Note 20 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

20

- Income Taxes

Since our inception, we have never recorded a provision or benefit for federal and state income taxes.

The reconciliation of the income tax benefit computed at the federal statutory rates to our recorded tax benefit for the years ended

December 31, 2019

and

2018

is as follows:

	December 31,
(in thousands)	2019			2018
Income tax benefit, statutory rates	$	(5,770	)	$	(4,312	)
State taxes on income, net of federal benefit		(1,182	)		(535	)
Impact of tax reform		-			5
Research and development tax credit		(934	)		(351	)
Foreign rate differential		22			24
Employee related and other		1,983			2,875
Interest related		79			186
Income tax expense / (benefit), statutory rates		(5,802	)		(2,108	)
Valuation allowance		5,802			2,108
Income tax benefit, net	$	-		$	-

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities, at

December 31, 2019

and

2018,

are as follows:

	December 31,
(in thousands)	2019			2018
Long-term deferred assets:
Net operating loss carryforwards (federal and state)	$	180,979		$	176,759
Research and development tax credit		17,599			16,718
Compensation expense on stock		2,142			1,121
Charitable contribution carryforward		-			-
Other accrued		934			1,016
Deferred revenue		-			57
Depreciation		128			309
Total long-term deferred tax assets		201,782			195,980
Long-term deferred liabilities:
IPRD		(15,419	)		(15,476	)
Total long-term deferred tax liabilities		(15,419	)		(15,476	)
Valuation allowance		(201,782	)		(195,980	)
Deferred tax liabilities, net	$	(15,419	)	$	(15,476	)

We are in a net deferred tax liability position at

December 31, 2019

and

2018.

Because we have never realized a profit, management has fully reserved the net deferred tax asset since realization is

not

assured. It is our policy to classify interest and penalties recognized on uncertain tax positions as a component of income tax expense. There was neither interest nor penalties accrued as of

December 31, 2019

or

2018,

nor were any incurred in

2019

or

2018.

At

December 31, 2019

and

2018,

we had available carryforward net operating losses for federal tax purposes of

$618.9

million and

$606.6

million, respectively, research and development tax credit carryforward of

$16.9

million and

$16.7

million, respectively and orphan drug tax credit carryforwards of

$0.1

million. Of the of

$618.9

million of federal net operating loss carryforwards,

$35.9

million can be carried forward indefinitely. The remaining Federal net operating loss, research and development tax credit carryforwards and orphan drug credit carryforward will continue to expire through

2038.

At

December 31, 2019

and

2018,

we had available carryforward losses of approximately

$597.1

million and

$584.8

million, respectively, for state tax purposes. Of the

$597.1

million state tax carryforward losses,

$582.7

million is associated with the state of Pennsylvania, with the remainder associated with the other

6

states within which we have established tax nexus.

Utilization of net operating loss (NOL) and research and development (R&D) credit carryforwards

may

be subject to a substantial annual limitation under Section

382

of the Internal Revenue Code of

1986

due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes

may

limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. There also could be additional ownership changes in the future, which

may

result in additional limitations in the utilization of the carryforward NOLs and credits.

A full valuation allowance has been provided against our deferred tax assets and, if a future assessment requires an adjustment, an adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be

no

impact to the consolidated balance sheet or statement of operations if an adjustment were required.