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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 16. Income Taxes Loss from continuing operations before provision for income tax for the Company’s domestic and international operations was as follows (in thousands):
|  | December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
US |  | $ | (113,679 | ) |  | $ | 129,361 |  |  | $ | (358,047 | )
Foreign |  |  | (3,603 | ) |  |  | (3,697 | ) |  |  | (10,398 | )
Loss before provision for income taxes |  | $ | (117,282 | ) |  | $ | 125,664 |  |  | $ | (368,445 | )
At December 31, 2017, the Company has concluded that it is more likely than not that the Company may not realize the benefit of its deferred tax assets due to its history of losses. The provision for income taxes for the year ended December 31, 2017 was $0.05 million, and there was no provision for income taxes for the years ended December 31, 2016 and 2015, respectively because the Company had incurred operating losses since inception. Accordingly, the net deferred tax assets have been fully reserved. The provision for income taxes consists of the following (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Current |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | 51 |  |  | $ | — |  |  | $ | — |
U.S. state |  |  | — |  |  |  | — |  |  |  | — |
Non-U.S. |  |  | — |  |  |  | — |  |  |  | — |
Total current |  |  | 51 |  |  |  | — |  |  |  | — |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  |  | 244,801 |  |  |  | (43,814 | ) |  |  | 109,512 |
U.S. state |  |  | 15,398 |  |  |  | (4,311 | ) |  |  | (29,394 | )
Non-U.S. |  |  | — |  |  |  | — |  |  |  | — |
Total deferred |  |  | 260,199 |  |  |  | (48,125 | ) |  |  | 80,118 |
Valuation allowance |  |  | (260,199 | ) |  |  | 48,125 |  |  |  | (80,118 | )
Total |  | $ | 51 |  |  | $ | — |  |  | $ | — |
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when uncertainty exists as to whether all or a portion of the net deferred tax assets will be realized. Components of the net deferred tax assets as of December 31, 2017 and 2016, are as follows (in thousands):
|  | December 31, |
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 507,235 |  |  | $ | 712,124 |
Research and development credits |  |  | 83,461 |  |  |  | 77,998 |
Capitalized research |  |  | 1,016 |  |  |  | 5,117 |
Milestone Rights |  |  | 1,908 |  |  |  | 3,242 |
Accrued expenses |  |  | 211 |  |  |  | 440 |
Loss on purchase commitment |  |  | 23,654 |  |  |  | 36,775 |
Non-qualified stock option expense |  |  | 7,004 |  |  |  | 17,331 |
Capitalized patent costs |  |  | 5,194 |  |  |  | 8,781 |
Other |  |  | 795 |  |  |  | 7,380 |
Depreciation |  |  | 23,820 |  |  |  | 45,310 |
Total net deferred tax assets |  |  | 654,298 |  |  |  | 914,498 |
Valuation allowance |  |  | (654,298 | ) |  |  | (914,498 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
The Company’s effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2017, 2016 and 2015:
|  | December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal tax benefit rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Permanent items |  |  | 6.2 |  |  |  | (1.9 | ) |  |  | — |
Intercompany transfer of intellectual property |  |  | — |  |  |  | 0.9 |  |  |  | (1.0 | )
2017 tax law changes |  |  | (265.0 | ) |  |  | — |  |  |  | — |
Stock based compensation |  |  | (5.0 | ) |  |  | — |  |  |  | — |
Tax attribute expirations |  |  | (2.8 | ) |  |  | — |  |  |  | — |
Valuation allowance |  |  | 231.6 |  |  |  | (34.0 | ) |  |  | (34.0 | )
Effective income tax rate |  |  | — | % |  |  | — | % |  |  | — | %
As of December 31, 2017 and 2016, management assessed the realizability of deferred tax assets. Management evaluated the need for an amount of any valuation allowance for deferred tax assets on a jurisdictional basis. This evaluation utilizes the framework contained in ASC 740, Income Taxes, wherein management analyzes all positive and negative evidence available at the balance sheet date to determine whether all or some portion of the Company’s deferred tax assets will not be realized. Under this guidance, a valuation allowance must be established for deferred tax assets when it is more likely than not (a probability level of more than 50 percent) that the Company may not realize the benefit of its deferred tax assets. In assessing the realization of the Company’s deferred tax assets, the Company considers all available evidence, both positive and negative. In concluding on the evaluation, management placed significant emphasis on guidance in ASC 740, which states that “a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome.” Based upon available evidence, it was concluded on a more-likely-than-not basis that all deferred tax assets were not realizable as of December 31, 2017. Accordingly, a valuation allowance of $654.3 million