XML 80 R14.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes

7.

Income Taxes

The Company did not record net income tax benefits for the operating losses incurred during the periods presented due to the uncertainty of realizing a tax benefit from those losses. Accordingly, any benefit recorded related to these deferred tax assets was offset by a valuation allowance reflecting management’s conclusion that realization of those assets was not more likely than not.

A reconciliation of the federal statutory income tax rate and the Company’s effective income tax rate is as follows:

 

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

Federal statutory income tax rate

 

 

(21.0

)%

 

 

(21.0

)%

 

 

(34.0

)%

State income taxes

 

 

(8.9

)

 

 

(8.6

)

 

 

(6.9

)

Research and development tax credits

 

 

(5.1

)

 

 

(4.7

)

 

 

(3.4

)

Stock-based compensation

 

 

1.2

 

 

 

(0.6

)

 

 

3.6

 

Change in U.S. tax rate

 

 

-

 

 

 

-

 

 

 

18.7

 

Change in valuation allowance

 

 

33.8

 

 

 

34.9

 

 

 

22.0

 

Effective income tax rate

 

 

-

%

 

 

-

%

 

 

-

%

 

The Company’s net deferred tax assets (liabilities) consisted of the following:

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Intangibles, including acquired in-process

   research and development

 

$

1,091

 

 

$

1,201

 

Capitalized start-up costs

 

 

421

 

 

 

463

 

Net operating loss carryforwards

 

 

63,245

 

 

 

34,234

 

Research and development credit carryforwards

 

 

19,417

 

 

 

11,766

 

Operating lease liability

 

 

5,008

 

 

 

-

 

Deferred revenue

 

 

7,843

 

 

 

12,199

 

Equity-based compensation

 

 

7,092

 

 

 

4,064

 

Accruals and allowances

 

 

1,245

 

 

 

1,359

 

Gross deferred tax assets

 

 

105,362

 

 

 

65,286

 

Deferred tax asset valuation allowance

 

 

(98,513

)

 

 

(64,046

)

Total deferred tax assets

 

 

6,849

 

 

 

1,240

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Fixed assets

 

 

(1,633

)

 

 

(1,240

)

Operating lease right-of-use assets

 

 

(5,216

)

 

 

-

 

Total deferred tax liabilities

 

 

(6,849

)

 

 

(1,240

)

Net deferred tax asset (liability)

 

$

-

 

 

$

-

 

 

As of December 31, 2019, the Company had federal and state net operating loss carryforwards of $229.9 million and $236.8 million, respectively.  As of December 31, 2019, approximately $193.0 million of the Company’s federal net operating loss carryforward can be carried forward indefinitely while the remaining federal net operating loss of $36.9 million  begins to expire in 2034. As of December 31, 2019, the Company had federal and state research and development and other credit carryforwards of approximately $12.6 million and $8.7 million, which begin to expire in 2035 and 2031, respectively.

The Company evaluated the expected realizability of its net deferred tax assets and determined that there was significant negative evidence due to its net operating loss position and insufficient positive evidence to support the realizability of these net deferred tax assets. The Company concluded it is more likely than not that its net deferred tax assets would not be realized in the future; therefore, the Company has provided a full valuation allowance against its net deferred tax asset balance as of December 31, 2019 and 2018. The valuation allowance increased by $34.5 million in 2019, $28.7 million in 2018 and $14.8 million in 2017.

Utilization of the net operating loss and research and development credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss and research and development credit carryforwards that can be utilized annually to offset future taxable income and tax expense, respectively. The Company has not yet conducted a study to assess whether a change of control, as defined in Section 382, has occurred or whether there have been multiple changes in control since inception.

As of December 31, 2019, the Company had not identified any unrecognized tax benefits. The Company files income tax returns in the U.S. federal tax jurisdiction and Massachusetts and various other state tax jurisdictions. The Company is subject to examination by the Internal Revenue Service and Massachusetts taxing authorities. The returns in these jurisdictions since inception remain open for examination; however, there are currently no pending tax examinations.