Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3—Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis – The following assets and liabilities are measured at fair value on a recurring basis as of December 31, 2022 and December 31, 2021:


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents
Money market funds	$	13,141	$	—	$	—	$	13,141
Commercial paper		—		323		—		323
Corporate debt		—		2,197		—		2,197
Yankee CD		—		550		—		550
Short-term marketable securities at fair value
U.S. treasury and government agencies		12,873		3,570		—		16,443
Corporate debt		—		23,372		—		23,372
Asset-backed securities		—		13,896		—		13,896
Yankee CD		—		8,068		—		8,068
Total	$	26,014	$	51,976	$	—	$	77,990


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	105,220	$	—	$	—	$	105,220
Total	$	105,220	$	—	$	—	$	105,220
Liabilities:
Derivative liability	$	—	$	—	$	173	$	173
Total	$	—	$	—	$	173	$	173

The carrying amounts of the Company’s money market funds classified as cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate their fair value due to the short-term nature of these assets and liabilities. The derivative liability is carried at fair value based on unobservable market inputs. Based on the borrowing rates currently available to the Company for debt with similar terms and consideration of default and credit risk, the carrying value of the term loan approximates their fair value.

The Company's available for sale securities portfolio consists of investments in U.S. treasury and government agency securities, commercial paper, corporate debt securities, asset-backed securities, and Yankee CDs. Yankee CDs are certificates of deposit issued in the United States by a branch of a foreign bank and are denominated in U.S. dollars. The fair value of level 1 securities is determined on trade prices in active markets for identical assets. The fair value of level 2 securities is determined using valuation models using inputs that are observable either directly or indirectly, such as quoted prices for similar assets, interest rates, yield curves, credit spreads, default rates, loss severity, broker and dealer quotes, as well as other relevant economic measures.

As discussed in Note 6, in July 2020, the Company entered into a term loan facility with CR Group LP ("CRG") and accounted for embedded features in the agreement as a derivative liability with an initial fair value of $0.2 million that was a level 3 valuation. The derivative liability was accounted for at fair value using the income approach and inputs consisting of (i) the probability of events occurring that trigger an event of default of the Company’s term loans under the CRG term loan facility, ranging from 1% to 2%, (ii) the prepayment premium payable upon early redemption, and (iii) additional interest payable upon an event of default. The change in fair value of the derivative liability was $0.2 million and $0.1 million in the years ended December 31, 2022 and 2021, respectively, and was recorded as a component of other expense, net in the statements of operations and comprehensive loss. There was no adjustment to the fair value of the derivative liability recognized in net loss for the year ended December 31, 2020.

There were no assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2022 and December 31, 2021.