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.

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, 2020
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Money market funds	$	624,714	$	624,714	$	—	$	—
Government and government agency bonds		892,614		892,614		—		—
Strategic equity investments		32,769		2,769		—		30,000
Certificates of deposit		1,001		1,001		—		—
Total assets	$	1,551,098	$	1,521,098	$	—	$	30,000

Liabilities
Contingent consideration	$	50,500	$	—	$	—	$	50,500
Total liabilities	$	50,500	$	—	$	—	$	50,500

	Fair Value Measurement as of December 31, 2019
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Money market funds	$	203,410	$	203,410	$	—	$	—
Government and government agency bonds		809,159		809,159		—		—
Strategic equity investments		31,937		1,937		—		30,000
Certificates of deposit		1,001		1,001		—		—
Total assets	$	1,045,507	$	1,015,507	$	—	$	30,000

Liabilities
Contingent consideration	$	5,200	$	—	$	—	$	5,200
Total liabilities	$	5,200	$	—	$	—	$	5,200

The Company’s assets with fair value categorized as Level 1 within the fair value hierarchy include money market funds, government and government agency bonds, the Company’s strategic investment in Lysogene S.A. and certificates of deposit. Certain of the government and government agency bonds are publicly traded fixed income securities and are presented as cash equivalents on the unaudited condensed consolidated balance sheets as of September 30, 2020.

The Company’s asset with fair value categorized as Level 3 within the fair value hierarchy consists of a strategic investment in Series A preferred stock of Lacerta Therapeutics, Inc. (“Lacerta”). 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, 2019. The fair value of the asset was initially based on a cost approach corroborated by the Black-Scholes option pricing model. This 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 will be adjusted if Lacerta issues similar or identical equity securities or when there is a triggering event for impairment. There were no changes in the fair value of the Lacerta strategic investment during the nine months ended September 30, 2020.

The Company’s contingent consideration liability with fair value categorized as Level 3 within the fair value hierarchy relate to the regulatory-related contingent payments to Myonexus Therapeutics, Inc. (“Myonexus”) selling shareholders as well as to an academic institution 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, 2019. 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.

There were no transfers between levels 1, 2 and 3 during the three and nine months ended September 30, 2020. The following table represents a roll-forward of the fair value of level 3 financial liabilities:

An increase of $0.3 million was recorded during the three months ended September 30, 2020 to account for a new contingent consideration liability associated with a new license agreement with an academic institution that meets the definition of a derivative. An increase of $45.0 million was recorded during the three months ended September 30, 2020 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 probability of success of the underlying programs, the estimate of the amount of payments to be ultimately made, and the estimate of the year that the payments are expected to be made. As of September 30, 2020, 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.