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Fair value of financial instruments and marketable securities | 9 Months Ended
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Sep. 30, 2021
Fair Value Disclosures [Abstract] |
Fair value of financial instruments and marketable securities | 4. Fair value of financial instruments and marketable securities The Company follows the fair value measurement rules, which provideguidance on the use of fair value in accounting and disclosure for assets and liabilities when such accounting and disclosure is called for by other accounting literature. These rules establish a fair value hierarchy for inputs to be used to measure fair value of financial assets and liabilities. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority).
| ● | Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the balance sheet date.
| ● | Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
| ● | Level 3—Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.
Cash equivalents and marketable securities are reflected in the accompanying financial statements at fair value. The carrying amount of receivables and accounts payable and accrued expenses approximates fair value due to the short-term nature of those instruments. In May 2019, the Company purchased $4.0 million of shares of ClearPoint Neuro, Inc.’s ("ClearPoint"), formerly known as 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. In February 2021, the Company purchased $0.1 million of shares of ClearPoint’s common stock, at a purchase price of $23.50 per share, in connection with ClearPoint’s underwritten public offering of common stock. The Company determined that the May 2019 and February 2021 ClearPoint equity investments (collectively, the “ClearPoint Equity Investments”) represent financial instruments, and therefore, are recorded at fair value, which is readily determinable. The ClearPoint Equity Investments are components of deposits and other assets on the consolidated balance sheet. During the three and nine month periods ended September 30, 2021, the Company recorded an unrealized loss of $1.7 million and an unrealized gain of $2.4 million on the ClearPoint Equity Investments, respectively. During the three and nine month periods ended September 30, 2020, the Company recorded unrealized gains of $2.5 million and $0.9 million, respectively. These unrealized gains and losses are components of other (expense) income, net within the consolidated statement of operations. The fair value of the ClearPoint Equity Investments was $23.0 million and $20.5 million as of September 30, 2021 and December 31, 2020, respectively. The Company classifies the ClearPoint Equity Investments as Level 1 assets within the fair value hierarchy, as the value is based on a quoted market price in an active market, which is not adjusted. In January 2020, the Company purchased a $10.0 million convertible note from ClearPoint that the Company can convert into ClearPoint shares at a conversion rate of $6.00 per share at any point throughout the term of the loan, which matures five years from the purchase date. The Company determined that the convertible note represents an available for sale debt security and the Company has elected to record it at fair value under ASC 825. The Company classifies its ClearPoint convertible debt security as a Level 2 asset within the fair value hierarchy, as the value is based on inputs other than quoted prices that are observable. The fair value of the ClearPoint convertible debt security is determined at each reporting period by utilizing a Black-Scholes option pricing model, as well as a present value of expected cash flows from the debt security utilizing the risk free rate and the estimated credit spread as of the valuation date as the discount rate. During the three and nine month periods ended September 30, 2021, the Company recorded an unrealized loss of $2.3 million and an unrealized gain of $2.1 million, respectively. During the three and nine month periods ended September 30, 2020, the Company recorded unrealized gains of $1.4 million and $0.6 million, respectively. These unrealized gains and losses are components of other (expense) income, net within the consolidated statement of operations. The fair value of the convertible debt security was $31.3 million and $29.3 million as of September 30, 2021 and December 31, 2020, respectively. The convertible debt security is considered to be long term and is included as a component of deposits and other assets on the consolidated balance sheet. Other than the ClearPoint Equity Investments and the convertible debt security, no other items included in deposits and other assets on the consolidated balance sheets are fair valued. In February 2021, the Company invested $200.0 million