Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2022

(3)

Fair Value of Financial Instruments

The tables below present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, as described under Note 2, Summary of Significant Accounting Policies, in the audited financial statements included in the 2021 Annual Report.

The Company’s investment portfolio includes many fixed income securities that do not always trade on a daily basis. As a result, the pricing services used by the Company applied other available information as applicable through processes such as benchmark yields, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. In addition, model processes were used to assess interest rate impact and develop prepayment scenarios. These models take into consideration relevant credit information, perceived market movements, sector news and economic events. The inputs into these models may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads and other relevant data.

At June 30, 2022 and December 31, 2021, the Company has classified assets measured at fair value on a recurring basis as follows (in thousands):


	Fair Value Measurements at Reporting Date Using
	June 30,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	2022		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	21,912	$	21,912	$	—	$	—
Commercial paper (included in cash and cash equivalents)		8,989		—		8,989	$	—
Commercial paper		56,614		—		56,614		—
Corporate debt securities		—		—		—		—
U.S. government agency securities and treasuries		19,276		19,276		—		—
Total	$	106,791	$	41,188	$	65,603	$	—

	Fair Value Measurements at Reporting Date Using
	December 31,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	2021		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	16,437	$	16,437	$	—	$	—
Commercial paper		106,277		—		106,277		—
Corporate debt securities		5,873		—		5,873		—
U.S. government agency securities and treasuries		8,041		8,041		—		—
Total	$	136,628	$	24,478	$	112,150	$	—

Cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses at June 30, 2022 and December 31, 2021 are carried at amounts that approximate fair value due to their short-term maturities. Finance lease obligations at June 30, 2022 and December 31, 2021 approximate fair value as they bear interest at a rate approximating a market interest rate.

- 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.

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