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Income taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes The loss from operations before tax (expense) benefit consisted of the following for the years ended December 31, 2016, 2015, and 2014:
|  | 2016 |  | 2015 |  | 2014
Domestic |  | (61,446 | ) |  | (50,944 | ) |  | (46,501 | )
Foreign |  | (80,095 | ) |  | (119,018 | ) |  | (51,945 | )
Total |  | (141,541 | ) |  | (169,962 | ) |  | (98,446 | )
The Income Tax Provision consisted of the following for the years ended December 31, 2016, 2015 and 2014:
|  | 2016 |  | 2015 |  | 2014
Current: |  |  |  |  |  |  |  |
U.S. Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
U.S. State and Local |  | (2 | ) |  | (2 | ) |  | 4,890 |
Foreign |  | (766 | ) |  | (483 | ) |  | (197 | )
Deferred: |  |  |  |  |  |
U.S. Federal |  | 199 |  |  | — |  |  | — |
U.S. State and Local |  | — |  |  | — |  |  | — |
Foreign |  | — |  |  | — |  |  | — |
Total Tax (Expense) Benefit |  | $ | (569 | ) |  | $ | (485 | ) |  | $ | 4,693 |
A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows:
|  | December 31,
|  | 2016 |  | 2015 |  | 2014
Federal income tax (benefit) at statutory rate |  | 34.00 | % |  | 34.00 | % |  | 34.00 | %
State income tax benefit, net of federal benefit |  | 3.05 |  |  | (0.43 | ) |  | (1.60 | )
Permanent differences |  | (3.70 | ) |  | (6.61 | ) |  | (0.93 | )
NOL IRC Section 382 Limitations |  | — |  |  | — |  |  | (21.53 | )
Research and development |  | 16.66 |  |  | 19.50 |  |  | 3.78 |
Increase to valuation allowance |  | (30.72 | ) |  | (20.87 | ) |  | 9.17 |
Foreign tax rate differential |  | (19.84 | ) |  | (24.06 | ) |  | (18.14 | )
Benefit allocated from other comprehensive income |  | 0.14 |  |  | — |  |  | — |
Other |  | 0.01 |  |  | (1.82 | ) |  | 0.01 |
Effective income tax rate |  | (0.40 | )% |  | (0.29 | )% |  | 4.76 | %
The significant components of the Company’s deferred tax assets and liabilities at December 31, 2016 and 2015 are as follows:
|  | 2016 |  | 2015
Deferred tax assets: |  |  |  |  |  |
Accrued Expense |  | $ | 849 |  |  | $ | 848 |
Amortization |  | 46 |  |  | 57 |
Depreciation |  | 2,968 |  |  | 2,631 |
Federal tax credits |  | 74,475 |  |  | 50,850 |
State tax credits |  | 4,996 |  |  | 3,356 |
Federal net operating losses |  | 80,061 |  |  | 75,200 |
State net operating losses |  | 9,672 |  |  | 8,848 |
Capitalized research and development costs |  | 7,248 |  |  | 8,917 |
Other |  | 22,125 |  |  | 10,345 |
Total gross deferred tax assets |  | 202,440 |  |  | 161,052 |
Less valuation allowance |  | (183,015 | ) |  | (139,584 | )
Total deferred tax assets, net of valuation allowance |  | $ | 19,425 |  |  | $ | 21,468 |
Deferred tax liabilities: |  |  |  |  |  |
Convertible debt |  | $ | (19,190 | ) |  | $ | (21,468 | )
Gain on marketable securities |  | $ | (235 | ) |  | $ | — |
Total gross deferred tax assets |  | (19,425 | ) |  | (21,468 | )
Net deferred tax assets (liabilities) |  | $ | — |  |  | $ | — |
At December 31, 2016 and 2015, the Company recorded a full valuation allowance against its net deferred tax assets of approximately $183.0 million and $139.6 million, respectively. The change in the valuation allowance during the years ended December 31, 2016 and 2015 was approximately $43.4 million and $16.3 million, respectively. A full valuation allowance has been recorded since, in the judgment of management, these assets are not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences and carryforwards become deductible or are utilized. As of December 31, 2016, the Company has approximately $285.8 million and $213.2 million of federal and state net operating loss carryforwards, respectively. As a result of realization requirements of the guidance issued by the FASB, certain deferred tax assets that arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting are excluded from the total deferred tax assets. As of December 31, 2016, approximately $50.4 million of the federal net operating loss carryforwards are related to the exercise of employee stock options and vesting of restricted stock, and the Company will record a tax benefit of approximately of $17.1 million through capital in excess of par value if such losses are realized. As of December 31, 2016, research and development credit carryforwards for federal and state purposes are approximately $14.4 million and $7.3 million, respectively. In addition, the Orphan Drug Credit Carryover available as of December 31, 2016 is approximately $60.1 million. The federal net operating loss carryforwards begin to expire in 2021, while the federal credit carryforwards begin to expire in 2019. State net operating loss carryforwards begin to expire in 2030, and the state credit carryforwards began to expire in 2016. Sections 382 and 383 of the Internal Revenue Code of 1986 subject the future utilization of net operating losses and certain other tax attributes, such as research and development tax credits, to an annual limitation in the event of certain ownership changes, as defined. The Company has undergone an ownership change and has determined that a “change in ownership” as defined by IRC Section 382 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, did occur in June of 2013. Accordingly, about $231.5 million of the Company’s NOL carryforwards are limited and the Company can only use $16.7 million for the first five years from the ownership change and $5.7 million per year going forward. Therefore, $169.2 million of the NOL’s will be freed up over the next 20 years and $62.3 million are expected to expire unused which are not included in the deferred tax assets listed above. In summary, there are $285.8 million of NOLs available, out of which $169.2 million are limited by IRC Section 382. At December 31, 2016, there is $175.1 million available for immediate use and an additional $16.7 million will free up in 2017. The income tax expense and benefit for the years ended December 31, 2016 and 2015 differed from the amounts computed by applying the U.S. federal income tax rate of 34% to loss before tax expense and benefit as a result of foreign taxes, nondeductible expenses, tax credits generated, true up of net operating loss carryforwards, and increases in the Company’s valuation allowance. The Company applies the elements of FASB ASC 740-10 regarding accounting for uncertainty in income taxes. This clarifies the accounting for uncertainty in income taxes recognized in financial statements and required impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of December 31, 2016 the Company did not have any unrecognized tax benefits and has not accrued any interest or penalties through 2016. The Company does not expect to have any unrecognized tax benefits within the next twelve months. The Company’s policy is to recognize interest and penalties related to tax matters within the income tax provision. Tax years beginning in 2013 are generally subject to examination by taxing authorities, although net operating losses from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used. Subsequent to year end, the Company received a notice of examination from the United States Internal Revenue Service for tax year 2014 to commence in 2017. As the examination has not yet begun, the timing and ultimate resolution of is uncertain. For all years through December 31, 2016, the Company generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company’s research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the deferred tax asset established for the research and development credit carryforwards and the valuation allowance. U.S. federal income taxes have not been provided on undistributed earnings of our international subsidiaries as it is our intention to reinvest any earnings into the respective subsidiaries. It is not practicable to estimate the amount of tax that might be payable if some or all of such earnings were to be repatriated, and the amount of foreign tax credits that would be available to reduce or eliminate the resulting U.S. income tax liability. As of December 31, 2016 and December 31, 2015 there are no undistributed earnings.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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