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

(7) Income Taxes

We are subject to taxation in the U.S. and in various state, local, and foreign jurisdictions. We remain subject to examination by U.S. Federal, state, local, and foreign tax authorities for tax years 2021 through 2024. With a few exceptions, we are no longer subject

to U.S. Federal, state, local, and foreign examinations by tax authorities for the tax year 2020 and prior. However, net operating losses from the tax year 2020 and prior would be subject to examination if and when used in a future tax return to offset taxable income. Our policy is to recognize income tax related penalties and interest, if any, in our provision for income taxes and, to the extent applicable, in the corresponding income tax assets and liabilities, including any amounts for uncertain tax positions.

As of December 31, 2024, we had available net operating loss carryforwards of $910.1 million and $437.1 million for Federal and state income tax purposes, respectively, which are available to offset future Federal and state taxable income, if any, $404.5 million of these Federal and $1.7 million of these State net operating loss carryforwards do not expire, while the remaining net operating loss carryforwards expire between 2025 and 2044. Our ability to use these net operating losses may be limited by change of control provisions under Internal Revenue Code Section 382 and may expire unused. In addition, we have $5.8 million and $1.4 million of Federal and state research and development credits, respectively, available to offset future taxable income. These Federal and state research and development credits expire between 2025 and 2034 and 2025 and 2030, respectively. Additionally, we have $21,000 of state investment tax credits, available to offset future taxable income that expire in 2026. We also have foreign net operating loss carryforwards, which do not expire, available to offset future foreign taxable income of $2.6 million in the United Kingdom, $9.1 million in Belgium, $715,000 in Ireland, $289,000 in Hong Kong and $2.3 million in Russia. Additionally, we have $3.0 million of net operating loss carryforwards, in Switzerland, which begin to expire in 2030. The potential impacts of these provisions are among the items considered and reflected in management’s assessment of our valuation allowance requirements.

Beginning January 1, 2022, the Tax Cuts and Jobs Act (the “Tax Act”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code (“IRC”) Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. We have included the impact of this provision, which results in additional deferred tax assets of approximately $87.0 million and $70.9 million as of December 31, 2024 and 2023, respectively.

The tax effect of temporary differences and net operating loss and tax credit carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2024 and 2023 are presented below (in thousands).

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

U.S. Federal and State net operating loss carryforwards

 

$

216,158

 

 

$

191,671

 

Foreign net operating loss carryforwards

 

 

3,906

 

 

 

7,093

 

Research and development tax credits

 

 

7,153

 

 

 

8,348

 

Share-based compensation

 

 

4,675

 

 

 

5,083

 

Intangible Assets

 

 

19,279

 

 

 

24,563

 

Interest expense carryforward

 

 

15,369

 

 

 

12,183

 

Deferred Revenue

 

 

44,005

 

 

 

46,025

 

Lease Liability

 

 

13,246

 

 

 

17,709

 

Capitalized research expenditures

 

 

87,041

 

 

 

70,879

 

Other

 

 

5,920

 

 

 

8,773

 

Total deferred tax assets

 

 

416,752

 

 

 

392,327

 

Less: valuation allowance

 

 

(401,491

)

 

 

(376,483

)

Net deferred tax assets

 

 

15,261

 

 

 

15,844

 

Foreign intangible assets

 

 

(441

)

 

 

(462

)

Right of use asset

 

 

(5,875

)

 

 

(6,761

)

Depreciable assets

 

 

(8,919

)

 

 

(8,589

)

Other

 

 

(138

)

 

 

(144

)

Deferred tax liabilities

 

 

(15,373

)

 

 

(15,956

)

Net deferred tax liability

 

$

(112

)

 

$

(112

)

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating loss and tax credit carryforwards can be utilized or the temporary differences become deductible. We consider projected future taxable income and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, we will need to generate future taxable income sufficient to utilize net operating losses prior to their expiration. Based upon our history of not generating taxable income due to our business activities focused on product development, we believe that it is more likely than not that deferred tax assets will not be realized through future earnings. Accordingly, a valuation allowance has been established for deferred tax assets which will not be offset by the reversal of deferred tax liabilities. The valuation allowance on the deferred tax assets increased by $25.0 million and $28.6 million during the years ended December 31, 2024 and 2023, respectively.

Income tax expense was nil for the years ended December 31, 2024, 2023 and 2022. Income taxes recorded differed from the amounts computed by applying the U.S. Federal income tax rate of 21% to loss before income taxes as a result of the following (in thousands).

 

 

2024

 

 

2023

 

 

2022

 

Computed “expected” Federal tax benefit

 

$

(48,780

)

 

$

(54,096

)

 

$

(48,438

)

(Increase) reduction in income taxes benefit resulting from:

 

 

 

 

 

 

 

 

 

Change in valuation allowance

 

 

25,986

 

 

 

27,647

 

 

 

50,039

 

(Decrease) increase due to uncertain tax positions

 

 

40

 

 

 

—

 

 

 

—

 

Nontaxable liquidation of subsidiaries

 

 

1,402

 

 

 

1,925

 

 

 

—

 

Loan forgiveness

 

 

—

 

 

 

—

 

 

 

1,206

 

State and local income benefit, net of Federal income tax
   benefit

 

 

2,002

 

 

 

4,565

 

 

 

(12,533

)

Equity based compensation

 

 

3,054

 

 

 

4,696

 

 

 

3,000

 

Foreign rate differential

 

 

396

 

 

 

(213

)

 

 

(267

)

Change in fair value contingent consideration

 

 

—

 

 

 

—

 

 

 

(171

)

Expiration of tax attributes

 

 

14,250

 

 

 

14,288

 

 

 

10,428

 

Other, net

 

 

1,650

 

 

 

1,188

 

 

 

(3,264

)

Income tax benefit

 

$

—

 

 

$

—

 

 

$

—

 

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):

 

 

2024

 

 

2023

 

 

2022

 

Balance, January 1

 

$

3,433

 

 

$

3,291

 

 

$

3,148

 

Increase (decrease) related to current year positions

 

 

(51

)

 

 

(6

)

 

 

3

 

Increase (decrease) related to previously recognized positions

 

 

(152

)

 

 

148

 

 

 

140

 

Balance, December 31

 

$

3,230

 

 

$

3,433

 

 

$

3,291

 

These unrecognized tax benefits would all impact the effective tax rate if recognized. There are no positions which we anticipate could change within the next twelve months.