The Company’s financial instruments that are measured at fair value on a recurring basis consist of cash equivalents, marketable securities, equity securities of Verve Therapeutics, Inc., or Verve, and Prime Medicine, Inc., or Prime, contingent consideration liabilities related to the Agreement and Plan of Merger, dated February 23, 2021, between the Company and Guide, or the Guide Merger Agreement, and success payment derivative liabilities pursuant to the Harvard and Broad License Agreements.

The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at December 31, 2023 (in thousands):


	Carrying amount		Fair value		Level 1		Level 2		Level 3
Assets
Cash equivalents:
Money market funds	$	435,689	$	435,689	$	435,689	$	—	$	—
Marketable securities:
Commercial paper		285,289		285,289		—		285,289		—
Corporate notes		23,525		23,525		—		23,525		—
U.S. Treasury securities		152,147		152,147		—		152,147		—
U.S. Government securities		271,145		271,145		—		271,145		—
Corporate equity securities		21,875		21,875		21,875		—		—
Total assets	$	1,189,670	$	1,189,670	$	457,564	$	732,106	$	—

Liabilities
Success payment liability – Harvard	$	5,200	$	5,200	$	—	$	—	$	5,200
Success payment liability – Broad Institute		5,600		5,600		—		—		5,600
Contingent consideration liability – Technology		1,371		1,371		—		—		1,371
Contingent consideration liability – Product		1,352		1,352		—		—		1,352
Total liabilities	$	13,523	$	13,523	$	—	$	—	$	13,523

The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at December 31, 2022 (in thousands):


	Carrying amount		Fair value		Level 1		Level 2		Level 3
Assets
Cash equivalents:
Money market funds	$	218,794	$	218,794	$	218,794	$	—	$	—
Commercial paper		10,475		10,475		—		10,475		—
Corporate notes		3,498		3,498		—		3,498		—
Marketable securities:
Commercial paper		577,728		577,728		—		577,728		—
Corporate notes		18,996		18,996		—		18,996		—
U.S. Treasury securities		145,312		145,312		—		145,312		—
U.S. Government securities		62,864		62,864		—		62,864		—
Equity securities included in marketable securities:
Corporate equity securities		40,467		40,467		40,467		—		—
Total assets	$	1,078,134	$	1,078,134	$	259,261	$	818,873	$	—

Liabilities
Success payment liability – Harvard	$	9,000	$	9,000	$	—	$	—	$	9,000
Success payment liability – Broad Institute		9,300		9,300		—		—		9,300
Contingent consideration liability – Technology		6,025		6,025		—		—		6,025
Contingent consideration liability – Product		6,438		6,438		—		—		6,438
Total liabilities	$	30,763	$	30,763	$	—	$	—	$	30,763

Cash equivalents – Money market funds included within cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Commercial paper and corporate notes are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through using models or other valuation methodologies.

Marketable securities – Marketable securities, excluding corporate equity securities, are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies.

During the years ended December 31, 2023 and 2022, the Company held an investment in Verve consisting of shares of Verve’s common stock. As of December 31, 2023, the Company owned 546,970 shares of Verve's common stock, the value of which is included in marketable securities in the consolidated balance sheet. The Company recorded the investment at fair value of $7.6 million and $10.6 million as of December 31, 2023 and 2022, respectively. The Company recognized $3.0 million and $9.6 million of other expense during the years ended December 31, 2023 and 2022, respectively, associated with changes in the fair value of Verve's common stock.

In October 2022, Prime completed an initial public offering of its common stock. As of December 31, 2023 and 2022, the Company owned 1,608,337 shares of Prime's common stock valued at $14.2 million and $29.9 million, respectively. The Company recognized $15.6 million of other expense and $29.8 million of other income during the years ended December 31, 2023 and 2022, respectively, associated with changes in the fair value of Prime's common stock.

Success Payment Liability – As discussed further in Note 10, the Company is required to make payments to Harvard and Broad Institute based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred or, subsequent to the IPO, the market value of the Company's common stock, at specified valuation dates. The Company’s liability for the share-based success payments under the Harvard and Broad License Agreements are carried at fair value. To determine the estimated fair value of the success payment liability, the Company uses a Monte Carlo simulation methodology, which models the future movement of stock prices based on several key variables.

The computation of expected volatility was estimated using the Company's historical volatility along with available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption. In addition, the Company incorporated the estimated number, timing, and probability of valuation measurement dates in the calculation of the success payment liability.

Contingent consideration liabilities – As discussed further in Note 9, under the Guide Merger Agreement, Guide’s former stockholders and optionholders are eligible to receive up to an additional $100.0 million in technology milestone payments and $220.0 million in product milestone payments, payable in the Company’s common stock valued using the volume-weighted average price of the Company’s stock over the ten-day trading period ending two trading days prior to the date on which the applicable milestone is achieved. As these milestones are payable with a variable number of shares of the Company’s common stock, the milestone payments result in liability classification under ASC 480, Distinguishing Liabilities from Equity. These contingent consideration liabilities are carried at fair value which was estimated by applying a probability-based model, which utilized inputs based on timing of achievement that were unobservable in the market. These contingent consideration liabilities are classified within Level 3 of the fair value hierarchy.