Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

The Company is subject to U.S. federal and various state corporate income taxes as well as taxes in foreign jurisdictions for the foreign parent and where foreign subsidiaries have been established.

Net loss before taxes

For the years ended December 31, 2024, 2023 and 2022, the net loss before income taxes consist of the following (in thousands):

Years Ended December 31,
2024	2023	2022

Domestic	$	41,232		$	30,357		$	1,321
Foreign		(403,897	)		(181,079	)		(651,821	)
Total	$	(362,665	)	$	(150,722	)	$	(650,500	)

The (provision) benefit for income taxes consist of the following (in thousands):

	Years Ended December 31,
	2024			2023			2022
Current income taxes:
Federal	$	(2,592	)	$	(2,318	)	$	(444	)
State		(1,479	)		(994	)		(241	)
Foreign		—			—			—
Total current income taxes		(4,071	)		(3,312	)		(685	)
Deferred income taxes:
Federal	$	492			424			1,010
State		(8	)		—			—
Foreign		—			—			—
Total deferred income taxes		484			424			1,010
Total income tax (provision) benefit	$	(3,587	)	$	(2,888	)	$	325

A reconciliation of income tax expense computed at the statutory corporate income tax rate to the effective income tax rate for the years ended December 31, 2024, 2023 and 2022 is as follows:

	Years Ended December 31,
	2024			2023			2022
Income tax expense at statutory rate		11.9	%		11.9	%		11.9	%
State income tax, net of federal benefit		1.1	%		2.3	%		1.2	%
Nondeductible expenses		0.0	%		(0.2	)%		(0.2	)%
Foreign rate differential		(1.0	)%		(2.1	)%		(0.1	%)
Statutory to U.S. GAAP permanent differences		0.0	%		0.0	%		0.0	%
Stock-based compensation		(0.4	)%		(4.0	%)		(0.2	)%
Impact of deferred rate change		(0.1	)%		0.1	%		(0.1	)%
Research credits		2.7	%		8.2	%		3.3	%
Change in valuation allowance		(15.2	)%		(17.2	)%		(15.8	)%
Other Rate Items		0.0	%		(0.9	)%		0.0	%
Effective income tax rate		(1.0	%)		(1.9	%)		—

The federal statutory rate reflects the Switzerland mixed company service rate.

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 are comprised of the following (in thousands):

	Years Ended December 31,
	2024			2023
Deferred tax assets:
Net operating loss carryforwards	$	178,061		$	133,384
Accruals and reserves		4,479			4,485
Operating lease liabilities		60,570			65,177
Other deferred tax assets		17,809			15,987
Stock-based compensation		20,553			18,346
Research credit		74,012			70,404
Total deferred tax assets		355,484			307,783
Less valuation allowance		(282,739	)		(227,615	)
Net deferred tax assets		72,745			80,168
Deferred tax liabilities:
Depreciation		(34,078	)		(38,725	)
Operating lease assets		(38,845	)		(42,058	)
Intangible assets		—			(4	)

Other deferred tax liabilities		(36	)		—
Total deferred tax liabilities		(72,959	)		(80,787	)
Long term deferred taxes	$	(214	)	$	(619	)

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of worldwide operating losses, the Company has concluded that it is more-likely-than-not that the benefit of its U.S. and non-U.S. deferred tax assets will not be realized. Accordingly, as of December 31, 2024 and 2023, the Company has provided a full valuation allowance against its net deferred tax assets in Switzerland and the United Kingdom. The Company has also provided a valuation allowance against the U.S. deferred tax assets that cannot be realized by existing deferred tax liabilities based upon when they are scheduled to reverse. The valuation allowance increased by $55.1 million during 2024, which is primarily attributable to increase in net operating loss carryforwards as a result of current year net loss.

As of December 31, 2024, the Company had no available U.S. federal net operating loss carryforwards. As of December 31, 2024, the Company had available non-U.S. net operating loss carryforwards of $2,982.0 million of which $1,489.7 million relate to Switzerland, $1,489.7 million relate to the Canton of Zug, and $2.6 million relate to the Company’s wholly-owned subsidiary in the United Kingdom. The net operating losses generated in Switzerland and the Canton of Zug begin to expire in 2027 and the net operating losses generated in the United Kingdom can be carried forward indefinitely.

As of December 31, 2024, the Company had U.S. domestic federal research and development credit carryforwards of $29.8 million that begin to expire in 2040 for federal purposes, which are net of uncertain tax positions of $22.3 million. As of December 31, 2024, the Company had U.S. domestic federal orphan drug credit carryforwards of $27.0 million which begin to expire in 2040 for federal purposes, which are net of uncertain tax positions of $11.5 million. As of December 31, 2024, the Company had U.S. domestic state research and development credit carryforwards of $21.8 million which begin to expire in 2035, which are net of uncertain tax positions of $14.5 million.

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement by prescribing the minimum recognition threshold and measurement of a tax position taken or expected to be taken in a tax return.

As of December 31, 2024, the Company had gross unrecognized tax benefits of $50.0 million of which $45.6 million would favorably impact the effective tax rate if recognized. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2024, interest and penalties recognized in the Company's financial statements related to uncertain tax positions were not material. As of December 31, 2023 and 2022, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the Company’s consolidated statements of operations and comprehensive loss.

The aggregate changes in gross unrecognized tax benefits were as follows (in thousands):

	Years Ended December 31,
	2024		2023			2022
Balance at beginning of year	$	44,148	$	34,536		$	21,395
Increases for tax positions taken during current period		5,777		9,703			10,439
Increases for tax positions taken in prior periods		34		—			2,702
Decreases for tax positions taken during current period		—		—			—
Decreases for tax positions taken in prior periods		—		(91	)		—
Balance at end of year	$	49,959	$	44,148		$	34,536

The Company files income tax returns in the U.S. federal jurisdiction, Massachusetts, California and certain non-U.S. jurisdictions. The Company is subject to U.S. federal, Massachusetts, California and non-U.S. income tax examinations by authorities for tax years ending after December 31, 2020. Research credits generated in prior tax years that are closed for examination may still be adjusted upon future examination if they have or will be used in a future period. The Company is subject to income tax examinations

by authorities in its non-U.S. jurisdictions for all years.