Fair Value Measurements and Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2023

Fair Value Measurements and Fair Value of Financial Instruments

FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables set forth the fair value of the Company’s financial assets that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands).


	September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	33,984	$	—	$	—	$	33,984
Total cash equivalents	33,984		—		—		33,984
Investments:
U.S. Treasury securities	—		246,652		—		246,652
U.S. Non-Treasury securities	—		22,741		—		22,741
Commercial paper	—		25,505		—		25,505
Corporate debt securities	—		49,527		—		49,527
Total investments	—		344,425		—		344,425
Total assets measured at fair value	$	33,984	$	344,425	$	—	$	378,409


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	53,208	$	—	$	—	$	53,208
Total cash equivalents	53,208		—		—		53,208
Investments:
U.S. Treasury securities	—		227,692		—		227,692
U.S. Non-Treasury securities	—		10,702		—		10,702
Commercial paper	—		55,433		—		55,433
Corporate debt securities	—		79,361		—		79,361
Total investments	—		373,188		—		373,188
Total assets measured at fair value	$	53,208	$	373,188	$	—	$	426,396

There were no financial liabilities measured at fair value. The Company classifies money market funds within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company classifies its investments in U.S. Treasury securities (Treasury bills, Treasury notes, and Treasury bonds), U.S. Non-Treasury securities (government agency debt), commercial paper, and corporate debt securities as Level 2 instruments and obtains fair value from an independent pricing service, which may use quoted market prices for identical or comparable instruments or model-driven valuations using observable market data or inputs corroborated by observable market data.

The carrying amount of the Company’s accounts receivable, other receivables, prepaid expenses and other current assets, accounts payable and accrued expenses approximate fair value due to their short maturities.

The following is a summary of the Company’s cash equivalents and investments and the gross unrealized holding gains and losses (in thousands):


	September 30, 2023
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Assets:
Cash equivalents:
Money market funds	$	33,984	$	—	$	—	$	33,984

Total cash equivalents	33,984		—		—		33,984
Investments:
U.S. Treasury securities	247,784		1		(1,133)		246,652
U.S. Non-Treasury securities	22,778		—		(37)		22,741
Commercial paper	25,527		—		(22)		25,505
Corporate debt securities	49,632		9		(114)		49,527
Total investments	345,721		10		(1,306)		344,425
Total assets measured at fair value	$	379,705	$	10	$	(1,306)	$	378,409


	December 31, 2022
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Assets:
Cash equivalents:
Money market funds	$	53,208	$	—	$	—	$	53,208
Total cash equivalents	53,208		—		—		53,208
Investments:
U.S. Treasury securities	228,563		25		(896)		227,692
U.S. Non-Treasury securities	10,699		6		(3)		10,702
Commercial paper	55,561		3		(131)		55,433
Corporate debt securities	79,616		6		(261)		79,361
Total investments	374,439		40		(1,291)		373,188
Total assets measured at fair value	$	427,647	$	40	$	(1,291)	$	426,396

As of September 30, 2023 and December 31, 2022, unrealized losses on available-for-sale investments are not attributable to credit risk and are considered to be temporary. Approximately $1.0 million of the Company’s investments have been in a continuous unrealized loss position for 12 months or longer. The Company believes it is more likely than not that investments in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value. As of September 30, 2023, $49.6 million of available-for-sale investments had remaining maturities between one and two years. The remainder of the available-for-sale investments have a remaining maturity of one year or less. As of September 30, 2023 and December 31, 2022, the Company recorded $0.7 million and $0.6 million of accrued interest, respectively, related to its available-for-sale investments as a component of other receivables on the condensed consolidated balance sheets.

- 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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