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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2014
Fair Value Measurements [Abstract] |
Fair Value Measurements |
6. | Fair Value Measurements
Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. We follow a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:
| · | Level 1: Quoted prices in active markets for identical assets or liabilities.
| · | Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
| · | Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.
The following table provides a summary of the recognized assets and liabilities that we measure at fair value on a recurring basis:
|  | Balance as of |  |  | Basis of Fair Value Measurements |
|  | December 31, 2014 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 8,144,000 |  |  | $ | 8,144,000 |  |  | $ | — |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Warrant liability |  | $ | 9,793,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,793,000 |
|  | Balance as of |  |  | Basis of Fair Value Measurements |
|  | December 31, 2013 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 4,644,000 |  |  | $ | 4,644,000 |  |  | $ | — |  |  | $ | — |
We use quoted market prices to determine the fair value of our cash equivalents, which consist of money market funds and therefore these are classified in Level 1 of the fair value hierarchy. Warrants with exercise price reset features (down-round protection) are accounted for as liabilities, with changes in the fair value included in net loss for the respective periods. Because some of the inputs to our valuation model are either not observable or are not derived principally from or corroborated by observable market data by correlation or other means, the warrant liability is classified as Level 3 in the fair value hierarchy. The following table summarizes the change in our Level 3 warrant liability value:
Warrant liability |  | December 31, 2014 |  |  | December 31, 2013 |
Beginning balance |  | $ | — |  |  | $ | 418,000 |
Additions to warrant liability |  |  | 10,162,000 |  |  |  | — |
Change in fair value |  |  | (369,000 | ) |  |  | (418,000 | )
Ending balance |  | $ | 9,793,000 |  |  | $ | — |
We valued our Put liability using an option pricing theory based simulation analysis (i.e., a Monte Carlo simulation). The Put was cancelled as a result of the Joint Venture Termination Agreement executed in 2013. The following table summarizes the change in our Level 3 Put option liability value:
Put option liability |  | Year ended December 31, 2013 |
Beginning balance |  | $ | (2,250,000 | )
Decrease (increase) in fair value recognized in operating expenses |  |  | 2,250,000 |
Ending balance |  | $ | — |

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19279-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19190-110258 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 + Details
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