INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of components of income tax expense

The provisions for income tax expense (benefit), to the Company's wholly-owned subsidiary, MethylGene US Inc., are as follows (in thousands):



	Year ended December 31,
Current:	2013			2012
Federal	$	(23	)	$	30
State	—			9
Canada	—			—
Total current tax expense (benefit)	$	(23	)	$	39

Schedule of Effective Income Tax Reconciliation

The differences between the effective income tax rate and the statutory tax rates during the years ended 2013 and 2012 are as follows (in thousands):



	Year Ended December 31,
	2013			2012
Net loss before tax	$	(52,882	)	$	(20,247	)
Statutory combined US federal and state tax rate (2012 - statutory combined Canadian federal and provincial tax rate)	39.83		%	26.90		%
Statutory federal and provincial taxes	$	(21,063	)	$	(5,446	)
Increase (decrease) in taxes recoverable resulting from:
Effect of change in valuation allowance	8,537			5,145
Non-deductible stock-based compensation	1,085			539
Non-deductible warrant expenses for tax purposes	8,403			—
Tax credits not taxable in Quebec	(96		)	(70		)
Share issue costs - temporary difference	(184		)	(183		)
Share issue costs - permanent difference	206			—
Effect of foreign jurisdiction tax expense	—			39
Differential in income tax rates of foreign subsidiary	3,059			—
Other differences	30			15
Income tax expense (benefit)	$	(23	)	$	39

Schedule of deferred tax

The following table summarizes the significant components of our deferred tax assets (in thousands):



	DECEMBER 31,
Deferred tax assets	2013			2012
Assets
Tangible and intangible depreciable assets	$	874		$	853
Manufactured drug product inventory to be used in research	1,459			757
Provisions	93			30
Financing fees	445			628
Net operating loss carry forwards	13,099			6,883
Scientific research and experimental development expenditures	5,766			4,245
Deferred tax assets	21,736			13,396
Valuation allowance	(21,736		)	(13,396		)
Net deferred tax assets	$	—		$	—

Schedule of expiration of NOLs

The NOLs expire as follows (in thousands):



	US				Canada
	Federal		State		Federal		Provincial
Expires in:
2030	$	—	$	—	$	5,907	$	5,984
2031	—		—		7,059		7,066
2032	—		—		12,371		12,495
2033	2,838		2,919		18,717		19,467
	$	2,838	$	2,919	$	44,054	$	45,012

Schedule of reconciliation of the beginning and ending gross amounts of unrecognized tax positions

A reconciliation of the beginning and ending gross amounts of Canadian unrecognized tax positions adopted by the Company are as follows (in thousands):



	Federal					Provincial
	December 31,					December 31,
	2013			2012		2013		2012
Unrecognized tax positions, beginning of year	$	159		$	157	$	5	$	3
Gross decrease — current period tax positions	—			—		—		—
Gross increase — current period tax positions	—			2		—		2
Gross decrease — prior period tax positions	(48		)	—		—		—
Gross increase — prior period tax positions	18			—		18		—
Unrecognized tax positions, end of year	$	129		$	159	$	23	$	5

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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