Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Financial instruments, including cash and cash equivalents, are recorded at cost, which approximates fair value. Former holders of shares of Science 37, Inc. (“Legacy Science 37”) common stock were allocated Earn-Out Shares in connection with the completion of the October 2021 merger with LifeSci Acquisition II Corp. (the “Merger”) (for more information on the Merger transaction, please refer to Note 1 “Company Background and Basis of Presentation” and Note 3 “Business Combination” to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on March 6, 2023). These Earn-Out Shares are accounted for as a liability and require fair value measurement on a recurring basis. Due to the significant unobservable inputs that are required to value these shares, they are classified as Level 3 in the fair value hierarchy. Please refer to Note 12 “Earn-Out Shares” for additional details surrounding the valuation methodology for the Earn-Out Shares.

None of the Company’s non-financial assets or liabilities are subject to fair value measurement on a non-recurring basis. There were no transfers between fair value measurement levels during the three months ended March 31, 2023.

The following table summarizes the fair values of the Company’s assets and liabilities that were measured and reported at fair value on a recurring basis as of March 31, 2023:


(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	77,289	$	—	$	—	$	77,289
Total	$	77,289	$	—	$	—	$	77,289
Liabilities:
Earn-out liability related to shareholders	$	—	$	—	$	60	$	60
Total	$	—	$	—	$	60	$	60

The following table summarizes the fair values of the Company’s assets and liabilities that were measured and reported at fair value on a recurring basis as of December 31, 2022:


(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	104,138	$	—	$	—	$	104,138
Total	$	104,138	$	—	$	—	$	104,138
Liabilities:
Earn-out liability related to shareholders	$	—	$	—	$	170	$	170
Total	$	—	$	—	$	170	$	170