XML 38 R17.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

8. Income Taxes

Domestic and foreign pre-tax income (loss) is as follows (in thousands):

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

Domestic

 

$

(100,215

)

 

$

(233,216

)

 

$

(138,913

)

Foreign

 

 

49,179

 

 

 

19,772

 

 

 

(28,606

)

 

 

$

(51,036

)

 

$

(213,444

)

 

$

(167,519

)

The income tax provision consists of the following (in thousands):

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

Current provision:

 

 

 

 

 

 

 

 

 

Federal

 

$

5,440

 

 

$

—

 

 

$

—

 

State

 

 

4,805

 

 

 

2,531

 

 

 

351

 

Foreign

 

 

5

 

 

 

—

 

 

 

—

 

Total deferred tax assets

 

 

10,250

 

 

 

2,531

 

 

 

351

 

Total income tax provision

 

$

10,250

 

 

$

2,531

 

 

$

351

 

 

At December 31, 2023, the Company had federal, state, and foreign net operating loss (NOL) carryforwards of approximately $196.8 million, $456.3 million, and $845.1 million, respectively. 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, 2022 and concluded no additional ownership changes occurred. Future ownership changes may further limit the Company’s ability to utilize its remaining tax attributes.

The Company had federal and state carryforwards of $29.4 million and $454.4 million that will begin to expire in 2031 and 2024 respectively unless utilized. The remaining federal and state NOL carryforwards of $167.4 million and $1.9 million will carry forward indefinitely. At December 31, 2023, the Company had federal and state charitable contribution carryforwards of $174.8 million which will begin to expire in 2024. At December 31, 2023, the Company had $75.6 million of federal R&D credit carryforwards, of which $0.5 million will expire in 2024 unless utilized, and the remaining federal R&D credit carryforwards will begin to expire beginning in 2025. At December 31, 2023, the Company had state R&D credit carryforwards of approximately $2.3 million that will begin to expire in 2025 and $20.3 million that have no expiration date. At December 31, 2023, the Company had foreign NOL carryforwards of $231.6 million that will expire in 2024 unless utilized and $6.5 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,

 

 

 

2023

 

 

2022

 

Deferred tax assets

 

 

 

 

 

 

NOL carryforwards

 

$

149,049

 

 

$

225,993

 

R&D credit carryforwards

 

 

70,906

 

 

 

83,074

 

Capitalized R&D

 

 

90,164

 

 

 

38,507

 

Stock-based compensation

 

 

51,028

 

 

 

51,661

 

Charitable contributions

 

 

40,956

 

 

 

42,677

 

Lease liabilities

 

 

13,671

 

 

 

14,730

 

Intangibles

 

 

43,220

 

 

 

24,030

 

Property and equipment

 

 

51

 

 

 

—

 

Accrued rebates

 

 

19,401

 

 

 

5,748

 

Other

 

 

16,036

 

 

 

8,022

 

Total deferred tax assets

 

 

494,482

 

 

 

494,442

 

Valuation allowance

 

 

(482,089

)

 

 

(481,210

)

Deferred tax liabilities

 

 

 

 

 

 

Property and equipment

 

 

—

 

 

 

(29

)

Right-of-use assets

 

 

(12,393

)

 

 

(13,203

)

Total deferred tax liabilities

 

 

(12,393

)

 

 

(13,232

)

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 $0.9 million in 2023 primarily due to an increase in deferred tax assets generated by capitalization of research and development expenses, acquired intangibles and accrued rebates, offset in part by the utilization of US and state net operating losses and research credits, the expiration of Switzerland NOLs, and the remeasurement of the Company’s deferred tax balance for future state tax rates.

An accounting policy may be selected to either (i) treat taxes due on future U.S. inclusions in taxable income related to global intangible low-taxed income (GILTI) as a current-period expense when incurred or (ii) factor such amounts into a company’s measurement of its deferred taxes. The Company has elected to account for GILTI as a period cost.

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,

 

 

 

2023

 

 

2022

 

 

2021

 

Amounts computed at statutory federal rate

 

$

(10,718

)

 

$

(44,823

)

 

$

(35,179

)

Stock-based compensation and other permanent differences

 

 

8,458

 

 

 

7,596

 

 

 

6,083

 

Branded pharmaceutical drug fee

 

 

1,848

 

 

 

1,454

 

 

 

613

 

Write-off of IP R&D

 

 

—

 

 

 

2,449

 

 

 

1,277

 

R&D credits

 

 

(5,827

)

 

 

(9,974

)

 

 

(11,727

)

Change in valuation allowance

 

 

1,100

 

 

 

11,227

 

 

 

36,099

 

State taxes

 

 

(977

)

 

 

(2,232

)

 

 

(2,617

)

Contingencies

 

 

(2,071

)

 

 

6,993

 

 

 

3,879

 

Foreign rate differential

 

 

(5,076

)

 

 

(1,971

)

 

 

2,857

 

Deferred adjustments for limits on executive compensation

 

 

2,112

 

 

 

3,918

 

 

 

1,808

 

Deferred rate adjustment

 

 

(192

)

 

 

922

 

 

 

(2,424

)

Switzerland tax reform

 

 

(246

)

 

 

—

 

 

 

(923

)

Expiration of attributes

 

 

17,225

 

 

 

16,142

 

 

 

726

 

GILTI

 

 

7,665

 

 

 

10,804

 

 

 

—

 

Other

 

 

(3,051

)

 

 

26

 

 

 

(121

)

Income tax expense

 

$

10,250

 

 

$

2,531

 

 

$

351

 

The tax years 2003-2022 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 $18.0 million, $5.1 million and $4.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. Due to the valuation allowance recorded against the Company’s deferred tax assets, approximately $6.8 million and $1.2 million of the total unrecognized tax benefits as of December 31, 2023 and December 31, 2022, respectively, 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, 2023 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 immaterial interest and/or penalties accrued on the Company’s consolidated balance sheets at December 31, 2023 or 2022, respectively. Further, the Company recognized an insignificant amount of interest and/or penalties in the statement of operations for the years ended December 31, 2023, 2022 and 2021, respectively, related to uncertain tax positions.

The following table provides a reconciliation of changes in unrecognized tax benefits (in thousands):

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

Balance at beginning of period

 

$

19,064

 

 

$

13,923

 

 

$

9,843

 

Additions related to current period tax positions

 

 

5,304

 

 

 

5,140

 

 

 

3,973

 

Additions related to prior period tax positions

 

 

12,956

 

 

 

38

 

 

 

140

 

Reductions related to prior period tax positions

 

 

(212

)

 

 

(37

)

 

 

(33

)

Balance at end of period

 

$

37,112

 

 

$

19,064

 

 

$

13,923