XML 32 R15.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 8. Income Taxes Domestic and foreign pre-tax loss is as follows (in thousands):
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Domestic |  | $ | (238,885 | ) |  | $ | (123,411 | ) |  | $ | (78,112 | )
Foreign |  |  | (42,088 | ) |  |  | (110,972 | ) |  |  | (165,824 | )
|  | $ | (280,973 | ) |  | $ | (234,383 | ) |  | $ | (243,936 | )
At December 31, 2020, the Company had federal, state, and foreign net operating loss (NOL) carryforwards of approximately $539.2 million, $416.3 million, and $1,186.5 million, respectively. The Company recognized state income tax provisions of $0.4 million, $0.9 million and $1.3 million for the years ended December 31, 2020, 2019 and 2018, respectively. The Company recognized foreign income tax in the amount of $0.2 million for the year ended December 31, 2020. These tax liabilities were associated with minimum taxes and a patent box entry tax for Switzerland in the current year and the apportionment of income to certain state jurisdictions which the Company did not have corresponding NOLs in 2018. Utilization of the domestic NOL and research and development (R&D) credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred or that could occur in the future, as required by Section 382 of the Code, as well as similar state and foreign provisions. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders or public groups. The Company previously completed a study to assess whether an ownership change, as defined by Section 382 of the Code, had occurred from the Company’s formation through December 31, 2013. Based upon this study, the Company determined that several ownership changes had occurred. Accordingly, the Company reduced its deferred tax assets related to the federal NOL carryforwards and the federal R&D credit carryforwards that are anticipated to expire unused as a result of these ownership changes. These tax attributes were excluded from deferred tax assets with a corresponding reduction of the valuation allowance with no net effect on income tax expense or the effective tax rate. The Company completed a study through December 31, 2019 and concluded no additional ownership changes occurred. Future ownership changes may further limit the Company’s ability to utilize its remaining tax attributes. Federal and state NOL carryforwards of $6.9 million and less than $0.1 million will expire in 2025 unless utilized. The remaining federal and state NOL carryforwards will begin to expire in 2026. At December 31, 2020, the Company had federal and state charitable contribution carryforwards of $120.8 million, which will begin to expire in 2021. At December 31, 2020, the Company had $55.5 million of federal R&D credit carryforwards of which $0.2 million will expire in 2021 unless utilized, and the remaining federal R&D credit carryforwards will begin to expire in 2022. At December 31, 2020, the Company had state R&D credit carryforwards of approximately $2.6 million that will begin to expire in 2024 and $16.5 million that have no expiration date. At December 31, 2020, the Company had foreign NOL carryforwards of approximately $1,186.5 million that will begin to expire in 2022 and $3.7 million that have no expiration date. The Company continues to record the deferred tax assets related to these attributes, subject to valuation allowance, until expiration occurs. The components of the deferred tax assets are as follows (in thousands):
|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets |  |  |  |  |  |  |  |
NOL carryforwards |  |  | 218,905 |  |  |  | 182,948 |
R&D credit carryforwards |  |  | 63,886 |  |  |  | 48,069 |
Stock-based compensation |  |  | 47,547 |  |  |  | 45,440 |
Charitable contributions |  |  | 28,470 |  |  |  | 18,303 |
Lease liabilities |  |  | 11,675 |  |  |  | 2,366 |
Intangibles |  |  | 7,109 |  |  |  | 59,783 |
Capitalized R&D |  |  | 6,073 |  |  |  | 7,607 |
Other |  |  | 9,390 |  |  |  | 8,773 |
Total deferred tax assets |  |  | 393,055 |  |  |  | 373,289 |
Valuation allowance |  |  | (380,533 | ) |  |  | (370,783 | )
Deferred tax liabilities |  |  |  |  |  |  |  |
Right-of-use assets |  |  | (11,142 | ) |  |  | (2,301 | )
Propery and equipment |  |  | (1,380 | ) |  |  | (205 | )
Total deferred tax liabilities |  |  | (12,522 | ) |  |  | (2,506 | )
Total net deferred tax assets |  | $ | — |  |  | $ | — |
