XML 72 R12.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Taxes | 6. Income Taxes For the years ended December 31, 2013, 2012 and 2011 there was no current provision for federal or state income taxes due to the taxable losses which resulted or use of legacy NOL carryforwards. The significant components of the Company’s deferred tax assets (liabilities) were as follows:
|  | December 31, |
|  | 2013 |  |  | 2012 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Federal U.S. net operating loss carryforward |  | $ | 36,561,195 |  |  | $ | 35,330,167 |
State net operating loss carryforward |  |  | 3,315,514 |  |  |  | 3,521,722 |
Research and development credit, net |  |  | 3,785,612 |  |  |  | 2,777,899 |
Orphan drug credit, net |  |  | 19,883,076 |  |  |  | 19,039,613 |
Deferred rent |  |  | 5,132,458 |  |  |  | 5,218,002 |
Deferred revenue |  |  | 8,216,695 |  |  |  | 9,379,064 |
Depreciation |  |  | 1,438,477 |  |  |  | 1,247,772 |
Other |  |  | 1,438,870 |  |  |  | 1,575,782 |
Gross deferred income tax assets |  |  | 79,771,897 |  |  |  | 78,090,021 |
Valuation allowance |  |  | (79,376,945 | ) |  |  | (78,090,021 | )
Net deferred income tax assets |  |  | 394,952 |  |  |  | — |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Other |  |  | (394,952 | ) |  |  | — |
Gross deferred income tax liabilities |  |  | (394,952 | ) |  |  | — |
Net deferred income tax asset/(liability) |  | $ | — |  |  | $ | — |
The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management considers (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary difference and carryforwards; (iii) taxable income in prior carryback years if carryback is permitted under applicable tax law; and (iv) tax planning strategies. The Company’s net deferred income tax asset is not more likely than not to be utilized due to the lack of sufficient sources of future taxable income and cumulative book losses which have resulted over the years. The net increase in the valuation allowance in 2013 is due to the fact the Company generated research and development and orphan drug credits and NOL carryforwards which increased the net deferred tax asset. The increase in the credits and NOL carryforwards were offset by the decrease in deferred revenue and resulted in a net current year increase to the valuation allowance. The Company has reported book losses from inception through December 31, 2010. The NOL carryforwards of approximately $104.8 million for U.S. federal and approximately $60.3 million for state will expire in various years beginning in 2023 through 2033. In addition, the Company has U.S. federal tax credits of $23.7 million which will expire in various years beginning in 2020 through 2033. The use of the Company’s U.S. federal NOL and tax credit carryforwards in future years are restricted due to changes in the Company’s ownership and tax attributes acquired by the Company in a purchase. As of December 31, 2013, $8.5 million of the Company’s NOLs are limited for use over the years 2014 – 2027 in which a range of such amounts could be utilized on an annual basis of $0.2 million to $1.4 million. The remaining $96.3 million of NOLs is not limited and can be offset against future taxable income. Additionally, approximately $1.8 million of NOLs will be recognized as a benefit through additional-paid-in-capital when realized. Further, despite the NOL and credit carryforwards, the Company may have a future tax liability due to an alternative minimum tax or state tax requirements in which net operating losses do not exist. The reconciliation of the reported estimated income tax benefit to the amount that would result by applying the U.S. federal statutory tax rate to the net income is as follows:
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
United States federal tax at statutory rate |  | $ | (91,293 | ) |  | $ | 2,926,615 |  |  | $ | 2,350,992 |
State taxes (net of federal benefit) |  |  | 609,476 |  |  |  | 1,460,289 |  |  |  | 1,480,185 |
Deferred income tax adjustments |  |  | (855,130 | ) |  |  | (512,375 | ) |  |  | — |
Deferred state blended rate adjustments |  |  | (344,178 | ) |  |  | — |  |  |  | — |
Research credit, net |  |  | (225,605 | ) |  |  | — |  |  |  | — |
Orphan drug credit, net |  |  | (843,463 | ) |  |  | (4,895,671 | ) |  |  | (7,056,607 | )
Other permanent items |  |  | 2,931 |  |  |  | 7,627 |  |  |  | 4,696 |
Equity-based compensation |  |  | 241,467 |  |  |  | 279,165 |  |  |  | 725,811 |
Fair value adjustment of preferred stock warrant liability |  |  | 218,872 |  |  |  | (52,743 | ) |  |  | (496,208 | )
Change in valuation allowance |  |  | 1,286,923 |  |  |  | 787,093 |  |  |  | 2,991,131 |
Income tax expense/(benefit) |  | $ | — |  |  | $ | — |  |  | $ | — |
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Beginning balance |  | $ | 1,592,357 |  |  | $ | 1,533,986 |  |  | $ | 1,246,025 |
Increases/(decreases) for current year tax positions |  |  | 115,502 |  |  |  | 58,371 |  |  |  | 287,961 |
Increases/(decreases) for prior year tax positions |  |  | — |  |  |  | — |  |  |  | — |
Decreases as a result of expiration of statute of limitations |  |  | — |  |  |  | — |  |  |  | — |
Ending balance |  | $ | 1,707,859 |  |  | $ | 1,592,357 |  |  | $ | 1,533,986 |
As of December 31, 2013 and 2012, of the total gross unrecognized tax benefits, approximately $1.2 million and $1.1 million would favorably impact the Company’s effective income tax rate, respectively. Although, due to the Company’s determination that the deferred income tax asset would not more likely than not be realized, a valuation allowance would be recorded, therefore, zero net impact would result within the Company’s effective income tax rate. The Company’s uncertain income tax position liability has been recorded to deferred income taxes to offset the tax attribute carryforward amounts. For the years ended December 31, 2013, 2012 and 2011, the Company has not recognized any interest or penalties related to the uncertain income tax positions due to the fact such position is related to tax attribute carryforwards which have not yet been utilized. The Company does not expect its unrecognized income tax position to significantly decrease within the next twelve months. The Company’s U.S. Federal and state income tax returns from 2001 to 2012 remain subject to examination by the tax authorities. The Company’s 2001 through 2009 years remain open for examination, even though the statute of limitations has expired, due to the net operating losses and credits carried forward for use in prospective years.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration