Marketable Debt and Equity Securities

12 Months Ended

Dec. 31, 2022

The Company’s marketable debt securities held as of December 31, 2022 and 2021 are summarized below:


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Money Market Funds	$	40,967	$	—	$	—	$	40,967
Corporate Securities	201,752		—		(1,126)		200,626
Government Securities	335,705		3		(5,819)		329,889
	$	578,424	$	3	$	(6,945)	$	571,482

Reported as
Cash and cash equivalents							$	40,967
Marketable securities							530,515
Total investments							$	571,482


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Money Market Funds	$	123,892	$	—	$	—	$	123,892
Corporate Securities	144,584		—		(166)		144,418
Government Securities	311,148		1		(1,335)		309,814
	$	579,624	$	1	$	(1,501)	$	578,124

Reported as
Cash and cash equivalents							$	123,892
Marketable securities							454,232
Total investments							$	578,124

The maturities of the Company’s marketable debt securities as of December 31, 2022 are as follows:


	Amortized Cost		Estimated Fair Value
(in thousands)
Mature in one year or less	$	533,626	$	526,689
Mature within two years	3,831		3,826
	$	537,457	$	530,515

The unrealized losses on available-for-sale investments and their related fair values as of December 31, 2022 and 2021 are as follows:


	December 31, 2022
	Less than 12 months				12 months or greater
	Fair value		Unrealized losses		Fair value		Unrealized losses
(in thousands)
Corporate Securities	$	132,658	$	(1,121)	$	3,826	$	(5)
Government Securities	324,933		(5,819)		—		—
	$	457,591	$	(6,940)	$	3,826	$	(5)


	December 31, 2021
	Less than 12 months				12 months or greater
	Fair value		Unrealized losses		Fair value		Unrealized losses
(in thousands)
Corporate Securities	$	50,337	$	(51)	$	45,872	$	(115)
Government Securities	39,909		(54)		254,593		(1,281)
	$	90,246	$	(105)	$	300,465	$	(1,396)

The unrealized losses from the listed securities are due to a change in the interest rate environment and not a change in the credit quality of the securities.

The Company’s equity securities include securities with a readily determinable fair value. These investments are carried at fair value with changes in fair value recognized each period and reported within other income (expense). Equity securities with a readily determinable fair value and their fair values (in thousands) as of December 31, 2022 and 2021 are as follows:


	Fair Value December 31, 2022		Fair Value December 31, 2021
Astria Common Stock	$	9,529	$	3,449
INmune Common Stock	11,954		19,233
Viridian Common Stock	20,948		14,178
	$	42,431	$	36,860

The Company also has investments in equity securities without a readily determinable fair value. The Company elects the measurement alternative to record these investments at their initial cost and evaluates such investments at each reporting period for evidence of impairment or observable price changes in orderly transactions for the identical or a similar investment of the same issuer. During the year ended December 31, 2022, the Company recorded an impairment charge of $0.1 million related to the Astria preferred stock. Equity securities without a readily determinable fair value and their carrying values (in thousands) as of December 31, 2022 and 2021 are as follows:


	Carrying Value December 31, 2022		Carrying Value December 31, 2021
Astria Preferred Stock	$	174	$	312
Zenas Preferred Stock	54,209		30,950
	$	54,383	$	31,262

In 2018, the Company received equity shares in Quellis Biosciences, Inc. (Quellis) in connection with a licensing transaction. In 2021, Quellis merged into Catabasis Pharmaceuticals, Inc. (Catabasis), and the Company received common and preferred stock in Catabasis in exchange for its Quellis equity. In June 2021, shares of the Catabasis preferred stock were exchanged for shares of Catabasis common stock; the shares of the Catabasis common stock have a readily determinable fair value. In September 2021, Catabasis changed its name to Astria Therapeutics, Inc. (Astria). The Company accounts for the shares in Astria common stock at their fair value each reporting period and the adjustment in the fair value of the Astria common stock has been recorded in unrealized gain (loss) on equity securities for the year ended December 31, 2022.

The Company records its investment in the shares of Astria preferred stock as an equity interest without a readily determinable fair value. The Company elected to record the original shares of preferred stock at their initial cost and to review the carrying value for impairment or other changes in carrying value at each reporting period. The Company subsequently recorded impairment charges of $0.1 million and $0.8 million related to its investment in Astria’s preferred stock in 2022 and 2021, respectively.

In 2017, the Company received shares of common stock of INmune Bio, Inc. (INmune) and an option to acquire additional shares of INmune’s common stock in connection with a licensing transaction. The Company received a second option to acquire additional shares of INmune common stock in connection with a designee appointed by us serving on the board of directors of INmune. The Company originally recorded its investment at cost pursuant to ASC 323, Investments – Equity Method and Joint Ventures. In June 2021, the Company entered into an Option Cancellation Agreement with INmune and received $15.0 million in proceeds and an additional shares of INmune common stock in exchange for the initial option. During 2021, the Company determined that it should no longer account for its investment in INmune under the equity method. In September 2021, the Company exercised its second option to purchase 108,000 shares of INmune common stock for $0.8 million and the Company recorded a gain of $0.9 million on the purchase. The Company's current share holdings, which consist of common stock of INmune, have a readily determinable fair value, and the adjustment in the fair value of the shares of INmune common stock was recorded in gain (loss) on equity securities for the year ended December 31, 2022.

In December 2021, the Company received shares of common stock of Viridian Therapeutics, Inc. (Viridian) in connection with the Viridian Agreement. In December 2022, the Company received additional shares of common stock of Viridian in connection with the Second Viridian Agreement (defined below). The shares of Viridian common stock are classified as equity securities with a readily determinable fair value and the adjustment in the fair value of the shares of Viridian common stock was recorded in gain (loss) on equity securities for the year ended at December 31, 2022.

In 2020, the Company received an equity interest in Zenas BioPharma Limited (Zenas), in connection with the Zenas Agreement (defined below). The Company elected the measurement alternative to carry the Zenas equity at cost minus impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or a similar investment of the same issuer. In 2021, the Company received a warrant to receive equity from Zenas in connection with the Second Zenas Agreement (defined below). In 2021, the Company purchased a convertible promissory note from Zenas. In 2022, the Zenas warrant was exchanged for additional equity in Zenas. In 2022, the convertible note and accrued interest through the conversion date were exchanged for equity shares in Zenas. We recognized an unrealized gain of $21.9 million from the warrant exchange and the conversion of the promissory note. During the year ended December 31, 2022, there was no impairment related to this investment.

Unrealized gains and losses recognized on equity securities (in thousands) during the year ended December 31, 2022 and 2021 consist of the following:


	Year Ended December 31,
	2022		2021

Net gains recognized on equity securities	$	23,434	$	39,289
Less: net gains recognized on equity securities redeemed	—		18,301
Unrealized gain (losses) recognized on equity securities	$	23,434	$	20,988