The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following three levels:

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Current assets:
Cash equivalents:
Money market funds	$	15,677	$	—	$	—	$	15,677
Corporate debt securities		—		2,500		—		2,500
Commercial paper		—		13,499		—		13,499
Total cash equivalents		15,677		15,999		—		31,676
Short-term investments:
Corporate debt securities		—		11,588		—		11,588
Commercial paper		—		50,027		—		50,027
Total short-term investments		—		61,615		—		61,615
Total assets measured at fair value	$	15,677	$	77,614	$	—	$	93,291

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Current assets:
Cash equivalents:
Money market funds	$	12,859	$	—	$	—	$	12,859
Corporate debt securities		—		500		—		500
Total cash equivalents		12,859		500		—		13,359
Short-term investments:
Government agency bonds		—		2,750		—		2,750
Corporate debt securities		—		11,349		—		11,349
Commercial paper		—		5,987		—		5,987
Total short-term investments		—		20,086		—		20,086
Total assets measured at fair value	$	12,859	$	20,586	$	—	$	33,445
Current liabilities:
Preferred stock tranche obligation	$	—	$	—	$	2,158	$	2,158
Total liabilities measured at fair value	$	—	$	—	$	2,158	$	2,158

The following tables present information as to cost, unrealized gains and losses and fair value determination of the Company’s financial assets measured at fair value on a recurring basis (in thousands):

	December 31, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses			Aggregate Fair Value
Current assets:
Cash equivalents:
Money market funds	$	15,677	$	—	$	—		$	15,677
Corporate debt securities		2,502		—		(2	)		2,500
Commercial paper		13,498		1		—			13,499
Total cash equivalents		31,677		1		(2	)		31,676
Short-term investments:
Corporate debt securities		11,588		1		(1	)		11,588
Commercial paper		50,030		2		(5	)		50,027
Total short-term investments		61,618		3		(6	)		61,615
Total assets measured at fair value	$	93,295	$	4	$	(8	)	$	93,291

	December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Aggregate Fair Value
Current assets:
Cash equivalents:
Money market funds	$	12,859	$	—	$	—		$	12,859
Corporate debt securities		500		—		—			500
Total cash equivalents		13,359		—		—			13,359
Short-term investments:
Government agency bonds		2,750		—		—			2,750
Corporate debt securities		11,348		2		(1	)		11,349
Commercial paper		5,985		2		—			5,987
Total short-term investments		20,083		4		(1	)		20,086
Total assets measured at fair value	$	33,442	$	4	$	(1	)	$	33,445

Money market funds are highly liquid investments which are actively traded. The pricing information on the Company’s money market funds is based on quoted prices in active markets for identical securities. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

The fair value of short-term investments is determined from market pricing and other observable market inputs for similar securities obtained from various third-party data providers. The pricing services utilize industry-standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.

As of December 31, 2020 and 2019, the contractual maturities of all available-for-sale investments were less than 12 months. The Company periodically reviews the available-for-sale investments for other-than-temporary impairment loss. All investments with unrealized losses have been in a loss position for less than 12 months. As a result, the Company did not recognize any other-than-temporary impairment losses as of December 31, 2020 and 2019.

In connection with the Company’s convertible preferred stock financing in July 2019, certain investors were granted an option to purchase additional shares contingent upon delivery to them of certain clinical trial results (the Preferred Stock Tranche Obligation, see Note 6). In September 2020, the board of directors and these investors amended the stock purchase agreement such that the option to purchase additional shares would no longer be exercisable and would expire upon the effectiveness of the Company’s IPO registration statement on September 24, 2020. As a result, the fair value of the Preferred Stock Tranche Obligation was remeasured as of the date of the amendment and adjusted to its fair value at that time which was deemed to be immaterial. The Preferred Stock Tranche Obligation was remeasured at fair value at each reporting period until its expiration on September 24, 2020 using an option pricing valuation methodology. Due to the low probability of the Preferred Stock Tranche Obligation being settled, the fair value immediately prior to the IPO was immaterial.

The fair value of the Preferred Stock Tranche Obligation includes inputs not observable in the market and thus represents a Level 3 measurement. The option methodology utilized requires inputs based on certain subjective assumptions, including (a) expected stock price volatility, (b) calculation of an expected term, (c) a risk-free interest rate and (d) expected dividends. This approach results in the classification of this security as Level 3 of the fair value hierarchy. The assumptions utilized to fair value the Preferred Stock Tranche Obligation as of December 31, 2019 were (a) expected stock price volatility of 30%, (b) expected term of 0.7 years, (c) a risk-free interest rate of 1.6% and (d) an expectation of no dividends. The change in the fair value for the year ended December 31, 2020 was $2.2 million.

The following table provides a reconciliation of Level 3 liabilities measured at fair value on a recurring basis using significant unobservable inputs (in thousands):