Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Measurements

Fair Value Measurements

4. Fair Value Measurements

The Company's financial assets and liabilities carried at fair value are comprised of investment assets that include money market and investments, and a liability for common stock warrants.

The fair value accounting guidance requires that assets and liabilities be carried at fair value and classified in one of the following three categories:

Level I: Quoted prices in active markets for identical assets and liabilities that the Company has the ability to access

Level II: Observable market‑based inputs or unobservable inputs that are corroborated by market data, such as quoted prices, interest rates, and yield curves

Level III: Inputs that are unobservable data points that are not corroborated by market data.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis

The following table represents the fair value hierarchy for the Company’s financial assets and financial liabilities measured at fair value on a recurring basis:

	September 30, 2018								December 31, 2017
	Level I		Level II		Level III		Total		Level I		Level II		Level III		Total
	(in thousands)
Financial Assets:
Money market deposits	$	17,880	$	—	$	—	$	17,880	$	3,477	$	—	$	—	$	3,477
U.S. Treasury securities		100,468		—		—		100,468		67,026		—		—		67,026
U.S. agency securities		—		18,849		—		18,849		—		27,072		—		27,072
Municipal securities		—		11,574		—		11,574		—		12,149		—		12,149
Total financial assets	$	118,348	$	30,423	$	—	$	148,771	$	70,503	$	39,221	$	—	$	109,724
Current Liabilities:
Warrants	$	—	$	—	$	—	$	—	$	—	$	—	$	2,644	$	2,644
Total financial liabilities	$	—	$	—	$	—	$	—	$	—	$	—	$	2,644	$	2,644

During the nine months ended September 30,  2018, the Company did not make any transfers between Level I and Level II assets.

The Company's warrants to purchase common stock were valued using Level III inputs; the Company used inputs from a Black-Scholes model with market volatility that is determined for comparable companies in the same business sector. The carrying amounts of cash, accounts receivable, and accounts payable approximate their fair value and are excluded from the table above.

The following table provides a roll forward of the fair value, as determined by Level III inputs, of the warrants for the nine months ended September 30, 2018:

	Warrants
	(in thousands)
Balance at December 31, 2017	$	2,644
Change in fair value		4,119
Warrants exercised		(6,763)
Balance at September 30, 2018	$	—

As of September 30, 2018, the warrants were fully exercised.  See Note 10 for more detail regarding the exercise of warrants.