Fair Value Measurements

12 Months Ended

Dec. 31, 2015

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. The following levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities:


•	Level 1 – quoted prices in active markets for identical assets, which include U.S. treasury securities


•	Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.), which include corporate debt securities


•	Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of the Symphony Icon purchase consideration liability)

The inputs or methodology used for valuing securities are not necessarily an indication of the credit risk associated with investing in those securities. The following tables provide the fair value measurements of applicable Company assets and liabilities that are measured at fair value on a recurring basis according to the fair value levels defined above as of December 31, 2015 and 2014.



	Assets and Liabilities at Fair Value
	As of December 31, 2015
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash and cash equivalents	$	200,526	$	2,463	$	—	$	202,989
Short-term investments	312,888		5,475		—		318,363
Total cash and cash equivalents and investments	$	513,414	$	7,938	$	—	$	521,352
Liabilities
Accrued liabilities	$	—	$	—	$	12,453	$	12,453
Other long-term liabilities	—		—		10,362		10,362
Total liabilities	$	—	$	—	$	22,815	$	22,815



	Assets and Liabilities at Fair Value
	As of December 31, 2014
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash and cash equivalents	$	137,266	$	—	$	—	$	137,266
Short-term investments	201,521		552		—		202,073
Total cash and cash equivalents and investments	$	338,787	$	552	$	—	$	339,339
Liabilities
Other long-term liabilities	$	—	$	—	$	17,638	$	17,638
Total liabilities	$	—	$	—	$	17,638	$	17,638

The Company did not have any Level 3 assets during the years ended December 31, 2015, 2014 and 2013. Transfers between levels are recognized at the actual date of circumstance that caused the transfer. The Company’s Level 3 liabilities represent the contingent purchase consideration payable to Symphony Icon, and are estimated using a probability-based income approach utilizing an appropriate discount rate. Subsequent changes in the fair value of the Symphony Icon (“Symphony Icon”) purchase consideration liability are recorded as an increase or decrease in Symphony Icon purchase liability in the accompanying consolidated statements of comprehensive loss. The fair value of the Symphony Icon purchase consideration liability increased by $5.9 million during the year ended December 31, 2015, increased by $1.4 million during the year ended December 31, 2014, and decreased by $2.2 million during the year ended December 31, 2013. The following table summarizes the change in consolidated balance sheet carrying value associated with Level 3 liabilities for the years ended December 31, 2013, 2014 and 2015.



	Other Long-term Liabilities
	(in thousands)
Balance at December 31, 2012	$	29,920
Change in valuation of purchase consideration payable to former Symphony Icon stockholders	(2,210		)
Balance at December 31, 2013	27,710
Change in valuation of purchase consideration payable to former Symphony Icon stockholders	1,428
Payment of base payment obligation with common stock and cash	(11,500		)
Balance at December 31, 2014	17,638
Change in valuation of purchase consideration payable to former Symphony Icon stockholders	5,927
Payment of contingent payment obligation with cash	(750		)
Balance at December 31, 2015	$	22,815

The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include goodwill associated with the acquisitions of Coelacanth Corporation in 2001 and Symphony Icon in 2010 and intangible assets associated with the acquisition of Symphony Icon in 2010. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired.

- 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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