| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company’s wholly‑owned subsidiaries, Exact Sciences Laboratories, LLC, Exact Sciences Finance Corporation, CG Growth, LLC, Exact Sciences Development Company, LLC, Sampleminded, Inc., Exact Sciences Europe LTD, Beijing Exact Sciences Medical Technology Company Limited, and variable interest entities. See Note 10 for the discussion of financing arrangements involving certain entities that are variable interest entities that are included in the Company’s consolidated financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. The Company does have a minority equity interest in a company accounted for as a cost method investment. The operating results of this company are not included in the Company’s results of operations.
References to “Exact”, “we”, “us”, “our”, or the “Company” refer to Exact Sciences Corporation and its wholly owned subsidiaries.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers cash on hand, demand deposits in a bank, money market funds, and all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. The Company had no restricted cash at December 31, 2017 and 2016.
Marketable Securities
Management determines the appropriate classification of debt securities at the time of purchase and re‑evaluates such designation as of each balance sheet date. Debt securities carried at amortized cost are classified as held‑to‑maturity when the Company has the positive intent and ability to hold the securities to maturity. Marketable equity securities and debt securities not classified as held‑to‑maturity are classified as available‑for‑sale. Available‑for‑sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the straight‑line method. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other‑than‑temporary on available‑for‑sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available‑for‑sale are included in investment income.
At December 31, 2017 and December 31, 2016 the Company’s marketable securities were comprised of fixed income investments, and all were deemed available‑for‑sale. The objectives of the Company’s investment strategy are to provide liquidity and safety of principal while striving to achieve the highest rate of return consistent with these two objectives. The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations (including those with a contractual term greater than one year from the date of purchase) are classified as current. All of the Company’s investments are considered current. Realized gains were $23,000, $24,000, and $14,000, net of insignificant realized losses, for the years ended December 31, 2017, 2016, and 2015, respectively and are included in investment income.
The Company periodically reviews investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, the Company’s intent not to sell the security, and whether it is more likely than not that the Company will have to sell the security before recovery of its cost basis. For the year ended December 31, 2017, no investments were identified with other-than-temporary declines in value.
Available‑for‑sale securities at December 31, 2017 consist of the following:
December 31, 2017
Gains in Accumulated
Losses in Accumulated
Other Comprehensive
Other Comprehensive
Estimated Fair
(In thousands)
Amortized Cost
Income
Income
Value
Corporate bonds
$
181,639
$
10
$
(344)
$
181,305
Asset backed securities
94,700
—
(185)
94,515
U.S. government agency securities
54,974
—
(162)
54,812
Commercial paper
9,953
—
(7)
9,946
Certificates of deposit
6,647
1
(2)
6,646
Total available-for-sale securities
$
347,913
$
11
$
(700)
$
347,224
Available‑for‑sale securities at December 31, 2016 consist of the following:
December 31, 2016
Gains in Accumulated
Losses in Accumulated
Other Comprehensive
Other Comprehensive
Estimated Fair
(In thousands)
Amortized Cost
Income
Income
Value
Corporate bonds
$
137,013
$
17
$
(93)
$
136,937
Asset backed securities
55,667
3
(30)
55,640
U.S. government agency securities
49,591
3
(120)
49,474
Commercial paper
19,069
8
(1)
19,076
Certificates of deposit
1,053
—
(1)
1,052
Total available-for-sale securities
$
262,393
$
31
$
(245)
$
262,179
Changes in Accumulated Other Comprehensive Income (Loss)
The amount recognized in accumulated other comprehensive income (loss) (“AOCI”) for the years ended December 31, 2017, 2016 and 2015 were as follows:
Accumulated
Cumulative
Unrealized
Other
Translation
Gain (Loss)
Comprehensive
(In thousands)
Adjustment
on Securities
Income (Loss)
Balance at January 1, 2015
$
—
$
(115)
$
(115)
