Fair Value Measurements

9 Months Ended

Sep. 30, 2013

Fair Value Measurements [Abstract]

Fair Value Disclosures [Text Block]

Fair Value Measurements

Fair value of financial assets and liabilities that are being measured and reported are defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market at the measurement date (exit price). The Company is required to classify fair value measurements in one of the following categories:

Level 1 inputs are defined as quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 inputs are defined as inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.

Level 3 inputs are defined as unobservable inputs for the assets or liabilities. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The Company determined the fair value of the warrant derivative liabilities to be level 3 inputs. These inputs require material subjectivity because value is derived through the use of a lattice model that values the derivatives based on probability weighted discounted cash flows.

The Company also determined the fair value of contingent consideration, initially recognized on October 17, 2011 in connection with the Company's acquisition of Amorcyte, to be level 3 inputs. The fair value of contingent consideration obligations is based on a discounted cash flow model using a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on our own assumptions and experience. The value of our contingent consideration was initially calculated using a discount rate of 30%. We base the timing to complete the development and approval of this product on the current development stage of the product and the inherent difficulties and uncertainties in developing a product candidate, such as obtaining U.S. Food and Drug Administration (FDA) and other regulatory approvals. In determining the probability of regulatory approval and commercial success, we utilize data regarding similar milestone events from several sources, including industry studies and our own experience. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense we record in any given period. Changes in the fair value of the contingent consideration obligations are recorded in our consolidated statement of operations.

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2013, and December 31, 2012 (in thousands):

	September 30, 2013
	Fair Value Measurements Using Fair Value Hierarchy
	Level 1		Level 2		Level 3
Warrant derivative liabilities	$	—	$	—	$	114.1
Contingent consideration	—		—		7,550.0

	December 31, 2012
	Fair Value Measurements Using Fair Value Hierarchy
	Level 1		Level 2		Level 3
Warrant derivative liabilities	$	—	$	—	$	101.2
Contingent consideration	—		—		7,550.0

For those financial instruments with significant Level 3 inputs, the following table summarizes the activity for the three and nine months endedSeptember 30, 2013 by type of instrument (in thousands):

	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
	Warrants		Contingent Consideration		Warrants		Contingent Consideration
Beginning liability balance	$	32.6	$	7,550.0	$	101.2	$	7,550.0
Change in fair value recorded in earnings	81.5		—		12.9		—
Ending liability balance	$	114.1	$	7,550.0	$	114.1	$	7,550.0

Some of the Company’s financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate fair value due to their liquid or short-term nature, such as cash and cash equivalents, accounts receivable, accounts payable and notes payable, and long-term notes payable and mortgages.