Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2016

Assets and liabilities measured at fair value on recurring basis

The following tables summarize each major class of our financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated, classified by valuation hierarchy (in thousands):

			Fair Value Measurements at March 31, 2016
	Balance at March 31, 2016		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	$	64,678	$	64,678	$	-	$	-
Total assets	$	64,678	$	64,678	$	-	$	-

Liabilities:
Contingent consideration liability	$	19,000	$	-	$	-	$	19,000
Total liabilities	$	19,000	$	-	$	-	$	19,000

			Fair Value Measurements at December 31, 2015
	Balance at December 31, 2015		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	$	68,140	$	68,140	$	-	$	-
Total assets	$	68,140	$	68,140	$	-	$	-

Liabilities:
Contingent consideration liability	$	18,800	$	-	$	-	$	18,800
Total liabilities	$	18,800	$	-	$	-	$	18,800

Quantitative information for fair value measurement of Level 3

The following table summarizes quantitative information and assumptions pertaining to the fair value measurement of the Level 3 inputs at March 31, 2016 and December 31, 2015 (in thousands). The increase in the contingent consideration liability of $200 thousand during the three months ended March 31, 2016 was primarily attributable to a decrease in the discount period.

	Fair Value at
	March 31, 2016		December 31, 2015		Valuation Technique	Unobservable Input	Range (Weighted-Average)
Contingent Consideration Liability:
AZEDRA commercialization	$	2,600	$	2,500	Probability adjusted discounted cash flow model	Probability of success	40%
						Period of expected milestone achievement	2018
						Discount rate	10%

1404 commercialization		4,300		4,200	Probability adjusted discounted cash flow model	Probability of success	59%
						Period of expected milestone achievement	2019
						Discount rate	10%

1095 commercialization		500		500	Probability adjusted discounted cash flow model	Probability of success	19%
						Period of expected milestone achievement	2023
						Discount rate	10%

Net sales targets		11,600		11,600	Monte-Carlo simulation	Probability of success	19 %- 59 % (37.4%)
						Period of expected milestone achievement	2019-2024 at March 31, 2016 2019-2025 at December 31, 2015
						Discount rate ⁽¹⁾	11.5 %/4.0 % at March 31, 2016 12.0 %/3.5 % at December 31, 2015
Total	$	19,000	$	18,800

(1) The contingent consideration liability related to the net sales targets was derived from a model under a risk neutral framework resulting in the application of 11.5% and 4% at March 31, 2016 and 12% and 3.5% at December 31, 2015, discount rates to estimated cash flows.

Summary of activities in financial instruments with Level 3 inputs

The following table summarizes the activity for those financial instruments with significant Level 3 inputs for the three months ended March 31, 2016 and 2015 (in thousands):

	Liability – Contingent Consideration Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	For the Three Months Ended March 31,
	2016		2015
Balance at beginning of period	$	18,800	$	17,200
Fair value change included in net loss		200		300
Balance at end of period	$	19,000	$	17,500
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	$	200	$	300