Fair Value Measurements

9 Months Ended

Sep. 30, 2021

4. Fair Value Measurements

The Company classifies fair value-based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices (unadjusted) in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and 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, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of September 30, 2021 and December 31, 2020, the Company’s financial assets recognized at fair value on a recurring basis consisted of the following:


	Fair Value as of September 30, 2021
	Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents and restricted cash equivalents	$	335,916	$	335,916	$	-	$	-
Marketable securities:
U.S. Treasury and other government securities		251,242		220,670		30,572		-
Financial institution debt securities		394,998		-		394,998		-
Corporate debt securities		32,090		-		32,090		-
Other asset-backed securities		135,652		-		135,652		-
Total marketable securities		813,982		220,670		593,312		-
Total	$	1,149,898	$	556,586	$	593,312	$	-

	Fair Value as of December 31, 2020
	Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents and restricted cash equivalents	$	163,805	$	163,805	$	-	$	-
Marketable securities:
U.S. Treasury and other government securities		245,668		241,664		4,004		-
Financial institution debt securities		138,443		-		138,443		-
Corporate debt securities		41,766		-		41,766		-
Other asset-backed securities		11,474		-		11,474		-
Total marketable securities		437,351		241,664		195,687		-
Total	$	601,156	$	405,469	$	195,687	$	-

Certain of the Company’s financial assets, including cash equivalents, restricted cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third-party pricing services or other observable market data. The pricing services utilize industry standard valuation models and observable market inputs to determine value. After completing its validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of September 30, 2021 or December 31, 2020.

Other financial instruments, including accounts receivable, accounts payable and accrued expense, are carried at cost, which approximates fair value due to the short duration and term to maturity.

The Company’s investment in NewCo was recorded at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. Refer to Note 8 for further details.

- Definition

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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