v2.4.0.6
Fair value measurements
 3 Months Ended
Mar. 31, 2012
Fair value measurements [Abstract]  
Fair value measurements
2.     Fair value measurements  
 
The following table represents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis:

 
At March 31, 2012
 
(in thousands)
 
Level 1
  
Level 2
  
Level 3
  
Total
 
Assets:
            
Investment in money market funds (1)
 $50,861  $-  $-  $50,861 
Total assets
 $50,861  $-  $-  $50,861 
                  
Liabilities:
                
Contingent value rights
 $-  $-  $-  $- 
Total liabilities
 $-  $-  $-  $- 
                  
 
At December 31, 2011
 
(in thousands)
 
Level 1
  
Level 2
  
Level 3
  
Total
 
Assets:
                
Investment in money market funds (1)
 $73,005  $-  $-  $73,005 
U.S. Treasury securities (2)
  -   1,966   -   1,966 
Total assets
 $73,005  $1,966  $-  $74,971 
                  
Liabilities:
                
Contingent value rights
 $-  $-  $4,753  $4,753 
Total liabilities
 $-  $-  $4,753  $4,753 

(1)                    Included in cash and cash equivalents in accompanying consolidated balance sheets.
(2)                    Included in investments in accompanying consolidated balance sheets.

The fair value of the contingent value right (“CVR”) obligations is based on management’s assessment of certain development and collaboration milestones, which are inputs that have no observable market (Level 3).  The obligation is measured using a discounted cash flow model. For the three months ended March 31, 2012 and 2011, the changes in the fair value of the CVR obligations resulted from an update to the probability and estimated timing of achievement for certain development milestones along with an adjustment to the discount rates.  During the three months ended March 31, 2012, the Company recorded a decrease of $3.0 million in the value of the CVRs related to the Pfizer, Inc. (“Pfizer”) agreement, and made a CVR payment in the amount of $1.7 million related to the Company’s collaboration with Abbott Laboratories (“Abbott”), which was terminated on March 20, 2012. During the three months ended March 31, 2011, the Company recorded a charge to adjust the CVRs to fair value of $581,000.  The adjustments to fair value are classified in the Company’s statement of operations as research and development expense within the Company’s Biosciences segment.

As of March 31, 2012 and 2011, the Company did not have any transfers between Level 1 and Level 2 assets or liabilities.

The following table is a reconciliation of the beginning and ending balance of the liabilities measured at fair value using significant unobservable inputs (Level 3) during the three months ended March 31, 2012 and the year ended December 31, 2011:

(in thousands)
   
Balance at January 1, 2011
 $14,532 
Expense (income) included in earnings
  221 
Expense (income) included in comprehensive income
  - 
Settlements
  (10,000)
Purchases, sales, issuances and settlements
  - 
Transfers in/(out) of Level 3
  - 
Balance at December 31, 2011
 $4,753 
Expense (income) included in earnings
  (3,005)
Expense (income) included in comprehensive income
  - 
Settlements
  (1,748)
Purchases, sales and issuances
  - 
Transfers in/(out) of Level 3
  - 
Balance at March 31, 2012
 $- 

Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis, as documented above, from those measured at fair value on a nonrecurring basis.  As of March 31, 2012, the Company’s SBI-087 in-process research and development (“IPR&D”) asset and goodwill were measured at fair value on a nonrecurring basis.  As of March 31, 2011 the Company had no assets or liabilities that were measured at fair value on a nonrecurring basis.

Both the carrying value and fair value of long-term indebtedness at March 31, 2012 and December 31, 2011 were $60.9 million and $59.5 million, respectively.