Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

The tables below present information about our assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques we utilized to determine such fair value:

As of June 30, 2020 (In millions)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	1,869.6	$	—	$	1,869.6	$	—
Marketable debt securities:
Corporate debt securities	1,790.2		—		1,790.2		—
Government securities	966.8		—		966.8		—
Mortgage and other asset backed securities	108.5		—		108.5		—
Marketable equity securities	527.0		344.3		182.7		—
Derivative contracts	59.9		—		59.9		—
Plan assets for deferred compensation	27.7		—		27.7		—
Total	$	5,349.7	$	344.3	$	5,005.4	$	—
Liabilities:
Derivative contracts	$	14.3	$	—	$	14.3	$	—
Contingent consideration obligations	351.6		—		—		351.6
Total	$	365.9	$	—	$	14.3	$	351.6

As of December 31, 2019 (In millions)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	2,541.1	$	—	$	2,541.1	$	—
Marketable debt securities:
Corporate debt securities	1,695.1		—		1,695.1		—
Government securities	1,013.9		—		1,013.9		—
Mortgage and other asset backed securities	261.3		—		261.3		—
Marketable equity securities	337.5		7.9		329.6		—
Derivative contracts	43.8		—		43.8		—
Plan assets for deferred compensation	27.7		—		27.7		—
Total	$	5,920.4	$	7.9	$	5,912.5	$	—
Liabilities:
Derivative contracts	$	8.3	$	—	$	8.3	$	—
Contingent consideration obligations	346.1		—		—		346.1
Total	$	354.4	$	—	$	8.3	$	346.1

There have been no material impairments of our assets measured and carried at fair value during the three and six months ended June 30, 2020. In addition, there were no changes in valuation techniques during the three and six months ended June 30, 2020. The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities was determined through third-party pricing services. The fair value of Level 2 instruments classified as marketable equity securities represents our investment in Sangamo Therapeutics, Inc. (Sangamo) common stock and is valued using an option pricing valuation model as the investment is subject to certain holding period restrictions. For additional information on our investment in Sangamo common stock, please read Note 8, Financial Instruments, to these condensed consolidated financial statements

Our investments in marketable equity securities also include shares of Ionis Pharmaceuticals, Inc. (Ionis) common stock acquired in June 2018. Our shares in Ionis common stock were initially subject to certain holding period restrictions that expired during the first quarter of 2020. The fair value of this investment was a Level 1 measurement as of June 30, 2020.

For a description of our validation procedures related to prices provided by third-party pricing services and our option pricing valuation model, please read Note 1, Summary of Significant Accounting Policies - Fair Value Measurements, to our consolidated financial statements included in our 2019 Form 10-K.

The following table summarizes the significant unobservable inputs in the fair value measurement of our contingent consideration obligations as of June 30, 2020:

	As of June 30, 2020
(In millions)	Fair Value		Valuation Technique	Unobservable Input	Range	Weighted Average
Liabilities:
Contingent consideration obligation	$	351.6	Discounted cash flow	Discount rate	0.83% to 1.18%	0.92%
				Timing of achievement of development milestones	2021 to 2027	—

The weighted average discount rate was calculated based on the relative fair value of our contingent consideration obligations. In addition, we apply various probabilities of technological and regulatory success, ranging from high single digits to certain probability, to the valuation models to estimate the fair values of our contingent consideration obligations.

Debt Instruments

The fair and carrying values of our debt instruments, which are Level 2 liabilities, are summarized as follows:

	As of June 30, 2020				As of December 31, 2019
(In millions)	Fair Value		Carrying Value		Fair Value		Carrying Value
2.900% Senior Notes due September 15, 2020(1)	$	—	$	—	$	1,509.6	$	1,495.8
3.625% Senior Notes due September 15, 2022	1,061.0		997.3		1,038.9		996.6
4.050% Senior Notes due September 15, 2025	1,994.1		1,740.3		1,897.2		1,739.5
2.250% Senior Notes due May 1, 2030	1,514.1		1,490.7		—		—
5.200% Senior Notes due September 15, 2045	2,247.1		1,723.2		2,107.9		1,722.9
3.150% Senior Notes due May 1, 2050	1,441.3		1,472.3		—		—
Total	$	8,257.6	$	7,423.8	$	6,553.6	$	5,954.8

⁽¹⁾ As of June 30, 2020, our 2.900% Senior Notes due September 15, 2020, were redeemed in full using the net proceeds from the issuance on April 30, 2020, of our senior unsecured notes for an aggregate principal amount of $3.0 billion. For additional information, please read Note 11, Indebtedness, to these condensed consolidated financial statements.

The fair values of each of our series of Senior Notes were determined through market, observable and corroborated sources. For additional information related to our Senior Notes issued on September 15, 2015, please read Note 12, Indebtedness, to our consolidated financial statements included in our 2019 Form 10-K. For additional information related to our Senior Notes issued on April 30, 2020, please read Note 11, Indebtedness, to these condensed consolidated financial statements.

Contingent Consideration Obligations

In connection with our acquisitions of Convergence and BIN, we agreed to make additional payments based upon the achievement of certain milestone events. The following table provides a roll forward of the fair values of our contingent consideration obligations, which includes Level 3 measurements:

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
(In millions)	2020		2019			2020		2019
Fair value, beginning of period	$	341.6	$	421.3		$	346.1	$	409.8
Changes in fair value	10.0		(20.0		)	5.5		(8.5		)
Payments	—		—			—		—
Fair value, end of period	$	351.6	$	401.3		$	351.6	$	401.3

As of June 30, 2020 and December 31, 2019, approximately $202.5 million and $197.7 million, respectively, of the fair value of our total contingent consideration obligations was reflected as a component of other long-term liabilities in our condensed consolidated balance sheets with the remaining balance reflected as a component of accrued expenses and other.

For the three and six months ended June 30, 2020, changes in the fair value of our contingent consideration obligations were primarily due to changes in the interest rates used to revalue our contingent consideration liabilities, changes in the probability and the expected timing of the achievement of certain remaining developmental milestones and the passage of time.

For the three and six months ended June 30, 2019, changes in the fair value of our contingent consideration obligations were primarily due to changes in the probability and the expected timing of the achievement of certain remaining development milestones, partially offset by a decrease in interest rates used to revalue our contingent consideration liabilities and the passage of time.