Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments (Tables)

v2.4.0.8
Financial Instruments (Tables)
3 Months Ended
Mar. 31, 2014
Investments, All Other Investments [Abstract]  
Summary of the assets and liabilities measured at fair value 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 March 31, 2014 (in thousands):

Fair Value Measurements at Reporting Date Using
 
 
 
Quoted Prices in
Active Markets
for Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Current portion of co-promote termination payments receivable
$
688

 
$

 
$

 
$
688

Available-for-sale securities
12,275

 
12,275

 

 

Long-term portion of co-promote termination payments receivable
448

 

 

 
448

     Total assets
$
13,411

 
$
12,275

 
$

 
$
1,136

Liabilities:
 
 
 
 
 
 
 
Current portion of contingent liabilities-CyDex
$
1,094

 
$

 
$

 
$
1,094

Current portion of co-promote termination liability
688

 

 

 
688

Long-term portion of contingent liabilities-Metabasis
6,657

 
6,657

 

 

Long-term portion of contingent liabilities-CyDex
6,086

 

 

 
6,086

Liability for short-term investments owed to former licensees
1,841

 
1,841

 

 

Long-term portion of co-promote termination liability
448

 

 

 
448

     Total liabilities
$
16,814

 
$
8,498

 
$

 
$
8,316


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, 2013 (in thousands):

Fair Value Measurements at Reporting Date Using
 
 
 
Quoted Prices in
Active Markets
for Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Current portion of co-promote termination payments receivable
$
4,329

 
$

 
$

 
$
4,329

Available-for-sale securities
4,340

 
4,340

 

 

Long-term portion of co-promote termination payments receivable
7,417

 

 

 
7,417

     Total assets
$
16,086

 
$
4,340

 
$

 
$
11,746

Liabilities:
 
 
 
 
 
 
 
Current portion of contingent liabilities-CyDex
$
1,712

 
$

 
$

 
$
1,712

Current portion of co-promote termination liability
4,329

 

 

 
4,329

Long-term portion of contingent liabilities-Metabasis
4,196

 
4,196

 

 

Long-term portion of contingent liabilities-CyDex
7,599

 

 

 
7,599

Liability for short-term investments owed to former licensees
651

 
651

 

 

Long-term portion of co-promote termination liability
7,417

 

 

 
7,417

     Total liabilities
$
25,904

 
$
4,847

 
$

 
$
21,057

CyDex Acquisition
The following table represents significant unobservable inputs used in determining the fair value of contingent liabilities assumed in the acquisition of CyDex:

 
December 31,
 
2014
 
2013
Range of annual revenue subject to revenue sharing (1)
$5.1 million-$17.9 million
 
$4.2 million-$19.8 million
Revenue volatility
25%
 
25%
Average of probability of commercialization
67.4%
 
67.6%
Sales beta
0.60
 
0.60
Credit rating
BBB
 
BBB
Equity risk premium
6%
 
6%
(1)
Revenue subject to revenue sharing represent management’s estimate of the range of total annual revenue subject to revenue sharing (i.e. annual revenues in excess of $15 million) through December 31, 2016, which is the term of the CVR agreement.
Reconciliation of level 3 financial instruments
A reconciliation of the level 3 financial instruments as of March 31, 2014 is as follows (in thousands):

Assets:
 
Fair value of level 3 financial instrument assets as of December 31, 2013
$
11,746

Assumed payments made by Pfizer or assignee
(276
)
Fair value adjustments to co-promote termination liability
(10,334
)
Fair value of level 3 financial instrument assets as of March 31, 2014
$
1,136

 
 
Liabilities:
 
Fair value of level 3 financial instrument liabilities as of December 31, 2013
$
21,057

Assumed payments made by Pfizer or assignee
(276
)
Payments to CVR and other former license holders
(1,618
)
Fair value adjustments to contingent liabilities
(513
)
Fair value adjustments to co-promote termination liability
(10,334
)
Fair value of level 3 financial instrument liabilities as of March 31, 2014
$
8,316