v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following is a summary of the domestic and foreign components of income before income taxes for the years ended December 31, 2022, 2021 and 2020:
Year Ended December 31,
(in thousands)202220212020
Domestic$11,216 $42,221 $31,667 
Foreign84 143 (12)
Total income before income taxes$11,300 $42,364 $31,655 
The following is a summary of the provision (benefit) for income taxes for the years ended December 31, 2022, 2021 and 2020:
 Year Ended December 31,
(in thousands)202220212020
Current
Federal$— $— $— 
State3,710 2,200 2,061 
Foreign185 267 68 
Deferred
Federal1,238 6,604 6,076 
State(111)119 155 
Foreign3 22 (42)
Provision for income taxes$5,025 $9,212 $8,318 
The following is reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2022, 2021 and 2020:
 Year Ended December 31,
 202220212020
Federal tax at statutory rate21.0 %21.0 %21.0 %
State taxes4.8 %2.3 %2.6 %
Change in valuation allowance1.0 %(0.1)%(3.5)%
Research and development credit(25.9)%(6.5)%(5.4)%
Orphan drug credit(0.9)%(0.1)%(1.3)%
Section 162(m) limitation9.4 %2.6 %1.7 %
Other tax rate changes1.7 %(0.2)%0.2 %
Uncertain tax positions24.5 %4.0 %4.7 %
Stock-based compensation5.8 %(1.8)%5.1 %
Settlements2.6 %— %— %
Other items0.5 %0.5 %1.2 %
Effective tax rate44.5 %21.7 %26.3 %
The following is a summary of the components of the Company’s net deferred tax assets and the related tax valuation allowance as of December 31, 2022 and 2021.
(in thousands)December 31, 2022December 31, 2021
Deferred tax assets
Net operating loss carryforwards$13,746 $35,509 
Stock-based compensation4,930 4,846 
Accrued expenses1,469 1,409 
Allowance for returns and credit losses1,560 1,142 
Research and development and orphan drug credit carryforwards42,402 39,975 
Capitalized research and development expenses16,990 — 
Other3,798 3,081 
Total deferred tax assets84,895 85,962 
Deferred tax liabilities
Intangible assets(1,924)(1,919)
Other(1,796)(2,140)
Total deferred tax liabilities(3,720)(4,059)
Deferred tax assets, net81,175 81,903 
Less: Valuation allowance7,136 7,025 
Net deferred tax assets$74,039 $74,878 
The following is a summary of changes in the Company’s tax valuation allowance for the years ended December 31, 2022, 2021 and 2020:
(in thousands)
Balance at
Beginning
of Year
AdditionsReductions
Balance at
End of
Year
Year Ended
December 31, 2022$7,025 $111 $— $7,136 
December 31, 20217,051 — (26)7,025 
December 31, 20208,155 — (1,104)7,051 
The Company has NOL and other tax credit carryforwards in several jurisdictions. As of December 31, 2022, the Company has $6.1 million of deferred tax assets relating to U.S. federal NOL carryforwards, along with deferred tax assets of $17.9 million and $24.5 million related to U.S. federal research and development credits and orphan drug credits, respectively. These tax attributes will begin to expire in 2035, 2024 and 2030, respectively. In addition, the Company has $7.7 million of
deferred tax assets relating to other U.S. NOL carryforwards, which primarily relate to the District of Columbia. NOLs for the District of Columbia will begin to expire in 2032 and state NOLs will begin to expire in 2029.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
Year Ended December 31,
(in thousands)202220212020
Unrecognized tax benefits at the beginning of the year$12,935 $11,233 $9,741 
Increases (decreases) related to prior year tax positions(75)122 (121)
Increases related to current year tax positions2,895 1,580 1,613 
Settlements(270)— — 
Unrecognized tax benefits at the end of the year$15,485 $12,935 $11,233 
The amount of uncertain tax benefits that, if recognized, would impact the effective tax rate is $15.5 million. Unrecognized tax benefits are not expected to change materially over the next 12 months. Generally, the tax years 2019 through 2021 remain open to examination by the major taxing jurisdiction to which the Company is subject. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, or state or foreign tax authorities, to the extent utilized in a future period. As of December 31, 2022, the Company is not under examination by any federal or state tax jurisdiction.
Certain tax attributes of the Company, including NOLs and credits, would be subject to a limitation should an ownership change as defined under the Internal Revenue Code of 1986, as amended (IRC), Section 382, occur. The limitations resulting from a change in ownership could affect the Company’s ability to utilize its NOLs and credit carryforward (tax attributes). Ownership changes occurred in the years ending December 31, 2014 and December 31, 2008. The Company believes that the ownership changes in 2014 and 2008 will not impact its ability to utilize NOL and credit carryforwards; however, future ownership changes may cause the Company’s existing tax attributes to have additional limitations.