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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | 14. INCOME TAXES Income tax expense consists of the following:
|  | Year Ended December 31, |
(In thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | 23,438 |  |  | $ | 7,799 |  |  | $ | 40,822 |
State |  |  | 3,175 |  |  |  | 2,177 |  |  |  | 464 |
Total current |  |  | 26,613 |  |  |  | 9,976 |  |  |  | 41,286 |
Deferred |  |  |  |  |  |  |  |  |
Federal |  |  | (12,606 | ) |  |  | 6,594 |  |  |  | 26,026 |
State |  |  | (11 | ) |  |  | (2,194 | ) |  |  | (625 | )
Total deferred |  |  | (12,617 | ) |  |  | 4,400 |  |  |  | 25,401 |
Total income tax expense, net |  | $ | 13,996 |  |  | $ | 14,376 |  |  | $ | 66,687 |
The impacts of the differences between the expected U.S. federal statutory income tax to our income tax expense are as follows:
|  | Year Ended December 31, |
(In thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Expected tax at federal statutory rate |  | $ | 7,846 |  |  | $ | 40,747 |  |  | $ | 58,928 |
State income tax expense (benefit), net of federal benefit |  |  | 1,864 |  |  |  | 1,433 |  |  |  | (1,414 | )
Federal and state research credits |  |  | (90 | ) |  |  | (1,582 | ) |  |  | (2,453 | )
Foreign derived intangible income deduction |  |  | (11,767 | ) |  |  | (15,274 | ) |  |  | — |
Noncontrolling interest |  |  | — |  |  |  | — |  |  |  | 7,468 |
Impact of consolidation and deconsolidation of subsidiaries |  |  | — |  |  |  | — |  |  |  | (8,897 | )
Other |  |  | (2,243 | ) |  |  | 1,219 |  |  |  | (125 | )
Change in valuation allowance |  |  | 18,386 |  |  |  | (12,167 | ) |  |  | 13,180 |
Total income tax expense, net |  | $ | 13,996 |  |  | $ | 14,376 |  |  | $ | 66,687 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and deferred tax liabilities are as follows:
|  | December 31, |
(In thousands) |  | 2024 |  |  | 2023 |
Deferred tax assets |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 176,989 |  |  | $ | 182,013 |
Research and development tax credit carryforwards |  |  | 21,359 |  |  |  | 21,357 |
Unrealized loss on investment, net |  |  | 11,481 |  |  |  | — |
Deferred royalty obligation, net |  |  | 17,452 |  |  |  | 18,084 |
Other |  |  | 6,832 |  |  |  | 6,467 |
Total deferred tax assets before valuation allowance |  |  | 234,113 |  |  |  | 227,921 |
Valuation allowance |  |  | (187,635 | ) |  |  | (169,249 | )
Total deferred tax assets |  |  | 46,478 |  |  |  | 58,672 |
Deferred tax liabilities |  |  |  |  |  |
Depreciation and amortization |  |  | (31,626 | ) |  |  | (39,064 | )
Unrealized gain on investment, net |  |  | — |  |  |  | (13,747 | )
Inventory fair value adjustment |  |  | (2,798 | ) |  |  | (6,424 | )
Net deferred tax assets (liabilities) |  | $ | 12,054 |  |  | $ | (563 | )
We record deferred tax assets if the realization of such assets is more likely than not to occur. Significant management judgment is required in determining whether a valuation allowance against the deferred tax assets is required. We have considered all available evidence, both positive and negative, such as our historical operating results and predictability of future taxable income, in making such determination. We are also required to exercise significant management’s judgment in forecasting future taxable income. Specifically, we evaluate the following criteria when considering a valuation allowance: • the history of tax net operating losses in recent years; • predictability of operating results; • profitability for a sustained period of time; and • level of profitability on a quarterly basis. As of December 31, 2024, we had federal net operating loss carryforwards of approximately $520.6 million, $456.5 million of which do not expire. As of December 31, 2024, we also had state net operating loss carryforwards of approximately $1.0 billion, which will expire beginning 2030 and state research tax credits of approximately $33.3 million, which do not expire. Utilization of net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code and similar state provisions. Annual limitations may result in expiration of net operating loss and tax credit carryforwards before some or all of such amounts have been utilized. We conducted an Internal Revenue Code of 1986, as amended, Section 382 (“Section 382”) analysis of the Company through December 31, 2024 to determine whether an ownership change had occurred since inception. The Section 382 study concluded that it is more likely than not that the Company did not experience an ownership change during the testing period. If we ever undergo an ownership change, the utilization of the pre-ownership change net operating loss carryforwards or pre-ownership change tax attributes, such as research tax credits, to offset the post-ownership change income may be subject to an annual limitation, pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended. Similar rules may apply under state tax laws. As of December 31, 2024, $154.8 million of Entasis’ federal net operating losses and $365.8 million of La Jolla’s federal operating losses from the acquisitions in 2022, both subject to annual limitations, were available for future utilization. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2024 and 2023, we had no accrued interest or penalties due to the Company’s net operating losses available to offset any tax adjustments. We do not have any tax positions for which a significant change in the total amount of gross unrecognized tax benefits is reasonably possible within 12 months of December 31, 2024. Uncertain Tax Positions A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits are as follows:
(In thousands) |  | Amount |
Unrecognized tax benefits as of December 31, 2021 |  | $ | 14,872 |
Net increase in tax portions for 2022 |  |  | 1,452 |
Unrecognized tax benefits as of December 31, 2022 |  |  | 16,324 |
Net increase in tax portions for 2023 |  |  | 3,119 |
Unrecognized tax benefits as of December 31, 2023 |  |  | 19,443 |
Net increase in tax portions for 2024 |  |  | 41,851 |
Unrecognized tax benefits as of December 31, 2024 |  | $ | 61,294 |
The increase of $41.9 million in 2024 was primarily due to our strategic intercompany intellectual property alignment across different jurisdictions. We are subject to taxation in the U.S. and various state and foreign jurisdictions. The tax years 2006 through 2013, 2015 and forward remain open to examination by the federal and most state tax authorities due to net operating loss and overall credit carryforward positions. We are not currently subject to any income tax audits by federal or state taxing authorities. In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“BEPS Pillar Two”), and various governments around the world have enacted, or are in the process of enacting legislation. We are in the process of evaluating whether and when these new rules may come into effect and apply to us, including the eligibility to qualify for safe harbor rules. We plan to treat the tax if any as a period cost. We do not believe that the Pillar Two rules apply to us yet. As such, the potential future quantitative impact of the enacted or substantively enacted legislation is not yet reasonably estimable.

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