Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Measurements

Fair Value Measurements

10.Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date. Fair value has a three level hierarchy from highest priority (Level 1) to lowest priority (Level 3). The fair value hierarchy, defined by Accounting Standards Codification 820, Fair Value Measurements and Disclosures, was established based on whether the inputs are observable from independent sources or rely on unobservable inputs based on the Company’s market assumptions. The three levels of the fair value hierarchy are described below:

· Level 1—Quoted prices for identical assets or liabilities (unadjusted) in active markets.

· Level 2—Observable inputs other than quoted prices that are either directly or indirectly observable for the assets or liability.

· Level 3—Unobservable inputs that are supported by little or no market activity.

The levels are not necessarily an indication of the risk of liquidity associated with the financial assets or liabilities disclosed.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company has segregated its financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below.

The inputs used in measuring the fair value of the Company’s money market funds included in cash equivalents are considered to be Level 1 in accordance with the three‑tier fair value hierarchy. The fair market values are based on period‑end statements supplied by the various banks and brokers that held the majority of the funds.

Fixed-income investments categorized as Level 2 are valued at the custodian bank by a third-party pricing vendor’s valuation models that use verifiable observable market data, e.g., interest rates and yield curves observable at commonly quoted intervals and credit spreads, bids provided by brokers or dealers or quoted prices of securities with similar characteristics.

The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2016 (in thousands):

	September 30, 2016
	Total		Level 1		Level 2		Level 3
Money market funds	$	11,850	$	11,850	$	—	$	—
U.S. government agencies	$	1,202	$	—	$	1,202	$	—
Commercial paper	$	12,620	$	—	$	12,620	$	—
Note payable	$	15,000	$	—	$	15,000	$	—

	December 31, 2015
	Total		Level 1		Level 2		Level 3
Money market funds	$	3,939	$	3,939	$	—	$	—
Marketable securities	$	—	$	—	$	—	$	—

Non‑Financial Assets and Liabilities Measured at Fair Value on a Non‑Recurring Basis

The Company measures its long‑lived assets, including property and equipment, at fair value on a non‑recurring basis. These assets are recognized at fair value when they are deemed to be impaired. No such fair value impairment was recognized in the three and nine months ended September 30, 2016 or 2015.