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Fair value of financial instruments and marketable securities
 9 Months Ended
Sep. 30, 2024
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.

The Company owns common stock in ClearPoint Neuro, Inc. (“ClearPoint”) (formerly MRI Interventions, Inc.), a publicly traded medical device company. The 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 prepaids and other current assets on the consolidated balance sheet as of September 30, 2024 and December 31, 2023. 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. Other than the ClearPoint Equity Investments, no other items included in prepaids and other current assets on the consolidated balance sheets are fair valued.

In January 2020, the Company purchased a $10.0 million convertible note from ClearPoint that the Company was able to convert into ClearPoint shares at a conversion rate of $6.00 per share at any point throughout the term of the loan, with a maturity date five years from the purchase date. In August 2024, the outstanding principal amount of the convertible note, together with any accrued and unpaid interest thereon, was repaid in full by ClearPoint and therefore the balance at September 30, 2024 was $0. The Company determined that the convertible note represented an available for sale debt security and the Company had elected to record it at fair value under ASC 825. The Company classified its ClearPoint convertible debt security as a Level 2 asset within the fair value hierarchy, as the value was based on inputs other than quoted prices that are observable. The fair value of the ClearPoint convertible debt security was 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. The convertible debt security was included as a component of deposits and other assets as of December 31, 2023.

The Company has investments in mutual funds, including one 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 they are 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, net within the consolidated statement of operations. 

The table presented below is a summary of changes in the fair value for the Company’s marketable securities – equity investments, ClearPoint Equity Investments, and ClearPoint convertible debt security for the three and nine months ended September 30, 2024 and September 30, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ending

​

​

​

​

​

​

​

Foreign

​

​

​

​

​

​

​

Ending

​

​

Balance at

​

​

​

​

​

​

​

Currency

​

​

​

​

​

​

​

Balance at

​

​

June 30,

​

Unrealized

​

Realized

​

Unrealized

​

Investments

​

Redemptions/

​

September 30,

​

 

2024

 

Gain

 

Loss

​

Gain

   

Purchased

   

Sale

   

2024

Marketable securities - equity investments

​

$

16,889

​

​

812

​

​

—

​

​

400

​

​

32,208

​

​

(21,051)

​

$

29,258

ClearPoint Equity Investments

​

​

4,822

​

​

5,206

​

​

—

​

​

—

​

​

—

​

​

—

​

​

10,028

ClearPoint convertible debt security

​

​

10,622

​

​

—

​

​

(622)

​

​

—

​

​

—

​

​

(10,000)

​

​

—

Total Fair Value

​

$

32,333

​

$

6,018

​

$

(622)

​

$

400

​

$

32,208

​

$

(31,051)

​

$

39,286

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ending

​

​

​

​

Foreign

​

​

​

​

​

​

​

Ending

​

​

Balance at

​

​

​

​

Currency

​

​

​

​

​

​

​

Balance at

​

​

June 30,

​

Unrealized

​

Unrealized

​

Investments

​

Redemptions/

​

September 30,

​

   

2023

   

Gain/(Loss)

   

Loss

   

Purchased

   

Sale

   

2023

Marketable securities - equity investments

​

$

127,945

​

​

1,120

​

​

(1,426)

​

​

8,219

​

​

(7,830)

​

$

128,028

ClearPoint Equity Investments

​

​

6,477

​

​

(1,995)

​

​

—

​

​

—

​

​

—

​

​

4,482

ClearPoint convertible debt security

​

​

13,693

​

​

(3,056)

​

​

—

​

​

—

​

​

—

​

​

10,637

Total Fair Value

​

$

148,115

​

$

(3,931)

​

$

(1,426)

​

$

8,219

​

$

(7,830)

​

$

143,147

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ending

​

​

​

​

​

​

​

Foreign

​

​

​

​

​

​

​

Ending

​

​

Balance at

​

​

​

​

​

​

​

Currency

​

​

​

​

​

​

​

Balance at

​

​

December 31,

​

Unrealized

​

Realized

​

Unrealized

​

Investments

​

Redemptions/

​

September 30,

​

 

2023

 

Gain/(Loss)

 

Loss

​

Loss

   

Purchased

   

Sale

   

2024

Marketable securities - equity investments

​

$

22,634

​

​

1,923

​

​

—

​

​

(3,289)

​

​

49,614

​

​

(41,624)

​

$

29,258

ClearPoint Equity Investments

​

​

6,074

​

​

3,954

​

​

—

​

​

—

​

​

—

​

​

—

​

​

10,028

ClearPoint convertible debt security

​

​

12,553

​

​

(1,931)

​

​

(622)

​

​

—

​

​

—

​

​

(10,000)

​

​

—

Total Fair Value

​

$

41,261

​

$

3,946

​

$

(622)

​

$

(3,289)

​

$

49,614

​

$

(51,624)

​

$

39,286

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ending

​

​

​

​

​

​

​

Foreign

​

​

​

​

​

​

​

Ending

​

​

Balance at

​

​

​

​

​

​

​

Currency

​

​

​

​

​

​

​

Balance at

​

​

December 31,

​

Unrealized

​

Realized

​

Unrealized

​

Investments

​

Redemptions/

​

September 30,

​

   

