Fair Value Measurements

3 Months Ended

Mar. 31, 2024

The table below summarizes the Company's assets and liabilities which are measured at fair value on a recurring basis. The following fair value hierarchy is used to classify assets and liabilities, based on inputs to valuation techniques utilized to measure fair value:

•Level 1 - Quoted prices in active markets for identical assets or liabilities

•Level 2 - Significant other observable inputs, such as quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-based valuations in which significant inputs used are observable

•Level 3 - Significant other unobservable inputs


(In millions)			Fair Value Measurements at Reporting Date
As of March 31, 2024	Fair Value		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	1,056.4	$	125.8	$	930.6	$	—
Available-for-sale debt securities:
Corporate bonds	7,401.1		—		7,401.1		—
U.S. government and government agency obligations	5,273.4		—		5,273.4		—
Sovereign bonds	59.0		—		59.0		—
Commercial paper	866.9		—		866.9		—
Certificates of deposit	389.9		—		389.9		—
Asset-backed securities	124.7		—		124.7		—
Equity securities (unrestricted)	679.4		679.4		—		—
Equity securities (restricted)	101.9		101.9		—		—
Total assets	$	15,952.7	$	907.1	$	15,045.6	$	—

Liabilities:
Contingent consideration	$	59.0	$	—	$	—	$	59.0

As of December 31, 2023
Assets:
Cash equivalents	$	928.1	$	6.4	$	921.7	$	—
Available-for-sale debt securities:
Corporate bonds	6,398.0		—		6,398.0		—
U.S. government and government agency obligations	4,833.4		—		4,833.4		—
Sovereign bonds	57.2		—		57.2		—
Commercial paper	636.8		—		636.8		—
Certificates of deposit	521.4		—		521.4		—
Asset-backed securities	87.1		—		87.1		—
Equity securities (unrestricted)	864.5		864.5		—		—
Equity securities (restricted)	112.9		112.9		—		—
Total assets	$	14,439.4	$	983.8	$	13,455.6	$	—

Liabilities:
Contingent consideration	$	43.7	$	—	$	—	$	43.7

As of March 31, 2024, the Company held restricted equity securities which are subject to transfer restrictions that expire in June 2024.

During the three months ended March 31, 2024 and 2023, the Company recorded $196.2 million and $164.7 million, respectively, of net unrealized losses on equity securities in Other (expense) income, net.

In addition to the investments summarized in the table above, as of March 31, 2024 and December 31, 2023, the Company had $73.7 million and $74.3 million, respectively, in equity investments that do not have a readily determinable fair value. These investments are recorded within Other noncurrent assets.

As a result of the Company's acquisition of Decibel Therapeutics, Inc. in September 2023, the Company recorded a contingent consideration liability within other liabilities. The fair value of the liability is determined based on the probability of achieving certain clinical development and regulatory milestones and estimated discount rates, and is remeasured each reporting period until the contingencies are resolved. During the three months ended March 31, 2024, the Company recorded a $15.3 million charge related to the change in the estimated fair value of the contingent consideration liability within Other operating expense (income), net.

The fair value of the Company's long-term debt, which was determined based on Level 2 inputs, was estimated to be $1.497 billion and $1.528 billion as of March 31, 2024 and December 31, 2023, respectively.

- 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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