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Fair Value Measurements | 6 Months Ended
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Jun. 30, 2018
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements The following table presents the Company's hierarchy for assets and liabilities measured at fair value.
|  | June 30, 2018 |  | December 31, 2017
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term investments(1) |  | $ | 61,393 |  |  | $ | 803,871 |  |  | $ | — |  |  | $ | 865,264 |  |  | $ | 1,896 |  |  | $ | 179,145 |  |  | $ | — |  |  | $ | 181,041 |
Note receivable Viking |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,877 |  |  | 3,877 |
Investment in warrants (2) |  | 12,296 |  |  | — |  |  | — |  |  | 12,296 |  |  | 3,846 |  |  | — |  |  | — |  |  | 3,846 |
Total assets |  | $ | 73,689 |  |  | $ | 803,871 |  |  | $ | — |  |  | $ | 877,560 |  |  | $ | 5,742 |  |  | $ | 179,145 |  |  | $ | 3,877 |  |  | $ | 188,764 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current portion of contingent liabilities - Crystal (3) |  | $ | — |  |  | $ | — |  |  | $ | 3,618 |  |  | $ | 3,618 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,618 |  |  | 4,618 |
Current contingent liabilities-CyDex (4) |  | — |  |  | — |  |  | 36 |  |  | 36 |  |  | — |  |  | — |  |  | 86 |  |  | 86 |
Long-term portion of contingent liabilities - Crystal (3) |  | — |  |  | — |  |  | 3,784 |  |  | 3,784 |  |  | — |  |  | — |  |  | 3,783 |  |  | 3,783 |
Long-term contingent liabilities-CyDex (4) |  | — |  |  | — |  |  | 1,503 |  |  | 1,503 |  |  | — |  |  | — |  |  | 1,503 |  |  | 1,503 |
Long-term contingent liabilities-Metabasis (5) |  | — |  |  | 2,859 |  |  | — |  |  | 2,859 |  |  | — |  |  | 3,971 |  |  | — |  |  | 3,971 |
Total liabilities |  | $ | — |  |  | $ | 2,859 |  |  | $ | 8,941 |  |  | $ | 11,800 |  |  | $ | — |  |  | $ | 3,971 |  |  | $ | 9,990 |  |  | $ | 13,961 |
(1) | Investments in equity securities, which the Company received from Viking and another licensee as upfront and event-based payments, are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. Short-term investments in marketable debt securities with maturities greater than 90 days are classified as level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
(2) | Investment in warrants, which the Company received as a result of Viking’s partial repayment of the Viking note receivable and the Company’s purchase of Viking common stock and warrants in April 2016, are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. The change of the fair value is recorded in Gain (loss) from Viking in the Company's condensed consolidated statement of operations.
(3) | The fair value of Crystal contingent liabilities was determined using a probability weighted income approach. Most of the contingent payments are based on development or regulatory milestones as defined in the merger agreement with Crystal. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s estimates regarding the timing and probability of achievement of certain developmental and regulatory milestones. At June 30, 2018, most of the development and regulatory milestones were estimated to be highly probable of being achieved between 2018 and 2019. Changes in these estimates may materially affect the fair value.
(4) | The fair value of the liabilities for CyDex contingent liabilities were determined based on the income approach. To the extent the estimated future income may vary significantly given the long-term nature of the estimate, the Company utilizes a Monte Carlo model. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s estimates of timing and probability of achievement of certain revenue thresholds and developmental and regulatory milestones which may be achieved and affect amounts owed to former license holders. Changes in these assumptions can materially affect the fair value estimate.
(5) | The liability for CVRs for Metabasis are determined using quoted prices in a market that is not active for the underlying CVR. At June 30, 2018, the Company has a CVR payable of $3.8 million to the Glucagon CVR holders due on July 2, 2018, which is not included in the fair value disclosure.
For the three months ended June 30, 2018, there was no change to the fair value of the contingent liabilities associated with CyDex or Crystal. The Company made a $1.0 million payment to the former shareholders of Crystal in the first quarter of 2018. The following table represents significant unobservable inputs used in determining the fair value of contingent liabilities assumed in the acquisition of CyDex:
| June 30, 2018 |  | December 31, 2017
Revenue volatility | 25% |  | 25%
Average probability of commercialization | 12.5% |  | 12.5%
Market price of risk | 2.9% |  | 2.9%

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- 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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