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SEC Filings

10-K
MYOKARDIA INC filed this Form 10-K on 03/08/2018
Entire Document
 

 

10. Related Party Transactions

In September 2012, the Company began receiving consulting and management services pursuant to an unwritten agreement with Third Rock Ventures, which owned 85% of the Company’s redeemable convertible preferred stock outstanding at December 31, 2014 and continues to be the Company’s largest shareholder as of December 31, 2017. In addition, Kevin Starr, a director of the Company through December 31, 2017, is a partner of Third Rock Ventures. The Company incurred consulting fees with Third Rock Ventures in the ordinary course of business, which were transacted at arms-length, totaling $58,000 and $43,000 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, amounts due to Third Rock Ventures totaled $5,000 and $9,000, respectively. Kevin Starr resigned from the Board of Directors effective March 6, 2018.

 

 

11. Employee Benefit Plan

The Company sponsors a 401(k) Plan, which stipulates that eligible employees can elect to contribute to the 401(k) Plan, subject to certain limitations of eligible compensation.

 

 

12. Income Taxes

For each of the years ended December 31, 2017, 2016 and 2015, the effective income tax rate and tax provision from continuing operations were zero, primarily attributable to losses generated which are not more likely than not to be realized.

The following is the reconciliation between the statutory federal income tax rate and the Company’s effective tax rate:  

 

 

 

Year Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Federal statutory income tax rate

 

 

34.0

%

 

 

34.0

%

 

 

34.0

%

State taxes (tax effected)

 

 

7.5

 

 

 

7.9

 

 

 

7.2

 

Non-deductible expenses and other

 

 

2.4

 

 

 

(10.2

)

 

 

 

Research and development credits

 

 

7.4

 

 

 

14.1

 

 

 

3.0

 

Tax Act – net deferred tax rate change

 

 

(29.0

)

 

 

 

 

 

 

Change in valuation allowance

 

 

(22.3

)

 

 

(45.8

)

 

 

(44.2

)

Total

 

 

%

 

 

%

 

 

%

 

As of December 31, 2017, and 2016, the components of the Company’s deferred tax assets are as follows (in thousands):

 

 

 

As of December 31,

 

 

 

2017

 

 

2016

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Net operating loss carryforwards

 

$

23,022

 

 

$

23,937

 

Deferred revenue

 

 

6,296

 

 

 

 

Start-up costs

 

 

1,354

 

 

 

2,093

 

Research and development credits carryforwards

 

 

8,631

 

 

 

4,450

 

Depreciation

 

 

(457

)

 

 

(527

)

Other

 

 

2,217

 

 

 

865

 

Total deferred tax assets

 

 

41,063

 

 

 

30,818

 

Less: valuation allowance

 

 

(41,063

)

 

 

(30,818

)

Net deferred tax assets

 

$

 

 

$

 

 

In December 2017, Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 34% to 21% effective for tax years beginning after December 21, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017.

The Tax Act reduces the corporate tax rate to 21% effective January 1, 2018. Consequently, the Company has recorded a decrease in net deferred tax assets of $13.3 million, with a corresponding adjustment to the valuation allowance of $13.3 million, for the year ended December 31, 2017. The state and foreign deferred tax effect on federal deferred tax assets has been calculated using 21% rather than the previous 34% federal tax rate. The increase in deferred tax assets has been offset against an increase to the valuation allowance.

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