Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.4.0.6
Fair Value Measurements
6 Months Ended
Jun. 30, 2012
Fair Value Measurements [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 7 FAIR VALUE MEASUREMENTS

We record fair value at an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We utilize 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; 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.

 

A summary of our investments classified as available for sale, and carried at fair value is as follows (in thousands):

 

                                         

(in thousands)

  Amortized
cost
    Gross
unrealized
gains in
Accumulated
OCI
    Gross
unrealized
losses in
Accumulated
OCI
    Gain/(Loss)
in
Accumulated
Deficit
    Fair
Value
 
           

Common stock investments

  $ 1,731     $ 5,265     $ (80   $ —       $ 6,916  

BZNE Note and beneficial conversation feature

    1,700       53       —         287       2,040  

BZNE common stock warrants

    —         —         —         1,276       1,276  

Neovasc common stock options

    818       180       —         —         998  

Neovasc common stock warrants

    659       194       —         (453     400  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 4,908     $ 5,692     $ (80   $ 1,110     $ 11,630  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Any future fluctuation in fair value related to these instruments that is judged to be temporary, including any recoveries of previous write-downs, would be recorded in accumulated other comprehensive loss. If we determine that any future valuation adjustment was other-than-temporary, we would record a charge to the condensed consolidated statement of operations as appropriate.

Our financial assets and liabilities measured at fair value on a recurring basis are as follows:

 

                                 
    Fair value measurements as of June 30, 2012  

(in thousands)

  Quoted
prices in
active
markets
for
identical
assets

(Level 1)
    Significant
other
observable
inputs

(Level 2)
    Significant
unobservable
inputs

(Level  3)
    Total  

Assets:

                               

Money market funds

  $ 21,560     $ —       $ —       $ 21,560  

US Treasury securities

    24,996       —         —         24,996  

Certificates of deposit

    —         8,607       —         8,607  

Common stock investments

    6,916       —         —         6,916  

BZNE Note and beneficial conversation feature

    —         —         2,040       2,040  

BZNE common stock warrants

    —         —         1,276       1,276  

Neovasc common stock options

    —         998       —         998  

Neovasc common stock warrants

    —         400       —         400  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 53,472     $ 10,005     $ 3,316     $ 66,793  
   

 

 

   

 

 

   

 

 

   

 

 

 
         

Liabilities:

                               

Forward contracts

  $ —       $ 27     $ —       $ 27  

CURNA contingent consideration

    —         —         510       510  

OPKO Diagnostics contingent consideration

    —         —         14,512       14,512  

FineTech contingent consideration

    —         —         5,089       5,089  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

  $ —       $ 27     $ 20,111     $ 20,138  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

The following table reconciles the beginning and ending balances of our Level 3 assets and liabilities:

 

                 

(in thousands)

  BNZE
Note and
BZNE
Warrants
    Contingent
consideration
 

Balance at December 31, 2011

  $ —       $ 18,002  

Additions

    1,700       —    

Change in fair value included in:

               

Operating expenses

    —         2,109  

Other income and expense, net

    1,616       —    
   

 

 

   

 

 

 

Balance at June 30, 2012

  $ 3,316     $ 20,111  
   

 

 

   

 

 

 

Our U.S. Treasury securities mature on July 26, 2012 ($10.0 million) and September 28, 2012 ($15.0 million). We indend to hold the U.S. Treasury securities until their maturities. Of the $20.1 million of contingent consideration, $5.2 million is recorded as an Accrued expense and $14.9 million is recorded in Other long-term liabilities. We valued the contingent consideration utilizing a discounted cash flow model for the expected payments. The carrying value of our other assets and liabilities approximates their fair value due to their short-term nature.