Investments

As of September 30, 2014, we have invested our excess cash primarily in debt instruments of the U.S. Treasury, financial institutions, corporations, and U.S. government agencies with strong credit ratings and an investment grade rating at or above A-1, P-1 or F-1 by Moody’s, Standard & Poor’s (S&P) or Fitch, respectively. We have established guidelines relative to diversification and maturities that maintain safety and liquidity. We periodically review and modify these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity.

The following table summarizes the contract maturity of the available-for-sale securities we held as of September 30, 2014:

One year or less	57%
After one year but within two years	32%
After two years but within three years	11%
Total	100%

As illustrated above, we primarily invest our excess cash in short-term instruments with 89 percent of our available-for-sale securities having a maturity of less than two years.

All of our available-for-sale securities are available to us for use in our current operations. As a result, we categorize all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date.

At September 30, 2014, we had an ownership interest of less than 20 percent in one private company and four public companies with which we conduct business. The privately-held company is Atlantic Pharmaceuticals Limited and the publicly-traded companies are Antisense Therapeutics Limited, Achaogen Inc., iCo Therapeutics Inc., and Regulus. We account for equity investments in the privately-held companies under the cost method of accounting and we account for equity investments in the publicly-traded companies at fair value. We record unrealized gains and losses as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments.

The following is a summary of our investments (in thousands):

	Amortized		Unrealized					Other- Than- Temporary Impairment		Estimated
September 30, 2014	Cost		Gains		Losses			Loss		Fair Value
Available-for-sale securities:
Corporate debt securities(1)	$	205,973	$	153	$	(67	)	$	—	$	206,059
Debt securities issued by U.S. government agencies (1)		51,021		13		(35	)		—		50,999
Debt securities issued by the U.S. Treasury		9,022		18		—			—		9,040
Debt securities issued by states of the United States and political subdivisions of the states		38,134		19		(48	)		—		38,105
Total securities with a maturity of one year or less		304,150		203		(150	)		—		304,203
Corporate debt securities		148,079		55		(345	)		—		147,789
Debt securities issued by U.S. government agencies		55,525		5		(132	)		—		55,398
Debt securities issued by states of the United States and political subdivisions of the states		26,275		41		(77	)		—		26,239
Total securities with a maturity of more than one year		229,879		101		(554	)		—		229,426
Total available-for-sale securities	$	534,029	$	304	$	(704	)	$	—	$	533,629

	Cost			Unrealized							Other- Than- Temporary Impairment				Estimated
September 30, 2014	Basis			Gains			Losses				Loss				Fair Value
Equity securities:
Regulus Therapeutics Inc.		$	15,316		$	32,110		$	—			$	—			$	47,426
Securities included in other current assets			1,269			1,021			—				(1,269	)			1,021
Total equity securities		$	16,585		$	33,131		$	—			$	(1,269	)		$	48,447
Total available-for-sale and equity securities		$	550,614		$	33,435		$	(704	)		$	(1,269	)		$	582,076

	Amortized		Unrealized					Other- Than- Temporary Impairment		Estimated
December 31, 2013	Cost		Gains		Losses			Loss		Fair Value
Available-for-sale securities:
Corporate debt securities(1)	$	142,096	$	75	$	(27	)	$	—	$	142,144
Debt securities issued by U.S. government agencies (1)		23,242		22		(16	)		—		23,248
Debt securities issued by the U.S. Treasury		6,239		6		—			—		6,245
Debt securities issued by states of the United States and political subdivisions of the states		8,082		6		(28	)		—		8,060
Total securities with a maturity of one year or less		179,659		109		(71	)		—		179,697
Corporate debt securities		265,969		177		(393	)		—		265,753
Debt securities issued by U.S. government agencies		41,308		3		(127	)		—		41,184
Debt securities issued by the U.S. Treasury		9,062		21		—			—		9,083
Debt securities issued by states of the United States and political subdivisions of the states		14,186		37		(28	)		—		14,195
Total securities with a maturity of more than one year		330,525		238		(548	)		—		330,215
Total available-for-sale securities	$	510,184	$	347	$	(619	)	$	—	$	509,912

	Cost			Unrealized							Other- Than- Temporary Impairment				Estimated
December 31, 2013	Basis			Gains			Losses				Loss				Fair Value
Equity securities:
Regulus Therapeutics Inc.		$	15,526		$	36,570		$	—			$	—			$	52,096
Securities included in other current assets			1,538			618			—				(880	)			1,276
Securities included in deposits and other assets			625			—			—				—				625
Total equity securities		$	17,689		$	37,188		$	—			$	(880	)		$	53,997
Total available-for-sale and equity securities		$	527,873		$	37,535		$	(619	)		$	(880	)		$	563,909

(1)

Includes investments classified as cash equivalents on our condensed consolidated balance sheet.

Investments we considered to be temporarily impaired at September 30, 2014 were as follows (in thousands):

			Less than 12 months of temporary impairment					More than 12 months of temporary impairment					Total temporary impairment
	Number of Investments		Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Corporate debt securities		178	$	165,321	$	(397	)	$	9,266	$	(15	)	$	174,587	$	(412	)
Debt securities issued by U.S. government agencies		10		56,358		(167	)		-		-			56,358		(167	)
Debt securities issued by states of the United States and political subdivisions of the states		19		22,661		(78	)		228		(47	)		22,889		(125	)
Total temporarily impaired securities		207	$	244,340	$	(642	)	$	9,494	$	(62	)	$	253,834	$	(704	)

We believe that the decline in value of these securities is temporary and primarily related to the change in market interest rates since purchase. We believe it is more likely than not that we will be able to hold these securities to maturity. Therefore we anticipate full recovery of their amortized cost basis at maturity.