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FAIR VALUE MEASUREMENTS | 9 Months Ended
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Sep. 30, 2020
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | 2. FAIR VALUE MEASUREMENTS Cash Equivalents and Marketable Securities Cash equivalents, restricted cash and marketable securities by security type at September 30, 2020 were as follows:
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Estimated |
(In thousands) |  | Cost |  |  | Gains |  |  | Losses |  |  | Fair Value |
Included in cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 41,608 |  |  | $ | — |  |  | $ | — |  |  | $ | 41,608 |
Restricted cash: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market fund |  | $ | 92 |  |  | $ | — |  |  | $ | — |  |  | $ | 92 |
Certificate of deposit |  |  | 271 |  |  |  | — |  |  |  | — |  |  |  | 271 |
|  | $ | 363 |  |  | $ | — |  |  | $ | — |  |  | $ | 363 |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities (due in one to two years) |  | $ | 5,635 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 5,636 |
Government-sponsored enterprise securities (due in less than one year) |  |  | 3,000 |  |  |  | — |  |  |  | — |  |  |  | 3,000 |
Government-sponsored enterprise securities (due in one to two years) |  |  | 11,000 |  |  |  | 1 |  |  |  | (1 | ) |  |  | 11,000 |
Commercial paper (due in less than one year) |  |  | 88,047 |  |  |  | 49 |  |  |  | (2 | ) |  |  | 88,094 |
Corporate notes (due in less than one year) |  |  | 91,471 |  |  |  | 107 |  |  |  | (5 | ) |  |  | 91,573 |
Corporate notes (due in one to two years) |  |  | 29,112 |  |  |  | 25 |  |  |  | (5 | ) |  |  | 29,132 |
|  | $ | 228,265 |  |  | $ | 183 |  |  | $ | (13 | ) |  | $ | 228,435 |
Cash equivalents, restricted cash and marketable securities by security type at December 31, 2019 were as follows:
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Estimated |
(In thousands) |  | Cost |  |  | Gains |  |  | Losses |  |  | Fair Value |
Included in cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 6,671 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,671 |
Commercial paper |  |  | 3,990 |  |  |  | — |  |  |  | — |  |  |  | 3,990 |
|  | $ | 10,661 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,661 |
Restricted cash: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Certificate of deposit |  | $ | 270 |  |  | $ | — |  |  | $ | — |  |  | $ | 270 |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprise securities (due in less than one year) |  | $ | 6,506 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 6,512 |
Government-sponsored enterprise securities (due in one to two years) |  |  | 6,999 |  |  |  | 1 |  |  |  | — |  |  |  | 7,000 |
Commercial paper (due in less than one year) |  |  | 40,110 |  |  |  | 33 |  |  |  | (3 | ) |  |  | 40,140 |
Corporate notes (due in less than one year) |  |  | 78,926 |  |  |  | 116 |  |  |  | (13 | ) |  |  | 79,029 |
Corporate notes (due in one to two years) |  |  | 12,659 |  |  |  | 1 |  |  |  | (9 | ) |  |  | 12,651 |
|  | $ | 145,200 |  |  | $ | 157 |  |  | $ | (25 | ) |  | $ | 145,332 |
Cash equivalents and marketable securities with unrealized losses that have been in a continuous unrealized loss position for less than 12 months and 12 months or longer at September 30, 2020 and December 31, 2019 were as follows:
|  | Less Than 12 Months |  |  | 12 Months or Longer |  |  | Total |
|  |  |  |  |  | Gross |  |  |  |  |  |  | Gross |  |  |  |  |  |  | Gross |
|  | Estimated |  |  | Unrealized |  |  | Estimated |  |  | Unrealized |  |  | Estimated |  |  | Unrealized |
(In thousands) |  | Fair Value |  |  | Losses |  |  | Fair Value |  |  | Losses |  |  | Fair Value |  |  | Losses |
As of September 30, 2020: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprise securities (due in one to two years) |  | $ | 5,999 |  |  | $ | (1 | ) |  | $ | — |  |  | $ | — |  |  | $ | 5,999 |  |  | $ | (1 | )
Commercial paper (due in less than one year) |  |  | 16,981 |  |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | 16,981 |  |  |  | (2 | )
Corporate notes (due in less than one year) |  |  | 20,096 |  |  |  | (5 | ) |  |  | — |  |  |  | — |  |  |  | 20,096 |  |  |  | (5 | )
Corporate notes (due in one to two years) |  |  | 10,519 |  |  |  | (5 | ) |  |  | — |  |  |  | — |  |  |  | 10,519 |  |  |  | (5 | )
|  | $ | 53,595 |  |  | $ | (13 | ) |  | $ | — |  |  | $ | — |  |  | $ | 53,595 |  |  | $ | (13 | )
As of December 31, 2019: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper (due in less than one year) |  | $ | 8,571 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | — |  |  | $ | 8,571 |  |  | $ | (3 | )
Corporate notes (due in less than one year) |  |  | 26,082 |  |  |  | (13 | ) |  |  | — |  |  |  | — |  |  |  | 26,082 |  |  |  | (13 | )
Corporate notes (due in one to two years) |  |  | 11,624 |  |  |  | (9 | ) |  |  | — |  |  |  | — |  |  |  | 11,624 |  |  |  | (9 | )
|  | $ | 46,277 |  |  | $ | (25 | ) |  | $ | — |  |  | $ | — |  |  | $ | 46,277 |  |  | $ | (25 | )
The gross unrealized losses related to government-sponsored enterprise securities, commercial paper and corporate notes as of September 30, 2020 and December 31, 2019 were due to changes in interest rates and not credit risk. We determined that the gross unrealized losses on our marketable securities as of September 30, 2020 and December 31, 2019 were temporary in nature. Our exposure to unrealized losses may increase in the future due to the economic pressures or uncertainties associated with local or global economic recessions as a result of the current COVID-19 pandemic. We review our investments quarterly to identify and evaluate whether any investments have indications of possible other-than-temporary impairment. Factors considered in determining whether a loss is temporary include the length of time and extent to which the fair value has been less than the amortized cost basis and whether we intend to sell the security or whether it is more likely than not that we would be required to sell the security before recovery of the amortized cost basis. We currently do not intend to sell these securities before recovery of their amortized cost bases. Fair Value on a Recurring Basis We categorize financial instruments recorded at fair value on our condensed balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:
| Level 1 | — | Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
| Level 2 | — | Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
| Level 3 | — | Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Below is a description of the valuation methodologies used for financial instruments measured at fair value on our condensed balance sheets, including the category for such financial instruments. Money market funds are categorized as Level 1 within the fair value hierarchy as their fair values are based on quoted prices available in active markets. C ommercial paper, government-sponsored enterprise securities, U.S. Treasury notes, corporate notes and equity investments are categorized as Level 2 within the fair value hierarchy as their fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. The following table presents information about our financial instruments that are measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 and indicates the fair value category assigned.
