Financial Instruments

12 Months Ended

Dec. 31, 2024

Investments, All Other Investments [Abstract]

Fair Value Measurements

The Company categorizes its financial assets and liabilities measured at fair value into a three-level hierarchy established by U.S. GAAP that prioritizes those inputs to valuation techniques used to measure fair value based on the degree to which they are observable. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices in active markets for identical assets and liabilities; Level 2 inputs, other than quoted prices included within Level 1, are observable for the asset or liability either directly or indirectly; and Level 3 inputs are not observable in the market.

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, marketable securities, accounts receivable, loans receivable, accounts payable and other liabilities, and contingent consideration payable. The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other liabilities, and loans receivable, approximate their fair values, and are primarily classified as Level 2.

Contingent Consideration

Contingent consideration relates to potential earn-out payments and future successful milestone payouts from previous business acquisitions. Contingent consideration is recorded at fair value on the acquisition date and adjusted on a recurring basis for changes in its fair value. Changes in the fair value of contingent consideration liabilities can result from changes in anticipated payments and changes in assumed discount periods and rates and are included in other income on the consolidated statements of income (loss). The inputs are unobservable in the market and are therefore categorized as

Level 3 inputs. There were no changes to the valuation technique and inputs used in these fair value measurements since acquisition.

The following table presents the changes in fair value of the liability for contingent consideration:


	December 31, 2023
	Liability at beginning of the year		Decrease in fair value of liability for contingent consideration		Repayment of contingent consideration		Liability at end of the year
Contingent consideration(i)	$	60,265	$	(3,929)	$	(948)	$	55,388


	December 31, 2024
	Liability at beginning of the year		Decrease in fair value of liability for contingent consideration		Repayment of contingent consideration		Liability at end of the year
Contingent consideration(i)	$	55,388	$	(47,301)	$	—	$	8,087

(i) The estimated fair value was determined by estimating the expected future cash flows associated with the contingent payments. The significant assumptions include the amount and timing of projected future cash flows, risk adjusted for various factors including probability of success, discounted at ranging from 12.8% to 22%, which measures the risks inherent in each relevant future cash flows stream. In the year ended December 31, 2024, the fair value of the contingent consideration was adjusted to reflect the expected value due to the impact from the Company's ongoing internal program prioritization and expected achievement of a milestone required for an earn-out payment associated with a specific license. Changes in the fair value of the liability for contingent consideration is recognized as a non-cash fair value gain through other income.

In-Process Research and Development Assets

As discussed in Note 7, the estimated fair values in support of the TetraGenetics full impairment charge were categorized within Level 3 of the fair value hierarchy and were determined using an income-based approach, which was based on a probability-adjusted present value of the future estimated after-tax cash flows attributable to the intangible assets. The significant assumptions inherent in estimating the fair values, from the perspective of a market participant, include a probability-adjusted success rate of its continued development through to clinical trials, future revenue, operating and development costs, milestone and regulatory success, obsolescence, and profitability. A de-risked discount rate of 12.8% for TetraGenetics was used to present value the probability of success risk adjusted after-tax cash flows attributable to the IPR&D.

Marketable Securities

As part of the Company’s cash management strategy, the Company holds a diversified portfolio of high credit quality marketable securities that are available to support the Company’s operations. As of December 31, 2024, our marketable securities were rated A- or higher (or its equivalent) by at least two of the major rating agencies with a weighted average life of approximately 0.5 years.

Level 2 marketable securities in the fair value hierarchy were based on quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value. There were no transfers between Level 1, Level 2 and Level 3 during the period.

The following table presents information about the Company’s marketable securities that are measured at fair value on a recurring basis and indicates the level of the fair value hierarchy used to determine such fair values:


	Fair Value Measurements at December 31, 2023:
	Level 1		Level 2		Level 3		Total
Marketable securities
U.S. government agencies	$	142,674	$	—	$	—	$	142,674
Certificate of deposit	—		244,444		—		244,444
Commercial paper	—		60,118		—		60,118
Corporate bonds	—		128,519		—		128,519
Asset backed securities	—		51,510		—		51,510
	$	142,674	$	484,591	$	—	$	627,265


	Fair Value Measurements at December 31, 2024:
	Level 1		Level 2		Level 3		Total
Marketable securities
U.S. government agencies	$	90,601	$	—	$	—	$	90,601
Certificate of deposit	—		90,632		—		90,632
Commercial paper	—		53,757		—		53,757
Corporate bonds	—		130,088		—		130,088
Asset backed securities	—		104,211		—		104,211
	$	90,601	$	378,688	$	—	$	469,289