8. In August 2007 and December 2008, we made an aggregate investment of $7.5 million in Intelliject,a privately held specialty pharmaceutical company. Intelliject seeks to set a new standard in drug/device combination pharmaceuticals designed to enable superior treatment outcomes, improved cost effectiveness and intuitive patient administration. Our ownership interest on a fully diluted basis is approximately 20%, and the investment is accounted for under the fair value method. At the time of our initial investment, we elected the fair value option over the equity method of accounting since our investment objectives were similar to those of venture capitalists, which typically do not have controlling financial interests.

At March 31, 2013 and December 31, 2012, the estimated fair value of our investment (also the carrying value included in "Other assets and deferred charges" in our balance sheet) was $34.8 million and $33.7 million, respectively. The fair value estimates are based upon significant unobservable (Level 3) inputs since there is no secondary market for our ownership interest. Accordingly, until the next round of financing or other significant financial transaction, value estimates will primarily be based on assumptions relating to meeting product development and commercialization milestones, corresponding cash flow projections (projections of sales, costs, expenses, capital expenditures and working capital investment) and discounting of these factors for the high degree of risk. Adjustments to the estimated fair value of our investment will be made in the period during which changes can be quantified.

We recognized unrealized gains (included in "Other income (expense), net" in the consolidated statements of income) of $1.1 million and $3.6 million in the first quarters of 2013 and 2012, respectively. The unrealized gain in the first quarter of 2013 was primarily related to adjustments in the fair value for the passage of time as anticipated cash flows associated with achieving product development and commercialization milestones are discounted at 55% for their high degree of risk. The unrealized gain in 2012 is primarily attributed to the appreciation of our ownership interest after the weighted average cost of capital used to discount cash flows in our valuation of Intelliject was reduced to reflect the completion of certain process testing and a reassessment of the risk associated with the timing for obtaining final marketing approval from the U.S. Food and Drug Administration for its first product.

The fair market valuation of our interest in Intelliject is sensitive to changes in the weighted average cost of capital used to discount cash flow projections for the high degree of risk associated with meeting development and commercialization milestones as anticipated. The weighted average cost of capital used in the fair market valuation of our interest in Intelliject was 55% at March 31, 2013 and December 31, 2012. At March 31, 2013, the effect of a 500 basis point decrease in the weighted average cost of capital assumption would have further increased the fair value of our interest in Intelliject by approximately $6 million, and a 500 basis point increase in the weighted average cost of capital assumption would have decreased the fair value of our interest by approximately $5 million.

Had we not elected to account for our investment under the fair value method, we would have been required to use the equity method of accounting. The condensed unaudited balance sheets for Intelliject at March 31, 2013 and December 31, 2012 and condensed unaudited statements of operations for the three months ended March 31, 2013 and 2012, as reported to us by Intelliject, are provided below:


		March 31,		December 31,			March 31,		December 31,
(In Thousands)		2013		2012			2013		2012
Assets:					Liabilities & Equity:
Cash & cash equivalents	$	39,013	$	53,288	Long term debt, current portion	$	1,322	$	-
Other current assets		3,171		686	Other current liabilities		4,466		13,405
Patents		2,176		2,152	Non-current liabilities		1,738		1,449
Other long-term assets		6,633		4,278	Long term debt, net of discount		13,397		14,696
					Redeemable preferred stock		21,235		20,995
					Equity		8,835		9,859
Total assets	$	50,993	$	60,404	Total liabilities & equity	$	50,993	$	60,404


		Three Months Ended
		March 31,
		2013			2012
Revenues & Expenses:
Royalty revenues	$	1,800		$	-
Expenses and other, net		(3,802	)		(2,489	)
Income tax (expense) benefit		1,087			950
Net income (loss)	$	(915	)	$	(1,539	)

Our investment in the Harbinger Fund had a carrying value (included in "Other assets and deferred charges") of $3.4 million at March 31, 2013, compared with $3.6 million at December 31, 2012. We recorded an unrealized loss of $1.1 million ($0.7 million after taxes) on our investment in the Harbinger Fund in the first quarter of 2012 (included in "Other income (expense), net" in the consolidated statements of income) as a result of a reduction in the estimated fair value of our investment that is not expected to be temporary.

The carrying value at March 31, 2013 reflected Tredegar's cost basis in its investment in the Harbinger Fund, net of total withdrawal proceeds received and unrealized losses. Withdrawal proceeds in the first quarter of 2013 were $0.2 million (none in the first quarter of 2012). The timing and amount of future installments of withdrawal proceeds, which commenced in August 2010, were not known as of March 31, 2013. Gains on our investment in Harbinger will be recognized when the amounts expected to be collected from our withdrawal from the investment are known, which will likely be when cash in excess of our remaining carrying value is received. Losses will be recognized when management believes it is probable that future withdrawal proceeds will not exceed the remaining carrying value.