Fair Value Measurements

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

2. Fair Value Measurements

The carrying amounts of cash equivalents, prepaid and other assets, accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. Investment securities are recorded at fair value.

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial assets measured at fair value on a recurring basis consist of investment securities. Investment securities are recorded at fair value, defined as the exit price in the principal market in which we would transact, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data, or discounted cash flow techniques and include our investments in commercial paper, corporate debt securities and U.S. government agencies securities. We have no financial liabilities measured at fair value on a recurring basis. None of our non-financial assets and liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.

Assets measured at fair value on a recurring basis are as follows (in thousands):

			Fair Value Measurements 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 June 30, 2024
Assets:
Current:
Cash equivalents	$	5,083	$	5,083	$	—	$	—
Available-for-sale investments:
Commercial paper		41,173		—		41,173		—
Corporate debt securities		23,562		—		23,562		—
U.S. government agencies		6,942		—		6,942		—
Total available-for-sale investments		71,677		—		71,677		—
Total assets measured at fair value	$	76,760	$	5,083	$	71,677	$	—

			Fair Value Measurements 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, 2023
Assets:
Current:
Cash equivalents	$	21,626	$	21,626	$	—	$	—
Available-for-sale investments:
Commercial paper		31,198		—		31,198		—
Corporate debt securities		27,578		—		27,578		—
U.S. government agencies		16,846		—		16,846		—
Total available-for-sale investments		75,622		—		75,622		—
Total assets measured at fair value	$	97,248	$	21,626	$	75,622	$	—

As of June 30, 2024 and December 31, 2023, available-for-sale investments are detailed as follows (in thousands):

		June 30, 2024
	Contractual Maturity	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Available-for-sale investments:
Commercial paper	Within 1 year	$	41,245	$	—	$	(72	)	$	41,173
Corporate debt securities	Within 1 year		23,603		—		(41	)		23,562
U.S. government agencies	Within 1 year		6,947		1		(6	)		6,942
		$	71,795	$	1	$	(119	)	$	71,677

		December 31, 2023
	Contractual Maturity	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Available-for-sale investments:
Commercial paper	Within 1 year	$	31,198	$	14	$	(14	)	$	31,198
Corporate debt securities	Within 2 years		27,607		12		(41	)		27,578
U.S. government agencies	Within 1 year		16,841		26		(21	)		16,846
		$	75,646	$	52	$	(76	)	$	75,622

We evaluate our available-for-sale debt securities for credit losses when the amortized cost basis exceeds fair value. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive income (loss). When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. We recorded no allowance for credit losses in the unaudited interim condensed consolidated statements of operations and comprehensive loss during the six months ended June 30, 2024.

As of June 30, 2024, all available-for-sale investments had a variety of effective maturity dates of less than one year. As of June 30, 2024, 25 out of 27 available-for-sale investments were in a gross unrealized loss position of which four available-for-sale investments with a market value of $8.0 million were in such position for greater than 12 months.

As of June 30, 2024 and December 31, 2023, accrued interest receivable on available-for-sale securities for each of the period-ended was $0.3 million.