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 three months ended March 31, 2024, there were no transfers into or out of Level 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 the valuation techniques it utilizes to determine such fair value:


	Fair Value Measurement as of March 31, 2024
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Money market funds	$	277,870	$	277,870	$	—	$	—
Commercial paper		43,354		—		43,354		—
Government and government agency bonds		780,997		—		780,997		—
Corporate bonds		118,158		—		118,158		—
Strategic investments		7,457		6,457		—		1,000
Certificates of deposit		54,863		—		54,863		—
Total assets	$	1,282,699	$	284,327	$	997,372	$	1,000

Liabilities
Contingent consideration	$	48,200	$	—	$	—	$	48,200
Total liabilities	$	48,200	$	—	$	—	$	48,200


	Fair Value Measurement as of December 31, 2023
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Money market funds	$	63,919	$	63,919	$	—	$	—
Commercial paper		113,362		—		113,362		—
Government and government agency bonds		1,001,137		—		1,001,137		—
Corporate bonds		130,380		—		130,380		—
Strategic investments		6,527		5,527		—		1,000
Certificates of deposit		56,621		—		56,621		—
Total assets	$	1,371,946	$	69,446	$	1,301,500	$	1,000

Liabilities
Contingent consideration	$	38,100	$	—	$	—	$	38,100
Total liabilities	$	38,100	$	—	$	—	$	38,100

The Company’s assets with a fair value categorized as Level 1 within the fair value hierarchy include money market funds and the Company's strategic investment in a biotechnology company listed on the Nasdaq Global Market.

The Company's assets with a fair value categorized as Level 2 within the fair value hierarchy consist of commercial paper, government and government agency bonds, corporate bonds and certificates of deposit. These assets have been initially valued at the transaction price and subsequently valued at the end of each reporting period utilizing third-party pricing services. The Company uses observable market inputs to determine value, which primarily consist of reportable trades.

The Company’s assets with a fair value categorized as Level 3 within the fair value hierarchy consist of a strategic investment in a private biotechnology company whose fair value measurement was based upon significant inputs not observable in the market and therefore represented a Level 3 measurement. At the end of each reporting period, the fair value of the Company's strategic investments, that are not listed securities are adjusted if the issuers were to issue similar or identical securities or when there is a triggering event for impairment. There were no valuation measurement events related to the fair value of the Company's Level 3 strategic investments during the three months ended March 31, 2024 or 2023, as no impairment indicators were identified nor were similar securities issued.

The Company’s contingent consideration liability with a 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 to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 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. This fair value measurement was based upon significant inputs not observable in the market and therefore represented a Level 3 measurement. 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.

For the three months ended March 31, 2024, the Company recorded an increase of $10.1 million to account for the change in fair value of the Company's existing contingent consideration liabilities. These changes, which are recorded through earnings, were a result of updates made to certain inputs and assumptions impacting the probability-weighted expected cash flows, principally the probability of success of the underlying programs and the discount rate utilized to determine the present value of future payments to be made. As of March 31, 2024, the contingent consideration was recorded as a long-term liability on the Company's unaudited condensed consolidated balance sheets. For the three months ended March 31, 2023, there were no changes to the fair value of the contingent consideration liability.

The fair value of the senior notes due on November 15, 2024 (the “2024 Notes”) and September 15, 2027 (the “2027 Notes”) is based on open market trades and is classified as Level 1 in the fair value hierarchy. The following table summarizes the carrying value and fair value of the Company's convertible notes for each of the period indicated: