Fair Value Measurements

12 Months Ended

Dec. 31, 2021

Fair Value Measurements

3.Fair Value Measurements

Fair Value Measured on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2021 and 2020:

	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	460,936	$	—	$	—	$	460,936
Liabilities:
Contingent consideration - earnout obligation	$	—	$	—	$	94,238	$	94,238
	As of December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	549,030	$	—	$	—	$	549,030

Cash and cash equivalents

As of December 31, 2021 and 2020, cash and cash equivalents on the Company’s consolidated balance sheets included $460.9 million and $549.0 million, respectively, in money market accounts. These funds are valued on a recurring basis using Level 1 inputs.

Contingent Consideration – Earnout

On September 20, 2021, the Company completed the acquisition of Avitide (the "Avitide Acquisition"), a privately-held affinity ligand discovery and development company headquartered in Lebanon, New Hampshire. The transaction consisted of upfront payments of $150.0 million and up to an additional $125.0 million (undiscounted) in contingent consideration earnout payments made equally in cash and the Company's common stock over a three-year performance period beginning January 1, 2022 and ending December 31, 2024. See Note 4, "Acquisitions" below for additional information.

A reconciliation of the change in fair value of contingent consideration – earnout is included in the following table (amounts in thousands):

Balance as of December 31, 2020	$	—
Acquisition date fair value of contingent consideration - earnout		88,373
Contingent consideration expense		5,865
Balance as of December 31, 2021	$	94,238

The recurring Level 3 fair value measurement of our contingent consideration – earnout that we expect to be required to settle, include the following significant unobservable inputs:

Contingent Consideration Earnout	Fair Value as of  December 31, 2021 (amounts in thousands)		Valuation Technique	Unobservable Input	Range	Weighted Average(1)
				Probability of
Commercialization-based			Monte Carlo	Success	100%	100%
payments	$	29,717	Simulation	Earnout Discount Rate	1.6%-2.4%	2%
				Volatility	22.8%	22.8%
Revenue and Volume-			Monte Carlo	Revenue & Volume
based payments	$	64,521	Simulation	Discount Rate	7.1%	7.1%
				Earnout Discount Rate	1.6%-2.4%	2%

(1)Unobservable inputs were weighted by the relative fair value of the contingent consideration liability.

The Company estimates the fair value of the contingent consideration earnouts using a Monte Carlo simulation. Changes in the projected performance of the acquired business could result in a higher or lower contingent consideration obligation in the future.

During the fourth quarter of 2021, we recorded a contingent consideration expense of $5.9 million to the Company’s consolidated statement of comprehensive income.

Fair Value Measured on a Nonrecurring Basis

During 2021, there were no re-measurements to fair value of financial assets and liabilities that are measured at fair value on a nonrecurring basis.

Convertible Senior Notes

In July 2019, the Company issued $287.5 million aggregate principal amount of the Company’s 0.375% Convertible Senior Notes due July 15, 2024 (the “2019 Notes”). Interest is payable semi-annually in arrears on January 15 and July 15 of each year. The 2019 Notes will mature on July 15, 2024 unless earlier converted or repurchased in accordance with their terms. At December 31, 2021 and 2020, the carrying value of the 2019 Notes was $255.3 million and $243.7 million, respectively, net of unamortized discount, and the fair value of the 2019 Notes was $678.5 million and $501.0 million, respectively. The fair value of the 2019 Notes is a Level 1 valuation and was determined based on the most recent trade activity of the 2019 Notes as of December 31, 2021. The 2019 Notes are discussed in more detail in Note 13, “Convertible Senior Notes,” to these consolidated financial statements.

There were no remeasurements to fair value during the year ended December 31, 2021 of financial assets and liabilities that are not measured at fair value on a recurring basis.