Ocera Therapeutics, Inc. - 10-Q filing on 2014-11-13

Fair Value Measurements

9 Months Ended

Sep. 30, 2014

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2014, and December 31, 2013, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. As a basis for categorizing inputs, the Company uses a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value from market-based assumptions to entity specific assumptions:

Level 1: Quoted prices in active markets for identical assets or liabilities;

Level 2: Inputs, other than level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3: Unobservable inputs that are supported by little or no market activity, which require the Company to develop its own assumptions.

Assets measured at fair value on a recurring basis as of September 30, 2014 are as follows (in thousands):



	Balance as of September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	7,445	$	7,445	$	—	$	—
Commercial paper	5,250		—		5,250		—
Corporate debt securities	42,053		—		42,053		—
Total assets	$	54,748	$	7,445	$	47,303	$	—

Assets measured at fair value on a recurring basis as of December 31, 2013 are as follows (in thousands):



	Balance as of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	5,774	$	5,774	$	—	$	—
Commercial paper	15,246		—		15,246		—
Corporate debt securities	20,884		—		20,884		—
Total assets	$	41,904	$	5,774	$	36,130	$	—