14. Income taxes

For the years ended December 31, 2013, 2012 and 2011, the Company did not record a current or deferred income tax expense or benefit.

The components of loss before income taxes were as follows:


	Year ended December 31,
	2013			2012			2011
U.S.	$	(26,018	)	$	(23,700	)	$	(15,300	)
Foreign		697			30			(298	)

Total	$	(25,321	)	$	(23,670	)	$	(15,598	)

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following:


	Year ended December 31,
	2013			2012
Deferred tax assets:
U.S. net operating loss carryforwards	$	11,010		$	24,044
Foreign net operating loss carryforwards		659			587
Tax credit carryforwards		3,638			1,910
Capitalized research and development expenses, net		1,837			2,334
Deferred revenue		21,830			267
Accruals and other		4,177			289

Total deferred tax assets		43,151			29,431
Fixed assets		(2,596	)		—
Less valuation allowance		(40,555	)		(29,431	)

Net deferred taxes	$	—		$	—

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of operating losses, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2013 and 2012. The valuation allowance increased approximately $11,124 during the year ended December 31, 2013, due primarily to net operating losses. The Company has allocated its valuation allowance in accordance with the provisions of ASC 740, which resulted in a current deferred tax asset of $693 and a long term deferred tax liability of $693.

A reconciliation of income tax expense computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows:


	Year ended December 31,
	2013			2012			2011
Federal income tax expense at statutory rate		34.0	%		34.0	%		34.0	%
State income tax, net of federal benefit		4.5	%		4.4	%		5.0	%
Permanent differences		(0.6	%)		(0.8	%)		(1.3	%)
Research and development credit		6.0	%		0.8	%		3.4	%
Other		0.0	%		0.6	%		(0.6	%)
Change in valuation allowance		(43.9	%)		(39.0	%)		(40.5	%)

Effective income tax rate		0.0	%		0.0	%		0.0	%

As of December 31, 2013, 2012 and 2011, the Company had U.S. federal net operating loss carryforwards of approximately $30,310, $62,600 and $42,400, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2033. As of December 31, 2013, 2012 and 2011, the Company also had U.S. state net operating loss carryforwards of approximately $13,287, $52,300 and $31,300, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2033. At December 31, 2013, 2012 and 2011, the Company also had approximately $1,977, $1,800, and $1,800, respectively, of foreign net operating loss carryforwards which may be available to offset future income tax liabilities; these carryforwards do not expire. As a result of the up-front payment pursuant to the Company’s collaboration agreement with Celgene, the Company expects that it will use approximately $35,400 of its federal and state net operating loss carryforwards.

As of December 31, 2013, 2012 and 2011, the Company had federal research and development tax credit carryforwards of approximately $2,685, $1,300 and $1,000, respectively, available to reduce future tax liabilities which expire at various dates through 2032. As of December 31, 2013, 2012 and 2011, the Company had state credit carryforwards of approximately $1,443, $900 and $400, respectively, available to reduce future tax liabilities which expire at various dates through 2027.

Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception which it believes has resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code.

The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2013, 2012 and 2011, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s consolidated statements of operations and comprehensive loss.

For all years through December 31, 2013, the Company generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company’s research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position for these two years. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the deferred tax asset established for the research and development credit carryforwards and the valuation allowance.

The Company or one of its subsidiaries files income tax returns in the United States, and various state and foreign jurisdictions. The federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2010 through December 31, 2013. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.