Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Assets and Liabilities Measured at Fair Value on Recurring Basis

Except for the Company’s Level 2 liabilities which are discussed in Note 10, “Convertible Senior Notes,” the following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2016 and December 31, 2015, by level, within the fair value hierarchy:



	As of June 30, 2016								As of December 31, 2015
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 as of June 30, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2015
	(in thousands)
Assets:
Money market	$	56,058	$	—	$	—	$	56,058	$	6,030	$	—	$	—	$	6,030
Total assets at fair value	$	56,058	$	—	$	—	$	56,058	$	6,030	$	—	$	—	$	6,030
Liabilities:
Contingent purchase price	$	—	$	—	$	118,571	$	118,571	$	—	$	—	$	123,757	$	123,757
Total liabilities at fair value	$	—	$	—	$	118,571	$	118,571	$	—	$	—	$	123,757	$	123,757

Fair Value Inputs, Quantitative Information

The following table provides quantitative information associated with the fair value measurements of the Company’s Level 3 liabilities:



	Fair Value as of June 30, 2016		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(in thousands)
Targanta:
Contingent purchase price	$	6,171	Probability-adjusted discounted cash flow	Probability of success	20%
				Period in which milestone is expected to be achieved	2020
				Discount rate	11%
Incline:
Contingent purchase price	$	27,000	Probability-adjusted discounted cash flow	Probabilities of successes	64% - 72% (67%)
				Period in which milestones are expected to be achieved	2018 - 2019
				Discount rate	18%
Rempex:
Contingent purchase price: commercial milestones	$	57,400	Probability-adjusted discounted cash flow	Probabilities of successes	11% - 95% (51%)
				Period in which milestones are expected to be achieved	2016 - 2021
				Discount rate	3.0% - 5.7%
Contingent purchase price: sales milestones	$	11,000	Risk-adjusted revenue simulation	Probabilities of successes	11% - 63% (25%)
				Period in which milestones are expected to be achieved	2018 - 2022
				Discount rate	4.5% - 5.9%

Annovation:
Contingent purchase price	$	17,000	Probability-adjusted discounted cash flow	Probabilities of successes	9% - 50% (30%)
				Period in which milestones are expected to be achieved	2017 - 2030
				Discount rate	3.3% - 7.3%



	Fair Value as of December 31, 2015		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(in thousands)
Targanta:
Contingent purchase price	$	5,857	Probability-adjusted discounted cash flow	Probability of success	20%
				Period in which milestone is expected to be achieved	2020
				Discount rate	11%
Incline:
Contingent purchase price	$	28,600	Probability-adjusted discounted cash flow	Probabilities of successes	64% - 72% (67%)
				Period in which milestones are expected to be achieved	2017 - 2018
				Discount rate	18%
Rempex:
Contingent purchase price: commercial milestones	$	63,000	Probability-adjusted discounted cash flow	Probabilities of successes	11% - 95% (56%)
				Period in which milestones are expected to be achieved	2016 - 2020
				Discount rate	3.6% - 6.0%
Contingent purchase price: sales milestones	$	10,300	Risk-adjusted revenue simulation	Probabilities of successes	11% - 63% (30%)
				Period in which milestones are expected to be achieved	2018 - 2022
				Discount rate	5.5% - 6.7%

Annovation:
Contingent purchase price	$	16,000	Probability-adjusted discounted cash flow	Probabilities of successes	8% - 50% (31%)
				Period in which milestones are expected to be achieved	2016 - 2030
				Discount rate	4.1% - 8.2%

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The changes in fair value of the Company’s Level 3 contingent purchase price during the three and six months ended June 30, 2016 and 2015 were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(in thousands)
Balance at beginning of period	$	119,612		$	369,552		$	123,757		$	351,134
Fair value of contingent purchase price with respect to Annovation as of February 2, 2015	—			—			—			18,000
Settlements	(4,474		)	(174,550		)	(7,247		)	(175,650		)
Fair value adjustment to contingent purchase prices included in net income (loss)	3,433			12,158			2,061			13,676
Balance at end of period	$	118,571		$	207,160		$	118,571		$	207,160