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sana-10q_20230331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39941

Sana Biotechnology, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	83-1381173
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
188 East Blaine Street, Suite 400 Seattle, Washington	98102
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (206) 701-7914

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		SANA		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2023, the registrant had 191,500,944 shares of common stock, $0.0001 par value per share, outstanding.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Loss	7
	Condensed Consolidated Statements of Stockholders’ Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	98
Item 3.	Defaults Upon Senior Securities	98
Item 4.	Mine Safety Disclosures	98
Item 5.	Other Information	98
Item 6.	Exhibits	99
	Signatures	100

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (Quarterly Report) contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report could be deemed forward-looking statements, including those statements highlighted below. In some cases, you can identify these statements by forward-looking words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should,” “would,” or “will,” the negative of these terms, and other comparable terminology. These forward-looking statements, which are subject to risks, include, but are not limited to, statements about:

•

our expectations regarding the potential market size and size of the potential patient populations for our product candidates and any future product candidates, if approved for commercial use;

•

our clinical and regulatory development plans;

•

our expectations with regard to the results of our preclinical studies, clinical trials, and research and development programs, including the timing and availability of data from such studies and trials;

•

the timing of commencement of future preclinical studies, clinical trials, and research and development programs;

•

our ability to acquire, discover, and develop product candidates and timely advance them into and through clinical data readouts and successful completion of clinical trials;

•

our expectations regarding the potential safety, efficacy, or clinical utility of our product candidates;

•

our intentions with respect to and our ability to establish collaborations or partnerships;

•

the timing or likelihood of regulatory filings and approvals for our product candidates;

•

our commercialization, marketing, and manufacturing expectations, including with respect to the buildout of our manufacturing facility and capabilities and the timing thereof;

•

impact of future regulatory, judicial, and legislative changes or developments in the United States and foreign countries;

•

our intentions with respect to the commercialization of our product candidates;

•

the pricing and reimbursement of our product candidates, if approved;

•

the potential effects of public health crises on our preclinical and clinical programs and business;

•

our expectations regarding the impact of global events and macroeconomic conditions on our business;

•

the implementation of our business model and strategic plans for our business and product candidates, including additional indications which we may pursue;

•

our ability to effectively manage our growth, including our ability to retain and recruit personnel, and maintain our culture;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, including the projected terms of patent protection;

•

estimates of our expenses, future revenue, capital requirements, needs for additional financing, and ability to obtain additional capital;

•

our expected use of proceeds from our initial public offering and our existing cash, cash equivalents, and marketable securities;

•

the performance of our third-party suppliers and manufacturers;

•

our future financial performance;

•

our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (JOBS Act); and

•

developments and projections relating to our competitors and our industry, including competing products.

We have based these forward-looking statements largely on our current expectations, estimates, forecasts, and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur in a timely manner or at all. You should refer to the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Other sections of this Quarterly Report may include additional factors that could harm our business and financial performance. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Sana Biotechnology, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

	March 31, 2023			December 31, 2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	160,456		$	176,765
Marketable securities		188,850			247,198
Restricted cash		6,100			6,100
Prepaid expenses and other current assets		14,502			14,374
Total current assets		369,908			444,437
Long-term marketable securities		5,825			10,051
Property and equipment, net		64,260			66,917
Operating lease right-of-use assets		98,116			92,486
Long-term restricted cash		4,408			4,408
Intangible asset		59,195			59,195
Goodwill		140,627			140,627
Other non-current assets		4,589			4,599
TOTAL ASSETS	$	746,928		$	822,720
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,334		$	2,857
Accrued compensation		17,029			26,362
Accrued expenses and other current liabilities		13,298			14,547
Operating lease liabilities		12,892			12,393
Contingent consideration		57,224			55,345
Total current liabilities		102,777			111,504
Operating lease liabilities, net of current portion		101,607			95,860
Contingent consideration, net of current portion		98,615			95,034
Success payment liabilities, net of current portion		15,667			21,007
Total liabilities		318,666			323,405
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, $0.0001 par value; 50,000 shares authorized; zero shares issued and outstanding as of March 31, 2023 and December 31, 2022		-			-
Common stock, $0.0001 par value; 750,000 shares authorized; 191,409 and 191,022 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		19			19
Additional paid-in capital		1,567,341			1,558,459
Accumulated other comprehensive loss		(2,139	)		(4,327	)
Accumulated deficit		(1,136,959	)		(1,054,836	)
Total stockholders' equity		428,262			499,315
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	746,928		$	822,720

