Fair Value of Financial Assets and Liabilities

9 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

3. Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial assets and liabilities that were subject to fair value measurement on a recurring basis as of June 30, 2022 and September 30, 2021, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:

	Fair Value Measurements at June 30, 2022 Using:
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	13,554	$	—	$	—	$	13,554
Marketable securities:
U.S. Treasury notes		97,176		—		—		97,176
Corporate bonds		—		83,947		—		83,947
Commercial paper		—		83,225		—		83,225
	$	110,730	$	167,172	$	—	$	277,902
Liabilities:
Series 1 nonconvertible preferred stock	$	—	$	—	$	1,506	$	1,506
	$	—	$	—	$	1,506	$	1,506

	Fair Value Measurements at September 30, 2021 Using:
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	54,819	$	—	$	—	$	54,819
Marketable securities:
U.S. Treasury notes		83,038		—		—		83,038
Corporate bonds		—		124,703		—		124,703
Commercial paper		—		87,471		—		87,471
	$	137,857	$	212,174	$	—	$	350,031
Liabilities:
Series 1 nonconvertible preferred stock	$	—	$	—	$	1,506		1,506
	$	—	$	—	$	1,506	$	1,506

During the nine months ended June 30, 2022 and 2021, there were no transfers between Level 1, Level 2 and Level 3.

The outstanding shares of Series 1 nonconvertible preferred stock are measured at fair value. The fair value of these instruments was based on significant inputs not observable in the market, which represented a Level 3 measurement within the fair value hierarchy. The Company utilized a probability-weighted valuation model which takes into consideration various outcomes that may require the Company to transfer assets upon liquidation. Changes in the fair value of the Series 1 nonconvertible preferred stock are recognized in other income (expense), net in the consolidated statements of operations.

The recurring Level 3 fair value measurements of the Company’s outstanding Series 1 nonconvertible preferred stock using probability-weighted discounted cash flow include the following significant unobservable inputs:

	Range
	June 30,	September 30,
Unobservable Input	2022	2021
Probabilities of payout	0%-65%	0%-65%
Discount rate	4.25%	4.25%

The following table provides a rollforward of the aggregate fair values of the Company’s outstanding Series 1 nonconvertible preferred stock for which fair value is determined by Level 3 inputs:

	Series 1 Nonconvertible Preferred Stock
Balance, September 30, 2021	$	1,506
Change in fair value of nonconvertible preferred stock		—
Balance, June 30, 2022	$	1,506