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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Note 11 — Income Taxes Loss before provision for income taxes includes the following components (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Domestic |  | $ | (274,998 | ) |  | $ | (371,900 | ) |  | $ | (524,440 | )
Foreign |  |  | (1,258 | ) |  |  | 6,917 |  |  |  | 1,160 |
Loss before provision for income taxes |  | $ | (276,256 | ) |  | $ | (364,983 | ) |  | $ | (523,280 | )
Provision for Income Taxes The provision for income taxes consists of the following (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | (43 | ) |  |  | (608 | ) |  |  | 50 |
Foreign |  |  | (17 | ) |  |  | 1,115 |  |  |  | 609 |
Total current income tax expense |  |  | (60 | ) |  |  | 507 |  |  |  | 659 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | (140 | ) |  |  | 2,708 |  |  |  | (102 | )
Total deferred income tax expense |  |  | (140 | ) |  |  | 2,708 |  |  |  | (102 | )
Provision (benefit) for income taxes |  | $ | (200 | ) |  | $ | 3,215 |  |  | $ | 557 |
Our income tax provision related to continuing operations differs from the amount computed by applying the statutory income tax rate of 21% to our pretax loss as follows (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Income tax benefit at federal statutory rate |  | $ | (58,013 | ) |  | $ | (76,647 | ) |  | $ | (109,889 | )
Research credits |  |  | (1,192 | ) |  |  | (987 | ) |  |  | (4,727 | )
Change in valuation allowance |  |  | 35,033 |  |  |  | 51,108 |  |  |  | 97,914 |
Expiration of net operating loss carryforwards |  |  | 312 |  |  |  | 12,348 |  |  |  | 286 |
Stock-based compensation |  |  | 8,919 |  |  |  | 15,778 |  |  |  | 6,627 |
Non-cash interest expense on liability related to sales of future royalties |  |  | 5,320 |  |  |  | 6,071 |  |  |  | 9,936 |
Non-cash royalty revenue related to sales of future royalties |  |  | (7,838 | ) |  |  | (7,112 | ) |  |  | (7,891 | )
Loss on revaluation of liability related to the sale of future royalties |  |  | — |  |  |  | — |  |  |  | 4,940 |
Impairment of goodwill |  |  | 16,065 |  |  |  | — |  |  |  | — |
Other |  |  | 1,194 |  |  |  | 2,656 |  |  |  | 3,361 |
Provision (benefit) for income taxes |  | $ | (200 | ) |  | $ | 3,215 |  |  | $ | 557 |
Deferred Tax Assets and Liabilities Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We measure deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. Significant components of our deferred tax assets for federal and state income taxes are as follows (in thousands):
|  | December 31, |
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 574,737 |  |  | $ | 545,508 |
Research and other credits |  |  | 144,128 |  |  |  | 142,198 |
Net capital loss carryforwards |  |  | 39,655 |  |  |  | 38,445 |
Operating lease liabilities |  |  | 25,384 |  |  |  | 28,254 |
Stock-based compensation |  |  | 19,447 |  |  |  | 22,110 |
Capitalized research and development costs |  |  | 34,675 |  |  |  | 24,134 |
Liability related to the sale of future royalties |  |  | 6,729 |  |  |  | 13,424 |
Other |  |  | 13,863 |  |  |  | 13,935 |
Deferred tax assets before valuation allowance |  |  | 858,618 |  |  |  | 828,008 |
Valuation allowance for deferred tax assets |  |  | (854,528 | ) |  |  | (816,235 | )
Total deferred tax assets |  |  | 4,090 |  |  |  | 11,773 |
Deferred tax liabilities: |  |  |  |  |  |
Operating lease right-of-use assets |  |  | (3,824 | ) |  |  | (11,335 | )
Investment in foreign subsidiary |  |  | (521 | ) |  |  | (2,451 | )
Other |  |  | (265 | ) |  |  | (392 | )
Total deferred tax liabilities |  |  | (4,610 | ) |  |  | (14,178 | )
Net deferred tax assets (liabilities) |  | $ | (520 | ) |  | $ | (2,405 | )
Realization of our deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of our lack of U.S. earnings history and projected future losses, we have fully reserved our net U.S. deferred tax assets with a valuatio n allowance. The valuation allowance increased by $38.3 million for the year ended December 31, 2023 and increased by $30.5 m illion for the year ended December 31, 2022. Our net deferred tax liability position reflects the provision for the withholding taxes associated with the repatriation of accumulated earnings and profits from India. Net Operating Loss and Tax Credit Carryforwards As of December 31, 2023, we had a net operating loss car ryforward for federal income tax purposes of approximately $2.7 billion, of which $1.3 billion is subject to expiration beginning in 2024 and a total state net operating loss carryforward of approximately $0.7 billion, portions of which will begin to expire in 2027. We have federal tax credits of approximately $126.0 million, which will begin to expire in 2024 and state research credits of approximately $59.9 million which have no expiration date. Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and simil ar state provisions. Unrecognized tax benefits We have the following activity relating to unrecognized tax benefits (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Beginning balance |  | $ | 85,845 |  |  | $ | 80,604 |  |  | $ | 78,665 |
Tax positions related to current year: |  |  |  |  |  |  |  |  |
Additions |  |  | 848 |  |  |  | 378 |  |  |  | 2,371 |
Reductions |  |  | — |  |  |  | — |  |  |  | — |
Tax positions related to prior years: |  |  |  |  |  |  |  |  |
Additions |  |  | 40,079 |  |  |  | 5,272 |  |  |  | 58 |
Reductions |  |  | — |  |  |  | — |  |  |  | (490 | )
Settlements |  |  | — |  |  |  | — |  |  |  | — |
Lapses in statute of limitations |  |  | (274 | ) |  |  | (409 | ) |  |  | — |
Ending balance |  | $ | 126,498 |  |  | $ | 85,845 |  |  | $ | 80,604 |
If we are eventually able to recognize our uncertain tax positions, our effective tax rate may be reduced. We currently have a full valuation allowance against our U.S. net deferred tax asset which would impact the timing of the effective tax rate benefit should any of these uncertain tax positions be favorably settled in the future. Adjustments to the substantial majority of our uncertain tax positions would result in an adjustment of our net operating loss or tax credit carryforwards rather than resulting in a cash outlay. We file income tax returns in the U.S., California, Alabama, certain other states and India. As a result of our net operating loss and research credit carryforwards, substantially all of our domestic tax years remain open and subject to examination. We may be subject to examination in India from time to time, but we do not believe that any liability resulting from such an examination would have a material effect on our financial position or results of operations. Our policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for income taxes in the consolidated statements of operations. During the years ended December 31, 2023, 2022 and 2021, no significant interest or penalties were recognized relating to unrecognized tax benefits. Although it is reasonably possible that certain unrecognized tax benefits could change in the future, we do not anticipate any significant changes over the next twelve months.

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