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Fair Value Measurements and Marketable Securities | 12 Months Ended
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Dec. 31, 2021
Fair Value Disclosures [Abstract] |
Fair Value Measurements and Marketable Securities | 3. Fair Value Measurements and Marketable Securities The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands):
|  | Fair Value Measurements at December 31, 2021 Using: |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | — |  |  | $ | 109,316 |  |  | $ | — |  |  | $ | 109,316 |
Corporate bonds |  |  | — |  |  |  | 2,701 |  |  |  | — |  |  |  | 2,701 |
Total cash equivalents |  |  | — |  |  |  | 112,017 |  |  |  | — |  |  |  | 112,017 |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | — |  |  |  | 11,479 |  |  |  | — |  |  |  | 11,479 |
Commercial paper |  |  | — |  |  |  | 22,339 |  |  |  | — |  |  |  | 22,339 |
Total marketable securities |  |  | — |  |  |  | 33,818 |  |  |  | — |  |  |  | 33,818 |
Total cash equivalents and marketable securities |  | $ | — |  |  | $ | 145,835 |  |  | $ | — |  |  | $ | 145,835 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivative liability |  | $ | — |  |  | $ | — |  |  | $ | 802 |  |  | $ | 802 |
|  | $ | — |  |  | $ | — |  |  | $ | 802 |  |  | $ | 802 |
|  | Fair Value Measurements at December 31, 2020 Using: |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | — |  |  | $ | 73,488 |  |  | $ | — |  |  | $ | 73,488 |
Commercial paper |  |  |  |  |  | 5,998 |  |  |  | — |  |  |  | 5,998 |
Corporate bonds |  |  |  |  |  | 3,006 |  |  |  | — |  |  |  | 3,006 |
Total cash equivalents |  |  | — |  |  |  | 82,492 |  |  |  | — |  |  |  | 82,492 |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | — |  |  |  | 13,221 |  |  |  | — |  |  |  | 13,221 |
Commercial paper |  |  | — |  |  |  | 28,476 |  |  |  | — |  |  |  | 28,476 |
Total marketable securities |  |  | — |  |  |  | 41,697 |  |  |  | — |  |  |  | 41,697 |
Total cash equivalents and marketable securities |  | $ | — |  |  | $ | 124,189 |  |  | $ | — |  |  | $ | 124,189 |
Excluded from the tables above is cash of $0.6 million and $2.7 million as of December 31, 2021 and 2020, respectively. During the years ended December 31, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3 categories. Marketable Securities The Company’s marketable securities are classified as Level 2 assets under the fair value hierarchy as these assets were primarily determined from independent pricing sources, which generally derive security prices from recently reported trades for identical or similar securities. The Company evaluated debt securities with unrealized losses for any expected credit losses and determined unrealized losses on these securities were related to non-credit factors. Additionally, the Company currently does not intend to and is not required to sell these investments prior to an anticipated recovery in value. The following table summarizes the gross unrealized gains and losses of the Company’s marketable securities as of December 31, 2021 and 2020 (in thousands):
|  | December 31, 2021 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | 11,481 |  |  |  | — |  |  |  | (2 | ) |  |  | 11,479 |
Commercial paper |  |  | 22,339 |  |  |  | — |  |  |  | — |  |  |  | 22,339 |
|  | $ | 33,820 |  |  | $ | — |  |  | $ | (2 | ) |  | $ | 33,818 |
|  | December 31, 2020 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | 13,227 |  |  |  | — |  |  |  | (6 | ) |  |  | 13,221 |
Commercial paper |  |  | 28,476 |  |  |  | — |  |  |  | — |  |  |  | 28,476 |
|  | $ | 41,703 |  |  | $ | — |  |  | $ | (6 | ) |  | $ | 41,697 |
As of December 31, 2021 and 2020, all of the Company’s marketable securities had remaining contractual maturity dates of one year or less from the respective consolidated balance sheet date. Embedded Derivative In connection with the liability related to the sale of future royalties (see Note 10), the Company classified $1.0 million at inception of its Revenue Interest Financing Agreement as a derivative liability on its consolidated balance sheet because there were embedded instruments that represent a conditional obligation to pay HCR the final payment, which is 250% of the Investment Amount, upon an event of default or change of control. The Company will remeasure the derivative liability to fair value at each reporting date, and recognize changes in the fair value of the derivative liability as a component of other income (expense) in the consolidated statement of operations and comprehensive loss. The Company valued the Change of Control Provision using a Monte Carlo Simulation Method, assuming a lognormal distribution for revenue. The assumptions used in the valuation model include (1) our estimates of the probability and timing of related events (2) our estimates of future revenues subject to the Revenue Interest Financing Agreement (3) volatility (4) the risk-adjusted discount rate and (5) the probability of a change in control occurring during the term of the instrument. The fair value of the derivative liability upon issuance in October 2021 was $1.0 million, and is classified as Level 3 liability under the fair value hierarchy. As of December 31, 2021 the fair value of the derivative liability decreased by $0.2 million to $0.8 million, primarily due to the passage of time and changes in the market volatility and underlying credit risk inputs. L

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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=123874694&loc=d3e19207-110258 + Details
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