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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The domestic and foreign components of loss before income taxes are as follows:
Year Ended December 31,
(In thousands)202320222021
Domestic$(450,311)$(1,148,604)$(794,729)
Foreign16,794 21,611 (57,415)
Loss before income taxes$(433,517)$(1,126,993)$(852,144)
The provision for income taxes consisted of the following:
Year Ended December 31,
(In thousands)202320222021
Current provision:
Domestic$4,022 $— $293 
Foreign3,416 5,596 3,154 
Total current provision7,438 5,596 3,447 
Deferred benefit:
Domestic— — — 
Foreign(713)(1,433)(2,767)
Total deferred benefit(713)(1,433)(2,767)
Total provision for income taxes$6,725 $4,163 $680 
During the year ended December 31, 2023, we recorded a net provision for income taxes of $6.7 million. This is primarily comprised of $4.0 million of state current provision, $3.4 million of foreign current provision offset by $0.7 million of foreign deferred provision.
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. We establish a valuation allowance when uncertainty exists as to whether all or a portion of the net deferred tax assets will be realized. Components of the net deferred tax asset are as follows:
As of December 31,
(In thousands)20232022
Deferred tax assets:
Net operating loss carryforwards$803,221 $803,251 
Research and development and other credit carryforwards417,446 381,032 
Sale of future royalties353,974 326,183 
Lease liability66,558 67,242 
Deferred revenue74,704 59,437 
Deferred compensation67,150 52,989 
Intangible assets697,784 264,564 
Capitalized research and development expenditures285,411 206,727 
Other132,529 133,376 
Total deferred tax assets2,898,777 2,294,801 
Deferred tax liabilities:
Property, plant and equipment, net(21,503)(12,786)
Unrealized gain on marketable securities(2,277)(5,728)
Right of use assets(46,021)(46,819)
Deferred revenue tax accounting method change— (24,995)
Deferred tax asset valuation allowance(2,817,395)(2,193,633)
Net deferred tax asset$11,581 $10,840 
Our effective income tax rate differs from the statutory federal income tax rate, as follows:
Year Ended December 31,
(In thousands)202320222021
At U.S. federal statutory rate21.0 %21.0 %21.0 %
State taxes, net of federal effect8.6 6.0 5.2 
Stock-based compensation3.9 4.4 4.6 
Tax credits6.7 2.7 4.5 
Nondeductible compensation(3.0)— — 
Other permanent items0.8 (1.5)(1.0)
Foreign rate differential(0.7)(0.5)(1.7)
Bermuda tax law enactment85.9 — — 
Internal reorganization of certain intellectual property rights12.6 — 20.1 
Other1.7 (0.8)(0.1)
Revaluation of deferred due to rate change 5.1 (0.4)1.1 
Valuation allowance(144.1)(31.3)(53.8)
Effective income tax rate(1.5)%(0.4)%(0.1)%
We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets. We have concluded, in accordance with the applicable accounting standards, that it is more likely than not that we may not realize the benefit of all of our deferred tax assets, with the exception of the deferred assets related to certain foreign subsidiaries. Accordingly, we have recorded a valuation allowance against our U.S., Bermuda and Switzerland deferred tax assets. We continue to maintain a valuation allowance on the majority of our net operating losses and other deferred tax assets because we have a history of cumulative losses. On a quarterly basis, we reassess the valuation allowance on our deferred income tax assets weighing positive and negative evidence to assess the recoverability of the deferred tax assets. Based on our recent financial performance and our future projections, we could record a reversal of all, or a portion of the valuation allowance. However, any such change is subject to actual performance and other considerations that may present positive or negative evidence at the time
of the assessment. The valuation allowance increased by $623.8 million, $384.6 million and $459.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. The increase in our valuation allowance is primarily due to capitalized research and development costs and internally developed intellectual property for the year ending December 31, 2023, additional net operating losses for the year ended December 31, 2022, and primarily due to the liability related to the sale of future royalties for the year ended December 31, 2021.
As of December 31, 2023, we had federal and state net operating loss carryforwards, or NOLs, of $2.74 billion and $3.18 billion, respectively, to reduce future taxable income. Federal NOLs of $912.0 million, generated before 2017, will begin expiring in varying amounts through 2037 unless utilized. The remaining federal NOLs of $1.83 billion, generated after 2017, will be carried forward indefinitely and could be used to offset up to 80% of taxable income in all other future tax years. State NOLs will begin expiring in varying amounts through 2043 unless utilized. As of December 31, 2023, we had federal and state research and development, including Orphan Drug, and state investment tax credit carryforwards of $376.7 million and $62.1 million, respectively, available to reduce future tax liabilities that expire at various dates through 2043. We have a valuation allowance against the net operating loss and tax credit carryforwards as it is unlikely that we will realize these assets. Ownership changes, as defined in the Internal Revenue Code and similar state provisions, including those resulting from the issuance of common stock in connection with our public offerings, may limit the amount of federal and state net operating loss and tax credit carryforwards that can be utilized to offset future taxable income or tax liability. The amount of the limitation is determined in accordance with Section 382 of the Internal Revenue Code and similar state provisions. We have performed an analysis of ownership changes through December 31, 2023. Based on this analysis, we do not believe that any of our federal and state tax attributes will expire unutilized due to Section 382 limitations.
As of December 31, 2023, we had Switzerland NOLs of $382.4 million to reduce future taxable income which will begin expiring in varying amounts through 2030 unless utilized. We have a valuation allowance against our Switzerland NOLs as it is unlikely that we will realize these assets given our historical losses.
On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act of 2023, or Corporate Income Tax Act, which introduces a corporate income tax regime in Bermuda with a statutory tax rate of 15% effective January 1, 2025. Companies are not subject to income tax in Bermuda prior to this change and with the transition into the Act there is an economic transition adjustment that requires the tax basis of certain Bermudian assets to be established at fair market value. Upon the enactment of the Corporate Income Tax Act, we determined the fair market value of our identifiable intangibles in Bermuda and recognized a deferred tax asset in our consolidated financial statements. We recorded a full valuation allowance against this deferred tax asset as we have generated historical losses and expect to generate future losses.
We apply the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes. Our reserves related to income taxes are based on a determination of whether, and how much of, a tax benefit taken by us in our tax filings or positions is more likely than not to be realized and ultimately sustained upon challenge by a taxing authority based upon its technical merits and subject to certain recognition and measurement criteria. We recognize potential interest and penalties related to unrecognized tax benefits in our provision for income taxes. Our reserve related to income taxes, including potential interest and penalties, was not material as of December 31, 2023 and 2022.
Our uncertain income tax positions do not impact our effective tax rate due to our full valuation allowance in the U.S.
As of December 31, 2023, the unremitted earnings of our foreign subsidiaries are approximately $45.0 million. We have not provided for U.S. income taxes or foreign withholding taxes on these earnings as it is our current intention to permanently reinvest these earnings outside the U.S. The tax liability on these earnings is also not material. Events that could trigger a tax liability include, but are not limited to, distributions, reorganizations or restructurings and/or tax law changes.
The tax years 2020 through 2023 remain open to examination by major taxing jurisdictions, which are primarily in the U.S., although net operating loss and tax credit carryforwards generated prior to 2020 may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in a future period.