in two mutual funds. In August 2021, the Company made a $5.4 million investment into a third mutual fund that is denominated in a foreign currency. All of these are equity investments and are classified as marketable securities on the Company’s consolidated balance sheets. These equity investments are reported at fair value, as it is readily available, and as such are classified as Level 1 assets. Unrealized holding gains and losses for these equity investments are included as components of other (expense) income, net within the consolidated statement of operations. For the three and nine month periods ended September 30, 2021, the Company had $0.7 million and $1.4 million unrealized net gains relating to the equity investments still held at the reporting date, respectively. For the three and nine month periods ended September 30, 2021, the Company had redemptions of $0.7 million and $0.7 million, respectively. For the three and nine month periods ended September 30, 2021, the Company had $0.2 million and $0.2 million foreign currency unrealized losses relating to these equity investments. Fair value of marketable securities that are classified as available for sale debt securities is based upon market prices using quoted prices in active markets for identical assets quoted on the last day of the period. In establishing the estimated fair value of the remaining available for sale debt securities, the Company used the fair value as determined by its investment advisors using observable inputs other than quoted prices. The following represents the fair value using the hierarchy described above for the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2021
​ |  | ​ | ​ |  | Quoted prices |  | Significant |  | ​ | ​
​ | ​ | ​ | ​ |  | in active |  | other |  | Significant
​ | ​ | ​ | ​ |  | markets for |  | observable |  | unobservable
​ | ​ | ​ | ​ |  | identical assets |  | inputs |  | inputs
​ |  | Total |  | (level 1) |  | (level 2) |  | (level 3)
Marketable securities - available for sale | ​ | $ | 472,338 | ​ | $ | — | ​ | $ | 472,338 | ​ | $ | —
Marketable securities - equity investments | ​ | $ | 205,787 | ​ | $ | 205,787 | ​ | $ | — | ​ | $ | —
ClearPoint Equity Investments | ​ | $ | 22,979 | ​ | $ | 22,979 | ​ | $ | — | ​ | $ | —
ClearPoint convertible debt security | ​ | $ | 31,306 | ​ | $ | — | ​ | $ | 31,306 | ​ | $ | —
Contingent consideration payable- development and regulatory milestones | ​ | $ | 140,200 | ​ | $ | — | ​ | $ | — | ​ | $ | 140,200
Contingent consideration payable- net sales milestones and royalties | ​ | $ | 111,800 | ​ | $ | — | ​ | $ | — | ​ | $ | 111,800
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2020
​ |  | ​ | ​ |  | Quoted prices |  | Significant |  | ​ | ​
​ | ​ | ​ | ​ |  | in active |  | other |  | Significant
​ | ​ | ​ | ​ |  | markets for |  | observable |  | unobservable
​ | ​ | ​ | ​ |  | identical assets |  | inputs |  | inputs
​ |  | Total |  | (level 1) |  | (level 2) |  | (level 3)
Marketable securities - available for sale | ​ | $ | 894,838 | ​ | $ | — | ​ | $ | 894,838 | ​ | $ | —
ClearPoint Equity Investments | ​ | $ | 20,503 | ​ | $ | 20,503 | ​ | $ | — | ​ | $ | —
ClearPoint convertible debt security | ​ | $ | 29,252 | ​ | $ | — | ​ | $ | 29,252 | ​ | $ | —
Contingent consideration payable- development and regulatory milestones | ​ | $ | 139,200 | ​ | $ | — | ​ | $ | — | ​ | $ | 139,200
Contingent consideration payable- net sales milestones and royalties | ​ | $ | 101,200 | ​ | $ | — | ​ | $ | — | ​ | $ | 101,200
​ No transfers of assets between Level 1, Level 2, or Level 3 of the fair value measurement hierarchy occurred during the periods ended September 30, 2021 and December 31, 2020. ​ ​ ​ The following is a summary of marketable securities accounted for as available for sale debt securities at September 30, 2021 and December 31, 2020: ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2021
​ |  | Amortized |  | Gross Unrealized | ​ | ​ | ​
​ |  | Cost |  | Gains |  | Losses |  | Fair Value
Commercial paper | ​ | $ | 109,890 | ​ | $ | 20 | ​ | $ | — | ​ | $ | 109,910
Corporate debt securities | ​ |  | 281,467 | ​ |  | 351 | ​ |  | (37) | ​ |  | 281,781
Asset-backed securities | ​ |  | 20,704 | ​ |  | 45 | ​ |  | (1) | ​ |  | 20,748
Government obligations | ​ | ​ | 59,883 | ​ | ​ | 20 | ​ |  | (4) | ​ | ​ | 59,899
Total | ​ | $ | 471,944 | ​ | $ | 436 | ​ | $ | (42) | ​ | $ | 472,338
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2020
​ |  | Amortized |  | Gross Unrealized | ​ | ​ | ​
​ |  | Cost |  | Gains |  | Losses |  | Fair Value
Commercial paper | ​ | $ | 276,855 | ​ | $ | 19 | ​ | $ | (37) | ​ | $ | 276,837
Corporate debt securities | ​ |  | 474,030 | ​ |  | 1,658 | ​ |  | (29) | ​ |  | 475,659
Asset-backed securities | ​ |  | 28,681 | ​ |  | 210 | ​ |  | (3) | ​ |  | 28,888
