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FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2022
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 December 31, 2022 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

 

$

39,771

 

 

$

—

 

 

$

—

 

 

$

39,771

 

 

 

$

39,771

 

 

$

—

 

 

$

—

 

 

$

39,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash:

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

93

 

 

$

—

 

 

$

—

 

 

$

93

 

Certificate of deposit

 

 

271

 

 

 

—

 

 

 

—

 

 

 

271

 

 

 

$

364

 

 

$

—

 

 

$

—

 

 

$

364

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities (due in
   less than one year)

 

$

12,983

 

 

$

—

 

 

$

(62

)

 

$

12,921

 

Municipal securities (due in less than one year)

 

 

3,000

 

 

 

—

 

 

 

(24

)

 

 

2,976

 

Government-sponsored enterprise securities
   (due in less than one year)

 

 

9,860

 

 

 

—

 

 

 

(14

)

 

 

9,846

 

Commercial paper (due in less than one year)

 

 

64,285

 

 

 

6

 

 

 

(92

)

 

 

64,199

 

Corporate notes (due in less than one year)

 

 

26,014

 

 

 

—

 

 

 

(55

)

 

 

25,959

 

 

 

$

116,142

 

 

$

6

 

 

$

(247

)

 

$

115,901

 

 

Cash equivalents, restricted cash and marketable securities by security type at December 31, 2021 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

 

$

24,207

 

 

$

—

 

 

$

—

 

 

$

24,207

 

Commercial paper

 

 

7,499

 

 

 

—

 

 

 

—

 

 

 

7,499

 

 

 

$

31,706

 

 

$

—

 

 

$

—

 

 

$

31,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash:

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

93

 

 

$

—

 

 

$

—

 

 

$

93

 

Certificate of deposit

 

 

271

 

 

 

—

 

 

 

—

 

 

 

271

 

 

 

$

364

 

 

$

—

 

 

$

—

 

 

$

364

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities (due in
   less than one year)

 

$

15,585

 

 

$

—

 

 

$

(18

)

 

$

15,567

 

U.S. Treasury securities (due in
   one to two years)

 

 

1,524

 

 

 

—

 

 

 

(3

)

 

 

1,521

 

Municipal securities (due in
   one to two years)

 

 

3,000

 

 

 

—

 

 

 

(15

)

 

 

2,985

 

Government-sponsored enterprise securities
   (due in less than one year)

 

 

12,500

 

 

 

—

 

 

 

(7

)

 

 

12,493

 

Commercial paper (due in less than one year)

 

 

84,398

 

 

 

2

 

 

 

(38

)

 

 

84,362

 

Corporate notes (due in less than one year)

 

 

36,444

 

 

 

2

 

 

 

(17

)

 

 

36,429

 

Corporate notes (due in one to two years)

 

 

24,224

 

 

 

—

 

 

 

(79

)

 

 

24,145

 

 

 

$

177,675

 

 

$

4

 

 

$

(177

)

 

$

177,502

 

 

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 December 31, 2022 and 2021 were as follows:

 

 

 

Less Than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

 

 

 

 

Gross

 

 

 

 

 

Gross

 

 

 

 

 

Gross

 

 

 

Estimated

 

 

Unrealized

 

 

Estimated

 

 

Unrealized

 

 

Estimated

 

 

Unrealized

 

(In thousands)

 

Fair Value

 

 

Losses

 

 

Fair Value

 

 

Losses

 

 

Fair Value

 

 

Losses

 

As of December 31, 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury
   securities (due in
   less than one year)

 

$

11,424

 

 

$

(57

)

 

$

1,497

 

 

$

(5

)

 

$

12,921

 

 

$

(62

)

Municipal securities
   (due in less than a
   year)

 

 

—

 

 

 

—

 

 

 

2,976

 

 

 

(24

)

 

 

2,976

 

 

 

(24

)

Government-sponsored
   enterprise securities
   (due in less than
   one year)

 

 

9,845

 

 

 

(14

)

 

 

—

 

 

 

—

 

 

 

9,845

 

 

 

(14

)

Commercial paper
   (due in less than
   one year)

 

 

52,454

 

 

 

(92

)

 

 

—

 

 

 

—

 

 

 

52,454

 

 

 

(92

)

Corporate notes (due in
   less than one year)

 

 

1,998

 

 

 

(2

)

 

 

23,962

 

 

 

(53

)

 

 

25,960

 

 

 

(55

)

 

 

$

75,721

 

 

$

(165

)

 

$

28,435

 

 

$

(82

)

 

$

104,156

 

 

$

(247

)

As of December 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury
   securities (due in
   less than one year)

 

$

15,567

 

 

$

(18

)

 

$

—

 

 

$

—

 

 

$

15,567

 

 

$

(18

)

U.S. Treasury
   securities (due in
   one to two years)

 

 

1,521

 

 

 

(3

)

 

 

—

 

 

 

—

 

 

 

1,521

 

 

 

(3

)

Municipal securities
   (due in one to two
   years)

 

 

2,985

 

 

 

(15

)

 

 

—

 

 

 

—

 

 

 

2,985

 

 

 

(15

)

