Fair Value Measurements

6 Months Ended

Jun. 30, 2020

6. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on our principal or, in absence of a principal, most advantageous market for the specific asset or liability.

We use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

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Level 1— Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets at the measurement date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Our Level 1 assets consist of bank deposits and money market funds.

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Level 2— Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities. Our Level 2 assets consist of corporate debt securities including commercial paper, government sponsored securities and corporate bonds, as well as foreign municipal securities.

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Level 3— Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

During the periods presented, no transfers were made into or out of the Level 1, 2 or 3 categories. We will continue to review the fair value inputs on quarterly basis.

We utilize a third-party pricing service to assist in obtaining fair value pricing for our investments in marketable debt securities. Inputs are documented in accordance with the fair value disclosure hierarchy.

Recurring Valuations

Financial assets and liabilities measured at fair value on a recurring basis are summarized below at June 30, 2020 and December 31, 2019 (in thousands):

	Fair Value Measurements at June 30, 2020
	(Unaudited)
	Total		Level 1		Level 2		Level 3
Assets:
Current:
Cash and cash equivalents	$	102,698	$	101,496	$	1,202	$	—
Corporate debt securities		7,925		—		7,925		—
Total assets measured at fair value	$	110,623	$	101,496	$	9,127	$	—

	Fair Value Measurements at December 31, 2019
	Total		Level 1		Level 2		Level 3
Assets:
Current:
Cash and cash equivalents	$	15,508	$	15,508	$	—	$	—
Corporate debt securities		32,389		—		32,389		—
Foreign government bonds		1,007		—		1,007		—
Government sponsored securities		2,748		—		2,748		—
Noncurrent:
Corporate debt securities		1,497		—		1,497		—
Total assets measured at fair value	$	53,149	$	15,508	$	37,641	$	—

Non-recurring Valuations

Non-financial assets and liabilities are recognized at fair value subsequent to initial recognition when they are deemed to be other-than-temporarily impaired. There were no material non-financial assets and liabilities deemed to be other-than-temporarily impaired and measured at fair value on a non-recurring basis for the three months ended June 30, 2020.