Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Summary of financial instruments measured at fair value on a recurring basis

The following table summarizes the financial instruments measured at fair value on a recurring basis in the accompanying condensed balance sheets as of June 30, 2014 and December 31, 2013 (in thousands):

	June 30, 2014
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents:
Cash	$	1,133	$	—	$	—	$	1,133
Money market funds (1)	31,417		—		—		31,417
Domestic corporate debt securities (2)	—		5,381		—		5,381
Domestic corporate commercial paper (2)	—		10,440		—		10,440
Total	$	32,550	$	15,821	$	—	$	48,371
Marketable securities:
Domestic corporate debt securities (2)	—		22,152		—		22,152
Domestic corporate commercial paper (2)	—		8,498		—		8,498
Total	$	—	$	30,650	$	—	$	30,650

	December 31, 2013
	Level 1		Level 2		Level 3		Total

Assets
Cash and cash equivalents:
Cash	$	2,710	$	—	$	—	$	2,710
Money market funds (1)	9,593		—		—		9,593
	$	12,303	$	—	$	—	$	12,303

Liabilities
Warrant liability (3)	$	—	$	—	$	1,945	$	1,945
Stock liability (3)	—		—		5,328		5,328
	$	—	$	—	$	7,273	$	7,273

(1) Fair value is based upon quoted market prices.

(2) Fair value is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Inputs are obtained from various sources, including market participants, dealers and brokers.

(3) Fair value is determined using the probability-weighted expected return model (“PWERM”), as discussed below. Changes in the fair value of the Level 3 assets and liabilities are recorded as other (expense) income in the condensed statement of operations.

Roll-forward of fair value of assets determined by Level 3 inputs

The following table provides a roll-forward of the fair value of the assets, where fair value is determined using Level 3 inputs (in thousands):

Balance at December 31, 2013	$	—
Issuance of shares of Series A-6 - prepayment	1,220
Nordic amendment	(1,220		)
Balance at June 30, 2014	$	—

Roll-forward of fair value of liabilities determined by Level 3 inputs

The following table provides a roll-forward of the fair value of the liabilities, where fair value is determined using Level 3 inputs (in thousands):

Balance at December 31, 2013	$	7,273
Issuance of shares of Series A-6	(8,889		)
Additions — accrued shares of Series A-6	2,717
Additions — warrants	1,511
Change in fair value	505
Warrant liability reclassified to equity	(3,117		)
Balance at June 30, 2014	$	—

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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