Fair Value of Financial Assets and Liabilities

6 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

3.Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial assets and liabilities that were subject to fair value measurement on a recurring basis as of March 31, 2018 and September 30, 2017 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:

	Fair Value Measurements at March 31, 2018 Using:
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	24,465	$	—	$	—	$	24,465
U.S. Treasury notes		14,493		—		—		14,493
Commercial paper		—		9,980		—		9,980
Corporate bonds		—		2,594		—		2,594
Marketable securities:
U.S. Treasury notes		32,633		—		—		32,633
Corporate bonds		—		162,037		—		162,037
Commercial paper		—		27,313		—		27,313
	$	71,591	$	201,924	$	—	$	273,515
Liabilities:
Series 1 nonconvertible preferred stock	$	—	$	—	$	1,528	$	1,528
	$	—	$	—	$	1,528	$	1,528

	Fair Value Measurements at September 30, 2017 Using:
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	19,863	$	—	$	—	$	19,863
Commercial paper		—		29,756		—		29,756
Corporate bonds		—		3,000		—		3,000
Marketable securities:
U.S. Treasury notes		60,843		—		—		60,843
Corporate bonds		—		150,731		—		150,731
Commercial paper		—		12,458		—		12,458
U.S. Agency bonds		—		4,000		—		4,000
	$	80,706	$	199,945	$	—	$	280,651
Liabilities:
Warrant liability	$	—	$	—	$	807	$	807
Series 1 nonconvertible preferred stock		—		—		762		762
	$	—	$	—	$	1,569	$	1,569

During the six months ended March 31, 2018 and 2017, there were no transfers between Level 1, Level 2 and Level 3.

As of September 30, 2017, the Company’s warrant liability was comprised of the value of warrants for the purchase of its Series 1 nonconvertible preferred stock. These warrants were financial instruments that might have required a transfer of assets because of the liquidation features in the contract and were therefore recorded as liabilities and measured at fair value. These warrants expired on October 4, 2017, and are therefore no longer outstanding. The outstanding shares of Series 1 nonconvertible preferred stock are also measured at fair value. The fair value of both these instruments was based on significant inputs not observable in the market, which represented a Level 3 measurement within the fair value hierarchy. The Company utilized a probability-weighted valuation model which takes into consideration various outcomes that may require the Company to transfer assets upon exercise. Changes in the fair value of the warrant liability and Series 1 nonconvertible preferred stock are recognized in other income (expense), net in the consolidated statements of operations.

The recurring Level 3 fair value measurements of the Company’s outstanding warrant liability and Series 1 nonconvertible preferred stock using probability-weighted discounted cash flow include the following significant unobservable inputs:

		Range (Weighted Average)
		March 31,	September 30,
	Unobservable Input	2018	2017
Warrant liability and Series 1 nonconvertible preferred stock	Probabilities of payout	0%-65%	0%-65%
	Discount rate	5.25%	5.25%

The following table provides a rollforward of the aggregate fair values of the Company’s warrants for the purchase of Series 1 nonconvertible preferred stock and the outstanding Series 1 nonconvertible preferred stock for which fair value is determined by Level 3 inputs:

	Warrant Liability			Series 1 Nonconvertible Preferred Stock
Balance, September 30, 2017	$	807		$	762
Warrants exercised		(766	)		766
Warrants expired		(41	)		—
Balance, March 31, 2018	$	—		$	1,528