Other comprehensive (loss) income before reclassifications
11
(361)
(350)
Amounts reclassified from accumulated other comprehensive loss
—
32
32
Net current period change in accumulated other comprehensive income (loss)
11
(329)
(318)
Balance at December 31, 2015
$
11
$
(444)
$
(433)
Other comprehensive (loss) income before reclassifications
(215)
117
(98)
Amounts reclassified from accumulated other comprehensive loss
—
113
113
Net current period change in accumulated other comprehensive income (loss)
(215)
230
15
Balance at December 31, 2016
$
(204)
$
(214)
$
(418)
Other comprehensive (loss) income before reclassifications
143
(530)
(387)
Amounts reclassified from accumulated other comprehensive loss
—
55
55
Net current period change in accumulated other comprehensive income (loss)
143
(475)
(332)
Balance at December 31, 2017
$
(61)
$
(689)
$
(750)
Amounts reclassified from accumulated other comprehensive loss for the years ended December 31, 2017, 2016 and 2015 were as follows:
Affected Line Item in the
Year Ended December 31,
Details about AOCI Components (In thousands)
Statement of Operations
2017
2016
2015
Change in value of available-for-sale investments
Sales and maturities of available-for-sale investments
Investment income
$
55
$
113
$
32
Total reclassifications
$
55
$
113
$
32
Allowance for Doubtful Accounts
The Company estimates an allowance for doubtful accounts against accounts receivable based on estimates of expected collections consistent with historical cash collection experience. The allowance for doubtful accounts is evaluated on a regular basis and adjusted when trends, significant events or other substantive evidence indicate that expected collections will be less than applicable accrual rates. At December 31, 2017 and 2016 there was no allowance for doubtful accounts recorded. For the years ended December 31, 2017, 2016 and 2015, there was no bad debt expense written off against the allowance and charged to operating expense.
Inventory
Inventory is stated at the lower of cost or market value (net realizable value). The Company determines the cost of inventory using the first-in, first out method (“FIFO”). The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and records a charge to cost of sales for such inventory as appropriate. In addition, the Company’s products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales to write down such unmarketable inventory to its estimated realizable value.
Inventory consists of the following:
December 31,
December 31,
(In thousands)
2017
2016
Raw materials
$
10,344
$
2,408
Semi-finished and finished goods
15,683
4,425
Total inventory
$
26,027
$
6,833
Property and Equipment
Pro
Estimated
Asset Classification
Useful Life
Laboratory equipment
3 - 5 years
Computer equipment and computer software
3 years
Leasehold and building improvements
Lesser of the remaining lease term, building life, or useful life
Furniture and fixtures
3 years
Land improvements
15 years
Buildings
30 years
Depreciation expense for the years ended December 31, 2017, 2016, and 2015 was $14.5 million, $11.3 million, and $7.6 million, respectively.
At December 31, 2017, the Company had $28.7 million of assets under construction which consisted of $13.8 million related to building and leasehold improvements, $2.6 million of capitalized costs related to software projects and $12.3 million of costs related to laboratory equipment. Depreciation will begin on these assets once they are placed into service. The Company expects to incur an additional $102.4 million to complete the building projects, $15.8 million to complete the laboratory equipment, and minimal cots to complete the computer equipment and computer software projects. These projects are expected to be completed in 2018 and 2019. The Company assesses its long-lived assets, consisting primarily of property and equipment, for impairment when material events and changes in circumstances indicate that the carrying value may not be recoverable. There were no impairment losses for the years ended December 31, 2017, 2016 or 2015.
Software Capitalization Policy
Software development costs related to internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post‑implementation stage. Costs incurred during the preliminary project and post‑implementation stages are expensed as incurred. Costs incurred during the application development stage that meet the criteria for capitalization are capitalized and amortized, when the software is ready for its intended use, using the straight‑line basis over the estimated useful life of the software.
