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Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

10. Income Taxes

The components of the gross deferred tax asset and related valuation allowance at December 31 were as follows:

​

​	​	​	​	​	​	​	​
​		2021			2020
Deferred income tax assets:	​	​	​	​	​	​	​
Net operating loss carryforward	​	$	79,788,146	​	$	63,830,866	​
Capitalized start-up costs	​		920,516	​		1,114,309	​
Patent amortization	​		73,480	​		88,949	​
Research and orphan drug credits	​		47,976,370	​		42,008,797	​
Stock-based compensation	​		7,102,947	​		6,778,569	​
Operating lease liabilities	​	​	528,340	​	​	775,598	​
Accrued bonus	​	​	592,260	​	​	919,410	​
Other	​	​	209,580	​	​	283,751	​
Gross deferred income tax assets	​		137,191,639	​		115,800,249	​
Valuation allowance	​		(136,613,829)	​		(115,016,323)	​
Net deferred income tax assets	​		577,810	​		783,926	​
​	​	​	​	​	​	​	​
Deferred income tax liabilities:	​	​	​	​	​	​	​
Operating lease right-of-use assets	​		(433,727)	​		(639,843)	​
Property and equipment	​		(144,083)	​		(144,083)	​
Gross deferred income tax liabilities	​		(577,810)	​		(783,926)	​
Net deferred income tax asset/(liability)	​	$	—	​	$	—	​

​

Based on the Company’s operating history and management’s expectation regarding future profitability, management believes the Company’s deferred tax assets will not be realizable under ASC 740, Income Taxes. Accordingly, a full valuation allowance has been established as of December 31, 2021 and 2020.

As of December 31, 2021, the Company had $290.0 million of U.S. Federal and state net operating losses, $10.3 million of research and development tax credits and $37.7 million of orphan drug tax credits available to carry forward. A portion of the net operating loss carryforwards will begin to expire in 2026, the research and development tax credits in 2023 and the orphan drug tax credit in 2033. Under current federal income tax laws, federal net operating losses incurred in 2018 and in future years may be carried forward, indefinitely, but the deductibility of such federal net operating losses is limited.

The Company’s tax attributes, including net operating losses and credits, are subject to any ownership changes as defined under Internal Revenue Code Sections 382 and 383. A change in ownership could affect the Company’s ability

to utilize its net operating losses and credits. As of December 31, 2021, the Company does not believe that an ownership change has occurred. Any future ownership changes may cause a limitation on the Company’s ability to utilize existing tax attributes.

The Company files income tax returns in the U.S. federal jurisdiction and in the State of Maryland. The Company’s federal income tax returns for tax years 2003 and after remain subject to examination by the U.S. Internal Revenue Service due to tax attributes available to be carried forward to open or future tax years. The Company’s Maryland income tax returns for the tax years 2006 and thereafter remain subject to examination by the Comptroller of Maryland. In addition, all of the net operating losses, research and development tax credit and orphan drug credit carryforwards that may be used in future years are still subject to adjustment.

The Company did not have unrecognized tax benefits as of December 31, 2021 and 2020, and does not anticipate this to change significantly over the next 12 months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. Reconciliations between the statutory federal income tax rate and the effective income tax rate of income tax expense is as follows as of December 31:

​

​	​	​	​	​	​	​	​
​		2021		2020		2019
U.S. Federal statutory tax rate		21.0	%	21.0	%	21.0	%
State taxes		5.9		5.7		5.7	​
Research credit		0.9		0.7		0.8	​
Orphan drug credit		6.6		9.8		8.8	​
Other	​	(0.3)	​	0.4	​	(0.1)	​
Change in valuation allowance		(34.1)		(37.6)		(36.2)	​
Provision for 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 http://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
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-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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