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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Total income (loss) before income taxes summarized by region were as follows (in thousands):
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
United States |  | $ | 248,918 |  |  | $ | 248,071 |  |  | $ | 130,427 |
Foreign |  | — |  |  | 447 |  |  | (1,125) |
Net income before income taxes |  | $ | 248,918 |  |  | $ | 248,518 |  |  | $ | 129,302 |
Significant components of our net deferred tax assets/(liabilities) were as follows (in thousands).
|  | December 31,
|  | 2022 |  | 2021
Deferred tax assets: |  |  |  |
Net operating loss carryforwards |  | $ | 32,887 |  |  | $ | 42,182 |
Deferred revenue |  | 837 |  |  | 909 |
Research and development and orphan drug credits |  | 96,133 |  |  | 109,041 |
Share-based compensation |  | 6,353 |  |  | 1,814 |
ASC 842 lease liability |  | 2,480 |  |  | 600 |
Capitalized research expense |  | 10,168 |  |  | — |
Transaction related expense |  | 2,354 |  |  | — |
Inventory related reserves |  | 18,395 |  |  | — |
Interest expense limitation |  | — |  |  | — |
Other, net |  | 3,054 |  |  | 3,449 |
|  | $ | 172,661 |  |  | $ | 157,995 |
Valuation allowance for deferred tax assets |  | (707) |  |  | (500) |
Deferred tax assets, net of valuation allowance |  | $ | 171,954 |  |  | $ | 157,495 |
Deferred tax liabilities: |  |  |  |
Non-deductible book amortization |  | (115,578) |  |  |
Depreciation |  | (2,559) |  |  | (1,185) |
Convertible note |  | — |  |  | (17) |
ASC 842 right of use asset |  | (9,061) |  |  | (426) |
Other, net |  | (330) |  |  | (433) |
Total deferred tax liabilities |  | $ | (127,528) |  |  | $ | (2,061) |
Net deferred tax asset |  | $ | 44,426 |  |  | $ | 155,434 |
A valuation allowance of $0.7 million and $0.5 million has been established to offset the net deferred tax assets as of December 31, 2022 and 2021, respectively, as realization of such assets is uncertain. On a periodic basis, we reassess the valuation allowance of our DTAs, weighing all positive and negative evidence, to assess if it is more-likely-than-not that some or all of our DTAs will be realized. In 2021, we have demonstrated profitability and cumulative pretax income and are forecasting income growth. After assessing both the positive and negative evidence, we determined that it was more likely than not that our DTAs would be realized and released the valuation allowance in 2021. On May 24, 2022, we acquired the outstanding shares of Antares Pharma Inc. This transaction was treated as a non-taxable acquisition, we have increased our deferred tax liabilities by approximately $119.7 million related to acquired intellectual property and a step-up to the value of inventory the amortization of which will not be tax deductible. Income tax (benefit) expense was comprised of the following components (in thousands):
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Current - federal |  | $ | 6,157 |  |  | $ | (9) |  |  | $ | (11) |
Current - state |  | 2,525 |  |  | 1,251 |  |  | 228 |
Deferred - federal |  | 44,757 |  |  | (117,925) |  |  | — |
Deferred - state |  | (6,650) |  |  | (37,509) |  |  | — |
|  | $ | 46,789 |  |  | $ | (154,192) |  |  | $ | 217 |
The provision for income taxes on earnings subject to income taxes differs from the statutory federal income tax rate due to the following:
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Federal income tax expense (benefit) at 21% |  | 21.00 | % |  | 21.00 | % |  | 21.00 | %
State income tax expense (benefit), net of federal income tax impact |  | 0.82 | % |  | 2.67 | % |  | (1.59) | %
(Decrease) increase in valuation allowance |  | (0.39) | % |  | (84.92) | % |  | 34.59 | %
Worthless stock deduction of international subsidiary |  | — | % |  | — | % |  | (52.07) | %
Foreign income subject to tax at other than federal statutory rate |  | — | % |  | 0.02 | % |  | 0.16 | %
Share-based compensation |  | (0.66) | % |  | (2.50) | % |  | (1.89) | %
Executive compensation limitation |  | 2.61 | % |  | 2.32 | % |  | 1.61 | %
Non-deductible expenses and other |  | (0.40) | % |  | 0.54 | % |  | (1.64) | %
Foreign-derived intangible income |  | (5.06) | % |  | (1.18) | % |  | — | %
Transaction costs |  | 0.88 | % |  | — | % |  | — | %
|  | 18.80 | % |  | (62.05) | % |  | 0.17 | %
At December 31, 2022, our unrecognized tax benefit and uncertain tax positions were $19.5 million, which will impact the effective tax rate when resolved. Of the unrecognized tax benefits, we do not expect any significant changes to occur in the next 12 months. Interest and/or penalties related to uncertain income tax positions are recognized by us as a component of income tax expense. For the years ended December 31, 2022, 2021 and 2020, we recognized an immaterial amount of interest and penalties. The following table summarizes the activity related to our unrecognized tax benefits (in thousands):
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Gross unrecognized tax benefits at beginning of period |  | $ | 17,692 |  |  | $ | 19,167 |  |  | $ | 21,483 |
Increases in tax positions for prior years |  | — |  |  | 21 |  |  | 41 |
Decreases in tax positions for prior years and lapse in statue of limitations |  | (1,148) |  |  | (1,496) |  |  | (2,357) |
Increases in tax positions related to business acquisition |  | 2,151 |  |  | — |  |  | — |
Increases in tax positions for current year |  | 787 |  |  | — |  |  | — |
Gross unrecognized tax benefits at end of period |  | $ | 19,482 |  |  | $ | 17,692 |  |  | $ | 19,167 |
At December 31, 2022, we had federal, California and other state tax net operating loss carryforwards of approximately $31.2 million, $237.4 million and $63.4 million, respectively. The California and Minnesota net operating loss carryforwards begin to expire in 2028 and 2022, respectively. As a result of the acquisition of Antares, we acquired federal and Minnesota research and development credits of approximately $7.4 million and $0.72 million, respectively. We expect to be able to fully utilize these attributes without limitation. At December 31, 2022, we had federal, California and Minnesota research and development tax credit carryforwards of approximately $30.8 million, $17.0 million and $0.7 million, respectively. The federal research and development tax credits will begin to expire in 2030 unless previously utilized. The California research and development tax credits will carryforward indefinitely until utilized. The Minnesota research and development credit will begin to expire in 2023 unless previously utilized. Additionally, we had Orphan Drug Credit carryforwards of $70.0 million which will begin to expire in 2034. Pursuant to Internal Revenue Code Section 382, the annual use of the net operating loss carryforwards and research and development tax credits could be limited by any greater than 50% ownership change during any three year testing period. As a result of any such ownership change, portions of our net operating loss carryforwards and research and development tax credits are subject to annual limitations. We completed an updated Section 382 analysis regarding the limitation of the net operating losses and research and development credits as of December 31, 2020. Based upon the analysis, we determined that ownership changes occurred in prior years; however, the annual limitations on net operating loss and research and development tax credit carryforwards will not have a material impact on the future utilization of such carryforwards. We do not provide for U.S. income taxes on the undistributed earnings of our foreign subsidiary as it is our intention to utilize those earnings in the foreign operations for an indefinite period of time. At December 31, 2022 and 2021, there were no undistributed earnings in foreign subsidiaries. We are subject to taxation in the U.S. and in various state and foreign jurisdictions. Our tax years for 2008 and forward are subject to examination by the U.S. and California tax authorities due to the carryforward of unutilized net operating losses and research and development credits.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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