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Income taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income taxes

13. Income taxes

The loss from operations before tax (expense) benefit consisted of the following for the years ended December 31, 2024, 2023, and 2022:

​

​

​

​

​

​

​

​

​

​

​

​

    

2024

    

2023

    

2022

Domestic

​

$

(598,807)

​

$

(784,744)

​

$

(591,126)

Foreign

​

 

235,688

​

 

88,634

​

 

3,639

Total

​

$

(363,119)

​

$

(696,110)

​

$

(587,487)

​

The Income Tax Provision consisted of the following for the years ended December 31, 2024, 2023 and 2022:

​

​

​

​

​

​

​

​

​

​

​

​

    

2024

    

2023

    

2022

Current:

 

​

  

 

​

  

 

​

  

U.S. Federal

​

$

(26,798)

​

$

—

​

$

—

U.S. State and Local

​

 

(19,419)

​

 

27,226

​

 

(4,224)

Foreign

​

 

(8,896)

​

 

(4,003)

​

 

(1,582)

Deferred:

​

 

​

​

 

​

​

 

​

U.S. Federal

​

 

49,511

​

 

36,408

​

 

23,689

U.S. State and Local

​

 

6,397

​

 

10,521

​

 

10,587

Foreign

​

 

(971)

​

 

(646)

​

 

—

Total tax (expense) benefit

​

$

(176)

​

$

69,506

​

$

28,470

​

A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows:

​

​

​

​

​

​

​

​

​

​

    

December 31, 

 

​

    

2024

    

2023

    

2022

 

Federal income tax provision at statutory rate

​

21.00

%  

21.00

%  

21.00

%  

State income tax provision, net of federal benefit

​

(1.57)

 

0.32

 

3.07

 

Permanent differences

​

11.79

 

(1.43)

 

(1.83)

 

Research and development

​

5.07

 

4.59

 

5.89

 

Change in valuation allowances

​

(27.99)

 

(16.86)

 

(23.36)

 

Change in deferred tax assets

​

—

 

—

 

(0.10)

 

Foreign tax rate differential

​

9.14

 

0.05

 

(0.17)

 

Tax rate change

​

(11.69)

 

(1.26)

 

0.34

 

Release (accrual) of uncertain tax positions

​

(5.90)

​

3.71

​

—

​

Other

​

0.13

 

(0.12)

 

—

 

Effective income tax rate

​

(0.02)

%  

10.00

%  

4.84

%

​

Accounting for income taxes under U.S. GAAP requires that individual tax-paying entities of the company offset all deferred tax liabilities and assets within each particular tax jurisdiction and present them as a noncurrent deferred tax liability or asset. Amounts in different tax jurisdictions cannot be offset against each other. The noncurrent deferred income tax asset is recorded within deposits and other assets on the balance sheet. The amount of deferred income taxes are as follows:

​

​

​

​

​

​

​

​

​

    

December 31, 

​

​

2024

    

2023

Assets:

 

​

  

 

​

  

Noncurrent deferred income taxes

​

$

—

​

$

—

Liabilities:

​

 

  

​

 

  

Noncurrent deferred income taxes

​

 

—

​

 

(55,905)

Deferred income taxes - net

​

$

—

​

$

(55,905)

​

The significant components of the Company’s deferred tax assets and liabilities at December 31, 2024 and 2023 are as follows:

​

​

​

​

​

​

​

​

​

    

2024

    

2023

Deferred tax assets:

 

​

  

 

​

  

Accrued expense

​

$

8,744

​

$

25,400

Amortization

​

 

102,308

​

 

137,808

Federal tax credits

​

 

146,515

​

 

205,485

State tax credits

​

 

9,822

​

 

9,817

Federal net operating losses

​

 

—

​

 

60,270

State net operating losses

​

 

13,319

​

 

18,680

Foreign net operating losses

​

 

3,265

​

 

4,052

Capitalized research and development costs

​

 

157,234

​

 

149,683

Share based compensation and other

​

 

24,219

​

 

30,757

Liability for sale of future royalties

​

​

394,132

​

​

190,659

Noncash interest expense

​

​

10,413

​

​

9,410

Other comprehensive loss

​

 

(647)

​

 

(728)

Total gross deferred tax assets

​

 

869,324

​

 

841,293

Less valuation allowance

​

 

(857,584)

​

 

(833,810)

Total deferred tax assets, net of valuation allowance

​

$

11,740

​

$

7,483

Deferred tax liabilities:

​

 

  

​

 

  

Depreciation

​

$

(11,740)

​

$

(7,483)

Indefinite lived intangible

​

 

—

​

 

(55,905)

Total gross deferred tax liabilities

​

 

(11,740)

​

 

(63,388)

Net deferred tax assets (liabilities)

​

$

—

​

$

(55,905)

​

For the year ended December 31, 2024, the Company generated taxable income in the U.S. of $810.3 million. The Company has recorded a federal income tax provision expense of $26.8 million and a state income tax expense of $19.4 million which are driven by the recognition of previously deferred revenue from the A&R Royalty Purchase Agreement.

