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Income Taxes
 9 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

14. INCOME TAXES

 

The Company recognizes income taxes under the asset and liability method. Deferred income taxes are recognized for differences between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In determining future taxable income, the Company is responsible for assumptions that it utilizes, including the amount of Irish and non-Irish pre‑tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company uses to manage the underlying business.

 

The Company recorded an income tax benefit of $0.4 million and $3.7 million during the three and nine months ended September 30, 2023, respectively, primarily due to enhanced foreign derived intangible income (“FDII”) deductions arising from the capitalization of research and development expenses in accordance with Section 174 of the U.S. Internal Revenue Code of 1986, as amended.

 

On a quarterly basis, the Company reassesses the valuation allowance on its deferred tax assets, weighing positive and negative evidence to determine the recoverability of such deferred tax assets. In the fourth quarter of 2022, the Company reassessed the valuation allowance and considered all positive and negative evidence, including its cumulative losses over the years ended December 31, 2022, 2021 and 2020 and concluded that it should maintain the valuation allowance on its Irish net operating losses and other deferred tax assets as of December 31, 2022.

 

The Company may release a significant portion of the valuation allowance upon completion of the planned separation of its oncology business; however, the release of the valuation allowance, as well as the exact timing and the amount of such release, continue to be subject to, among other things, the Company’s level of profitability, revenue growth, clinical program progression, the successful completion of the planned separation of the oncology business and expectations regarding future profitability. The Company’s Irish deferred tax asset balance subject to the valuation allowance was approximately $245.8 million at December 31, 2022.