Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

The Company determines the fair value of financial and non-financial assets and liabilities based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels as follows:

• Level 1: Quoted prices in active markets for identical instruments

• Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments)

• Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments)

The carrying amounts of financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other current assets, accounts payable, accrued compensation, accrued and other current liabilities approximate the related fair values due to the short maturities of these instruments. As the long-term debt is subject to variable interest rates that are based on market rates which are regularly reset, considering level 2 inputs, the Company believes the carrying value of the long-term debt approximates its fair value.

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows (in thousands):

	March 31, 2021
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	23,040	$	23,040	$	—	$	—
Total cash equivalents		23,040		23,040		—		—
Short-term marketable securities:
U.S. government debt securities		17,561		—		17,561		—
U.S. treasuries		56,056		—		56,056		—
Total short-term marketable securities		73,617		—		73,617		—
Long-term marketable securities:
U.S. treasuries		8,789		—		8,789		—
U.S. government debt securities		1,001		—		1,001		—
Total long-term marketable securities		9,790		—		9,790		—
Total assets subject to fair value measurements    on a recurring basis	$	106,447	$	23,040	$	83,407	$	—

	December 31, 2020
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	13,686	$	13,686	$	—	$	—
Total cash equivalents		13,686		13,686		—		—
Short-term marketable securities:
U.S. treasuries		55,349		—		55,349		—
U.S. and foreign commercial paper		11,999		—		11,999		—
U.S. and foreign corporate debt securities		1,001		—		1,001		—
U.S. government debt securities		11,543		—		11,543		—
Total short-term marketable securities		79,892		—		79,892		—
Long-term marketable securities:
U.S. treasuries		7,370		—		7,370		—
U.S. government debt securities		10,501		—		10,501		—
Total long-term marketable securities		17,871		—		17,871		—
Total assets subject to fair value measurements    on a recurring basis	$	111,449	$	13,686	$	97,763	$	—

The Company estimates the fair value of its money market funds, U.S. and foreign commercial paper, U.S. and foreign corporate debt securities, U.S. treasuries and U.S. government debt securities by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs. See Note 4, “Marketable Securities,” for further information regarding the carrying value of the Company's financial instruments. 

The Company had previously recorded a contingent consideration liability related to three agreements (the “Commercial Agreements”) with Ascentage Pharma Group Corp. Limited, a clinical-stage biopharmaceutical company based in Hong Kong China (“Ascentage Pharma”). See Note 5, “License Agreements and Strategic Investment”. The fair value of the contingent consideration liability at December 31, 2019 included inputs not observable in the market and thus represented a Level 3 measurement. The probability of achieving the defined milestone events under the Commercial Agreements was estimated on a quarterly basis by the Company’s management using a probability-weighted valuation approach model which utilized current stock price and reflected the probability and timing of future issuances of shares. As a result of settlements and changes made to the Commercial Agreements, there was no contingent consideration liability at March 31, 2021 and December 31, 2020.

The following table provides a reconciliation of the Company’s financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at March 31, 2020 (in thousands):

	Amount
Balance at December 31, 2019	$	1,131
Additions		—
Settlements		—
Change in fair value		(221	)
Balance at March 31, 2020	$	910

There were no transfers into and out of Level 3 of the fair value hierarchy during the three months ended March 31, 2021 and 2020.