9. Financial instruments

Securities classified as available for sale

The Company has no short-term investments as of September 30, 2018. The Company’s short-term investments as at December 31, 2017, consisted of available-for-sale securities as follows:


(in thousands) December 31, 2017	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Short-term investments:
U.S. treasury securities	$	56,123	$	—	$	(70	)	$	56,053

Contractual maturities:
Due within one year	$	56,123						$	56,053

The aggregate estimated fair value of the Company’s investments with unrealized losses are as follows:


	Period of continuous unrealized loss
	12 months or less					Greater than 12 months
(in thousands) December 31, 2017	Fair value		Gross unrealized losses			Fair value		Gross unrealized losses
U.S. treasury securities	$	15,983	$	(27	)	$	40,070	$	(43	)

Fair value of financial instruments

Fair value is defined as the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value of the Company’s financial instruments are determined according to a fair value hierarchy that prioritizes the inputs and assumptions used, and the valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the hierarchy are as follows:

Level 1 –

Quoted prices in active markets for identical assets or liabilities.

Level 2 –

Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 –

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The determination of a financial instrument’s level within the fair value hierarchy is based on an assessment of the lowest level of any input that is significant to the fair value measurement. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The carrying amounts of certain of the Company’s financial instruments including cash, cash equivalents, receivables, accounts payable and other liabilities, approximate their fair values because of their nature and/or short maturities. The Company holds short-term investments that are classified as available-for-sale securities, which are measured at fair value determined on a recurring basis according to the fair value hierarchy.

The following table presents the fair value of our financial instruments that are measured at fair value on a recurring basis:


(in thousands)	QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UN- OBSERVABLE INPUTS (LEVEL 3)		TOTAL
BALANCES – December 31, 2017
Short-term investments – U.S. treasury securities	$	56,053	$	—	$	—	$	56,053

	$	56,053	$	—	$	—	$	56,053

Level 1 instruments, which include investments that are valued based on quoted market prices in active markets, consisted of U.S. treasury securities. The Company had no Level 2 or 3 investments as at September 30, 2018 and December 31, 2017. There were no transfers between Levels 1, 2, and 3 during the three and nine months ended September 30, 2018 and the year ended December 31, 2017.

Total gains for securities were $0.3 million for each of the three months ended September 30, 2018 and 2017 and $0.7 million for each of the nine months ended September 30, 2018 and 2017.