Fair Value Measurements

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. 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. Based on the borrowing rates currently available to us for loans with similar terms, which is considered a Level 2 input, we believe that the fair value of our commercial bank debt and convertible promissory notes approximate their carrying values. Investment securities and preferred stock warrant liabilities 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 corporate debt securities, commercial paper, asset-backed securities and United States Treasury securities. Financial liabilities measured at fair value on a recurring basis include our preferred stock warrant liabilities. None of our non-financial assets and liabilities is recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.

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

			Fair Value Measurements Using
			QuotedPricesin ActiveMarkets forIdentical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2015:
Assets:
Current:
Cash and cash equivalents	$	53,025	$	53,025	$	—	$	—
Short-term investments:
Commercial paper		2,996		—		2,996		—
Corporate debt securities		39,514		—		39,514		—
Sub-total short-term investments		42,510		—		42,510		—
Long-term investments:
United States Treasury securities		1,999		1,999		—		—
Asset-backed securities		10,912		—		10,912		—
Corporate debt securities		16,903		—		16,903		—
Sub-total long-term investments		29,814		1,999		27,815		—
Total assets measured at fair value	$	125,349	$	55,024	$	70,325	$	—
As of December 31, 2014:
Assets:
Cash and cash equivalents	$	13,899	$	13,899	$	—	$	—
Short-term investments - Corporate debt securities		1,954		—		1,954		—
Total assets measured at fair value	$	15,853	$	13,899	$	1,954	$	—
Liabilities:
Preferred stock warrant liabilities	$	319	$	—	$	—	$	319

As of December 31, 2015 and 2014, available-for-sale investments are detailed as follows (in thousands):

	December 31, 2015
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Short-term investments:
Commercial paper	$	2,996	$	—	$	—		$	2,996
Corporate debt securities		39,575		—		(61	)		39,514
	$	42,571	$	—	$	(61	)	$	42,510
Long-term investments:
United States Treasury securities	$	2,006	$	—	$	(7	)	$	1,999
Asset-backed securities		10,928		—		(16	)		10,912
Corporate debt securities		16,990		—		(87	)		16,903
	$	29,924	$	—	$	(110	)	$	29,814

	December 31, 2014
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Market Value
Short-term:
Corporate debt securities	$	1,954	$	—	$	—	$	1,954

Available-for-sale investments that are in an unrealized loss position as of December 31, 2015 are as follows (in thousands):

	Estimated Fair Value		Gross Unrealized Losses
United States Treasury securities	$	1,999	$	(7	)
Asset-backed securities		10,912		(16	)
Corporate debt securities		56,416		(148	)
	$	69,327	$	(171	)

As of December 31, 2015, all available-for-sale investments have contractual maturity dates within two years. As of December 31, 2015, there are 39 available-for-sale investments in gross unrealized loss position, all of which have been in such position for less than twelve months.

At each reporting date, we perform an evaluation of impairment to determine if the unrealized losses are other-than-temporary. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, and our intent and ability to hold the investment until recovery of its amortized cost basis. We intend, and have the ability, to hold our investments in unrealized loss positions until their amortized cost basis has been recovered. Based on our evaluation, we determined that the unrealized losses were not other-than-temporary as of December 31, 2015.

All warrant liabilities were recorded at fair value utilizing the Black-Scholes option pricing model using significant unobservable inputs consistent with the inputs used for our stock-based compensation expense adjusted for the warrants’ expected life.

The following table provides a reconciliation of all liabilities measured at fair value using Level 3 significant unobservable inputs (in thousands):

	Warrant Liabilities
Balance as of December 31, 2014	$	319
Change in fair value		(29	)
Balance as of May 5, 2015	$	290
Reclassification to additional paid-in capital as of IPO on    May 6, 2015		(290	)
Balance as of December 31, 2015	$	—