9 .	Income Taxes

For the years ended

December

31,

2016,

2015

and

2014,

we did not record a provision for income taxes because we have incurred operating losses for all

three

years.

Deferred income tax assets and liabilities arising from differences between accounting for financial statement purposes and tax purposes, less valuation allowance at year-end are as follows (in thousands):

	December 31,
	201 6			201 5
Deferred tax assets:
Net operating loss carryforward	$	138,727		$	94,465
Research and development credits		16,687			11,181
Stock-based compensation		10,272			6,726
Other, net		3,204			1,345
Total deferred tax assets		168,890			113,717
Valuation allowance for net deferred tax assets		(168,890	)		(113,717	)
Net deferred taxes	$	—		$	—

Taxes on income vary from the statutory federal income tax rate applied to earnings before tax on income as follows (in thousands):

	December 31,
	201 6			201 5			201 4
Statutory federal income tax rate of 34%	$	(58,868	)	$	(33,181	)	$	(25,965	)
Stock-based compensation expense		2,694			894			551
NOL not benefitted		53,798			31,935			25,085
Non-deductible compensation		1,864			—			—
Other, net		512			352			329
Provision for taxes	$	—		$	—		$	—

A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. We have established a valuation allowance to offset net deferred tax assets at

December

31,

2016

and

2015

due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets. The net change in the total valuation allowance for the year ended

December

31,

2016

and

2015

was an increase of

$55.2

million and

$40.4

million, respectively.

December

31,

2016,

we had federal and California state net operating loss (“NOL”) carryforwards of

$387.6

million and

$268.5

million, respectively, expiring beginning in

2018

for federal and

2017

for California state purposes. Federal NOLs of

$10.0

million and state NOLs of

$4.2

million relate to stock-based compensation deductions in excess of book expense, the tax effect of which would be to credit additional paid-in capital, if realized. At

December

31,

2016,

we had federal and California state research credit carryforwards of

$11.6

million and

$7.6

million, respectively, expiring beginning in

2022

for federal. The California state credits can be carried forward indefinitely.

Internal Revenue Code section

382

places a limitation on the amount of taxable income that can be offset by NOL carryforwards after a change in control (generally greater than

50%

change in ownership) of a loss corporation. California has similar rules. Generally, after a change in control, a loss corporation cannot deduct NOL carryforwards in excess of the Section

382

limitation. We have performed an IRC Section

382

analysis and determined there were ownership changes in

2007,

2011,

and

2013.

We are currently in the process of completing the IRC Section

382

analysis for

2016

and we do not expect an ownership change for the year ended

December

31,

2016.

The limitation in the Federal and state carryforwards associated with the NOL and credit carryforwards reduce the deferred tax assets, which are further offset by a full valuation allowance. The limitation can result in the expiration of the NOLs and credit carryforwards available as of

December

31,

2016,

before utilization.

We file U.S. and state income tax returns with varying statutes of limitations. The tax years from

1997

2016

remain open to examination due to the carryover of unused NOL carryforwards and tax credits.

For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than

percent likely of being realized upon settlement. It is our policy to recognize interest and penalties related to income tax matters in income tax expense. As of

December

31,

2016

and

2015,

we had no accrued interest and penalties related to uncertain tax positions.

As of

December

31,

2016

and

2015,

we had unrecognized tax benefits of

$0.1

million, and the amount that would impact our effective tax rate, before the consideration of the valuation allowance, is

$0.1

million. We do not expect any material changes to the estimated amount of liability associated with its uncertain tax positions within the next

months.