2022

   

Gain/(Loss)

   

Loss

​

Loss

   

Purchased

   

Sale

   

2023

Marketable securities - equity investments

​

$

108,261

​

​

5,484

​

​

—

​

​

(17)

​

​

26,378

​

​

(12,078)

​

$

128,028

ClearPoint Equity Investments

​

​

10,965

​

​

(3,107)

​

​

(782)

​

​

—

​

​

—

​

​

(2,594)

​

​

4,482

ClearPoint convertible debt security

​

​

15,231

​

​

(4,594)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

10,637

Total Fair Value

​

$

134,457

​

$

(2,217)

​

$

(782)

​

$

(17)

​

$

26,378

​

$

(14,672)

​

$

143,147

​

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, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

 

​

​

 

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

​

$

458,098

​

$

—

​

$

458,098

​

$

—

Marketable securities - equity investments

​

$

29,258

​

$

29,258

​

$

—

​

$

—

ClearPoint Equity Investments

​

$

10,028

​

$

10,028

​

$

—

​

$

—

Contingent consideration payable- development and regulatory milestones

​

$

9,900

​

$

—

​

$

—

​

$

9,900

Contingent consideration payable- net sales milestones

​

$

12,100

​

$

—

​

$

—

​

$

12,100

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

 

​

​

 

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

​

$

260,104

​

$

—

​

$

260,104

​

$

—

Marketable securities - equity investments

​

$

22,634

​

$

22,634

​

$

—

​

$

—

ClearPoint Equity Investments

​

$

6,074

​

$

6,074

​

$

—

​

$

—

ClearPoint convertible debt security

​

$

12,553

​

$

—

​

$

12,553

​

$

—

Contingent consideration payable- development and regulatory milestones

​

$

26,600

​

$

—

​

$

—

​

$

26,600

Contingent consideration payable- net sales milestones and royalties

​

$

9,700

​

$

—

​

$

—

​

$

9,700

​

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, 2024 and December 31, 2023.

The following is a summary of marketable securities accounted for as available for sale debt securities at September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

 

Amortized

 

Gross Unrealized

​

​

​

​

    

Cost

    

Gains

    

Losses

    

Fair Value

Commercial paper

​

$

118,783

​

$

636

​

$

—

​

$

119,419

Corporate debt securities

​

​

44,494

​

​

156

​

​

(8)

​

​

44,642

Government obligations

​

​

292,291

​

​

1,746

​

​

—

​

​

294,037

Total

​

$

455,568

​

$

2,538

​

$

(8)

​

$

458,098

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

 

Amortized

 

Gross Unrealized

​

​

​

​

    

Cost

    

Gains

    

Losses

    

Fair Value

Commercial paper

​

$

117,044

​

$

128

​

$

(12)

​

$

117,160

Corporate debt securities

​

 

1,650

​

​

—

​

​

(2)

​

​

1,648

Government obligations

​

​

141,084

​

​

212

​

​

—

​

​

141,296

Total

​

$

259,778

​

$

340

​

$

(14)

​

$

260,104

​

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 months ended September 30, 2024 and 2023, 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 basis, 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 months ended September 30, 2024 and 2023, no allowance was recorded for credit losses. Unrealized gains and losses are reported as a component of accumulated other comprehensive (loss) income in stockholders’ deficit.

For the three and nine months ended September 30, 2024, the Company had $0.8 million and $0.8 million realized gains from the sale of available for sale debt securities, respectively. For the three months ended September 30, 2023, the Company did not have any realized gains or losses from the sale of available for sale debt securities. For the nine months ended September 30, 2023, the Company had $0.3 million realized losses from the sale of available for sale debt securities. Realized gains and losses are reported as a component of interest expense, net in the consolidated statement of operations. Reclassified amounts from other comprehensive items were determined using the actual realized gains and losses from the sales of marketable securities.

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 or equal to 12 months as of September 30, 2024 are as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

 

Securities in an unrealized loss

 

Securities in an unrealized loss

 

​

​

​

​

​

​

 

position less than 12 months

 

position greater than or equal to 12 months

​

Total

​

   

Unrealized losses

   

Fair Value

   

Unrealized losses

   

Fair Value

   

Unrealized losses

   

Fair Value

Corporate debt securities

​

$

(8)

​

​

14,984

​

​

—

​

​

—

​

​

(8)

​

$

14,984

Total

​

$

(8)

​

$

14,984

​

$

—

​

$

—

​

$

(8)

​

$

14,984

​

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 or equal to 12 months as of December 31, 2023 are as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

 

Securities in an unrealized loss

 

Securities in an unrealized loss

 

​

​

​

​

​

​

 

position less than 12 months

 

position greater than or equal to 12 months

​

Total

​

   

Unrealized losses

   

Fair Value

   

Unrealized losses

   

Fair Value

   

Unrealized losses

   

Fair Value

Commercial paper

​

$

(12)

