Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

12.Income Taxes

There is no provision for income taxes because the Company has incurred operating losses since inception. The reported amounts of income tax expense for the years ended December 31, 2021 and 2020 differ from the amounts that would result from applying domestic federal statutory

tax rates to pretax losses primarily because of the changes in the valuation allowance. Significant components of the Company’s deferred tax assets at December 31, 2021 and 2020 are as follows:

	December 31,
(in thousands)	2021			2020
Deferred tax assets:
Net operating loss carryforwards	$	164,486		$	147,004
Start-up and organizational costs		21,705			25,909
Research and development credit carryforwards		39,817			37,183
Stock compensation		706			1,478
Capitalized acquisition costs		2,946			3,691
Lease liability		1,278			1,225
Depreciation		102			71
Other		156			135
		231,196			216,696
Less valuation allowance		(230,119	)		(215,513	)
Total deferred tax assets		1,077			1,183
Right-of-use asset		(1,077	)		(1,183	)
Total deferred tax liabilities	$	(1,077	)	$	(1,183	)
Net deferred taxes	$	—		$	—

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 2021, the Company has aggregate net operating loss carryforwards for federal tax purposes of approximately $639 million, of which approximately $342 million expires at various dates through December 31, 2037 and approximately $297 million can be carried forward indefinitely. The Company also has approximately $480 million of state net operating loss carryforwards available to offset future state taxable income, expiring at various dates through 2041. Additionally, the Company has approximately $40 million of federal and state research and development credits at December 31, 2021, expiring in varying amounts through 2041, which may be available to reduce future taxes.

The Company has provided a valuation allowance for the full amount of these net deferred tax assets since it is more likely than not that these future benefits will not be realized. However, these deferred tax assets may be available to offset future income tax liabilities and expenses. The valuation allowance increased by $14.6 million in 2021 due primarily to net operating loss carryforwards and the increase in research and development credits.

Income taxes using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to non-deductible expenses related to the Company’s issuance of warrants along with the change in the valuation allowance on deferred tax assets.

A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:

	Year Ended December 31,
(in thousands)	2021			2020
Federal income tax at statutory rates		21	%		21	%
State income tax, net of federal tax benefit		1	%		3	%
Research and development credits		2	%		3	%
Stock compensation		-1	%		-1	%
Sec. 162(m)		-2	%		0	%
Federal/state rate change		-2	%		-2	%
Change in valuation allowance		-19	%		-24	%
Effective tax rate		0	%		0	%

The Company adopted ASC 740, Accounting for Uncertain Tax Positions on January 1, 2007 (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” ASC 740 prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in a tax return.

The Company did not establish any additional reserves for uncertain tax liabilities upon adoption of ASC 740. There were no adjustments to its uncertain tax positions in the years ended December 31, 2021 and 2020.

The Company has not recognized any interest and penalties in the statement of operations because of the Company’s net operating losses and tax credits that are available to be carried forward. When necessary, the Company will account for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. The Company does not expect the amounts of unrecognized benefits will change significantly within the next twelve months.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state jurisdictions for the years ended December 31, 1999 through 2021.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act into law which was an emergency economic stimulus package in response to the COVID-19 pandemic and its impact on the economy, public health, state and local governments, individuals and businesses. The Company has considered the legislation surrounding the impact of the CARES Act and the potential effects it may have on the Company. Some of the more significant provisions under the CARES Act include five-year carryback of net operating losses (Section 2303), Refundable AMT credit (Section 2305), relaxation of the limitation of adjusted taxable income (ATI) as determined under IRC Section 163(j) from 30% to 50% (Section 2306), and changes to qualified bonus improvement property (QIP) tax life and bonus depreciation eligibility allowing for a 15-year tax useful life an eligibility for 100% bonus depreciation (Section 2307). Due to the Company’s history of US taxable losses, and use of MACRS and/or straight-line depreciation for tax purposes, there is no impact to the tax provision as a result of the enactment of the CARES Act. As of December 31, 2020, the Company has analyzed the provisions of the CARES Act and has recorded no income tax benefit or expense related to it.