Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 3. Fair Value of Financial Instruments

The following is a summary of our marketable security portfolio for the periods presented (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized (Losses)		Estimated Fair Value
December 31, 2024
Debt securities (government)	$	469,917	$	971	$	(625)	$	470,263
December 31, 2023
Debt securities (government)	$	442,816	$	450	$	(599)	$	442,667

The table below summarizes the contractual maturities of our available-for-sale debt securities as of December 31, 2024 (in thousands):

	Total		Less than 1 Year		1-5 Years
Fair value of debt securities (government)	$	470,263	$	265,135	$	205,128

Debt security assets were assessed for risk of expected credit losses per our accounting policy as described in Note 1. As of December 31, 2024 and 2023, the available-for-sale debt securities were held in U.S.-government backed securities and in Treasury bonds and were assessed on an individual security basis to have a de minimis risk of credit loss.

Fair Value Measurements

FASB accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (“the exit price”) in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value, we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities.

Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.

Recurring Fair Value Measurements

Our marketable securities consist of investments in U.S. government debt securities that are classified as available-for-sale.

At December 31, 2024 and 2023, our Level 2 U.S. government debt securities were valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of investments. Our long term equity investments classified as Level 1 were valued using their respective closing stock prices on The Nasdaq Stock Market. We did not experience any transfers of financial instruments between the fair value hierarchy levels during the years ended December 31, 2024 and 2023.

The following fair value hierarchy table presents information about each major category of our financial assets measured at fair value on a recurring basis (in thousands):

	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2024
Cash and cash equivalents	$	1,687,829	$	—	$	—	$	1,687,829
Debt securities (government)	—		470,263		—		470,263
Long term equity investments (Note 7)	18,814		—		—		18,814
Total assets	$	1,706,643	$	470,263	$	—	$	2,176,906

	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2023
Cash and cash equivalents	$	3,213,376	$	—	$	—	$	3,213,376
Debt securities (government)	—		442,667		—		442,667
Long term equity investments (Note 7)	187,716		—		—		187,716
Total assets	$	3,401,092	$	442,667	$	—	$	3,843,759

The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis (in thousands):

	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2024
Acquisition-related contingent consideration	$	—	$	—	$	193,000	$	193,000
Total liabilities	$	—	$	—	$	193,000	$	193,000

	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2023
Acquisition-related contingent consideration	$	—	$	—	$	212,000	$	212,000
Total liabilities	$	—	$	—	$	212,000	$	212,000

The following is a roll forward of our Level 3 liabilities (in thousands):

	2024		2023
Balance at January 1,	$	212,000	$	221,000
Contingent consideration earned during the period but not yet paid	(9,956)		(10,260)
Payments made during the period	(28,847)		(27,942)
Change in fair value of contingent consideration	19,803		29,202
Balance at December 31,	$	193,000	$	212,000

The initial fair value of the contingent consideration was determined on the date of acquisition, June 1, 2016, using an income approach based on projected future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment over 18 years, and discounted to present value at a rate of 10%. The fair value of the contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations. The valuation inputs utilized to estimate the fair value of the contingent consideration as of December 31, 2024 and 2023 included a discount rate of 10% and updated projections of future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment. The loss on change in fair value of the contingent consideration during the years ended December 31, 2024 and 2023 was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of ICLUSIG and the passage of time.

We generally make payments to Takeda quarterly based on the royalties earned in the previous quarter. As of December 31, 2024 and 2023, contingent consideration earned but not yet paid was $10.0 million and $10.3 million, respectively, and was included in accrued and other current liabilities.

Non-Recurring Fair Value Measurements

During the years ended December 31, 2024 and 2023, there were no measurements required for any assets or liabilities at fair value on a non-recurring basis.