Government-sponsored
   enterprise securities
   (due in less than
   one year)

 

 

1,500

 

 

 

—

 

 

 

4,993

 

 

 

(7

)

 

 

6,493

 

 

 

(7

)

Commercial paper
   (due in less than
   one year)

 

 

66,872

 

 

 

(38

)

 

 

—

 

 

 

—

 

 

 

66,872

 

 

 

(38

)

Corporate notes (due in
   less than one year)

 

 

16,001

 

 

 

(17

)

 

 

—

 

 

 

—

 

 

 

16,001

 

 

 

(17

)

Corporate notes (due in
   one to two years)

 

 

24,145

 

 

 

(79

)

 

 

—

 

 

 

—

 

 

 

24,145

 

 

 

(79

)

 

 

$

128,591

 

 

$

(170

)

 

$

4,993

 

 

$

(7

)

 

$

133,584

 

 

$

(177

)

 

The gross unrealized losses related to U.S. Treasury securities, municipal securities, government-sponsored enterprise securities, commercial paper and corporate notes as of December 31, 2022 and 2021 were due to changes in interest rates and not credit risk. We determined that the gross unrealized losses on our cash equivalents and marketable securities as of December 31, 2022 and 2021 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 ongoing COVID-19 pandemic and ongoing geopolitical events, such as the current military conflict between Ukraine and Russia, as well as recent and potential future disruptions in access to bank deposits or lending commitments due to bank failure. 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 consolidated 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 the 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 consolidated balance sheets, including the category for such financial instruments.

Money market funds and certificates of deposit are categorized as Level 1 within the fair value hierarchy as their fair values are based on quoted prices available in active markets. Commercial paper, U.S. Treasury securities, municipal securities, government-sponsored enterprise securities and corporate notes 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 December 31, 2022 and 2021 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 December 31, 2022:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds(1)(2)

 

$

39,864

 

 

$

—

 

 

$

—

 

 

$

39,864

 

Certificate of deposit(2)

 

 

271

 

 

 

—

 

 

 

—

 

 

 

271

 

U.S. Treasury securities(3)

 

 

—

 

 

 

12,921

 

 

 

—

 

 

 

12,921

 

Municipal securities(3)

 

 

—

 

 

 

2,976

 

 

 

—

 

 

 

2,976

 

Government-sponsored enterprise securities(3)

 

 

—

 

 

 

9,846

 

 

 

—

 

 

 

9,846

 

Commercial paper(3)

 

 

—

 

 

 

64,199

 

 

 

—

 

 

 

64,199

 

Corporate notes(3)

 

 

—

 

 

 

25,959

 

 

 

—

 

 

 

25,959

 

Total

 

$

40,135

 

 

$

115,901

 

 

$

—

 

 

$

156,036

 

As of December 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds(1)

 

$

24,207

 

 

$

—

 

 

$

—

 

 

$

24,207

 

U.S. Treasury securities(3)(4)

 

 

—

 

 

 

17,088

 

 

 

—

 

 

 

17,088

 

Municipal securities(4)

 

 

—

 

 

 

2,985

 

 

 

—

 

 

 

2,985

 

Government-sponsored enterprise securities(3)

 

 

—

 

 

 

12,493

 

 

 

—

 

 

 

12,493

 

Commercial paper(1)(3)

 

 

—

 

 

 

91,861

 

 

 

—

 

 

 

91,861

 

Corporate notes(3)(4)

 

 

—

 

 

 

60,574

 

 

 

—

 

 

 

60,574

 

Total

 

$

24,207

 

 

$

185,001

 

 

$

—

 

 

$

209,208

 

 

(1)
Included in cash and cash equivalents on our consolidated balance sheets.
(2)
Included in restricted cash on our consolidated balance sheets.
(3)
Included in current portion of marketable securities on our consolidated balance sheets.
(4)
Included in noncurrent portion of marketable securities on our consolidated balance sheets.

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 them 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 reassessed the fair value of our equity investment in Sienna at each reporting date and any resulting change in fair value was recognized on our consolidated 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.

During the first quarter of 2021, we sold all of our holdings in BARD1 and recognized a net gain of approximately $1,233,000 from the sales, including gains from foreign currency translation adjustments, which has been included in other income and expense on our consolidated statements of operations. As of March 31, 2021, no value remained for our equity investment in BARD1.

Credit Risk

We currently place our cash, restricted cash, cash equivalents and marketable securities with five financial institutions in the United States. Generally, these deposits may be redeemed upon demand and therefore, bear minimal risk. Deposits with banks may exceed the amount of insurance provided on such deposits. Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents and marketable securities. Cash equivalents and marketable securities currently consist of money market funds,

government-sponsored enterprise securities, U.S. Treasury securities, municipal securities, commercial paper and corporate notes. Our investment policy, approved by the audit committee of our board of directors, limits the amount we may invest in any one type of investment issuer, thereby reducing credit risk concentrations. However, we are exposed to credit risk in the event of default by the financial institutions holding our cash and cash equivalents to the extent recorded in our consolidated balance sheets. We have not experienced any losses in such accounts and we believe that we are not exposed to significant credit risk of our financial position at the depository institutions in which those deposits are held.