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Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Fair Value Measurements

Fair Value Measurements

3.Fair Value Measurements

The fair value of financial instruments are classified into one of the following categories based upon the lowest level of input that is significant to the fair value measurement:

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Level 1 — Quoted prices in active markets for identical assets or liabilities.

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Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair values of cash equivalents approximate their carrying values due to the short-term nature of such financial instruments.

In connection with the Surface Acquisition on September 8, 2023 (see Note 6. Surface Acquisition), the Company acquired money market funds and marketable securities and recorded a contingent consideration liability related to the CVRs. At the end of each reporting period, the fair value of the CVR liability is determined using a financial model representing a Level 3 measurement within the fair value hierarchy. Assumptions used in this calculation include estimated revenue, discount rate and various probability factors. If different assumptions were used for the various inputs, the estimated fair value could be significantly higher or lower than the fair value the Company determined. For example, increases in discount rates and the time to payment may result in lower fair value measurements. There is no assurance that any of the conditions for payment of the CVR liability will be met. As of December 31, 2023, the CVR liability was reduced by a fair value adjustment of $0.9 million which was recorded within selling, general and administrative expense in the

consolidated statements of operations. The CVR liabilities were recorded in accrued and other current liabilities and other liabilities, non-current on the consolidated balance sheets.

Financial liabilities related to long-term debt obligations are summarized in Note 8. Debt Obligations. Other financial liabilities and financial assets measured at fair value on a recurring basis are summarized as follows:


		Fair Value Measurements
		December 31, 2023
(in thousands)		Level 1			Level 2			Level 3			Total
Financial Assets:
Cash equivalents⁽¹⁾		$	88,460		$	998		$	—		$	89,458
Marketable debt securities:
U.S. government agency securities			5,195			—			—			5,195
U.S. treasury securities			2,993			—			—			2,993
Commercial paper and corporate notes			—			6,669			—			6,669
Prepaid financial instrument in Prepaid manufacturing⁽²⁾			—			—			625			625
Total		$	96,648		$	7,667		$	625		$	104,940
Financial Liabilities:
Contingent consideration		$	—		$	—		$	4,472		$	4,472


		Fair Value Measurements
		December 31, 2022
(in thousands)		Level 1			Level 2			Level 3			Total
Financial Assets:
Cash equivalents⁽¹⁾		$	55,060		$	—		$	—		$	55,060
Marketable debt securities:
U.S. government agency securities			19,964			—			—			19,964
U.S. treasury securities			68,418			—			—			68,418
Commercial paper and corporate notes			—			48,203			—			48,203
Total		$	143,442		$	48,203		$	—		$	191,645

(1)	Cash equivalents consist of money market funds, U.S treasury securities, and commercial paper and corporate notes with original maturities of 90 days or less.

(2)	Relates to Optional Stock Purchase Agreement.

The cost, unrealized gains or losses, and fair value by investment type are summarized as follows:


		December 31, 2023
(in thousands)		Cost			Unrealized Gain			Unrealized (Loss)			Fair Value
Money market funds		$	79,484		$	—		$	—		$	79,484
U.S. government agency securities			5,200			—			(5)			5,195
U.S. treasury securities			11,967			2			—			11,969
Commercial paper and corporate notes			7,673			—			(6)			7,667
Total		$	104,324		$	2		$	(11)		$	104,315


		December 31, 2022
(in thousands)		Cost			Unrealized Gain			Unrealized (Loss)			Fair Value
Money market funds		$	55,060		$	—		$	—		$	55,060
U.S. government agency securities			19,929			35			—			19,964
U.S. treasury securities			68,431			8			(21)			68,418
Commercial paper and corporate notes			48,203			—			—			48,203
Total		$	191,623		$	43		$	(21)		$	191,645

The Company held 9 and 13 positions that were in unrealized loss positions as of December 31, 2023 and 2022, respectively. No impairment was recognized in 2023 or 2022. As of December 31, 2023 and 2022, the remaining contractual maturities of available-for-sale securities were less than one year, and the average maturity of investments upon acquisition was approximately 9 and 7 months, respectively. The accrued interest receivable on available-for-sale marketable securities was immaterial at December 31, 2023 and 2022.

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.

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