Fair Value Disclosures

12 Months Ended

Dec. 31, 2021

The Company’s investments include cash equivalents and available-for-sale investment securities consisting of money market funds, US treasury notes, and high quality, marketable debt instruments of corporations and government sponsored enterprises in accordance with the Company’s investment policy. The Company’s investment policy defines allowable investment securities and establishes guidelines relating to credit quality, diversification, and maturities of its investments to preserve principal and maintain liquidity.

The Company measures its financial assets and liabilities at fair value, which is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company uses the following three-level valuation hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial assets and liabilities:


Level 1			–Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
Level 2			–Quoted prices for similar instruments in active markets or inputs that are observable for the asset or liability, either directly or indirectly.
Level 3			–Significant unobservable inputs based on the Company’s assumptions.

The following tables present the Company’s valuation hierarchy for its financial assets that are measured at fair value on a recurring basis, in thousands:


	Fair Value Measurements as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Money market funds(1)	$	170,171	$	—	$	—	$	170,171
US government and government agency notes(2)	195,184		—		—		195,184
Corporate debt securities(2)	—		176,808		—		176,808
Commercial paper(2)	—		114,701		—		114,701
	$	365,355	$	291,509	$	—	$	656,864

	Fair Value Measurements as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Money market funds(1)	$	64,361	$	—	$	—	$	64,361
US government and government agency notes(2)	621,400		—		—		621,400
Corporate debt securities(2)	—		162,906		—		162,906
Commercial paper(3)	—		131,525		—		131,525
	$	685,761	$	294,431	$	—	$	980,192

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(1)Included in cash and cash equivalents in the accompanying consolidated balance sheets.

(2)Included in available-for-sale investments in the accompanying consolidated balance sheets.

(3)Included in either cash and cash equivalents or available-for-sale investments in the accompanying consolidated balance sheets.

The Company obtains the fair value of its Level 2 financial instruments from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and matrices and obtaining market values from other pricing sources. The Company did not adjust or override any fair value measurements provided by these pricing services as of December 31, 2021 and 2020, respectively. The Company has not transferred any investment securities between the classification levels.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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