Income Taxes

For the three months ended June 30, 2015 and 2014, the Company recorded a $21.3 million benefit and a $23.4 million benefit for income taxes, respectively, based upon its estimated federal, state and foreign tax liability for the year. The worldwide effective income tax rates for the Company for the three months ended June 30, 2015 and 2014 were 31.4% and 81.9%, respectively. This decrease in effective tax rate was primarily driven by a projected loss for the year 2015 and a discrete tax benefit related to a partial release of a valuation allowance related to Dutch net operating losses associated with ProFibrix B.V. as a result of the regulatory approvals of Raplixa in both the United States and European Union, which were offset by the establishment of a valuation allowance against certain deferred tax assets, an increase in foreign taxable income, and an increase in the non-cash tax impact arising from changes in the value of contingent consideration under the Company's agreements for the acquisitions of Targanta Therapeutics Corporation (Targanta), Incline Therapeutics, Inc. (Incline), ProFibrix B.V. (ProFibrix), Rempex Pharmaceuticals, Inc. (Rempex),Tenaxis Medical, Inc. (Tenaxis) and Annovation BioPharma, Inc. (Annovation).

According to the standards of ASC 740, the Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed to reduce its deferred tax assets to the amount that is more likely than not to be realized. During the three months ended June 30, 2015, the Company placed significant weight on the following pieces of negative evidence in recording valuation allowances on certain of its deferred tax assets as of June 30, 2015:


•	The Company expects to be in a cumulative net loss for the three year period ended December 31, 2015 as Angiomax will now face generic competition in the U.S. due to the July 2, 2015 decision by the Federal Circuit Court which held the ‘727 patent and ‘343 patent invalid.


•	The commercial success of the Company's marketed and approved products is not assured.

For the six months ended June 30, 2015 and 2014, the Company recorded a $15.5 million benefit and a $1.3 million benefit for income taxes, respectively, based upon its estimated federal, state and foreign tax liability for the year. The worldwide effective income tax rates for the Company for the six months ended June 30, 2015 and 2014 were 27.2% and 11.6%, respectively. This increase in the effective tax rate is primarily due the establishment of a valuation allowance against certain deferred tax assets, an increase in foreign taxable income, and an increase in the non-cash tax impact arising from changes in the value of contingent consideration related to the Company's acquisitions of Targanta, Incline, ProFibrix, Rempex and Tenaxis and Annovation, offset primarily by a discrete tax benefit related to a partial release in a valuation allowance related to Dutch net operating losses associated with ProFibrix B.V. as a result of the regulatory approvals of Raplixa in both the United States and European Union.

According to the standards of ASC 740, the Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed to reduce its deferred tax assets to the amount that is more likely than not to be realized. The Company places significant weight on the following pieces of negative evidence:


•	The Company expects to be in a cumulative net loss for the three year period ended December 31, 2015 as Angiomax will now face generic competition in the U.S. due to the July 2, 2015 decision by the Federal Circuit Court which held the ‘727 patent and ‘343 patent invalid.


•	The commercial success of the Company's marketed and approved products is not assured.

The Company will continue to evaluate its ability to realize its deferred tax assets on a periodic basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any additional changes to the valuation allowance recorded on deferred tax assets in the future would impact the Company's income taxes.