(6) Income Taxes

The Company’s effective income tax rate differs from the U.S. statutory rate primarily due to an increase in the valuation allowance and expense recorded on the equity forfeiture.

For the three-month periods ended September 30, 2022 and 2021, the Company recorded a provision of $1.4 million and a benefit of $3.1 million for income taxes, respectively. The effective income tax rates for the Company for the three-month periods ended September 30, 2022 and 2021 were (11.3)% and 10.2%, respectively. The variances in the effective tax rates for the three-month period ended September 30, 2022, as compared to the three-month period ended September 30, 2021, was primarily due to an increase in the existing valuation allowance recorded on the Company’s deferred tax assets for which no tax benefit can be recognized, which increase includes the valuation allowance due to a deemed ownership change described below.

For the nine-month periods ended September 30, 2022 and 2021, the Company recorded a provision from income taxes of $28.2 million and a benefit of $6.8 million, respectively. The effective income tax rates for the nine-month periods ended September 30, 2022 and 2021 were (49.69)% and 7.53%, respectively. The variance in the effective tax rates for the nine-month period ended September 30, 2022 as compared to the nine-month period ended September 30, 2021 was due primarily to forfeitures of equity of which no tax deduction is recorded and an increase in the existing valuation allowance recorded on the Company’s deferred tax assets for which no tax benefit can be recognized, which increase includes the valuation allowance due to a deemed ownership change described below.

The Internal Revenue Code of 1986 contains certain provisions that can limit a taxpayer's ability to utilize net operating loss and tax credit carryforwards in any given year resulting from cumulative changes in ownership interests in excess of 50 percent over a three-year period (“ownership change”). In the event of such a deemed ownership change, Section 382 imposes an annual limitation on pre-ownership change tax attributes. In the nine-month period ended September 30, 2022, the Company experienced an ownership change under Section 382 due to cumulative changes in the Company’s ownership over three years. Accordingly, the Company's ability to utilize NOL’s and tax credit carryforwards attributable to periods prior to the deemed ownership change is subject to the annual limitation. As a result of the impact of this limitation, the Company recorded a cumulative tax provision of approximately $25.0 million, which is reflected in the increase to the valuation allowance on deferred tax assets in the nine-month period ended September 30, 2022, with respect to the Section 382 impact.

The Company continues to evaluate the realizability of its deferred tax assets on a quarterly basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any changes to the valuation allowance or deferred tax assets and liabilities in the future would impact the Company's income taxes.

The Company has ongoing state examinations in Massachusetts and New Jersey which cover multiple years. There have been no proposed adjustments at this stage of the examination. The Minnesota examination was finalized during the second quarter of 2022 for years 2018 and 2019 with no adjustments.