Government obligations | ​ | ​ | 113,372 | ​ | ​ | 88 | ​ | ​ | (6) | ​ | ​ | 113,454
Total | ​ | $ | 892,938 | ​ | $ | 1,975 | ​ | $ | (75) | ​ | $ | 894,838
​ For available for sale debt securities in an unrealized loss position, the Company assesses whether it intends to sell or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value. For the three and nine month periods ended September 30, 2021, no write downs occurred. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity. The Company also reviews its available for sale debt securities in an unrealized loss position and evaluates whether the decline in fair value has resulted from credit losses or other factors. This review is subjective, as it requires management to evaluate whether an event or change in circumstances has occurred in that period that may be related to credit issues. For the three and nine month periods ended September 30, 2021 and 2020, no allowance was recorded for credit losses. Unrealized gains and losses are reported as a component of accumulated other comprehensive (loss) income in stockholders’ equity. For the three and nine month periods ended September 30, 2021, the Company had $0.0 million and $0.7 million realized gains from the sale of available for sale debt securities, respectively. For the three and nine month periods ended September 30, 2020, the Company had $0.3 million and $0.5 million realized gains from the sale of available for sale debt securities, respectively. Realized gains and losses are reported as a component of interest expense, net in the consolidated statement of operations. The unrealized losses and fair values of available for sale debt securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of September 30, 2021 are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2021
​ |  | Securities in an unrealized loss |  | Securities in an unrealized loss |  | ​ | ​ | ​ | ​ | ​
​ |  | position less than 12 months |  | position greater than 12 months | ​ | Total
​ |  | Unrealized losses |  | Fair Value |  | Unrealized losses |  | Fair Value |  | Unrealized losses |  | Fair Value
Corporate debt securities | ​ | ​ | (37) | ​ | ​ | 78,272 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (37) | ​ | ​ | 78,272
Asset-backed securities | ​ |  | (1) | ​ |  | 499 | ​ |  | — | ​ |  | — | ​ |  | (1) | ​ |  | 499
Government obligations | ​ | ​ | (4) | ​ | ​ | 19,926 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (4) | ​ | ​ | 19,926
Total | ​ | $ | (42) | ​ | $ | 98,697 | ​ | $ | — | ​ | $ | — | ​ | $ | (42) | ​ | $ | 98,697
​ The unrealized losses and fair values of available for sale debt securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2020 are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2020
​ |  | Securities in an unrealized loss |  | Securities in an unrealized loss |  | ​ | ​ | ​ | ​ | ​
​ |  | position less than 12 months |  | position greater than 12 months | ​ | Total
​ |  | Unrealized losses |  | Fair Value |  | Unrealized losses |  | Fair Value |  | Unrealized losses |  | Fair Value
Commercial paper | ​ | $ | (37) | ​ | ​ | 129,630 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (37) | ​ | ​ | 129,630
Corporate debt securities | ​ | ​ | (29) | ​ | ​ | 102,426 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (29) | ​ | ​ | 102,426
Asset-backed securities | ​ |  | (3) | ​ |  | 1,830 | ​ |  | — | ​ |  | — | ​ |  | (3) | ​ |  | 1,830
Government obligations | ​ | ​ | (6) | ​ | ​ | 27,084 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (6) | ​ | ​ | 27,084
Total | ​ | $ | (75) | ​ | $ | 260,970 | ​ | $ | — | ​ | $ | — | ​ | $ | (75) | ​ | $ | 260,970
​ Available for sale debt securities at September 30, 2021 and December 31, 2020 mature as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2021
​ |  | Less Than |  | More Than
​ |  | 12 Months |  | 12 Months
Commercial paper | ​ | $ | 109,910 | ​ | $ | —
Corporate debt securities | ​ |  | 154,067 | ​ |  | 127,714
Asset-backed securities | ​ |  | 8,881 | ​ |  | 11,867
Government obligations | ​ | ​ | 49,608 | ​ | ​ | 10,291
Total | ​ | $ | 322,466 | ​ | $ | 149,872
​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2020
​ |  | Less Than |  | More Than
​ |  | 12 Months |  | 12 Months
Commercial paper | ​ | $ | 276,837 | ​ | $ | —
Corporate debt securities | ​ |  | 240,139 | ​ |  | 235,520
Asset-backed securities | ​ |  | 6,363 | ​ |  | 22,525
Government obligations | ​ | ​ | 65,524 | ​ | ​ | 47,930
Total | ​ | $ | 588,863 | ​ | $ | 305,975
