Fair Value Measurements

9 Months Ended

Sep. 30, 2022

The Company’s cash equivalents are classified within Level 1 and Level 2 of the fair value hierarchy. The Company’s investments in marketable securities are classified within Level 2 of the fair value hierarchy.

The fair values of the Company’s marketable securities are based on prices obtained from independent pricing sources. Consistent with the fair value hierarchy described in Note 2, Summary of Significant Accounting Policies, marketable securities with validated quotes from pricing services are reflected within Level 2, as they are primarily based on observable pricing for similar assets or other market observable inputs. Typical inputs used by these pricing services include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers or estimates of cash flow, prepayment spreads and default rates. The Company performs validation procedures to ensure the reasonableness of this data. The Company performs its own review of prices received from the independent pricing services by comparing these prices to other sources. After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of September 30, 2022 and December 31, 2021.

The following tables summarize the Company’s cash equivalents and marketable securities as of September 30, 2022 and December 31, 2021:


	September 30, 2022
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Cash equivalents:
Money market funds	$	168,766	$	168,766	$	—	$	—
U.S. corporate bonds		4,443		—		4,443		—
U.S. commercial paper		7,883		—		7,883		—
International commercial paper		10,979		—		10,979		—
U.S. municipal securities		6,672		—		6,672		—
Total cash equivalents		198,743		168,766		29,977		—
Marketable securities:
U.S. government securities		393,969		—		393,969		—
U.S. corporate bonds		398,792		—		398,792		—
International corporate bonds		151,048		—		151,048		—
U.S. commercial paper		52,671		—		52,671		—
International commercial paper		130,216		—		130,216		—
U.S. certificates of deposit		13,727		—		13,727		—
U.S. municipal securities		53,390		—		53,390		—
Total marketable securities		1,193,813		—		1,193,813		—
	$	1,392,556	$	168,766	$	1,223,790	$	—


	December 31, 2021
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Cash equivalents:
Money market funds	$	289,440	$	289,440	$	—	$	—
U.S. commercial paper		2,000		—		2,000		—
International commercial paper		1,999		—		1,999		—
Total cash equivalents		293,439		289,440		3,999		—
Marketable securities:
U.S. government securities		324,532		—		324,532		—
U.S. corporate bonds		627,780		—		627,780		—
International corporate bonds		236,812		—		236,812		—
U.S. commercial paper		80,176		—		80,176		—
International commercial paper		142,335		—		142,335		—
U.S. municipal securities		36,428		—		36,428		—
Total marketable securities		1,448,063		—		1,448,063		—
	$	1,741,502	$	289,440	$	1,452,062	$	—

During the nine months ended September 30, 2022 and 2021, there were no transfers among the Level 1, Level 2 and Level 3 categories.

The following tables summarize the gross unrealized gains and losses of the Company’s marketable securities as of September 30, 2022 and December 31, 2021:


	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Credit Losses		Fair Value
	(in thousands)
Assets:
U.S. government securities	$	400,180	$	3	$	(6,214	)	$	—	$	393,969
U.S. corporate bonds		404,074		—		(5,282	)		—		398,792
International corporate bonds		153,088		3		(2,043	)		—		151,048
U.S. commercial paper		52,778		—		(107	)		—		52,671
International commercial paper		130,461		—		(245	)		—		130,216
U.S. certificates of deposit		13,727		—		—			—		13,727
U.S. municipal securities		54,388		9		(1,007	)		—		53,390
	$	1,208,696	$	15	$	(14,898	)	$	—	$	1,193,813


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Credit Losses		Fair Value
	(in thousands)
Assets:
U.S. government securities	$	325,514	$	—	$	(982	)	$	—	$	324,532
U.S. corporate bonds		628,836		27		(1,083	)		—		627,780
International corporate bonds		237,303		—		(491	)		—		236,812
U.S. commercial paper		80,194		—		(18	)		—		80,176
International commercial paper		142,358		—		(23	)		—		142,335
U.S. municipal securities		36,518		—		(90	)		—		36,428
	$	1,450,723	$	27	$	(2,687	)	$	—	$	1,448,063

The following tables summarize the fair value and the unrealized losses of the Company’s marketable securities that are in a loss position as of September 30, 2022 and December 31, 2021:


	September 30, 2022
	Less than 12 months					Greater than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
U.S. government securities	$	268,949	$	(3,872	)	$	120,107	$	(2,342	)	$	389,056	$	(6,214	)
U.S. corporate bonds		337,682		(4,485	)		61,969		(797	)		399,651		(5,282	)
International corporate bonds		120,338		(1,676	)		30,151		(367	)		150,489		(2,043	)
U.S. commercial paper		21,996		(106	)		2,999		(1	)		24,995		(107	)
International commercial paper		41,813		(245	)		—		—			41,813		(245	)
U.S. municipal securities		47,652		(1,007	)		—		—			47,652		(1,007	)
	$	838,430	$	(11,391	)	$	215,226	$	(3,507	)	$	1,053,656	$	(14,898	)


	December 31, 2021
	Less than 12 months					Greater than 12 months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. government securities	$	309,588	$	(982	)	$	—	$	—	$	309,588	$	(982	)
U.S. corporate bonds		601,475		(1,083	)		—		—		601,475		(1,083	)
International corporate bonds		231,672		(491	)		—		—		231,672		(491	)
U.S. commercial paper		21,968		(18	)		—		—		21,968		(18	)
International commercial paper		35,059		(23	)		—		—		35,059		(23	)
U.S. municipal securities		24,953		(90	)		—		—		24,953		(90	)
	$	1,224,715	$	(2,687	)	$	—	$	—	$	1,224,715	$	(2,687	)

As of September 30, 2022 and December 31, 2021, the unrealized losses on the Company’s investments in U.S. government securities, U.S. corporate bonds, and international corporate bonds were caused by interest rate increases. The Company purchased those investments at a premium relative to their face amount. The current credit ratings are all within the guidelines of the investment policy of the Company and the Company does not expect the issuers to settle any security at a price less than the amortized cost basis of the investment. The Company does not intend to sell the investments and it is not probable that the Company will be required to sell the investments before recovery of their amortized cost basis.

As of September 30, 2022, all marketable securities held by the Company had remaining contractual maturities of one year or less, except for U.S. government securities, U.S. corporate bonds, international corporate bonds and municipal securities with a fair value of $178.3 million and maturities of one to two years.

As of December 31, 2021, all marketable securities held by the Company had remaining contractual maturities of one year or less, except for U.S. government securities, U.S. corporate bonds, international corporate bonds and municipal securities with a fair value of $436.1 million and maturities of one to two years.

All marketable securities, including those with remaining contractual maturities of more than one year, are classified as current assets on the balance sheet because they are considered to be “available for sale” and the Company can convert them into cash to fund current operations.

There have been no impairments of the Company’s assets measured and carried at fair value during the nine months ended September 30, 2022 and the year ended December 31, 2021.