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FAIR VALUE MEASUREMENTS | 6 Months Ended
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Jun. 30, 2024
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | 4. 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 six months ended June 30, 2024, there were no transfers into or out of Level 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 the valuation techniques it utilizes to determine such fair value:
|  | Fair Value Measurement as of June 30, 2024 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 100,859 |  |  | $ | 100,859 |  |  | $ | — |  |  | $ | — |
Commercial paper |  |  | 26,866 |  |  |  | — |  |  |  | 26,866 |  |  |  | — |
Government and government agency bonds |  |  | 854,254 |  |  |  | — |  |  |  | 854,254 |  |  |  | — |
Corporate bonds |  |  | 180,781 |  |  |  | — |  |  |  | 180,781 |  |  |  | — |
Strategic investments |  |  | 7,606 |  |  |  | 6,606 |  |  |  | — |  |  |  | 1,000 |
Certificates of deposit |  |  | 53,130 |  |  |  | — |  |  |  | 53,130 |  |  |  | — |
Total assets |  | $ | 1,223,496 |  |  | $ | 107,465 |  |  | $ | 1,115,031 |  |  | $ | 1,000 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | 48,200 |  |  | $ | — |  |  | $ | — |  |  | $ | 48,200 |
Total liabilities |  | $ | 48,200 |  |  | $ | — |  |  | $ | — |  |  | $ | 48,200 |
|  | Fair Value Measurement as of December 31, 2023 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 63,919 |  |  | $ | 63,919 |  |  | $ | — |  |  | $ | — |
Commercial paper |  |  | 113,362 |  |  |  | — |  |  |  | 113,362 |  |  |  | — |
Government and government agency bonds |  |  | 1,001,137 |  |  |  | — |  |  |  | 1,001,137 |  |  |  | — |
Corporate bonds |  |  | 130,380 |  |  |  | — |  |  |  | 130,380 |  |  |  | — |
Strategic investments |  |  | 6,527 |  |  |  | 5,527 |  |  |  | — |  |  |  | 1,000 |
Certificates of deposit |  |  | 56,621 |  |  |  | — |  |  |  | 56,621 |  |  |  | — |
Total assets |  | $ | 1,371,946 |  |  | $ | 69,446 |  |  | $ | 1,301,500 |  |  | $ | 1,000 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | 38,100 |  |  | $ | — |  |  | $ | — |  |  | $ | 38,100 |
Total liabilities |  | $ | 38,100 |  |  | $ | — |  |  | $ | — |  |  | $ | 38,100 |
The Company’s assets with a fair value categorized as Level 1 within the fair value hierarchy include money market funds and the Company's strategic investment in a biotechnology company listed on the Nasdaq Global Market. The Company's assets with a fair value categorized as Level 2 within the fair value hierarchy consist of commercial paper, 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 Company uses observable market inputs to determine value, which primarily consist of reportable trades. Certain of the short-term investments with maturities of less than three months at the date of acquisition are presented as cash equivalents on the unaudited condensed consolidated balance sheets as of June 30, 2024. The Company’s assets with a fair value categorized as Level 3 within the fair value hierarchy consist of a strategic investment in a private biotechnology company whose fair value measurement was based upon significant inputs not observable in the market and therefore represented a Level 3 measurement. At the end of each reporting period, the fair value of the Company's strategic investments that are not listed securities are adjusted if the issuers were to issue similar or identical securities or when there is a triggering event for impairment. There were no valuation measurement events related to the fair value of the Company's Level 3 strategic investments during the six months ended June 30, 2024 or 2023, as no impairment indicators were identified nor were similar securities issued. The Company’s contingent consideration liability with a 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 to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 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. The following table represents a roll-forward of the fair value of Level 3 financial liabilities for the periods indicated:
|  | As of June 30, 2024 |  |  | As of June 30, 2023 |
|  | (in thousands) |
Fair value, as of beginning of period |  | $ | 38,100 |  |  | $ | 36,900 |
Change in estimated fair value |  |  | 10,100 |  |  |  | — |
Liabilities terminated |  |  | — |  |  |  | (800 | )
Fair value, as of end of period |  | $ | 48,200 |  |  | $ | 36,100 |
For the six months ended June 30, 2024, the Company recorded an increase of $10.1 million to account for the change in fair value of the Company's existing contingent consideration liabilities. These changes, which are recorded through earnings, were a result of updates made to certain inputs and assumptions impacting the probability-weighted expected cash flows, principally the probability of success of the underlying programs and the discount rate utilized to determine the present value of future payments to be made. As of June 30, 2024, the contingent consideration was recorded as a long-term liability on the Company's unaudited condensed consolidated balance sheets. For the six months ended June 30, 2023, a decrease of $0.8 million was recorded to account for the termination of a license agreement with an academic institution that had met the definition of a derivative. The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximated fair value because of the immediate or short-term maturity of these financial instruments. For fair value information related to the Company's debt facilities, please read Note 10, Indebtedness.

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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 -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/820/tableOfContent + Details
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