FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2019

The Company measures certain financial assets and liabilities at fair value in accordance with the policy described in Note 3 – Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The following tables present the classification within the fair value hierarchy of financial assets and liabilities not disclosed elsewhere in these Condensed Consolidated Financial Statements that are remeasured on a recurring basis as of September 30, 2019 and December 31, 2018. There were no financial assets or liabilities that were remeasured using a quoted price in active markets for identical assets (Level 1) as of September 30, 2019.



	Fair Value Measurements at September 30, 2019
		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Other current assets:
NQDC Plan assets		$	1,135	$	—	$	1,135
Other assets:
NQDC Plan assets		15,039		—		15,039
Restricted investments ⁽¹⁾		3,157		—		3,157
Total other assets		18,196		—		18,196
Total assets		$	19,331	$	—	$	19,331
Liabilities:
Current liabilities:
NQDC Plan liability ⁽²⁾		$	1,135	$	—	$	1,135
Contingent consideration		—		10,000		10,000
Total current liabilities		1,135		10,000		11,135
Other long-term liabilities:
NQDC Plan liability ⁽²⁾		15,039		—		15,039
Contingent consideration		—		48,930		48,930
Total other long-term liabilities		15,039		48,930		63,969
Total liabilities		$	16,174	$	58,930	$	75,104



	Fair Value Measurements at December 31, 2018
	Quoted Price in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Other current assets:
NQDC Plan assets	$	—	$	370	$	—	$	370
Restricted investments ⁽¹⁾	—		9,581		—		9,581
Total other current assets	—		9,951		—		9,951
Other assets:
NQDC Plan assets	—		12,828		—		12,828
Restricted investments ⁽¹⁾	—		2,450		—		2,450
Strategic investments ⁽³⁾	942		—		—		942
Total other assets	942		15,278		—		16,220
Total assets	$	942	$	25,229	$	—	$	26,171
Liabilities:
Current liabilities:
NQDC Plan liability	$	55	$	370	$	—	$	425
Contingent consideration	—		—		85,951		85,951
Total current liabilities	55		370		85,951		86,376
Other long-term liabilities:
NQDC Plan liability	17,598		12,828		—		30,426
Contingent consideration	—		—		46,883		46,883
Total other long-term liabilities	17,598		12,828		46,883		77,309
Total liabilities	$	17,653	$	13,198	$	132,834	$	163,685


(1)	The restricted investments at September 30, 2019 and December 31, 2018 secure the Company's irrevocable standby letters of credit obtained in connection with certain commercial agreements.

(2)

The Company’s NQDC Plan was amended during the second quarter of 2019, which resulted in a change to the classification of the obligation associated with the Company's common stock held in the NQDC Plan. The obligation was previously classified as a liability recorded at fair value and has been reclassified into equity and recorded at the shares' respective grant date fair values at June 30, 2019. The change to the NQDC Plan related to the prohibition of participants to diversify investments for deferrals of Company stock contributed into other types of investments. The NQDC Plan liabilities classified as Level 2 represent investments held in plan assets excluding shares of the Company's common stock.


(3)	The Company had investments in marketable equity securities measured using quoted prices in an active market that were considered strategic investments and were included in Other Assets on the Company's Condensed Consolidated Balance Sheets. During the second quarter of 2019, the Company realized an immaterial gain upon the sale of the shares.

There were no transfers between levels during the three and nine months ended September 30, 2019.

The following table represents a roll-forward of contingent consideration.



Contingent consideration at December 31, 2018	$	132,834
Changes in fair value of other contingent consideration	19,916
Milestone payments to Ares Trading S.A. (Merck Serono)	(83,472		)
Milestone payments to former LEAD Therapeutics, Inc. shareholders	(5,987		)
Realized gain on settlement of contingent consideration	(1,928		)
Foreign exchange remeasurement of Euro denominated contingent consideration	(2,433		)
Contingent consideration at September 30, 2019	$	58,930

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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