Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2016

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at December 31, 2016 and 2015 were as follows (in thousands):



	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
At December 31, 2016
Assets
Cash equivalents (1)	$	87,792	$	—	$	—	$	87,792
Liabilities
Common stock warrant liabilities (2)	$	—	$	—	$	809	$	809
Contingent purchase consideration (3)	$	—	$	—	$	52,800	$	52,800

At December 31, 2015
Assets
Cash equivalents (1)	$	148,588	$	—	—		$	148,588
Liabilities
Common stock warrant liability (2)	$	—	$	—	$	6,196	$	6,196
Contingent purchase consideration (3)	$	—	$	—	$	51,000	$	51,000


(1)	Cash equivalents consists of investments in money market funds.

(2)

Common stock warrant liabilities include liabilities associated with warrants issued in connection with the Company’s July 2012 public offering of common stock and warrants (see Note 10) and warrants issued in connection with the financing agreement entered into with Healthcare Royalty Partners, which are measured at fair value using the Black-Scholes option pricing valuation model. The assumptions used in the Black-Scholes option pricing valuation model for both common stock warrant liabilities were: (a) a risk-free interest rate based on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the remaining contractual term of the warrants; (b) an assumed dividend yield of zero based on the Company’s expectation that it will not pay dividends in the foreseeable future; (c) an expected term based on the remaining contractual term of the warrants; and (d) expected volatility based upon the Company’s historical volatility. The significant unobservable input used in measuring the fair value of the common stock warrant liabilities associated with the Healthcare Royalty Financing Agreement is the expected volatility. Significant increases in volatility would result in a higher fair value measurement. The following additional assumptions were used in the Black-Scholes option pricing valuation model to measure the fair value of the warrants sold in the July 2012 public offering: (a) management’s projections regarding the probability of the occurrence of an extraordinary event and the timing of such event; and for the valuation scenario in which an extraordinary event occurs that is not an all cash transaction or an event whereby a public acquirer would assume the warrants, (b) an expected volatility rate using the Company’s historical volatility through the projected date of public announcement of an extraordinary transaction, blended with a rate equal to the lesser of 40% and the 180-day volatility rate obtained from the HVT function on Bloomberg as of the trading day immediately following the public announcement of an extraordinary transaction. The significant unobservable inputs used in measuring the fair value of the common stock warrant liabilities associated with the July 2012 public offering are the expected volatility and the probability of the occurrence of an extraordinary event. Significant increases in volatility would result in a higher fair value measurement and significant increases in the probability of an extraordinary event occurring would result in a significantly lower fair value measurement.

(3)

Contingent purchase consideration was measured at fair value using the income approach based on significant unobservable inputs including management’s estimates of the probabilities and timing of achieving specific net sales levels and development milestones and appropriate risk adjusted discount rates. Significant changes of any of the unobservable input could have a significant effect on the calculation of fair value of the contingent purchase consideration liability.

Reconciliation of Liabilities Measured at Fair Value Using Significant Observable Inputs (Level 3)

The following table provides a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2016 and 2015 (in thousands):



	Short-term investments			Contingent Purchase Consideration			Common Stock Warrant Liability
Balance at December 31, 2014	$	—		$	53,000		$	5,093
Additions	11,926			—			—
Dispositions	(6,180		)	—			—
Changes in fair value	(5,746		)	(2,000		)	1,103
Balance at December 31, 2015	—			51,000			6,196
Additions	—			—			—
Dispositions	—			—			—
Changes in fair value	—			1,800			(5,387		)
Balance at December 31, 2016	$	—		$	52,800		$	809

Property and Equipment Useful Lives

Depreciation is calculated on a straight-line basis over the estimated useful lives of the respective assets and primarily consists of the following:



Computer equipment and software		3 years
Furniture and fixtures		3-7 years
Leasehold improvements		Shorter of estimated useful life or lease term

Basic and Diluted Net Loss Per Share

The following table presents the computation of basic and diluted net (loss) income per share (in thousands, except per share amounts):



	Year Ended December 31,
	2016						2015					2014
	Continuing operations			Discontinued operations			Continuing operations			Discontinued operations		Continuing operations		Discontinued operations
Numerator
Net (loss) income, basic and diluted	$	(68,686	)	$	(1,021	)	$	(41,704	)	$	67,848	$	61,487	$	(52,900	)
Denominator
Weighted average common shares outstanding, basic	24,785			24,785			21,449			21,449		17,825		17,825
Effect of dilutive securities:
Common stock warrants	—			—			—			—		30		30
Weighted average common shares outstanding, diluted	24,785			24,785			21,449			21,449		17,855		17,855
Net (loss) income per share, basic	$	(2.77	)	$	(0.04	)	$	(1.94	)	$	3.16	$	3.45	$	(2.97	)
Net (loss) income per share, diluted	$	(2.77	)	$	(0.04	)	$	(1.94	)	$	3.16	$	3.44	$	(2.96	)

Schedule of Calculation of Diluted Net Loss Per Share



	Year Ended December 31,
	2016	2015	2014
Common stock options and restricted stock units	3,256	529	1,244
Common stock warrants	1,975	—	—
	5,231	529	1,244