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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

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.

Schedule of CyDex Acquisition

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

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
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-URI http://asc.fasb.org/extlink&oid=99377789&loc=d3e19207-110258

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-Publisher FASB
-Name Accounting Standards Codification
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Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique for each separate class of asset and liability measured on recurring and nonrecurring basis.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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