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Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Cash, Cash Equivalents and Marketable Securities Held to Maturity

The following table summarizes the Company's cash, cash equivalents and marketable securities held to maturity as of December 31, 2022:


	As of December 31, 2022
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(Amounts in thousands)
Cash and cash equivalents:
Cash and money market funds	$	523,458	$	—	$	—	$	523,458
Total cash and cash equivalents		523,458		—		—		523,458
Marketable securities held to maturity:
U.S. treasury bills - short-term		100,299		24		—		100,323
Total cash, cash equivalents and marketable securities	$	623,757	$	24	$	—	$	623,781

During the fourth quarter of 2022, the Company purchased $100.0 million of 6-month U.S. treasury bills with the positive intent and ability to hold them until maturity. Therefore, the Company classified this investment as held to maturity and stated it at amortized cost on the consolidated balance sheet. There is no comparable investment as of December 31, 2021.

The amortized cost and fair value of the Company's held to maturity securities by contractual maturity at December 31, 2022 are summarized below. There is no comparable investment as of December 31, 2021:


	December 31, 2022
	Amortized Costs		Estimated Fair Value
Maturity of one year or less	$	100,299	$	100,323
Total	$	100,299	$	100,323

Fair Value Measured on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2022 and 2021:


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	343,929	$	—	$	—	$	343,929
Liabilities:
Short-term contingent consideration	$	—	$	—	$	13,950	$	13,950
Long-term contingent consideration	$	—	$	—	$	51,559	$	51,559

	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	460,936	$	—	$	—	$	460,936
Liabilities:
Long-term contingent consideration	$	—	$	—	$	94,238	$	94,238

Contingent Consideration – Earnout

On September 20, 2021, the Company completed the Avitide Acquisition. Avitide is a privately-held affinity ligand discovery and development company headquartered in Lebanon, New Hampshire. The transaction consisted of upfront payments of $150.0 million and up to an additional $125.0 million (undiscounted) in contingent consideration earnout payments made equally in cash and the Company's common stock over a three-year performance period beginning January 1, 2022 and ending December 31, 2024. See Note 4, "Acquisitions" below for additional information.

During 2022, a change in market inputs and a shift in revenue and volume projections, due to the expected timing of achievement over the three-year performance period, resulted in a material change in amounts reported as of December 31, 2022. A reconciliation of the change in fair value of contingent consideration – earnout is included in the following table (amounts in thousands):


Balance at December 31, 2021	$	94,238
Decrease in fair value of contingent consideration earnouts		(28,729	)
Balance at December 31, 2022	$	65,509

The recurring Level 3 fair value measurement of our contingent consideration – earnout that we expect to be required to settle, include the following significant unobservable inputs:


Contingent Consideration Earnout	Fair Value as of December 31, 2022		Valuation Technique	Unobservable Input	Range	Weighted Average(1)
				Probability of
Commercialization-based			Monte Carlo	Success	100%	100%
payments	$	28,969	Simulation	Earnout Discount Rate	5.4%-6.1%	5.7%

				Volatility	20.8%	20.8%
Revenue and Volume-			Monte Carlo	Revenue & Volume
based payments	$	36,540	Simulation	Discount Rate	5.4%	5.4%
				Earnout Discount Rate	5.4%-6.1%	5.7%

(1)

Unobservable inputs were weighted by the relative fair value of the contingent consideration liability.

The Company estimates the fair value of the contingent consideration earnouts using a Monte Carlo simulation. Changes in the projected performance of the acquired business could result in a higher or lower contingent consideration obligation in the future.

Fair Value Measured on a Nonrecurring Basis

During 2022, there were no re-measurements to fair value of financial assets and liabilities that are measured at fair value on a nonrecurring basis.

Convertible Senior Notes

In July 2019, the Company issued $287.5 million aggregate principal amount of the 2019 Notes. Interest is payable semi-annually in arrears on January 15 and July 15 of each year. The 2019 Notes will mature on July 15, 2024, unless earlier converted or repurchased in accordance with their terms. At December 31, 2022, the carrying value of the 2019 Notes was $284.6 million, net of unamortized debt issuance costs and the fair value of the 2019 Notes was $452.0 million. At December 31, 2021, prior to the adoption of ASU 2020-06, the carrying value of the 2019 Notes was $255.3 million, net of unamortized discount and unamortized issuance costs, and the fair value of the 2019 Notes was $678.5 million. The fair value of the 2019 Notes is a Level 1 valuation and was determined based on the most recent trade activity of the 2019 Notes as of December 31, 2022 and 2021. The 2019 Notes are discussed in more detail in Note 13, “Convertible Senior Notes,” to these consolidated financial statements.

- 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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