XML 16 R9.htm IDEA: XBRL DOCUMENT

Investments

9 Months Ended

Sep. 30, 2012

3. Investments

As of September 30, 2012, we primarily invested our excess cash in commercial paper and 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, 2012:

One year or less	63	%
After one year but within two years	24	%
After two years but within three years	13	%
Total	100	%

As illustrated above, we primarily invest our excess cash in short-term instruments with 87 percent of our available-for-sale securities having a maturity of less than two years.

At September 30, 2012, we had an ownership interest of less than 20 percent in each of three private companies and three public companies with which we conduct business. The privately-held companies are Santaris Pharma A/S (formerly Pantheco A/S), Achaogen Inc., and Atlantic Pharmaceuticals Limited. The publicly-traded companies are Antisense Therapeutics Limited, or ATL, iCo Therapeutics Inc., or iCo, and Sarepta Therapeutics, Inc. (formerly AVI BioPharma). 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 and record unrealized gains and losses as a separate component of stockholders’ equity and include net realized gains and losses in gain (loss) on investments. In October 2012, Regulus completed an IPO and we now own less than 20 percent of Regulus’ common stock. Beginning in the fourth quarter, we will no longer use the equity method to account for our investment in Regulus and instead we will account for our equity investment in Regulus at fair value.

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

								Other-Than-
								Temporary
	Amortized		Unrealized					Impairment			Estimated
September 30, 2012	Cost		Gains		Losses			Loss			Fair Value
Short-term investments:
Corporate debt securities	$	135,045	$	146	$	(7	)	$	—		$	135,184
Debt securities issued by U.S. government agencies	18,015		6		—			—			18,021
Debt securities issued by states of the United States and political subdivisions of the states	11,100		7		—			—			11,107
Total securities with a maturity of one year or less	164,160		159		(7		)	—			164,312
Corporate debt securities	55,374		127		(37		)	—			55,464
Debt securities issued by U.S. government agencies	13,177		36		(83		)	—			13,130
Debt securities issued by the U.S. Treasury	13,455		31		—			—			13,486
Debt securities issued by states of the United States and political subdivisions of the states	12,572		49		(3		)	—			12,618
Total securities with a maturity of more than one year	94,578		243		(123		)	—			94,698
Subtotal	$	258,738	$	402	$	(130	)	$	—		$	259,010
Equity securities:
Current portion (included in Other current assets)	$	1,579	$	2,491	$	—		$	(880	)	$	3,190
Long-term portion (included in Deposits and other assets)	625		—		—			—			625
Subtotal	$	2,204	$	2,491	$	—		$	(880	)	$	3,815
	$	260,942	$	2,893	$	(130	)	$	(880	)	$	262,825

								Other-Than-
								Temporary
	Amortized		Unrealized					Impairment			Estimated
December 31, 2011	Cost		Gains		Losses			Loss			Fair Value
Short-term investments:
Corporate debt securities	$	109,842	$	13	$	(255	)	$	—		$	109,600
Debt securities issued by U.S. government agencies	53,723		35		(5		)	—			53,753
Debt securities issued by the U.S. Treasury	2,353		3		—			—			2,356
Debt securities issued by states of the United States and political subdivisions of the states	16,141		4		(3		)	—			16,142
Total securities with a maturity of one year or less	182,059		55		(263		)	—			181,851
Corporate debt securities	57,632		21		(331		)	—			57,322
Debt securities issued by U.S. government agencies	26,754		—		(67		)	—			26,687
Debt securities issued by states of the United States and political subdivisions of the states	12,331		19		(23		)	—			12,327
Total securities with a maturity of more than one year	96,717		40		(421		)	—			96,336
Subtotal	$	278,776	$	95	$	(684	)	$	—		$	278,187
Equity securities:
Current portion (included in Other current assets)	$	1,538	$	624	$	—		$	(880	)	$	1,282
Long-term portion (included in Deposits and other assets)	625		—		—			—			625
Subtotal	$	2,163	$	624	$	—		$	(880	)	$	1,907
	$	280,939	$	719	$	(684	)	$	(880	)	$	280,094

Investments we considered to be temporarily impaired at September 30, 2012 were as follows (in thousands):

		Less than 12 months of temporary impairment
	Number of Investments	Estimated Fair Value		Unrealized Losses
Corporate debt securities	24	$	37,348	$	(44	)
Debt securities issued by U.S. government agencies	2	7,056		(83		)
Debt securities issued by the U.S. Treasury
Debt securities issued by states of the United States and political subdivisions of the states	1	5,200		(3		)
Total temporarily impaired securities	27	$	49,604	$	(130	)

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.