Financial Instruments

9 Months Ended

Sep. 30, 2022

The Company’s short-term investments consist of U.S. Treasury securities, U.S. Government agency securities and highly rated, investment-grade corporate debt securities with original maturities beyond three months at the date of purchase. The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time even prior to maturity and such investments represent cash available for current operations. As a result, short-term investments may include securities with maturities beyond twelve months that are classified within current assets in the Balance Sheets. The Company’s short-term investments classified as available-for-sale are carried at fair market value with unrealized losses or income recognized in other comprehensive income (loss).

The Company’s cash equivalent Money Market Funds are classified as Level 1 because they are valued using quoted active market prices. The fair value of the Company’s U.S. Treasury securities, U.S. government agency securities and corporate debt securities are classified as Level 2 because they are valued using observable inputs to quoted market prices other than Level 1 prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency and include U.S. government agency securities, U.S. Treasury securities and corporate debt securities.

There were no assets or liabilities recorded at fair value to the condensed balance sheets using Level 3 inputs as of September 30, 2022 and as of December 31, 2021.

The following tables show the Company’s Money Market Funds, U.S. Treasury securities, U.S. government agency securities and corporate debt securities by significant investment category as of September 30, 2022 and December 31, 2021 (in thousands):


	As of September 30, 2022
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Market Value
Level 1:
Money Market Funds	$	12,465	$	—	$	—	$	12,465
Level 2:
U.S. Treasury securities included in cash and cash equivalents and short-term investments	2,469		—		(4)		2,465
U.S. government agency securities included in cash and cash equivalents and short-term investments	25,748		1		(82)		25,667
Corporate debt securities included in cash and cash equivalents and short-term investments	304,832		—		(2,369)		302,463
Total financial assets	$	345,514	$	1	$	(2,455)	$	343,060


	As of December 31, 2021
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Market Value
Level 1:
Money Market Funds	$	15,329	$	—	$	—	$	15,329
Level 2:
U.S. government agency securities included in short-term investments	5,003		—		—		5,003
Corporate debt securities included in cash and cash equivalents and short-term investments	163,626		1		(202)		163,425
Total financial assets	$	183,958	$	1	$	(202)	$	183,757

The Company may sell certain of its short-term securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.

There were no liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021. The Company evaluates transfers between levels at the end of each reporting period and there have been no transfers between fair value measurement levels during the nine months ended September 30, 2022. In addition, there were no assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2022 and December 31, 2021.

As of September 30, 2022, the Company had not recorded any impairment related to other-than-temporary declines in the fair value of short-term investments. Short-term investments are considered impaired when a decline in fair value is judged to be other-than-temporary. The Company consults with its investment managers and considers available quantitative and qualitative evidence in evaluating potential impairment of its short-term investments on a quarterly basis. If the cost of an individual investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than cost and its intent and ability to hold the investment.

The Company records interest income and accretion income earned on Money Market Funds and U.S. Treasury, U.S. government agency and corporate debt securities to interest and other income, net in its condensed statement of operations and comprehensive loss.

- 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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