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Fair Value Measurements
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements

4. Fair Value Measurements

The Company’s investments include cash equivalents, available-for-sale investment securities consisting of money market funds, U.S. treasury notes, and marketable debt instruments of corporations and government sponsored enterprises in accordance with the Company’s investment policy, and equity investments. The Company’s investment policy defines allowable investment securities and establishes guidelines relating to credit quality, diversification, and maturities of its investments to preserve principal and maintain liquidity. All investment securities have a credit rating of at least Aa3/AA- or better, or P-1/A-1 or better, as determined by Moody’s Investors Service or Standard & Poor’s.

The Company’s cash equivalents, available-for-sale investment securities, and equity securities are classified within the fair value hierarchy as defined by authoritative guidance. The Company’s investment securities and equity securities classified as Level 1 are valued using quoted market prices. The Company obtains the fair value of its Level 2 financial instruments from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other

market-related data, are observable. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and matrices and obtaining market values from other pricing sources. After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by these pricing services as of December 31, 2024 and 2023, respectively.

In November 2021, the Company established a plan whereby substantially all full-time employees excluding executive management are eligible to receive a series of cash bonuses based on achievement of certain conditions as described in more detail in Note 6 to the consolidated financial statements. The Company estimated the fair value of the cash awards using a Monte Carlo simulation, which utilizes level 3 inputs such as volatility, probabilities of success, and other inputs that are not observable in active markets. The cash awards are required to be measured at fair value on a recurring basis each reporting period, with changes in the fair value recognized as compensation cost over the derived service period of the awards.

The Company has not transferred any investment securities between the classification levels.

The recurring fair value measurements of the Company’s cash equivalents, available-for-sale investment securities, and equity securities at December 31, 2024 and 2023 consisted of the following (in thousands):

 

 

 

 

 

Fair Value Measurements at
Reporting Date Using

 

 

 

December 31, 2024

 

 

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

151,555

 

 

$

151,555

 

 

$

—

 

 

$

—

 

U.S. Treasury notes

 

 

245,903

 

 

 

245,903

 

 

 

—

 

 

 

—

 

Government sponsored enterprise securities

 

 

190,501

 

 

 

—

 

 

 

190,501

 

 

 

—

 

Total

 

$

587,959

 

 

$

397,458

 

 

$

190,501

 

 

$

—

 

 

 

 

 

 

 

Fair Value Measurements at
Reporting Date Using

 

 

 

December 31, 2023

 

 

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

64,586

 

 

$

64,586

 

 

$

—

 

 

$

—

 

U.S. Treasury notes

 

 

75,334

 

 

 

75,334

 

 

 

—

 

 

 

—

 

Government sponsored enterprise securities

 

 

174,874

 

 

 

—

 

 

 

174,874

 

 

 

—

 

Total

 

$

314,794

 

 

$

139,920

 

 

$

174,874

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Cash awards

 

$

4,506

 

 

$

—

 

 

$

—

 

 

$

4,506

 

    Total

 

$

4,506

 

 

$

—

 

 

$

—

 

 

$

4,506

 

Changes in estimated fair value of contingent cash awards during the twelve months ended December 31, 2024 are as follows (in thousands):

 

Balance as of December 31, 2023

 

$

4,506

 

Vesting of awards

 

 

—

 

Expense forfeited

 

 

(392

)

Change in fair value

 

 

(4,114

)

Balance as of December 31, 2024

 

$

—