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Fair Value Measurements
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9 Months Ended |
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| Fair Value Disclosures [Abstract] |
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| Fair Value Measurements |
Fair Value Measurements The Company measures and reports certain financial instruments as assets and liabilities at fair value on a recurring basis. These liabilities, consisting of the Medicis settlement, are considered Level 3 instruments, while the assets, consisting of money market funds and U.S. government agency obligations, are considered Level 1 and Level 2 instruments, respectively. The fair value of these instruments was as follows (in thousands): | | | | | | | | | | | | | | | | | | | | Fair Value | | Level 1 | | Level 2 | | Level 3 | Assets | | | | | | | | Money market funds | $ | 72,454 |
| | $ | 72,454 |
| | $ | — |
| | $ | — |
| U.S. government agency obligations | 53,721 | | — |
| | 53,721 | | — |
| Total assets measured at fair value | $ | 126,175 |
| | $ | 72,454 |
| | $ | 53,721 |
| | $ | — |
| | | | | | | | | Liabilities | | | | | | | | Derivative liabilities associated with the Medicis settlement | $ | 1,481 |
| | $ | — |
| | $ | — |
| | $ | 1,481 |
| Total liabilities measured at fair value | $ | 1,481 |
| | $ | — |
| | $ | — |
| | $ | 1,481 |
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| | | | | | | | | | | | | | | | | | | | Fair Value | | Level 1 | | Level 2 | | Level 3 | Assets | | | | | | | | Money market funds | $ | 166,038 |
| | $ | 166,038 |
| | $ | — |
| | $ | — |
| Total assets measured at fair value | $ | 166,038 |
| | $ | 166,038 |
| | $ | — |
| | $ | — |
| | | | | | | | | Liabilities | | | | | | | | Derivative liabilities associated with the Medicis settlement | $ | 1,541 |
| | $ | — |
| | $ | — |
| | $ | 1,541 |
| Total liabilities measured at fair value | $ | 1,541 |
| | $ | — |
| | $ | — |
| | $ | 1,541 |
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The fair value of the U.S. government agency obligations are estimated by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. The Company did not transfer any assets or liabilities measured at fair value on a recurring basis to or from Level 1 and Level 2 during the nine months ended September 30, 2015 and the year ended December 31, 2014. The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial instruments as follows (in thousands): | | | | | | Derivative Liability Associated with the Medicis Settlement | | $ | 1,541 |
| Change in fair value | (60 | ) | | $ | 1,481 |
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The fair value of the derivative liability resulting from the Medicis litigation settlement, specifically the derivative related to the Product Approval Payment (Note 3), was determined by estimating the timing and probability of the related regulatory approval and multiplying the payment amount by this probability percentage and a discount factor based primarily on the estimated timing of the payment and a credit risk adjustment. The significant unobservable inputs used in the fair value measurement of the Product Approval Payment derivative are the expected timing and probability of the payments at the valuation date and the credit risk adjustment. |
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- DefinitionThe 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.
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