At December 31,
2013
Quoted
Prices in
ActiveMarkets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents (1) . . . . . . . . . . . . . . . . . . . . . . . . . .
$133,233
$133,233 $ — $ —
Corporate debt securities (7) . . . . . . . . . . . . . . . . . . . .
407,897
— 407,897
—
Debt securities issued by U.S. government
agencies (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,432
— 64,432
—
Debt securities issued by the U.S. Treasury (3). . . . .
15,328
15,328
— —
Debt securities issued by states of the United States
and political subdivisions of the states (3) . . . . . . .
22,255
— 22,255
—
Investment in Regulus Therapeutics Inc. . . . . . . . . . .
52,096
52,096
— —
Equity securities (6). . . . . . . . . . . . . . . . . . . . . . . . . . .
1,276
1,276
— —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$696,517
$201,933 $494,584 $ —
(1) Included in cash and cash equivalents on our consolidated balance sheet.
(2) $0.8 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term
investments on our consolidated balance sheet.
(3) Included in short-term investments on our consolidated balance sheet.
(4) $10.0 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term
investments on our consolidated balance sheet.
(5) $9.3 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term
investments on our consolidated balance sheet.
(6) Included in other current assets on our consolidated balance sheet.
(7) $13.1 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term
investments on our consolidated balance sheet.
At the beginning of 2013 our Level 3 investments consisted of our investments in the equity securities we
owned of Regulus and Sarepta Therapeutics, Inc. which had a gross fair value of $44.4 million and $1.0 million,
respectively, less a lack of marketability discount of $10.8 million and $0.3 million, respectively, for a net
carrying value of $33.6 million and $0.7 million, respectively. In the first quarter of 2013, we sold all of the
common stock of Sarepta that we owned resulting in a realized gain of $1.1 million. In the fourth quarter of
2013, we re-classified our investment in Regulus to a Level 1 investment because we were no longer subject to
contractual trading restrictions on the Regulus shares we owned. In the first quarter of 2014, Achaogen
completed an initial public offering. As a result, we stopped using the cost method of accounting for our equity
investment inAchaogen and instead we began accounting for it at fair value. Until September 2014, the fair
value of our investment inAchaogen included a lack of marketability discount because there were restrictions on
when we could trade the securities. As such, we classified our Achaogen stock as a Level 3 investment. In
September 2014, we reclassified our investment inAchaogen to a Level 1 investment because the contractual
trading restrictions on the shares we owned ended. In November 2014, Regulus completed a public offering. As
part of the offering, we sold shares of Regulus’ common stock and became subject to trading restrictions on our
remaining shares through January 2015. Therefore, at December 31, 2014, our investment in Regulus included a
lack of marketability discount and was classified as a Level 3 investment.
We recognize transfers between levels of the fair value hierarchy on the date of the event or change in
circumstances that caused the transfer.
F-19
