Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

2. Fair Value Measurements

The carrying amounts of cash equivalents, prepaid and other assets, accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. Investment securities are recorded at fair value.

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial assets measured at fair value on a recurring basis consist of investment securities. Investment securities are recorded at fair value, defined as the exit price in the principal market in which we would transact, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data, or discounted cash flow techniques and include our investments in commercial paper, corporate debt securities, municipal bonds and U.S. government agencies securities. We have no financial liabilities measured at fair value on a recurring basis. None of our non-financial assets and liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.

Assets measured at fair value on a recurring basis are as follows (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of March 31, 2023
Assets:
Current:
Cash equivalents	$	20,514	$	20,514	$	—	$	—
Available-for-sale investments:
Commercial paper		52,492		—		52,492		—
Corporate debt securities		20,880		—		20,880		—
Municipal bonds		1,001		—		1,001		—
U.S. government agencies		19,322		—		19,322
Total available-for-sale investments		93,695		—		93,695		—
Total assets measured at fair value	$	114,209	$	20,514	$	93,695	$	—

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2022
Assets:
Current:
Cash equivalents	$	8,585	$	8,585	$	—	$	—
Available-for-sale investments:
Commercial paper		28,074		—		28,074		—
Corporate debt securities		26,094		—		26,094		—
Municipal bonds		1,997		—		1,997		—
Total available-for-sale investments		56,165		—		56,165		—
Total assets measured at fair value	$	64,750	$	8,585	$	56,165	$	—

As of March 31, 2023 and December 31, 2022, available-for-sale investments are detailed as follows (in thousands):

		March 31, 2023
	Contractual Maturity	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Available-for-sale investments:
Commercial paper	Within 1 year	$	52,552	$	3	$	(63	)	$	52,492
Corporate debt securities	1 to 2 years		21,031		13		(164	)		20,880
Municipal bonds	Within 1 year		1,013		—		(12	)		1,001
U.S. government agencies	Within 1 year		19,297		26		(1	)		19,322
		$	93,893	$	42	$	(240	)	$	93,695

		December 31, 2022
	Contractual Maturity	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Available-for-sale investments:
Commercial paper	Within 1 year	$	28,121	$	—	$	(47	)	$	28,074
Corporate debt securities	1 to 2 years		26,401		—		(307	)		26,094
Municipal bonds	Within 1 year		2,026		—		(29	)		1,997
		$	56,548	$	—	$	(383	)	$	56,165

We evaluate our available-for-sale debt securities for credit losses when the amortized cost basis exceeds fair value. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive income (loss). When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. We recorded no allowance for credit losses in the condensed consolidated statement of operations and comprehensive loss during the three months ended March 31, 2023.

As of March 31, 2023, all available-for-sale investments had a variety of effective maturity dates of less than two years. As of March 31, 2023, $89.8 million of our short-term investments had maturities less than one year and $3.9 million had maturities greater than one year.

As of March 31, 2023 and December 31, 2022, accrued interest receivable on available-for-sale securities for each of the period-ended was $0.2 million.