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

15. Income Taxes

The components of loss before income taxes are as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

Domestic

 

$

(142,819

)

 

$

(324,581

)

Foreign

 

 

(10,548

)

 

 

1,359

 

Loss before provision for income taxes

 

$

(153,367

)

 

$

(323,222

)

The provision for income taxes consists of the following (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

Current:

 

 

 

 

 

 

Federal

 

$

—

 

 

$

—

 

State

 

 

—

 

 

 

—

 

Foreign

 

 

(269

)

 

 

(252

)

Total current

 

 

(269

)

 

 

(252

)

Deferred:

 

 

 

 

 

 

Federal

 

 

—

 

 

 

—

 

State

 

 

—

 

 

 

—

 

Foreign

 

 

—

 

 

 

—

 

Total deferred

 

 

—

 

 

 

—

 

Benefit from income taxes

 

$

(269

)

 

$

(252

)

The following is the reconciliation between the statutory federal income tax rate and the Company’s effective tax rate:

 

 

Years Ended December 31,

 

 

2024

 

 

2023

 

Tax at statutory federal rate

 

21.0

 %

 

 

21.0

 %

State tax

 

—

%

 

 

—

%

Stock-based compensation expense

 

(3.2

)%

 

 

(1.0

)%

Net operating losses not benefitted

 

(13.9

)%

 

 

(15.6

)%

Foreign net operating losses not benefitted

 

(1.4

)%

 

 

0.1

 %

Deduction limitation on executive compensation

 

—

%

 

 

(0.4

)%

Global intangible low-taxed income

 

(2.1

)%

 

 

(3.8

)%

Other

 

(0.2

)%

 

 

(0.2

)%

Total

 

0.2

 %

 

 

0.1

 %

 

Significant components of the Company’s deferred tax assets are as follows (in thousands):

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Federal and state net operating loss carryforwards

 

$

206,365

 

 

$

175,258

 

Tax credit carryforwards

 

 

129,320

 

 

 

123,156

 

Foreign net operating loss carryforwards

 

 

120

 

 

 

157

 

Capitalized research and development expenses

 

 

83,329

 

 

 

81,697

 

Stock-based compensation

 

 

6,365

 

 

 

7,269

 

Lease obligations

 

 

22

 

 

 

16,508

 

Reserves and accruals

 

 

4,418

 

 

 

5,475

 

Deferred revenue

 

 

7,785

 

 

 

10,038

 

Intangible assets

 

 

15,036

 

 

 

16,517

 

Other

 

 

—

 

 

 

5

 

Subtotal

 

 

452,760

 

 

 

436,080

 

Less: Valuation allowance

 

 

(452,740

)

 

 

(426,355

)

Net deferred tax assets

 

 

20

 

 

 

9,725

 

 

 

 

 

 

 

 

Fixed assets

 

 

(20

)

 

 

(9,725

)

Non-deductible accrued expenses

 

 

—

 

 

 

—

 

Net deferred tax liabilities

 

 

(20

)

 

 

(9,725

)

Total net deferred tax assets

 

$

—

 

 

$

—

 

A valuation allowance has been provided to reduce the deferred tax assets to an amount management believes is more likely than not to be realized. Expected realization of the deferred tax assets for which a valuation allowance has not been recognized is based on upon the reversal of existing temporary differences and future taxable income.

The valuation allowance increased by $26.4 million and $66.8 million for the years ended December 31, 2024 and 2023, respectively. Due to uncertainty surrounding the realization of the favorable tax attributes in the future tax returns, the Company has established a valuation allowance against its otherwise recognizable net deferred tax assets.

The Company intends to continue maintaining a full valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance.

At December 31, 2024, the Company had net operating loss carryforwards available to offset future taxable income of approximately $945.5 million and $145.0 million for federal and state tax purposes, respectively. $292.4 million of the federal net operating loss carryforwards will begin to expire in 2026 if not utilized, while the remainder can be carried forward indefinitely. The state net operating loss carryforward will begin to expire in 2028 if not utilized. The Company also had foreign net operating loss carryforwards of approximately $0.6 million, which expire between 2025 and 2034 if not utilized.

At December 31, 2024, the Company had approximately $150.8 million of federal and $53.3 million of California research and development tax credit and other tax credit carryforwards available to offset future taxable income. The federal credits begin to expire in 2025 and the California research credits have no expiration dates.

Federal and state tax laws impose substantial restrictions on the utilization of net operating loss and credit carryforwards in the event of an “ownership change” for tax purposes, as defined in Internal Revenue Code (“IRC”) Section 382. The Company performed an IRC Section 382 analysis and has determined that there were no ownership changes as of December 31, 2024. Thus, IRC Section 382 will not limit the use of the Company’s net operating loss and tax credit carryforwards. The Company will continue to monitor trading activities in its shares which could cause ownership change in future years.

Uncertain Tax Positions

The Company had unrecognized tax benefits of approximately $74.3 million as of December 31, 2024. Approximately $0.4 million of unrecognized tax benefits, if recognized, would affect the effective tax rate. The interest accrued as of December 31, 2024 and 2023 was immaterial.

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits during the two years ended December 31, 2024 is as follows (in thousands):

 

 

 

Federal and State

 

Balance as of December 31, 2022

 

$

62,249

 

Decrease due to prior positions

 

 

(154

)

Increase due to current year position

 

 

8,805

 

Foreign exchange rate differential

 

 

(190

)

Balance as of December 31, 2023

 

 

70,710

 

Decrease due to prior positions

 

 

(156

)

Increase due to current year position

 

 

3,920

 

Foreign exchange rate differential

 

 

(153

)

Balance as of December 31, 2024

 

$

74,321

 

Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business. The Company does not anticipate a material change to its unrecognized tax benefits over the next twelve months that would affect the Company’s effective tax rate.

The Company classifies interest and penalties as a component of tax expense, if any.

The Company files income tax returns in the U.S. federal jurisdiction, U.S. state and other foreign jurisdictions. The U.S. federal and U.S. state taxing authorities may choose to audit tax returns for tax years beyond the statute of limitation period due to significant tax attribute carryforwards from prior years, making adjustments only to carryforward attributes. The foreign statute of limitation generally remains open from 2015 to 2024. The Company is not currently under audit in any tax jurisdiction.