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Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

​

Note 14—Income Taxes

The components of income tax expense (benefit) from continuing and discontinued operations were as follows:

​

​	​	​	​	​	​	​	​	​	​
​		December 31,
​		2022			2021			2020
​	​	(In thousands)
Continuing operations:	​	​	​	​	​	​	​	​	​
Current income tax expense:	​	​			​			​
Federal	​	$	—	​	$	—	​	$	—
State	​		—	​		—	​		—
Total current income tax expense	​		—	​		—	​		—
​	​	​	​	​	​	​	​	​	​
Deferred income tax benefit:	​			​			​
Federal	​		—	​		—	​		(19,472)
State	​		—	​		—	​		(3,784)
Total deferred income tax benefit	​	​	—	​	​	—	​	​	(23,256)
Income tax benefit in continuing operations	​	$	—	​	$	—	​	$	(23,256)
​	​	​	​	​	​	​	​	​	​
Income tax expense as a component of discontinued operations	​	$	3,952	​	$	1,006	​	$	11,245

​

In 2022 and 2021, for federal and state income tax purposes, we had net losses from continuing operations and net income from discontinued operations, which resulted in overall taxable net income. For federal income tax purposes, we utilized existing net operating loss carryforwards of $269.8 million and $245.1 million respectively to fully offset our federal tax liability for both periods. For state income tax purposes, we did not have adequate net operating losses and tax credits to fully offset our state tax liability. We recorded a state income tax expense of $4.0 million and $1.0 million in discontinued operations in 2022 and 2021, respectively. As of December 31, 2022, income taxes payable of $4.9 million is included in accrued expenses in our consolidated balance sheet.

In 2020, we adopted ASU 2019-12, Income Taxes (Topic 740), which eliminated the exception to the incremental approach of intra-period tax allocation whereby losses from continuing operations can no longer offset income from discontinued operations. This resulted in an income tax benefit of $23.3 million in continuing operations and income tax expense of $11.2 million in discontinued operations in 2020.

Deferred income taxes reflect the tax effect of net operating loss and tax credit carryforwards and the net temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of deferred income taxes were as follows:

​

​	​	​	​	​	​	​
​		December 31,
​		2022			2021
​	​	(In thousands)
Deferred tax assets:	​	​			​
Net operating loss carryforwards	​	$	85,887	​	$	143,657
Research and development tax credits	​		78,992	​		66,612
OMIDRIA royalty obligation	​	​	28,938	​	​	—
Capitalized research and development	​	​	21,864	​	​	—
Stock-based compensation	​		12,517	​		11,327
Lease liability	​		5,926	​		9,995
Other	​		9,234	​		17,862
Total deferred tax assets	​		243,358	​		249,453
Deferred tax liabilities:	​			​
Gain on discontinued operations	​	​	(34,883)	​	​	(42,212)
Right of use assets	​	​	(4,987)	​	​	(6,467)
Property and equipment	​	​	(288)	​	​	(102)
Total deferred tax liabilities	​		(40,158)	​		(48,781)
Net deferred tax assets before valuation allowance	​		203,200	​		200,672
Less valuation allowance	​		(203,200)	​		(201,340)
Net deferred tax liabilities	​	$	—	​	$	(668)

​

As of December 31, 2022, we had federal net operating loss carryforwards of approximately $361.0 million and state net operating loss carryforwards of approximately $220.0 million. Pre-2018 federal net operating losses of $109.4 million expire between 2035 and 2037. Post-2018 federal net operating losses of $251.6 million do not expire. Research and development tax credit carryforwards of $79.2 million expire between 2023 and 2042.

The Tax Cuts and Jobs Act was enacted on December 22, 2017 and requires the capitalization and subsequent amortization of research and experimental expenditures beginning in 2022. During 2022, we capitalized $21.9 million of research and development expenses into deferred tax assets. Prior to 2022, these costs were expensed as incurred for tax purposes.

We established a 100% valuation allowance for all periods due to the uncertainty around our ability to generate sufficient taxable income to realize our deferred tax assets. During 2022 and 2021, respectively, our valuation allowance decreased $1.9 million and $19.3 million.

Reconciliation of income tax computed at federal statutory rates to the reported provisions for income taxes from continuing operations are as follows:

​

​	​	​	​	​	​	​	​
​		Year ended December 31,
​		2022		2021		2020
U.S. Federal statutory rate on net loss	​	(21.0)	%	(21.0)	%	(21.0)	%
State tax, net of federal tax benefit	​	(1.7)	%	(0.6)	%	(3.1)	%
Change in valuation allowance	​	28.3	%	26.9	%	19.3	%
Research and development tax credits	​	(6.8)	%	(5.5)	%	(6.2)	%
Stock compensation	​	1.4	%	0.3	%	0.5	%
Other	​	(0.2)	%	(0.1)	%	(1.3)	%
Effective tax rate	​	(0.0)	%	(0.0)	%	(11.8)	%

​

We file federal and certain state income tax returns, which provides varying statutes of limitations on assessments. However, because of net operating loss carryforwards, substantially all our tax years remain open to federal and state tax examination.

We recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense. To date, there have been no significant interest or penalties charged to us in relation to the underpayment of income taxes.

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- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

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