Fair value of financial assets and liabilities

6 Months Ended

Jun. 30, 2021

Fair value of financial assets and liabilities

Fair value of financial assets and liabilities

3.            Fair value of financial assets and liabilities

Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

● Level 1—Quoted prices in active markets for identical assets or liabilities.

● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

● Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The following is a summary of our financial assets measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020:

	June 30, 2021
	Total		Level 1		Level 2		Level 3
Money market funds	$	151,379	$	151,379	$	—	$	—
Commercial paper		12,993		—		12,993		—
Corporate debt securities		59,497		—		59,497		—
	$	223,869	$	151,379	$	72,490	$	—
	December 31, 2020
	Total		Level 1		Level 2		Level 3
Money market funds	$	158,023	$	158,023	$	—	$	—
Commercial paper		47,955		—		47,955		—
Corporate debt securities		33,190		—		33,190		—
	$	239,168	$	158,023	$	81,145	$	—

Commercial paper and corporate debt securities were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. During the six months ended June 30, 2021 and the twelve months ended December 31, 2020, there were no transfers between Level 1, Level 2 and Level 3.