Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 - Inputs other than quoted market prices included in Level 1 are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 - Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy:


		June 30, 2022
	Valuation Hierarchy	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
		(In thousands)
Assets:
Cash equivalents:
Money market funds	Level 1	$	26,265	$	—	$	—		$	26,265
Commercial paper	Level 2		3,746		—		(1	)		3,745
Marketable securities:
U.S. treasuries	Level 1		88,636		6		(549	)		88,093
Commercial paper	Level 2		55,473		4		(141	)		55,336
Government agencies bonds	Level 2		6,535		—		(58	)		6,477
Total financial assets		$	180,655	$	10	$	(749	)	$	179,916


		December 31, 2021
	Valuation Hierarchy	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
		(In thousands)
Assets:
Cash equivalents:
Money market funds	Level 1	$	37,129	$	—	$	—		$	37,129
Marketable securities:
U.S. treasuries	Level 1		78,097		—		(85	)		78,012
Commercial paper	Level 2		121,634		—		(50	)		121,584
Corporate bonds	Level 2		8,979		—		(3	)		8,976
Government agencies bonds	Level 2		4,602		—		(3	)		4,599
Total financial assets		$	250,441	$	—	$	(141	)	$	250,300

Money market funds are classified as Level 1 because they are valued using quoted market prices in active markets for identical assets. Financial instruments classified within Level 2 of the fair value hierarchy are valued based on observable inputs or can be derived from non-binding quotes from the Company’s investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, or historical pricing trends of a security relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company considers the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.

The Company believes it is more likely than not that its marketable securities 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 June 30, 2022, all available-for-sale marketable securities had remaining maturities of less than one year.

The carrying amount of our remaining financial assets and liabilities, which include cash, receivables and payables, approximate their fair values due to their short-term nature.

- 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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