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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
For the years ended December 31, 2021, 2020 and 2019 there was no provision for income taxes due to taxable losses generated, fully offset by a valuation allowance.
The significant components of the Company's deferred income tax assets (liabilities) were as follows (in thousands):
December 31,
20212020
Deferred income tax assets:
Federal U.S. net operating loss carryforward$175,802 $136,086 
State net operating loss carryforward49,965 37,465 
Research and development credit, net60,514 50,271 
Orphan drug credit, net24,858 23,409 
Operating lease liabilities7,008 8,048 
Deferred revenue1,245 3,132 
Other16,727 14,285 
Gross deferred income tax assets336,119 272,696 
Valuation allowance(327,595)(263,403)
Net deferred income tax assets8,524 9,293 
Deferred income tax liabilities:
Depreciation(1,688)(2,123)
Operating lease ROU assets(4,576)(5,316)
Prepaid expenditures(2,260)(1,854)
Gross deferred income tax liabilities(8,524)(9,293)
Net deferred income tax asset/(liability)$— $— 
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.
As of December 31, 2021, the Company has U.S. federal and state net operating loss (NOL) carryforwards of approximately $837.0 million. Of these NOLs, $238.0 million will expire in various years beginning in 2025 through 2037. $599.0 million of NOLs were generated post December 31, 2017 and carryforward indefinitely. In addition, the Company has U.S. federal tax credits of $81.0 million which will expire in various years beginning in 2022 through 2041.
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 through the Company's acquisitions. As of December 31, 2021, $13.5 million of the Company's U.S. Federal NOLs are limited for use over the years 2022 – 2028 in which a range of such amounts could be utilized on an annual basis of $0.2 million to $1.4 million. The remaining $824.0 million of NOLs is not limited and can be offset against future taxable income, subject to certain limitations for newly enacted tax legislation.
The reconciliation of the reported estimated income tax benefit to the amount that would result by applying the U.S. federal statutory tax rate to the net income is as follows (in thousands):
Year Ended December 31,
202120202019
United States federal tax at statutory rate$(42,445)$(27,245)$(31,880)
State taxes (net of federal benefit)(12,806)(8,100)(9,524)
Deferred income tax adjustments473 344 2,004 
Research credit, net(10,243)(14,691)(5,830)
Orphan drug credit, net(1,449)(528)(301)
Other permanent items1,199 1,156 1,206 
Equity-based compensation1,079 554 1,889 
Change in valuation allowance64,192 48,510 42,436 
Income tax expense/(benefit)$— $— $— 
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
Year Ended December 31,
202120202019
Beginning balance$6,126 $4,950 $4,318 
Increases for current year tax positions965 839 637 
Increases/(decreases) for prior year tax positions106 337 (5)
Ending balance$7,197 $6,126 $4,950 
As of December 31, 2021 and 2020, of the total gross unrecognized tax benefits, approximately $7.2 million and $6.1 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, 2021, 2020 and 2019, 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 2002 forward remain open to examination due to the carryover of unused income tax credits, and from 2004 forward due to the carryover of unused net operating losses.