Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.  A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

As a result of the Company’s cumulative losses, management has concluded that a full valuation allowance against the Company’s net deferred tax assets is appropriate. The Company has recorded a net deferred tax liability of $65,195,000 as of June 30, 2015 and December 31, 2014 as it has not considered the deferred tax liability, which is related to acquired in-process research and development, to be a future source of taxable income in evaluating the need for a valuation allowance against its deferred tax assets due to the in-process research and development asset being considered an indefinite-lived intangible asset.

The Company’s effective income tax rate was -1.99% and -0.27% for the three and six months ended June 30, 2015.  The primary driver of the effective tax rate is the valuation allowance offsetting the Company’s net deferred tax assets and the elimination of income tax expense recorded in other comprehensive income that is related to unrealized gains on marketable securities no longer held by the Company.  The Company’s effective tax rate was 0% for the three and six-months ended June 30, 2014.  The primary driver of the effective tax rate was the full valuation allowance offsetting the Company’s net deferred tax assets.

FASB ASC Topic 740, Income Taxes (“ASC 740”) prescribes a recognition threshold and a measurement criterion for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.  For those benefits to be recognized, a tax position must be considered more likely than not to be sustained upon examination by taxing authorities.  The Company records interest and penalties related to uncertain tax positions as a component of the provision for income taxes.  As of June 30, 2015 and June 30, 2014, the Company has no unrecognized tax benefits.

The Company currently files income tax returns in the United States federal and various state jurisdictions.  The Company is not currently under examination in any jurisdiction.

The federal Income tax expense for the three and six months ended June 30, 2015 was $52,000.