Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis

The following tables represent the fair value of our financial assets and financial liabilities measured at fair value on a recurring basis and which level was used in the fair value hierarchy at the respective dates.


						Fair Value Measurements at the Reporting Date Using
	Carrying			Fair
	Value			Value		Level 1		Level 2		Level 3
	(in thousands)
As of March 31, 2015
Assets
Short-term investments	$	70,354		$	70,354	$	—	$	70,354	$	—
Long-term investments		1,225			1,225		—		1,225		—

Liabilities
Convertible senior notes		116,871	(1)		164,079		—		164,079		—
Contingent consideration		45,840			45,840		—		—		45,840
Royalties		971			971		—		—		971
Lease exit costs		1,500			1,500		—		—		1,500


						Fair Value Measurements at the Reporting Date Using
	Carrying			Fair
	Value			Value		Level 1		Level 2		Level 3
	(in thousands)
As of December 31, 2014
Assets
Short-term investments	$	75,535		$	75,535	$	—	$	75,535	$	—
Long-term investments		1,225			1,225		—		1,225		—

Liabilities
Convertible senior notes		114,803	(1)		153,978		—		153,978		—
Contingent consideration		43,740			43,740		—		—		43,740
Royalties		962			962		—		—		962
Lease exit costs		1,207			1,207		—		—		1,207

(1)	The carrying amount of our convertible senior notes is net of unamortized discount. See Note 7 (Debt) for more information.

Summary of Change in Fair Value of Contingent Consideration as Determined by Level 3 Inputs

The following table summarizes the change in fair value, as determined by Level 3 inputs, of the contingent consideration for the three months ended March 31, 2015:


	Contingent Consideration
	(in thousands)

Beginning balance	$	43,740
Payments		—
Change in fair value		2,100

Ending balance	$	45,840

Summary of Change in Fair Value of Royalties as Determined by Level 3 Inputs

The following table summarizes the change in fair value, as determined by Level 3 inputs, of the royalties for the three months ended March 31, 2015:


	Royalties
	(in thousands)

Beginning balance	$	962
Payments		(10	)
Change in fair value		19

Ending balance	$	971

Summary of Change in Fair Value of Lease Exit Costs as Determined by Level 3 Inputs

The following table summarizes the change in fair value, as determined by Level 3 inputs, of the lease exit costs for the three months ended March 31, 2015:


	Lease Exit Costs
	(in thousands)

Beginning balance	$	1,207
Adjustments		454
Payments		(172	)
Change in fair value		11

Ending balance	$	1,500

Schedule of Quantitative Information for Level 3 Fair Value Measurements

The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of March 31, 2015:


	Valuation Methodology		Significant Unobservable Input		Weighted Average (range, if applicable)

Contingent consideration		Probability weighted income approach		Milestone dates	2019 to 2022
				Discount rate	17.0% to 24.0%
				Probability of occurrence	0% to 100%

Royalties		Discounted cash flow		Discount rate	4.8% to 7.8%

Lease exit costs		Discounted cash flow		Sublease start date	July 1, 2016
				Sublease rate	$26.50/square foot
				Discount rate	3.5%