​ The Company classifies all of its marketable securities as current as they are all either available for sale debt securities or equity investments and are available for current operations. Convertible senior notes In August 2015, the Company issued $150.0 million of 3.00% convertible senior notes due August 15, 2022 (the “2022 Convertible Notes”). In September 2019, the Company issued $287.5 million of 1.50% convertible senior notes due September 15, 2026 (the “2026 Convertible Notes,” together with the “2022 Convertible Notes,” the “Convertible Notes”). 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 September 30, 2021 and December 31, 2020 was $155.5 million and $193.2 million, respectively. The estimated fair value of the 2026 Convertible Notes at September 30, 2021 and December 31, 2020 was $294.9 million and $394.9 million, respectively. Level 3 valuation The contingent consideration payable is fair valued each reporting period with the change in fair value recorded as a gain or loss within the change in the fair value of deferred and contingent consideration on the consolidated statements of operations. The fair value of the development and regulatory milestones is 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. At September 30, 2021, the weighted average discount rate for the development and regulatory milestones was 3.3% and the weighted average probability of success was 42%. 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. At September 30, 2021, the weighted average discount rate for the net sales milestones and royalties was 11.0% and the weighted average probability of success for the net sales milestones was 48%. The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuations for the contingent consideration payable for the periods ended September 30, 2021 and September 30, 2020: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Level 3 liabilities
​ | ​ | ​ | ​ | ​ | Contingent consideration payable- | ​ | Contingent consideration payable-
​ | ​ | ​ | ​ | ​ | development and regulatory | ​ | net sales milestones and royalties
​ |  | ​ | ​ | milestones |  | ​
Beginning balance as of December 31, 2020 | ​ | ​ | ​ | ​ | $ | 139,200 | ​ | $ | 101,200
Additions | ​ | ​ | ​ | ​ |  | — | ​ |  | —
Change in fair value | ​ | ​ | ​ | ​ |  | 1,000 | ​ |  | 10,600
Payments | ​ | ​ | ​ | ​ | ​ | — | ​ | ​ | —
Ending balance as of September 30, 2021 | ​ | ​ | ​ | ​ | $ | 140,200 | ​ | $ | 111,800
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Level 3 liabilities
​ | ​ | ​ | ​ | ​ | Contingent consideration payable- | ​ | Contingent consideration payable-
​ | ​ | ​ | ​ | ​ | development and regulatory | ​ | net sales milestones and royalties
​ |  | ​ |  | milestones |  | ​
Beginning balance as of December 31, 2019 | ​ | ​ | ​ | ​ | $ | 290,500 | ​ | $ | 65,800
Additions | ​ | ​ | ​ | ​ |  | — | ​ |  | —
Change in fair value | ​ | ​ | ​ | ​ |  | (13,120) | ​ |  | 30,100
Payments | ​ | ​ | ​ | ​ | ​ | — | ​ | ​ | —
Rights Exchange settlement | ​ | ​ | ​ | ​ | ​ | (139,180) | ​ | ​ | —
Ending balance as of September 30, 2020 | ​ | ​ | ​ | ​ | $ | 138,200 | ​ | $ | 95,900
​ The following significant unobservable inputs were used in the valuation of the contingent consideration payable for the periods ended September 30, 2020 and December 31, 2020: ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2021
​ |  | Fair Value |  | Valuation Technique |  | Unobservable Input |  | Range
Contingent consideration payable- development and regulatory milestones | ​ | $140,200 |  | Probability-adjusted discounted cash flow |  | Potential development and regulatory milestones Probabilities of success Discount rates Projected years of payments | ​ | $0 - $381 million 25% - 94% 1.6% - 4.7% 2022 - 2028
Contingent considerable payable- net sales milestones and royalties | ​ | $111,800 |  | Option-pricing model with Monte Carlo simulation |  | Potential net sales milestones Probabilities of success Potential percentage of net sales for royalties Discount rate Projected years of payments | ​ | $0 - $150 million 25% - 94% 2% - 6% 11.0% 2022 - 2040
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2020
​ |  | Fair Value |  | Valuation Technique |  | Unobservable Input |  | Range
Contingent consideration payable- development and regulatory milestones | ​ | $139,200 |  | Probability-adjusted discounted cash flow |  | Potential development and regulatory milestones Probabilities of success Discount rates Projected years of payments | ​ | $0 - $381 million 25% - 94% 2.2% - 4.5% 2021 - 2028
Contingent considerable payable- net sales milestones and royalties | ​ | $101,200 |  | Option-pricing model with Monte Carlo simulation |  | Potential net sales milestones Probabilities of success Potential percentage of net sales for royalties Discount rate Projected years of payments | ​ | $0 - $150 million 25% - 94% 2% - 6% 11.5% 2022 - 2040
​ ​ 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.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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