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Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Measurements

Fair Value Measurements

16. Fair Value Measurements

Financial instruments of the Company primarily consist of cash and cash equivalents, investment in equity securities, accounts receivable, long-term investments, accounts payable, accrued liabilities, notes payable and bank borrowings. As of June 30, 2022 and December 31, 2021, the carrying amount of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, notes payable and bank borrowings were carried at cost which approximates their fair values due to the short-term nature of the instruments.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the hierarchy.

The Company has equity investments in the common stock of two publicly traded companies. The Company’s investments in these equity securities are carried at their estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period. The fair value of the common stock is based on quoted market price for the investees’ common stock, a Level 1 input.

The Company has an equity investment in the warrants of a publicly traded company. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period. The fair value of the warrants was measured using observable market-based inputs other than quoted prices in active markets for identical assets, level 2 inputs. The Company uses the Black-Scholes-Merton valuation model to estimate the fair value of warrants. Option valuation models, including Black-Scholes-Merton, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the fair value determination of a warrant.

The Company has an investment in the convertible debt of Alesta Therapeutics B.V.. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period using Level 3 input.

The Company has an investment in the convertible debt of Cleave. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period using Level 3 input. The unpaid balance for this convertible debt amounted to $5.7 million and $5.6 million as of June 30, 2022 and December 31, 2021, respectively.

The following tables present the Company’s financial assets accounted for at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy:


(In thousands)		Fair Value at
Description		June 30, 2022			Level 1			Level 2			Level 3
Investments classified as Current and non-Current Assets
Investments in common stock		$	5,705		$	5,705		$	—		$	—
Investment in warrants - Designated as investment measured at FVTPL		$	486		$	—		$	486		$	—
Investment in convertible loan - AFS		$	274		$	—		$	—		$	274
Investment in convertible loan - Designated as investment measured at FVTPL		$	5,842		$	—		$	—		$	5,842

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value at			Valuation			Unobservable
Description		June 30, 2022			Techniques			Input			Average/Median
Investment in convertible loan - Designated as investment measured at FVTPL		$	5,842			Discounted cash flow			Discount rate			20%/20%


(In thousands)		Fair Value at
Description		December 31, 2021			Level 1			Level 2			Level 3
Investments classified as Current and non-Current Assets
Investments in common stock		$	9,868		$	9,868		$	—		$	—
Investment in warrants - Designated as investment measured at FVTPL		$	591		$	—		$	591		$	—
Investment in convertible loan - AFS		$	268		$	—		$	—		$	268
Investment in convertible loan - Designated as investment measured at FVTPL		$	5,576		$	—		$	—		$	5,576

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value at			Valuation			Unobservable
Description		December 31, 2021			Techniques			Input			Average/Median
Investment in convertible loan - Designated as investment measured at FVTPL		$	5,576			Discounted cash flow			Discount rate			20%/20%

Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company measures equity investments without readily determinable fair values at its cost, minus impairment, if any, plus or minus changes resulting from observable transactions of identical or similar securities of the same issuer.

Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company had no non-financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2022.

Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company had no non-financial assets and liabilities that are measured at fair value on a non-recurring basis as of June 30, 2022.

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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