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $9.8 million in 2020 primarily due to an increase in deferred tax assets generated from net operating losses, R&D credits and stock-based compensation expense, and the increase in tax attributes associated with the acquisition of CerSci, offset in part by the impact of the Switzerland tax reform, the remeasurement of deferred tax balance for changes in state tax rates, and limitations on executive stock compensation. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted and signed into law in response to COVID-19. The CARES Act, among other things, included several significant provisions that impacted corporate taxpayers’ accounting for income taxes. Prior to the enactment of the CARES Act, the 2017 Tax Cuts and Jobs Act generally eliminated the ability to carryback NOLs, and permitted the NOLs arising in tax years beginning after December 31, 2017 to be carried forward indefinitely, limited to 80% of the taxpayer’s income. The CARES Act amended the NOL rules, suspending the 80% limitation on the utilization of NOLs generated after December 31, 2017 and before January 1, 2021. Additionally, the CARES Act allows corporate NOLs arising in taxable years beginning after December 31, 2017 and before January 1, 2021, to be carried back to each of the five taxable years preceding the taxable year of the loss. Also, the CARES Act allows companies to defer making certain payroll tax payments until future years. The Company did not have any qualitative or quantitative impact to the financials as a result of the CARES Act in the current year. During 2019, Switzerland implemented tax reform that is effective for tax years 2020 and forward. As a result, the Company has remeasured the deferred tax assets, primarily comprised of net operating loss carryforwards, at the amount and rate in which it is anticipated they will reverse. The tax reform also allowed the Company to take as a deduction for Cantonal purposes only, a portion of the increase in value of the intellectual property transferred to Switzerland. This deduction was available as a result of establishing Lucerne as the Cantonal location for the Company. As a result, during 2019 a deferred tax asset of $57.0 million was established which was the estimated amount that would be allowed as a future deduction. During December 2020, the Company moved to Basel-City from Lucerne. As a result, the intellectual property deduction is no longer available and has been reversed. Additionally, the deferred tax assets and net operating losses were remeasured at the amount and rate in which they are anticipated to reverse as a result of the change in jurisdiction. As a result of the Cantonal change, the deferred taxes for Switzerland decreased by $52.8 million. The adjustments made to the deferred tax assets are offset by a valuation allowance. A reconciliation of income taxes to the amount computed by applying the statutory federal income tax rate to the pretax loss is summarized as follows (in thousands):
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Amounts computed at statutory federal rate |  | $ | (59,004 | ) |  | $ | (49,365 | ) |  | $ | (51,226 | )
Stock-based compensation and other permanent differences |  |  | 991 |  |  |  | 5,691 |  |  |  | 3,379 |
Write-off of IP R&D |  |  | 9,565 |  |  |  | — |  |  |  | — |
R&D credits |  |  | (17,909 | ) |  |  | (16,687 | ) |  |  | (7,941 | )
Change in valuation allowance |  |  | 5,925 |  |  |  | 99,846 |  |  |  | 34,333 |
State taxes |  |  | (5,038 | ) |  |  | (2,138 | ) |  |  | (1,017 | )
Contingencies |  |  | 2,665 |  |  |  | 1,861 |  |  |  | 2,938 |
Foreign rate differential |  |  | 4,208 |  |  |  | 20,413 |  |  |  | 20,896 |
Limitation on executive compensation |  |  | 3,705 |  |  |  | 1,178 |  |  |  | 53 |
Deferred rate adjustment |  |  | 2,130 |  |  |  | — |  |  |  | — |
Switzerland tax reform |  |  | 53,045 |  |  |  | (59,181 | ) |  |  | — |
Other |  |  | 328 |  |  |  | (742 | ) |  |  | (159 | )
Income tax expense |  | $ | 611 |  |  | $ | 876 |  |  | $ | 1,256 |
The tax years 2001-2019 remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination. The Company recorded an uncertain tax position reserve of $2.9 million, $1.9 million and $3.1 million for the years ended December 31, 2020, 2019 and 2018, respectively. Due to the valuation allowance recorded against the Company’s deferred tax assets, an immaterial amount of the total unrecognized tax benefits as of December 31, 2020 would reduce the annual effective tax rate if recognized. The Company does not anticipate that the amount of unrecognized tax benefits as of December 31, 2020 will significantly change within the next twelve months. The Company’s practice is to recognize interest and/or penalties related to uncertain income tax positions in income tax expense. The Company had no interest and/or penalties accrued on the Company’s consolidated balance sheets at December 31, 2020 or 2019, respectively. Further, the Company did not recognize any interest and/or penalties in the statement of operations for the years ended December 31, 2020, 2019 and 2018, respectively, related to uncertain tax positions. The following table provides a reconciliation of changes in unrecognized tax benefits (in thousands):
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Balance at beginning of period |  | $ | 6,945 |  |  | $ | 5,037 |  |  | $ | 1,933 |
Additions related to current period tax positions |  |  | 2,722 |  |  |  | 1,908 |  |  |  | 3,104 |
Additions related to prior period tax positions |  |  | 212 |  |  |  | — |  |  |  | — |
Reductions related to prior period tax positions |  |  | (36 | ) |  |  | — |  |  |  | — |
Balance at end of period |  | $ | 9,843 |  |  | $ | 6,945 |  |  | $ | 5,037 |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration