Marketable Securities and Fair Value Measurements (Tables)

3 Months Ended

Jun. 30, 2017

The Company’s marketable securities at June 30, 2017 and March 31, 2017 are invested in the following:

	Amortized		Gross Unrealized		Gross Unrealized			Fair Market
	Cost		Gains		Losses			Value
	(in $000's)
June 30, 2017:
Short-term U.S. Treasury mutual fund securities	$	36,138	$	—	$	(20	)	$	36,118
Short-term government-backed securities		113,432		—		(138	)		113,294
Short-term corporate debt securities		58,053		1		(25	)		58,029
Long-term government-backed securities		34,970		1		(24	)		34,947
Long-term corporate debt securities		2,718		4		—			2,722
	$	245,311	$	6	$	(207	)	$	245,110

	Amortized		Gross Unrealized		Gross Unrealized			Fair Market
	Cost		Gains		Losses			Value
	(in $000's)
March 31, 2017
Short-term U.S. Treasury mutual fund securities	$	45,199	$	—	$	(13	)	$	45,186
Short-term government-backed securities		90,199		1		(87	)		90,113
Short-term corporate debt securities		55,465		—		(31	)		55,434
Long-term U.S. Treasury mutual fund securities		1,998		—		(3	)		1,995
Long-term government-backed securities		43,484		5		(18	)		43,471
Long-term corporate debt securities		1,853		—		(1	)		1,852
	$	238,198	$	6	$	(153	)	$	238,051

Financial Instruments Recorded at Fair Value

The following table presents the Company’s financial instruments recorded at fair value in the condensed consolidated balance sheets, classified according to the three categories described above:

	Level 1		Level 2		Level 3		Total
June 30, 2017:	(in $000's)
Assets
Short-term U.S. Treasury mutual fund securities	$	—	$	36,118	$	—	$	36,118
Short-term government-backed securities		—		113,294		—		113,294
Short-term corporate debt securities		—		58,029		—		58,029
Long-term government-backed securities		—		34,947		—		34,947
Long-term corporate debt securities		—		2,722		—		2,722
Liabilities
Contingent consideration		—		—		9,418		9,418

	Level 1		Level 2		Level 3		Total
March 31, 2017:	(in $000's)
Assets
Short-term U.S. Treasury mutual fund securities	$	—	$	45,186	$	—	$	45,186
Short-term government-backed securities		—		90,113		—		90,113
Short-term corporate debt securities		—		55,434		—		55,434
Long-term U.S. Treasury mutual fund securities		—		1,995		—		1,995
Long-term government-backed securities		—		43,471		—		43,471
Long-term corporate debt securities		—		1,852		—		1,852
Liabilities
Contingent consideration		—		—		9,153		9,153

Valuation Method Used to Calculate Level 3 Liabilities Measured at Estimated Fair Value of Contingent Consideration Related to Acquisition

This liability is reported as Level 3 as the estimated fair value of the contingent consideration related to the acquisition of the ECP requires significant management judgment or estimation and is calculated using the following valuation methods:

Fair Value at

Weighted Average

June 30, 2017

Significant

(range, if

(in $000's)

Valuation Methodology

Unobservable Input

applicable)

Clinical and regulatory milestone

5,453

Probability

weighted income approach

Projected fiscal year of milestone payments

2019 to 2022

Discount rate

2.6% to 3.3%

Probability of occurrence

Probability adjusted level of 40% for the base case scenario and 5% to 20% for various upside and downside scenarios

Revenue-based milestone

3,965

Monte Carlo simulation model

Projected fiscal year of milestone payments

2023 to 2035

Discount rate

18%

Expected volatility for forecasted revenues

50%

9,418

Change in Fair Value of Contingent Consideration as Determined by Level 3 Inputs

The following table summarizes the change in fair value, as determined by Level 3 inputs, of the contingent consideration for the three months ended June 30, 2017 and 2016:

	For the Three Months Ended June 30,
		2017		2016
	(in $000's)
Level 3 liabilities, beginning balance	$	9,153	$	7,563
Additions		—		—
Payments		—		—
Change in fair value		265		176
Level 3 liabilities, ending balance	$	9,418	$	7,739