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Fair Value Measurements
12 Months Ended
Dec. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements
4.
Fair Value Measurements

The Company classifies fair value-based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The Company’s financial assets and liabilities recognized at fair value on a recurring basis consisted of the following:

 

 

Fair Value as of December 31, 2023

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

(In thousands)

 

Cash equivalents and restricted cash equivalents

 

$

136,254

 

 

$

136,254

 

 

$

-

 

 

$

-

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and other government-backed securities

 

 

382,308

 

 

 

120,556

 

 

 

261,752

 

 

 

-

 

Financial institution debt securities

 

 

246,119

 

 

 

-

 

 

 

246,119

 

 

 

-

 

Corporate debt securities

 

 

97,408

 

 

 

-

 

 

 

97,408

 

 

 

-

 

Other asset-backed securities

 

 

59,504

 

 

 

-

 

 

 

59,504

 

 

 

-

 

Total marketable securities

 

 

785,339

 

 

 

120,556

 

 

 

664,783

 

 

 

-

 

                  Total

 

$

921,593

 

 

$

256,810

 

 

$

664,783

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value as of December 31, 2022

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

(In thousands)

 

Cash equivalents and restricted cash equivalents

 

$

534,581

 

 

$

534,581

 

 

$

-

 

 

$

-

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and other government-backed securities

 

 

242,686

 

 

 

172,939

 

 

 

69,747

 

 

 

-

 

Financial institution debt securities

 

 

379,861

 

 

 

-

 

 

 

379,861

 

 

 

-

 

Corporate debt securities

 

 

101,550

 

 

 

-

 

 

 

101,550

 

 

 

-

 

Other asset-backed securities

 

 

14,357

 

 

 

-

 

 

 

14,357

 

 

 

-

 

Total marketable securities

 

 

738,454

 

 

 

172,939

 

 

 

565,515

 

 

 

-

 

                  Total

 

$

1,273,035

 

 

$

707,520

 

 

$

565,515

 

 

$

-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

24,026

 

 

$

-

 

 

$

-

 

 

$

24,026

 

Certain of the Company’s financial assets, including cash equivalents, restricted cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third party pricing services or other observable market data. The pricing services utilize industry standard valuation models and observable market inputs to determine value.

Other financial instruments, including accounts receivable, accounts payable and accrued expense, are carried at cost, which approximates fair value due to the short duration and term to maturity.

Level 3 Assets and Liabilities

Equity-Method Investments

The Company’s equity-method investment in AvenCell is classified as a Level 3 asset and is not included in the fair value table above as it is not valued at fair value on a recurring basis. Refer to Note 10 for further details. The carrying value of the Company’s equity-method investment as of December 31, 2023 and 2022 was $11.8 million and $32.5 million, respectively.

Other Investments

The Company’s other investments are classified as Level 3 assets and are not included in the fair value table above as they are not valued at fair value on a recurring basis .

The Company’s investment in SparingVision was initially recorded at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. The SparingVision investment is included in “Investments and other assets” on the consolidated balance sheets. This investment is accounted for using the measurement alternative at cost minus impairment adjusted for changes in observable prices. There were no changes in observable prices or impairment of this investment as of December 31, 2023 or 2022. The carrying value of the SparingVision investment was $14.8 million as of December 31, 2023 and 2022. Refer to Note 10 for further details.

The Company’s investment in Kyverna was initially recorded at cost, which is representative of fair value. The Kyverna investment is included in “Investments and other assets” on the consolidated balance sheets. This investment is accounted for using the measurement alternative at cost minus impairment adjusted for changes in observable prices. There were no changes in observable prices or impairment of this investment as of December 31, 2023 or 2022. The carrying value of the Kyverna investment was $10.0 million as of December 31, 2023 and 2022. Refer to Note 10 for further details.

Contingent Consideration

As discussed further in Note 11, as part of its acquisition of Rewrite, the Company made a $25.0 million research milestone payment in February of 2023, payable in a combination of $0.9 million in cash and the remainder in the Company’s common stock. The milestone payable in the Company’s common stock resulted in liability classification under ASC 480. This contingent consideration liability was carried at fair value which was estimated by applying a probability-based model, which utilized inputs based on timing of achievements that were unobservable in the market. The contingent consideration liability was classified within Level 3 of the fair value hierarchy until it was settled in February of 2023.

The following table reconciles the change in fair value of the contingent consideration liability based on the level 3 inputs listed below for the years ended December 31, 2023 and 2022 (in thousands):

Balance at February 2, 2022 (at inception)

$

10,541

 

Change in fair value

 

13,485

 

Balance at December 31, 2022

 

24,026

 

Change in fair value

 

100

 

Payment of contingent consideration

 

(24,126

)

Balance at December 31, 2023

$

-

 

 

 

As of inception (February 2, 2022)

As of December 31, 2022

Discount rate

7%

10.1%

Probability of achievement

50%

100%

Projected year of achievement

2024

2023