Fair Value of Financial Assets and Liabilities

12 Months Ended

Sep. 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 September 30, 2020 and 2019 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:

	Fair Value Measurements at September 30, 2020 Using:
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	81,502	$	—	$	—	$	81,502
Marketable securities:
U.S. Treasury notes		94,208		—		—		94,208
Commercial paper		—		93,909		—		93,909
Corporate bonds		—		144,035		—		144,035
	$	175,710	$	237,944	$	—	$	413,654
Liabilities:
Series 1 nonconvertible preferred stock		—		—		1,479		1,479
	$	—	$	—	$	1,479	$	1,479

	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
Commercial paper		—		66,667		—		66,667
Corporate bonds		—		111,837		—		111,837
	$	215,084	$	178,504	$	—	$	393,588
Liabilities:
Series 1 nonconvertible preferred stock		—		—		1,628		1,628
	$	—	$	—	$	1,628	$	1,628

Cash equivalents at September 30, 2020 and 2019 consist of money market funds which are readily convertible to cash and with less than 90 days until maturity.

During the years ended September 30, 2020, 2019, and 2018, there were no transfers between Level 1, Level 2 and Level 3.

The outstanding shares of Series 1 nonconvertible preferred stock as of September 30, 2020 and 2019 were measured at fair value. These outstanding shares 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. The fair value of the outstanding shares were 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 liquidation. Changes in the fair values 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 warrant liability and Series 1 nonconvertible preferred stock using probability-weighted discounted cash flow include the following significant unobservable inputs:

	Range
	September 30,
Unobservable Input	2020	2019
Probabilities of payout	0%-60%	0%-60%
Discount rate	4.25%	6.00%

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
	(in thousands)
Balance, September 30, 2017	$	807		$	762
Warrants exercised		(766	)		766
Warrants expired		(41	)		—
Increase in fair value		—			100
Balance, September 30, 2018		—			1,628
Increase in fair value		—			—
Balance, September 30, 2019		—			1,628
Decrease in fair value		—			(149	)
Balance, September 30, 2020	$	—		$	1,479