Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured on Recurring Basis

The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2019 and 2018 (in thousands):

Fair Value Measurements at Reporting Date Using
December 31, 2019			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments (1)	$	939,989	$	3,073	$	936,791	$	125
Investment in Viking common stock	48,425		48,425		—		—
Investment in Viking warrants (2)	9,910		9,910		—		—
Total assets	$	998,324	$	61,408	$	936,791	$	125
Liabilities:
Contingent liabilities - Crystal (3)	$	2,659	$	—	$	—	$	2,659
Contingent liabilities - Cydex	348		—		—		348
Contingent liabilities - Metabasis (4)	5,935		—		5,935		—
Liability for amounts owed to a former licensor	75		75		—		—
Total liabilities	$	9,017	$	75	$	5,935	$	3,007

Fair Value Measurements at Reporting Date Using
December 31, 2018			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments (1)	$	601,217	$	1,326	$	599,891	$	—
Investment in Viking common stock	46,191		46,191		—		—
Investment in Viking warrants (2)	9,257		9,257		—		—
Total assets	$	656,665	$	56,774	$	599,891	$	—
Liabilities:
Contingent liabilities - Crystal (3)	$	6,477	$	—	$	—	$	6,477
Contingent liabilities - Cydex	514		—		—		514
Contingent liabilities - Metabasis (4)	5,551		—		5,551		—
Liability for amounts owed to a former licensor	199		199		—		—
Total liabilities	$	12,741	$	199	$	5,551	$	6,991

(1) Short-term investments in marketable debt and equity securities are classified as available-for-sale securities based on management's intentions and are at level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Short-term investments in mutual funds are valued at their net asset value (NAV) on the last day of the period. We have classified marketable securities with original maturities of greater than one year as

short-term investments based upon our ability and intent to use any and all of those marketable securities to satisfy the liquidity needs of our current operations. In addition, we have investment in warrants resulting from Seelos milestone payments that were settled in shares during the first quarter of 2019 and are at level 3 of the fair value hierarchy, based on black scholes value estimated by management as of December 31, 2019.

(2) Investment in Viking warrants, which we received as a result of Viking’s partial repayment of the Viking note receivable and our purchase of Viking common stock and warrants in April 2016, is classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. The change of the fair value is recorded in “Gain (loss) from Viking” in our consolidated statement of operations. See further discussion in “Note (3), Investment in Viking.”

(3) The fair value of Crystal contingent liabilities was determined using a probability weighted income approach. Most of the contingent payments are based on development or regulatory milestones as defined in the merger agreement with Crystal. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s estimates regarding the timing and probability of achievement of certain developmental and regulatory milestones. During the twelve months ended December 31, 2019, we paid $3.0 million contingent liability on development milestones to former Crystal shareholders. At December 31, 2019, $1.8 million of the development and regulatory milestones were considered to be achieved and will be paid to former Crystal shareholders during the first half of 2020.

(4) In connection with our acquisition of Metabasis in January 2010, we issued Metabasis stockholders four tradable CVRs, one CVR from each of four respective series of CVR, for each Metabasis share. The CVRs entitle Metabasis stockholders to cash payments as frequently as every six months as cash is received by us from proceeds from the sale or partnering of any of the Metabasis drug development programs, among other triggering events. The liability for the CVRs is determined using quoted prices in a market that is not active for the underlying CVR. The carrying amount of the liability may fluctuate significantly based upon quoted market prices and actual amounts paid under the agreements may be materially differ than the carrying amount of the liability. Several of the Metabasis drug development programs have been outlicensed to Viking, including VK2809. VK2809 is a novel selective TR-β agonist with potential in multiple indications, including hypercholesterolemia, dyslipidemia, NASH, and X-ALD. Under the terms of the agreement with Viking, we may be entitled to up to $375.0 million of development, regulatory and commercial milestones and tiered royalties on potential future sales including a $10.0 million payment upon initiation of a Phase 3 clinical trial. Another Metabasis drug development program, RVT-1502, has been outlicensed to Metavant. RVT-1502 is a novel, orally-bioavailable, small molecule, glucagon receptor antagonist or “GRA.”

Schedule of Reconciliation of Level 3 Financial Instruments

A reconciliation of the level 3 financial instruments as of December 31, 2019 is as follows (in thousands):

Liabilities
Fair value of level 3 financial instruments as of December 31, 2018	$	6,991
Payments to CVR holders and other contingency payments	(3,050)
Fair value adjustments to contingent liabilities	(934)
Fair value of level 3 financial instruments as of December 31, 2019	$	3,007