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Fair Value of Financial Assets and Liabilities
9 Months Ended
Jun. 30, 2020
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 June 30, 2020 and September 30, 2019, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:

 

 

 

Fair Value Measurements at June 30, 2020 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

(in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

87,608

 

 

$

 

 

$

 

 

$

87,608

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury notes

 

 

139,902

 

 

 

 

 

 

 

 

 

139,902

 

Commercial paper

 

 

 

 

 

57,824

 

 

 

 

 

 

57,824

 

Corporate bonds

 

 

 

 

 

137,823

 

 

 

 

 

 

137,823

 

 

 

$

227,510

 

 

$

195,647

 

 

$

 

 

$

423,157

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series 1 nonconvertible preferred stock

 

$

 

 

$

 

 

$

1,628

 

 

$

1,628

 

 

 

$

 

 

$

 

 

$

1,628

 

 

$

1,628

 

 

 

 

Fair Value Measurements at September 30, 2019 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

(in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

44,569

 

 

$

 

 

$

 

 

$

44,569

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury notes

 

 

170,515

 

 

 

 

 

 

 

 

 

170,515

 

Corporate bonds

 

 

 

 

 

111,837

 

 

 

 

 

 

111,837

 

Commercial paper

 

 

 

 

 

66,667

 

 

 

 

 

 

66,667

 

 

 

$

215,084

 

 

$

178,504

 

 

$

 

 

$

393,588

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series 1 nonconvertible preferred stock

 

$

 

 

$

 

 

$

1,628

 

 

$

1,628

 

 

 

$

 

 

$

 

 

$

1,628

 

 

$

1,628

 

 

During the nine months ended June 30, 2020 and 2019, there were no transfers between Level 1, Level 2 and Level 3.

The outstanding shares of Series 1 nonconvertible preferred stock are measured at fair value. The fair value of 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 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 Series 1 nonconvertible preferred stock using probability-weighted discounted cash flow include the following significant unobservable inputs:

 

 

 

Range (Weighted Average)

 

 

June 30,

 

September 30,

Unobservable Input

 

2020

 

2019

Probabilities of payout

 

0%-60%

 

0%-60%

Discount rate

 

6.00%

 

6.00%

 

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

 

 

 

Series 1

Nonconvertible

Preferred

Stock

 

Balance, September 30, 2019

 

$

1,628

 

Change in fair value of nonconvertible preferred stock

 

 

 

Balance, June 30, 2020

 

$

1,628