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Fair Value Measurements
9 Months Ended
Sep. 30, 2022
Fair Value Measurements  
Fair Value Measurements

(3)  Fair Value Measurements

The following tables set forth the Company’s financial assets and liabilities subject to fair value measurements:

As of

    

September 30, 2022

    

Level 1

    

Level 2

    

Level 3

(In thousands)

Assets:

Money market funds and cash equivalents

$

10,729

$

10,729

Marketable securities

304,888

304,888

$

315,617

$

315,617

Liabilities:

Kolltan acquisition contingent consideration

$

$

$

$

As of

    

December 31, 2021

    

Level 1

    

Level 2

    

Level 3

(In thousands)

Assets:

Money market funds and cash equivalents

$

26,220

$

26,220

Marketable securities

369,107

369,107

$

395,327

$

395,327

Liabilities:

Kolltan acquisition contingent consideration

$

6,862

$

6,862

$

6,862

$

6,862

The Company’s financial assets consist mainly of money market funds, 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 nine months ended September 30, 2022 (in thousands):

Other Liabilities:

Contingent

    

 Consideration

Balance at December 31, 2021

$

6,862

Fair value adjustments included in operating expenses

 

(6,862)

Balance at September 30, 2022

$

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 Pharmaceuticals, Inc. (“Kolltan”) in 2016, 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.

During the three and nine months ended September 30, 2022, the Company recorded a $0.0 million and $6.9 million gain on fair value remeasurement of contingent consideration, respectively, primarily due to the Company’s decision to deprioritize the CDX-1140 program. During the three and nine months ended September 30, 2021, the Company recorded a $1.9 million and $1.2 million gain on fair value remeasurement of contingent consideration, respectively, primarily due to updated assumptions for the TAM program, changes in discount rates and the passage of time. The assumptions related to determining the fair 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 in or out of Level 3 assets or liabilities during the nine months ended September 30, 2022.