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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of loss before provision for income taxes were as follows (in thousands):
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Domestic | $ | (206,674) |  |  | $ | (225,127) |  |  | $ | (159,632) |
Foreign | (19,555) |  |  | (19,256) |  |  | (22,177) |
Loss before provision for income taxes | $ | (226,229) |  |  | $ | (244,383) |  |  | $ | (181,809) |
The components of the (benefit) expense for income taxes were as follows (in thousands):
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Current expense (benefit) provision: |  |  |  |  |
U.S. Federal and state | $ | (45) |  |  | $ | 2,430 |  |  | $ | 2,179 |
Foreign | 1,037 |  |  | 292 |  |  | 233 |
Total current expense provision | 992 |  |  | 2,722 |  |  | 2,412 |
Deferred expense (benefit) provision: |  |  |  |  |
U.S. Federal and state | (120) |  |  | 11 |  |  | (159) |
Foreign | (562) |  |  | — |  |  | — |
Total deferred expense provision | (682) |  |  | 11 |  |  | (159) |
Total expense provision | $ | 310 |  |  | $ | 2,733 |  |  | $ | 2,253 |
The differences between the Company’s effective tax rate and the statutory tax rate in 2023, 2022, and 2021 were as follows (in thousands):
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Income tax benefit at federal statutory rate (21% for 2023, 2022 and 2021) | $ | (47,328) |  |  | $ | (51,321) |  |  | $ | (38,175) |
State and local income taxes net of federal tax benefit | (3,477) |  |  | (1,816) |  |  | (2,288) |
Permanent items | 3,015 |  |  | (1,608) |  |  | (1,343) |
Expiration of attribute carryforwards | — |  |  | — |  |  | (1,057) |
Research and development tax credits | (3,301) |  |  | (9,793) |  |  | (5,994) |
Foreign rate differential | 2,255 |  |  | 1,862 |  |  | 1,940 |
Other | 1,656 |  |  | (5,485) |  |  | 1,216 |
Change in valuation allowance | 47,490 |  |  | 70,894 |  |  | 47,954 |
Income tax expense | $ | 310 |  |  | $ | 2,733 |  |  | $ | 2,253 |
The Company recognizes the impact of a tax position in its financial statements if it is more likely than not that the position will be sustained on audit based on the technical merits of the position. The Company has concluded that it has an uncertain tax position pertaining to its research and development and orphan drug credit carryforwards. The Company has established these credits based on information and calculations it believes are appropriate and the best estimate of the underlying credit. Any changes to the Company’s unrecognized tax benefits are offset by an adjustment to the valuation allowance and there would be no impact on the Company’s financial statements. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| 2023 |  | 2022
Balance at January 1, | $ | 13,844 |  |  | $ | 9,729 |
Additions to current period tax positions | 825 |  |  | 4,115 |
Reductions to prior period tax provisions | (307) |  |  | — |
Balance at December 31, | $ | 14,362 |  |  | $ | 13,844 |
The Company’s ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of past or future ownership changes as defined in Section 382 of the IRC and similar state tax law. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| December 31,
| 2023 |  | 2022
Deferred tax assets: |  |  |
Net federal and state operating losses | $ | 108,753 |  |  | $ | 101,600 |
Research and development credits | 88,390 |  |  | 86,321 |
Royalty income | 122,391 |  |  | 115,554 |
Stock-based compensation | 26,113 |  |  | 19,374 |
Capitalized R&D | 75,081 |  |  | 62,794 |
Leasing obligations | 3,076 |  |  | 1,842 |
Other | 17,515 |  |  | 4,354 |
Total deferred tax assets | 441,319 |  |  | 391,839 |
Deferred tax liabilities: |  |  |
Fixed assets | (678) |  |  | (717) |
Right of use asset | (2,872) |  |  | (1,525) |
Total deferred tax liabilities | (3,550) |  |  | (2,242) |
Valuation allowance | (437,098) |  |  | (389,608) |
Net deferred tax assets (liabilities) | $ | 671 |  |  | $ | (11) |
The majority of the Company’s deferred tax assets relate to net operating loss and research and development carryforwards that can only be realized if the Company is profitable in future periods. It is uncertain whether the Company will realize any tax benefit related to these carryforwards. Accordingly, the Company has provided a valuation allowance against substantially all the net deferred tax assets due to uncertainties as to their ultimate realization. The valuation allowance will remain at the full amount of the deferred tax assets until it is more likely than not that the related tax benefits will be realized. The Company’s valuation allowance increased by $47,490, $70,894, and $47,954 in 2023, 2022, and 2021, respectively. As of December 31, 2023, the Company had U.S. federal operating loss carryforwards of $432,328, state operating loss carryforwards of $183,478, foreign net operating losses of $65,416, and U.S. research and development and orphan drug credit carryforwards of $102,752, which will expire at various dates from 2024 through 2043. Federal losses, state losses, and research and development credit carryforwards began expiring in 2021. The foreign net operating losses have an indefinite carryforward period. Tax years 2020-2023 remain open to examination by the major taxing jurisdictions to which the Company is subject. Additionally, years prior to 2020 are also open to examination to the extent of loss and credit carryforwards from those years. The Company recognizes interest and penalties accrued related to unrecognized tax benefits as components of its income tax provision. However, there were no provisions or accruals for interest and penalties in 2023, 2022, and 2021. As of December 31, 2023, the Company has minimal accumulated undistributed earnings generated by its foreign subsidiaries which have already been subject to local and U.S. tax (as part of the global intangible low-taxed income provisions). The Company intends to indefinitely reinvest these earnings, as well as future earnings from its foreign subsidiaries to fund its international operations. In addition, the Company expects future U.S. cash generation will be sufficient to meet future U.S. cash needs.

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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/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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