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Fair Value Measurements
 3 Months Ended
Mar. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements FAIR VALUE MEASUREMENTS
Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type are presented in the following table:
 March 31, 2024
 Level 1Level 2Level 3Total
Assets:
Money market funds(1)
$186,744 $— $— $186,744 
U.S. Treasury securities31,812 — — 31,812 
Commercial paper— 30,828 — 30,828 
Corporate debt securities— 25,490 — 25,490 
Government-related debt securities— 23,604 — 23,604 
Common stock in LianBio46 — — 46 
Total assets measured at fair value$218,602 $79,922 $— $298,524 
(1) This balance includes cash requirements settled on a nightly basis.
December 31, 2023
Level 1Level 2Level 3Total
Assets:
Money market funds(1)
$224,947 $— $— $224,947 
Government-related debt securities— 2,495 — 2,495 
Common stock in LianBio631 — — 631 
Equity warrants (for LianBio shares)— — 225 225 
Total assets measured at fair value$225,578 $2,495 $225 $228,298 
(1) This balance includes cash requirements settled on a nightly basis.
Money Market Funds and U.S. Treasury Securities
Money market funds and U.S. Treasury securities are highly liquid investments and are actively traded with readily-available market prices that are publicly observable and independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.
Commercial Paper, Corporate Debt Securities and Government-related Debt Securities
Commercial paper, corporate debt securities and government-related debt securities were valued using Level 2 inputs that utilized industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. The Company reviews trading activity and pricing for these investments as of each measurement date.
LianBio Common Stock and Equity Warrants
In March 2021, contemporaneous with the China Out-License transaction, the Company and LianBio, executed a warrant agreement for the Company to purchase, in three tranches, common shares in LianBio at an exercise price equal to common stock par value, which converted into warrants of the parent company of LianBio (a pharmaceutical company focused on the Greater China and other Asian markets; Nasdaq: LIAN; any references to common stock or warrants of LianBio shall refer to common stock or warrants of the publicly-traded parent of LianBio) in connection with LianBio's previous Initial Public Offering. The first two tranches were vested exercised, and converted into 156,746 shares of LianBio common stock as of December 31, 2022 and are recognized at fair value within long-term investments in the Condensed Balance Sheets as of March 31, 2024 and December 31, 2023.
On February 13, 2024, LianBio announced its plan to wind down its operations. On March 14, 2024, LianBio's Board of Directors made a special cash dividend payment to the Company for $0.7 million (equivalent to $4.80 per share), which was recorded to other income (expense) in the Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024, and cash and cash equivalents in the Condensed Balance Sheets as of March 31, 2024. LianBio was delisted from NASDAQ in March 2024 and now trades on the over-the-counter markets. As of March 31, 2024 and December 31, 2023, LianBio common stock is classified within Level 1 of the fair value hierarchy, given its publicly reported price.
On March 26, 2024, the Company executed an agreement with LianBio to terminate the unvested third warrant tranche (the "Warrant Termination Agreement") for a cancellation payment of $0.4 million (see Note 8). Upon execution of the Warrant Termination Agreement the Company recorded the final change in fair value of the equity warrant to other income (expense) in the Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024, and removed the equity warrant from other assets in the Condensed Balance Sheet as of March 31, 2024. The third tranche of the equity warrant was classified as Level 3 in the fair value hierarchy and presented within other assets in the accompanying Condensed Balance Sheets as of December 31, 2023. The most significant assumptions used in the option pricing valuation model as of each balance sheet date to determine its fair value included observable and unobservable inputs: LianBio common stock volatility (based on the historical volatility of similar companies); the probability of regulatory milestone achievement for vesting; and the application of an assumed discount rate.
The estimated fair value of the equity warrants were remeasured each reporting period with adjustments reported within other income (expense) on the accompanying Condensed Statements of Operations and Comprehensive Loss, until exercised, expired or terminated. These equity warrants are valued in the accompanying Condensed Financial Statements as follows:
Value of equity warrants
Fair value as of December 31, 2023$225 
Remeasurement of equity warrants prior to termination(201)
Termination of equity warrants(24)
Fair value as of March 31, 2024$— 
Value of equity warrants
Fair value as of December 31, 2022$108 
Remeasurement of equity warrants(17)
Fair value as of March 31, 2023$91 
The fair value and amortized cost of cash equivalents and available-for-sale investments by major security type are presented in the following table:
March 31, 2024
Amortized costUnrealized gainsUnrealized lossesEstimated fair value
Cash equivalents:
Money market funds(1)
$186,744 $— $— $186,744 
U.S. Treasury securities3,484 — — 3,484 
Commercial paper3,478 — (1)3,477 
Total cash equivalents$193,706 $— $(1)$193,705 
Marketable securities:
U.S. Treasury securities$28,341 $— $(13)$28,328 
Commercial paper27,374 — (23)27,351 
Corporate debt securities25,509 — (19)25,490 
Government-related debt securities23,613 4 (13)23,604 
Common stock in LianBio1,108 — (1,062)46 
Total marketable securities$105,945 $4 $(1,130)$104,819 
(1) This balance includes cash requirements settled on a nightly basis.
December 31, 2023
Amortized costUnrealized gainsUnrealized lossesEstimated fair value
Cash equivalents:
Money market funds(1)
$224,947 $— $— $224,947 
Total cash equivalents$224,947 $— $— $224,947 
Marketable securities:
Government-related debt securities$2,496 $— $(1)$2,495 
Total marketable securities$2,496 $— $(1)$2,495 
Long-term investments:
Common stock in LianBio$1,108 $— $(477)$631 
Total long-term investments$1,108 $— $(477)$631 
(1 ) This balance includes cash requirements settled on a nightly basis.
As of March 31, 2024, substantially all available-for-sale debt securities had a maturity of 12 months or less. Four securities have a contractual maturity between one and two years, with an estimated fair market value of $20.6 million and amortized cost of $20.6 million. As of December 31, 2023, all available-for-sale debt securities had a maturity of 12 months or less. As of March 31, 2024 and December 31, 2023, the Company had twenty-six available-for-sale debt securities and one available-for-sale debt security, respectively, in a continuous gross unrealized loss position for less than one year. As of March 31, 2024 and December 31, 2023, unrealized credit losses on these securities were not material. Further, the Company does not intend to sell these investments prior to maturity and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis. Accordingly, the Company did not recognize any other-than-temporary impairment losses.