XML 39 R22.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 15. Income Taxes Loss from continuing operations before provision for income tax for the Company’s domestic and international operations was as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
United States |  | $ | (57,458 | ) |  | $ | (51,044 | )
Foreign |  |  | — |  |  |  | (859 | )
Loss before provision for income taxes |  | $ | (57,458 | ) |  | $ | (51,903 | )
At December 31, 2019, 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. For the year ended December 31, 2020 there was an income tax benefit of $0.22 million. The income tax benefit relates to a refund of previously paid withholding taxes in a foreign jurisdiction The Company has 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, |
|  | 2020 |  |  | 2019 |
Current |  |  |  |  |  |  |  |
U.S. federal |  | $ | — |  |  | $ | — |
U.S. state |  |  | — |  |  |  | — |
Non-U.S. |  |  | (218 | ) |  |  | — |
Total current |  |  | (218 | ) |  |  | — |
Deferred |  |  |  |  |  |  |  |
U.S. federal |  |  | (4,377 | ) |  |  | (8,551 | )
U.S. state |  |  | (469 | ) |  |  | 3,299 |
Non-U.S. |  |  | — |  |  |  | — |
Total deferred |  |  | (4,846 | ) |  |  | (5,252 | )
Valuation allowance |  |  | 4,846 |  |  |  | 5,252 |
Total |  | $ | (218 | ) |  | $ | — |
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, 2020 and 2019, are as follows (in thousands):
|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 533,448 |  |  | $ | 531,970 |
Research and development credits |  |  | 79,455 |  |  |  | 80,488 |
Capitalized research |  |  | — |  |  |  | 44 |
Milestone Rights |  |  | 1,547 |  |  |  | 1,528 |
Accrued expenses |  |  | 1,436 |  |  |  | 1,951 |
Loss on purchase commitment |  |  | 23,864 |  |  |  | 22,167 |
Non-qualified stock option expense |  |  | 3,766 |  |  |  | 3,128 |
Capitalized patent costs |  |  | 5,273 |  |  |  | 4,964 |
Other |  | 2093 |  |  |  | 147 |
Lease liability |  | 559 |  |  |  | 827 |
Interest expense limitation |  |  | 2,460 |  |  |  | 1,167 |
Depreciation |  |  | 20,735 |  |  |  | 21,132 |
Deferred Product Revenue & Costs |  |  | 1,569 |  |  |  | 2,062 |
Total net deferred tax assets |  |  | 676,205 |  |  |  | 671,575 |
Valuation allowance |  |  | (675,463 | ) |  |  | (670,617 | )
Net deferred tax assets |  | $ | 742 |  |  | $ | 958 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Right of use asset |  | $ | (510 | ) |  | $ | (751 | )
Other prepaids |  |  | (232 | ) |  |  | (207 | )
Total deferred tax liabilities |  |  | (742 | ) |  |  | (958 | )
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, 2020 and 2019:
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Federal tax benefit rate |  |  | 21.0 | % |  |  | 21.0 | %
Permanent items |  |  | (6.1 | ) |  |  | (3.3 | )
Tax law changes |  |  | — |  |  |  | (2.7 | )
Stock based compensation |  |  | (0.5 | ) |  |  | (0.9 | )
Tax attribute expirations |  |  | (6.6 | ) |  |  | (4.0 | )
Foreign withholding tax |  |  | 0.4 |  |  |  | — |
Valuation allowance |  |  | (7.8 | ) |  |  | (10.1 | )
Effective income tax rate |  |  | 0.4 | % |  |  | 0.0 | %
As of December 31, 2020 and 2019, 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%) 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, 2020. Accordingly, a valuation allowance of $675.5 million has been recorded to offset this deferred tax asset. During the years ended December 31, 2020 and 2019, the change in the valuation allowance was $4.8 million and $5.3 million, respectively. At December 31, 2020, the Company had federal and state net operating loss carryforwards of approximately $2.4 billion and $1.3 billion available, respectively, to reduce future taxable income. $395.2 million of the federal losses do not expire and the remaining federal and state losses have started expiring, beginning in 2020 through various future dates. Pursuant to Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company’s federal and state net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. 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 carryforwards 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. We have completed a Section 382 analysis beginning from the date of our initial public offering through December 31, 2020, to determine whether additional limitations may be placed on the net operating loss carryforwards and other tax attributes, and no additional changes in ownership that met Section 382 study ownership change threshold has been identified through December 31, 2020. There is a risk that changes in ownership may occur in tax years after December 31, 2020. If a change in ownership were to occur, our net operating loss carryforwards and other tax attributes could be further limited or restricted. If limited, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, related to the Company’s operations in the U.S. will not impact the Company’s effective tax rate. At December 31, 2020, the Company had $54.2 million of U.S. federal research and development credits which expire beginning in 2024, and $25.3 million of state research and development credits. The California credits do not expire and the New Jersey credits began to expire in 2020. The Company also had two types of credits in Connecticut of which $15.7 million do not expire and $0.1 million of $1.0 million expired at the end of 2020. Due to the existence of the valuation allowance, the expiration of the research and development credits will not impact the Company’s consolidated statements of operations. A reconciliation of beginning and ending amounts of unrecognized tax benefits in 2020 and 2019, respectively, was as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Gross unrecognized Tax benefit as of 1/1/2020 |  | $ | — |  |  | $ | — |
Gross increases for tax positions of prior years |  |  | 268,902 |  |  |  | — |
Gross decreases for tax positions of current year |  |  | — |  |  |  | — |
Settlements |  |  | — |  |  |  | — |
Lapse of statute of limitations |  |  | — |  |  |  | — |
Gross unrecognized tax benefits as of 12/31/2020 |  | $ | 268,902 |  |  | $ | — |
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 2016 remain subject to examination by federal, state and foreign tax authorities. 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, 2020 the Company had no undistributed earnings from its foreign subsidiaries. The Company adopted ASC Topic 842, Leases, on January 1, 2019. Under Topic 842, the Company is required to recognize the assets and liabilities that arise from most operating leases on the balance sheet. Upon adoption, no change in retained earnings was recorded related to income taxes as the Company maintains a full valuation allowance. As of the implementation date, an adjustment of $0.7 million was recorded as a deferred tax liability and an adjustment of $0.7 million was recorded as a deferred tax asset. See above for more information about the non-income tax impact of the adoption of the new leasing standard. The Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI in the year the tax is incurred. On March 27, 2020, the U.S. government enacted the CARES Act, a $2 trillion relief package comprising a combination of tax provisions and other stimulus measures. The CARES Act broadly provides entities tax payment relief and significant business incentives and makes certain technical corrections to the Tax Act. The tax relief measures for entities include a five-year net operating loss carry back, increased interest expense deduction limits, acceleration of alternative minimum tax credit refunds, payroll tax relief, and a technical correction to allow accelerated deductions for qualified improvement property. The Act also provides other non-income tax benefits, including federal funding for a range of stabilization measures and emergency funding to assist those impacted by the COVID-19 pandemic. Similar legislation is being enacted in other jurisdictions in which the Company operates. ASC Topic 740, Income Taxes, requires the effect of changes in tax rates and laws on deferred tax balances to be recognized in the period in which new legislation is enacted. The enactment of the CARES Act and similar legislation in other jurisdictions in which the Company operates was not material to the Company’s income tax benefit for the year ended December 31, 2020.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration