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Fair Value Measurements
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements

4. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities, which are measured at fair value on a recurring basis (in thousands):

 

 

Fair Value Measurements at September 30, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

332,707

 

 

$

—

 

 

$

—

 

 

$

332,707

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

—

 

 

 

191,882

 

 

 

—

 

 

 

191,882

 

Corporate bonds

 

 

—

 

 

 

409,841

 

 

 

—

 

 

 

409,841

 

Government and agency securities

 

 

—

 

 

 

120,444

 

 

 

—

 

 

 

120,444

 

U.S. treasury bills

 

 

—

 

 

 

76,898

 

 

 

—

 

 

 

76,898

 

 

$

332,707

 

 

$

799,065

 

 

$

—

 

 

$

1,131,772

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Related party revenue share liability

 

$

—

 

 

$

—

 

 

$

16,600

 

 

$

16,600

 

 

 

 

 

Fair Value Measurements at December 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash equivalents

 

$

327,055

 

 

$

—

 

 

$

—

 

 

$

327,055

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

—

 

 

 

67,080

 

 

 

—

 

 

 

67,080

 

Corporate bonds

 

 

—

 

 

 

193,949

 

 

 

—

 

 

 

193,949

 

Government and agency securities

 

 

—

 

 

 

89,027

 

 

 

—

 

 

 

89,027

 

U.S. treasury bills

 

 

—

 

 

 

34,462

 

 

 

—

 

 

 

34,462

 

 

$

327,055

 

 

$

384,518

 

 

$

—

 

 

$

711,573

 

Cash equivalents were valued by the Company based on quoted market prices for identical securities, which represent a Level 1 measurement within the fair value hierarchy. Commercial paper, corporate bonds, government and agency securities and U.S. treasury bills were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. During the three and nine months ended September 30, 2024 and 2023, there were no transfers in or out of Level 3. The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities.

The following table sets forth the changes in estimated fair value of the Company’s related party revenue share liability for the nine months ended September 30, 2024, which represents a Level 3 measurement within the fair value hierarchy (in thousands):

Estimated fair value as of December 31, 2023

 

$

—

 

Change in fair value

 

 

16,600

 

Estimated fair value as of September 30, 2024

 

$

16,600

 

The fair value of the related party revenue share liability was estimated using a discounted cash flow model to calculate the estimated payments that could become due upon commercialization. Assumptions in the model include but are not limited to the following: probability and timing of product approval, future product revenues and discount rate. Changes in fair value each reporting period are recognized as a component of other income (expense) in the statements of operations and comprehensive loss. Due to changes in certain assumptions related to the probability of product approval and the timing thereof, as well as the probability and timing of sales forecasts, the Company estimated the fair value of the related party revenue share liability to be $16.6 million as of September 30, 2024. The Company estimated the fair value of the related party revenue share liability to be de minimis as of December 31, 2023. See Note 9 for additional information regarding the revenue sharing agreement with Deerfield Healthcare Innovations Fund, L.P. and Deerfield Private Design Fund, IV, L.P. (collectively, “Deerfield”), each an investor in the Company.