Fair Value Measurements

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 investments, which include U.S. treasury securities


•	Level 2 - other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.), which includes 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 table provides 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 described above as of March 31, 2016 and December 31, 2015.



	Assets and Liabilities at Fair Value as of March 31, 2016
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash and cash equivalents	$	21,682	$	2,999	$	—	$	24,681
Short-term investments	434,803		17,662		—		452,465
Total cash and cash equivalents and investments	$	456,485	$	20,661	$	—	$	477,146
Liabilities
Accrued liabilities	$	—	$	—	$	12,979	$	12,979
Other long-term liabilities	—		—		10,801		10,801
Total liabilities	$	—	$	—	$	23,780	$	23,780



	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

The Company’s Level 3 liabilities, which consist of the Symphony Icon purchase consideration liability, is estimated using a probability-based income approach utilizing an appropriate discount rate. Subsequent changes in the fair value of the Symphony Icon purchase consideration liability are recorded as an increase or decrease in Symphony Icon purchase liability expense in the accompanying consolidated statements of comprehensive loss. The following table summarizes the change in consolidated balance sheet carrying value associated with Level 3 liabilities for the three months ended March 31, 2016 and 2015 (in thousands).



Balance at December 31, 2015	$	22,815
Change in valuation of purchase consideration payable to former Symphony Icon stockholders	965
Balance at March 31, 2016	$	23,780

Balance at December 31, 2014	$	17,638
Change in valuation of purchase consideration payable to former Symphony Icon stockholders	1,753
Payment of contingent payment obligation with cash	(750		)
Balance at March 31, 2015	$	18,641

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.