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2023			2022
Operating expenses:
Research and development	$	67,166		$	72,689
Research and development related success payments and contingent consideration		120			(55,438	)
General and administrative		16,766			14,434
Total operating expenses		84,052			31,685
Loss from operations		(84,052	)		(31,685	)
Interest income, net		1,976			339
Other expense, net		(47	)		(102	)
Net loss	$	(82,123	)	$	(31,448	)
Net loss per common share – basic and diluted	$	(0.43	)	$	(0.17	)
Weighted-average number of common shares – basic and diluted		191,228			185,955

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2023			2022
Net loss	$	(82,123	)	$	(31,448	)
Other comprehensive loss, net of tax:
Unrealized gain (loss) on marketable securities, net		2,188			(3,806	)
Total comprehensive loss	$	(79,935	)	$	(35,254	)

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands)

	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Loss			Deficit			Equity
Balance as of December 31, 2022		191,022	$	19	$	1,558,459		$	(4,327	)	$	(1,054,836	)	$	499,315
Fees incurred related to issuance of common stock from at the market offering		-		-		(200	)		-			-			(200	)
Vesting of restricted stock		154		-		-			-			-			-
Exercise of stock options		233		-		331			-			-			331
Stock-based compensation expense		-		-		8,751			-			-			8,751
Unrealized gain on marketable securities, net		-		-		-			2,188			-			2,188
Net loss		-		-		-			-			(82,123	)		(82,123	)
Balance as of March 31, 2023		191,409	$	19	$	1,567,341		$	(2,139	)	$	(1,136,959	)	$	428,262

	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance as of December 31, 2021		184,929	$	18	$	1,515,210		$	(1,366	)	$	(785,360	)	$	728,502
Vesting of restricted stock		1,419		1		(1	)		-			-			-
Exercise of stock options		284		-		652			-			-			652
Stock-based compensation expense		-		-		7,755			-			-			7,755
Unrealized loss on marketable securities, net		-		-		-			(3,806	)		-			(3,806	)
Net loss		-		-		-			-			(31,448	)		(31,448	)
Balance as of March 31, 2022		186,632	$	19	$	1,523,616		$	(5,172	)	$	(816,808	)	$	701,655

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2023			2022
OPERATING ACTIVITIES:
Net loss	$	(82,123	)	$	(31,448	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		4,346			3,614
Stock-based compensation expense		8,751			7,755
Change in the estimated fair value of contingent consideration		5,460			(528	)
Change in the estimated fair value of success payment liabilities		(5,340	)		(54,910	)
Non-cash expense for operating lease right-of-use assets		3,354			2,606
Other non-cash items, net		(2,913	)		(1,437	)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(106	)		(3,191	)
Operating lease right-of-use assets and liabilities		(8	)		372
Accounts payable		(354	)		1,917
Accrued expenses and other liabilities		(10,339	)		(2,459	)
Net cash used in operating activities		(79,272	)		(77,709	)
INVESTING ACTIVITIES:
Purchases of marketable securities		(20,431	)		(25,675	)
Proceeds from maturities of marketable securities		85,334			45,753
Purchases of property and equipment		(2,176	)		(7,533	)
Net cash provided by investing activities		62,727			12,545
FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net		236			652
Net cash provided by financing activities		236			652
Net decrease in cash, cash equivalents, and restricted cash		(16,309	)		(64,512	)
Cash, cash equivalents, and restricted cash at beginning of period		187,273			261,848
Cash, cash equivalents, and restricted cash at end of period	$	170,964		$	197,336
SUPPLEMENTAL CASH FLOW INFORMATION:
Operating lease right-of-use assets obtained in exchange for lease obligations	$	8,984		$	3,431
Purchases of property and equipment included in accounts payable and accrued liabilities	$	968		$	3,425
Cash received for amounts related to tenant improvement allowances	$	-		$	541

See accompanying notes.

Sana Biotechnology, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization

Sana Biotechnology, Inc. (the Company or Sana) is a biotechnology company focusing on utilizing engineered cells as medicines. The Company’s operations to date have included identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, preparing for clinical trials of our product candidates, acquiring technology, organizing and staffing the Company, business planning, establishing and maintaining the Company’s intellectual property portfolio, raising capital, and providing general and administrative support for these operations.

Liquidity and capital resources

The Company is subject to a number of risks and uncertainties similar to other biotechnology companies in the development stage, including, but not limited to, those related to the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, building out internal and external manufacturing capabilities, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s products, the need to protect the Company’s intellectual property and proprietary technologies, and the need to attract and retain key scientific and management personnel. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations with the proceeds from additional equity or debt financings or capital obtained in connection with strategic collaborations or licensing or other arrangements. In the event that additional financing is required, the Company may not be able to raise it on terms acceptable to it or at all.

In August 2022, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), acting as sales agent, pursuant to which it may offer and sell through Cowen shares of the Company’s common stock having an aggregate offering price of up to $150.0 million from time to time in a series of one or more at the market equity offerings.

