5. Investments and Fair Value Measurements

Available‑for‑Sale Securities

The estimated fair value of marketable securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. The fair value of our marketable securities classified within Level 2 is based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two‑sided markets, benchmark securities, bids, offers and reference data including market research publications.

Available‑for‑sale securities are summarized below:


		March 31, 2018
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	99,833	$	—	$	(372)	$	99,461
US government agency securities	Level 2		37,187		—		(89)		37,098
Corporate notes	Level 2		120,945		1		(383)		120,563
Commercial paper	Level 2		73,523		—		(11)		73,512
Marketable securities			331,488		1		(855)		330,634
Money market funds	Level 1		73,184		—		—		73,184
Total		$	404,672	$	1	$	(855)	$	403,818


		December 31, 2017
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	89,896	$	—	$	(342)	$	89,554
US government agency securities	Level 2		50,891		—		(113)		50,778
Corporate notes	Level 2		141,226		2		(280)		140,948
Commercial paper	Level 2		19,893		—		—		19,893
Marketable securities			301,906		2		(735)		301,173
Money market funds	Level 1		69,055		—		—		69,055
Total		$	370,961	$	2	$	(735)	$	370,228

As of March 31, 2018, all of the marketable securities had contractual maturities within two years and the weighted average maturity of the marketable securities was approximately six months. There were no transfers between Level 1 and Level 2 during the periods presented and there have been no changes to our valuation techniques during the three months ended March 31, 2018.

In general, we invest in debt securities with the intent to hold such securities until maturity at par value. We do not intend to sell the investments that are currently in an unrealized loss position, and it is unlikely that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. We have determined that the gross unrealized losses on our marketable securities, as of March 31, 2018, were temporary in nature. There were no material unrealized losses on investments which have been in a loss position for more than twelve months as of March 31, 2018.

As of March 31, 2018, our accumulated other comprehensive loss on our condensed consolidated balance sheets consisted of net unrealized losses on available-for-sale investments. During the three months ended March 31, 2018, we did not sell any of our marketable securities.

Long-term Debt Fair Value

We have $230.0 million of 3.25% convertible senior notes (“Notes”) outstanding as of March 31, 2018 with an estimated fair value of $234.0 million. The estimated fair value was primarily based upon the underlying price of Theravance Biopharma’s publicly traded shares and other observable inputs as of March 31, 2018. The inputs to determine fair value of the Notes are categorized as Level 2 inputs. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.