Investments

As of September 30, 2016, we had primarily invested our excess cash 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, or 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, 2016:

One year or less	54%
After one year but within two years	28%
After two years but within three and a half years	18%
Total	100%

As illustrated above, at September 30, 2016, 82 percent of our available-for-sale securities had 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, 2016, we had an ownership interest of less than 20 percent in two private companies and two public companies with which we conduct business. The privately-held companies are Atlantic Pharmaceuticals Limited and Kastle and the publicly-traded companies are Antisense Therapeutics Limited 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):

			Gross Unrealized
September 30, 2016	Cost (1)		Gains		Losses			Other-Than- Temporary Impairment Loss			Estimated Fair Value
Available-for-sale securities:
Corporate debt securities	$	195,953	$	36	$	(152	)	$	—		$	195,837
Debt securities issued by U.S. government agencies		29,512		11		—			—			29,523
Debt securities issued by the U.S. Treasury (2)		28,011		14		—			—			28,025
Debt securities issued by states of the U.S. and political subdivisions of the states (2)		79,805		2		(119	)		—			79,688
Total securities with a maturity of one year or less		333,281		63		(271	)		—			333,073
Corporate debt securities		217,980		457		(713	)		—			217,724
Debt securities issued by U.S. government agencies		33,859		1		(33	)		—			33,827
Debt securities issued by states of the U.S. and political subdivisions of the states		36,169		24		(100	)		—			36,093
Total securities with a maturity of more than one year		288,008		482		(846	)		—			287,644
Total available-for-sale securities	$	621,289	$	545	$	(1,117	)	$	—		$	620,717
Equity securities:
Regulus Therapeutics Inc.	$	7,162	$	2,745	$	—		$	(525	)	$	9,382
Total equity securities	$	7,162	$	2,745	$	—		$	(525	)	$	9,382
Total available-for-sale and equity securities	$	628,451	$	3,290	$	(1,117	)	$	(525	)	$	630,099

			Gross Unrealized
December 31, 2015	Cost (1)		Gains		Losses			Estimated Fair Value
Available-for-sale securities:
Corporate debt securities	$	181,670	$	5	$	(250	)	$	181,425
Debt securities issued by U.S. government agencies		50,559		1		(19	)		50,541
Debt securities issued by the U.S. Treasury		2,604		—		(3	)		2,601
Debt securities issued by states of the U.S. and political subdivisions of the states (2)		79,414		18		(88	)		79,344
Total securities with a maturity of one year or less		314,247		24		(360	)		313,911
Corporate debt securities		258,703		3		(1,705	)		257,001
Debt securities issued by U.S. government agencies		38,956		—		(244	)		38,712
Debt securities issued by states of the U.S. and political subdivisions of the states		48,552		3		(243	)		48,312
Total securities with a maturity of more than one year		346,211		6		(2,192	)		344,025
Total available-for-sale securities	$	660,458	$	30	$	(2,552	)	$	657,936
Equity securities:
Regulus Therapeutics Inc.	$	7,162	$	17,630	$	—		$	24,792
Total equity securities	$	7,162	$	17,630	$	—		$	24,792
Total available-for-sale and equity securities	$	667,620	$	17,660	$	(2,552	)	$	682,728

(1)

Our available-for-sale securities are held at amortized cost.

(2)

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

Investments we consider to be temporarily impaired at September 30, 2016 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		162	$	203,357	$	(470	)	$	33,639	$	(395	)	$	236,996	$	(865	)
Debt securities issued by U.S. government agencies		19		31,517		(33	)		—		—			31,517		(33	)
Debt securities issued by states of the U.S. and political subdivisions of the states		117		63,551		(140	)		16,979		(79	)		80,530		(219	)
Total temporarily impaired securities		298	$	298,425	$	(643	)	$	50,618	$	(474	)	$	349,043	$	(1,117	)

We believe that the decline in value of these securities is temporary and for our debt securities is 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 our debt securities to maturity. Therefore we anticipate full recovery of our debt securities’ amortized cost basis at maturity.