Prior to the Spin-off, the Company was included in the consolidated federal tax return of PDL. The provision for income taxes for the year ended December 31, 2019 was calculated by using a “separate return” method. Under this method, the Company was assumed to file a separate return with the applicable tax authority(ies). The provision was the amount of tax payable or refundable on the basis of a hypothetical, current-year separate return. Deferred taxes were provided on temporary differences and on any attributes being carried forward that could be claimed on the hypothetical return. The need for a valuation allowance was assessed on a separate company basis and on projected separate return assets.

Subsequent to the Spin-Off, the Company is no longer included in the consolidated federal tax return of PDL and will file a tax return for the period following the Spin-Off as a separate company. The provision for income taxes for the year ended December 31, 2020 reflects the impact of the Spin-Off and the Company’s status as a separate company for federal and state income tax filing purposes.

For financial reporting purposes, loss before income taxes includes the following components:

	Years Ended December 31,
	2020			2019
United States	$	(19,774	)	$	(14,657	)
Foreign		—			—
Total	$	(19,774	)	$	(14,657	)

The provision for income taxes for the years ended December 31, 2020 and 2019 consisted of the following:

	Year Ended December 31,
	2020		2019
Current income tax expense (benefit)
Federal	$	—	$	—
State		—		—
Foreign		—		—
Total current		—		—
Deferred income tax (benefit)
Federal		—		—
State		—		—
Foreign		—		—
Total deferred		—		—
Total provision	$	—	$	—

A reconciliation of the income tax provision computed using the U.S. statutory federal income tax rate compared to the income tax provision included in the statements of operations is as follows:

	Year Ended December 31,
	2020			2019
Tax at U.S. statutory rate on income before income taxes	$	(4,153	)	$	(3,078	)
Change in valuation allowance		1,573			2,218
State taxes		(210	)		543
Accrued preferred dividend		—			321
(Income)/Loss taxable in period under the separate return method		2,719			—
Other		71			(4	)
Total	$	—		$	—

Deferred tax assets and liabilities are determined based on the differences between financial reporting and income tax bases of assets and liabilities, as well as net operating loss carryforwards, and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The significant components of the Company’s net deferred tax assets and liabilities are as follows:

	Year Ended December 31,
	2020			2019
Deferred tax assets:
Net operating loss carryforwards	$	496		$	38,781
Intangible assets		6,541			3,827
Stock-based compensation		1,886			340
Other		170			1,724
Total deferred tax assets		9,093			44,672
Valuation allowance		(9,084	)		(44,465	)
Total deferred tax assets, net of valuation allowance		9			207
Deferred tax liabilities:
Other		(9	)		(207	)
Total deferred tax liabilities		(9	)		(207	)
Net deferred tax assets	$	—		$	—

The deferred tax assets associated with net operating losses included in the table above for the year ended December 31, 2019 reflected net operating losses as if the Company was a taxpayer separate from PDL on the “separate return method” of accounting for an entity that files as part of a consolidated group. The deferred tax assets associated with net operating losses included in the table above for the year ended December 31, 2020 reflect the net operating losses the Company expects to generate on its separate federal and state income tax returns subsequent to the Spin-Off.

As of December 31, 2020 and 2019, the Company maintained federal net operating loss carryforwards of $2,046 and $158,297, respectively. As of December 31, 2020 and 2019, the Company also maintained state net operating loss carryforwards of $1,558 and $131,761, respectively. As of December 31, 2020 and 2019, the Company had $0 and $2,234 of R&D credits. The Company eliminated the December 31, 2019 tax return attributes at the time the separation was executed. The federal net operating losses generated during the period ended December 31, 2020 after the Spin-Off may only be utilized to offset 80% of taxable income annually and may be carried forward indefinitely. The state net operating losses generated during the period ended December 31, 2020 after the Spin-Off will begin to expire in the year 2028 if not utilized.

As of December 31, 2020, the Company determined that it was more likely than not that certain federal and state deferred tax assets would not be realized in the near future and maintained a $9,084 valuation allowance against deferred tax assets. The net change in total valuation allowance between the years ended December 31, 2020 and 2019, was a decrease of $35,381; however, the deferred tax assets the Company maintained at December 31, 2019 were indicative of the “separate return method” as the Company was part of the PDL federal consolidated group at that time, and the tax return attributes were eliminated following the Spin-Off.

A reconciliation of the Company’s unrecognized tax benefits, excluding accrued interest and penalties, is as follows:

	Year Ended December 31,
	2020			2019
Balance at the beginning of the year	$	2,255		$	2,255
Decreases related to prior year tax positions		—			—
Increases related to tax positions from prior fiscal years		—			—
Increases related to tax positions taken during current fiscal year		—			—
Decreases related to the Spin-Off		(2,255	)		—
Balance at the end of the year	$	—		$	2,255

The Company periodically evaluates its exposures associated with its tax filing positions. At this time, the Company does not anticipate a material change in the unrecognized tax benefits that would affect the effective tax rate or deferred tax assets or valuation allowances over the next 12 months.

The U.S. federal income tax returns for which the Company filed as part of the PDL consolidated group are subject to examination for tax years 2017 forward. The Company’s income tax returns for periods separate from our consolidation with PDL are subject to examination by U.S. federal, state and local tax authorities for tax years 2009 forward. The Company is not currently under examination in any significant tax jurisdictions. Interest and penalties associated with unrecognized tax benefits accrued on the balance sheet were $0 as of December 31, 2020 and 2019.

In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. The Company will monitor additional guidance and impact that the CARES Act and other potential legislation may have on its income taxes.