The Company has incurred operating losses each year since inception and expects such losses to continue for the foreseeable future. As of March 31, 2023, the Company had cash, cash equivalents, and marketable securities of $355.1 million, and an accumulated deficit of $1.1 billion, which includes cumulative non-cash charges related to the revaluation of the success payment liabilities and contingent consideration of $13.2 million and $104.6 million, respectively.

2. Summary of significant accounting policies

Basis of presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). Certain prior period amounts have been reclassified to conform to current period presentation.

The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (SEC) on March 16, 2023 (2022 Annual Report).

Significant accounting policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 are consistent with those discussed in Note 2 in the 2022 Annual Report.

Use of estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates. The most significant estimates in the Company’s condensed consolidated financial statements relate to success payment liabilities, contingent consideration, business combinations, accrued expenses, and operating lease right-of-use assets and liabilities.

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the adoption of recently issued standards has had or may have a material impact on its condensed consolidated financial statements or disclosures.

3. Acquisitions

Cobalt Biomedicine, Inc.

In February 2019, the Company acquired 100% of the outstanding equity in Cobalt Biomedicine, Inc. (Cobalt), a privately held early-stage biotechnology company developing a platform technology using its fusogen technology to specifically and consistently deliver various biological payloads to cells (the Cobalt acquisition).

As part of the Cobalt acquisition, the Company recorded an intangible asset of $59.2 million, which consists of in-process research and development that is classified as indefinite-lived until the successful completion of the associated research and development technology, at which point it becomes a finite-lived asset and will be amortized over its estimated useful life. If the research and development technology is abandoned, an impairment charge will be recorded. The Company is actively developing the fusogen technology and, accordingly, the intangible asset is not complete. Amortization will begin when regulatory approval of a product candidate developed using the fusogen technology is obtained in a major market, typically either the United States or the European Union.

The Company recognized $140.6 million of goodwill as a result of the Cobalt acquisition, which is primarily attributable to the value the acquisition provides the Company by complementing the Company’s ex vivo portfolio with in vivo fusogen cell engineering technology and furthering the Company’s research in using engineered cells as medicines. The goodwill is not deductible for income tax purposes. There were no impairments of the intangible asset or goodwill since the acquisition.

Pursuant to the terms and conditions in the Cobalt acquisition agreement, the Company has an obligation to pay to certain former Cobalt stockholders contingent consideration (Cobalt Contingent Consideration) of up to an aggregate of $500.0 million upon the achievement of certain specified development milestones and a success payment (Cobalt Success Payment) of up to $500.0 million, each of which is payable in cash or stock. The Cobalt Success Payment is payable if, at pre-determined valuation measurement dates, the Company’s market capitalization equals or exceeds $8.1 billion, and the Company is advancing a program based on the fusogen technology in a clinical trial pursuant to an investigational new drug application, or has filed, or received approval for, a biologics license application or new drug application for a product developed using the fusogen technology. The Cobalt Success Payment can be achieved over a maximum of 20 years from the date of the acquisition, but this period could be shorter upon the occurrence of certain events. A valuation measurement date would also be triggered upon a change of control of the Company if at least one of the Company’s programs based on the fusogen technology is an active research program at the time of such change of control. If the Company’s market capitalization is below $8.1 billion as of the date of a change of control, the amount of the potential Cobalt Success Payment will decrease, and the amount of potential Cobalt Contingent Consideration will increase. As of March 31, 2023, a Cobalt Success Payment has not been triggered.

The following table sets forth various thresholds for the Company’s market capitalizations as of the date of a change of control and the resulting potential Cobalt Success Payment and additional potential Cobalt Contingent Consideration:

Sana market capitalization upon a change of control and resulting impact to Cobalt Success payment and additional potential Cobalt Contingent Consideration	Cobalt Success Payment		Additional potential Cobalt Contingent Consideration
	(in millions)
Equal to or exceeds $8.1 billion	$	500	$	-
Equal to or exceeds $7.4 billion, but less than $8.1 billion		150		350
Equal to or exceeds $6.8 billion, but less than $7.4 billion		100		400
Less than $6.8 billion		-		500

The Cobalt Success Payment and Cobalt Contingent Consideration liabilities are carried at fair value, with changes in fair value recognized in research and development related success payments and contingent consideration. As of March 31, 2023 and December 31, 2022, the estimated fair value of the Cobalt Success Payment liability was $14.3 million and $19.0 million, respectively, and was recorded in long-term liabilities. For the three months ended March 31, 2023 and 2022, the Company recognized a gain of $4.8 million and $46.8 million, respectively, in connection with the change in the estimated fair value of the Cobalt Success Payment.

