Note L - Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Fair Value Disclosures [Text Block]
L.
Fair Value of Financial Instruments
 
The
carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash and accounts payable, approximate their respective fair values due to the short-term nature of such instruments.
 
The fair value of the Deerfield Convertible Notes
was
$10.2
million and
$42.0
million, respectively, at
December
31,
2016
and
2015.
The fair value of the
2021
Notes, which were issued during the
first
quarter of
2016,
 was
$46.3
million at
December
31,
2016.
 Both the Deerfield Convertible Notes and 
2021
Notes fall within Level
3
of the fair value hierarchy as their value is based on the credit worthiness of the Company, which is an unobservable input.
The Company used a Tsiveriotis-Fernandes model to value the Deerfield Convertible Notes
at
December
31,
2016
and
2015
and the
2021
Notes at
December
31,
2016.
 
Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in whi
ch to classify them for each reporting period. This determination requires significant judgments to be made. The following table summarizes the conclusions reached regarding fair value measurements as of
December
31,
2016
and
2015
(in thousands):
 
   
 
 
 
  
Quoted Prices in
    
 
    
 
  
   
Balance at
    
Active Markets for
    
Significant Other
    
Significant
  
   
December 31,
    
Identical Assets
    
Observable Inputs
    
Unobservable Inputs
  
   
2016
    
(Level
1)
    
(Level 2)
    
(Level 3)
  
Underwriter Warrant liability
   $
16
     $
—
     $
—
     $
16
  
Deerfield Warrant liability
    
4,231
      
—
      
—
      
4,231
  
Embedded Put Option
    
365
      
—
      
—
      
365
  
Fundamental change and make-whole interest provisions embedded in 2021 Notes    
 6
      
 —
      
 —
      
 6
  
Total liabilities
   $
4,618
     $
—
     $
—
     $
4,618
  
Trading securities:
                                
Certificates of deposit
    
7,788
      
7,788
      
—
      
—
  
U.S. Treasury securities    
 37,066
      
 37,066
      
 —
      
 —
  
U.S. government-sponsored agency securities
    
14,349
      
—
      
14,349
      
—
  
Total assets
   $
59,203
     $
44,854
     $
14,349
     $
—
  
 
   
 
 
 
  
Quoted Prices in
   
 
    
 
  
   
Balance at
    
Active Markets for
    
Significant Other
    
Significant
  
   
December 31,
    
Identical Assets
    
Observable Inputs
    
Unobservable Inputs
  
   
2015
    
(Level 1)
    
(Level 2)
    
(Level 3)
  
Underwriter Warrant liability
   $
3,877
     $
—
     $
—
     $
3,877
  
Deerfield Warrant liability
    
33,750
      
—
      
—
      
33,750
  
Embedded Put Option
    
212
      
—
      
—
      
212
  
Total liabilities
    $
37,839
      $
—
      $
—
      $
37,839
  
Trading securities:
                                
Certificates of deposit    
 8,951
      
 8,951
      
 —
      
 —
  
U.S. Treasury securities    
4,996
      
4,996
      
—
      
—
  
U.S. government-sponsored agency securities    
 5,055
      
 5,055
      
 —
      
 —
  
Total assets    $
 19,002
      $
 19,002
      $
 —
      $
 —
  
 
The Company
’s Underwriter Warrant liability, Deerfield Warrant liability, embedded Put Option and the fundamental change and the make-whole interest provisions embedded in the
2021
Notes, as well as the trading securities are measured at fair value on a recurring basis. As of
December
31,
2016
and
2015,
the Underwriter Warrant liability, Deerfield Warrant liability and embedded Put Option are reported on the balance sheet in derivative and warrant liability, while the trading securities are reported on the balance sheet in marketable securities and long-term investments. The
2021
Notes were issued during the
first
quarter of
2016
and the fundamental change and make-whole interest provisions embedded in the
2021
Notes are reported on the balance sheet in derivative and warrant liability. The Company used a Monte Carlo simulation to value the Underwriter Warrant liability, Deerfield Warrant liability and the embedded Put Option at
December
31,
2016
and
2015.
A Monte Carlo simulation was also used to value the fundamental change and make-whole interest provisions embedded in the
2021
Notes as of the issuance date and
December
31,
2016.
Significant unobservable inputs used in measuring the fair value of these financial instruments included the Company’s estimated enterprise value, an estimate of the timing of a liquidity or fundamental change event, a present value discount rate and an estimate of the Company’s stock volatility using the volatilities of guideline peer companies. Changes in the fair value of the Underwriter Warrant liability, the Deerfield 
Warrant liability, the embedded Put Option and the fundamental change and make-whole interest provisions embedded in the
2021
Notes are reflected in the statements of operations as a
fair value adjustment.
 
A reconciliation of the beginning and ending balances for the derivative and warrant liability measured at fair value on a recurring basis using signific
ant unobservable inputs (Level
3)
is as follows (in thousands):
 
   
2016
    
2015
  
Balance at beginning of period
   $
37,839
     $
15,966
  
Reclassification of 2013 warrants to equity
    
—
 
    
(1,110
 ) 
Exercise of warrants
    
(756
)
    
(4,293
 ) 
Adjustment to fair value
    
(32,465
 )     
27,276
  
Balance at end of period
   $
4,618
     $
37,839