Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Note 3. Fair Value Measurements

The Company records certain financial assets and liabilities at fair value. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. 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:

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Level 1: Inputs which include quoted prices in active markets for identical assets and liabilities.

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Level 2: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s primary financial instruments include cash, cash equivalents, short- and long-term investments, prepaid expenses, accounts payable, and accrued liabilities. The carrying amounts of the Company’s financial

instruments, other than cash equivalents, short- and long-term investments, approximate fair value due to their relatively short maturities.

The following table presents the Company’s financial assets, which consist of cash equivalents and investments classified as available-for-sale investments, that are measured at fair value on a recurring basis (in thousands):


	June 30, 2022
	Level	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Cash equivalents:
Money market funds	Level 1	$	392	$	—	$	—		$	392
Commercial paper	Level 2		21,237		—		(9	)		21,228
U.S. Government agency securities	Level 2		4,991		—		—			4,991
Short-term investments:
U.S. Treasury securities	Level 1		34,850		—		(243	)		34,607
Commercial paper	Level 2		35,260		1		(96	)		35,165
Asset-backed securities	Level 2		3,009		—		(8	)		3,001
Long-term investments:
U.S. Treasury securities	Level 1		2,433		—		(14	)		2,419
Total		$	102,172	$	1	$	(370	)	$	101,803


	December 31, 2021
	Level	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Cash equivalents:
Money market funds	Level 1	$	3,567	$	—	$	—		$	3,567
Commercial paper	Level 2		2,999		—		—			2,999
Corporate debt securities	Level 2		1,501		—		—			1,501
Short-term investments:
U.S. Treasury securities	Level 1		4,500		—		(11	)		4,489
Commercial paper	Level 2		33,716		4		(5	)		33,715
Asset-backed securities	Level 2		8,261		—		(7	)		8,254
Long-term investments:
U.S. Treasury securities	Level 1		3,494		—		(8	)		3,486
Total		$	58,038	$	4	$	(31	)	$	58,011

For the six months ended June 30, 2022 and 2021, there were no other-than-temporary impairment charges recognized in accumulated other comprehensive income.

The Company classifies its money market funds and U.S. Treasury securities, which are valued based on quoted market prices in active markets with no valuation adjustment, as Level 1 assets within the fair value hierarchy.

The Company classifies its investments in commercial paper, corporate debt securities and asset- backed-securities as Level 2 within the fair value hierarchy. The fair values of these investments are estimated by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs. There were no transfers of financial instruments between valuation levels during the six months ended June 30, 2022.

As of June 30, 2022, none of the Company’s available-for-sale investments that were in an unrealized loss position had been in an unrealized loss position for more than 12 months. During the six months ended June 30, 2022 and 2021, the Company did not sell any available-for-sale investments.

The Company’s short-term investments had maturities of less than one year from the balance sheet date. The Company’s long-term investments had maturities of between one and two years from the balance sheet date.