As of March 31, 2023, the estimated fair value of the Cobalt Contingent Consideration was $155.8 million, of which $57.2 million was recorded in short-term liabilities and $98.6 million was recorded in long-term liabilities. As of December 31, 2022, the estimated fair value of the Cobalt Contingent Consideration was $150.4 million, of which $55.4 million was recorded in short-term liabilities and $95.0 million was recorded in long-term liabilities. For the three months ended March 31, 2023 and 2022, the Company recognized an expense of $5.5 million and a gain of $0.5 million, respectively, in connection with the change in the estimated fair value of the Cobalt Contingent Consideration.

4. License and collaboration agreements

Beam Therapeutics Inc.

In October 2021, the Company entered into an option and license agreement with Beam Therapeutics Inc. (Beam), pursuant to which the Company was granted a non-exclusive license to use Beam’s proprietary CRISPR Cas12b nuclease editing technology to research, develop, and commercialize engineered cell therapy products that (i) are directed to certain antigen targets, with respect to the Company’s allogeneic T cell programs, or (ii) comprise certain human cell types, with respect to the Company’s stem cell-derived programs. The Company made an upfront payment of $50.0 million to Beam, which was recorded in research and development expense for the year ended December 31, 2021. Additionally, under the terms of the agreement, the Company may be obligated to pay up to $65.0 million for each licensed product in specified developmental and commercial milestone payments and royalties on licensed products. At the time of the entry into the option and license agreement, a member of the Company’s board of directors was a beneficial owner of greater than 10% of the outstanding shares of Beam. This director is also affiliated with a member of the board of directors of Beam.

President and Fellows of Harvard College

In March 2019, the Company entered into an exclusive license agreement with the President and Fellows of Harvard College (Harvard) to access certain intellectual property for the development of hypoimmune-modified cells.

The Company has paid to Harvard aggregate consideration of $12.0 million, comprising $9.0 million in common stock and $3.0 million in cash. Under the terms of the agreement, the Company may be required to pay to Harvard up to an aggregate of $175.0 million in success payments, payable in cash, based on increases in the fair value of the Company’s common stock (Harvard Success Payments). The potential Harvard Success Payments are based on multiples of increased value ranging from 5x to 40x, based on a comparison of the fair market value of the Company’s common stock relative to the original issuance price of $4.00 per share at ongoing pre-determined valuation measurement dates. The Harvard Success Payments can be achieved over a maximum of 12 years from the effective date of the agreement. If a higher success payment tier is first met at the same time a lower tier is first met, both tiers will be owed. Any previous success payments made to Harvard would be credited against the success payment owed as of any valuation measurement date so that Harvard does not receive multiple success payments in connection with the same threshold. As of March 31, 2023, a Harvard Success Payment had not been triggered.

The following table summarizes the potential success payments and common stock price required for payment:

Multiple of Equity Value at Issuance	5x		10x		20x		30x		40x
Per share common stock price required for payment	$	20.00	$	40.00	$	80.00	$	120.00	$	160.00
Success payment(s) (in millions)	$	5.0	$	15.0	$	30.0	$	50.0	$	75.0

The Harvard Success Payment liabilities are carried at fair value, with the initial value and changes in fair value recognized in research and development related success payments and contingent consideration. As of March 31, 2023 and 2022, the estimated fair value of the Harvard Success Payment liability was $1.4 million and $2.0 million, respectively, and were recorded in long-term liabilities. In connection with the change in the estimated fair value of the Harvard Success Payment liability, the Company recognized gains of $0.6 million and $8.1 million, respectively, for the three months ended March 31, 2023 and 2022.

5. Restricted cash

As of March 31, 2023 and December 31, 2022, the Company maintained two standby letters of credit totaling $10.5 million in the aggregate, which are collateralized with a bank account at a financial institution in accordance with the applicable lease agreements. The Company’s letter of credit related to its lease for industrial space located in Fremont, California will reduce from $6.7 million to $0.6 million in July 2023, and as such, $6.1 million in restricted cash is included in current assets on the balance sheet as of March 31, 2023.

6. Fair value measurements

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy:

		March 31, 2023
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
		(in thousands)
Financial assets:
Cash equivalents:
Money market funds	Level 1	$	98,694	$	-	$	-		$	98,694
U.S. government and agency securities	Level 2		23,981		6		-			23,987
Corporate debt securities	Level 2		3,465		-		(3	)		3,462
Total cash equivalents			126,140		6		(3	)		126,143
Short-term marketable securities:
U.S. government and agency securities	Level 2		170,445		9		(1,859	)		168,595
Corporate debt securities	Level 2		20,429		-		(174	)		20,255
Total short-term marketable securities			190,874		9		(2,033	)		188,850
Long-term marketable securities:
U.S. government and agency securities	Level 2		5,943		-		(118	)		5,825
Total long-term marketable securities			5,943