Fair Value of Financial Instruments |
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| Fair Value of Financial Instruments | 5. Fair Value of Financial Instruments Fair Value of Financial Instruments Accounting Standards Codification (“ASC”) 820, Fair Value Measurement, defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified on a three-tier hierarchy as follows:
In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. The carrying amounts of the Company’s short-term financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these level 1 instruments. 5. Fair Value of Financial Instruments – (continued) As a result of the acquisition of VCN the Company acquired interest-free or below-market interest rate loans extended by Spanish government. Additionally, the Company received an unsecured loan of €1.3 million (approximately $1.4 million) as a lump sum payment on January 17, 2025 which bears interest at a rate of 4.015% from the National Knowledge Transfer Program of the Spanish government’s Ministry of Science, Innovation & Universities (See Note 12) The carrying value of the loans payable approximate fair value and are classified under level 2. In connection with the Acquisition of VCN, the Company was required to pay up to $70.2 million in additional consideration upon the achievement of certain milestones, including regulatory filings of which to date $6.3 million has been paid. In September 2022, the Company received approval from the FDA to proceed with the Phase 2 clinical trial of VCN - 01 in PDAC. Due to this approval the Company paid Grifols Innovation and New Technologies Limited ("Grifols"), $3.0 million in the fourth quarter 2022. In August 2023, the Company initiated patient dosing in the U.S. in its Phase 2 clinical trial of VCN-01 in PDAC. As a result, payment was made subsequent to September 30, 2023 in the amount of $3.25 million. The discounted cash flow method used to value this contingent consideration includes inputs of not readily observable market data, which are Level 3 inputs. The fair value of the contingent consideration was $7.0 million as of March 31, 2025 and is reflected as contingent consideration, current portion of $1.3 million and non-current contingent consideration liability of $5.7 million. During the three months ended March 31, 2025 and 2024, the Company recognized in operating expense a $21,000 and $202,000, respectfully, fair value adjustment increase to contingent consideration. There were no transfers in or out of the level 3 liabilities during the three months ended March 31, 2025 and 2024. The following table summarizes the change in the fair value as determined by Level 3 inputs for the contingent consideration liabilities as of March 31, 2025 and December 31, 2024:
The fair value of financial instruments measured on a recurring basis is as follows:
5. Fair Value of Financial Instruments – (continued) The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs:
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