NOTE 10—INCOME TAXES

Domestic and foreign loss before income taxes are as follows:


	For The		For The
	Year Ended		Year Ended
	December 31,		December 31,
	2019		2018
	(thousands)		(thousands)
United States	$	(80,598)	$	(42,456)
Foreign		(430)		(818)
Total	$	(81,028)	$	(43,274)

The Company provided no current and deferred income tax benefits on net losses of $(81,028,000) and $(43,274,000) for years ended December 31, 2019 and 2018, respectively, and maintains a full valuation allowance against its net deferred tax assets.

The difference between income taxes expected at the U.S. federal statutory income tax rate of 21% for tax years ended December 31, 2019 and December 31, 2018, respectively, and income taxes provided are set forth below:


	December 31, 2019		December 31, 2018
	(thousands)		(thousands)
Taxes on income at U.S. federal statutory rate	$	(17,016)	$	(9,127)
State and local taxes, net of federal tax effects		(11,022)		(5,778)
Effect of rate change		(22)		(9)
Foreign tax rate differential		(4)		(8)
Valuation allowance		33,984		16,376
Tax credits		(5,924)		(1,431)
Other		4		(23)
Total		—		—

Significant components of the Company’s net deferred tax assets/(liabilities) are as follows:


	December 31, 2019		December 31, 2018
	(thousands)		(thousands)
Deferred tax assets/(liabilities):
Acquired intangibles	$	2,504	$	2,682
Accrued bonus		153		—
Unrealized foreign exchange loss		(261)		(163)
Accrued royalty		415		415
Stock based compensation		2,594		981
Net operating loss carryforwards		51,649		25,285
Tax credit carryforwards		8,412		2,789
ROU asset		(625)		—
Lease liability		711		—
Other		(63)		78
Total deferred tax assets/(liabilities)		65,489		32,067
Valuation allowance		(65,489)		(32,067)
Net deferred tax assets/(liabilities)		—		—

The Company recognizes income tax benefits for tax positions determined more likely than not to be sustained upon examination, based on the technical merits of the positions. As of December 31, 2019, and 2018, the Company has determined that there were no uncertain tax positions. The Company’s tax returns for the years 2018, 2017 and 2016 are open for tax examination by U.S. federal and state, and the Danish tax authorities.

The Company maintains a full valuation allowance on its U.S. and foreign deferred tax assets. The assessment regarding whether a valuation allowance is required considers both positive and negative evidence when determining whether it is more‑likely‑than‑not that deferred tax assets are recoverable. In making this assessment, significant weight is given to evidence that can be objectively verified. In its evaluation, the Company considered its cumulative losses historically and in recent years and its forecasted losses in the near‑term as significant negative evidence. Based upon review of available positive and negative evidence, the Company determined that the negative evidence outweighed the positive evidence and a full valuation allowance on its U.S. and foreign deferred tax assets will be maintained. The Company will continue to assess the realizability of its deferred tax assets and will adjust the valuation allowance as needed.

As of December 31, 2019, the Company had U.S. federal and state net operating loss (“NOL”) carryforwards of approximately $147,839,000 and $148,608,000, respectively, which are available to reduce future taxable income. The Company also had approximately $148,608,000 of unused NOL carryforwards for New York City purposes. The Company also had U.S. federal tax credits of $8,412,000 as of December 31, 2019, which may be used to offset future tax liabilities. The federal NOL carryforwards of approximately $29,909,000 will expire through 2037. The federal NOL of approximately $117,930,000 can be carried forward indefinitely but limited to offset 80% of taxable income. The New York State and New York City NOL and tax credit carryforwards will begin to expire in 2035. The NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986 (“IRC”). The Company has performed an analysis of its Section 382 ownership changes through December 31, 2018. Due to the large annual limitation, the Company believes that it is more likely than not that none of the net operating loss carryforwards will expire as a result of the limitation from the ownership change under Section 382. The Company also has Danish NOL carryforwards of $1,540,000, which have an indefinite carryforward period.