Fair Value Measurements and Investments

6 Months Ended

Jun. 30, 2022

4. Fair Value Measurements and Investments

In accordance with Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures, the Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:

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Level I: Inputs which include quoted prices in active markets for identical assets and liabilities.

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Level II: Inputs other than Level I 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.

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Level III: 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 carrying amounts of the Company’s financial instruments, including restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. The Company’s financial instruments consist of Level I assets which consist primarily of highly liquid money market funds, some of which are included in restricted cash; and U.S. government bonds that are included in short-term investments.

The following tables set forth the fair value of the Company’s investments subject to fair value measurements on a recurring basis and the level of inputs used in such measurements:


		June 30, 2022
	Valuation Hierarchy	Amortized Cost		Unrealized Gains		Unrealized Losses			Aggregate Fair Value
		(in thousands)
Assets
Money market funds	Level I	$	75,878	$	—	$	—		$	75,878
Restricted cash (money market funds)	Level I		917		—		—			917
U.S. Government bonds	Level I		100,037		—		(1,162	)		98,875
Total		$	176,832	$	—	$	(1,162	)	$	175,670


		December 31, 2021
	Valuation Hierarchy	Amortized Cost		Unrealized Gains		Unrealized Losses			Aggregate Fair Value
		(in thousands)
Assets
Money market funds	Level I	$	165,736	$	—	$	—		$	165,736
Restricted cash (money market funds)	Level I		917		—		—			917
U.S. Government bonds	Level I		99,938		—		(242	)		99,696
Total		$	266,591	$	—	$	(242	)	$	266,349

No securities have contractual maturities of greater than twelve months.

As of June 30, 2022, the unrealized losses on the Company’s investment in US Government bonds were caused by interest rate changes and were not attributable to credit losses. The remaining contractual terms of those investments are less than a year. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

- 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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