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Marketable Debt and Equity Securities

12 Months Ended

Dec. 31, 2021

Marketable Debt and Equity Securities

Marketable Debt and Equity Securities

3. Marketable Debt and Equity Securities

The Company’s marketable debt securities held as of December 31, 2021 and 2020 are summarized below:


		December 31, 2021
					Gross			Gross
		Amortized			Unrealized			Unrealized
		Cost			Gains			Losses			Fair Value
(in thousands)
Money Market Funds		$	123,892		$	—		$	—		$	123,892
Corporate Securities			144,584			—			(166)			144,418
Government Securities			311,148			1			(1,335)			309,814
		$	579,624		$	1		$	(1,501)		$	578,124

Reported as
Cash and cash equivalents											$	123,892
Marketable securities												454,232
Total investments											$	578,124


		December 31, 2020
					Gross			Gross
		Amortized			Unrealized			Unrealized
		Cost			Gains			Losses			Fair Value
(in thousands)
Money Market Funds		$	158,937		$	—		$	—		$	158,937
Corporate Securities			119,782			57			(6)			119,833
Government Securities			315,319			37			(3)			315,353
		$	594,038		$	94		$	(9)		$	594,123

Reported as
Cash and cash equivalents											$	158,937
Marketable securities												435,186
Total investments											$	594,123

The maturities of the Company’s marketable debt securities as of December 31, 2021 are as follows:


		Amortized			Estimated
		Cost			Fair Value
(in thousands)
Mature in one year or less		$	153,871		$	153,767
Mature within two years			301,861			300,465
		$	455,732		$	454,232

The unrealized losses on available-for-sale investments and their related fair values as of December 31, 2021 and 2020 are as follows:


		December 31, 2021
		Less than 12 months						12 months or greater
			Fair value			Unrealized losses			Fair value			Unrealized losses
(in thousands)
Corporate Securities		$	50,337		$	(51)		$	45,872		$	(115)
Government Securities			39,909			(54)			254,593			(1,281)
		$	90,246		$	(105)		$	300,465		$	(1,396)


		December 31, 2020
		Less than 12 months						12 months or greater
			Fair value			Unrealized losses			Fair value			Unrealized losses
(in thousands)
Corporate Securities		$	15,843		$	(6)		$	—		$	—
Government Securities			40,802			(3)			—			—
		$	56,645		$	(9)		$	—		$	—

The unrealized losses from the listed securities are due to a change in the interest rate environment and not a change in the credit quality of the securities.

The Company’s equity securities include securities with a readily determinable fair value. These investments are carried at fair value with changes in fair value recognized each period and reported within other income (expense). Equity securities with a readily determinable fair value and their fair values (in thousands) as of December 31, 2021 and 2020 are as follows:


		Fair Value			Fair Value
		December 31, 2021			December 31, 2020
Astria Common Stock		$	3,449		$	—
INmune Common Stock			19,233			—
Viridian Common Stock			14,178			5,303
		$	36,860		$	5,303

The Company also has investments in equity securities without a readily determinable fair value. The Company elects the measurement alternative to record these investments at their initial cost and evaluate such investments at each reporting period for evidence of impairment, or observable price changes in orderly transactions for the identical or a similar investment of the same issuer. During the year ended December 31, 2021, the Company recorded an impairment charge of $0.8 million related to the Astria preferred stock. Equity securities without a readily determinable fair value and their carrying values (in thousands) as of December 31, 2021 and 2020 are as follows:


		Carrying Value			Carrying Value
		December 31, 2021			December 31, 2020
Astria Preferred Stock		$	312		$	—
Zenas Preferred Stock			30,950			16,071
		$	31,262		$	16,071

In 2018, the Company received equity shares in Quellis Biosciences, Inc. (Quellis) in connection with a licensing transaction. The Company recorded the Quellis equity as securities without a readily determinable fair value, and the investment was recorded at its original cost. In 2021, Quellis merged into Catabasis Pharmaceuticals, Inc. (Catabasis), and the Company received 259,206 shares of common stock and 3,928 shares of preferred stock in Catabasis in exchange for its Quellis equity. In June 2021, 3,581 shares of the Catabasis preferred stock were exchanged for 3,580,539 shares of Catabasis common stock. The total 3,839,745 shares of the Catabasis common stock have a readily determinable fair value. In August 2021, Catabasis effected a reverse stock split of its shares of common stock at a ratio of 1:6, and in September 2021, Catabasis changed its name to Astria Therapeutics, Inc. (Astria). The adjustment in the fair value of the Astria common stock has been recorded in unrealized gain (loss) on equity securities for the year ended December 31, 2021.

The Company records its investment in the shares of Astria preferred stock as an equity interest without a readily determinable fair value. The Company elected to record the original 3,928 shares of preferred stock at their initial cost of $12.1 million and to review the carrying value for impairment or other changes in carrying value at each reporting period. After the conversion of 3,581 shares of Astria preferred stock to common stock in June 2021, the Company owned 347 shares of preferred stock and continued to carry the shares at their original cost of $1.1 million. The Company subsequently recorded impairment charges of $0.8 million related to its investment in Astria’s preferred stock.

In 2017, the Company received 1,585,000 shares of common stock of INmune Bio, Inc. (INmune) and an option to acquire an additional 10% of INmune’s outstanding shares of common stock in connection with a licensing transaction. The Company also received an option to acquire 108,000 shares of INmune common stock in connection with a designee appointed by us serving on the board of directors of INmune. The Company initially recorded its equity interest, including its option to acquire additional equity in INmune, at cost pursuant to ASC 323, Investments – Equity Method and Joint Ventures. In June 2021, the Company entered into an Option Cancellation Agreement with INmune and received $15.0 million in proceeds and an additional 192,533 shares of INmune common stock in exchange for the option to acquire 10% of INmune. During the three-month period ended June 30, 2021, the Company determined that it should no longer account for its investment in INmune under the equity method. In September 2021, the Company exercised its option to purchase 108,000 shares of INmune common stock for $0.8 million and the Company recorded a gain of $0.9 million on the purchase. The 1,885,533 shares of INmune common stock have a readily determinable fair value, and the adjustment in the fair value of the shares of INmune common stock was recorded in gain (loss) on equity securities for the year ended December 31, 2021.

In December 2020, the Company received 322,407 shares of common stock of Viridian Therapeutics, Inc. (Viridian) in connection with the Viridian Agreement (defined below). In December 2021, the Company received an additional 394,737 shares of common stock of Viridian in connection with the Second Viridian Agreement (defined below). The shares of Viridian common stock are classified as equity securities with a readily determinable fair value and the adjustment in the fair value of the shares of Viridian common stock was recorded in gain (loss) on equity securities for the year ended at December 31, 2021.

In 2020, the Company received an equity interest in Zenas BioPharma Limited (Zenas), in connection with the Zenas Agreement (defined below). The Company elected the measurement alternative to carry the Zenas equity at cost minus impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. In 2021, the Company received a warrant to receive equity from Zenas in connection with the Second Zenas Agreement (defined below). During the year ended December 31, 2021, there have not been any impairment or observable price changes related to this investment.

Unrealized gains and losses recognized on equity securities (in thousands) during the year ended December 31, 2021 and 2020 consist of the following:


		Year Ended December 31,
		2021			2020


Net gains recognized on equity securities		$	39,289		$	105
Less: net gains recognized on equity securities redeemed			18,301			801
Unrealized gain (losses) recognized on equity securities		$	20,988		$	(696)