (net of a decrease in unrecognized tax benefits of $1.9 million) and a corresponding decrease in valuation allowance in 2023.
The following table presents domestic and foreign components of loss before provision for income taxes:
Years ended December 31,
20242023 As Restated
(In thousands)
U.S.$(130,768)$(123,040)
Foreign(159)(154)
Loss before income taxes$(130,927)$(123,194)
The components of the Company’s income tax (benefit) provision were as follows:
Years ended December 31,
20242023 As Restated
(In thousands)
Current:
Foreign$— $(1,078)
Total current tax (benefit) provision— (1,078)
Deferred
Foreign— — 
Total deferred tax provision— — 
Total income tax (benefit) provision$— $(1,078)
The income tax provision for the years ended December 31, 2024 and 2023 differed from the amounts computed by applying the statutory federal income tax rate of 21% to pretax loss as a result of the following:
Years ended December 31,
20242023 As Restated
(In thousands)
Federal income tax benefit at statutory rate$(27,495)$(25,871)
Stock compensation3,189 6,001 
Non-deductible expenses41 21 
Research and development tax credits(5,642)(1,810)
Change in valuation allowance23,801 19,558 
Foreign rate differential(14)(14)
Impact of internal reorganization— 1,323 
Uncertain tax positions6,100 (1,078)
Other20 792 
Total tax (benefit) provision$— $(1,078)
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,
20242023 As Restated
(In thousands)
Deferred tax assets:
Net operating loss carryforwards$137,140 $128,171 
Accruals, reserve and other1,972 1,749 
Tax credit carryforwards29,263 21,254 
Stock-based compensation6,349 7,274 
Intangibles7 11 
Lease obligation19,622 17,322 
Capital losses9,850 9,850 
Section 174 R&D capitalization35,842 29,688 
Other5 3 
Total deferred tax assets before valuation allowance240,050 215,322 
Valuation allowance(232,058)(205,861)
Total deferred tax assets7,992 9,461 
Deferred tax liabilities:
Right-of-use assets(7,149)(8,153)
Property and equipment(843)(1,308)
Total deferred tax liabilities$(7,992)$(9,461)
Net deferred tax assets$— $— 
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, 2024 and 2023. The valuation allowance increased approximately $26.2 million and $17.7 million during the years ended December 31, 2024 and 2023, respectively, mainly driven by net operating losses (“NOLs”).
As of December 31, 2024, the Company had U.S. federal NOLs carryforwards of approximately $552.7 million to offset any future federal income. Approximately $57.3 million of NOLs expire at various years beginning with 2032. As of December 31, 2024, the Company also had U.S. state NOL carryforwards of approximately $345.2 million to offset any future state income. U.S. state NOLs expire at various years beginning with 2037. At December 31, 2024, the Company also had approximately $49.5 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, 2024, the Company had federal research and development tax credit carryforwards of approximately $25.1 million available to reduce future tax liabilities which expire at various years beginning with 2036. As of December 31, 2024, the Company had state credit carryforwards of approximately $13.8 million available to reduce future tax liabilities which do not expire.
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 the Company has 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. The Company is conducting a Section 382 study, which is still subject to finalization, but which may show that the Company experienced an ownership change in 2024. If such an ownership change has occurred then up to vast majority of the NOLs, capital losses and research credit carryforwards presented in the consolidated financial statements would be subject to limitations and therefore may expire unutilized.
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, 2019 through December 31, 2023. 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, 2024 and 2023 of approximately $27.2 million and $22.8 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,
20242023 As Restated
(In thousands)
Unrecognized tax benefits as of the beginning of the year$22,758 $23,069 
Increase related to tax positions taken during the prior year— 43 
Decrease related to tax positions taken during the prior year
(2,880)— 
Increase related to tax position taken during the current year
7,310 3,121 
Decrease related to tax position taken during the current year— (3,475)
Unrecognized tax benefits as of the end of the year$27,188 $22,758 
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2024 and 2023, the Company had no accrued interest and penalties related to uncertain tax positions and no amount has been recognized in the Company's consolidated statement of operations and comprehensive loss. There are no ongoing examinations by taxing authorities at this time.