Entity information:

• Entity registrant name: AGENUS INC
• CIK: 0001098972
• SEC filing page: http://www.sec.gov/Archives/edgar/data/1098972/000156459018006093/0001564590-18-006093-index.htm
• XBRL Instance: http://www.sec.gov/Archives/edgar/data/1098972/000156459018006093/agen-20171231.xml
• XBRL Cloud Viewer: https://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/1098972/000156459018006093/agen-20171231.xml
• EDGAR Dashboard: https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0001098972
• Generator: Donnelley Financial Solutions
• Total assets: 138,402,024
• Income tax expense (benefit):
• Found reconcilation from statutory to effective rates: True
• Found income tax policy: Coming soon!

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(8) Income Taxes

We are subject to taxation in the U.S. and in various state, local, and foreign jurisdictions. We remain subject to examination by U.S. Federal, state, local, and foreign tax authorities for tax years 2014 through 2017. With a few exceptions, we are no longer subject to U.S. Federal, state, local, and foreign examinations by tax authorities for the tax year 2013 and prior. However, net operating losses from the tax year 2013 and prior would be subject to examination if and when used in a future tax return to offset taxable income. Our policy is to recognize income tax related penalties and interest, if any, in our provision for income taxes and, to the extent applicable, in the corresponding income tax assets and liabilities, including any amounts for uncertain tax positions.

As of December 31, 2017, we had available net operating loss carryforwards of $809.1 million and $279.3 million for Federal and state income tax purposes, respectively, which are available to offset future Federal and state taxable income, if any, and expire between 2018 and 2037. The Company adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, on January 1, 2017, upon which the net operating loss carryforward deferred tax assets were increased by the excess tax benefits of $0.3 million (tax-effected) with a corresponding increase to the Company’s valuation allowance. Our ability to use these net operating losses is limited by change of control provisions under Internal Revenue Code Section 382 and may expire unused. In addition, we have $8.9 million and $13.4 million of Federal and state research and development credits, respectively, available to offset future taxable income. These Federal and state research and development credits expire between 2018 and 2036 and 2018 and 2032, respectively. Additionally, we have $0.2 million of state investment tax credits, available to offset future taxable income and expire between 2018 and 2020. We also have foreign income tax net operating loss carryforwards of approximately $54.6 million which are available to offset future foreign taxable income, if any, and expire between 2018 and 2024.  The potential impacts of such provisions are among the items considered and reflected in management’s assessment of our valuation allowance requirements.

The tax effect of temporary differences and net operating loss and tax credit carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2017 and 2016 are presented below (in thousands).

 

 

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating loss and tax credit carryforwards can be utilized or the temporary differences become deductible. We consider projected future taxable income and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, we will need to generate future taxable income sufficient to utilize net operating losses prior to their expiration. Based upon our history of not generating taxable income due to our business activities focused on product development, we believe that it is more likely than not that deferred tax assets will not be realized through future earnings. Accordingly, a valuation allowance has been established for deferred tax assets which will not be offset by the reversal of deferred tax liabilities. The valuation allowance on the deferred tax assets decreased by $63.1 million during the year ended December 31, 2017, which primarily related to the “Tax Cuts and Jobs Act”, which reduced the federal tax rate from 34% to 21%, and the valuation allowance increased by $35.3 during the year ended December 31, 2016.

Income tax benefit was nil for the years ended December 31, 2017 and 2016, and $5.4 million for the year ended December 31, 2015. The income tax benefit of $5.4 million for the year ended December 31, 2015 was entirely related to a deferred tax benefit recognized as a result of deferred tax liabilities recorded in connection with our acquisitions of PhosImmune and certain assets from XOMA. Income taxes recorded differed from the amounts computed by applying the U.S. Federal income tax rate of 34% to loss before income taxes as a result of the following (in thousands).

 

 

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):

 

 

These unrecognized tax benefits would all impact the effective tax rate if recognized. There are no positions which we anticipate could change within the next twelve months.