Fair Value

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value

3. Fair Value

The Company has certain assets and liabilities that are measured at fair value on a recurring basis according to a fair value hierarchy that prioritizes the inputs, assumptions and valuation techniques used to measure fair value. The three levels of the fair value hierarchy are:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2—Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3—Inputs are generally unobservable and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are determined using model-based techniques, including probability-based simulation methodologies.

The determination of a financial instrument’s level within the fair value hierarchy is based on an assessment of the lowest level of any input that is significant to the fair value measurement. The Company considers observable data to be market data, which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The following tables reflect the Company’s financial asset balances measured on a recurring basis as of March 31, 2021 and December 31, 2020 (in thousands):

	March 31, 2021
	Level	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents:
Money market fund	1	$	54,549	$	—	$	—		$	54,549
Commercial paper	2		63,829		—		(3	)		63,826
Total cash equivalents		$	118,378	$	—	$	(3	)	$	118,375
Short-term investments:
Commercial paper	2		116,581		—		(15	)		116,566
U.S. government debt and agency    securities	2		49,258		21		—			49,279
Corporate bonds	2		10,528		—		(6	)		10,522
Total short-term investments		$	176,367	$	21	$	(21	)	$	176,367
Long-term investments:
U.S. government debt and agency    securities	2		53,436		31		—			53,467
Total long-term investments		$	53,436	$	31	$	—		$	53,467

	December 31, 2020
	Level	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents:
Money market fund	1	$	5	$	—	$	—		$	5
Commercial paper	2		44,318		—		(2	)		44,316
U.S. government debt and agency    securities	2		4,999		—		—			4,999
U.S. treasury bills	2		4,450		—		—			4,450
Total cash equivalents		$	53,772	$	—	$	(2	)	$	53,770
Short-term investments:
Commercial paper	2		77,272		1		(4	)		77,269
U.S. government debt and agency    securities	2		31,835		7		—			31,842
U.S. treasury bills	2		14,029		—		(3	)		14,026
Corporate bonds	2		920		—		—			920
Total short-term investments		$	124,056	$	8	$	(7	)	$	124,057
Long-term investments:
U.S. government debt and agency    securities	2		78,924		32		—			78,956
U.S. treasury bills	2		4,551		2		—			4,553
Total long-term investments		$	83,475	$	34	$	—		$	83,509

All the commercial paper, U.S. government debt and agency securities, U.S. treasury bills, and corporate bonds designated as short-term investments have an effective maturity date that is equal to or less than one year from the respective balance sheet date. Those that are designated as long-term investments have an effective maturity date that is more than one year, but less than two years, from the respective balance sheet date.

The Company evaluated its investments for other-than-temporary impairment and considers the decline in market value for the securities to be primarily attributable to current economic and market conditions. For the investments, it is not more-likely-than-not that the Company will be required to sell the investments, and the Company does not intend to do so prior to the recovery of the amortized cost basis.

Prior to the IPO, the Company’s level 3 financial liabilities carried at fair value and remeasured on a recurring basis are the grant liability, derivative liability, and the convertible preferred stock warrant liability. In the third quarter of 2020, the Company recorded an additional $464,000 to bring the total grant liability to $1.5 million as the Company’s IPO triggered the repayment obligation (see Note 7), and the derivative was settled upon the Company’s conversion of its convertible notes in May 2020 (see Note 8). The losses resulting from the change in fair value of the grant liability, the bifurcated conversion and redemption features related to the derivative liability, and the convertible preferred stock warrant liability are classified as other income (expense), net in the accompanying condensed consolidated statements of operations and comprehensive loss. Changes in any of the assumptions related to the unobservable inputs identified may change the fair value of these instruments. For example, an increase in interest rates would generally correspond to a decrease in the fair value of the liabilities.

The following table presents the activity for the grant liability for the year ended December 31, 2020 (in thousands):

	Year Ended December 31, 2020
Fair value at beginning of period	$	1,036
Change in fair value of grant liability		464
Grant liability settled upon completion of IPO		(1,500	)
Fair value at end of period	$	—

The following table presents the activity for the derivative liability for the year ended December 31, 2020 (in thousands):

	Year Ended December 31, 2020
Fair value at beginning of period	$	999
Derivative liability recorded upon issuance of    convertible notes		774
Change in fair value of derivative liability		132
Derivative liability settled upon conversion of    convertible notes		(1,905	)
Fair value at end of period	$	—