Fair value measurements

12 Months Ended

Dec. 31, 2023

The following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2023 and 2022 (in thousands):


	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2023
Assets:
Cash and cash equivalents	$	74,958	$	74,958	$	—	$	—
Marketable securities:
U.S. government agency securities and treasuries	101,625		—		101,625		—
Commercial paper	45,222		—		45,222		—
Restricted cash and cash equivalents	1,725		1,725		—
Restricted investments	32,774		—		32,774		—
Total assets	$	256,304	$	76,683	$	179,621	$	—
Liabilities:
Contingent consideration	$	2,415	$	—	$	—	$	2,415
Total liabilities	$	2,415	$	—	$	—	$	2,415
December 31, 2022
Assets:
Cash and cash equivalents	$	71,032	$	71,032	$	—	$	—
Marketable securities:
U.S. government agency securities and treasuries	118,779		—		118,779		—
Corporate bonds	2,498		—		2,498		—
Commercial paper	75,375		—		75,375		—
Restricted cash and cash equivalents	1,258		1,258		—		—
Restricted investments	31,768		—		31,768		—
Total assets	$	300,710	$	72,290	$	228,420	$	—
Liabilities:
Contingent consideration	$	2,180	$	—	$	—	$	2,180
Total liabilities	$	2,180	$	—	$	—	$	2,180

Marketable securities

Marketable securities classified as Level 2 within the valuation hierarchy generally consist of U.S. government agency securities and treasuries, corporate bonds, and commercial paper. The Company estimates the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs. The Company validates the prices provided by its third-party pricing sources by understanding the models used, obtaining market values from other pricing sources and analyzing pricing data in certain instances.

Contingent consideration

In connection with bluebird bio's prior acquisition of Precision Genome Engineering, Inc. (“Pregenen”), the Company may be required to pay future consideration that is contingent upon the achievement of specified development, regulatory approvals or sales-based milestone events. Contingent consideration is measured at fair value and is based on significant unobservable inputs, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant. The Company assesses these estimates on an on-going basis as additional data impacting the assumptions is obtained. Future changes in the fair value of contingent consideration related to updated assumptions and estimates are recognized within the consolidated and combined statements of operations and comprehensive loss. In the absence of new information related to the probability of milestone achievement, changes in fair value will reflect changing discount rates and the passage of time. Contingent consideration is included in other non-current liabilities on the consolidated balance sheets.

The table below provides a roll-forward of fair value of the Company’s contingent consideration obligations that include Level 3 inputs (in thousands):


	Year ended December 31,
	2023		2022
Beginning balance	$	2,180	$	1,948
Additions	—		—
Changes in fair value	235		232
Payments	—		—
Ending balance	$	2,415	$	2,180

Please refer to Note 8, Commitments and contingencies, for further information.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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