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Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2013
Fair Value Disclosures [Abstract]  
Schedule of assets and liabilities measured on recurring basis
The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2013 (in thousands):

Fair Value Measurements at Reporting Date Using
 
 
 
Quoted Prices in
Active Markets
for Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Current portion of co-promote termination payments receivable
$
4,329

 
$
—

 
$
—

 
$
4,329

Short-term investments
4,340

 
4,340

 
—

 
—

Long-term portion of co-promote termination payments receivable
7,417

 
—

 
—

 
7,417

     Total assets
$
16,086

 
$
4,340

 
$
—

 
$
11,746

Liabilities:
 
 
 
 
 
 
 
Current portion of contingent liabilities - CyDex
$
1,712

 
$
—

 
$
—

 
$
1,712

Current portion of co-promote termination liability
4,329

 
—

 
—

 
4,329

Long-term portion of contingent liabilities - Metabasis
4,196

 
4,196

 
—

 
—

Long-term portion of contingent liabilities - CyDex
7,599

 
—

 
—

 
7,599

Liability for restricted investments owed to former licensees
651

 
651

 
—

 
—

Long-term portion of co-promote termination liability
7,417

 
—

 
—

 
7,417

     Total liabilities
$
25,904

 
$
4,847

 
$
—

 
$
21,057


The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2012 (in thousands):

Fair Value Measurements at Reporting Date Using
 
 
 
Quoted Prices in
Active Markets
for Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Current portion of co-promote termination payments receivable
$
4,327

 
$
—

 
$
—

 
$
4,327

Available-for-sale securities
1,426

 
—

 
—

 
1,426

Long-term portion of co-promote termination payments receivable
8,207

 
—

 
—

 
8,207

     Total assets
$
13,960

 
$
—

 
$
—

 
$
13,960

Liabilities:
 
 
 
 
 
 
 
Current portion of contingent liabilities - CyDex
$
356

 
$
—

 
$
—

 
$
356

Current portion of co-promote termination liability
4,327

 
—

 
—

 
4,327

Long-term portion of contingent liabilities - CyDex
10,543

 
—

 
—

 
10,543

Liability for restricted investments owed to former licensees
214

 
—

 
—

 
214

Long-term portion of co-promote termination liability
8,207

 
—

 
—

 
8,207

     Total liabilities
$
23,647

 
$
—


$
—


$
23,647
Significant unobservable inputs used in determining the fair value of contingent liabilities
The following table represents significant unobservable inputs used in determining the fair value of contingent liabilities assumed in the acquisition of CyDex:

 
 
December 31,
 
 
2013
 
2012
Range of annual revenue subject to revenue sharing (1)
 
$4.2 million-$19.8 million
 
$3.6 million-$28.3 million
Revenue volatility
 
25%
 
25%
Average of probability of commercialization
 
67.6%
 
68.4%
Sales beta
 
0.60
 
0.60
Credit rating
 
BBB
 
BBB
Equity risk premium
 
6%
 
6%
(1)
Revenue subject to revenue sharing represent management’s estimate of the range of total annual revenue subject to revenue sharing (i.e. annual revenues in excess of $15 million) through December 31, 2016, which is the term of the CVR agreement.
Reconciliation of the level 3 financial instruments
A reconciliation of the level 3 financial instruments as of December 31, 2013 is as follows (in thousands):

Assets:
 
Fair value of level 3 financial instruments as of December 31, 2012
$
13,960

Assumed payments made by Pfizer or assignee
(3,310
)
Fair value adjustments recorded as unrealized gain on available-for-sale securities
2,914

Fair value adjustments to co-promote termination liability
2,522

Transfer of available-for-sale investments from level 3 to level 1
(4,340
)
Fair value of level 3 financial instrument assets as of December 31, 2013
$
11,746

 
 
Liabilities
 
Fair value of level 3 financial instruments as of December 31, 2012
$
23,647

Assumed payments made by Pfizer or assignee
(3,310
)
Fair value adjustments for amounts owed related to restricted investments and recorded as other expense
437

Payments to CVR and other former license holders
(989
)
Fair value adjustments to contingent liabilities
(599
)
Fair value adjustments to co-promote termination liability
2,522

Transfer of liability for restricted investments owed to former licensees from level 3 to level 1
(651
)
Fair value of level 3 financial instruments as of December 31, 2013
$
21,057