2. Investments

As of December 31, 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 December 31, 2016:

One year or less		55 %
After one year but within two years		32 %
After two years but within three and a half years		13 %
Total		100 %

As illustrated above, at December 31, 2016, 87 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 December 31, 2016, we had an ownership interest of less than 20 percentin three private companies and two public companies with which we conduct business. The privately held companies are Atlantic Pharmaceuticals Limited, Kastle Therapeutics and Dynacure, SAS 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.

During 2015 and 2014, we realized a net gain on investments of $20.3 million, and $21.2 million, respectively. Our net gain for 2015 and 2014 was primarily from the $20.2 million and $19.9 million gain we realized when we sold a portion of our stock in Regulus, respectively. We have reflected this gain in a separate line called “Gain on investment in Regulus Therapeutics Inc.”, on our Consolidated Statements of Operations. During 2016, we recognized nominal gains from sales of our investments. As of December 31, 2016, our carrying balance of our investment in Regulus was $2.4 million on our consolidated balance sheet.

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

			Gross Unrealized
December 31, 2016	Cost (1)		Gains		Losses			Estimated Fair Value
Available-for-sale securities:
Corporate debt securities	$	195,087	$	25	$	(161	)	$	194,951
Debt securities issued by U.S. government agencies		26,548		—		(10	)		26,538
Debt securities issued by the U.S. Treasury		29,298		2		(14	)		29,286
Debt securities issued by states of the U.S. and political subdivisions of the states (2)		72,775		2		(134	)		72,643
Total securities with a maturity of one year or less		323,708		29		(319	)		323,418
Corporate debt securities		202,408		36		(1,174	)		201,270
Debt securities issued by U.S. government agencies		28,807		1		(167	)		28,641
Debt securities issued by states of the U.S. and political subdivisions of the states		36,816		1		(349	)		36,468
Total securities with a maturity of more than one year		268,031		38		(1,690	)		266,379
Total available-for-sale securities	$	591,739	$	67	$	(2,009	)	$	589,797
Equity securities:
Regulus Therapeutics Inc.	$	2,133	$	281	$	—		$	2,414
Total equity securities	$	2,133	$	281	$	—		$	2,414
Total available-for-sale and equity securities	$	593,872	$	348	$	(2,009	)	$	592,211

			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 consolidated balance sheet.

Investments we consider to be temporarily impaired at December 31, 2016 are 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		255	$	280,393	$	(1,197	)	$	32,753	$	(138	)	$	313,146	$	(1,335	)
Debt securities issued by U.S. government agencies		29		43,851		(177	)		—		—			43,851		(177	)
Debt securities issued by the U.S. Treasury		2		18,782		(14	)		—		—			18,782		(14	)
Debt securities issued by states of the U.S. and political subdivisions of the states		135		80,896		(398	)		6,934		(85	)		87,830		(483	)
Total temporarily impaired securities		421	$	423,922	$	(1,786	)	$	39,687	$	(223	)	$	463,609	$	(2,009	)

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.