Fair Value Measurement

9 Months Ended

Sep. 30, 2022

The Company determines the fair value of its short-term investments based on one or more valuations from its investment accounting and reporting service provider. The investment service provider values the securities using a hierarchical security pricing model that relies primarily on valuations provided by an industry-recognized valuation service. Such valuations may be based on trade prices in active markets for identical assets (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets, yield curves, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, and broker and dealer quotes, as well as other relevant economic measures.

The following table sets forth the recurring fair value of the Company’s financial assets and liabilities, allocated into the Level 1, Level 2 and Level 3 hierarchy that were measured at fair value on a recurring basis (amounts in thousands):


	Fair Value Measurements as of September 30, 2022
	Level 1		Level 2		Level 3		Total
Money market funds (1)	$	126,058	$	—	$	—	$	126,058
U.S. government treasury bills	24,929		—		—		24,929
Commercial paper (2)	—		21,996		—		21,996
Corporate bonds	—		3,013		—		3,013
Total financial assets	$	150,987	$	25,009	$	—	$	175,996


	Fair Value Measurements as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (1)	$	140,032	$	—	$	—	$	140,032

(1)Included in cash and cash equivalents in the accompanying balance sheets.

(2)$1.7 million of commercial paper included in cash and cash equivalents in the accompanying balance sheets.

Intangible Asset Impairment

During the three and nine months ended September 30, 2021, the Company recognized an impairment of $74.2 million of the contract intangible asset acquired in connection with the Merger and reduced the contract intangible asset to its estimated fair value of $3.9 million at the Effective Time. This represented a Level 3 fair value measurement as factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity.

During the nine months ended September 30, 2022, upon receipt of the Notice of Termination, the Company impaired the contract intangible asset by $3.7 million to its estimated fair value of zero (which represented a Level 3 fair value measurement) based on receipt of the formal notice of termination from Gossamer for the Gossamer License Agreement.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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