Cash Equivalents, Marketable Securities and Fair Value Measurements (Tables)

3 Months Ended

Jun. 30, 2018

Cash Equivalents and Marketable Securities by Balance Sheet Classification

The Company’s cash equivalents and marketable securities at June 30, 2018 and March 31, 2018 are classified on the balance sheet as follows:

	June 30, 2018		March 31, 2018
	(in $000's)
Cash equivalents	$	29,910	$	22,595
Short-term marketable securities		299,228		319,274
Long-term marketable securities		6,887		37,502
	$	336,025	$	379,371

Cash Equivalents and Marketable Securities

The Company’s cash equivalents and marketable securities at June 30, 2018 and March 31, 2018 are invested in the following:

	Amortized		Gross Unrealized		Gross Unrealized			Fair Market
	Cost		Gains		Losses			Value
	(in $000's)
June 30, 2018:
Money market funds	$	29,910	$	—	$	—		$	29,910
Short-term U.S. Treasury mutual fund securities		23,024		—		(44	)		22,980
Short-term government-backed securities		210,836		—		(463	)		210,373
Short-term corporate debt securities		36,439		—		(97	)		36,342
Short-term commercial paper		29,549		—		(16	)		29,533
Long-term U.S. Treasury mutual fund securities		6,888		—		(1	)		6,887
	$	336,646	$	—	$	(621	)	$	336,025

	Amortized		Gross Unrealized		Gross Unrealized			Fair Market
	Cost		Gains		Losses			Value
	(in $000's)
March 31, 2018:
Money market funds	$	5,845	$	—	$	—		$	5,845
Repurchase agreements		16,750		—		—			16,750
Short-term U.S. Treasury mutual fund securities		18,132		—		(29	)		18,103
Short-term government-backed securities		212,255		3		(538	)		211,720
Short-term corporate debt securities		52,737		—		(161	)		52,576
Short-term commercial paper		36,936		2		(63	)		36,875
Long-term U.S. Treasury mutual fund securities		10,953		—		(16	)		10,937
Long-term government-backed securities		24,798		1		(12	)		24,787
Long-term corporate debt securities		1,777		1		—			1,778
	$	380,183	$	7	$	(819	)	$	379,371

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, 2018:	(in $000's)
Assets
Money market funds	$	29,910	$	—	$	—	$	29,910
Short-term U.S. Treasury mutual fund securities		—		22,980		—		22,980
Short-term government-backed securities		—		210,373		—		210,373
Short-term corporate debt securities		—		36,342		—		36,342
Short-term commercial paper		—		29,533		—		29,533
Long-term U.S. Treasury mutual fund securities		—		6,887		—		6,887
Liabilities
Contingent consideration		—		—		10,331		10,331

	Level 1		Level 2		Level 3		Total
March 31, 2018:	(in $000's)
Assets
Money market funds	$	5,845	$	—	$	—	$	5,845
Repurchase agreements		—		16,750		—		16,750
Short-term U.S. Treasury mutual fund securities		—		18,103		—		18,103
Short-term government-backed securities		—		211,720		—		211,720
Short-term corporate debt securities		—		52,576		—		52,576
Short-term commercial paper		—		36,875		—		36,875
Long-term U.S. Treasury mutual fund securities		—		10,937		—		10,937
Long-term government-backed securities		—		24,787		—		24,787
Long-term corporate debt securities		—		1,778		—		1,778
Liabilities
Contingent consideration		—		—		10,490		10,490

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 ECP requires significant management judgment or estimation and is calculated using the following valuation methods:

Milestone Payment

Fair Value at June 30, 2018 (in $000's)

Valuation Methodology

Significant Unobservable Input

Weighted Average (range, if applicable)

Clinical and regulatory milestone

7,000

5,712

Probability

weighted income approach

Projected fiscal year of milestone payments

2019 to 2022

Discount rate

3.9% to 4.2%

Probability of occurrence

Probability adjusted level of 40% for the base case scenario and 10% to 40% for various upside and downside scenarios

Revenue-based milestone

8,000

4,619

Monte Carlo simulation model

Projected fiscal year of milestone payments

2024 to 2035

Discount rate

14%

Expected volatility for forecasted revenues

50%

Probability of payment

78%

15,000

10,331

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, 2018 and 2017:

	For the Three Months Ended June 30,
		2018			2017
	(in $000's)
Level 3 liabilities, beginning balance	$	10,490		$	9,153
Additions		—			—
Payments		—			—
Change in fair value		(159	)		265
Level 3 liabilities, ending balance	$	10,331		$	9,418