INCOME TAXES

12 Months Ended

Dec. 31, 2023

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,
	2023			2022			2021
	(in thousands)
Domestic	$	(238,660	)	$	(251,384	)	$	(47,633	)
Foreign		(281,438	)		(438,579	)		(371,315	)
Total	$	(520,098	)	$	(689,963	)	$	(418,948	)

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,
	2023			2022			2021
	(in thousands)
Current provision:
Federal	$	4,180		$	—		$	—
State		11,111			13,193			(40	)
Foreign		753			944			181
Total current provision		16,044			14,137			141
Deferred benefit:
Federal		—			—			—
State		—			—			—
Foreign		(165	)		(612	)		(309	)
Total deferred benefit		(165	)		(612	)		(309	)
Total income tax expense (benefit)	$	15,879		$	13,525		$	(168	)

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,
	2023				2022				2021
Federal income tax rate		21.0		%		21.0		%		21.0		%
State taxes		(7.7	)			4.1				0.4
Research and development tax    credits		28.3				6.9				10.0
Valuation allowance		(13.7	)			(14.7	)			(9.8	)
Permanent differences		(0.2	)			(1.1	)			(0.3	)
Stock-based compensation		(2.0	)			(1.5	)			(3.4	)
Excess benefit stock deductions		1.6				0.3				0.4
Foreign rate differential		(11.3	)			(13.2	)			(18.4	)
Non-deductible repurchase premium		—				(2.2	)			—
Non-deductible premium on note conversion		(15.3	)			—				—
Other		(3.8	)			(1.6	)			0.1
Effective tax rate		(3.1	)	%		(2.0	)	%		(0.0	)	%

The significant items impacting the Company’s effective tax rate for each of the periods primarily includes state taxes, research and development tax credits, valuation allowance and foreign rate differential. For the year ended December 31, 2023, the

Company's effective tax rate was also significantly impacted by the $379.9 million non-deductible premium paid on the conversion of the 2024 Notes.

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

	As of December 31,
	2023			2022
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	154,948		$	241,826
Difference in depreciation and amortization		36,611			39,725
Research and development tax credits		374,017			261,067
Stock-based compensation		94,452			80,193
Lease liabilities		33,792			11,782
Capitalized inventory		35,269			33,366
Debt discount		25,597			35,975
Capitalized research and development costs		106,534			74,886
Other		50,308			44,022
Total deferred tax assets		911,528			822,842
Deferred tax liabilities:
Right of use asset		(25,800	)		(9,174	)
Debt discount		—			—
Total deferred tax liabilities		(25,800	)		(9,174	)
Valuation allowance		(883,665	)		(811,908	)
Net deferred tax assets	$	2,063		$	1,760

For tax years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to currently deduct research and development expenses and requires taxpayers to capitalize and amortize the costs over five years for research activities performed in the United States and 15 years for research activities performed outside the United States. The requirement to capitalize research and development costs for tax purposes resulted in the Company having taxable profits and recording federal and state tax expense of $4.2 million and $11.1 million, respectively. The state tax expense of $11.1 million is primarily related to the temporary suspension of utilizing net operating loss carryforwards in certain states the Company operates in.

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, capitalized research and development costs, 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 its net federal and state deferred tax assets. Accordingly, a full valuation allowance against the U.S. net deferred tax asset is maintained at December 31, 2023 and 2022. The net change in the valuation allowance for deferred tax assets was an increase of $71.8 million and $139.6 million for the years ended December 31, 2023 and 2022, respectively. This increase for the year ended December 31, 2023 was primarily due to the capitalization of section 174 costs and federal and state tax credits recorded in the current year.

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 the net deferred tax assets in these foreign jurisdictions. Brazil and the Netherlands have generated deferred tax assets, which consist primarily of net operating loss carryforwards. The Company has concluded that it is more likely than not that it will not recognize the future benefits of the deferred tax assets in these jurisdictions, and accordingly, a full valuation allowance has been recorded against these foreign deferred tax assets.

As of December 31, 2023, the Company had federal and state net operating loss carryforwards of $550.3 million and $473.1 million, respectively, available to reduce future taxable income. Federal and state net operating loss carry forwards of $262.2 million and $445.0 million will expire at various dates between 2024 and 2041. Federal and state net operating loss carryforwards of $288.1 million and $28.1 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 $102.6 million and $40.5 million of federal and state research and

development credits, respectively, and $239.4 million of federal orphan drug tax credits available to offset future tax liabilities. These federal and state research and development credits expire between 2024 and 2043 and between 2024 and 2038, respectively. The federal orphan drug credits expire between 2033 and 2043. The Company also has foreign net operating loss carryforwards of $16.7 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, 2020 through December 31, 2023. 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 following 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,
	2023			2022			2021
	(in thousands)
Balance at beginning of the period	$	61,704		$	53,815		$	48,475
Increase related to current year tax positions		4,126			8,079			5,503
Increase related to prior year tax positions		—			—			—
Decrease related to prior year tax positions		(800	)		(190	)		(163	)
Balance at end of the period	$	65,030		$	61,704		$	53,815

The balance of total unrecognized tax benefits at December 31, 2023, 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 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, 2023 or 2022. No interest and/or penalties were recognized in 2023, 2022, or 2021.

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.