Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.4.0.6
Fair Value Measurements
9 Months Ended
Sep. 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 as of September 30, 2012, classified as available for sale, and carried at fair value is as follows:

 

                                         

(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     $ 5,407     $ —       $ —       $ 7,138  

BZNE Note and conversion feature

    1,700       53       —         287       2,040  

Neovasc common stock options

    925       249       —         119       1,293  

Neovasc common stock warrants

    659       194       —         (375     478  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 5,015     $ 5,903     $ —       $ 31     $ 10,949  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 income. If we determine that any future valuation adjustment was other-than-temporary, we would record a loss during the period that such determination is made.

 

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

 

                                 
    Fair value measurements as of September 30, 2012  

(In thousands)

  Quote 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

  $ 14,505     $ —       $ —       $ 14,505  

US Treasury securities

    14,997       —         —         14,997  

Certificates of deposit

    —         10,423       —         10,423  

Forward contracts

    —         59       —         59  

Common stock investments

    7,138       —         —         7,138  

BZNE Note and conversion feature

    —         —         2,040       2,040  

Neovasc common stock options

    —         1,293       —         1,293  

Neovasc common stock warrants

    —         478       —         478  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 36,640     $ 12,253     $ 2,040     $ 50,933  
   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities:

                               

Deferred acquisition payments, net of discount

  $ —       $ —       $ 9,752     $ 9,752  

CURNA contingent consideration

    —         —         510       510  

OPKO Diagnostics contingent consideration

    —         —         15,098       15,098  

FineTech contingent consideration

    —         —         5,042       5,042  

Farmadiet contingent consideration

    —         —         1,251       1,251  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

  $ —       $ —       $ 31,653     $ 31,653  
   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

                         

(In thousands)

  BZNE
Note and
conversion
feature
    Contingent
consideration
    Deferred
acquisition
payments,
net of discount
 

Balance at December 31, 2011

  $ —       $ 18,002     $ —    

Additions

    1,700       1,234       9,673  

Change in fair value included in:

                       

Operating expenses

    —         2,665       —    

Other income and (expense), net

    1,563       —         79  

Other comprehensive loss

   
53
 
    —         —    

Transfer out to equity method investment

    (1,276     —         —    
   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2012

  $ 2,040     $ 21,901     $ 9,752  
   

 

 

   

 

 

   

 

 

 

Our U.S. Treasury security matures on December 20, 2012 ($15.0 million). We intend to hold the U.S. Treasury security until its maturity. Of the $21.9 million of contingent consideration, $8.0 million is recorded in Accrued expenses and $13.9 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.