Fair value of certain investments is based upon market prices using quoted prices in active markets for identical assets quoted on the last day of the year. In establishing the estimated fair value of the remaining investments, the Company used the fair value as determined by its investment advisors using observable inputs other than quoted prices.

The Company reviews its available for sale debt investments on a periodic basis for other-than-temporary impairments. This review is subjective, as it requires management to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the fair value of the investment.

In May 2019, the Company purchased $4.0 million of shares of ClearPoint Neuro, Inc.’s (“ClearPoint”) (formerly MRI Interventions, Inc.) common stock, at a purchase price of $3.10 per share, in connection with a securities purchase agreement that the Company entered into with ClearPoint, a publicly traded medical device company. The Company determined that the equity investment represents a financial instrument and therefore, recorded it at fair value, which is readily determinable. The equity investment is a component of deposits and other assets on the consolidated balance sheet. During the year ended December 31,

2019, the Company recorded an unrealized gain of $2.2 million, which is a component of other (income) expense, net within the consolidated statement of operations. The fair value of the equity investment was $6.2 million as of December 31, 2019. The Company classifies its equity investment in ClearPoint as a Level 1 asset within the fair value hierarchy, as the value is based on a quoted market price in an active market, which is not adjusted.



	December 31, 2019
	Total		Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)
Marketable securities	$	398,535	$	—	$	398,535	$	—
Equity Investment	$	6,194	$	6,194	$	—	$	—
Stock appreciation rights liability	$	3,186	$	—	$	—	$	3,186
Deferred consideration payable	$	40,000	$	—	$	40,000	$	—
Contingent consideration payable- development and regulatory milestones - Agilis	$	290,500	$	—	$	—	$	290,500
Contingent consideration payable- net sales milestones and royalties - Agilis	$	65,800	$	—	$	—	$	65,800



	December 31, 2018
	Total		Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)
Marketable securities	$	58,088	$	—	$	58,088	$	—
Stock appreciation rights liability	$	3,814	$	—	$	—	$	3,814
Deferred consideration payable	$	37,700	$	—	$	37,700	$	—
Contingent consideration payable- development and regulatory milestones- Agilis	$	257,040	$	—	$	—	$	257,040
Contingent consideration payable- net sales milestones and royalties- Agilis	$	53,200	$	—	$	—	$	53,200

The Company uses the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company’s marketable securities investments classified as Level 2 primarily utilize broker quotes in a nonactive market to value these securities. No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the years ended December 31, 2019 and 2018.



	December 31, 2019
	Amortized Cost		Gross Unrealized					Fair Value
			Gross Unrealized
			Gains		Losses
Commercial paper	$	157,936	$	162	$	—		$	158,098
Corporate debt securities	188,778		576		(20		)	189,334
Asset-backed securities	51,062		49		(8		)	51,103
Total	$	397,776	$	787	$	(28	)	$	398,535



	December 31, 2018
	Amortized Cost		Gross Unrealized					Fair Value
			Gross Unrealized
			Gains		Losses
Commercial paper	$	31,657	$	43	$	(1	)	$	31,699
Corporate debt securities	26,399		—		(10		)	26,389
Total	$	58,056	$	43	$	(11	)	$	58,088

Unrealized gains and losses are reported as a component of accumulated other comprehensive (loss) income in stockholders’ equity. During the year ended December 31, 2019, the Company did not have any realized gains or losses from the sale of marketable securities. The cost of securities sold is based on the specific identification method. The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. At December 31, 2019, the Company held securities with an unrealized loss position that were not considered to be other-than-temporarily impaired as the Company has the ability and intent to hold such investments until recovery of their amortized cost bases, which may be maturity. The Company has determined that it is not more likely than not that the Company will be required to sell the investments before such recovery.

In addition, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position when determining if the losses are other than temporary.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2019 are as follows:



	December 31, 2019
	Securities in an unrealized loss position less than 12 months					Securities in an unrealized loss position greater than 12 months				Total
	Unrealized losses			Fair Value		Unrealized losses		Fair Value		Unrealized losses			Fair Value
Corporate debt securities	$	(20	)	$	71,779	$	—	$	—	$	(20	)	$	71,779
Asset-backed Securities	(8		)	24,211		—		—		(8		)	24,211
Total	$	(28	)	$	95,990	$	—	$	—	$	(28	)	$	95,990



	December 31, 2018
	Securities in an unrealized loss position less than 12 months					Securities in an unrealized loss position greater than 12 months					Total
	Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value
Commercial paper	$	(1	)	$	1,993	$	—		$	—	$	(1	)	$	1,993
Corporate debt securities	(7		)	14,230		(3		)	10,087		(10		)	24,317
Total	$	(8	)	$	16,223	$	(3	)	$	10,087	$	(11	)	$	26,310

Marketable securities on the balance sheet at December 31, 2019 and 2018 mature as follows:



	December 31, 2019
	Less Than 12 Months		More Than 12 Months
Commercial paper	$	158,098	$	—
Corporate debt securities	139,596		49,738
Asset-backed Securities	44,724		6,379
Total Marketable securities	$	342,418	$	56,117



	December 31, 2018
	Less Than 12 Months		More Than 12 Months
Commercial paper	$	31,699	$	—
Corporate debt securities	26,389		—
Total Marketable securities	$	58,088	$	—

