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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Summary of the Domestic and Foreign Components of Income Before Income Taxes | The following is a summary of the domestic and foreign components of income before income taxes for the years ended December 31, 2020, 2019 and 2018:
| Year Ended December 31,
(in thousands) | 2020 |  | 2019 |  | 2018
Domestic | $ | 31,667 |  |  | $ | 28,794 |  |  | $ | 25,123 |
Foreign | (12) |  |  | 234 |  |  | 223 |
Total income before income taxes | $ | 31,655 |  |  | $ | 29,028 |  |  | $ | 25,346 |
Summary of Provision (Benefit) for Income Taxes | The following is a summary of the provision (benefit) for income taxes for the years ended December 31, 2020, 2019 and 2018:
| Year Ended December 31,
(in thousands) | 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | 2,061 |  |  | 1,161 |  |  | 53 |
Foreign | 68 |  |  | 81 |  |  | 99 |
Deferred: |  |  |  |  |
Federal | 6,076 |  |  | (85,624) |  |  | — |
State | 155 |  |  | (2,127) |  |  | — |
Foreign | (42) |  |  | (16) |  |  | (14) |
Provision (benefit) for income taxes | $ | 8,318 |  |  | $ | (86,525) |  |  | $ | 138 |
Reconciliation Between Statutory Tax Rate and Effective Tax Rate | The following is reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2020, 2019 and 2018:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Federal tax at statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes | 2.6 | % |  | 1.8 | % |  | 1.7 | %
Change in valuation allowance (1) | (3.5) | % |  | (357.6) | % |  | (16.4) | %
Research and development credit (2) | (5.4) | % |  | (10.9) | % |  | (9.1) | %
Orphan drug credit (2) | (1.3) | % |  | 17.1 | % |  | (2.7) | %
Section 162(m) limitation | 1.7 | % |  | 2.7 | % |  | 3.1 | %
Other tax rate changes | 0.2 | % |  | (0.5) | % |  | (0.7) | %
Other changes in state deferred taxes (3) | — | % |  | — | % |  | 5.9 | %
Uncertain tax positions (2) | 4.7 | % |  | 26.3 | % |  | — | %
Stock-based compensation | 5.1 | % |  | (1.0) | % |  | (3.9) | %
Other items | 1.2 | % |  | 3.0 | % |  | 1.6 | %
Effective tax rate | 26.3 | % |  | (298.1) | % |  | 0.5 | %
(1)Reductions in 2020 valuation allowances are attributable to 2020 income before income taxes. Reductions in 2019 valuation allowances include $7.5 million related to 2019 U.S. income before income taxes, $10.7 related to adjustments for prior period credit carryforwards and uncertain tax positions and $85.6 million related to a change in beginning-of-the-year balances that resulted from a change in circumstances that caused a change in judgment about the realizability of U.S. deferred tax assets in future years. Reductions in 2018 valuation allowances are attributable to 2018 income before income taxes. (2)2019 activity includes adjustments to prior year credit carryforwards and prior year tax positions. As a result of the tax valuation allowance previously recorded against deferred tax assets in the U.S., these adjustments resulted in no change in tax expense. (3)Includes adjustments to state deferred taxes based on changes to filing jurisdictions.
Components of Net Deferred Tax Assets and Related Valuation Allowance | The following is a summary of the components of the Company’s net deferred tax assets and the related tax valuation allowance as of December 31, 2020 and 2019. Certain prior period amounts in the table have been reclassified to conform to the current period presentation.
(in thousands) | December 31, 2020 |  | December 31, 2019
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 43,623 |  |  | $ | 52,034 |
Stock-based compensation | 4,653 |  |  | 5,298 |
Accrued expenses | 2,429 |  |  | 1,266 |
Allowance for returns and credit losses | 1,169 |  |  | 1,468 |
Research and development and orphan drug credit carryforwards | 37,737 |  |  | 36,041 |
Other | 3,279 |  |  | 4,572 |
Total deferred tax assets | 92,890 |  |  | 100,679 |
Deferred tax liabilities: |  |  |
Intangible assets | (1,911) |  |  | (1,994) |
Other | (2,412) |  |  | (2,850) |
Total deferred tax liabilities | (4,323) |  |  | (4,844) |
Deferred tax assets, net | 88,567 |  |  | 95,835 |
Less: Valuation allowance | 7,051 |  |  | 8,155 |
Net deferred tax assets | $ | 81,516 |  |  | $ | 87,680 |
Summary of Changes in Tax Valuation Allowance | The following is a summary of changes in the Company’s tax valuation allowance for the years ended December 31, 2020, 2019 and 2018:
(in thousands) | Balance at Beginning of Year |  | Additions |  | Reductions |  | Balance at End of Year
Year Ended: |  |  |  |  |  |  |
December 31, 2020 | $ | 8,155 |  |  | $ | — |  |  | $ | (1,104) |  |  | $ | 7,051 |
December 31, 2019 | 111,950 |  |  | — |  |  | (103,795) |  |  | 8,155 |
December 31, 2018 | 116,110 |  |  | 4,036 |  |  | (8,196) |  |  | 111,950 |
Reconciliation of Gross Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
| Year Ended December 31,
(in thousands) | 2020 |  | 2019 |  | 2018
Unrecognized tax benefits at the beginning of the year | $ | 9,741 |  |  | $ | — |  |  | $ | — |
Increases (decreases) related to prior year tax positions | (121) |  |  | 8,223 |  |  | — |
Increases related to current year tax positions | 1,613 |  |  | 1,518 |  |  | — |
Unrecognized tax benefits at the end of the year | $ | 11,233 |  |  | $ | 9,741 |  |  | $ | — |

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