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Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
The following is a summary of our marketable security portfolio for the periods presented (in thousands):
Amortized
Cost		Net
Unrealized
Losses		Estimated
Fair Value
September 30, 2022
Debt securities (government)$292,941 $(6,441)$286,500 
December 31, 2021
Debt securities (government)$291,871 $(1,119)$290,752 
Our available-for-sale debt securities generally have contractual maturity dates of between 12 to 18 months. Debt security assets were assessed for risk of expected credit losses. As of September 30, 2022 and December 31, 2021, the available-for-sale debt securities were held in U.S.-government backed securities and in Treasury bonds and were assessed on an individual security basis to have a de minimis risk of credit loss.
Fair Value Measurements
FASB accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (“the exit price”) in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:
Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities.
Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.
Recurring Fair Value Measurements
Our marketable securities consist of investments in U.S. government debt securities that are classified as available-for-sale.
At September 30, 2022 and December 31, 2021, our Level 2 U.S. government debt securities were valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of investments. Our long term investments classified as Level 1 were valued using their respective closing stock prices on The Nasdaq Stock Market. We did not experience any transfers of financial instruments between the fair value hierarchy levels during the nine months ended September 30, 2022.
The following fair value hierarchy table presents information about each major category of our financial assets measured at fair value on a recurring basis (in thousands):
Fair Value Measurement at Reporting Date Using:
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance as of
September 30, 2022
Cash and cash equivalents$2,690,622 $— $— $2,690,622 
Debt securities (government)— 286,500 — 286,500 
Long term investments (Note 7)
149,124 — — 149,124 
Total assets$2,839,746 $286,500 $— $3,126,246 
Fair Value Measurement at Reporting Date Using:
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance as of
December 31, 2021
Cash and cash equivalents$2,057,440 $— $— $2,057,440 
Debt securities (government)— 290,752 — 290,752 
Long term investments (Note 7)
221,266 — — 221,266 
Total assets$2,278,706 $290,752 $— $2,569,458 
The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis as (in thousands):
Fair Value Measurement at Reporting Date Using:
Quoted Prices in
Active Markets for
Identical Liabilities
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance as of
September 30, 2022
Acquisition-related contingent consideration$— $— $206,000 $206,000 
Total liabilities$— $— $206,000 $206,000 
Fair Value Measurement at Reporting Date Using:
Quoted Prices in
Active Markets for
Identical Liabilities
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance as of
December 31, 2021
Acquisition-related contingent consideration$— $— $244,000 $244,000 
Total liabilities$— $— $244,000 $244,000 
The following is a rollforward of our Level 3 liabilities (in thousands):
2022
Balance at January 1, $244,000 
Contingent consideration earned during the period but not yet paid(25,802)
Change in fair value of contingent consideration(12,198)
Balance at September 30,$206,000 
The fair value of the contingent consideration was determined on the date of acquisition, June 1, 2016, using an income approach based on projected future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment over 18 years, and discounted to present value at a rate of 10%. The fair value of the contingent consideration is remeasured each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations. The valuation inputs utilized to estimate the fair value of the contingent consideration as of September 30, 2022 and December 31, 2021 included a discount rate of 10% and updated projections of future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment. The gain on change in fair value of the contingent consideration during the three and nine months ended September 30, 2022 was due primarily to the changes in foreign currency exchange rates included within the updated projections of future net revenues of ICLUSIG.
We generally make payments to Takeda Pharmaceutical Company Limited quarterly based on the royalties or any additional milestone payments earned in the previous quarter. At September 30, 2022 and December 31, 2021, contingent consideration earned but not yet paid was $25.8 million and $19.6 million, respectively, and was included in accrued and other current liabilities.