XML 42 R25.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income taxes Income taxes
The components of loss before income taxes were as follows (in thousands):
Year ended December 31,
202120202019
U.S.$(487,404)$(431,452)$(414,586)
Foreign(74,976)(128,918)(140,981)
Total$(562,380)$(560,370)$(555,567)
The provision for (benefit from) income taxes were as follows (in thousands):
Year ended December 31,
202120202019
Current:
Federal$— $— $— 
State— 2 7 
Foreign258 684 612 
Deferred:
Federal— — (966)
State— — (198)
Foreign— — — 
Total income tax expense (benefit)$258 $686 $(545)
A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to the Company’s effective income tax rate as reflected in the financial statements is as follows:
Year ended December 31,
202120202019
Federal income tax expense at statutory rate21.0 %21.0 %21.0 %
State income tax, net of federal benefit3.9 %3.1 %3.7 %
Permanent differences(0.6)%(0.6)%(0.8)%
Stock-based compensation(3.1)%(2.4)%(0.7)%
Research and development credit4.3 %6.0 %5.4 %
Foreign differential(1.9)%(4.6)%(3.7)%
Other— %(0.3)%0.8 %
Change in valuation allowance(23.6)%(22.3)%(25.6)%
Effective income tax rate (expense) benefit— %(0.1)%0.1 %
For the years ended December 31, 2021, 2020 and 2019, the Company recognized an income tax expense (benefit) of $0.3 million or 0.0%, $0.7 million or (0.1)%, and $(0.5) million or 0.1%, respectively.  The Company did not recognize any significant tax expense for the years ended December 31, 2021, 2020, or 2019 as the Company was subject to a full valuation allowance. Tax expense associated with the sale of bRT and the Separation, accounted for as discontinued operations and discussed in Note 3, is $0 for the years ended December 31, 2021, 2020, or 2019 due to the full valuation allowance. Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are composed of the following (in thousands):
Year ended December 31,
2021
2020 (1)
Deferred tax assets:
U.S. net operating loss carryforwards (federal and state)$703,125 $546,098 
Tax credit carryforwards (federal and state)281,687 246,742 
Capitalized license fees and research and development expenses2,237 1,558 
Deferred revenue604 398 
Stock-based compensation25,181 37,164 
Lease liabilities22,916 14,787 
Accruals and other15,598 12,894 
Total deferred tax assets1,051,348 859,641 
Right-of-use assets(23,053)(15,044)
Fixed assets(1,546)(1,212)
Less valuation allowance(1,026,749)(843,385)
Net deferred taxes$— $— 
(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.
A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized. Due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns, the Company has recorded a full valuation allowance against the Company’s otherwise recognizable net deferred tax assets. The valuation allowance increased on a net basis by approximately $183.4 million during the year ended December 31, 2021 due primarily to net operating losses, tax credit carryforwards, and stock-based compensation, offset by the sale of bRT and the Separation. Effective January 1, 2021, the Company adopted ASU 2019-12, which simplifies accounting for income taxes. There was no material impact on the Company's financial position or results of operations upon adoption.
As of December 31, 2021, 2020 and 2019, the Company had U.S. federal net operating loss carryforwards of approximately $2.63 billion, $2.03 billion, and $1.62 billion, respectively, which may be available to offset future income tax liabilities. Of the amount as of December 31, 2021, $1.92 billion will carryforward indefinitely while $711.0 million will expire at various dates through 2037. As of December 31, 2021, 2020 and 2019, the Company also had U.S. state net operating loss
carryforwards of approximately $2.39 billion, $1.89 billion, and $1.56 billion, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2041.
As of December 31, 2021, 2020 and 2019, the Company had federal research and development and orphan drug tax credit carryforwards of approximately $268.3 million, $235.3 million, and $203.1 million, respectively, available to reduce future tax liabilities which expire at various dates through 2041. As of December 31, 2021, 2020 and 2019, the Company had state credit carryforwards of approximately $16.9 million, $14.5 million, and $13.6 million, respectively, available to reduce future tax liabilities which expire at various dates through 2036. During the fourth quarter of 2018, the Company completed an analysis of prior year estimates of U.S. research and development and orphan drug tax credits for the years 2013 through 2017. The analysis resulted in an immaterial adjustment to the Company's income tax benefit, which was offset by an adjustment to the valuation allowance. An analysis of the U.S. research and development and orphan drug credits has not yet been completed for 2019, 2020, or 2021.
In March 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted. This law temporarily suspends and adjusts certain law changes enacted in the Tax Cuts and Jobs Act in 2017. In December 2020, the Consolidated Appropriations Act was enacted. This law modified the employee retention credit under the CARES Act and created credit extenders for certain credits. In March 2021, the American Rescue Plan Act ("ARPA") was enacted and contained extenders to the refundable employee retention credit and provided further limitations to executive compensation effective for tax years beginning after 2026. The Company has concluded that the provisions in the CARES Act, Consolidated Appropriations Act, and ARPA have an immaterial impact on the Company’s income tax expense due to its cumulative losses and full valuation allowance position.
Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception, which it believes has resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code. The Company completed a study through December 2020 confirming no additional ownership changes; any ownership shifts occurring after December 2020 could result in an ownership change under Section 382.
The Company files Federal income tax returns in the United States, and various state and foreign jurisdictions. The federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2018 through December 31, 2020. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, or state or foreign tax authorities to the extent utilized in a future period.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Unrecognized tax benefits
Balance as of December 31, 2019$15,945 
Increases (decreases) for tax positions related to current period3,149 
Increases (decreases) for tax positions related to prior periods(100)
Balance as of December 31, 202018,994 
Increases (decreases) for tax positions related to current period2,949 
Increases (decreases) for tax positions related to prior periods17 
Balance as of December 31, 202121,960 
The unrecognized tax benefits at December 31, 2021, if recognized, would not affect the Company’s effective tax rate due to its full valuation allowance position. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. The Company has elected to include interest and penalties related to uncertain tax positions as a component of its provision for income taxes. For the years ended December 31, 2021, 2020 and 2019, the Company’s accrued interest and penalties related to uncertain tax positions were not material.