has been recorded to offset this deferred tax asset. During the years ended December 31, 2017 and 2016, the change in the valuation allowance was $(260.2) million and $(48.1) million, respectively. At December 31, 2017, the Company had federal and state net operating loss carryforwards of approximately $2.0 billion and $2.2 billion available, respectively, to reduce future taxable income. These losses are available to reduce taxable income and have started expiring, starting in the current year through various future dates for both federal and state purposes. As a result of the Company’s initial public offering, an ownership change within the meaning of Internal Revenue Code Section 382 occurred in August 2004. As a result, federal net operating loss and credit carry forwards of approximately $216.0 million are subject to an annual use limitation of approximately $13.0 million. The annual limitation is cumulative and therefore, if not fully utilized in a year can be utilized in future years in addition to the Section 382 limitation for those years. The federal net operating losses generated subsequent to the Company’s initial public offering in August 2004 are currently not subject to any such limitation as there have been no ownership changes since August 2004 within the meaning of Internal Revenue Code Section 382. At December 31, 2017, the Company had research and development credits of $55.1 million and $28.4 million for federal and state purposes, respectively. The federal credits begin to expire in 2024, and the state credits may be carried forward indefinitely. The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business the Company is subject to examination by taxing authorities throughout the country. These audits could include examining the timing and amount of deductions, the allocation of income among various tax jurisdictions and compliance with federal, state and local laws. The Company’s tax years since 2012 remain subject to examination by federal, state and foreign tax authorities. We adopted ASU 2016-09 in the first quarter of 2017. Under the new guidance companies will no longer record excess tax benefits and certain tax deficiencies related to share-based payments to employees in additional paid-in capital (APIC). Instead, the Company will recognize all income tax effects of awards in our income statement when awards vest or are settled. All excess tax benefits not previously recognized were to be recorded to retained earnings as a cumulative effect adjustment upon adoption. Upon adoption, no adjustment to retained earnings was necessary due to the Company’s valuation allowance position. Approximately $10.8 million attributable to excess tax benefits on stock compensation that had not been previously recognized were added to the Net Operating Loss with a corresponding increase to the valuation allowance. At December 31, 2017 and 2016, the Company has not recognized a liability for unrecognized tax benefits If any were recognized, it would affect the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the year ended December 31, 2017, the interest and penalties recognized were not material. During the years ended December 31, 2016 and 2015 the Company recognized and accrued an insignificant amount of interest or penalties related to unrecognized tax benefits. The Company considers its undistributed earnings of foreign subsidiaries to be permanently reinvested in foreign operations and has not provided for U.S. income taxes on such earnings. As of December 31, 2017 the Company had no undistributed earnings from its foreign subsidiaries. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code of 1986, as amended. The changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017, and expanded limits on employee remuneration. The Company has calculated its best estimate of the impact of the Act in its year end income tax provision in accordance with its understanding of the Act and guidance available as of the date of this filing, and as a result, the Company recorded no additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities is based on the rates at which they are expected to reverse in the future. The impact of this Act was a decrease of deferred tax assets approximately $301 million, offset by a decrease in valuation allowance of $301 million, resulting in no additional income tax expense or benefit. No provisional amount was recorded related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings. Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, the Company has determined that the provisional amounts recorded are a reasonable estimate at December 31, 2017. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 during which the analysis is complete.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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