FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2022

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

(3) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):

			Fair Value Measurements Using
			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
	2022		(Level 1)		(Level 2)		(level 3)
Assets:
Cash equivalents
Money market funds	$	17,201	$	17,201	$	—	$	—
Total cash equivalents		17,201		17,201		—		—
Short-term investments
U.S. Treasury bills		25,592		25,592		—		—
Commercial paper		80,188		—		80,188		—
Agency bond		14,379		—		14,379		—
Total short-term investments		120,159		25,592		94,567		—
Total fair value of assets	$	137,360	$	42,793	$	94,567	$	—

			Fair Value Measurements Using
			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2021		(Level 1)		(Level 2)		(level 3)
Assets:
Cash equivalents
Money market funds	$	39,653	$	39,653	$	—	$	—
Commercial paper		14,448		—		14,448		—
Total cash equivalents		54,101		39,653		14,448		—
Short-term investments
U.S. Treasury bills		25,135		25,135		—		—
Corporate debt securities		10,715		—		10,715		—
Commercial paper		77,328		—		77,328		—
Total short-term investments		113,178		25,135		88,043		—
Total fair value of assets	$	167,279	$	64,788	$	102,491	$	—

Cash Equivalents and Short-Term Investments

Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and short-term investments. Cash equivalents consisted of money market funds and commercial paper, and short-term investments consisted of U.S. Treasury bills, corporate debt securities and commercial paper. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers.

The following tables summarize the Company’s short-term investments (in thousands):

		As of September 30, 2022
				Gross		Gross
		Amortized		unrealized		unrealized		Estimated fair
	Maturity	cost		gains		losses		value
Commercial paper	1 year or less		80,379		2		(193)		80,188
U.S. Treasury bills	2 years or less		26,052		—		(460)		25,592
Agency bond	2 years or less		14,499		—		(120)		14,379
		$	120,930	$	2	$	(773)	$	120,159

		As of December 31, 2021
				Gross		Gross
		Amortized		unrealized		unrealized		Estimated fair
	Maturity	cost		gains		losses		value
Corporate debt securities	1 year or less	$	10,726	$	—	$	(11)	$	10,715
Commercial paper	1 year or less		77,328		9		(9)		77,328
U.S. Treasury bills	2 years or less		25,183		—		(48)		25,135
		$	113,237	$	9	$	(68)	$	113,178

The Company considers whether unrealized losses have resulted from a credit loss or other factors. The unrealized losses on the Company’s available-for-sale securities as of September 30, 2022 and December 31, 2021 were caused by fluctuations in market value and interest rates as a result of the economic environment and not credit risk. As of September 30, 2022 and December 31, 2021, no allowance for credit losses was recorded. During the nine months ended September 30, the Company did not recognize any impairment losses related to its short-term investments. It is neither management’s intention to sell nor is it more likely than not that the Company will be required to sell these investments prior to recovery of their cost basis or recovery of fair value. Unrealized gains and losses are included in accumulated other comprehensive loss. The Company excludes accrued interest from both the fair value and the amortized cost basis of the available-for-sale debt securities for the purposes of identifying and measuring an impairment and to not measure an allowance for expected credit losses for accrued interest receivables. Accrued interest receivable is written off through net realized investment gains (losses) at the time the issuer of the bond defaults or is expected to default on payment. It is the Company’s policy to present the accrued interest receivable balance as part of prepaid expenses and other current assets in the balance sheets. Accrued interest receivable related to short-term investments was $0.1 million as of September 30, 2022 and December 31, 2021.