Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Investments at June 30, 2020, which were measured at fair value on a recurring basis, consisted of the following:


			Fair Value Measurements Using
(in millions)	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash and money market funds	$	415.1	$	415.1	$	—	$	—
Total cash and cash equivalents	415.1		415.1		—		—
Restricted cash:
Certificates of deposit	3.2		3.2		—		—
Total restricted cash	3.2		3.2		—		—
Debt securities available-for-sale:
Commercial paper	140.1		—		140.1		—
Corporate debt securities	465.0		—		465.0		—
Securities of government-sponsored entities	123.3		—		123.3		—
Total debt securities available-for-sale	728.4		—		728.4		—
Equity securities:
Equity securities–biotechnology industry	50.7		—		—		50.7
Total equity securities	50.7		—		—		50.7
Total recurring fair value measurements	$	1,197.4	$	418.3	$	728.4	$	50.7

Investments at December 31, 2019, which were measured at fair value on a recurring basis, consisted of the following:


			Fair Value Measurements Using
(in millions)	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash and money market funds	$	112.3	$	112.3	—		—
Total cash and cash equivalents	112.3		112.3		—		—
Restricted cash:
Certificates of deposit	3.2		3.2		—		—
Total restricted cash	3.2		3.2		—		—
Debt securities available-for-sale:
Commercial paper	144.5		—		144.5		—
Corporate debt securities	521.9		—		521.9		—
Securities of government-sponsored entities	191.5		—		191.5		—
Total debt securities available-for-sale	857.9		—		857.9		—
Equity securities:
Equity securities–biotechnology industry	55.9		—		—		55.9
Total equity securities	55.9		—		—		55.9
Total recurring fair value measurements	$	1,029.3	$	115.5	$	857.9	$	55.9

The following table presents a reconciliation of equity security investments, which were measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Balance at beginning of period	$	39.4	$	56.4	$	55.9	$	—
Purchases	—		—		—		54.7
Unrealized gains (losses) included in earnings	11.3		21.0		(5.2)		22.7
Balance at end of period	$	50.7	$	77.4	$	50.7	$	77.4

At June 30, 2020, the discount for lack of marketability used in the valuation analysis of equity securities ranged from 17.5% to 31.5% (weighted average of 27.5%). The discount for lack of marketability was weighted by the relative fair value of the

instruments. A significant increase (decrease) in the discount for lack of marketability in isolation would result in a significantly lower (higher) fair value measurement. Unrealized gains and losses on equity securities are included in other income (expense), net.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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