Fair Value Measurement and Marketable Securities

12 Months Ended

Dec. 31, 2023

Fair Value Measurement and Marketable Securities

3. Fair Value Measurement and Marketable Securities

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities at the measurement date.

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 which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

As of December 31, 2023, financial assets measured and recorded at fair value are as follows (in thousands):


		December 31, 2023
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Assets
U.S. government securities(1)	Level 2	$	412,679	$	591	$	(135	)	$	413,135
Corporate bonds	Level 2		53,983		197		(32	)		54,148
Commercial paper(2)	Level 2		126,601		—		(58	)		126,543
Marketable securities			593,263		788		(225	)		593,826
Money market funds(3)	Level 1		38,300		—		—			38,300
Total fair value of assets		$	631,563	$	788	$	(225	)	$	632,126

(1)

$37.8 million was included in cash and cash equivalents on the balance sheet due to securities with purchase dates within 90 days of maturity dates

(2)

$80.4 million was included in cash and cash equivalents on the balance sheet due to securities with purchase dates within 90 days of maturity dates

(3)

Included in cash and cash equivalents on the balance sheet

As of December 31, 2022, financial assets measured and recognized at fair value are as follows (in thousands):


		December 31, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Assets
U.S. government securities	Level 2	$	146,030	$	—	$	(2,291	)	$	143,739
Corporate bonds	Level 2		86,546		—		(580	)		85,966
Commercial paper(1)	Level 2		78,797		—		—			78,797
Marketable securities			311,373		—		(2,871	)		308,502
Money market funds(2)	Level 1		64,153		—		—			64,153
Total fair value of assets		$	375,526	$	—	$	(2,871	)	$	372,655

(1)

$4.0 million was included in cash and cash equivalents on the balance sheet due to securities with purchase dates within 90 days of maturity dates

(2)

Included in cash and cash equivalents on the balance sheet

As of December 31, 2023 and December 31, 2022, all marketable securities had a remaining maturity of less than two years. There were no financial liabilities measured and recognized at fair value as of December 31, 2023 and December 31, 2022.

The Company considers available evidence in evaluating potential other-than-temporary impairments of its marketable securities, including the duration and extent to which fair value is less than cost, and the Company’s ability and intent to hold the investment. As of December 31, 2023 and December 31, 2022, the Company held certain securities in an unrealized loss position. These unrealized losses were considered to be temporary as the Company expects to recover the entire amortized cost basis on the securities in unrealized loss positions based on the creditworthiness of the underlying issuer, and the Company neither intends to sell these securities nor considers it more likely than not that the Company would be required to sell any such security before its anticipated recovery. As a result, the Company did not consider any of these investments to be other-than-temporarily impaired at December 31, 2023 and December 31, 2022.