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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company's loss before income taxes is as follows (in thousands):
 
As of December 31,
20212020
U.S.$(6,956)$(4,664)
Non - U.S.(13,980)(12,110)
$(20,936)$(16,774)

The components of federal and state income tax (benefit) are as follows (in thousands):
 
As of December 31,
20212020
Current
Federal$— $— 
State2 5 
Foreign— — 
Total current2 5 
Deferred expense
Federal(239)— 
State— (22)
Foreign— — 
Total deferred(239)(22)
Total income tax benefit$(237)$(17)
The components of net deferred tax assets are as follows (in thousands):
 
As of December 31,
20212020
Net operating loss carryforwards$9,059 $7,155 
Stock-based compensation140 75 
Licensing deduction deferral3,236 4,059 
Contingent consideration62 973 
Lease liability170 208 
Other217 190 
Gross deferred tax assets12,884 12,660 
Valuation allowance(12,732)(11,514)
Net deferred tax assets$152 $1,146 

The components of gross deferred tax liabilities are as follows (in thousands):
As of December 31,
20212020
In-process research and development not subject to future amortization for tax purposes$— $1,197 
Right of use asset152 188 
Gross deferred tax liability$152 $1,385 

The net deferred tax liabilities are as follows (in thousands):
As of December 31,
20212020
Net deferred tax asset$152 $1,146 
Gross deferred tax liability152 1,385 
Net deferred tax liability$— $239 

The provision for income taxes differs from the provision computed by applying the federal statutory rate to net loss before income taxes as follows:
As of December 31,
20212020
U.S. federal statutory income tax rate(21.0)%(21.0)%
State and local taxes, net of federal benefit(0.2)%2.5 %
Foreign rate differential14.0 %15.2 %
Permanent differences0.2 %0.2 %
Contingent consideration— %0.1 %
Other0.1 %11.0 %
Valuation allowance5.8 %(8.1)%
Effective income tax rate(1.1)%(0.1)%

At December 31, 2021, the Company had domestic federal and state net operating loss carryforwards of approximately $42.6 million and $2.0 million, respectively, available to reduce future taxable income, which expire
beginning in 2027. The income tax benefit for the years ended December 31, 2021 and 2020 relates to the indefinite lived deferred tax liabilities.

Under the provisions of the Internal Revenue Code, the net operating losses (“NOL”) and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, respectively, as well as similar state tax provisions. This could limit the amount of tax attributes that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception, which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future. Utilization of the net operating loss and tax credits carryforwards may be limited by “ownership change” rules, as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. This annual limitation may result in the expiration of the net operating losses and credits before utilization.

In assessing the need for a valuation allowance the Company may utilize indefinite-lived deferred tax liabilities from an indefinite-lived intangible asset as a future source of income. The Company’s IPR&D, as recorded in acquisition accounting, can be utilized as a source of income arising from the future reversal of temporary difference that can be offset against post 2017 indefinite-lived NOLs. Therefore, the Company is permitted to offset the indefinite-lived deferred tax liability up to the 80 percent limitation for NOL’s generated subsequent to January 1, 2018. The valuation allowance increased by $1.2 million for the year ended December 31, 2021, which was driven by the impairment charge recorded on the Company's IPR&D during the current year and resulting decrease in the related deferred tax liability.
The Company files income tax returns in the United States and various state jurisdictions. The Company is subject to tax examinations for the 2015 tax year and beyond. The Company does not recognize tax benefits that are not more-likely-than-not to be supported based upon the technical merits of the tax position taken. In assessing its unrecognized tax benefits, the Company has analyzed its tax return filing positions in all of the federal, state and foreign filing jurisdictions where it is required to file income tax returns, as well as all open years in those jurisdictions.

As of December 31, 2021, the Company has no unrecognized tax benefits or accrued interest or penalties associated with uncertain tax positions. The Company does not believe that it is reasonably possible that its unrecognized tax benefits would significantly change in the following 12 months.
In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized in the near term. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Securities Act (CARES Act) was signed into law in the US in March 2020. The American Rescue Plan Act of 2021 ("American Rescue Plan") was subsequently signed into law on March 11, 2021 as a follow on to the CARES act to provide additional relief in connection with the ongoing COVID-19 pandemic. The CARES Act and American Rescue Plan adjusted a number of provisions in the tax code, including, among other things, the calculation and eligibility of certain deductions, the treatment of net operating losses and tax credits, provisions relating to PPP loan extension The enactment of the CARES Act and American Rescue Plan did not have a material impact on the Company's income tax provision or consolidated financial statements for the years ended December 31, 2021 and 2020.