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Assets and Liabilities Measured at Fair Value

9 Months Ended

Sep. 30, 2023

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 September 30, 2023 are identified in the following tables:


(in thousands)	Level 2		Total
Assets:
Commercial paper	$	16,829	$	16,829
Money market	6,818		6,818
	$	23,647	$	23,647


(in thousands)	Level 2		Total
Liabilities:
Deferred compensation plan liability	$	6,718	$	6,718
	$	6,718	$	6,718

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, 2022 are identified in the following tables:


(in thousands)	Level 2		Total
Assets:
Commercial paper	$	144,381	$	144,381
Money market	5,808		5,808
	$	150,189	$	150,189


(in thousands)	Level 2		Level 3		Total
Liabilities:
Contingent consideration payable	$	—	$	21,417	$	21,417
Deferred compensation plan liability	5,458		—		5,458
	$	5,458	$	21,417	$	26,875

The Company's Senior Secured Term Loan due 2026 falls 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 due 2026 approximates the fair value. Deferred compensation plan liability is recorded as a component of other non-current liabilities on the Company's Consolidated Balance Sheets.

The Company did not have any Level 3 assets as of September 30, 2023 or December 31, 2022. Liabilities measured at fair value using Level 3 inputs consisted of contingent consideration.

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.

Contingent Consideration Payable

The contingent consideration payable resulted from the acquisition of Callidus Biopharma, Inc. ("Callidus") in November 2013. The Company reached regulatory milestones of $9.0 million in March 2023 and $15.0 million in September 2023 associated with the approval of Pombiliti™ by the EC and FDA, respectively. The $9.0 million milestone payment was paid in the second quarter of 2023 and the $15.0 million milestone payment, which is payable in cash, is recorded as a component of accounts payable on the Company's Consolidated Balance Sheets as of September 30, 2023.

The following table shows the change in the balance of contingent consideration payable for the three and nine months ended September 30, 2023 and 2022, respectively:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Balance, beginning of the period	$	13,005	$	19,266	$	21,417	$	20,339
Changes in fair value during the period, included in the Consolidated Statements of Operations	1,995		567		2,583		(506)
Milestone paid or payable in cash	(15,000)		—		(24,000)		—
Balance, end of the period	$	—	$	19,833	$	—	$	19,833

- 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.

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