Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Various inputs are used in determining the fair value of the Company’s financial assets and liabilities. These inputs are summarized into the following three broad categories:

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk, etc.

Level 3 – significant unobservable inputs, including the Company’s own assumptions in determining fair value

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Marketable securities, which consist primarily of corporate and U.S. government agency bonds, are classified as available for sale and fair value did not differ significantly from carrying value as of March 31, 2024 and December 31, 2023. The following table presents information about the Company’s assets measured at fair value as of March 31, 2024:


	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents and restricted cash	$	134,874	$	—	$	—	$	134,874
Marketable securities	—		300,843		—		300,843
Equity investments	87,759		—		1,928		89,687
Total	$	222,633	$	300,843	$	1,928	$	525,404

The following table presents information about the Company’s assets measured at fair value as of December 31, 2023:


	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents and restricted cash	$	161,066	$	—	$	—	$	161,066
Marketable securities	—		307,688		—		307,688
Equity investments	79,623		—		1,928		81,551
Total	$	240,689	$	307,688	$	1,928	$	550,305

The following table sets forth changes in fair value of the Company’s Level 3 investments:


	Amount
As of December 31, 2022	$	1,629
Realized gain	147,213
Cash distributions	(147,213)
Transfer to Level 1	(1,629)
Unrealized gain	1,928
As of December 31, 2023	1,928


Unrealized loss	—
As of March 31, 2024	$	1,928

The fair value of the Company’s investment in Nimbus Therapeutics, LLC (“Nimbus”), classified as Level 3 in the fair value hierarchy, was recorded as an equity method investment under Topic 323, using the hypothetical liquidated book value method (“HLBV method”) through June 30, 2023, as further described in Note 10, Equity Investments. Significant unobservable inputs used to determine Nimbus’ fair value under the HLBV method were the entity's annual financial statements and the Company’s liquidation preference. During the year ended December 31, 2023, the Company recorded a realized gain of $147,213 on account of its equity position in Nimbus following the closing of Takeda's acquisition of Nimbus Lakshmi, Inc., a wholly-owned subsidiary of Nimbus, and its tyrosine kinase 2 inhibitor, NDI-034858. The Company received $147,213 in cash distributions related to this sale from Nimbus during the year ended December 31, 2023. Following the dilution of the Company's investment in Nimbus during the period ended September 30, 2023, the fair value of the Company's investment is recorded under Topic 321 as a non-marketable equity security as the Company no longer exercises significant influence over Nimbus. This change in accounting method resulted in an unrealized gain of $1,928.

During the year ended December 31, 2023, the Company recorded a transfer of $1,629 from a Level 3 investment to a Level 1 investment due to the completion of Structure Therapeutics Inc.'s, ("Structure Therapeutics"), initial public offering ("IPO"). The Company's investment in Structure Therapeutics was previously recorded using the HLBV method. Following the completion of Structure Therapeutics' IPO, the Company's investment in Structure Therapeutics is recorded under Topic 321 because there is an observable price of the investment.

Unrealized gains and losses arising from changes in fair value of the Company’s equity investments are classified within change in fair value in the condensed consolidated statements of operations. Realized gains arising from distributions receivable from the Company's equity investments are classified within gain on equity investments in the condensed consolidated statements of operations.

For further information regarding the Company’s equity investments, see Note 10, Equity Investments.

- 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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