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Fair Value Measurement
 3 Months Ended
Mar. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurement
4. Fair Value Measurement

The Company measures its financial assets and liabilities at fair value, which is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company uses the following three-level valuation hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial assets and liabilities:

•Level 1 — Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
•Level 2 — Quoted prices for similar instruments in active markets or inputs that are observable for the asset or liability, either directly or indirectly.
•Level 3 — Significant unobservable inputs based on the Company’s assumptions.
Financial Instruments Measured on a Recurring Basis

The following tables provide a summary of the assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:

Fair Value Measurements as of
March 31, 2024
(in thousands)Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$12,589 $— $— $12,589 
Total cash equivalents$12,589 $— $— $12,589 
Short-term investments:
Government and agency securities$48,099 $— $— $48,099 
Asset-backed securities— 1,848 — 1,848 
Total short-term investments$48,099 $1,848 $— $49,947 
Liabilities:
Current contingent liabilities$— $— $891 $891 
Long-term contingent liabilities— — 3,178 3,178 
Total contingent liabilities$— $— $4,069 $4,069 

Fair Value Measurements as of
December 31, 2023
(in thousands)Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$12,289 $— $— $12,289 
Total cash equivalents$12,289 $— $— $12,289 
Short-term investments:
Government and agency securities$63,109 $4,998 $— $68,107 
Asset-backed securities— 2,518 — 2,518 
Total short-term investments$63,109 $7,516 $— $70,625 
Liabilities:
Current contingent liabilities$— $— $1,303 $1,303 
Long-term contingent liabilities— — 3,203 3,203 
Total contingent liabilities$— $— $4,506 $4,506 

The carrying amounts reported in the Company’s condensed consolidated balance sheets for accounts receivable, other assets, accounts payable and other accrued expenses and other current liabilities approximate fair value due to their relatively short periods to maturity.
Available-for-Sale Securities

The Company obtains the fair value of its Level 2 available-for-sale securities from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and obtaining market values from other pricing sources. The Company did not adjust or override any fair value measurements provided by these pricing services as of March 31, 2024 or December 31, 2023. The Company has not transferred any investment securities between classification levels.

Contingent Liabilities

Contingent liabilities are measured at fair value each reporting period by using a probability weighted income approach.

A reconciliation of the Level 3 financial instruments as of March 31, 2024 and December 31, 2023 is as follows:

(in thousands)
Icagen(1)
Taurus(2)
xCella(2)
Total
Balance as of January 1, 2023
$4,747 $1,600 $1,764 $8,111 
Payments to CVR holders(300)(1,600)(2,840)(4,740)
Fair value adjustments to contingent liabilities(341)400 1,076 1,135 
Balance as of December 31, 2023
4,106 400 — 4,506 
Payments to CVR holders(75)(400)— (475)
Fair value adjustments to contingent liabilities38 — — 38 
Balance as of March 31, 2024
$4,069 $— $— $4,069 
_____________
(1)Changes in the fair values of contingent liabilities in connection with the acquisition of Icagen are recognized in “Other operating expense, net” in the condensed consolidated statements of operations and in the operating section of the statements of cash flows. Payments to CVR holders are disclosed in the financing section of the statements of cash flows.
(2)Changes in the fair values of contingent liabilities in connection with the acquisitions of Taurus and xCella are recognized in “Intangible assets, net” in the condensed consolidated balance sheets. Payments to CVR holders are disclosed in the investing section of the statement of cash flows.

Contingent liabilities are classified as Level 3 liabilities as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market. These subjective estimates include but are not limited to assumptions involving the achievement probability of certain developmental and commercialization milestones, discount rates, and projected years of payments. If different assumptions were used for the various inputs to the valuation approaches, the estimated fair value could be materially higher or lower than the fair value determined.

Assets Measured on a Non-Recurring Basis

The Company applies fair value techniques on a non-recurring basis associated with valuing potential impairment losses related to goodwill, finite-lived intangible assets, and long-lived assets. No such fair value impairment was recognized during the three months ended March 31, 2024 or year ended December 31, 2023.