Fair Value Measurements and Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2020

The following is a summary of the inputs used to value our financial assets and liabilities measured at fair value as of December 31, 2020 and 2019 (in thousands):


	As of December 31, 2020
	Level 1		Level 2		Level 3		Total

Assets:

Cash equivalents
Money market funds	$	24,302	$	—	$	—	$	24,302
Commercial paper	—		77,176		—		77,176
Certificates of deposit	—		74,502		—		74,502
Marketable securities
Corporate debt securities	—		32,754		—		32,754
Commercial paper	—		444,554		—		444,554
Certificates of deposit	—		505,971		—		505,971
Available for sale debt securities	—		—		69,984		69,984
Total current assets	$	24,302	$	1,134,957	$	69,984	$	1,229,243

Equity securities (1)	298,689		—		—		298,689
Available for sale debt securities	—		—		144,416		144,416
Forwards (2)	—		—		18,600		18,600
Warrants (3)	—		5,439		—		5,439
Total non-current assets	$	298,689	$	5,439	$	163,016	$	467,144

(1)Upon Gilead’s acquisition of Immunomedics, our investment in Immunomedics common stock was redeemed in full in the fourth quarter of 2020, resulting in a gain of $292.3 million recognized within (Gain)/loss on equity securities in the year ended December 31, 2020.

(2)The Series B Forwards, recorded within Other assets in the consolidated balance sheet as of December 31, 2020, relate to our obligation to fund the acquisition of the Series B Biohaven Preferred Shares.

(3)Related to Epizyme transaction as described in Note 4–Derivative Instruments and recorded in the non-current asset portion of Derivative financial instruments in the consolidated balance sheet as of December 31, 2020.

The net unrealized gain or loss recognized on equity securities still held as of December 31, 2020 was a loss of $45.2 million, a gain of $125.6 million and a loss of $7.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.


	As of December 31, 2019
	Level 1		Level 2		Level 3		Total

Assets:

Cash equivalents
Money market funds	$	222,326	$	—	$	—	$	222,326

Certificates of deposit	—		4,000		—		4,000
Marketable securities
U.S. government securities	—		12,877		—		12,877
Commercial paper	—		21,367		—		21,367
Certificates of deposit	—		60,211		—		60,211
Total current assets	$	222,326	$	98,455	$	—	$	320,781

Equity securities	380,756		—		—		380,756
Available for sale debt securities	—		—		131,280		131,280
Warrants (1)	—		30,815		—		30,815
Forward purchase contract (1)	—		11,500		—		11,500
Total non-current assets	$	380,756	$	42,315	$	131,280	$	554,351

Liabilities:
Interest rate swaps	—		(9,215)		—		(9,215)
Total current liabilities	$	—	$	(9,215)	$	—	$	(9,215)

Interest rate swaps	—		(18,902)		—		(18,902)
Total non-current liabilities	$	—	$	(18,902)	$	—	$	(18,902)

(1)Related to Epizyme warrants and put option as described in Note 4–Derivative Instruments and both recorded in the non-current asset portion of Derivative financial instruments in the consolidated balance sheet as of December 31, 2019.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The tables presented below summarize the change in the carrying value of Level 3 financial instruments, which relate to our investment in the Series A Biohaven Preferred Shares and the Series B Forwards (in thousands).


	For the years ended December 31,
	2020		2019

Available for sale debt securities
Balance at the beginning of the period	$	131,280	$	—
Purchases	—		125,121
Unrealized gains on available for sale debt securities	52,725		—
Transfer to Level 2	(184,005)		—
Transfer from Level 2 (1)	198,526		—
Unrealized gains on available for sale debt securities	15,874		6,159
Balance at the end of the period	$	214,400	$	131,280

(1) Includes $14.5 million of unrealized gains on available for sale debt securities included in other comprehensive income while the instrument was classified as a Level 2 asset.


	For the year ended December 31,
	2020

Forwards
Balance at the beginning of the period	$	—

Unrealized gains included in earnings (1)	18,600


Balance at the end of the period	$	18,600

(1) Recorded within Unrealized gain on forwards on the consolidated statements of comprehensive income.

Fair Value Disclosure of Asset and Liability Not Measured at Fair Value

Estimated fair values based on Level 3 inputs and related carrying values for the non-current portion of our financial royalty assets as of December 31, 2020 and 2019 are presented below (in thousands).


	December 31, 2020				December 31, 2019
	Fair value		Carrying value, net		Fair value		Carrying value, net
Financial royalty assets, net	$	18,718,179	$	12,368,084	$	16,501,819	$	10,842,052