INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

18. INCOME TAXES

The following table summarizes the loss before the provision (benefit) for income taxes by jurisdiction for the periods indicated:

	For the Year Ended December 31,
	2021			2020			2019
	(in thousands)
Domestic	$	(47,633	)	$	(204,956	)	$	(489,747	)
Foreign		(371,315	)		(348,109	)		(224,133	)
Total	$	(418,948	)	$	(553,065	)	$	(713,880	)

The following table summarizes provision (benefit) for income taxes in the accompanying consolidated financial statements for the periods indicated:

	For the Year Ended December 31,
	2021			2020			2019
	(in thousands)
Current provision:
Federal	$	—		$	4		$	—
State		(40	)		624			521
Foreign		181			680			1,050
Total current provision		141			1,308			1,571
Deferred benefit:
Federal		—			—			(15	)
State		—			—			(5	)
Foreign		(309	)		(245	)		(356	)
Total deferred benefit		(309	)		(245	)		(376	)
Total income tax (benefit) expense	$	(168	)	$	1,063		$	1,195

The following table summarizes the reconciliation between the Company’s effective tax rate and the statutory income tax rate for each of the periods indicated:

	For the Year Ended December 31,
	2021				2020				2019
Federal income tax rate		21.0		%		21.0		%		21.0		%
State taxes		0.4				0.6				4.5
Research and development and other tax    credits		10.0				10.1				5.1
Valuation allowance		(9.8	)			(21.3	)			(16.8	)
Permanent differences		(0.3	)			(1.6	)			2.3
Stock-based compensation		(3.0	)			3.5				(0.6	)
Basis difference in subsidiary		—				—				(8.4	)
Foreign rate differential		(18.4	)			(12.9	)			(7.4	)
Other		0.1				0.4				0.1
Effective tax rate		(0.0	)	%		(0.2	)	%		(0.2	)	%

Permanent differences affecting the Company’s effective tax rate primarily include excess stock-based compensation tax deductions, net of non-deductible stock-based compensation and limitation on deductibility of officer compensations.

In February 2019, the Company exercised its option to acquire Myonexus. Accumulated costs of $253.7 million, associated with the Myonexus acquisition, were expensed for U.S. GAAP purposes. Of the $253.7 million in accumulated costs, $85.0 million relates to up-front and milestone payments as a result of the execution of the Warrant Agreement in May 2018 as well as certain development milestones being achieved or becoming probable of being achieved and $168.7 million relates to the exercise of the exclusive option to acquire Myonexus in February 2019. For U.S. income tax purposes, these costs are considered to be an investment in the subsidiary and are not currently deductible for tax purposes. The permanent difference related to this acquisition is separately stated in the rate reconciliation above.

The following table summarizes the analysis of the deferred tax assets and liabilities for each of the periods indicated:

	As of December 31,
	2021			2020
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	330,392		$	333,703
Difference in depreciation and amortization		31,563			31,259
Research and development tax credits		201,512			159,917
Stock-based compensation		38,132			31,212
Lease liabilities		10,890			13,120
Capitalized inventory		24,172			35,959
Debt discount		5,875			—
Other		38,315			28,381
Total deferred tax assets		680,851			633,551
Deferred tax liabilities:
Right of use asset		(7,405	)		(8,772	)
Debt discount		—			(18,044	)
Total deferred tax liabilities		(7,405	)		(26,816	)
Valuation allowance		(672,319	)		(605,848	)
Net deferred tax assets	$	1,127		$	887

The Company has evaluated the positive and negative evidence bearing upon the realizability of its U.S. net deferred tax assets, which are comprised principally of federal and state net operating loss carryforwards, research and development tax credit carryforwards, stock-based compensation expense, capitalized inventory, and intangibles. Under the applicable accounting standards, management has considered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of net federal and state deferred tax assets. Accordingly, a full valuation allowance of the U.S. net deferred tax asset is maintained at December 31, 2021 and 2020. The net change in the valuation allowance for deferred tax assets was an increase of $66.5 million and $117.0 million for the years ended December 31, 2021 and 2020, respectively. This increase for the year ended December 31, 2021 was primarily due to the generation of federal and state income tax credits and a decrease in the debt discount deferred tax liability that was recorded through additional paid-in capital as a result of the Company's early adoption of ASU 2020-06.

The Company generated foreign deferred tax assets mainly consisting of net operating loss carryforwards, stock-based compensation and unrealized gain/losses. Based upon the income projections in the majority of the foreign jurisdictions, the Company believes it will realize the benefit of its future deductible differences in these jurisdictions. As such, the Company has not recorded a valuation allowance against these foreign jurisdictions. Brazil, the Netherlands, Czech Republic and one of the entities in the United Kingdom have generated deferred tax assets, which consist of net operating loss carryforwards and stock-based compensation expense. The Company has concluded that it is more likely than not that we will not recognize the future benefits of the deferred tax assets, and accordingly, a full valuation allowance has been recorded against these foreign deferred tax assets.

As of December 31, 2021, the Company had federal and state net operating loss carryforwards of $1,280.4 million and $841.2 million, respectively, available to reduce future taxable income. The federal and state net operating loss carry forwards of $577.2 million and $797.0 million will expire at various dates between 2022 and 2041. The federal and state net operating loss carryforwards of $703.2 million and $44.2 million, respectively, can be carried forward indefinitely. Utilization of these net operating losses could be limited under Section 382 of the Internal Revenue Code and similar state laws based on historical or future ownership changes and the value of the Company’s stock. Additionally, the Company has $139.2 million and $77.0 million of federal and state research and development credits, respectively, available to offset future taxable income. These federal and state research and development credits begin to expire between 2022 and 2041 and between 2022 and 2036, respectively. The Company also has foreign net operating loss carryforwards of $13.6 million, mainly derived from the net operating loss generated by its subsidiary in Brazil, which may be carried forward indefinitely.

The Company, or one of its subsidiaries, files income tax returns in the U.S., 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, 2021. 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, state or foreign tax authorities to the extent utilized in a future period.

The follow table summarizes the reconciliation of the beginning and ending amount of total unrecognized tax benefits for each of the periods indicated:

	For the Year Ended December 31,
	2021			2020		2019
	(in thousands)
Balance at beginning of the period	$	48,475		$	41,753	$	37,544
Increase related to current year tax positions		5,503			6,722		4,275
Increase related to prior year tax positions		—			—		109
Decrease related to prior year tax positions		(163	)		—		(175	)
Balance at end of the period	$	53,815		$	48,475	$	41,753

The balance of total unrecognized tax benefits at December 31, 2021, if recognized, would not affect the effective tax rate on income from continuing operations, due to a full valuation allowance against the Company’s U.S. deferred tax assets. The Company does not expect that the amount of unrecognized tax benefits to change significantly in the next twelve months. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. It had no accrual for interest or penalties on its consolidated balance sheets at December 31, 2021 or 2020. No interest and/or penalties were recognized in 2021 or 2020.

The Company’s intent is to only make distributions from non-U.S. subsidiaries in the future when they can be made at no net tax cost. Otherwise, the Company considers all of its foreign earnings to be permanently reinvested outside of the U.S. and has no plans to repatriate these foreign earnings to the U.S. The Company has no material unremitted earnings from its non-U.S. subsidiaries.

The Tax Cuts and Jobs Act created a new provision that certain income earned by foreign subsidiaries, known as global intangible low-tax income, must be included in the gross income of their U.S. shareholder. The Company has adopted a policy to account for this provision as a period cost.