In August 2015, the Company issued $150.0 million of 3.0% convertible senior notes due August 15, 2022 (the “2022 Convertible Notes”). In September 2019, the Company issued $287.5 million of 1.5% convertible senior notes due September 15, 2026 (the “2026 Convertible Notes,” together with the “2022 Convertible Notes,” the “Convertible Notes”). The Company separately accounted for the liability and equity components of the Convertible Notes by allocating the proceeds between the liability component and equity component, as further discussed in Note 8. The fair value of the Convertible Notes, which differs from their carrying values, is influenced by interest rates, the Company’s stock price and stock price volatility and is determined by prices for the Convertible Notes observed in market trading which are Level 2 inputs. The estimated fair value of the 2022 Convertible Notes at December 31, 2019 and 2018 was $171.2 million and $146.6 million, respectively. The estimated fair value of the 2026 Convertible Notes at December 31, 2019 was $335.0 million.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and borrowings under the credit and security agreement with MidCap Financial Trust and other financial institutions (as further discussed in Note 8) approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts for the credit and security agreement approximate fair value based on market activity for other debt instruments with similar characteristics and comparable risk.

million and the achievement of certain regulatory approval milestones together with a milestone payment following the receipt of a priority review voucher up to an aggregate maximum amount of $535.0 million. The Company is required to pay $40.0 million of development milestone payments upon the passing of the second anniversary of the closing of the Merger, regardless of whether the applicable milestones have been achieved. The fair value of the deferred consideration payable at December 31, 2019 was $40.0 million. The Company did not apply a discount, as the milestones will be paid within one calendar year. Accordingly, as of December 31, 2019, the $40.0 million of the deferred consideration payable was classified as current on the balance sheet.

The stock appreciation rights (SARs) liability is classified in Other current liabilities on the Company’s consolidated balance sheets. The SARs liability is marked-to-market each reporting period with the change in fair value recorded as compensation expense on the Company’s consolidated statements of operations until the SARS vest. The fair value of the SARs liability is determined at each reporting period by utilizing the Black-Scholes option pricing model.

The contingent consideration payable is fair valued each reporting period with the change in fair value recorded as a gain or loss in the consolidated statements of operations. The fair value of the development and regulatory milestones are estimated utilizing a probability adjusted, discounted cash flow approach. The discount rates are estimated utilizing Corporate B rated bonds maturing in the years of expected payments based on the Company’s estimated development timelines for the acquired product candidate. The fair value of the net sales milestones and royalties is determined utilizing an option pricing model with Monte Carlo simulation to simulate a range of possible payment scenarios, and the average of the payments in these scenarios is then discounted to calculate present fair value.

The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the SARs liability and the contingent consideration payables for the years ended December 31, 2019, and 2018:



	Level 3 liabilities
		SARs			Contingent consideration payable- development and regulatory milestones - Agilis			Contingent consideration payable- net sales milestones and royalties - Agilis
Beginning balance as of December 31, 2017		$	1,665		$	—		$	—
Additions		—			263,500			27,000
Change in fair value		4,140			(6,460		)	26,200
Payments		$	(1,991	)	$	—		$	—
Ending balance as of December 31, 2018		3,814			257,040			53,200
Additions		—			—			—
Change in fair value		3,187			33,460			12,600
Payments		(3,815		)	—			—
Ending balance as of December 31, 2019		$	3,186		$	290,500		$	65,800



	December 31, 2019
	Fair Value	Valuation Technique	Unobservable Input	Range
SARs	$3,186	Option-pricing model	Volatility	28.93%
			Risk free interest rate	0.19%
			Strike price	$6.76 - $30.86
			Fair value of common stock	$48.03
			Expected life	0.01 years
Contingent consideration payable- development and regulatory milestones	$290,500	Probability-adjusted discounted cash flow	Potential development and regulatory milestones	$0 - $555 million
			Probabilities of success	25% - 94%
			Discount rates	2.2% - 4.7%
			Projected years of payments	2020 - 2026
Contingent considerable payable- net sales milestones and royalties	$65,800	Option-pricing model with Monte Carlo simulation	Potential net sales milestones	$0 - $150 million
			Probabilities of success	25% - 89%
			Potential percentage of net sales for royalties	2% - 6%
			Discount rate	14.5%
			Projected years of payments	2021 - 2038



	December 31, 2018
	Fair Value	Valuation Technique	Unobservable Input	Range
SARs	$3,814	Option-pricing model	Volatility	46.53% - 59.59%
			Risk free interest rate	2.44% - 2.63%
			Strike price	$6.76 - $30.86
			Fair value of common stock	$34.32
			Expected life	0.01 - 1.01 years
Contingent consideration payable- development and regulatory milestones	$257,040	Probability-adjusted discounted cash flow	Potential development and regulatory milestones	$0 - $555 million
			Probabilities of success	25% - 94%
			Discount rates	5.8% - 8.0%
			Projected years of payments	2020 - 2026
Contingent considerable payable- net sales milestones and royalties	$53,200	Option-pricing model with Monte Carlo simulation	Potential net sales milestones	$0 - $150 million
			Probabilities of success	25% - 89%
			Potential percentage of net sales for royalties	2% - 6%
			Discount rate	14.0%
			Projected years of payments	2021 - 2038

The contingent consideration payables are classified Level 3 liabilities as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market. If different assumptions were used for the various inputs to the valuation approaches, including but not limited to, assumptions involving probability adjusted sales estimates for the gene therapy platform and estimated discount rates, the estimated fair value could be significantly higher or lower than the fair value determined.