​

​

44,446

​

​

—

​

​

—

​

​

(12)

​

$

44,446

Corporate debt securities

​

$

—

​

​

—

​

​

(2)

​

​

1,648

​

​

(2)

​

$

1,648

Total

​

$

(12)

​

$

44,446

​

$

(2)

​

$

1,648

​

$

(14)

​

$

46,094

​

Available for sale debt securities at September 30, 2024 and December 31, 2023 mature as follows:

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

 

Less Than

 

More Than

​

    

12 Months

    

12 Months

Commercial paper

​

$

119,419

​

$

—

Corporate debt securities

​

​

44,642

​

​

—

Government obligations

​

​

294,037

​

​

—

Total

​

$

458,098

​

$

—

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

 

Less Than

 

More Than

​

    

12 Months

    

12 Months

Commercial paper

​

$

117,160

​

$

—

Corporate debt securities

​

 

1,648

​

 

—

Government obligations

​

​

141,296

​

​

—

Total

​

$

260,104

​

$

—

​

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 September 2019, the Company issued $287.5 million of 1.50% convertible senior notes due September 15, 2026 (the “2026 Convertible Notes,”). The fair value of the 2026 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 2026 Convertible Notes observed in market trading which are Level 2 inputs. The estimated fair value of the 2026 Convertible Notes at September 30, 2024 and December 31, 2023 was $293.4 million and $265.3 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 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. The fair value of the net sales milestones is determined utilizing a valuation framework that estimates net sales volatility to simulate a range of possible payment scenarios. The average of the payments in these scenarios is then discounted to calculate present fair value. As of September 30, 2024, the contingent consideration balance, consisting solely of the Upstaza related contingent milestones, was $22.0 million.

As of September 30, 2024, the weighted average discount rate for the Upstaza development and regulatory milestones was 5.5% and the weighted average probability of success was 95%. As of September 30, 2024, the weighted average discount

rate for the Upstaza net sales milestones was 13.0% and the weighted average probability of success for the net sales milestones was 98%.

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, 2024 and September 30, 2023:

​

​

​

​

​

​

​

​

​

​

Level 3 liabilities

​

​

Contingent consideration payable-

​

Contingent consideration payable-

​

​

development and regulatory

​

net sales milestones and royalties

​

    

milestones

    

​

Beginning balance as of December 31, 2023

​

$

26,600

​

$

9,700

Additions

​

 

—

​

 

—

Change in fair value

​

 

3,300

​

 

2,400

Reclassification to accounts payable and accrued expenses

​

​

—

​

​

—

Payments

​

​

(20,000)

​

​

—

Ending balance as of September 30, 2024

​

$

9,900

​

$

12,100

​

​

​

​

​

​

​

​

​

​

Level 3 liabilities

​

​

Contingent consideration payable-

​

Contingent consideration payable-

​

​

development and regulatory

​

net sales milestones and royalties

​

    

milestones

    

​

Beginning balance as of December 31, 2022

​

$

82,500

​

$

81,500

Additions

​

 

—

​

 

—

Change in fair value

​

 

(56,100)

​

 

(68,900)

Payments

​

​

—

​

​

—

Ending balance as of September 30, 2023

​

$

26,400

​

$

12,600

​

In May 2024, the Company’s BLA for its gene therapy treatment of AADC deficiency was accepted for filing by the FDA. The application has been granted priority review with a target regulatory action date of November 13, 2024. As a result of the acceptance, in accordance with the terms of the Agilis Merger Agreement, the Company paid a $20.0 million milestone payment to the former equityholders of Agilis during the three and nine months ended September 30, 2024.

​

The following significant unobservable inputs were used in the valuation of the contingent consideration payable for the periods ended September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

    

Fair Value

    

Valuation Technique

    

Unobservable Input

    

Range

Contingent consideration payable-
development and regulatory milestones

​

$9,900

 

 Probability-adjusted discounted cash flow 

 

Potential development and regulatory milestones
Probabilities of success
Discount rates
Projected years of payments

​

$0 - $11 million
95%
5.4% - 5.5%
2024 - 2026

Contingent considerable payable- net sales
milestones

​

$12,100

 

Option-pricing model with Monte Carlo simulation  

 

Potential net sales milestones
Probabilities of success
Discount rate
Projected years of payments

​

$0 - $50 million
95% - 100%
13%
2026 - 2034

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

    

Fair Value

    

Valuation Technique

    

Unobservable Input

    

Range

Contingent consideration payable-
development and regulatory milestones

​

$26,600

 

 Probability-adjusted discounted cash flow 

 

Potential development and regulatory milestones
Probabilities of success
Discount rates
Projected years of payments

​

$0 - $31 million
85% - 92%
5.8% - 6.1%
2024 - 2026

Contingent considerable payable- net sales
milestones

​

$9,700

 

Option-pricing model with Monte Carlo simulation  

 

Potential net sales milestones
Probabilities of success
Discount rate
Projected years of payments

​

$0 - $50 million
85% - 100%
11%
2026 - 2034

​

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.