12. Income Taxes

A reconciliation of the expected income tax benefit (expense) computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows for the years ended December 31, 2012, 2013, and 2014:

	December 31,
	2012			2013			2014
Income tax computed at federal statutory tax rate		34.0	%		34.0	%		34.0	%
State taxes, net of federal benefit		3.9	%		4.2	%		6.3	%
State taxes rate change, net of federal benefit		—			—			30.4	%
International operations		(0.2)	%		(2.1)	%		6.6	%
Research and development credits		2.4	%		13.8	%		(22.6)	%
Orphan drug credits		—			6.6	%		(57.4)	%
Equity compensation		(2.2)	%		(2.5)	%		16.6	%
Other		(0.2)	%		(1.3)	%		(2.1)	%
Change in valuation allowance		(37.7)	%		(52.7)	%		(11.8)	%
Total		0.0	%		0.0	%		0.0	%

At December 31, 2014, the Company had net operating loss carryforwards totaling approximately $179,478,000 and $235,422,000 for federal and state income taxes, respectively, that may be used to offset future taxable income. If not used, the carryforwards will begin expiring in the year 2021. The Company has determined that it experienced a change in ownership as defined under Section 382 of the U.S. Internal Revenue Code (the “Code”), as a result of the public offering in August 2011. As a result, the future use of its net operating losses, after giving effect to net unrealized built-in gains, will be limited to approximately $133,200,000 for 2014, $39,000,000 for 2015, $29,700,000 for 2016 and $16,800,000 for 2017. Any available but unused amounts will become available for use in all successive years.

Net deferred tax assets and liabilities are comprised of the following:

	December 31,
	2013		2014
Deferred tax assets
Net operating loss carryforwards	$	65,678,000	$	71,074,000
Research and development credit carryforwards		9,592,000		10,836,000
Orphan Drug Credit		1,495,000		6,286,000
Stock options		2,377,000		4,103,000
Other		120,000		202,000
Deferred tax assets		79,262,000		92,501,000
Deferred tax liabilities
Deferred revenue		(2,594,000)		(16,408,000)
Property and equipment		(241,000)		(316,000)
Deferred tax liabilities	$	(2,835,000)	$	(16,724,000)
Net deferred tax asset before valuation allowance	$	76,427,000	$	75,777,000
Less valuation allowance		(76,427,000)		(75,777,000)
Net deferred tax assets	$	—	$	—