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Fair Value Measurements and Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value Hierarchy

The following table summarizes assets and liabilities measured at fair value on a recurring basis at the dates indicated, classified in accordance with the fair value hierarchy described above (in thousands):

			As of June 30, 2022																								As of December 31, 2021
			Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3						Total
Assets:
Cash equivalents
Money market funds			$	307,797					$	—					$	—					$	307,797					$	598,253					$	—					$	—					$	598,253
Commercial paper			—						181,681						—						181,681						—						13,997						—						13,997
Certificates of deposit			—						36,001						—						36,001						—						40,954						—						40,954
Marketable securities
Commercial paper			—						87,622						—						87,622						—						207,457						—						207,457
Certificates of deposit			—						178,766						—						178,766						—						374,415						—						374,415
U.S. government securities			—						24,014						—						24,014						—						—						—						—
Available for sale debt securities
Debt securities (1)			—						—						300,000						300,000						—						—						66,000						66,000
Forwards (2)			—						—						63,700						63,700						—						—						—						—
Derivative instrument (3)			—						—						63,200						63,200						—						—						—						—
Total current assets			$	307,797					$	508,084					$	426,900					$	1,242,781					$	598,253					$	636,823					$	66,000					$	1,301,076
Equity securities			275,662						—						28,785						304,447						226,787						—						43,013						269,800
Available for sale debt securities
Debt securities (1)			—						—						63,000						63,000						—						—						187,700						187,700
Forwards (2)			—						—						—						—						—						—						16,700						16,700
Derivative instrument (3)			—						—						8,600						8,600						—						—						—						—
Royalty at fair value (4)			—						—						21,215						21,215						—						—						—						—
Total non-current assets			$	275,662					$	—					$	121,600					$	397,262					$	226,787					$	—					$	247,413					$	474,200
Liabilities:
Available for sale debt securities
Forwards (2)			—						—						(35,600)						(35,600)						—						—						—						—
Funding commitments (5)			—						—						(8,100)						(8,100)						—						—						—						—
Total non-current liabilities			$	—					$	—					$	(43,700)					$	(43,700)					$	—					$	—					$	—					$	—

(1)Reflects the fair value of the Series A Biohaven Preferred Shares and Series B Biohaven Preferred Shares. As of June 30, 2022, amounts also include the fair value of the funded portion of the Cytokinetics Commercial Launch Funding.

(2)Reflects the fair value of our obligations to fund the acquisitions of the Series B Biohaven Preferred Shares as recorded within current assets as of June 30, 2022 and within non-current assets as of December 31, 2021. As of December 31, 2021, the amount also reflects the fair value of our obligations to fund the Development Funding Bonds as recorded within non-current assets. As of June 30, 2022, the fair value of our obligations to fund the Development Funding Bonds was reflected within Other liabilities on the condensed consolidated balance sheet.

(3)Related to the Milestone Acceleration Option (defined below) recorded within Other current assets and Other assets on the condensed consolidated balance sheet.

(4)Recorded within Other assets on the condensed consolidated balance sheet. See Note 8–Non-Consolidated Affiliates for additional discussion.

(5)Related to the fair value of the Cytokinetics Funding Commitments as reflected within Other liabilities on the condensed consolidated balance sheet as of June 30, 2022.

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

The table presented below summarizes the change in the combined fair value (current and non-current) of Level 3 financial instruments, which relate to equity securities, a royalty interest, a derivative instrument and available for sale debt securities, including the underlying debt securities, related forwards and funding commitments (in thousands):

			For the Three Months Ended June 30, 2022																																										For the Three Months Ended June 30, 2021
			Equity Securities						Debt Securities						Forwards						Funding Commitments						Derivative Instrument						Royalty at Fair Value												Debt Securities						Forwards
Balance at the beginning of the period			$	62,538					$	314,000					$	(1,200)					$	(8,400)					$	—					$	—											$	226,800					$	22,400
Purchases			28,785						14,579						—						—						—						21,215												17,585						—
Losses on equity securities			(21,846)						—						—						—						—						—												—						—
Gains on derivative financial instrument			—						—						—						—						71,800						—												—						—
Unrealized gains included in other comprehensive losses (1)			—						9,325						—						—						—						—												6,025						—
Unrealized gains included in earnings (2)			—						31,800						38,221						300						—						—												500						13,515
Settlement of forwards (3)			—						8,921						(8,921)						—						—						—												5,115						(5,115)
Transfer to Level 1 (4)			(40,692)						—						—						—						—						—												—						—
Redemption of debt securities			—						(15,625)						—						—						—						—												(15,625)						—
Balance at the end of the period			$	28,785					$	363,000					$	28,100					$	(8,100)					$	71,800					$	21,215											$	240,400					$	30,800

