Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Assets and liabilities measured at fair value on recurring basis

The following tables present our money market funds and auction rate securities and contingent consideration liability measured at fair value on a recurring basis as of the dates indicated, classified by valuation hierarchy:

			Fair Value Measurements at September 30, 2014
	Balance at September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	70,397	$	70,397	$	-	$	-
Auction rate securities		2,208		-		-		2,208
Total Assets	$	72,605	$	70,397	$	-	$	2,208

Liability:
Contingent consideration	$	17,100	$	-	$	-	$	17,100
Total Liability	$	17,100	$	-	$	-	$	17,100

			Fair Value Measurements at December 31, 2013
	Balance at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	60,364	$	60,364	$	-	$	-
Auction rate securities		2,208		-		-		2,208
Total Assets	$	62,572	$	60,364	$	-	$	2,208

Liability:
Contingent consideration	$	15,700	$	-	$	-	$	15,700
Total Liability	$	15,700	$	-	$	-	$	15,700

Quantitative information for fair value measurement of Level 3

The following table presents quantitative information pertaining to the September 30, 2014 fair value measurement of the Level 3 inputs. The assumptions remained unchanged since December 31, 2013:

	Fair Value as of September 30, 2014		Fair Value as of December 31, 2013		Valuation Technique	Unobservable Input	Range (Weighted Average)

Asset:
Auction rate securities	$	2,208	$	2,208	Discounted cash flow model	Redemption period	5 to 15 years (6 years)
						Discount rate		0.25% - 3.00% (1.55%)
Contingent consideration liability:
Azedra commercialization	$	2,400	$	2,300	Probability adjusted discounted cash flow model	Probability of success		40%
						Period of milestone expected achievement		2017
						Discount rate		10%

1404 commercialization	$	2,200	$	2,000	Probability adjusted discounted cash flow model	Probability of success		31%
						Period of milestone expected achievement		2018
						Discount rate		10%

MIP-1095 commercialization	$	500	$	500	Probability adjusted discounted cash flow model	Probability of success		19%
						Period of milestone expected achievement		2021
						Discount rate		10%

Net sales targets	$	12,000	$	10,900	Monte-Carlo simulation	Probability of success		19% - 40% (32.8%)
						Period of milestone expected achievement		2018 - 2022
						Discount rate		12.5%

Summary of activities in financial instruments with Level 3 inputs

For those financial instruments with significant Level 3 inputs, the following table summarizes the activities for the periods indicated:

	Asset – Auction Rate Securities Fair Value Measurements Using Significant Unobservable Inputs (Level 3) For the Three Months Ended September 30,
	2014		2013
Description
Balance at beginning of period	$	2,208	$	2,208
Transfers into Level 3		-		-
Total realized/unrealized gains (losses)
Included in net income (loss)		-		-
Included in other comprehensive income (loss)		-		-
Settlements		-		-
Balance at end of period	$	2,208	$	2,208
Total amount of unrealized gains (losses) for the period included in other comprehensive income (loss) attributable to the change in fair market value of related assets still held at the reporting date	$	-	$	-

	Asset – Auction Rate Securities Fair Value Measurements Using Significant Unobservable Inputs (Level 3) For the Nine Months Ended September 30,
	2014		2013
Description
Balance at beginning of period	$	2,208	$	3,240
Transfers into Level 3		-		-
Total realized/unrealized gains (losses)
Included in net income (loss)		-		-
Included in other comprehensive income (loss)		-		68
Settlements		-		(1,100	)
Balance at end of period	$	2,208	$	2,208
Total amount of unrealized gains (losses) for the period included in other comprehensive income (loss) attributable to the change in fair market value of related assets still held at the reporting date	$	-	$	-

	Liability – Contingent Consideration Fair Value Measurements Using Significant Unobservable Inputs (Level 3) For the Three Months Ended September 30,
	2014		2013
Description
Balance at beginning of period	$	16,600	$	15,900
Fair value change to contingent consideration included in net income (loss)		500		-
Balance at end of period	$	17,100	$	15,900
Changes in unrealized gains or losses for the period included in earnings (or changes in net assets) for liabilities held at the end of the reporting period	$	500	$	-

	Liability – Contingent Consideration Fair Value Measurements Using Significant Unobservable Inputs (Level 3) For the Nine Months Ended September 30,
	2014		2013
Description
Balance at beginning of period	$	15,700	$	-
Fair value of contingent consideration – acquisition of Molecular Insight		-		15,900
Fair value change to contingent consideration included in net income (loss)		1,400		-
Balance at end of period	$	17,100	$	15,900
Changes in unrealized gains or losses for the period included in earnings (or changes in net assets) for liabilities held at the end of the reporting period	$	1,400	$	-

- 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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