Note 3 - Fair Value Measurements

9 Months Ended

Mar. 31, 2015

(3)	Fair Value Measurements

As per U.S. GAAP, a fair value hierarchy has been established which requires the Company to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy describes three levels of inputs that may be used to measure fair value:

	Level 1	Quoted prices in active markets for identical assets or liabilities.
	Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
	Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table sets forth the financial assets and liabilities that were measured at fair value on a recurring basis at March 31, 2015 and June 30, 2014, by level, within the fair value hierarchy. The assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Biota Pharmaceuticals, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(for the quarterly period ended March 31, 2015)

The Company’s long-term and short-term investments have been classified as Level 2, which have been initially valued at the transaction price and subsequently revalued at the end of each reporting period, utilizing a third party pricing service. The pricing service utilizes industry standard valuation models and observable market inputs to determine value that include surveying the bond dealer community, obtaining benchmark quotes, incorporating relevant trade data, and updating spreads daily. There have been no transfers of assets or liabilities between the fair value measurement classifications during the periods presented.

			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable
	Total		(Level 1)		(Level 2)		Inputs (Level 3)
March 31, 2015
Cash equivalents	$	21.2	$	21.2	$	—	$	—
Short-term investments available-for-sale		12.0		—		12.0		—
Long-term investments available-for-sale		0.9		—		0.9		—
Total	$	34.1	$	21.2	$	12.9	$	—

			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable
	Total		(Level 1)		(Level 2)		Inputs (Level 3)
June 30, 2014
Cash equivalents	$	36.9	$	36.9	$	—	$	—
Long-term investments available-for-sale		10.0		—		10.0		—
Total	$	46.9	$	36.9	$	10.0		—

Cash equivalents consist primarily of money market funds. Short-term investments consist of securities with a maturity less than 365 days from the date of acquisition. Long-term investments consist of securities classified as available-for-sale and have maturities greater than 365 days from the date of acquisition. The Company’s short and long investments consist of U.S. agency securities, U.S. Treasury securities, and corporate notes.

The Company has had no realized gains or losses from the sale of investments for the nine months ended March 31, 2015. The following table shows the unrealized gains and losses and fair values for those investments as of March 31, 2015 and June 30, 2014, aggregated by major security type:

			Unrealized		Unrealized
	At Cost		Gains		(Losses)			At Fair Value
March 31, 2015
Money market funds	$	21.2	$	—	$	—		$	21.2
Debt securities of U.S. government agencies		2.5		—		—			2.5
U.S. Treasury securities		7.6		—		(0.1	)		7.5
Corporate Securities		2.9		—		—			2.9
Total	$	34.2	$	—	$	(0.1	)	$	34.1

			Unrealized		Unrealized
	At Cost		Gains		(Losses)		At Fair Value
June 30, 2014
Money market funds	$	36.9	$	—	$	—	$	36.9
Debt securities of U.S. government agencies		4.9		—		—		4.9
U.S. Treasury securities		5.1		—		—		5.1
Total	$	46.9	$	—	$	—	$	46.9

As of March 31, 2015 and June 30, 2014, the Company had investments in an unrealized loss position. The Company has determined that the unrealized losses on these investments at March 31, 2015 and June 30, 2014 are temporary in nature and expects the securities to mature at their stated maturity principal.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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