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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Mar. 31, 2022
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | . FAIR VALUE MEASUREMENTS The Company has certain financial assets and liabilities that are recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements. • Level 1 — quoted prices for identical instruments in active markets; • Level 2 — quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and • Level 3 — valuations derived from valuation techniques in which one or more significant value drivers are unobservable. During the three months ended March 31, 2022, there were no transfers between Levels 1, 2 and 3. The tables below present information about the Company’s financial assets and liabilities that are measured and carried at fair value and indicate the level within the fair value hierarchy of valuation techniques it utilizes to determine such fair value:
|  | Fair Value Measurement as of March 31, 2022 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 606,498 |  |  | $ | 606,498 |  |  | $ | — |  |  | $ | — |
Commercial paper |  |  | 145,335 |  |  |  | — |  |  |  | 145,335 |  |  |  | — |
Government and government agency bonds |  |  | 602,288 |  |  |  | 54,856 |  |  |  | 547,432 |  |  |  | — |
Corporate bonds |  |  | 187,232 |  |  |  | — |  |  |  | 187,232 |  |  |  | — |
Strategic equity investments |  |  | 33,394 |  |  |  | 982 |  |  |  | — |  |  |  | 32,412 |
Certificates of deposit |  |  | 24,381 |  |  |  | — |  |  |  | 24,381 |  |  |  | — |
Total assets |  | $ | 1,599,128 |  |  | $ | 662,336 |  |  | $ | 904,380 |  |  | $ | 32,412 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | 43,600 |  |  | $ | — |  |  | $ | — |  |  | $ | 43,600 |
Total liabilities |  | $ | 43,600 |  |  | $ | — |  |  | $ | — |  |  | $ | 43,600 |
|  | Fair Value Measurement as of December 31, 2021 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 1,562,358 |  |  | $ | 1,562,358 |  |  | $ | — |  |  | $ | — |
Strategic equity investments |  |  | 34,892 |  |  |  | 2,480 |  |  |  | — |  |  |  | 32,412 |
Certificates of deposit |  |  | 250 |  |  |  | 250 |  |  |  | — |  |  |  | — |
Total assets |  | $ | 1,597,500 |  |  | $ | 1,565,088 |  |  | $ | — |  |  | $ | 32,412 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | 43,600 |  |  | $ | — |  |  | $ | — |  |  | $ | 43,600 |
Total liabilities |  | $ | 43,600 |  |  | $ | — |  |  | $ | — |  |  | $ | 43,600 |
The Company’s assets with fair value categorized as Level 1 within the fair value hierarchy include money market funds, the Company’s strategic investment in Lysogene S.A. and certain government and government agency bonds. The Company's assets with fair value categorized as Level 2 within the fair value hierarchy consist of commercial paper, certain government and government agency bonds, corporate bonds and certificates of deposit. These assets have been initially valued at the transaction price and subsequently valued at the end of each reporting period utilizing third-party pricing services. The pricing services use observable market inputs to determine value, which primarily consist of reportable trades. Certain of the government and government agency bonds, commercial paper and corporate bonds, with original maturities of less than three months, are presented as cash equivalents on the unaudited condensed consolidated balance sheets as of March 31, 2022. The Company’s assets with fair value categorized as Level 3 within the fair value hierarchy consist of a strategic investment in Series A preferred stock of Lacerta Therapeutics, Inc. (“Lacerta”) and strategic investments in two other private biotechnology companies. For more information related to Lacerta, please read Note 3, License and Collaboration Agreements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The fair value of the Lacerta investment was initially based on a cost approach corroborated by the Black-Scholes option pricing model. The most significant assumptions in the option pricing model include historical volatility of similar public companies, estimated term through Lacerta’s potential exit and a risk-free rate based on certain U.S. Treasury rates. The investments in the other two private companies are recorded at fair value at the time of purchase as measured by their respective investment cost. At the end of each reporting period, the fair value of the Company's strategic investments will be adjusted if the issuers are to issue similar or identical equity securities or when there is a triggering event for impairment. There were no valuation measurement events related to the fair value of the strategic investments during the three months ended March 31, 2022 and 2021, as no impairment indicators were identified nor were similar securities issued. The Company’s contingent consideration liability with fair value categorized as Level 3 within the fair value hierarchy relates to the regulatory-related contingent payments to Myonexus Therapeutics, Inc. (“Myonexus”) selling shareholders as well as to two academic institutions under separate license agreements that meet the definition of a derivative. For more information related to Myonexus, please read Note 3, License and Collaboration Agreements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The contingent consideration liability was estimated using an income approach based on the probability-weighted expected cash flows that incorporated industry-based probability adjusted assumptions relating to the achievement of the milestone and thus the likelihood of making the payments. This fair value measurement was based upon significant inputs not observable in the market and therefore represented a Level 3 measurement. Significant changes which increase or decrease the probabilities of achieving the milestone or shorten or lengthen the time required to achieve the milestone would result in a corresponding increase or decrease in the fair value of the liability. At the end of each reporting period, the fair value is adjusted to reflect the most current assumptions through earnings. For the three months ended March 31, 2022 and 2021, there have been no changes to the fair value of the contingent consideration liability. As of March 31, 2022, the contingent consideration was recorded as a non-current liability on the Company's unaudited consolidated balance sheets. The fair value of the senior notes due on November 15, 2024 (the “2024 Notes”) is based on open market trades and is classified as Level 1 in the fair value hierarchy. A s of March 31, 2022 and December 31, 2021, the fair value of the 2024 Notes was approximately $749.3 million and $846.1 million, respectively. The fair value of the December 13, 2019 term loan (the “December 2019 Term Loan”) is classified as Level 2 in the fair value hierarchy and is determined using a discounted cash flow analysis with market interest rates adjusted for credit risk as a significant input. A s of March 31, 2022 and December 31, 2021, the fair value of the December 2019 Term Loan was approximately $569.4 million and $576.1 million, respectively. The carrying values of the 2024 Notes and December 2019 Term Loan were $564.2 million and $534.6 million as of March 31, 2022 and $563.7 million and $533.2 million as of December 31, 2021, respectively. The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximated fair value because of the short-term maturity of these financial instruments.

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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