At December 31, 2024 and 2023, the Company recorded a valuation allowance against its net deferred tax assets of $857.6 million and $833.8 million, respectively. The change in the valuation allowance during the years ended December 31, 2024 and 2023 was $23.8 million and $161.6 million, respectively. A 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, 2024, the Company had $204.9 million, and $9.8 million of state and foreign net operating loss carryforwards, respectively. Further, the Company expects to utilize all federal net operating loss carryforwards in the 2024 tax year.

The Company recorded a deferred tax liability in conjunction with the Agilis Merger of $122.0 million in 2018, related to the tax basis difference in the IPRD indefinite-lived intangibles acquired. The Company’s policy is to record a deferred tax liability related to acquired IPR&D which may eventually be realized either upon amortization of the asset when the research is completed, and a product is successfully launched or the write-off of the asset if it is abandoned or unsuccessful. In July 2022, the Company received EMEA approval for a portion of the IPR&D assets, and thus, began the amortization of the intangible. In May 2023, the Company announced the discontinuation of its preclinical and early research programs in gene therapy as part of a strategic portfolio prioritization. In conjunction with the announcement, the Company recorded an impairment to its indefinite-lived intangible for IP research and development relating to the FA and Angelman syndrome

gene therapy assets. In November 2024, the Company was granted U.S. FDA approval and received (and subsequently sold) an associated Priority Review Voucher for a portion of the IPR&D assets. Additionally, in the fourth quarter of 2024, the Company recorded an impairment to the remainder of the indefinite-lived intangible IPR&D assets. As a result of this activity, the Company no longer has an associated deferred tax liability associated with the Agilis Merger to carry forward.

As of December 31, 2024, the combined Research and Development and Orphan Drug Credit carryforward  for federal purposes is $146.5 million.

The income tax (expense) benefit for the years ended December 31, 2024 and 2023 differed from the amounts computed by applying the U.S. federal income tax rate of 21% to loss before tax expense as a result of the IPR&D assets becoming partially amortizable in 2022, foreign taxes, the impact of temporary difference, including the updated section 174,  the impact of permanent differences, including “global intangible low-taxed income” (“GILTI”), tax credits generated, true up of net operating loss carryforwards, and increase in the Company’s valuation allowance.

Under the 2017 Tax Cuts and Jobs Act, the ability to currently deduct qualifying research and experimental costs under section 174, as well as software development costs, are eliminated for tax years beginning after December 31, 2021. Under the new rule, these costs must be capitalized and amortized over a five-year or fifteen-year period, depending on whether the research is conducted in the U.S. or abroad, respectively. The rule became effective for the Company during the 2022 tax year, and resulted in an increased current taxable income of the Company by $62.5 million for the tax year ended December 31, 2024.

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, 2024, the Company recorded unrecognized tax benefits in the amount of $108.0 million including interest and penalties through 2024. The Company’s policy is to recognize interest and penalties related to tax matters within the income tax provision. Tax years beginning in 2014 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. The Company is currently under a corporate business tax audit in New Jersey for tax years 2020 through 2022. Although the outcome of tax audits is always uncertain, the company does not expect any adjustment to result for these years as of December 31, 2024.

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.

As a result of U.S. tax reform legislation, distributions of profits from non-U.S. subsidiaries are not expected to cause a significant incremental U.S. tax impact in the future. However, distributions may be subject to non-U.S. withholding taxes if profits are distributed from certain jurisdictions. As of December 31, 2024, for purposes of ASC 740-10-25-3, the Company had $425.3 million of undistributed earnings from non-U.S. subsidiaries that it intends to reinvest permanently in its non-U.S. operations. As these ASC 740-10-25-3 earnings are considered permanently reinvested, no tax provision has been accrued. It is not feasible to estimate the amount of tax that might be payable on the eventual remittance of such earnings.

Unrecognized Tax Benefits

A reconciliation of the gross amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows:

​

​

​

​

Unrecognized Tax Benefits

Balance at December 31, 2023

​

1,360

Increases in uncertain tax benefits

 

106,628

Balance at December 31, 2024

$

107,988

​

Uncertain tax positions, for which management's assessment is that there is a more than 50% probability of sustaining the position upon challenge by a taxing authority based upon its technical merits, are subject to certain recognition and measurement criteria. The nature of the uncertain tax positions is often very complex and subject to change, and the amounts at issue can be substantial. The Company develops its cumulative probability assessment of the measurement of uncertain tax positions using internal experience, judgment, and assistance from professional advisors. The Company re-evaluates these uncertain tax positions on a quarterly basis based on a number of factors including, but not limited to, changes in facts or circumstances, changes in tax law, and effectively settled issues under audit and new audit activity. Any change in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.

The Company records penalties and tax-related interest expense on unrecognized tax benefits as a component of the provision for income taxes in the accompanying consolidated statement of operations. The Company has recorded interest related to uncertain tax positions for the year ended December 31, 2024, in the accompanying consolidated balance sheet.  Future changes in the Company’s unrecognized tax benefits will affect the Company’s annual effective tax rate.