4. Available-for-Sale Securities and Fair Value Measurements

Available-for Sale Securities

The classification of available-for-sale securities in the consolidated balance sheets is as follows:

(In thousands)	September 30, 2014		December 31, 2013
Cash and cash equivalents	$	119,022	$	125,009
Short-term marketable securities	143,536		321,615
Marketable securities	47,752		55,374
Restricted cash	6,433		833
Total	$	316,743	$	502,831

The estimated fair value of available-for-sales securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. Available-for-sale securities are summarized below:

	September 30, 2014
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	33,526	$	39	$	(1	)	$	33,564
U.S. government agencies	43,611		9		(6		)	43,614
U.S. corporate notes	59,644		9		(46		)	59,607
U.S. commercial paper	44,434		—		—			44,434
Equity securities	10,269		—		(201		)	10,068
Money market funds	125,456		—		—			125,456
Total	$	316,940	$	57	$	(254	)	$	316,743

	December 31, 2013
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	42,104	$	55	$	(1	)	$	42,158
U.S. government agencies	141,278		61		(8		)	141,331
U.S. corporate notes	94,923		54		—			94,977
U.S. commercial paper	102,021		2		(1		)	102,022
Money market funds	122,343		—		—			122,343
Total	$	502,669	$	172	$	(10	)	$	502,831

Equity securities consist of ordinary shares of Theravance Biopharma owned by us as of September 30, 2014. These equity securities are restricted securities and can only be resold pursuant to a registration statement or an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”). We expect to be able to sell these shares pursuant to Rule 144 promulgated under the Securities Act after the satisfaction of a six-month holding period and, therefore, have classified them as available-for-sale marketable securities.

At September 30, 2014, all of the available-for-sale securities had contractual maturities within two years and the average duration of debt securities was approximately eight months. We do not intend to sell the investments that are in an unrealized loss position, and it is unlikely that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. We have determined that the gross unrealized losses on our marketable securities at September 30, 2014 were temporary in nature. All marketable securities with unrealized losses at September 30, 2014 have been in a loss position for less than twelve months.

During the nine months ended September 30, 2014 and 2013, we sold marketable securities totaling $5.0 million and $22.6 million, and the related realized gains and losses were not significant in any of these periods.

Fair Value Measurements

Our available-for-sale securities are measured at fair value on a recurring basis and our debt is carried at the amortized cost basis. The estimated fair values were as follows:

	Estimated Fair Value Measurements at Reporting Date Using:
Types of Instruments	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets at September 30, 2014:
U.S. government securities	$	33,564	$	—	$	—	$	33,564
U.S. government agency securities	—		43,614		—		43,614
U.S. corporate notes	—		59,607		—		59,607
U.S. commercial paper	—		44,434		—		44,434
Equity securities	10,068		—		—		10,068
Money market funds	125,456		—		—		125,456
Total assets measured at estimated fair value	$	169,088	$	147,655	$	—	$	316,743
Liabilities at September 30, 2014:
Convertible subordinated notes due 2023	$	—	$	239,339	$	—	$	239,339
Non-recourse notes due 2029	—		454,500		—		454,500
Total fair value of liabilities	$	—	$	693,839	$	—	$	693,839

	Estimated Fair Value Measurements at Reporting Date Using
Types of Instruments	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets at December 31, 2013:
U.S. government securities	$	42,158	$	—	$	—	$	42,158
U.S. government agency securities	98,236		43,095		—		141,331
U.S. corporate notes	61,591		33,386		—		94,977
U.S. commercial paper	3,499		98,523		—		102,022
Money market funds	122,343		—		—		122,343
Total assets measured at estimated fair value	$	327,827	$	175,004	$	—	$	502,831
Liabilities at December 31, 2013:
Convertible subordinated notes due 2023	$	—	$	408,250	$	—	$	408,250

At September 30, 2014, securities with a total fair value of $5.4 million were measured using Level 2 inputs in comparison to December 31, 2013, at which time the securities had a fair value of $5.4 million and were measured using Level 1 inputs.