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Fair Value Measurements and Financial Instruments (Tables)

12 Months Ended

Dec. 31, 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 by level within the fair value hierarchy (in thousands):

			As of December 31, 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			$	5,068					$	—					$	—					$	5,068					$	598,253					$	—					$	—					$	598,253
Commercial paper			—						—						—						—						—						13,997						—						13,997
Certificates of deposit			—						—						—						—						—						40,954						—						40,954
Marketable securities
Commercial paper			—						—						—						—						—						207,457						—						207,457
Certificates of deposit			—						11,501						—						11,501						—						374,415						—						374,415
U.S. government securities			—						12,920						—						12,920						—						—						—						—
Available for sale debt securities
Debt securities (1)			—						—						1,300						1,300						—						—						66,000						66,000
Derivative instruments (2)			—						—						86,150						86,150						—						—						—						—
Total current assets			$	5,068					$	24,421					$	87,450					$	116,939					$	598,253					$	636,823					$	66,000					$	1,301,076
Equity securities			103,876						—						8,472						112,348						226,787						—						43,013						269,800
Available for sale debt securities
Debt securities (1)			—						—						226,300						226,300						—						—						187,700						187,700
Forwards (3)			—						—						—						—						—						—						16,700						16,700
Derivative instruments (2)			—						—						10,460						10,460						—						—						—						—
Royalty at fair value (4)			—						—						14,500						14,500						—						—						—						—
Total non-current assets			$	103,876					$	—					$	259,732					$	363,608					$	226,787					$	—					$	247,413					$	474,200
Liabilities:
Available for sale debt securities
Funding commitments (5)			—						—						(2,500)						(2,500)						—						—						—						—
Total non-current liabilities			$	—					$	—					$	(2,500)					$	(2,500)					$	—					$	—					$	—					$	—

(1)As of December 31, 2022, amounts reflect the fair value of the funded portion of the Cytokinetics Commercial Launch Funding and the funded portion of the Development Funding Bonds. As of December 31, 2021, amounts reflect the fair value of the Series A Biohaven Preferred Shares and Series B Biohaven Preferred Shares.

(2)Reflects the fair value of the Milestone Acceleration Option.

(3)Reflects the fair value of our obligations to fund the acquisitions of the Series B Biohaven Preferred Shares and our obligations to fund the Development Funding Bonds.

(4)Recorded within Other assets on the consolidated balance sheet. See Note 9–Non-Consolidated Affiliates for additional discussion.

(5)Related to the fair value of the Cytokinetics Funding Commitments.

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 (in thousands):

			Year Ended December 31, 2022																																				Year Ended December 31, 2021
			Equity Securities						Debt Securities						Forwards						Funding Commitments						Derivative Instruments						Royalty at Fair Value						Equity Securities						Debt Securities						Forwards
Balance at the beginning of the year			$	43,013					$	253,700					$	16,700					$	—					$	—					$	—					$	—					$	214,400					$	18,600
Purchases (1)			28,785						479,559						—						—						—						21,215						35,120						70,441						—
Gains/(losses) on initial recognition (2)			—						600						—						(9,400)						—						—						—						—						—
(Losses)/gains on equity securities			(22,634)						—						—						—						—						—						7,893						—						—
Gains on derivative financial instruments			—						—						—						—						96,610						—						—						—						—
Unrealized gains on available for sale debt securities included in other comprehensive losses			—						24,000						—						—						—						—						—						11,600						—
(Losses)/gains on available for sale debt securities included in earnings (3)			—						(67,800)						62,885						6,900						—						—						—						1,300						16,559
Other non-operating expense			—						—						—						—						—						(6,715)						—						—						—
Settlement of forwards (4)			—						79,585						(79,585)						—						—						—						—						18,459						(18,459)
Transfer out of Level 3 (5)			(40,692)						—						—						—						—						—						—						—						—
Redemptions (1)			—						(542,044)						—						—						—						—						—						(62,500)						—
Balance at the end of the year			$	8,472					$	227,600					$	—					$	(2,500)					$	96,610					$	14,500					$	43,013					$	253,700					$	16,700

(1)Following Pfizer’s acquisition of Biohaven in October 2022, we purchased all remaining unissued Series B Biohaven Preferred Shares and we received accelerated redemption payments for all outstanding Series A Biohaven Preferred Shares and Series B Biohaven Preferred Shares.

(2)Reflects the purchase price allocation for the long-term funding agreement entered into with Cytokinetics to arrive at the appropriate fair value of the Cytokinetics Funding Commitments on initial recognition. Amounts also reflect the losses on initial recognition of debt securities related to the difference in (a) the fair value of the Additional Funding of the Development Funding Bonds and (b) the actual additional funded amount of $150 million.

(3)Amounts reflect changes in the fair values of the Series B Biohaven Preferred Shares, Series B Forwards and the Development Funding Bond Forward. For 2022, amounts also reflect the change in the fair value of the funded portion of the Cytokinetics Commercial Launch Funding, the funded portion of the Development Funding Bonds and the Cytokinetics Funding Commitments.

(4)Amounts reflect the fair value attributed to the Series B Forwards that were settled as we acquired the Series B Biohaven Preferred Shares. Amounts in 2022 also reflect the fair value attributed to the Development Funding Bond Forward that was settled upon funding the Development Funding Bonds.

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

Fair Value Disclosure of Asset and Liability Not Measured at Fair Value

The estimated fair values and related carrying values of the non-current portion of financial royalty assets as of December 31, 2022 and 2021 are presented below (in thousands):

			As of December 31, 2022												As of December 31, 2021
			Fair Value						Carrying Value, net						Fair Value						Carrying Value, net
Financial royalty assets, net			$	17,314,094					$	13,493,106					$	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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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).

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