Financial Instruments - Note 5

9 Months Ended

Sep. 30, 2012

Financial Instruments Disclosure

Financial Instruments

(5) Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and marketable investment securities. The majority of the Company's accounts receivable are payable by pharmaceutical companies and collateral is generally not required from these companies. Substantially all of the Company's revenues for the three and nine months ended September 30, 2012 and 2011 and substantially all of the Company's accounts receivable balances at September 30, 2012 and December 31, 2011 were from four licensees. The Company's portfolio of marketable investment securities is subject to concentration limits set within the Company's investment policy that help to mitigate its credit exposure.

The following is a summary of the Company's marketable investment securities (in thousands):

				Gross		Gross
				unrealized		unrealized
		Amortized		holding		holding		Fair
		cost		gains		losses		value
As of September 30, 2012:
Debt securities:
Corporate	$	45,262	$	14	$	(11)	$	45,265
Government agency		21,384		3		(1)		21,386
Total marketable investment securites	$	66,646	$	17	$	(12)	$	66,651

				Gross		Gross
				unrealized		unrealized
		Amortized		holding		holding		Fair
		cost		gains		losses		value
As of December 31, 2011:
Debt securities:
Corporate	$	49,296	$	1	$	(124)	$	49,173
Government agency		30,668		3		(12)		30,659
Total marketable investment securites	$	79,964	$	4	$	(136)	$	79,832

Marketable investment securities available for sale in an unrealized loss position as of September 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

		Held for less than 12 months				Held for more than 12 months				Total
				Unrealized				Unrealized				Unrealized
		Fair value		losses		Fair value		losses		Fair value		losses
As of September 30, 2012:
Available for Sale:
Debt securities:
Corporate	$	29,844	$	11	$	-	$	-	$	29,844	$	11
Government agency		6,083		1		-		-		6,084		1
	$	35,927	$	12	$	-	$	-	$	35,927	$	12
As of December 31, 2011:
Available for Sale:
Debt securities:
Corporate	$	38,276	$	124	$	-	$	-	$	38,276	$	124
Government agency		23,425		12		-		-		23,425		12
	$	61,701	$	136	$	-	$	-	$	61,701	$	136

Summary of Contractual Maturities

Maturities of marketable investment securities are as follows at September 30, 2012 and December 31, 2011 (in thousands):

		As of September 30, 2012				As of December 31, 2011
		Amortized				Amortized
		cost		Fair value		cost		Fair value
Due within one year	$	64,444	$	64,451	$	70,902	$	70,794
Due after one year through five years		2,202		2,200		9,062		9,038
Due after five years through ten years		-		-		-		-
Due after ten years		-		-		-		-
Total debt securities	$	66,646	$	66,651	$	79,964	$	79,832

Impairments

No impairment losses were recognized through earnings related to available for sale securities during the three or nine months ended September 30, 2012 and 2011.

Proceeds from Available for Sale Securities

The proceeds from maturities and sales of available for sale securities and resulting realized gains and losses, were as follows (in thousands):

		For the Three Months				For the Nine Months
		Ended September 30,				Ended September 30,
		2012		2011		2012		2011
Proceeds from sales and maturities	$	22,858	$	25,537	$	79,440	$	63,808
Realized gains		-		-		3		-
Realized losses		-		-		-		-