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Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Measurements

Fair Value Measurements

4. Fair Value Measurements

Financial assets and liabilities are measured and recorded at fair value. The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:

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Level 1—Quoted prices in active markets for identical assets or liabilities

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Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

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Level 3—Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability

There have been no transfers of assets and liabilities between levels of hierarchy.

The Company’s Level 2 investments are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar investments, issuer credit spreads, benchmark investments, prepayment/default projections based on historical data and other observable inputs.

The following tables present information as of September 30, 2022 and December 31, 2021 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):


		September 30, 2022
		Fair Value Measured Using									Total
		(Level 1)			(Level 2)			(Level 3)			Balance
Assets
Cash equivalents		$	23,713		$	—		$	—		$	23,713
Marketable securities			19,034			5,995			—			25,029
		$	42,747		$	5,995		$	—		$	48,742


		December 31, 2021
		Fair Value Measured Using									Total
		(Level 1)			(Level 2)			(Level 3)			Balance
Assets
Cash equivalents		$	61,992		$	—		$	—		$	61,992
Marketable securities			1,011			4,982			—			5,993
		$	63,003		$	4,982		$	—		$	67,985

As of September 30, 2022, marketable securities had a maximum remaining maturity of eleven months.

As of September 30, 2022 and December 31, 2021, the fair value of available for sale marketable securities by type of security were as follows (in thousands):


		September 30, 2022
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
		Cost			Gains			Losses			Value
U.S. Treasury securities		$	19,078		$	1		$	(45)		$	19,034
U.S. Government agency securities			6,031			—			(36)			5,995
		$	25,109		$	1		$	(81)		$	25,029


		December 31, 2021
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
		Cost			Gains			Losses			Value
U.S. Treasury securities		$	1,012		$	—		$	(2)		$	1,010
U.S. Government agency securities			4,984			—			(1)			4,983
		$	5,996		$	—		$	(3)		$	5,993

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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