Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2023

8. Fair Value of Financial Instruments

Fair Value of Financial Instruments

The following tables summarize the Company’s financial instruments by significant investment category measured at fair value on a recurring basis within the fair value hierarchy (in thousands):


			Fair Value Measurements At Reporting Date Using
	Total		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2023
Cash and cash equivalents:
Money market funds	$	66,433	$	66,433	$	—	$	—
Total cash and cash equivalents	$	66,433	$	66,433	$	—	$	—

Short-term investments:
U.S. treasury securities	$	49,195	$	49,195	$	—	$	—
Total short-term investments	$	49,195	$	49,195	$	—	$	—

Total assets measured at fair value	$	115,628	$	115,628	$	—	$	—


			Fair Value Measurements At Reporting Date Using
	Total		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2022
Cash and cash equivalents:
Money market funds	$	53,894	$	53,894	$	—	$	—
Total cash and cash equivalents	$	53,894	$	53,894	$	—	$	—

Short-term investments:
U.S. treasury securities	$	84,475	$	84,475	$	—	$	—
Total short-term investments	$	84,475	$	84,475	$	—	$	—

Total assets measured at fair value	$	138,369	$	138,369	$	—	$	—

There were no transfers within the hierarchy and no changes in the valuation techniques used during the nine months ended September 30, 2023.

The following table summarizes available-for-sale securities (in thousands):


				As of September 30, 2023
	Maturity (in years)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Money market funds		$	66,433	$	—	$	—	$	66,433
Total cash and cash equivalents		$	66,433	$	—	$	—	$	66,433

Short-term investments:
U.S. treasury securities	1 or less	$	49,190	$	5	$	—	$	49,195
Total short-term investments		$	49,190	$	5	$	—	$	49,195

Total available-for-sale securities		$	115,623	$	5	$	—	$	115,628


				As of December 31, 2022
	Maturity (in years)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Cash and cash equivalents:
Money market funds		$	53,894	$	—	$	—		$	53,894
Total cash and cash equivalents		$	53,894	$	—	$	—		$	53,894

Short-term investments:
U.S. treasury securities	1 or less	$	84,977	$	—	$	(502	)	$	84,475
Total short-term investments		$	84,977	$	—	$	(502	)	$	84,475

Total available-for-sale securities		$	138,871	$	—	$	(502	)	$	138,369

As of September 30, 2023, none of the available-for-sale securities held have been in an unrealized loss position for greater than 12 months. The Company does not intend to sell these investments and it is not likely that the Company will be required to sell these investments before recovery of their amortized cost basis. No allowance for credit losses was recorded.

Debt

The 2014 Notes and 2019 Notes (collectively, the Convertible Notes) are not regularly traded. The estimated fair values for these securities represent Level III valuations since a fair value for these securities cannot be determined by using readily observable inputs or measures, such as market prices. Fair values were estimated using pricing models and risk-adjusted value ranges.

The estimated fair value of the Term Loan Facility also represents a Level III valuation since the value cannot be determined by using readily observable inputs or measures, such as market prices. The fair value of the Company's Term Loan Facility was estimated using a discounted cash flow model and current market interest rate data for similar loans.

The carrying value of the Company's lines of Term Loan Facility approximates fair value as interest rates applied to the underlying debt are adjusted quarterly to market interest rates. The carrying value of the Convertible Notes approximates fair value as the interest rate and terms are reflective of the rate the Company could obtain on debt with similar terms and conditions.

- 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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