Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Measurements

Fair Value Measurements

Note 3 – Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as 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, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The carrying amounts of cash, prepaid expenses and other current assets, accounts payable, accrued research and development and other current liabilities are reasonable estimates of their fair value due to the short-term nature of these accounts.

The Company’s money market funds under cash and cash equivalents are classified using Level 1 inputs within the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. There were no transfers between levels of the fair value hierarchy during the nine months ended September 30, 2022.

The following table summarizes financial assets that the Company measured at fair value on a recurring basis, classified in accordance with the fair value hierarchy (in thousands):

	Fair Value Measurements at Reporting Date Using:
	Level 1		Level 2		Level 3		Total
As of September 30, 2022:
Money market funds	$	7,874	$	—	$	—	$	7,874
Commercial paper		—		44,774		—		44,774
U.S. government securities		20,080		—		—		20,080
U.S. agency bonds		—		16,167		—		16,167
Corporate debt securities		—		992		—		992
Total cash equivalents and short-term investments	$	27,954	$	61,933	$	—	$	89,887
Reported as:
Cash and cash equivalents (includes cash of $821)							$	39,834
Short-term investments								50,874
Total cash, cash equivalents and short-term investments							$	90,708

	Fair Value Measurements at Reporting Date Using:
	Level 1		Level 2		Level 3		Total
As of December 31, 2021:
Money market funds	$	10,585	$	—	$	—	$	10,585
Commercial paper		—		84,616		—		84,616
U.S. government securities		27,824		—		—		27,824
U.S. agency bonds		—		8,531		—		8,531
Corporate debt securities		—		8,265		—		8,265
Total cash equivalents and short-term investments	$	38,409	$	101,412	$	—	$	139,821
Reported as:
Cash and cash equivalents (includes cash of $397)							$	24,780
Short-term investments								115,438
Total cash, cash equivalents and short-term investments							$	140,218