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Marketable Securities and Fair Value Measurements | 6 Months Ended
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Jun. 30, 2018
Fair Value Disclosures [Abstract] |
Marketable Securities and Fair Value Measurements | Marketable Securities and Fair Value Measurements The guidance regarding fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets that are accessible at the measurement date; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company did not have any transfer of assets and liabilities between Level 1, Level 2 and Level 3 of the fair value hierarchy during the six months ended June 30, 2018 or 2017. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis, and are determined using the following inputs as of June 30, 2018:
| Fair Value Measurements at
| June 30, 2018
| Total |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Unobservable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
Money market funds | $ | 1,649,759 |  |  | $ | 1,649,759 |  |  | $ | — |  |  | $ | — |
Mutual funds | 69,322,516 |  |  | — |  |  | 69,322,516 |  |  | — |
US corporate debt securities | 11,186,848 |  |  | — |  |  | 11,186,848 |  |  | — |
Investment in affiliated entities | 11,682,295 |  |  | 11,682,295 |  |  | — |  |  | — |
Total Assets | $ | 93,841,418 |  |  | $ | 13,332,054 |  |  | $ | 80,509,364 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Common stock warrants | $ | 228,665 |  |  | $ | — |  |  | $ | — |  |  | 228,665 |
Total Liabilities | $ | 228,665 |  |  | $ | — |  |  | $ | — |  |  | $ | 228,665 |
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis, and are determined using the following inputs as of December 31, 2017:
| Fair Value Measurements at
| December 31, 2017
| Total |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Unobservable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
Money market funds | $ | 9,843,482 |  |  | $ | 9,843,482 |  |  | $ | — |  |  | $ | — |
Mutual funds | 68,565,889 |  |  | — |  |  | 68,565,889 |  |  | — |
US corporate debt securities | 35,072,955 |  |  | — |  |  | 35,072,955 |  |  | — |
Investment in affiliated entities | 11,394,480 |  |  | 11,394,480 |  |  | — |  |  | — |
Total Assets | $ | 124,876,806 |  |  | $ | 21,237,962 |  |  | $ | 103,638,844 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Common stock warrants | $ | 360,795 |  |  | $ | — |  |  | $ | — |  |  | $ | 360,795 |
Total Liabilities | $ | 360,795 |  |  | $ | — |  |  | $ | — |  |  | $ | 360,795 |
Level 1 assets at June 30, 2018 consisted of money market funds held by the Company that are valued at quoted market prices, as well as the Company’s investments in affiliates, GeneOne and PLS. The Company accounts for its investment in 1,644,155 common shares of GeneOne based on the closing price of the shares on the Korean Stock Exchange on the applicable balance sheet date. The Company accounts for its investment in 395,758 common shares of PLS as an equity investment with a fair value based on the closing price of the shares on the Korea New Exchange (KONEX) Market on the applicable balance sheet date. The Company elected the fair value option in conjunction with the investment in GeneOne at the inception of the investment; therefore, changes in the fair value of the investment are reflected as other income (expense) in the condensed consolidated statements of operations. The Company did not elect the fair value option for the investment in PLS at the inception of the investment, but rather recorded the investment under the equity method until its ownership interest dropped below 20% in June 2015 and, accordingly, began recording the investment under the cost method using the carryover basis from the equity method of zero. Once shares of PLS began trading on the KONEX, the Company classified the investment as available-for-sale and began recording the investment at fair value. After the adoption of ASU No. 2016-01 on January 1, 2018, unrealized gains and losses on the Company's equity securities are reported in the condensed consolidated statement of operations as a gain (loss) on investment in affiliated entities, as discussed in Note 4. Level 2 assets at June 30, 2018 consisted of U.S. corporate debt securities and mutual funds held by the Company that are initially valued at the transaction price and subsequently valued, at the end of each reporting period, typically utilizing market observable data. The Company obtains the fair value of its Level 2 assets from a professional pricing service, which may use quoted market prices for identical or comparable instruments, or inputs other than quoted prices that are observable either directly or indirectly. The professional pricing service gathers quoted market prices and observable inputs from a variety of industry data providers. The valuation techniques used to measure the fair value of the Company's Level 2 financial instruments were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques. The Company validates the quoted market prices provided by the primary pricing service by comparing the service's assessment of the fair values of the Company's investment portfolio balance against the fair values of the Company's investment portfolio balance obtained from an independent source. There were no Level 3 assets held as of June 30, 2018. Level 3 liabilities at June 30, 2018 consisted of common stock warrant liabilities associated with warrants to purchase the Company's common stock issued in March 2013. If unexercised, the warrants will expire in September 2018. During the six months ended June 30, 2018 and 2017, no ne of these warrants were exercised. As of June 30, 2018, the Company had a $229,000 common stock warrant liability. The Company reassesses the fair value of the common stock warrants at each reporting date utilizing a Black-Scholes pricing model. Inputs used in the pricing model include estimates of stock price volatility, expected warrant life and risk-free interest rate. The Company develops its estimates based on historical data. The assumptions used to estimate the fair value of common stock warrants at June 30, 2018 are presented below:
Risk-free interest rate | 2.32%
Expected volatility | 43%
Expected life in years | 0.2
Dividend yield | —
Changes in these assumptions as well as fluctuations in the Company's stock price on the valuation date can have a significant impact on the fair value of the common stock warrant liability. As a result of these calculations, the Company recorded a decrease in fair value of $260,000 and $132,000 for the three and six months ended June 30, 2018, respectively, and an increase in fair value of $313,000 and $196,000 for the three and six months ended June 30, 2017, respectively. The change in fair value of common stock warrants is reflected in the Company's condensed consolidated statements of operations. The following table presents the changes in fair value of the Company’s Level 3 financial liabilities for the six months ended June 30, 2018:
Balance at December 31, 2017 | $ | 360,795 |
Decrease attributable to change in fair value of common stock warrants | (132,130 | )
Balance at June 30, 2018 | $ | 228,665 |

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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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