Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

FASB Accounting Standards Codification (ASC) 820-10 “Fair Value Measurements and Disclosures” (ASC 820-10) provides a framework for measuring fair value under GAAP and requires expanded disclosures regarding fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1    Quoted prices in active markets for identical assets or liabilities. The Company's Level 1 assets and liabilities consist of money market investments and U.S. treasury notes.

Level 2    Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company's Level 2 assets and liabilities consist of U.S. government agency notes and corporate debt securities.

Level 3    Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company's Level 3 assets and liabilities consist of the contingent purchase price associated with the Targanta acquisition. The fair value of the contingent purchase price was determined utilizing a probability weighted discounted financial model based on management's assessment of the likelihood of achievement of certain development and net sales milestones.

The following table sets forth the Company's assets and liabilities that were measured at fair value on a recurring basis at June 30, 2011 by level within the fair value hierarchy. As required by ASC 820-10, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability:

Assets and Liabilities	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)		Balance at  June 30, 2011
	(in thousands)
Assets:
Money market	$	7,884	$	—	$	—	$	7,884
U.S. treasury notes	3,089		—		—		3,089
U.S. government agency notes	—		21,550		—		21,550
Corporate debt securities	—		63,382		—		63,382
Total assets at fair value	$	10,973	$	84,932	$	—	$	95,905
Liabilities:
Contingent purchase price	$	—	$	—	$	27,416	$	27,416
Total liabilities at fair value	$	—	$	—	$	27,416	$	27,416

The changes in fair value of the Company's Level 3 contingent purchase price during the six months ended June 30, 2011 were as follows:

	Level 3
	(in thousands)
Balance at December 31, 2010	$	25,387
Fair value adjustment to contingent purchase price included in net income	2,029
Balance at June 30, 2011	$	27,416

For the six months ended June 30, 2011, the changes in the fair value of the contingent purchased price obligations resulted from an adjustment to the discount rates used in the probability weighted discounted financial model. No changes in valuation techniques or inputs occurred during the six months ended June 30, 2011.  No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the six months ended June 30, 2011.