Fair Value Measurement

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurement

3. Fair Value Measurement

The Company records cash equivalents, short-term investments, contingent consideration, and warrant liability at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020 consisted of the following:

	Fair Value Measurement at December 31, 2020
	Total		Level 1		Level 2		Level 3
Cash equivalents - money market funds	$	90,389,473	$	90,389,473	$	—	$	—
Short-term investments		100,005,558		—		100,005,558		—
Contingent consideration liability (see Note 8)		5,390,000		—		—		5,390,000
Warrant liability		10,000		—		—		10,000

The warranty liability is included in Other long-term liabilities in the consolidated balance sheet at December 31, 2020.

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2019 consisted of the following:

	Fair Value Measurement at December 31, 2019
	Total		Level 1		Level 2		Level 3
Cash equivalents — money market fund	$	8,034,640	$	8,034,640	$	—	$	—
Short-term investments		28,277,386		—		28,277,386		—
Contingent consideration liability (see Note 8)		2,750,000		—		—		2,750,000
Warrant liability		10,000		—		—		10,000

The warranty liability is included in Other long-term liabilities in the consolidated balance sheet at December 31, 2019.

Short-term investments have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data (Level 2). The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value.

Short-term investments with quoted prices at December 31, 2020 as shown below:

	As of December 31, 2020
	Amortized Cost		Unrealized Gain			Market Value
United States treasury securities	$	20,052,757	$	1,843		$	20,054,600
Asset-backed and corporate debt securities		54,935,963		(6,197	)		54,929,766
Certificates of deposit		25,021,192		—			25,021,192
Total	$	100,009,912	$	(4,354	)	$	100,005,558

Short-term investments with quoted prices at December 31, 2019 as shown below:

	As of December 31, 2019
	Amortized Cost		Unrealized Gain		Market Value
United States treasury securities	$	3,394,579	$	3,228	$	3,397,807
Asset-backed and corporate debt securities		24,862,800		16,779		24,879,579
Total	$	28,257,379	$	20,007	$	28,277,386

The fair value of contingent payments classified as a liability is based on the regulatory milestones described in Note 8 and estimated using the Monte Carlo simulation valuation model with Level 3 inputs.

The assumptions used to estimate the fair value of contingent payments that were classified as a liability at December 31, 2020 include the following significant unobservable inputs:

Unobservable input	Value or Range	Weighted Average
Expected volatility	114.9%	114.9%
Risk-free interest rate	0.11%	0.11%
Cost of capital	30%	30%
Discount for lack of marketability	9%-15%	12%
Probability of payment	63%	63%
Projected year of payment	2022	2022

The assumptions used to estimate the fair value of contingent payments that were classified as a liability at December 31, 2019 include the following significant unobservable inputs:

Unobservable input	Value or Range	Weighted Average
Expected volatility	95.3%	95.3%
Risk-free interest rate	1.60%	1.60%
Cost of capital	30%	30%
Discount for lack of marketability	8%-12%	10%
Probability of payment	31%-50%	46%
Projected year of payment	2020-2022	2020

The Company’s warrant liability is valued using the Monte Carlo simulation valuation model with Level 3 inputs.

If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. There were no transfers into and out of any of the levels of the fair value hierarchy during 2020 or 2019.

Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. Assets recorded at fair value on a non-recurring basis, such as property and equipment and intangible assets are recognized at fair value when they are impaired. During the year ended December 31, 2020, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring basis. During the year ended December 31, 2019, the Company recognized an intangible asset impairment (see Note 5) measured at fair value on a non-recurring basis.