Fair Value Measurements
 12 Months Ended
Dec. 31, 2021
Fair Value Disclosures [Abstract]  
Fair Value Measurements

9. Fair Value Measurements

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value (ASC 820-10-50), Fair Value Measurements and Disclosures:

 

  ● Level 1 – Inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
     
  ● Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
     
  ● Level 3 – Inputs to the valuation methodology are unobservable; that reflect management’s own assumptions about the assumptions market participants would make and significant to the fair value.

 

 

We measure cash, cash equivalents, marketable securities and our liability classified warrants at fair value on a recurring basis. The fair values of such assets were as follows for December 31, 2021 and 2020 (in thousands):

 

       Fair Value Measurements Using 
   Balance at
December 31, 2021		  

Quoted Prices in Active Markets for Identical Assets

(Level 1)

  

Significant Other
Observable Inputs
(Level 2)

  

Significant
Unobservable Inputs

(Level 3)

 
Assets:                    
Cash and cash equivalents  $55,742   $55,742   $-   $- 
Marketable securities   2,616    2,616    -    - 
                     
Liabilities:                    
Lineage Warrants   -    -    -    - 
Cell Cure Warrants   227    -    -    227 

 

       Fair Value Measurements Using 
   Balance at
December 31, 2020		  

Quoted Prices in Active Markets for Identical Assets

(Level 1)

  

Significant Other
Observable Inputs

(Level 2)

  

Significant
Unobservable Inputs
(Level 3)

 
Assets:                    
Cash and cash equivalents  $32,585   $32,585   $-   $- 
Marketable securities   8,977    8,977    -    - 
                     
Liabilities:                    
Lineage Warrants   1    -    -    1 
Cell Cure Warrants   437    -    -    437 

 

We have not transferred any instruments between the three levels of the fair value hierarchy.

 

In determining fair value, Lineage utilizes a Black-Scholes pricing model that maximizes the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. The significant unobservable inputs used in the fair value measurement of the Company’s Level 3 Cell Cure warrant liabilities are volatility and share value. A significant increase or decrease in these Level 3 inputs could result in a significantly higher or lower fair value measurements.

 

 

The following table sets forth the establishment of the Company’s Level 3 liabilities, as well as a summary of the changes in the fair value and other adjustments:

 

(Dollars in thousands) 

Cell Cure

Warrants

  

Lineage

Warrants

   Total 
Balance as of December 31, 2020  $437   $1   $438 
Change in fair value and other adjustments   (210)   -    (210)
Expiration of warrants   -    (1)   (1)
Balance as of December 31, 2021  $227   $-   $227 

 

Marketable equity securities include our positions in OncoCyte, and HBL. Both of these securities have readily determinable fair values quoted on the NYSE American or TASE stock exchanges. These securities are measured at fair value and reported as current assets on the consolidated balance sheets based on the closing trading price of the security as of the date being presented.

 

The fair value of Lineage’s assets and liabilities, which qualify as financial instruments under FASB guidance regarding disclosures about fair value of financial instruments, approximate the carrying amounts presented in the accompanying consolidated balance sheets. The carrying amounts of accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair values because of the short-term nature of these items.