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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of the components of income tax benefit

The components of the income tax expense (benefit) for continuing operations are as follows (in thousands):

	Year Ended December 31,
	2014				2013				2012
Current expense (benefit):
Federal	$	15			$	—			$	3
State	19				33				16
	34				33				19
Deferred expense (benefit):
Federal	406				404				(913		)
State	(30		)		(63		)		(297		)
	$	410			$	374			$	(1,191	)

Schedule of deferred tax assets and liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2014 and 2013 are shown below. A valuation allowance has been recognized to offset the net deferred tax assets as management believes realization of such assets is uncertain as of December 31, 2014, 2013 and 2012. The change in valuation allowance increased $9.8 million in 2014, decreased $5.4 million in 2013 and increased $41.8 million in 2012.

	December 31,
	2014				2013
	(in thousands)
Deferred assets:
Net operating loss carryforwards	$	193,747			$	196,421
Research and AMT credit carryforwards	28,288				30,092
Fixed assets and intangibles	13,237				17,293
Accrued expenses	1,579				1,474
Contingent liabilities	579				582
Deferred revenue	771				760
Present value of royalties	11,686				12,175
Organon termination asset	(111		)		(4,073		)
Organon termination liability	111				4,073
Royalty obligation	—				—
Deferred rent	730				1,634
Lease termination costs	—				—
Capital loss carryforwards	—				148
Other	5,780				3,701
	256,397				264,280
Valuation allowance for deferred tax assets	(240,420		)		(249,470		)
Net deferred tax assets	$	15,977			$	14,810
Deferred tax liabilities:
Retrophin fair value adjustment	$	(1,396	)		$	(859	)
Convertible debt	(1,436		)		—
Identified intangibles	(13,146		)		(13,984		)
Identified indefinite lived intangibles	(3,048		)		(2,639		)
Total	$	(3,049	)		$	(2,672	)

Schedule of effective income tax rate reconciliation

A reconciliation of income taxes from continuing operations to the amount computed by applying the statutory federal income tax rate to the net loss from continuing operations is summarized as follows:

	Years Ended December 31,
	2014				2013				2012
Amounts computed at statutory federal rate	$	(3,843	)		$	(3,131	)		$	1,317
State taxes net of federal benefit	(697		)		(293		)		196
Meals & entertainment	(9		)		(10		)		(8		)
Acquisition related transaction costs	—				—				—
Imputed interest	(53		)		(285		)		(259		)
Section 162(m) limitation	(490		)
Contingent liabilities	(1,748		)		(2,027		)		695
Stock-based compensation	(89		)		556				581
Expired NOLs	(88		)		—				(6,847		)
Research and development credits	113				4,581				(1,984		)
Change in uncertain tax positions	(7		)		(364		)		830
Rate change for changes in state law	(119		)		(901		)		(3,388		)
Increase in deferred tax assets from completion of 382 analysis	(43		)		(786		)		53,257
Change in valuation allowance	7,243				3,509				(41,768		)
Other	(580		)		(1,223		)		(1,431		)
	$	(410	)		$	(374	)		$	1,191

Schedule of unrecognized tax benefits

A reconciliation of the amount of unrecognized tax benefits at December 31, 2014 and 2013 is as follows (in thousands):

Balance at December 31, 2012	$	8,067
Additions based on tax positions related to the current year	417
Additions for tax positions of prior years	20
Balance at December 31, 2013	$	8,504
Additions based on tax positions related to the current year	40
Reductions for tax positions of prior years	(20		)
Balance at December 31, 2014	$	8,524

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

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Tabular disclosure of the change in unrecognized tax benefits, excluding amounts pertaining to examined tax returns.

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