Fair-Value Measurements

3 Months Ended

Mar. 31, 2023

Fair-Value Measurements

Fair-Value Measurements

Note 6—Investments and Fair-Value Measurements

All of our investments are held in our name and are classified as short-term and held-to-maturity on the accompanying condensed consolidated balance sheets. Investment income for the three months ended March 31, 2023 and December 31, 2022 consists of interest earned of $3.4 million and $2.2 million, respectively, and is included in other income.

The following tables summarize our investments:


		March 31, 2023
		Amortized Cost			Gross Unrealized Gains/(Losses)			Estimated Fair Value

		(In thousands)

U.S. government securities classified as short-term investments		$	293,645		$	205		$	293,850
Money-market funds classified as short-term investments			73,882			—			73,882
Total short-term investments			367,527			205			367,732
Certificate of deposit classified as non-current restricted investments			1,054			—			1,054
Total		$	368,581		$	205		$	368,786


		December 31, 2022
		Amortized Cost			Gross Unrealized Gains/(Losses)			Estimated Fair Value

		(In thousands)

U.S. government securities classified as short-term investments		$	99,027		$	22		$	99,049
Money-market funds classified as short-term investments			84,882			—			84,882
Total short-term investments			183,909			22			183,931
Certificate of deposit classified as non-current restricted investments			1,054			—			1,054
Total		$	184,963		$	22		$	184,985

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting standard establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required:

Level 1—Observable inputs for identical assets or liabilities, such as quoted prices in active markets;

Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—Unobservable inputs in which little or no market data exists, therefore they are developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Our fair value hierarchy for our financial assets and liabilities are as follows:


		March 31, 2023
		Level 1			Level 2			Level 3			Total

		(In thousands)
Assets:
U.S. government securities classified as short-term investments		$	293,850		$	—		$	—		$	293,850
Money-market funds classified as short-term investments			73,882			—			—			73,882
Total short-term investments			367,732			—			—			367,732
Certificate of deposit classified as non-current restricted investments			1,054			—			—			1,054
Total		$	368,786		$	—		$	—		$	368,786


		December 31, 2022
		Level 1			Level 2			Level 3			Total

		(In thousands)
Assets:
U.S. government securities classified as short-term investments		$	99,049		$	—		$	—		$	99,049
Money-market funds classified as short-term investments			84,882			—			—			84,882
Total short-term investments			183,931			—			—			183,931
Certificate of deposit classified as non-current restricted investments			1,054			—			—			1,054
Total		$	184,985		$	—		$	—		$	184,985

Cash held in demand deposit accounts of $3.8 million and $11.0 million is excluded from our fair-value hierarchy disclosure as of March 31, 2023 and December 31, 2022, respectively. The carrying amounts reported in the accompanying condensed consolidated balance sheets for receivables, accounts payable and other current monetary assets and liabilities approximate fair value.

See “Note 7—Unsecured Convertible Senior Notes” and “Note 8—OMIDRIA Royalty Obligation” for the carrying amount and estimated fair value of our outstanding convertible senior notes and the OMIDRIA royalty obligation.

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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