Patent Costs, Intangible Assets and Goodwill
Intangible Assets
Intangible assets consisted of the following:
December 31,
December 31,
(In thousands)
2017
2016
Intangible assets:
Finite-lived intangible assets
$
23,660
$
2,000
Less: Accumulated amortization
(1,500)
(450)
Net carrying value
$
22,160
$
1,550
Finite-Lived Intangible Assets
The following table summarizes the net-book-value and estimated remaining life of the Company’s finite-lived intangible assets as of December 31, 2017:
Weighted
Net Balance at
Average
December 31,
Remaining
(In thousands)
2017
Life (Years)
Licensed intellectual property and patents
$
21,241
10.5
Developed technology
919
7.6
Total
$
22,160
As of December 31, 2017, the estimated future amortization expense associated with the Company’s finite-lived intangible assets for each of the five succeeding fiscal years is as follows:
(In thousands)
2018
$
2,407
2019
2,407
2020
2,407
2021
2,372
2022
2,369
Thereafter
10,198
$
22,160
The Company reviews long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no impairment losses for the periods ended December 31, 2017, 2016, and 2015.
Patent costs, which have historically consisted of related legal fees, are capitalized as incurred, only if the Company determines that there is some probable future economic benefit derived from the transaction. A capitalized patent is amortized over its estimated useful life, beginning when such patent is approved. Capitalized patent costs are expensed upon disapproval, upon a decision by the Company to no longer pursue the patent or when the related intellectual property is either sold or deemed to be no longer of value to the Company. Other than the transactions discussed below, the Company determined that all patent costs incurred during the year ended December 31, 2017, 2016 and 2015 should be expensed and not capitalized as the future economic benefit derived from the transactions cannot be determined.
Direct and indirect manufacturing costs incurred during process validation and for other research and development activities, which are not permitted to be sold, have been expensed to research and development.
Under a technology license and royalty agreement entered into with MDx Health (“MDx”), dated July 26, 2010 (as subsequently amended, the “MDx License Agreement”), the Company was required to pay MDx milestone-based royalties on sales of products or services covered by the licensed intellectual property. Once the achievement of a milestone occurred or was considered probable, an intangible asset and corresponding liability was reported in other long-term assets and accrued liabilities, respectively. The liability was relieved once the milestone was achieved and payment made. The intangible asset is being amortized over the estimated ten-year useful life of the licensed intellectual property through 2024, and such amortization is reported in cost of sales. Payment for all remaining milestones under the License Agreement was made as part of the Royalty Buy-Out agreement outlined below.
Effective April 25, 2017, the Company and MDx entered into a royalty buy-out agreement (“Royalty Buy-Out Agreement”), which terminated the MDx License Agreement. Pursuant to the Royalty Buy-Out Agreement, the Company paid MDx a one-time fee of $8.0 million in exchange for an assignment of certain patents covered by the MDx License Agreement and the elimination of all ongoing royalties and other payments by the Company to MDx under the MDx License Agreement. Also included in the Royalty Buy-Out Agreement is a mutual release of liabilities, which includes all amounts previously accrued under the MDx License Agreement. Concurrently with entering into the Royalty Buy-Out Agreement, the Company entered into a patent purchase agreement (“Patent Purchase Agreement”) with MDx under which it paid MDx an additional $7.0 million in exchange for the assignment of certain other patent rights that were not covered by the MDx License Agreement. The total $15.0 million paid by the Company pursuant to the Royalty Buy-Out Agreement and Patent Purchase Agreement, net of liabilities relieved of $6.6 million, was recorded as an intangible asset and is being amortized over the estimated remaining useful life of the licensed intellectual property through 2024, and such amortization is reported in cost of sales. The $6.6 million of liabilities relieved were related to historical milestones and accrued royalties under the License Agreement.
As of December 31, 2017, an intangible asset of $9.0 million related to historical milestone payments made under the MDx License Agreement and intangible assets acquired as part of the Royalty Buy-Out Agreement and Patent Purchase Agreement is reported in intangible assets. As of December 31, 2016, an intangible asset of $1.6 million and a liability of $1.3 million related to historical milestone payments made under the MDx License Agreement, were reported in intangible assets and accrued liabilities, respectively. Amortization expense for the years ended December 31, 2017, 2016, and 2015 was $1.0 million, $0.2 million, and $0.2 million, respectively.
