Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

The carrying amounts of certain of the Company’s financial instruments, including cash equivalents, accounts receivable, and accounts payable are approximated at their fair values due to their short maturities. Assets and liabilities recorded at fair value on a recurring basis in the balance sheets, as well as assets and liabilities measured at fair value on a non-recurring basis or disclosed at fair value, are categorized based upon the level of judgment associated with inputs used to measure their fair values. The accounting guidance for fair value provides a framework for measuring fair value, and requires certain disclosures about how fair value is determined. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance also establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities 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 related assets or liabilities; and

Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s cash equivalents, which include money market funds, are classified as Level I because they are valued using quoted market prices. The Company’s marketable securities consist of available-for-sale securities and are generally classified as Level II because their value is based on valuations using significant inputs derived from or corroborated by observable market data.

In certain cases where there is limited activity or less transparency around the inputs to valuation, securities are classified as Level 3. Level 3 liabilities consist of common and preferred stock warrant liabilities. The determination of the fair value of the warrants is discussed in Note 8. Increases or decreases in the fair value of the underlying convertible preferred stock or common stock warrants are accounted for as (loss) gain from remeasurement of fair value of warrants in the accompanying condensed consolidated statements of operations.

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

	September 30, 2015
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money market funds	$	116,642	$	—	$	—	$	116,642
U.S. government and agency securities		—		204,068		—		204,068
Corporate debt securities		—		83,267		—		83,267
Commercial paper		—		38,464		—		38,464
Total	$	116,642	$	325,799	$	—	$	442,441

	December 31, 2014
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money market funds	$	110,001	$	—	$	—	$	110,001
Financial Liabilities:
Convertible preferred stock warrant liability	$	—	$	—	$	100	$	100
Common stock warrant liability		—		—		889		889
Total	$	—	$	—	$	989	$	989

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities (in thousands):

	Convertible Preferred Stock Warrant Liability			Common Stock Warrant Liability
Balance at December 31, 2014	$	100		$	889
Net increase in fair value upon remeasurement		1,108			24,969
Reclassification to additional paid-in capital		(1,208	)		(25,858	)
Balance at September 30, 2015	$	—		$	—

The following tables summarize the estimated value of our cash equivalents and marketable securities and the gross unrealized holding gains and losses (in thousands):

	September 30, 2015
	Amortized cost		Unrealized gains		Unrealized losses			Estimated Fair Value
Cash and cash equivalents:
Cash	$	5,972	$	—	$	—		$	5,972
Money market funds		116,642		—		—			116,642
Commercial paper		24,998		—		—			24,998
U.S. government and agency securities		23,658		—		—			23,658
Corporate debt securities		9,721		—		—			9,721
Total cash and cash equivalents	$	180,991	$	—	$	—		$	180,991
Marketable securities:
U.S. government and agency securities	$	180,344	$	64	$	—		$	180,408
Corporate debt securities		73,536		36		(25	)		73,547
Commercial paper		13,466		—		—			13,466
Total marketable securities	$	267,346	$	100	$	(25	)	$	267,421