Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We record a tax provision or benefit for interim periods using an estimated annual effective tax rate. This rate is applied to the current year-to-date pre-tax income or loss to determine the income tax provision or benefit allocated to the interim period. The income tax effects of unusual or infrequent items including a change in the valuation allowance as a result of a change in judgment about the realizability of the related deferred tax asset are excluded from the estimated annual effective tax rate and are required to be discretely recognized in the interim period they occur.

For the three and six months ended June 30, 2021, there was no provision for income taxes as we incurred pretax losses and as of June 30, 2021, we maintained a full valuation allowance against our net deferred tax assets.

For the three and six months ended June 30, 2020, we recognized an income tax benefit of $17.4 million on pretax loss of $70.7 million and $96.5 million, respectively, related to the completion of our in-process research program upon approval of Fintepla for marketing by the FDA. Until June 2020, our net deferred tax liability was related to book and tax basis differences for our indefinite-lived Fintepla IPR&D intangible asset that was acquired through the October 2014 acquisition of Brabant Pharma Limited. Previously, this deferred tax liability was not considered to be a source of income for purposes of establishing our deferred tax asset valuation allowance due to the uncertainty associated with the timing of reversals for this temporary tax difference. Upon FDA approval of Fintepla in June 2020, the indefinite-lived asset was reclassified to a finite-lived intangible asset and was subject to amortization over its estimated useful life. Because the detail scheduling of the timing of reversal for this temporary tax difference became available, the deferred tax liability associated with this finite-lived intangible asset was considered to be a source of income when assessing the realizability of our deferred tax assets as of June 30, 2020. We therefore recorded a $17.4 million income tax benefit for the three and six months ended June 30, 2020 with a corresponding reduction to our valuation allowance on deferred tax assets. The income tax benefit recognized for the three and six months ended June 30, 2020 included the effects of foreign exchange differences on remeasurement of the deferred tax liability. An immaterial portion of the adjustment for foreign exchange differences was related to prior periods.