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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2023
Disclosure Text Block [Abstract] |
Fair Value Measurements | 2. Fair Value Measurements The Company uses various valuation approaches in determining the fair value of its assets and liabilities. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. 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 that the Company has the ability to access
Level 2 - | Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities
Level 3 - | Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement. Cash, Cash Equivalents and Marketable Securities Held to Maturity The following table summarizes the Company's cash, cash equivalents and marketable securities held to maturity as of September 30, 2023 and December 31, 2022 (amounts in thousands):
|  | As of September 30, 2023 |
|  | Amortized Costs |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
Cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |
Cash and money market funds |  | $ | 630,779 |  |  | $ | — |  |  | $ | — |  |  | $ | 630,779 |
Total cash and cash equivalents |  | $ | 630,779 |  |  | $ | — |  |  | $ | — |  |  | $ | 630,779 |
|  | As of December 31, 2022 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
Cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |
Cash and money market funds |  | $ | 523,458 |  |  | $ | — |  |  | $ | — |  |  | $ | 523,458 |
Total cash and cash equivalents |  |  | 523,458 |  |  |  | — |  |  |  | — |  |  |  | 523,458 |
Marketable securities held to maturity: |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury bills – short-term |  |  | 100,299 |  |  |  | 24 |  |  |  | — |  |  |  | 100,323 |
Total cash, cash equivalents and marketable securities |  | $ | 623,757 |  |  | $ | 24 |  |  | $ | — |  |  | $ | 623,781 |
During the fourth quarter of 2022, the Company purchased $100.0 million of 6-month U.S. treasury bills with the positive intent and ability to hold them until maturity. Therefore, the Company classified this investment as held to maturity and stated it at amortized cost on the condensed consolidated balance sheet. These U.S. treasury bills matured in June 2023. The amortized cost and the fair value of the Company's held to maturity securities by contractual maturity at December 31, 2022 is summarized below:
|  | December 31, 2022 |  |
|  | Amortized Costs |  |  | Estimated Fair Value |  |
Maturity of one year or less |  | $ | 100,299 |  |  | $ | 100,323 |  |
Total |  | $ | 100,299 |  |  | $ | 100,323 |  |
Fair Value Measured on a Recurring Basis Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2023 and December 31, 2022 (amounts in thousands):
|  | As of September 30, 2023 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Money market accounts |  | $ | 389,473 |  |  | $ | — |  |  | $ | — |  |  | $ | 389,473 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Short-term contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 12,589 |  |  | $ | 12,589 |
Long-term contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 13,759 |  |  | $ | 13,759 |
|  | As of December 31, 2022 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Money market accounts |  | $ | 343,929 |  |  | $ | — |  |  | $ | — |  |  | $ | 343,929 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Short-term contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 13,950 |  |  | $ | 13,950 |
Long-term contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 51,559 |  |  | $ | 51,559 |
Contingent Consideration – Earnouts As of September 30, 2023, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay in connection with the completed acquisitions of Avitide, Inc. ("Avitide") in September 2021 and FlexBiosys, Inc. ("FlexBiosys") in April 2023, was $125.0 million over a three-year earnout period and $42.0 million over a two-year earnout period, respectively. Refer to Note 4, "Acquisitions" included in Part II, Item 8, “Financial Statements and Supplementary Data” to our Form 10-K and Note 3, "Acquisition of FlexBiosys, Inc.," to this report for additional information on the contingent consideration earnouts. During 2023, expected results and a change in market inputs used to calculate the discount rate, resulted in a decrease in amounts reported as of September 30, 2023. A reconciliation of the change in the fair value of contingent consideration – earnouts is included in the following table (amounts in thousands):
Balance at December 31, 2022 |  | $ | 65,509 |
Acquisition date fair value of contingent consideration earnout |  |  | 6,632 |
Payment of contingent consideration earnout |  |  | (14,527 | )
Decrease in fair value of contingent consideration earnouts |  |  | (31,266 | )
Balance at September 30, 2023 |  | $ | 26,348 |
The recurring Level 3 fair value measurement of our contingent consideration earnout that we expect to be required to settle our 2023, 2024 and 2025 contingent consideration obligations for Avitide and FlexBiosys include the following significant unobservable inputs (amounts in thousands, except percent data):
Contingent Consideration Earnout |  | Fair Value as of September 30, 2023 |  |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average(1)
|  |  |  |  |  |  |  | Probability of |  |  |  |
|  |  |  |  |  |  |  | Success |  | 100% |  | 100%
Commercialization-based payments |  | $ |  | 19,383 |  |  | Monte Carlo Simulation |  | Earnout Discount Rate |  | 7.1% |  | 7.1%
|  |  |  |  |  |  |  | Volatility |  | 13.1%-24.6% |  | 21.7%
Revenue and Volume- based payments |  | $ |  | 1,460 |  |  | Monte Carlo Simulation |  | Revenue & Volume Discount Rate |  | 5.1%-9.3% |  | 8.2%
|  |  |  |  |  |  |  | Earnout Discount Rate |  | 6.1%-7.1% |  | 6.5%
|  |  |  |  |  |  |  | Probability of Success |  | 100% |  | 100%
Manufacturing line expansions |  | $ |  | 5,505 |  |  | Probability-weighted present value |  | Earnout Discount Rate |  | 6.1%-6.4% |  | 6.3%
(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. Fair Value Measured on a Nonrecurring Basis During the three and nine months ended September 30, 2023, there were no re-measurements to the fair value of financial assets and liabilities that are measured at fair value on a nonrecurring basis.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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