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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

Note 14 — Income Taxes

Loss before provision for income taxes includes the following components (in thousands):

 

 

Year Ended December 31,

 

 

2024

 

 

2023

 

Domestic

 

$

(119,227

)

 

$

(274,998

)

Foreign

 

 

27

 

 

 

(1,258

)

Loss before provision for income taxes

 

$

(119,200

)

 

$

(276,256

)

 

Provision for Income Taxes

The provision for income taxes consists of the following (in thousands):

 

 

Year Ended December 31,

 

 

2024

 

 

2023

 

Current:

 

 

 

 

 

 

Federal

 

$

—

 

 

$

—

 

State

 

 

(277

)

 

 

(43

)

Foreign

 

 

48

 

 

 

(17

)

Total current income tax expense

 

 

(229

)

 

 

(60

)

Deferred:

 

 

 

 

 

 

Federal

 

 

—

 

 

 

—

 

State

 

 

—

 

 

 

—

 

Foreign

 

 

(10

)

 

 

(140

)

Total deferred income tax expense

 

 

(10

)

 

 

(140

)

Provision (benefit) for income taxes

 

$

(239

)

 

$

(200

)

 

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,

 

 

2024

 

 

2023

 

Income tax benefit at federal statutory rate

 

$

(25,032

)

 

$

(58,013

)

Research credits

 

 

7,741

 

 

 

(1,192

)

Change in valuation allowance

 

 

1,635

 

 

 

35,033

 

Expiration of net operating loss carryforwards

 

 

8,252

 

 

 

312

 

Stock-based compensation

 

 

4,280

 

 

 

8,919

 

Non-cash interest expense on liability related to sales of future royalties

 

 

5,904

 

 

 

5,320

 

Non-cash royalty revenue related to sales of future royalties

 

 

(5,645

)

 

 

(7,838

)

Impairment of goodwill

 

 

—

 

 

 

16,065

 

Other

 

 

2,626

 

 

 

1,194

 

Provision (benefit) for income taxes

 

$

(239

)

 

$

(200

)

 

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,

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforwards

 

$

587,528

 

 

$

574,737

 

Research and other credits

 

 

135,871

 

 

 

144,128

 

Net capital loss carryforwards

 

 

39,648

 

 

 

39,655

 

Operating lease liabilities

 

 

22,767

 

 

 

25,384

 

Stock-based compensation

 

 

19,619

 

 

 

19,447

 

Capitalized research and development costs

 

 

45,607

 

 

 

34,675

 

Liability related to the sale of future royalties

 

 

2,020

 

 

 

6,729

 

Other

 

 

9,402

 

 

 

13,863

 

Deferred tax assets before valuation allowance

 

 

862,462

 

 

 

858,618

 

Valuation allowance for deferred tax assets

 

 

(859,084

)

 

 

(854,528

)

Total deferred tax assets

 

 

3,378

 

 

 

4,090

 

Deferred tax liabilities:

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

(1,835

)

 

 

(3,824

)

Investment in foreign subsidiary

 

 

(511

)

 

 

(521

)

Outside basis difference in Gannet BioChem

 

 

(1,337

)

 

 

—

 

Other

 

 

(205

)

 

 

(265

)

Total deferred tax liabilities

 

 

(3,888

)

 

 

(4,610

)

Net deferred tax assets (liabilities)

 

$

(510

)

 

$

(520

)

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 valuation allowance. The valuation allowance increased by $4.6 million for the year ended December 31, 2024 and increased by $38.3 million for the year ended December 31, 2023.

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, 2024, we had a net operating loss carryforward for federal income tax purposes of approximately $2.8 billion, of which $1.2 billion is subject to expiration beginning in 2025 and a total state net operating loss carryforward of approximately $0.7 billion, portions of which will begin to expire in 2026. We have federal tax credits of approximately $126.7 million, which will begin to expire in 2025 and state research credits of approximately $60.7 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 similar state provisions.

Unrecognized tax benefits

We have the following activity relating to unrecognized tax benefits (in thousands):

 

 

Year Ended December 31,

 

 

2024

 

 

2023

 

Beginning balance

 

$

126,498

 

 

$

85,845

 

Tax positions related to current year:

 

 

 

 

 

 

Additions

 

 

582

 

 

 

848

 

Reductions

 

 

—

 

 

 

—

 

Tax positions related to prior years:

 

 

 

 

 

 

Additions

 

 

10,101

 

 

 

40,079

 

Reductions

 

 

(16

)

 

 

—

 

Settlements

 

 

(815

)

 

 

—

 

Lapses in statute of limitations

 

 

(678

)

 

 

(274

)

Ending balance

 

$

135,672

 

 

$

126,498

 

 

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 and certain other international jurisdictions. 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 and other jurisdictions 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, 2024 and 2023, 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.