|  | Fair Value Measurements at Reporting Date Using |
|  | Quoted Prices in |  |  |  |  |  |  | Significant |  |  |  |  |
|  | Active Markets for |  |  | Significant Other |  |  | Unobservable |  |  |  |  |
|  | Identical Assets |  |  | Observable Inputs |  |  | Inputs |  |  |  |  |
(In thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
As of September 30, 2020: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds(1) |  | $ | 41,608 |  |  | $ | — |  |  | $ | — |  |  | $ | 41,608 |
U.S. Treasury notes(3) |  |  | — |  |  |  | 5,636 |  |  |  | — |  |  |  | 5,636 |
Government-sponsored enterprise securities(2)(3) |  |  | — |  |  |  | 14,000 |  |  |  | — |  |  |  | 14,000 |
Commercial paper(2) |  |  | — |  |  |  | 88,094 |  |  |  | — |  |  |  | 88,094 |
Corporate notes(2)(3) |  |  | — |  |  |  | 120,705 |  |  |  | — |  |  |  | 120,705 |
Equity investment(4) |  |  | — |  |  |  | 385 |  |  |  | — |  |  |  | 385 |
Total |  | $ | 41,608 |  |  | $ | 228,820 |  |  | $ | — |  |  | $ | 270,428 |
As of December 31, 2019: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds(1) |  | $ | 6,671 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,671 |
Government-sponsored enterprise securities (2)(3) |  |  | — |  |  |  | 13,512 |  |  |  | — |  |  |  | 13,512 |
Commercial paper(1)(2) |  |  | — |  |  |  | 44,130 |  |  |  | — |  |  |  | 44,130 |
Corporate notes(2)(3) |  |  | — |  |  |  | 91,680 |  |  |  | — |  |  |  | 91,680 |
Equity investment(4) |  |  | — |  |  |  | 389 |  |  |  | — |  |  |  | 389 |
Total |  | $ | 6,671 |  |  | $ | 149,711 |  |  | $ | — |  |  | $ | 156,382 |
(1) | Included in cash and cash equivalents on our condensed balance sheets.
(2) | Included in current portion of marketable securities on our condensed balance sheets.
(3) | Included in noncurrent portion of marketable securities on our condensed balance sheets.
(4) | Included in deposits and other assets on our condensed balance sheets. See “Equity Investment” in this Note 2 for further discussion of this equity investment.
Equity Investment In December 2007, we received 13,842,625 ordinary shares in Sienna Cancer Diagnostics Limited, or Sienna, in connection with a license we granted to Sienna for our hTERT technology for use in human diagnostics. The shares, which represented less than 20% ownership, were recorded at a zero cost basis under the cost method of accounting, upon receipt. Since the adoption of ASU 2016-01 on January 1, 2018, we reassess the fair value of our equity investment in Sienna at each reporting date and any resulting change in fair value is recognized on our condensed statements of operations. In April 2020, Sienna announced its merger with BARD1 Life Sciences Limited, or BARD1, subject to approval by Sienna’s shareholders. Effective August 3, 2020, the merger was complete, and we received 13 BARD1 shares for every five shares of Sienna ordinary shares, resulting in our ownership of 35,990,825 shares of BARD1. In connection with this exchange, we recognized a gain of $182,000 which has been included in interest and other income on our condensed statements of operations. In the third quarter of 2020, we sold 15,322,939 shares of BARD1 and received $339,000 in net proceeds. In connection with the sales, we also recognized $34,000 in realized losses, which has been included in interest and other income. As of September 30, 2020, we held 20,667,886 shares of BARD1 and the fair value of those shares was $385,000, as reported on the Australian stock exchange and translated into U.S. dollars. For the three and nine months ended September 30, 2020, we recognized a decrease in fair value of equity investment of $118,000 and an increase in fair value of $109,000, respectively, compared to a decrease in fair value of $195,000 for each of the comparable periods in 2019, related to observable price changes on our condensed statements of operations. For the three and nine months ended September 30, 2020, we also recognized net gain s of $27,000 and $78,000, respectively, compared to net loss es of $14,000 and $17,000, respectively, for each of the comparable periods in 2019, related to foreign currency translation from Australian dollar to U.S. dollar, which have been included in interest and other expense o n our condensed statements of operations.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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