Fair Value Disclosures

9 Months Ended

Sep. 30, 2014

NOTE 11 — FAIR VALUE DISCLOSURES

The following table presents the Company’s cash equivalents as well as the hierarchy for its financial instruments measured at fair value on a recurring basis:


			Fair value measurements using:
	Fair Value		Level 1		Level 2		Level 3
September 30, 2014:
Cash equivalents:
Money market funds	$	209,245	$	209,245		—		—
December 31, 2013:
Cash equivalents:
Money market funds	$	189,092	$	189,092		—		—

The following table presents the total balance of the Company’s other financial instruments that are not measured at fair value on a recurring basis:


			Fair value measurements using:
	Total Balance		Level 1		Level 2		Level 3
September 30, 2014:
Assets:
Bank deposits (included in “Cash and cash equivalents”)	$	111,808	$	111,808		—		—
Liabilities:
Convertible Notes	$	363,902		—	$	363,902		—
December 31, 2013:
Assets:
Bank deposits (included in “Cash and cash equivalents”)	$	39,696	$	39,696		—		—
Liabilities:
Convertible Notes	$	277,145		—	$	277,145		—

Due to their short-term maturities, the Company believes that the fair value of its bank deposits, receivable from collaboration partner, accounts payable and accrued expenses and other current liabilities approximate their carrying value. The estimated fair value of the Company’s Convertible Notes, including the equity component, was $503.3 million and $383.3 million at September 30, 2014, and December 31, 2013, respectively, and was determined using recent trading prices of the Convertible Notes. The fair value of the Convertible Notes included in the table above represents only the liability component of the Convertible Notes, because the equity component is included in stockholders’ equity on the consolidated balance sheets. For the purposes of the table above, the fair value of the Convertible Notes was bifurcated between the debt and equity components in a ratio similar to the principal amounts of the Convertible Notes.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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