XML 27 R16.htm IDEA: XBRL DOCUMENT
v3.20.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Note 8—Income Taxes The amount of net loss before taxes for the years ended December 31, 2019, 2018, and 2017 is as follows:
|  | December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |
U.S. loss before taxes |  | $ | 138,342 |  |  | $ | 116,920 |  |  | $ | 6,771 |
Foreign loss before taxes |  |  | 41,965 |  |  |  | 30,049 |  |  |  | — |
Loss before income taxes |  |  | 180,307 |  |  |  | 146,969 |  |  |  | 6,771 |
A reconciliation of income tax expense for the years ended December 31, 2019, 2018, and 2017 is as follows:
|  | December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
Total current income tax expense |  |  | — |  |  |  | — |  |  |  | — |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
Total deferred income tax expense |  |  | — |  |  |  | — |  |  |  | — |
Total income tax expense |  | $ | — |  |  | $ | — |  |  | $ | — |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2019, 2018 and 2017 are shown below. The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred assets. At such time as it is determined that it is more likely than not that the deferred tax asset will be realized, the valuation allowance will be reduced. The change in the valuation allowance for the year ended December 31, 2019 was an increase of $41.0 million.
|  | December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Net operating losses |  | $ | 43,626 |  |  | $ | 14,442 |  |  | $ | 306 |
Tax credits, net |  |  | 9,196 |  |  |  | 1,131 |  |  |  | — |
Amortization |  |  | 6,597 |  |  |  | 6,267 |  |  |  | 1,588 |
Lease liability |  |  | 2,329 |  |  |  | — |  |  |  | — |
Accrued compensation |  |  | 1,476 |  |  |  | 834 |  |  |  | — |
Stock-based compensation |  |  | 1,388 |  |  |  | — |  |  |  | 1 |
Other |  |  | 383 |  |  |  | 154 |  |  |  | — |
Total gross deferred tax assets |  |  | 64,995 |  |  |  | 22,828 |  |  |  | 1,895 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Right of use asset |  |  | (2,164 | ) |  |  | — |  |  |  | — |
Property, plant and equipment |  |  | (57 | ) |  |  | (16 | ) |  |  | — |
Stock-based compensation |  |  | — |  |  |  | (1,057 | ) |  |  | — |
Total gross deferred tax liabilities |  |  | (2,221 | ) |  |  | (1,073 | ) |  |  | — |
Valuation allowance |  |  | (62,774 | ) |  |  | (21,755 | ) |  |  | (1,895 | )
Net deferred tax asset |  | $ | — |  |  | $ | — |  |  | $ | — |
At December 31, 2019, the Company has federal and California net operating losses (“NOL”) carryforwards of approximately $175.8 million and $1.1 million, respectively. The federal NOL carryforwards generated prior to January 1, 2018 begin to expire in 2034. The federal NOL generated after 2017 of $172.9 million can be carried forward indefinitely and be available to offset up to 80% of future taxable income each year. The California NOL carryforwards begin to expire in 2036. At December 31, 2019, the Company has Irish NOL carryforwards of approximately $53.0 million. The Irish NOL can be carried forward indefinitely. At December 31, 2019, the Company also has orphan drug credit and federal research tax credit carryforwards of approximately $9.6 million and California research tax credits of $2.7 million. The federal research tax credit carryforwards begin to expire in 2038 and the California research tax credit carryforward does not expire and can be carried forward indefinitely until utilized. A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows:
|  | December 31,
|  | 2019 |  | 2018 |  | 2017
Federal statutory income tax rate |  | 21.00% |  | 21.00% |  | 34.00%
State income taxes, net of federal benefit |  | —% |  | —% |  | 5.73%
Change in valuation allowance |  | (22.12%) |  | (13.17%) |  | (27.97%)
Change in tax law |  | —% |  | —% |  | (11.85%)
Research and experimentation credits |  | 3.81% |  | 0.77% |  | —%
Foreign rate differential |  | (1.84%) |  | (1.74%) |  | —%
Stock-based compensation |  | —% |  | (2.60%) |  | —%
In process research and development |  | —% |  | (3.92%) |  | —%
Other |  | (0.85%) |  | (0.34%) |  | 0.09%
Provision for income taxes |  | —% |  | —% |  | —%
The NOL carryforward may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986 (the “Code”), and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax respectively. In general, an ownership change as defined by Section 382 and 383, results from the transactions increasing ownership of certain stockholders or public groups in the stock of the corporation of more than 50 percentage points over a three-year period. As of December 31, 2019, the Company completed a Section 382 and 383 analysis regarding the limitation of NOL and credit carryforwards. In connection with the Company’s IPO in February 2019, the Company experienced an ownership change for the purposes of Section 382 and 383 of the Code. The ownership change did not result in the forfeiture of any NOLs or credits generated prior to this date. Consequently, the Company’s federal and state NOLs and tax credits generated through February 2019 will be subject to annual limitations. If a change in ownership occurs in the future, the NOL and tax credits carryforwards could be eliminated or restricted. If eliminated, 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, will not impact the Company’s effective tax rate. The Company files income tax returns in the United States, California, Ireland, and Luxembourg. Due to the Company’s unutilized NOLs and credits, the Company is subject to the income tax examination by authorities since inception. The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. As of December 31, 2019, 2018, or 2017, there were no significant accruals for interest related to unrecognized tax benefits or tax penalties. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was signed into law making significant changes to the Internal Revenue Code, including, but are not limited to (a) reducing the federal corporate income tax rate from 35% to 21%, effective January 1, 2018; (b) eliminating the federal corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; and (c) eliminating several business deductions and credits, including deductions for certain executive compensation in excess of $1 million. As a result of the rate reduction, the Company reduced the deferred tax asset balance as of December 31, 2017 by $0.8 million. Due to the Company's full valuation allowance position, there was no net impact on the Company’s income tax provision at December 31, 2017 as the reduction in the deferred tax asset balance was fully offset by a corresponding decrease in the valuation allowance. A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2019, 2018, and 2017, excluding interest and penalties, is as follows:
|  | December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |
Balance at beginning of the year |  | $ | 408 |  |  | $ | — |  |  | $ | — |
Increase related to current year positions |  |  | 2,346 |  |  |  | 408 |  |  |  | — |
Balance at the end of the year |  | $ | 2,754 |  |  | $ | 408 |  |  | $ | — |
Included in the balance of unrecognized tax benefits at December 31, 2019 is $2.6 million that, if recognized, would not impact the Company’s income tax benefit or effective tax rate as long as our deferred tax asset remains subject to a full valuation allowance. The Company does not expect any significant increases or decreases to our unrecognized tax benefits within the next 12 months.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration