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Income Taxes (Tables)

12 Months Ended

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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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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