Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

11. Fair Value Measurements

The fair value hierarchy prioritizes observable and unobservable inputs used to measure fair value into three broad levels:

Level 1 — unadjusted quoted prices in active markets for identical securities;

Level 2 — unadjusted quoted prices in markets that are not active,

Level 3 — significant unobservable inputs, including our own assumptions in determining fair value

The following table summarizes the financial assets that we measured at fair value as of:

	December 31, 2012
	Level 1		Level 2		Level 3		Total
Available for sale securities	$	838,309	$	—	$	—	$	838,309
Total assets	$	838,309	$	—	$	—	$	838,309
Contingent royalty	$	—	$	—	$	16,000,000	$	16,000,000
Total liabilities	$	—	$	—	$	16,000,000	$	16,000,000
	December 31, 2011
	Level 1		Level 2		Level 3		Total
Available for sale securities	$	—	$	27,446	$	—	$	27,446
Total assets	$	—	$	27,446	$	—	$	27,446

As of December 31, 2012, the Company’s Level 1 assets are comprised of 285,000 shares of Navidea Biopharmaceuticals, Inc. common stock. These shares are traded on the NYSE under the symbol NAVB. Also included in Level 1 assets as of December 31, 2012 are 39,209 shares of FluoroPharma Medical, Inc. common stock which are traded on the OTC Bulletin Board (“OTCBB”) under the symbol FPMI.

As of December 31, 2011, the Company’s Level 2 available for sale securities consisted of 39,209 shares of FluoroPharma Medical, Inc. stock. These shares were subject to Rule 144 restrictions and traded on very thin volume in the open market. Based on those two factors the Company previously classified the shares as a Level 2 asset. As of September 30, 2012, the Company determined that the FluoroPharma Medical, Inc. common stock should be reclassified to Level 1 based on the increased liquidity of the shares due to more stable trading volume in the open market.

A contingent royalty liability which resulted from the election by certain purchasers of the Company’s Convertible Promissory Note Purchase Agreement (the “Note Purchase Agreement”) to convert a total of $16,000,000 in debt obligation into a right to receive future royalties on net sales of the Company’s Molecular Imaging Products. The Company obtained a third party fair value valuation for its contingent royalty liability as of December 31, 2012. The fair value measurement is based on significant inputs not observable in the market, which require it to be reported as a Level 3 asset within the fair value hierarchy. The valuation uses assumptions that the Company believes would be made by a market participant. In particular, the valuation analysis employed the Income Approach based on the sum of the economic income that an asset is anticipated to produce in the future. In this case that asset is the potential royalty income to be paid to the Company by Navidea as a result of the license agreement for Altropane. The Discounted Cash Flow method of the Income Approach was chosen

as the method best suited to valuing the contingent royalty liability. Changes in the fair value of the contingent royalty liability will be reflected in the consolidated statements of comprehensive income in the period they become known. The actual calculated fair value of the liability was $16.6 million, however, as described in Note 7 the accounting guidance does not provide for an increase in the liability in a troubled debt restructuring.