Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

v2.4.0.8
Fair Value Measurements (Tables)
9 Months Ended
Sep. 30, 2014
Fair Value Disclosures [Abstract]  
Summary of the assets and liabilities measured at fair value on recurring basis
The following table provides a summary of the carrying value of assets and liabilities that are measured at fair value on a recurring basis as of September 30, 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 co-promote termination payments receivable
$
523

 
$

 
$

 
$
523

Available-for-sale securities
5,925

 
5,925

 

 

     Total assets
$
6,448

 
$
5,925

 
$

 
$
523

Liabilities:
 
 
 
 
 
 
 
Current contingent liabilities-CyDex
$
4,184

 
$

 
$

 
$
4,184

Current co-promote termination liability
523

 

 

 
523

Long-term contingent liabilities-Metabasis
3,511

 
3,511

 

 

Long-term contingent liabilities-CyDex
8,755

 

 

 
8,755

Liability for short-term investments owed to former licensees
917

 
917

 

 

     Total liabilities
$
17,890

 
$
4,428

 
$

 
$
13,462


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 licensors
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:

 
September 30, 2014
 
December 31, 2013
Range of annual revenue subject to revenue sharing (1)
$17.9 million-$20.5 million
 
$4.2 million-$19.8 million
Revenue volatility
25%
 
25%
Average of probability of commercialization
83.8%
 
67.6%
Sales beta
0.60
 
0.60
Credit rating
B
 
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 September 30, 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
(1,002
)
Fair value adjustments to co-promote termination liability
(10,221
)
Fair value of level 3 financial instrument assets as of September 30, 2014
$
523

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

Assumed payments made by Pfizer or assignee
(1,002
)
Payments to CVR and other former license holders
(1,936
)
Fair value adjustments to contingent liabilities
5,564

Fair value adjustments to co-promote termination liability
(10,221
)
Fair value of level 3 financial instrument liabilities as of September 30, 2014
$
13,462