Fair value measurements

9 Months Ended

Sep. 30, 2012

Fair value measurements [Abstract]

Fair value measurements

2.     Fair value measurements  

The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis:

	At September 30, 2012
(in thousands)		Level 1		Level 2		Level 3		Total
Assets:
Investment in money market funds (1)		$	62,901	$		$		$	62,901
Total assets		$	62,901	$	-	$	-	$	62,901
	At December 31, 2011
(in thousands)		Level 1		Level 2		Level 3		Total
Assets:
Investment in money market funds (1)		$	73,005	$	-	$	-	$	73,005
U.S. Treasury securities (2)			-		1,966		-		1,966
Total assets		$	73,005	$	1,966	$	-	$	74,971
Liabilities:
Contingent value rights		$	-	$	-	$	4,753	$	4,753
Total liabilities		$	-	$	-	$	4,753	$	4,753

(1)   Included in cash and cash equivalents in accompanying consolidated balance sheets.

(2)   Included in investments in accompanying consolidated balance sheets.

As of September 30, 2012 and 2011, the Company did not have any transfers between Level 1 and Level 2 assets or liabilities.

The fair value of the contingent value right ("CVR") obligations is based on management's assessment of certain development and collaboration milestones, which are inputs that have no observable market (Level 3).  The obligation is measured using a discounted cash flow model. For the three and nine months ended September 30, 2012 and 2011, changes in the fair value of the CVR obligations resulted from an update to the probability and estimated timing of achievement for certain development milestones along with an adjustment to the discount rates.

For the three months ended September 30, 2012, the Company recorded no adjustment to the fair value of the CVR obligations. For the nine months ended September 30, 2012, the Company recorded decreases in the CVR obligations of $3.0 million due to Pfizer Inc. ("Pfizer") ceasing development of programs related to the CVR milestones and a $1.7 million payment related to the Company's collaboration with Abbott Laboratories ("Abbott"). For the three months ended September 30, 2011, the Company recorded a reduction of $84,000 in the value for the CVRs. For the nine months ended September 30, 2011, the Company recorded a charge of $1.3 million to increase the CVRs to fair value. The adjustments to fair value are classified in the Company's statement of operations as research and development expense within the Company's Biosciences segment.

The following table is a reconciliation of the beginning and ending balance of the liabilities measured at fair value using significant unobservable inputs (Level 3) during the nine months ended September 30, 2012 and the year ended December 31, 2011.

(in thousands)
Balance at January 1, 2011	$	14,532
Expense included in earnings		221
Expense (income) included in comprehensive income (loss)		-
Settlements		(10,000	)
Purchases, sales, issuances and settlements		-
Transfers in/(out) of Level 3		-
Balance at December 31, 2011	$	4,753
Income included in earnings		(3,005	)
Expense (income) included in comprehensive income (loss)		-
Settlements		(1,748	)
Purchases, sales and issuances
Transfers in/(out) of Level 3
Balance at September 30, 2012	$	-

Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis, as documented above, from those measured at fair value on a nonrecurring basis.  During the nine months ended September 30, 2012, the Company's SBI-087 in-process research and development ("IPR&D") asset and goodwill were measured at fair value on a nonrecurring basis (see Note 4).  As of September 30, 2012, the Company had no other assets or liabilities that were measured at fair value on a nonrecurring basis.

Both the carrying value and fair value of long-term indebtedness at September 30, 2012 and December 31, 2011 were $63.0 million and $59.5 million, respectively.