XML 21 R9.htm IDEA: XBRL DOCUMENT v3.24.1.1.u2
Fair Value Measurements
3 Months Ended
Mar. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 3. Fair Value Measurements

The fair value of the Company's financial instruments reflects the amounts that the Company estimates that it would receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company discloses and recognizes the fair value of the assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active.

Level 3 - Inputs that are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company's financial instruments are carried in the accompanying condensed consolidated balance sheets at amounts that approximate fair value.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the quarter ended March 31, 2024 and December 31, 2023.

The Company elected the fair value option for the EIB Loan assumed as part of the EryDel Acquisition. The Company adjusted the EIB Loan to fair value through the change in fair value of debt in the accompanying consolidated statements of operations and comprehensive loss. Subsequent unrealized gains and losses on items for which the fair value option is elected are reported in earnings. The Company will breakout any change in value due to credit loss in accumulated other comprehensive loss. For the three months ended March 31, 2024 , there was no change in value due to credit loss.

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of March 31, 2024 and December 31, 2023 are presented in the following tables (in thousands):

 

 

Fair Value Measurements as of March 31, 2024

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

5,315

 

 

$

5,315

 

 

$

 

 

$

 

Certificates of Deposit

 

 

490

 

 

 

 

 

 

490

 

 

 

 

Government and agency notes

 

 

60,424

 

 

 

 

 

 

60,424

 

 

 

 

Total Assets

 

$

66,229

 

 

$

5,315

 

 

$

60,914

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

 

60,251

 

 

 

 

 

 

 

 

 

60,251

 

Long-term debt

 

 

13,518

 

 

 

 

 

 

 

 

 

13,518

 

Total

 

$

73,769

 

 

$

 

 

$

 

 

$

73,769

 

 

 

 

Fair Value Measurements as of December 31, 2023

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

4,285

 

 

$

4,285

 

 

$

 

 

$

 

Certificates of Deposit

 

 

729

 

 

 

 

 

 

729

 

 

 

 

Government and agency notes

 

 

68,524

 

 

 

3,971

 

 

 

64,553

 

 

 

 

Total Assets

 

$

73,538

 

 

$

8,256

 

 

$

65,282

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

 

57,706

 

 

 

 

 

 

 

 

 

57,706

 

Long-term debt

 

 

13,429

 

 

 

 

 

 

 

 

 

13,429

 

Total

 

$

71,135

 

 

$

 

 

$

 

 

$

71,135

 

The Company classifies certificates of deposit and government and agency notes as Level 2 investments as the Company uses quoted prices for similar assets sourced from certain third-party pricing services. The third-party pricing services generally utilize industry standard valuation models for which all significant inputs are observable, either directly or indirectly, to estimate the price or fair value of the securities. The primary input generally includes reported trades of or quotes on the same or similar securities. The Company does not make additional judgments or assumptions made to the pricing data sourced from the third-party pricing services.

Level 3 Assets and Liabilities

Contingent Consideration

The following table reflects the changes in present value of acquisition related accrued earnouts of contingent consideration liability using significant unobservable inputs (Level 3) for the three months ended March 31, 2024:

 

 

(in thousands)

 

Beginning Balance as of January 1, 2024

 

$

57,706

 

Change in fair value of contingent consideration

 

 

2,545

 

Ending Balance as of March 31, 2024

 

$

60,251

 

The following table summarizes the quantitative information including the unobservable inputs related to the Company's acquisition related accrued earnout as of March 31, 2024 (in thousands except for percentages):

 

 

March 31, 2024

 

 

Valuation Technique

 

Unobservable Input

 

Range (Input Used)

Contingent consideration

 

$

60,251

 

 

Expected present value

 

Probability of achieving
earnout objectives per the
 purchase agreement

 

0% - 100%

Long-term Debt

The following table presents the changes in the fair value of the Level 3 EIB Loan for the three months ended March 31, 2024:

 

 

(in thousands)

 

Beginning Balance as of January 1, 2024

 

$

13,429

 

Change in fair value

 

 

388

 

Due to foreign currency translation

 

 

(299

)

Ending Balance as of March 31, 2024

 

$

13,518

 

The following table summarizes the quantitative information including the unobservable inputs related to the Company's acquisition related long term debt as of March 31, 2024 (in thousands except for percentages):

 

 

 

March 31, 2024

 

 

Valuation Technique

 

Unobservable Input

 

Range (Input Used)

EIB loan

 

$

13,518

 

 

Expected present value

 

Credit quality of company
 and credit spreads for comparable debt

 

13%