The Company has incurred net operating losses for all the periods presented. The Company has not reflected the benefit of any such net operating loss carryforwards in the accompanying financial statements. The Company has established a full valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. All losses to date have been incurred domestically as the Company has no international operations or subsidiaries.

No provision for U.S. income taxes exists due to tax losses incurred in all periods presented. All losses incurred were U.S. based.

The effective tax rate for the years ended December 31, 2019, 2018 and 2017 is different from the federal statutory rate primarily due to the valuation allowance against deferred tax assets as a result of insufficient sources of income. The effective tax rate of the Company’s provision for income taxes differs from the federal statutory rate as follows:

	Year Ended December 31,
	2019				2018				2017
Taxes at the U.S. statutory income tax rate		21.0		%		21.0		%		34.0		%
State tax, net of federal benefit		(2.2	)			0.9				—
Other		(0.9	)			(0.1	)			(2.2	)
Stock-based compensation		(0.5	)			0.3				—
Research and development tax credits		(0.2	)			1.0				—
Reduction to state net operating losses		(3.9	)			—				—
Change in valuation allowance		(13.3	)			(23.1	)			(13.3	)
Change in income tax rate due to Tax Act		—				—				(18.5	)
Total provision for income taxes		—		%		—		%		—		%

On December 22, 2017, the U.S. federal government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act contains, among other things, significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21% for tax years beginning after December 31, 2017, limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, implementing a territorial tax system, and requiring a mandatory one-time tax on U.S. owned undistributed foreign earnings and profits known as the transition tax.

Pursuant to SAB 118, an entity may select between one of three scenarios to determine a reasonable estimate arising from the Tax Act. The scenarios are (i) a final estimate which effectively closes the measurement window; (ii) a reasonable estimate leaving the measurement window open for future revisions; and (iii) no estimate as the law is still being analyzed. The Company was able to provide a reasonable estimate for the revaluation of deferred taxes. As such, the Company recorded a $8.3 million reduction in deferred tax assets for the revaluation of deferred taxes in 2017 which was offset by a corresponding decrease to the Company’s full valuation allowance. The ultimate impact of the Act did not differ materially from provision amounts recorded. Adjustments, if any, would not have impacted the statement of operations and comprehensive loss due to the full valuation allowance on the Company’s deferred tax assets

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

The tax effects of significant items comprising the Company’s deferred tax assets are as follows:

	December 31,
	2019			2018
	(in thousands)
Deferred tax assets:
Federal and state operating loss carryforwards	$	40,435		$	29,926
Research and development tax credits		3,436			3,865
Stock-based compensation		3,514			1,839
Accruals and other		1,473			1,040
Contingent consideration		670			954
Charitable contributions		253			253
Total deferred tax assets		49,781			37,877
Deferred tax liabilities:
Unrealized gain on equity investment		(947	)		—
Total deferred tax liabilities		(947	)		—
Valuation allowance		(48,834	)		(37,877	)
Net deferred tax assets	$	—		$	—

The tax benefit of net operating losses, temporary differences and credit carryforwards should be recorded as an asset to the extent that management assesses that their realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.

Realization of the net deferred tax assets is dependent upon future taxable income, if any, the amount and timing of which is uncertain. Based on the weight of available positive and negative objective evidence, management believes it more likely than not that the Company’s deferred tax assets are not realizable. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $11.0 million, $17.6 million and $9.4 million during the years ended December 31, 2019, 2018 and 2017, respectively.

Net operating losses and tax credit carryforwards as of December 31, 2019 are as follows:

	Amount		Expiration Years
Net operating losses, federal (post December 31, 2017)	$	137,097	Do Not Expire
Net operating losses, federal (pre January 1, 2018)		64,136	2030 - 2037
Net operating losses, state		26,123	2030 - 2036
Research and development tax credits, federal		5,931	2031 - 2039
Research and development tax credits, state		5,216	Indefinite

Federal and state laws impose restrictions on the utilization of net operating loss carryforwards and R&D credit carryforwards in the event of a change in ownership of the Company, which constitutes an 'ownership change' as defined by Internal Revenue Code Section 382 and 383. The Company experienced an ownership change in the past that impacts the availability of its net operating losses and tax credits. The amounts indicated in the above tables reflect the reduction of net operating losses and credit carryforwards as a result of previous ownership changes that the Company experienced. Should there be additional ownership changes in the future, the Company's ability to utilize existing carryforwards could be substantially restricted.

The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings is more likely than not to be sustained upon examination by the relevant income tax authorities.

As of December 31, 2019, the Company has no accrued interest or penalties related to uncertain tax positions.

The following table summarizes the activity related to our unrecognized tax benefits:

	December 31,
	2019			2018
	(in thousands)
Gross unrecognized tax benefits at January 1	$	3,714		$	3,065
Additions for tax positions taken in the current year		6,221			753
Reductions for tax positions taken in the prior year		(173	)		(104	)
Gross unrecognized tax benefits at December 31	$	9,762		$	3,714

If recognized, none of the unrecognized tax benefits as of December 31, 2019 and 2018 would reduce the annual effective tax rate, primarily due to corresponding adjustments to the valuation allowance. The Company will recognize both accrued interest and penalties related to unrecognized benefits in income tax expense. As of December 31, 2019 and 2018, no liability has been recorded for potential interest or penalties. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.

The Company files income tax returns in the U.S. federal jurisdiction and California, Colorado and Delaware. The Company is not currently under audit by the Internal Revenue Service or other similar state or local authorities. All tax years remain open to examination by major taxing jurisdictions to which the Company is subject.