Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the provision for income taxes are as follows:

Expense classification:	Year Ended December 31,
	2024		2023
Current
Federal	$	(14)	$	245
State	—		—
Total	(14)		245
Deferred
Federal	—		—
State	—		—
Total	—		—
Provision for Income Tax	$	(14)	$	245

The tax effect of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2024 and 2023 are as follows:

	December 31,
	2024		2023
Deferred tax assets:
Accounts receivable	$	—	$	4
Inventory	337		345
Accrued expenses	186		73
NOL carryforwards	34,689		27,120
Interest limitation imposed by the TJCA	11,594		9,880
Stock Compensation	6,862		6,529
Deferred Revenue	5,157		7,662
Royalty Monetization	16,117		16,750
Property and Equipment	2,690		2,756
Orphan Drug and R&D Tax Credits	5,099		4,805
Intangible Assets	137		154
Section 174 R&D Capitalization	7,263		5,039
Sales of Royalty Rights	3,438		3,520
OID and Deferred Financing Cost	1,636		—
Other	143		58
	95,348		84,695
Deferred tax liabilities:
OID and Deferred Financing Cost	—		(193)
Prepaid expenses	(795)		(449)
	(795)		(642)
Valuation Allowance	(94,553)		(84,053)
Net deferred tax asset/(liability)	$	—	$	—

At December 31, 2024 and 2023, the Company had federal net operating loss carryforwards of $128,658 and $101,029, respectively, a significant portion of which carryforward for an indefinite period. At December 31, 2024 and 2023, the Company also had state net operating loss carryforwards of $139,189 and $104,478, respectively, which begin expiring in 2034. As a result of the December 2017 U.S. Tax Cuts and Jobs Act (“TCJA”), updated regulations under section 163(j) create new limitations on deductible interest expense. For the year ended December 31, 2024, the Company’s interest expense deduction under 163(j) will be limited for tax purposes based on a calculation of 30% of its EBIT on a tax basis. The Company has determined, based upon available evidence, that is more likely than not that the net deferred tax asset will not be realized and, accordingly, has provided a full valuation allowance against its net deferred tax assets. Valuation allowances of $94,553, and $84,053 have been established at December 31, 2024 and 2023, respectively. The Company may also be subject to the net operating loss utilization provisions of Section 382 of the Internal Revenue Code due to ownership changes. As a result, the use of NOL carry forwards from the current and prior periods are subject to annual limitations.

The TCJA requires taxpayers to capitalize and amortize R&D expenditures under section 174 for tax years beginning after December 31, 2021. For the years ended December 31, 2024 and 2023, the capitalized R&D costs were $17.3 million and $12.6 million, respectively. The Company will amortize these costs for tax purposes over five years if the R&D was performed in the U.S. and over 15 years if the R&D was performed outside the U.S.

Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that there were no uncertain positions as of December 31, 2024 and 2023.

A reconciliation of income tax benefit and the amount computed by applying the statutory federal income tax rates of 21% to loss before taxes for the years ended December 31, 2024 and 2023, respectively, as follows:

	Year Ended December 31,
	2024		2023
Income taxes at statutory rate	21.00	%	21.00	%
Increase (decrease) resulting from:
State income tax	3.27		4.00
Permanent differences	(1.10)		(0.43)
Valuation allowance	(23.50)		(26.53)
Return to provision	1.06		(3.28)
State rate change	(0.69)		(1.78)
FDII Deductions	0.00		3.80
Other	(0.01)		—
Effective tax rate	0.03	%	(3.22)	%

During the year ended December 31, 2023, the Company received an ERTC refund of $1,250, which is included in Interest income and other income, net on the Company's Statements of Operations and Comprehensive Loss.