Financial Instruments

9 Months Ended

Sep. 30, 2022

Financial Instruments

Financial Instruments

5. Financial Instruments

The Company elected to invest a portion of its cash assets in conservative, income earning, and liquid investments. Cash equivalents and investments, all of which are classified as available-for-sale securities, consisted of the following:

	September 30, 2022						December 31, 2021
	Amortized Cost		Gross Unrealized Loss		Estimated Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(in thousands)
Money market deposits	$	496	$	—	$	496	$	10,041	$	—	$	—	$	10,041
U.S. Treasury securities (1)		392,949		(14,841)		378,108		689,640		1,081		(2,624)		688,097
Corporate bonds and notes (1)		24,098		(724)		23,374		52,729		—		(392)		52,337
Municipal securities		66,350		(3,720)		62,630		89,814		261		(613)		89,462
Total	$	483,893	$	(19,285)	$	464,608	$	842,224	$	1,342	$	(3,629)	$	839,937
Classified as:
Cash equivalents (2)						496								10,041
Short-term investments						464,112								829,896
Total					$	464,608							$	839,937

(1) Per the Company’s investment policy, all U.S. Treasury securities and debt securities are classified as short-term investments irrespective of holding period.  

(2) Cash equivalents includes cash sweep accounts and U.S. Treasury money market mutual funds.

The Company invests in U.S. Treasuries, U.S. agency and high-quality municipal bonds which mature at par value and are all paying their coupons on schedule. The Company has therefore concluded there is currently no other than temporary impairment of its investments and will continue to recognize unrealized gains and losses in other comprehensive income (loss). During the nine months ended September 30, 2022, the Company sold $214.7 million of investments. During the nine months ended September 30, 2022, the amount of net realized losses upon sales of investments was $0.5 million. The Company uses the specific investment identification method to calculate realized gains and losses and amounts reclassified out of other comprehensive income to net income. As of September 30, 2022, the Company had 64 investments in an unrealized loss position in its portfolio. An allowance for credit losses was not necessary since the investments are low risk, investment grade securities. The Company has assessed the unrealized loss position for available-for-sale debt securities for which an allowance for credit losses has not been recorded. The fair value for investment securities at an unrealized loss position as of September 30, 2022 was $464.1 million. The aggregate amount of unrealized losses of these securities was $19.3 million, and the impact of the securities in a continuous loss position to the condensed consolidated statements of operations and comprehensive loss was not material as of September 30, 2022.

The following table summarizes the Company’s portfolio of available-for-sale securities by contractual maturity as of September 30, 2022:

	September 30, 2022
	Amortized Cost		Fair Value
	(in thousands)
Less than or equal to one year	$	234,061	$	227,890
Greater than one year but less than five years		249,336		236,222
Total	$	483,397	$	464,112