Fair Value Measurements |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | (4) Fair Value Measurements The following tables set forth the Company’s financial assets and liabilities subject to fair value measurements:
The Company’s financial assets consist mainly of cash equivalents and marketable securities and are classified as Level 2 within the valuation hierarchy. The Company values its marketable securities utilizing independent pricing services which normally derive security prices from recently reported trades for identical or similar securities, making adjustments based on significant observable transactions. At each balance sheet date, observable market inputs may include trade information, broker or dealer quotes, bids, offers or a combination of these data sources. The following table reflects the activity for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the year ended December 31, 2021 (in thousands):
The valuation technique used to measure fair value of the Company’s Level 3 liabilities, which consist of contingent consideration related to the acquisition of Kolltan in 2016 (Note 17), was primarily an income approach. The significant unobservable inputs used in the fair value measurement of the contingent consideration are estimates, including probability of success, discount rates and amount of time until the conditions of the milestone payments are met. As of December 31, 2021, the weighted average probability of success used in calculating the fair value of contingent consideration was 49.3% (with a range of 5.1% to 68.6%), the weighted average discount rate was 7.3% (with a range of 6.9% to 8.2%) and the weighted average amount of time until the conditions of the milestone payments are met was 3 years. Weighted averages are calculated based on the relative fair value of our contingent consideration obligations. During the year ended December 31, 2021, the Company recorded a $1.4 million gain on fair value remeasurement of contingent consideration, primarily due to updated assumptions for the TAM program, partially offset by losses related to changes in discount rates and the passage of time. The assumptions related to determining the value of contingent consideration include a significant amount of judgment, and any changes in the underlying estimates could have a material impact on the amount of contingent consideration adjustment recorded in any given period. The Company did not have any transfers of assets or liabilities between the fair value measurement classifications during the years ended December 31, 2021 and 2020. |