On December 15, 2017, the Company entered into an asset purchase agreement (the “Armune Purchase Agreement”) with Armune BioScience, Inc. (“Armune”), pursuant to which the Company acquired intellectual property and certain other assets underlying Armune’s APIFINY®, APIFINY® PRO and APIFINY® ACTIVE SURVEILLANCE prostate cancer diagnostic tests. The portfolio of Armune assets the Company acquired is expected to complement its product pipeline. The total consideration was comprised of an up-front cash payment of $12.0 million and $17.5 million in contingent payment obligations that will become payable upon the Company’s achievement of development and commercial milestones using the acquired intellectual property. The ability to meet these events is subject to many risks and is therefore uncertain. The Company will not record the contingent consideration until it is probable that the milestones will be met. There is no other consideration due to Armune beyond the milestone payments and the Company is not subject to future royalty obligations should a product be developed and commercialized. In connection with the Armune Purchase Agreement, Armune terminated a license agreement pursuant to which it licensed certain patent rights and know-how from the Regents of the University of Michigan (“University of Michigan”), and the Company entered into a license agreement with the University of Michigan with respect to such patent rights and know-how, as well as certain additional intellectual property rights. Pursuant to the Company’s agreement with the University of Michigan, it is required to pay the University of Michigan a low single-digit royalty on its net sales of products using the licensed intellectual property.
The Company accounted for the transaction as an asset acquisition under GAAP. The asset is comprised of a portfolio of biomarkers, related technology and know-how, which is a group of complementary assets concentrated in a single identifiable asset. The transaction costs directly related to the asset acquisition were added to the asset in accordance with GAAP. As such, the collective asset value from the acquisition resulted in an intangible asset of $12.2 million. The intellectual property asset, which includes related transaction costs, is being amortized on a straight-line basis over the period the Company expects to be benefited, which is in line with the legal life of the patents acquired. , the Company capitalized these costs as there is a reasonable expectation that the assets acquired will be used in an alternative manner in the future, that is not contingent on future development subsequent to acquisition, and the Company anticipates there to be economic benefit from these alternative uses. For the year-ending December 31, 2017, the Company recorded amortization expense of $40,000. At December 31, 2017 the net balance of $12.2 million is reported in net intangible assets in the Company’s consolidated balance sheet.
As a result of the Sampleminded acquisition, the Company recorded an intangible asset of $1.0 million which was comprised of developed technology acquired of $0.9 million, customer relationships of $0.1 million, and non-compete agreements of $32,000. The intangible assets acquired are being amortized over the remaining useful life which was determined to be eight years for developed technology acquired, three years for customer relationships, and five years for non-compete agreements. For the year-ended December 31, 2017, the Company recorded amortization expense of $52,000 and the net balance of $0.9 million is reported in intangible assets in our consolidated balance sheet.
Goodwill
As more fully described in Note 12, during the third quarter of 2017, the Company recognized goodwill of $2.0 million from the acquisition of Sampleminded, Inc., which was completed during the period. Goodwill is recorded as part of other long-term assets on the consolidated balance sheet. The Company will evaluate goodwill impairment on an annual basis or more frequently should an event or change in circumstance occur that indicates that the carrying amount is in excess of the fair value. There were no impairment losses for the years ended December 31, 2017, 2016, and 2015.
Investment in Privately-Held Company
On November 30, 2017, the Company made a 10 percent, investment in a supplier. The investment does not constitute a variable interest entity as the Company does not have control over the supplier’s business. Additionally, as the ownership percentage is below 20 percent, the equity method is not being used to account for the investment. The supplier is privately-held and there are no quoted prices or observable pricing inputs available, therefore the Company has accounted for this investment under the cost-method. The investment will be evaluated annually for impairment and there was no impairment recorded during the year ended December 31, 2017. The total cash paid related to the investment was $3.0 million, which agrees to the carrying value as of December 31, 2017 and is included in the other long-term assets on our consolidated balance sheets.
