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Income Taxes | 9 Months Ended | 12 Months Ended
--- | --- | ---
Sep. 30, 2022 | Dec. 31, 2021
Income Tax Disclosure [Abstract] |  |
Income Taxes |
9. | Income Taxes
The Company maintains deferred tax assets that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. These deferred tax assets include net operating loss carryforwards, research credits and temporary differences. In assessing the Company’s ability to realize deferred tax assets, management considers, on a periodic basis, whether it is more likely than not that some portion or all the deferred tax assets will not be realized. As such, management has determined that it is appropriate to maintain a valuation allowance against the Company’s deferred tax assets. The Company’s income tax (benefit) expense of $ (36.4 ) thousand and $ 10.0 thousand reflect effective tax rates of 0.7 % and 0.02 % for the nine months ended September 30 , 2022 and 2021 , respectively. The difference between the expected statutory federal tax rate of 21.0 % and the 0.7 % effective tax rate for the nine months ended September 30 , 2022 was primarily attributable to income tax expense associated with changes in a valuation allowance. |
12. | Income Taxes
Total loss before income taxes for the years ended December 31 , 2021 , 2020 and 2019 did not include a foreign component. The components of benefits for income taxes were as follows for the period ended December 31 (in thousands):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Current expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | 5 |  |  |  | (53 | ) |  |  | 2 |
|  |  | 5 |  |  |  | (53 | ) |  |  | 2 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
|  |  | — |  |  |  | — |  |  | $ | — |
Total |  | $ | 5 |  |  | $ | (53 | ) |  | $ | 2 |
Deferred income taxes reflect the net tax 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 components of the Company’s net deferred tax liabilities and related valuation allowance are as follows at December 31 (in thousands):
|  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets |  |  |  |  |  |  |  |
Interest expense limitations |  | $ | 12,205 |  |  | $ | 8,225 |
Tax credit carryforwards |  |  | 1,630 |  |  |  | 1,623 |
Net operating loss carryforwards |  |  | 39,714 |  |  |  | 31,732 |
Stock based compensation |  |  | 3,233 |  |  |  | 2,037 |
Operating lease liabilities |  |  | 404 |  |  |  | 510 |
Others |  |  | 1,753 |  |  |  | 2,285 |
Total Deferred Tax Assets |  |  | 58,939 |  |  |  | 46,412 |
Valuation allowance |  |  | (56,643 | ) |  |  | (43,514 | )
Total Deferred Tax Assets |  |  | 2,296 |  |  |  | 2,898 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Amortization of intangibles |  |  | (1,975 | ) |  |  | (2,486 | )
Other |  |  | (2 | ) |  |  | — |
Operating lease right-of-use assets |  |  | (319 | ) |  |  | (412 | )
Total Deferred Tax Liabilities |  | $ | (2,296 | ) |  | $ | (2,898 | )
The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that the deferred tax assets will not be realized. Due to such uncertainties surrounding the realization of the domestic deferred tax assets, the Company maintains a valuation allowance of $ 56.6 million and $ 43.5 million against its deferred tax assets as of December 31 , 2021 and 2020 , respectively. Realization of the deferred tax assets will b e primarily dependent upon the Company’s ability to generate sufficient taxable income prior to the expiration of its net operating losses. The reconciliation between U.S. federal income taxes at the statutory rate and the Company’s benefit from income taxes are as follows for the year ended December 31:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Statutory Federal Income Tax Rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State taxes, net of federal tax benefit |  |  | 2.8 | % |  |  | 2.7 | % |  |  | 5.0 | %
Debt discount and interest limitation |  |  | (10.1 | )% |  |  | 1.7 | % |  |  | 0.0 | %
In-process research and development |  |  | 0.0 | % |  |  | 0.0 | % |  |  | (11.0 | )%
Return to provision adjustments and carryback |  |  | 2.7 | % |  |  | (11.2 | )% |  |  | 0.0 | %
Others |  |  | (1.6 | )% |  |  | (0.8 | )% |  |  | (0.8 | )%
Change in valuation allowance |  |  | (14.8 | )% |  |  | (13.2 | )% |  |  | (14.2 | )%
Income Tax Benefit |  |  | 0.0 | % |  |  | 0.2 | % |  |  | 0.0 | %
As of December 31 , 2021 , the Company had net operating loss carryforwards of approximately $ 167.5 million for federal and $ 81.7 million for state income tax purposes, respectively. These may be used to offset future taxable income and will begin to expire in 2034 for state and 2035 for federal, except for $ 154.8 million of the federal net operating losses that have an indefinite carryforward period. Internal Revenue Code Section 382 rules apply to limit a corporation’s ability to utilize existing net operating loss and tax credit carryforwards once the corporation experiences an ownership change as defined in Section 382. For the years ended December 31, 2021, 2020, and 2019, there was no impact of such limitations on the Company’s income tax provision. The Company also has research and development and orphan drug credits of approximately $ 2.0 million for federal income taxes purposes. The federal credits may be used to offset future income tax and will begin to expire in 2035 . The Company is subject to taxation in the U.S., various state tax jurisdictions and various foreign tax jurisdictions. All of the Company’s tax years will remain open for three year for examination by the Federal and state tax authorities from the date of utilization of the net operating loss. The Company does not have any tax audits pending. The Company applies the accounting guidance for uncertainty in income taxes pursuant to ASC-740-10. Under ASC 740, the impact of an uncertain income tax position taken on a tax return must be recognized at the largest amount that is cumulatively “more likely than not” to be sustained upon audit by relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50 % likelihood of being sustained. The unrecognized tax benefits balances as of December 31, 2021, 2020 and 2019 and the related increases and decreases to the balances were immaterial. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. No interest and penalties have been recognized as of and for the periods ended December 31, 2021, 2020 and 2019. The Company believes that no material amount of liabilities for uncertain tax positions will expire within 12 months of December 31, 2021.

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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 -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -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) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 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 + Details
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