Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

5. FAIR VALUE MEASUREMENTS

The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on the Company’s Consolidated Balance Sheets are categorized as follows:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Include other inputs that are directly or indirectly observable in the marketplace.

Level 3—Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following table provides the assets and liabilities measured at fair value on a recurring basis as of September 30, 2011 and December 31, 2010:

	Carrying		Fair Value Measurement at September 30, 2011
	Value		Level 1		Level 2		Level 3
	(in thousands)
	(unaudited)
Cash and cash equivalents	$	144,241	$	144,241	$	—	$	—
Cash held in escrow	$	6,433	$	6,433	$	—	$	—
Restricted cash equivalents	$	12,265	$	12,265	$	—	$	—
Available-for-sale securities	$	5,694	$	5,694	$	—	$	—
Marketable securities - held-to-maturity:
Commercial paper	$	41,740	$	41,740	$	—	$	—
U.S. Treasury Bills		27,593		27,593		—		—
Government agency bonds		55,178		55,178		—		—
Certificates of deposit		11,626		11,626		—		—
	$	136,137	$	136,137	$	—	$	—

	Carrying		Fair Value Measurement at December 31, 2010
	Value		Level 1		Level 2		Level 3
	(in thousands)
	(unaudited)
Cash and cash equivalents	$	183,419	$	183,419	$	—	$	—
Cash held in escrow	$	6,434	$	6,434	$	—	$	—
Restricted cash equivalents	$	16,774	$	16,774	$	—	$	—
Available-for-sale securities	$	25,447	$	25,447	$	—	$	—
Marketable securities - held-to-maturity:
Commercial paper	$	27,362	$	27,362	$	—	$	—
U.S. Treasury Bills		12,053		12,053		—		—
Certificates of deposit		2,996		2,996		—		—
	$	42,411	$	42,411	$	—	$	—

As of September 30, 2011, $121.1 million of marketable securities had contractual maturities which were less than one year and $15.0 million of marketable securities had contractual maturities greater than one year. Held-to-maturity securities are carried at amortized cost, which, due to the short-term maturity of these instruments, approximates fair value using quoted prices in active markets for identical assets or liabilities defined as Level 1 inputs under the fair value hierarchy.

The Company’s holdings in Clarient during the three months and nine ended September 30, 2010 were measured at fair value using quoted prices for Clarient’s common stock as traded on the NASDAQ Capital Market, which is considered a Level 1 input under the valuation hierarchy.

The Company accounts for its holdings in Tengion as available-for-sale securities. The Company recognized impairment charges of $0.4 million, $0.3 million and $0.8 million in the third, second and first quarters of 2011, respectively, representing the unrealized losses on the mark-to-market of its ownership interest in Tengion which were previously recorded as a separate component of equity. As of September 30, 2011, the Company’s adjusted cost basis in available-for-sale securities of Tengion was $0.3 million. The value of the Company’s holdings in Tengion was measured by reference to quoted prices for Tengion’s common stock as traded on the NASDAQ Capital Market, which is considered a Level 1 input under the valuation hierarchy.

The Company recognized an impairment charge of $1.4 million related to SafeCentral in the first quarter of 2011 measured as the amount by which SafeCentral’s carrying value exceeded its estimated fair value. The fair market value of SafeCentral was determined based on Level 3 inputs as defined above.

The Company accounts for its holdings in NuPathe as available-for-sale securities. As of September 30, 2011, the Company’s adjusted cost basis in available-for-sale securities of NuPathe was $10.8 million. As of September 30, 2011 the Company’s holdings of available-for-sale securities in NuPathe had generated an unrealized loss of $5.5 million. The value of the Company’s holdings in NuPathe was measured by reference to quoted prices for NuPathe’s common stock as traded on the NASDAQ Capital Market, which is considered a Level 1 input under the valuation hierarchy.