FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Summary of assets and liabilities measured at fair value on a recurring basis

The following tables set forth the carrying amounts and fair values of the Company's financial instruments measured at fair value on a recurring basis as of December 31, 2019 and 2018 (in thousands):



	December 31, 2019
					Fair Value Measurement Based on
	Carrying Amount		Fair Value		Quoted Prices in Active Markets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (cash equivalents)	$	31,146	$	31,146	$	31,146	$	—	$	—
Liabilities:
Contingent consideration	$	120,020	$	120,020	$	—	$	—	$	120,020



	December 31, 2018
					Fair Value Measurement Based on
	Carrying Amount		Fair Value		Quoted Prices in Active Markets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (cash equivalents)	$	40,365	$	40,365	$	40,365	$	—	$	—
Liabilities:
Contingent consideration	$	48,400	$	48,400	$	—	$	—	$	48,400

Summary of Contingent Consideration Liability

The following table sets forth a summary by quarter of the change in the fair value of the Company's contingent consideration liability, measured on a recurring basis at each reporting period, for the year ended December 31, 2019 (in thousands):



Balance at December 31, 2018	$	48,400
Change in fair value included in loss	(1,000		)
Balance at March 31, 2019	47,400
Change in fair value included in loss⁽¹⁾	44,000
Balance at June 30, 2019	91,400
Change in fair value included in loss⁽²⁾	3,600
Balance at September 30, 2019	95,000
Change in fair value included in loss⁽³⁾	25,020
Balance at December 31, 2019	$	120,020

⁽¹⁾During the quarter ended June 30, 2019, management reassessed the total addressable global market for high-risk NMIBC and determined that both the global market size and the estimated potential Vicinium commercial sales within the global market were likely higher than the Company’s previous estimates. Specific drivers of the increased revenue estimates include the expectation that Vicinium could achieve peak market penetration earlier than previously estimated and the expectation that Vicinium sales outside the United States could be two to three times the expected sales volumes in the United States. As contingent consideration incorporates a royalty rate of 2% on all commercial net sales of Vicinium through December 2033, an increase in expected future net sales correlated to a $44.0 million increase in the estimated fair value of the Company’s contingent consideration as of June 30, 2019.

⁽²⁾The $3.6 million increase in the estimated fair value of contingent consideration was primarily attributable to a slightly lower discount rate, based on prevailing market conditions as of September 30, 2019, applicable to the earnout royalty payments potentially payable to Viventia's shareholders under the Share Purchase Agreement.

⁽³⁾The $25.0 million increase in the estimated fair value of contingent consideration was primarily attributable to increases in management's assumptions for both the estimated United States market share for Vicinium for the treatment of high-risk NMIBC, if approved, and the probability of success for achieving marketing approval by the FDA, based on expert commentary from a December 2019 public hearing of the FDA's Oncologic Drugs Advisory Committee during a review a competitor's product.