Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

Financial assets and liabilities are recorded at fair value. The carrying amount of certain financial instruments, including cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. Assets and liabilities recorded at fair value on a recurring basis in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

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

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

We determine the fair value of Level 1 assets using quoted prices in active markets for identical assets. We review trading activity and pricing for Level 2 investments as of each measurement date. Level 2 inputs, which are obtained from various third-party data providers, represent quoted prices for similar assets in active markets and were derived from observable market data, or, if not directly observable, were derived from or corroborated by other observable market data. There were no transfers between Level 1 and Level 2 securities in the periods presented.

In certain cases, where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3 within the valuation hierarchy. The Company does not have any assets or liabilities measured using Level 3 inputs as of September 30, 2018 or December 31, 2017.

As of September 30, 2018 and December 31, 2017, financial assets and liabilities measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above were as follows (in thousands):

	September 30, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Assets
Level 1:
Cash		691		—		—			691
Money market funds		13,072		—		—			13,072
U.S. Treasury securities		53,597		—		(18	)		53,579
Subtotal		67,360		—		(18	)		67,342
Level 2:
Commercial paper		13,712		—		(1	)		13,711
Corporate debt securities		6,571		—		(1	)		6,570
Government agency bonds		25,137		—		(5	)		25,132
Subtotal		45,420		—		(7	)		45,413
Total	$	112,780	$	—	$	(25	)	$	112,755
Reported as:
Cash and cash equivalents								$	39,594
Marketable securities								$	73,161

	December 31, 2017
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Assets
Level 1:
Cash		804		—		—		804
Money market funds		50,229		—		—		50,229
Restricted cash		13		—		—		13
Subtotal		51,046		—		—		51,046
Total	$	51,046	$	—	$	—	$	51,046
Reported as:
Cash and cash equivalents							$	51,033
Restricted cash							$	13

As of September 30, 2018, the amortized cost and estimated fair value of the Company’s available-for-sale securities by contractual maturity are shown below (in thousands):

	Amortized		Estimated
	Cost		Fair Value
Marketable securities maturing:
In one year or less	$	73,184	$	73,161
Total marketable securities	$	73,184	$	73,161

The Company determined that the gross unrealized losses on its marketable securities as of September 30, 2018 were temporary in nature. The Company currently does not intend to sell these securities prior to maturity and does not consider these investments to be other-than-temporarily impaired at September 30, 2018.