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Income Taxes
 12 Months Ended
Dec. 31, 2023
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)202320222021
United States$(234,482)$(343,424)$(333,571)
Foreign84,381 101,385 92,017 
Total$(150,101)$(242,039)$(241,554)
Following were the components of income tax expense (benefit) for the years ended December 31, 2023, 2022, and 2021:
Years Ended December 31,
(in thousands)202320222021
Current
Federal$— $— $— 
State14 6 15 
Foreign6,408 (5,760)8,857 
Deferred
Federal(4,801)274 — 
State(138)9 34 
Foreign— — — 
Total$1,483 $(5,471)$8,906 
A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2023, 2022, and 2021 are as follows:
Years Ended December 31,
202320222021
Statutory rate(21)%(21)%(21)%
Tax credits(8)(11)(9)
Impact of foreign operations(9)18 3 
Other8 3 3 
Valuation allowance31 9 28 
Net1 %(2)%4 %
On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act ("Tax Act"). The Tax Act significantly revised U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate to 21%, imposing a mandatory one-time transition tax on previously deferred foreign earnings, and eliminating or reducing certain income tax deductions. The Tax Act also introduced an additional U.S. tax on certain non-U.S. subsidiaries’ earnings which are considered to be Global Intangible Low Taxed Income (referred to as "GILTI"). After consideration of the relevant guidance and completing the accounting for the tax effects of the Tax Act, the Company has elected to treat GILTI as a period cost.
Beginning in 2022, the Tax Act eliminated the right to deduct research and development expenditures for tax purposes in the period the expenses were incurred and instead requires all U.S. and foreign research and development expenditures to be amortized over five and fifteen tax years, respectively.
Tax returns for years 2017 through 2022 are open to examination by tax authorities. The Company is also subject to examination in any period for which it has net operating losses.
Deferred income taxes reflect the net effect of temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows:
Years Ended
December 31,
(in thousands)20232022
Deferred tax assets
Intellectual property$— $68,567 
Research tax credit235,532 223,366 
Capitalized research and development costs34,425 29,317 
Net operating loss carry forwards321,004 315,444 
Share-based compensation17,314 16,417 
Interest carry forward limitation17,627 12,558 
Lease liability10,567 11,428 
Inventory1,931 10,400 
Other20,858 20,109 
Gross deferred tax assets659,258 707,606 
Deferred tax liabilities
Royalty payable— (68,567)
Other(10,004)(11,745)
Total net deferred tax assets649,254 627,294 
Less: valuation allowance(649,254)(632,233)
Net deferred tax liability$— $(4,939)
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, 2023 and 2022, the Company recorded valuation allowances of $649.3 million and $632.2 million, respectively, representing an increase in the valuation allowance of $17.0 million in 2023, 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 intangible assets acquired by the Company. The Company's policy is to record a deferred tax liability related to acquired intangible assets 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, 2023, the Company had U.S. federal, U.K. and state net operating loss carry forwards ("NOLs") of approximately $1.2 billion, $28.4 million and $1.0 billion, respectively. The federal carry forward for losses generated prior to 2018 will expire in 2029 through 2037. Federal net operating losses incurred in 2018 and onward have an indefinite expiration under the Tax Act. The U.K. carryforward period is unlimited. Most of the state net operating loss carry forwards generated prior to 2009 have expired through 2016. The remaining state net operating loss carry forwards including those generated in 2009 through 2023 will expire in 2030 through 2042. State research and development credits will expire beginning 2024 through 2033. Utilization of NOLs may be subject to a substantial limitation pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, 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. The Company may experience ownership changes in the future as a result of shifts in the stock ownership some of which are outside the Company's control. The Company completed a detailed study of the NOLs for the tax year 2023 and determined that there was not an ownership change in excess of 50%. Ownership changes in future periods may place additional limits on the Company's 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 decrease the amount of state attributes and increase state taxes owed.
The Company also has U.S. federal research and experimentation and orphan drug credit carryforwards of approximately $18.4 million and $203.1 million, respectively, which will expire in the years 2030 through 2043. The Company also has state research and development tax credit carryforwards of $14.1 million. Deferred tax assets for these carryforwards are subject to a full valuation allowance.
The Organization Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries, including European Union member states, have enacted or are expected to enact legislation to be effective as early as January 1, 2024, with general implementation of a global minimum tax by January 1, 2025. The Company does not expect this new rule to apply until the Company meets the minimum global revenue threshold.