Net Loss Per Share
Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share is the same because all outstanding common stock equivalents have been excluded, as they are anti‑dilutive as a result of the Company’s losses.
The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti‑dilutive effect due to net losses for each period:
December 31,
(In thousands)
2017
2016
2015
Shares issuable upon exercise of stock options
3,360
3,505
4,937
Shares issuable upon the release of restricted stock awards
6,149
5,601
3,445
9,509
9,106
8,382
Accounting for Stock‑Based Compensation
The Company requires all share‑based payments to employees, including grants of employee stock options, restricted stock, restricted stock units and shares purchased under an ESPP (if certain parameters are not met), to be recognized in the financial statements based on their fair values.
Revenue Recognition
Laboratory service revenue. The Company’s laboratory service revenue is generated by performing screening services using its Cologuard test, and the service is completed upon delivery of a test result to an ordering physician. The Company recognizes revenue in accordance with the provisions of ASC 954-605, Health Care Entities - Revenue Recognition. The Company recognizes revenue on an accrual basis, net of contractual and other adjustments, when amounts that will ultimately be collected can be reasonably estimated. Contractual and other adjustments represent the difference between the list price (the billing rate) and the estimated reimbursement rate from payers and patients. Upon ultimate collection, the aggregate amount received from payers and patients where reimbursement was estimated is compared to previous estimates and, if necessary, the contractual allowance is adjusted.
The estimates of amounts that will ultimately be collected require significant judgment by management, and the Company’s judgments will continue to evolve as it gains payment experience with payers and patients. Historically, in the absence of the ability to reasonably estimate the amount that will ultimately be collected for services, revenue was recognized upon cash receipt. Effective, during the first quarter of 2017, the Company determined that it had the ability to reasonably estimate the amount that will ultimately be collected from all payers, including the impact of patient cost-share collections. Accordingly, the Company now recognizes revenue on an accrual basis for all billed claims.
The components of laboratory service revenue, as recognized upon accrual or cash receipt, for the years ended December 31, 2017 and 2016 were as follows:
Year Ended December 31,
(In thousands)
2017
2016
2015
Revenue recognized on an accrual basis
$
261,480
$
87,037
$
36,364
Revenue recognized when cash is received
4,509
12,339
3,073
Total
$
265,989
$
99,376
$
39,437
Advertising Costs
The Company expenses the costs of media advertising at the time the advertising takes place. The Company expensed approximately $58.0 million, $38.1 million, and $10.8 million of media advertising during the years ended December 31, 2017, 2016, and 2015, respectively.
Fair Value Measurements
The FASB has issued authoritative guidance that requires fair value to be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under that standard, fair value measurements are separately disclosed by level within the fair value hierarchy. The fair value hierarchy establishes and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The three levels of the fair value hierarchy established are as follows:
Level 1
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3
Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.
Fixed‑income securities are valued using a third-party pricing agency. The valuation is based on observable inputs including pricing for similar assets and other observable market factors. There has been no material pricing change from period to period.
