Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

9. Income Taxes

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

 

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

Expected income tax benefit at the federal statutory rate

 

 

21.0

%

 

 

21.0

%

State and local taxes, net of federal benefit

 

 

12.5

 

 

 

12.5

 

Research and development credit, net

 

 

4.4

 

 

 

2.6

 

Non-deductible items and other

 

 

(0.6

)

 

 

(0.8

)

Change in valuation allowance

 

 

(37.3

)

 

 

(35.3

)

Total

 

 

0.0

%

 

 

0.0

%

 

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The principal components of the Company’s deferred tax assets consisted of the following:

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Federal, state and local net operating loss carryforwards

 

$

28,857

 

 

$

15,241

 

License fee deductions

 

 

318

 

 

 

340

 

Research and development tax credits

 

 

3,359

 

 

 

1,317

 

Stock-based compensation deductions

 

 

2,616

 

 

 

1,243

 

Accrued expenses

 

 

1,074

 

 

 

837

 

Gross deferred tax assets

 

 

36,224

 

 

 

18,978

 

Less: valuation allowance

 

 

(36,224

)

 

 

(18,978

)

Total deferred tax assets

 

 

—

 

 

 

—

 

Deferred tax liabilities:

 

 

—

 

 

 

—

 

 

 

$

—

 

 

$

—

 

Net deferred tax assets

 

$

—

 

 

$

—

 

 

 

The Company increased its valuation allowance by $17,246 for the year ended December 31, 2021 in order to maintain a full valuation allowance against its deferred tax assets. Based on the Company’s history of losses, the Company recorded a full valuation allowance against its deferred tax assets as of December 31, 2021. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support a reversal of the allowance.

As of December 31, 2021, the Company had federal, state and local net operating loss carryforwards of $85,798, $87,983 and $78,892, respectively; $85,548 of the federal amounts do not expire, and the remaining $250 expire in 2037. The state net operating losses begin to expire in 2037. The local net operating losses begin to expire in 2039. As of December 31, 2021, the Company had federal research and development tax credit carryforwards of $3,359, which begin to expire in 2038. Under the provisions of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the IRC), these net operating losses, credit carryforwards and other tax attributes may be subject to limitation based on previous significant changes in ownership and upon future significant changes in ownership of the Company, as defined by the IRC.

The Company files income tax returns in the U.S. federal jurisdiction as well as in Pennsylvania and Philadelphia. The tax years 2020, 2019 and 2018 remain open to examination by the jurisdictions where the Company is subject to tax.

The Company evaluates tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. As of December 31, 2021, the Company had no unrecognized income tax benefits that would affect the Company’s effective tax rate if recognized.