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VITAE PHARMACEUTICALS, INC filed this Form S-1 on 08/12/2014
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Vitae Pharmaceuticals, Inc.

Notes to Unaudited Condensed Financial Statements (Continued)

As of June 30, 2014 and December 31, 2013 and
for the Six Months Ended June 30, 2014 and 2013

4. Accrued Expenses

        At June 30, 2014 and December 31, 2013, accrued expenses consisted of the following:

  2014   2013  

Payroll and related costs

    735,293     1,099,210  

Research and development related costs

    542,220     74,260  

Offering costs


Legal and accounting related costs

    84,009     341,901  


    216,086     185,348  


    2,307,764     1,700,719  

5. Fair Value Measurements

        The Company measures certain assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (the "exit price") in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value, the Company maximizes the use of quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

    Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.
    Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities.
    Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.

        The Company's Level 1 assets include money market funds, certificates of deposit ("CD"), and U.S. Treasury notes. Level 2 assets include U.S. government agency securities and corporate debt securities.