The following table presents the Company’s fair value measurements as of December 31, 2017 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
Fair Value Measurement at December 31, 2017 Using:
Quoted Prices
Significant
in Active
Other
Significant
Markets for
Observable
Unobservable
Fair Value at
Identical Assets
Inputs
Inputs
(In thousands)
December 31, 2017
(Level 1)
(Level 2)
(Level 3)
Cash and cash equivalents
Cash and money market
$
61,297
$
61,297
—
—
Commercial paper
10,995
—
10,995
—
Certificates of deposit
1,499
—
1,499
—
U.S. government agency securities
3,700
—
3,700
—
Available-for-sale
Marketable securities
Corporate bonds
181,305
—
181,305
—
Asset backed securities
94,515
—
94,515
—
U.S. government agency securities
54,812
—
54,812
—
Commercial paper
9,946
—
9,946
—
Certificates of deposit
6,646
—
6,646
—
Total
$
424,715
$
61,297
$
363,418
$
—
The following table presents the Company’s fair value measurements as of December 31, 2016 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
Fair Value Measurement at December 31, 2016 Using:
Quoted Prices
Significant
in Active
Other
Significant
Markets for
Observable
Unobservable
Fair Value at
Identical Assets
Inputs
Inputs
(In thousands)
December 31, 2016
(Level 1)
(Level 2)
(Level 3)
Cash and cash equivalents
Cash and money market
$
48,921
$
48,921
—
—
Available-for-sale
Marketable securities
Corporate bonds
136,937
—
136,937
—
Asset backed securities
55,640
—
55,640
—
U.S. government agency securities
49,474
—
49,474
—
Commercial paper
19,076
—
19,076
—
Certificates of deposit
1,052
—
1,052
—
Total
$
311,100
$
48,921
$
262,179
$
—
The Company monitors investments for other-than-temporary impairment. It was determined that unrealized gains and losses at December 31, 2017 and 2016 are temporary in nature because the change in market value for those securities has resulted from fluctuating interest rates rather than a deterioration of the credit worthiness of the issuers. So long as the Company holds these securities to maturity, it is unlikely to experience gains or losses. In the event that the Company disposes of these securities before maturity, it is expected that realized gains or losses, if any, will be immaterial.
The following table summarizes the gross unrealized losses and fair values of investments in an unrealized loss position as of December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
December 31, 2017
Less than 12 months
12 months or greater
Total
(In thousands)
Fair Value
Gross Unrealized Loss
Fair Value
Gross Unrealized Loss
Fair Value
Gross Unrealized Loss
Marketable securities
Corporate bonds
$
158,790
$
(340)
$
4,715
$
(4)
$
163,505
$
(344)
Asset backed securities
85,906
(179)
8,609
(6)
94,515
(185)
U.S. government agency securities
24,878
(90)
29,934
(72)
54,812
(162)
Commercial paper
19,944
(7)
—
—
19,944
(7)
Certificates of deposit
2,997
(2)
—
—
2,997
(2)
Total
$
292,515
$
(618)
$
43,258
$
(82)
$
335,773
$
(700)
The following table summarizes the gross unrealized losses and fair value of investments in an unrealized loss position as of December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
December 31, 2016
Less than 12 months
12 months or greater
Total
(In thousands)
Fair Value
Gross Unrealized Loss
Fair Value
Gross Unrealized Loss
Fair Value
Gross Unrealized Loss
Marketable Securities
Corporate bonds
$
94,999
$
(93)
$
—
$
—
$
94,999
$
(93)
Asset backed securities
41,656
(27)
3,506
(2)
45,162
(29)
U.S. government agency securities
44,911
(120)
—
—
44,911
(120)
Commercial paper
5,606
(2)
—
—
5,606
(2)
Certificates of deposit
1,052
(1)
—
—
1,052
(1)
Total
$
188,224
$
(243)
$
3,506
$
(2)
$
191,730
$
(245)
The following table summarizes contractual underlying maturities of the Company’s available‑for‑sale investments at December 31, 2017:
Due one year or less
Due after one year through four years
(In thousands)
Cost
Fair Value
Cost
Fair Value
Marketable securities
Corporate bonds
$
126,908
$
126,756
$
54,731
$
54,549
U.S. government agency securities
54,974
54,812
—
—
Commercial paper
9,953
9,946
—
—
Certificates of deposit
6,647
6,646
—
—
Asset backed securities
20,369
20,343
74,331
74,172
Total
$
218,851
$
218,503
$
129,062
$
128,721
Concentration of Credit Risk
In accordance with GAAP, the Company is required to disclose any significant off‑balance‑sheet risk and credit risk concentration. The Company has no significant off‑balance‑sheet risk, such as foreign exchange contracts or other hedging arrangements. Financial instruments that |
