The Company has certain financial assets and liabilities that are recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

During the nine months ended September 30, 2021, there were no transfers between Levels 1, 2 and 3. The tables below present information about the Company’s financial assets and liabilities that are measured and carried at fair value and indicate the level within the fair value hierarchy of valuation techniques it utilizes to determine such fair value:


	Fair Value Measurement as of September 30, 2021
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Money market funds	$	1,287,292	$	1,287,292	$	—	$	—
Strategic equity investments		35,288		2,876		—		32,412
Certificates of deposit		250		250		—		—
Total assets	$	1,322,830	$	1,290,418	$	—	$	32,412

Liabilities
Contingent consideration	$	43,600	$	—	$	—	$	43,600
Total liabilities	$	43,600	$	—	$	—	$	43,600


	Fair Value Measurement as of December 31, 2020
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Money market funds	$	629,440	$	629,440	$	—	$	—
Government and government agency bonds		1,037,981		1,037,981		—		—
Strategic equity investments		38,799		3,699		—		35,100
Certificates of deposit		250		250		—		—
Total assets	$	1,706,470	$	1,671,370	$	—	$	35,100

Liabilities
Contingent consideration	$	50,800	$	—	$	—	$	50,800
Total liabilities	$	50,800	$	—	$	—	$	50,800

The Company’s assets with fair value categorized as Level 1 within the fair value hierarchy include money market funds, the Company’s strategic investment in Lysogene S.A. (“Lysogene”) and certificates of deposit. The Company did not hold any government and government agency bonds as of September 30, 2021. Certain of the government and government agency bonds held as of December 31, 2020 are publicly traded fixed income securities and are presented as cash equivalents on the condensed consolidated balance sheet as of December 31, 2020.

The Company’s assets with fair value categorized as Level 3 within the fair value hierarchy consist of a strategic investment in Series A preferred stock of Lacerta Therapeutics, Inc. (“Lacerta”) and strategic investments in another two private companies. For more information related to Lacerta, please read Note 3, License and Collaboration Agreements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The fair value of the Lacerta investment was initially based on a cost approach corroborated by the Black-Scholes option pricing model. The most significant assumptions in the option pricing model include historical volatility of similar public companies, estimated term through Lacerta’s potential exit and a risk-free rate based on certain U.S. Treasury rates. The investments in the other two private companies are recorded at fair value at the time of purchase as measured by their respective investment cost. At the end of each reporting period, the fair value of the Company's strategic investments will be adjusted if the issuers are to issue similar or identical equity securities or when there is a triggering event for impairment. During the three and nine months ended September 30, 2021, the Company recorded an impairment loss of $4.5 million related to its investment in one of the private companies.

The Company’s contingent consideration liability with fair value categorized as Level 3 within the fair value hierarchy relates to the regulatory-related contingent payments to Myonexus Therapeutics, Inc. (“Myonexus”) selling shareholders as well as to two academic institutions under separate license agreements that meet the definition of a derivative. For more information related to Myonexus, please read Note 3, License and Collaboration Agreements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The contingent consideration liability was estimated using an income approach based on the probability-weighted expected cash flows that incorporated industry-based probability adjusted assumptions relating to the achievement of the milestone and thus the likelihood of making the payments. Significant changes which increase or decrease the probabilities of achieving the milestone or shorten or lengthen the time required to achieve the milestone would result in a corresponding increase or decrease in the fair value of the liability. At the end of each reporting period, the fair value is adjusted to reflect the most current assumptions through earnings.

A net decrease of $7.2 million was recorded during the three and nine months ended September 30, 2021 to account for the change in fair value of existing contingent consideration liabilities. This change, which is recorded through earnings, was a result of updates made to certain inputs and assumptions impacting the probability-weighted expected cash flows, principally the expected approval date of the underlying programs and the estimate of the amount of payments to be ultimately made. As of September 30, 2021, the contingent consideration was recorded as a non-current liability on the Company’s unaudited condensed consolidated balance sheets.

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximated fair value because of the short-term maturity of these financial instruments. The fair value of the outstanding debt is disclosed in Note 11, Indebtedness.