For each of the years ended December 31, 2018, 2017 and 2016, the effective income tax rate and tax provision from continuing operations was zero percent for all periods, primarily attributable to losses generated which are not more likely than not to be realized. The Company adopted ASC 606 on January 1, 2018 and has revised the following information for the years ending December 31, 2017 and 2016 accordingly.

The following is the reconciliation between the statutory federal income tax rate and the Company’s effective tax rate:

	Year Ended December 31,
	2018			2017			2016
				As revised (Note 2)
Federal statutory income tax rate		21.0	%		34.0	%		34.0	%
State taxes (tax effected)		8.6			7.1			8.4
Non-deductible expenses and other		2.5			2.0			(12.9	)
Research and development credits		5.9			6.0			17.8
Tax Act – net deferred tax rate change		—			(25.1	)		—
Change in valuation allowance		(38.0	)		(24.0	)		(47.3	)
Total		—	%		—	%		—	%

As of December 31, 2018 and 2017, the components of the Company’s deferred tax assets are as follows (in thousands):

	As of December 31,
	2018			2017
				As revised (Note 2)
Deferred tax assets:
Net operating loss carryforwards	$	49,689		$	22,246
Research and development credits carryforwards		12,908			8,631
Stock-based compensation		4,349			890
Deferred revenue		—			9,391
Start-up costs		1,237			1,354
Depreciation		(959	)		(457	)
Other		1,858			1,327
Total deferred tax assets		69,082			43,382
Less: valuation allowance		(69,082	)		(43,382	)
Net deferred tax assets	$	—		$	—

In December 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. The Tax Act reduced the corporate income tax rate from 34% to 21% effective January 1, 2018. The Company re-measured its U.S. deferred tax assets and liabilities, which resulted in a reduction of net deferred tax assets with a corresponding adjustment to the valuation allowance. As a result, no tax expense was recorded related to the enactment of the Tax Act.

The Company’s primary deferred tax asset of $49.7 million at December 31, 2018 and $22.2 million at December 31, 2017 relates to its net operating loss carryforwards (“NOLs”). Based on a history of cumulative losses in recent periods and consideration of other available positive and negative evidence, the Company has recorded a valuation allowance to offset the net deferred tax assets at December 31, 2018 and December 31, 2017, respectively.

As of December 31, 2018, the Company had approximately $177.0 million and $179.4 million of federal and state net operating losses, respectively, that will begin to expire in 2032. As of December 31, 2018, the Company had approximately $4.5 million and $3.8 million of federal and state research and development tax credit carryovers, respectively. If not utilized, the federal credit carryforward will expire in 2032, and the state credit carryforward does not expire. As of December 31, 2018, the Company had approximately $9.0 million of federal orphan tax credit carryovers, which will begin to expire in 2036 if not utilized. The valuation allowance increased by approximately $25.7 million, $13.7 million and $4.9 million during the years ended December 31, 2018, 2017 and 2016, respectively.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”) if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income or taxes may be limited. Similar rules may apply under the laws of the state of California. The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change (subject to certain adjustments) by the applicable “long-term tax-exempt rate.” Such limitations may result in expiration of a portion of the NOLs and other tax attributes before utilization. Each ownership change resulted in an annual limitation, but all NOLs and other tax attributes generated prior to the ownership changes on April 20, 2015 and August 14, 2017 can be utilized prior to expiration if the Company earns sufficient taxable income. The Company’s follow-on stock offering completed in June 2018 did not result in an ownership change.

As of December 31, 2018, and 2017, the Company did not have a liability related to unrecognized tax benefits. All unrecognized tax benefits have been netted against the research and development and orphan drug credit carryforwards deferred tax asset.

The Company records interest and penalties related to unrecognized tax benefits within interest and other income, net. As of December 31, 2018, and 2017, the Company had not accrued any interest or penalties related to unrecognized tax benefits. The Company is subject to U.S. federal and California income tax assessment for years beginning in 2012 and Australia beginning in 2015. However, since the Company has incurred federal and California net operating losses every year since inception, all of its income tax returns are subject to examination and adjustments by the Internal Revenue Service for at least three years and by the California Franchise Tax Board for four years following the year in which the tax attributes are utilized. The Company does not believe that there will be a material change in its unrecognized tax positions over the next twelve months. There is no amount of unrecognized tax benefit that, if recognized, would affect the effective tax rate.

The Company has not been audited by the Internal Revenue Service, any state tax authority, or foreign tax authorities. It is subject to taxation in the United States and Australia. Because of the net operating loss, research credit carryforwards, and orphan drug tax credit carryforwards, substantially all of its tax years, from 2012 to 2018, remain open to U.S. federal and California tax examinations. The statute of limitation in Australia is four years.

At December 31, 2018, 2017 and 2016, the Company's reserve for unrecognized tax benefits is approximately $3.8 million, $2.5 million and $1.5 million, respectively. Due to the full valuation allowance at December 31, 2018, current adjustments to the unrecognized benefits will have no impact to the Company's effective income tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	For the Year Ended December 31,
	2018		2017			2016
			As revised (Note 2)
Beginning balance	$	2,471	$	1,474		$	719
Increases (decreases) of unrecognized tax benefits related to prior year		289		(97	)		—
Increases of unrecognized tax benefits related to current year		1,050		1,094			755
Ending balance	$	3,810	$	2,471		$	1,474

The Company does not anticipate material changes to its uncertain tax positions through the next twelve months.