(1)Recorded within Unrealized gains on available for sale debt securities in the condensed consolidated statements of comprehensive income for unrealized gains related to Series A Biohaven Preferred Shares.

(2)Recorded within Unrealized gains on available for sale debt securities in the condensed consolidated statements of operations for the unrealized change in fair value in the Series B Biohaven Preferred Shares, Series B Forwards and the Development Funding Bond Forward. For the three months ended June 30, 2022, amounts also reflect unrealized change in fair value in the funded portion of the Cytokinetics Commercial Launch Funding and the Cytokinetics Funding Commitments.

(3)Reflects the fair value attributed to the Series B Forwards that were settled simultaneously with the acquisition of the Series B Biohaven Preferred Shares, which is included in the fair value of the Series B Biohaven Preferred Shares.

(4)Related to transfer restriction expiration of BioCryst common stock.

			For the Six Months Ended June 30, 2022																																										For the Six Months Ended June 30, 2021
			Equity Securities						Debt Securities						Forwards						Funding Commitments						Derivative Instrument						Royalty at Fair Value												Debt Securities						Forwards
Balance at the beginning of the period			$	43,013					$	253,700					$	16,700					$	—					$	—					$	—											$	214,400					$	18,600
Purchases			28,785						79,158						—						—						—						21,215												35,170						—
Gains/(losses) on initial recognition (1)			—						9,400						—						(9,400)						—						—												—						—
Losses on equity securities			(2,321)						—						—						—						—						—												—						—
Gains on derivative financial instrument			—						—						—						—						71,800						—												—						—
Unrealized gains included in other comprehensive losses (2)			—						10,950						—						—						—						—												11,150						—
Unrealized gains included in earnings (3)			—						30,200						22,242						1,300						—						—												500						22,630
Settlement of forwards (4)			—						10,842						(10,842)						—						—						—												10,430						(10,430)
Transfer to Level 1 (5)			(40,692)						—						—						—						—						—												—						—
Redemption of debt securities			—						(31,250)						—						—						—						—												(31,250)						—
Balance at the end of the period			$	28,785					$	363,000					$	28,100					$	(8,100)					$	71,800					$	21,215											$	240,400					$	30,800

(1)Represents purchase price allocation to arrive at the appropriate fair value on initial recognition.

(2)Recorded within Unrealized gains on available for sale debt securities in the condensed consolidated statements of comprehensive income for unrealized gains related to Series A Biohaven Preferred Shares.

(3)Recorded within Unrealized gains on available for sale debt securities in the condensed consolidated statements of operations for the unrealized change in fair value in the Series B Biohaven Preferred Shares, Series B Forwards and the Development Funding Bond Forward. For the six months ended June 30, 2022, amounts also reflect the unrealized change in fair value in the funded portion of the Cytokinetics Commercial Launch Funding and the Cytokinetics Funding Commitments.

(4)Reflects the fair value attributed to the Series B Forwards that were settled simultaneously with the acquisition of the Series B Biohaven Preferred Shares, which is included in the fair value of the Series B Biohaven Preferred Shares.

(5)Related to transfer restriction expiration of BioCryst common stock.

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 financial royalty assets as of June 30, 2022 and December 31, 2021 are presented below (in thousands):

			As of June 30, 2022												As of December 31, 2021
			Fair Value						Carrying Value, net						Fair Value						Carrying Value, net
Financial royalty assets, net			$	18,254,440					$	13,423,629					$	19,047,183					$	13,718,245

X

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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Tabular disclosure of information about fair value of asset and liability not measured at fair value.

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Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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