Fair value of financial instruments

6 Months Ended

Jun. 30, 2022

Fair value of financial instruments

Fair value of financial instruments

(4) Fair value of financial instruments

The Company measures the following financial liabilities at fair value on a recurring basis. There were no transfers between levels of the fair value hierarchy during any of the periods presented.

The following tables set forth the Company’s financial assets and liabilities carried at fair value categorized using the lowest level of input applicable to each financial instrument as of June 30, 2022 and December 31, 2021:

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
	Balance at		Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs
	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	46,881	$	42,673	$	4,208	$	—
U.S. Treasury securities		40,725		—		40,725		—
Total Assets	$	87,606	$	42,673	$	44,933	$	—
Liabilities:
Contingent consideration – Long term portion	$	5,599	$	—	$	—	$	5,599
Total Liabilities	$	5,599	$	—	$	—	$	5,599

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
	Balance at		Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2021		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Contingent consideration – Long term portion	$	7,850	$	—	$	—	$	7,850
Total Liabilities	$	7,850	$	—	$	—	$	7,850

The following is a summary of cash, cash equivalents and marketable securities:

		June 30, 2022
				Gross		Gross
				Unrealized		Unrealized		Estimated
		Cost		Gains		Losses		Fair Value
Cash and cash equivalents	$	46,882	$	—	$	(1)	$	46,881
Marketable securities:				—		—
U.S. Treasury securities due in one year or less		40,816		—		(91)		40,725
Total marketable securities		40,816		—		(91)		40,725
Total cash, cash equivalents, and marketable securities	$	87,698	$	—	$	(92)	$	87,606

The Company held 17 debt securities at June 30, 2022 classified as marketable securities with original maturity dates greater than three months that were in an unrealized loss position for less than twelve months. The fair value of these securities was $40,725. The Company held 2 debt securities at June 30, 2022 classified as cash and cash equivalents with original maturity dates less than three months that were in an unrealized loss position. The fair value of these securities was $3,994. The Company evaluated its securities for other-than-temporary impairments based on quantitative and qualitative factors. The Company considered the decline in market value for these securities to be primarily attributable to current economic and market conditions. It is not more likely than not that the Company will be required to sell these securities, and the Company does not intend to sell these securities before the recovery of their

amortized cost basis. Based on its analysis, the Company does not consider these investments to be other-than-temporarily impaired as of June 30, 2022.

The Company had no material realized gains or losses on our available-for-sale securities for the three and six months ended June 30, 2022. There were no other-than-temporary impairments recognized for the three and six months ended June 30, 2022.

The Company’s recurring fair value measurements using Level 3 inputs relate to the Company’s contingent consideration liability and warrant liability. In those circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the contingent payments the Company expects to make as of the acquisition date. The Company re-measures this liability each reporting period and records changes in the fair value through changes in fair value of contingent consideration on the Company’s consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount rates, periods, timing and amount of projected revenue.

In September 2019, the Company entered into a Loan and Security Agreement with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”), under which Innovatus agreed to make a term loan to the Company in an aggregate principal amount of $25,000 (the “Innovatus Term Loan”). In connection with the Loan and Security Agreement, the Company also issued the lender a warrant to purchase 368,779 additional shares of Series D Preferred Stock, at a purchase price of $1.53 per share. The expiration date of the warrant is September 27, 2029. The holder may at any time and from time to time exercise this warrant, in whole or in part, and on any exercise of the warrant, the holder may elect to receive shares equal to the full value of the warrant or a portion of its full value. Prior to the IPO, since the underlying Series D redeemable convertible preferred stock was classified outside of permanent equity, the preferred stock warrant was classified as other long-term liabilities in the accompanying balance sheet. The preferred stock warrant liability was recorded at fair value utilizing the Black-Scholes model. The Black Scholes option pricing model is based on the estimated market value of the underlying redeemable convertible preferred stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates, expected dividends, and expected volatility of the price of the underlying redeemable convertible preferred stock. The Company adjusted the carrying value of the preferred stock warrant to its estimated fair value at each reporting date, with any related increase or decrease in the fair value recorded as an increase or decrease to other income (expense) in the statements of operations. In connection with the IPO, the preferred stock warrant was converted to a warrant to purchase shares of the Company’s common stock, pursuant to its preexisting terms. As such, the Company assessed the classification of the common stock warrant and determined it met the criteria to be classified within stockholders’ equity. Accordingly, the fair value of the warrant liability was reclassified to stockholders’ equity.

Changes in the fair value of the Company’s long-term portion of the contingent consideration liability during the six months ended June 30, 2022 and 2021 were as follows:

Balance as of December 31, 2021	$	7,850
Reclassification of FY 2022 payment to accrued expenses		(1,295)
Change in contingent consideration value		(956)
Balance as of June 30, 2022	$	5,599

Balance as of December 31, 2020	$	6,984
Reclassification of FY 2021 payment to accrued expenses		(1,183)
Change in contingent consideration value		826
Balance as of June 30, 2021	$	6,627

The recurring Level 3 fair value measurements of the Company’s contingent consideration liability include the following significant unobservable inputs:

	Fair Value
	as of
	June 30,		Valuation	Unobservable
Contingent Consideration Liability	2022		Technique	Inputs
Revenue-based Payments	$	5,599	Discounted Cash Flow Analysis under the Income Approach	Revenue discount factor, discount rate

Changes in the fair value of the Company’s warrant liability during the six months ended June 30, 2021 were as follows:

Balance as of December 31, 2020	$	490
Change in fair value of warrant liability		2,728
Reclassification of warrant liability to stockholders’ equity		(3,218)
Balance as of June 30, 2021	$	—