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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes For financial reporting purposes, income (loss) before income taxes includes the following components:
| Years Ended December 31,
(in thousands) | 2018 |  | 2017 |  | 2016
United States | $ | (309,183 | ) |  | $ | (440,696 | ) |  | $ | (174,913 | )
Foreign | (39,906 | ) |  | (8,425 | ) |  | (28,868 | )
Total | $ | (349,089 | ) |  | $ | (449,121 | ) |  | $ | (203,781 | )
Following were the components of income tax expense (benefit) for the years ended December 31, 2018, 2017 and 2016:
(in thousands) | 2018 |  | 2017 |  | 2016
Current |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | 6 |  |  | 9 |  |  | 7 |
Foreign | (100 | ) |  | 2,276 |  |  | — |
Deferred |  |  |  |  |
Federal | — |  |  | (150,015 | ) |  | (1,101 | )
State | — |  |  | (17,389 | ) |  | (2,645 | )
Foreign | — |  |  | — |  |  | — |
Total | $ | (94 | ) |  | $ | (165,119 | ) |  | $ | (3,739 | )
A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2018, 2017 and 2016 are as follows:
| Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Statutory rate | (21 | )% |  | (34 | )% |  | (34 | )%
State taxes, net of federal benefit | (4 | ) |  | (5 | ) |  | (5 | )
Nondeductible IPR&D | 6 |  |  | (1 | ) |  | 3 |
Contingent consideration | 1 |  |  | (18 | ) |  | — |
Tax credits | (10 | ) |  | (2 | ) |  | (3 | )
Foreign income tax rate differential | 2 |  |  | 5 |  |  | 2 |
Impact of 2017 Act | — |  |  | 27 |  |  | — |
Other | — |  |  | 5 |  |  | (1 | )
Valuation allowance | 26 |  |  | (14 | ) |  | 36 |
Net | — | % |  | (37 | )% |  | (2 | )%
On December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act significantly revises U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate to 21%, imposing a mandatory one-time transition tax on previously deferred foreign earnings, and eliminating or reducing certain income tax deductions. ASC 740, Income Taxes, requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted. However, due to the complexity and significance of the Tax Act's provisions, the SEC staff issued SAB 118, which allows companies to record the tax effects of the Tax Act on a provisional basis based on a reasonable estimate, and then, if necessary, subsequently adjust such amounts during a limited measurement period as more information becomes available. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from enactment. The Tax Act did not have a material impact on the Company's financial statements because its deferred temporary differences are fully offset by a valuation allowance and the Company does not have any significant offshore earnings from which to record the mandatory transition tax. The Company recorded an income tax benefit of $0.1 million in the Consolidated Statement of Operations, in connection with the reduction in the statutory corporate income tax rate. The Company operates in a consolidated loss position in its foreign operations, and does not have a one-time tax on accumulated earnings of foreign subsidiaries. As of December 31, 2017, we provisionally recorded certain impacts of the Tax Act including the adjustment to our net deferred tax liability arising from the reduction in the federal tax rate as well as the impact of mandatory deemed repatriation. Adjustments to these provisional amounts that we recorded in 2018 did not have a significant impact on our consolidated financial statements. Our accounting for the effects of the enactment of the Tax Act is now complete. The Company recorded an income tax benefit of $0.1 million in 2018 for taxes in foreign and state jurisdictions. The Company did not recognize interest or penalties related to income tax during the period ended December 31, 2018 and did not accrue for interest or penalties as of December 31, 2018. The Company does not have an accrual for uncertain tax positions as of December 31, 2018. Tax returns for all years 2010 and thereafter are subject to future examination by tax authorities. Deferred income taxes reflect the net effect of temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows:
| For Years Ended December 31,
(in thousands) | 2018 |  | 2017
Deferred tax assets |  |  |
Intellectual property | $ | 48,339 |  |  | $ | 44,573 |
Amortization/depreciation | 3,732 |  |  | 3,082 |
Research tax credit | 96,509 |  |  | 43,382 |
Net operating loss carry forwards | 248,398 |  |  | 221,912 |
Deferred revenue | 4,401 |  |  | 6,158 |
Non-cash stock issue | 16,850 |  |  | 10,751 |
Interest carry forward limitation | 1,032 |  |  | — |
Others | 10,852 |  |  | 7,328 |
Gross deferred tax assets | 430,113 |  |  | 337,186 |
Deferred tax liabilities |  |  |
Business acquisition | (6,465 | ) |  | (6,465 | )
Royalty payable | (48,339 | ) |  | (44,573 | )
Convertible notes | (16,666 | ) |  | (18,991 | )
Advanced R&D payments | (2,103 | ) |  | (3,069 | )
Total net deferred tax assets | 356,540 |  |  | 264,088 |
Less: valuation allowance | (363,005 | ) |  | (270,553 | )
Net deferred tax liability | $ | (6,465 | ) |  | $ | (6,465 | )
The Company records a valuation allowance for temporary differences for which it is more likely than not that the Company will not receive future tax benefits. At December 31, 2018 and 2017, the Company recorded valuation allowances of $363.0 million and $270.6 million, respectively, representing an increase in the valuation allowance of $92.4 million in 2018 due to the uncertainty regarding the realization of such deferred tax assets, to offset the benefits of net operating losses generated during those years. The deferred tax liability related to business acquisitions pertains to the basis difference in IPR&D acquired by the Company. The Company's policy is to record a deferred tax liability related to acquired IPR&D that 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. As of December 31, 2018, the Company had federal, state, and foreign net operating loss carry forwards ("NOLs") of approximately $858.4 million, $943.5 million, and $35.0 million, respectively. The federal carry forward for losses generated prior to 2018 will expire in 2030 through 2037. Federal net operating losses incurred in 2018 and onward have an indefinite expiration under the 2017 Tax Cut & Jobs Act. Most of the state carry forwards generated prior to 2009 have expired through 2016. The remaining state carry forwards including those generated in 2009 through 2018 will expire in 2030 through 2038. The foreign NOLs have indefinite expiration. Utilization of NOLs may be subject to a substantial limitation pursuant to Section 382 of the Code as well as similar state statutes in the event of an ownership change. Such ownership changes have occurred in the past, and could occur again in the future. Under Section 382 of the Internal Revenue Code of 1986, as amended, or Section 382, if a corporation undergoes an "ownership change," generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation's ability to use its pre-change NOLs and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income may be limited. We may experience ownership changes in the future as a result of shifts in our stock ownership some of which are outside our control. We completed a detailed study of our NOLs and determined that there was not an ownership change in excess of 50%. Ownership changes in future periods may place additional limits on our ability to utilize net operating loss and tax credit carry forwards. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. The Company also has research and experimentation and orphan drug credit carryforwards of approximately $23.7 million and $72.8 million, respectively, which will expire in the years 2023 through 2037. Deferred tax assets for these carryforwards are subject to a full valuation allowance.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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