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Assets and Liabilities Measured at Fair Value
 12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value Assets and Liabilities Measured at Fair Value
The Company's financial assets and liabilities are measured at fair value and classified within the fair value hierarchy which is defined as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly.
Level 3 — Inputs that are unobservable for the asset or liability.
A summary of the fair value of the Company's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall as of December 31, 2019 are identified in the following table:
(in thousands)
 
Level 2
 
Total
Assets:
 
 
 
 
Commercial paper
 
$
73,710

 
$
73,710

Asset-back securities
 
77,810

 
77,810

Corporate debt securities
 
145,991

 
145,991

U.S. Government Agency Bonds
 
11,991

 
11,991

Money market funds
 
4,768

 
4,768

 
 
$
314,270

 
$
314,270

(in thousands)
 
Level 2
 
Level 3
 
Total
Liabilities:
 
 
 
 
 
 
Contingent consideration payable
 
$
—

 
$
22,681

 
$
22,681

Deferred compensation plan liability
 
4,419

 
—

 
4,419

 
 
$
4,419

 
$
22,681

 
$
27,100

A summary of the fair value of the Company's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall as of December 31, 2018 are identified in the following table:
(in thousands)
 
Level 2
 
Total
Assets:
 
 
 
 
Commercial paper
 
$
115,141

 
$
115,141

Asset-back securities
 
68,135

 
68,135

Corporate debt securities
 
240,726

 
240,726

Money market funds
 
3,082

 
3,082

 
 
$
427,084

 
$
427,084

(in thousands)
 
Level 2
 
Level 3
 
Total
Liabilities:
 
 
 
 
 
 
Contingent consideration payable
 
$
—

 
$
19,700

 
$
19,700

Deferred compensation plan liability
 
2,732

 
—

 
2,732

 
 
$
2,732

 
$
19,700

 
$
22,432


The Company’s Convertible Notes falls into the Level 2 category within the fair value level hierarchy. The fair value was determined using broker quotes in a non-active market for valuation. The fair value of the Convertible Notes at December 31, 2019 was approximately $5.0 million.
The Company’s Senior Secured Term Loan fall into the Level 2 category within the fair value level hierarchy and the fair value was determined using quoted prices for similar liabilities in active markets, as well as inputs that are observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals. The carrying value of the Senior Secured Term Loan approximates the fair value.
The Company did not have any Level 3 assets as of December 31, 2019 or December 31, 2018.
Cash, Money Market Funds and Marketable Securities
The Company classifies its cash within the fair value hierarchy as Level 1 as these assets are valued using quoted prices in an active market for identical assets at the measurement date. The Company considers its investments in marketable securities as available-for-sale and classifies these assets and the money market funds within the fair value hierarchy as Level 2 primarily utilizing broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2019. No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the year ended December 31, 2019.
Contingent Consideration Payable
The contingent consideration payable resulted from the acquisition of Callidus, as discussed in "— Note 3. Acquisitions." The most recent valuation was determined using a probability weighted discounted cash flow valuation approach. Using this approach, expected future cash flows are calculated over the expected life of the agreement, are discounted, and then exercise scenario probabilities are applied. The valuation is performed quarterly. Gains and losses are included in the Consolidated Statements of Operations.
The contingent consideration payable for Callidus has been classified as a Level 3 recurring liability as its 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 approach, the estimated fair value could be significantly higher or lower than the fair value the Company determined. The Company may be required to record losses in future periods.
The following significant unobservable inputs were used in the valuation of the contingent consideration payable of Callidus for the ATB-200 Pompe program:
Contingent Consideration Liability
 
Fair value as of December 31, 2019
 
Valuation Technique
 
Unobservable Input
 
Range
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate
 
9.6%
Clinical and regulatory milestones
 
$
22,390

 
Probability weighted discounted cash flow
 
Probability of achievement of milestones
 
75% - 78%
 
 
 
 
 
 
Projected year of payments
 
2021 - 2022

Contingent consideration liabilities are remeasured to fair value each reporting period using discount rates, probabilities of payment, and projected payment dates. Projected contingent payment amounts related to clinical and regulatory based milestones are discounted back to the current period using a discounted cash flow model. Increases in discount rates and the time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs together, or in isolation, may result in a significantly lower or higher fair value measurement. There is no assurance that any of the conditions for the milestone payments will be met.
The Company reached a clinical milestone, which was the dosing of the first patient in a Phase 3 study, related to the contingent consideration from the acquisition of Callidus. The milestone for this event was $9.0 million, which was paid in Company common stock in the first quarter of 2019, resulting in $9.3 million impact on stockholder's equity.


The following table shows the change in the balance of contingent consideration payable for the year ended December 31, 2019 and 2018, respectively:
 
 
Year ended December 31,
(in thousands)
 
2019
 
2018
Balance, beginning of the period
 
$
19,700

 
$
25,400

Milestones payable, included in accrued expenses
 
—

 
(9,000
)
Changes in fair value during the period, included in the Consolidated Statements of Operations
 
3,297

 
3,300

Adjustment for contingent consideration paid in stock
 
(316
)
 
—

Balance, end of the period
 
$
22,681

 
$
19,700


Deferred Compensation Plan - Investment and Liability
The Deferred Compensation Plan (the "Deferral Plan") provides certain key employees and members of the Board of Directors with an opportunity to defer the receipt of such participant’s base salary, bonus and director’s fees, as applicable. Deferral Plan assets are classified as trading securities and recorded at fair value with changes in the investment’s fair value recognized in the period they occur. The asset investments consist of market exchanged mutual funds. The Company considers its investments in marketable securities as available-for-sale and classifies these assets and related liability within the fair value hierarchy as Level 2, primarily utilizing broker quotes in a non-active market for valuation of these securities.