v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Measurements  
Fair Value Measurements

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3.       Fair Value Measurements

The fair values of financial instruments are classified into one of the following categories based upon the lowest level of input that is significant to the fair value measurement:

●Level 1 — Quoted prices in active markets for identical assets or liabilities.
●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 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair values of cash equivalents approximate their carrying values due to the short-term nature of such financial instruments.

Unrealized gains and losses on available-for-sale debt securities are reported as a component of accumulated comprehensive income (loss), with the exception of unrealized losses believed to be related to credit losses, if any, which are recognized in earnings in the period the impairment occurs. Impairment assessments are made at the individual security level each reporting period. When the fair value of an available-for-sale debt investment is less than its cost at the balance sheet date, a determination is made as to whether the impairment is related to a credit loss and, if it is, the portion of the impairment relating to credit loss is recorded as an allowance through net income. Realized gains and losses, if any, on available-for-sale securities are included in other income (expense), net, in the condensed consolidated statements of operations based on the specific identification method.

In connection with the acquisition of Surface Oncology, Inc. (“Surface”) on September 8, 2023 (the “Surface Acquisition”), the Company recorded contingent consideration liabilities related to contingent value rights (“CVRs”). The fair value of the CVR liabilities were determined using a Monte Carlo simulation-based model discounted to present value and represents a Level 3 measurement within the fair value hierarchy. Assumptions used in this calculation include estimated revenue, discount rate and various probability factors.

The Revenue Participation Right Purchase and Sale Agreement (the “Revenue Purchase and Sale Agreement”), dated as of May 8, 2024 among the Company and Coduet Royalty Holdings, LLC, as administrative agent and each buyer named in an annex thereto (collectively, the “Purchaser Group”) (see Note 8. Financial Liabilities) contained an embedded derivative that met the criteria to be bifurcated and accounted for separately from the Revenue Purchase and Sale Agreement (the "Royalty Fee Derivative Liability"). The Company recorded the initial estimated fair value of the Royalty Fee Derivative Liability of $9.2 million in accrued and other current liabilities on the condensed consolidated balance sheets. To estimate the fair value, the Company uses Monte Carlo simulation models that require the use of Level 3 unobservable inputs, primarily the amount and timing of our expected future revenue, the estimated volatility of these revenues, the discount rate corresponding to the risk of revenue, and the probability of certain events. The Company estimated the total fair value of the Royalty Fee Derivative Liability at June 30, 2025 and December 31, 2024, to be $1.5 million and $13.6 million, respectively. In connection with the UDENYCA Sale, the UDENYCA portion of the Royalty Fee Derivative Liability was derecognized.

Financial liabilities related to long-term debt obligations are summarized in Note 8. Financial Liabilities. Other financial assets and liabilities from continuing operations measured at fair value on a recurring basis are summarized as follows:

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Fair Value Measurements

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June 30, 2025

(in thousands)

    

Level 1

    

Level 2

    

Level 3

    

Total

Financial Assets:

 

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Cash equivalents(1)

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$

214,948

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$

1,649

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$

—

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$

216,597

Marketable debt securities:

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​

​

 

​

​

 

​

​

 

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U.S. government agency securities

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​

1,174

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​

—

​

​

—

​

​

1,174

U.S. treasury securities

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​

1,730

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​

—

​

​

—

​

​

1,730

Commercial paper and corporate notes

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​

—

​

​

17,840

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​

—

​

​

17,840

Total

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$

217,852

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$

19,489

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$

—

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$

237,341

Financial Liabilities:

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​

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Royalty Fee Derivative Liability

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$

—

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$

—

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$

1,490

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$

1,490

Contingent consideration

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​

—

​

​

—

​

​

632

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​

632

Total

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$

—

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$

—

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$

2,122

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$

2,122

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Fair Value Measurements

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December 31, 2024

(in thousands)

    

Level 1

    

Level 2

    

Level 3

    

Total

Financial Assets:

 

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​

 

​

  

 

​

  

 

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Cash equivalents(1)

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$

125,549

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$

—

​

$

—

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$

125,549

Financial Liabilities:

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​

​

​

​

​

​

​

​

​

​

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Royalty Fee Derivative Liability

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$

—

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$

—

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$

13,620

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$

13,620

Contingent consideration

​

​

—

​

​

—

​

​

632

​

​

632

Total

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$

—

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$

—

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$

14,252

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$

14,252

(1)Cash equivalents may include the following: money market funds, U.S. treasury securities, commercial paper or corporate notes with original maturities of 90 days or less.

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The cost, unrealized gains or losses, and fair value by investment type are summarized as follows:

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June 30, 2025

(in thousands)

    

Cost

    

Unrealized Gain

    

Unrealized (Loss)

    

Fair Value

Money market funds

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$

211,475

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$

—

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$

—

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$

211,475

U.S. government agency securities

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​

1,174

 

​

—

​

​

—

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​

1,174

U.S. treasury securities

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​

5,203

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​

—

​

​

—

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​

5,203

Commercial paper and corporate notes

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​

19,489

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5

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(5)

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​

19,489

Total

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$

237,341

 

$

5

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$

(5)

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$

237,341

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December 31, 2024

(in thousands)

    

Cost

    

Unrealized Gain

    

Unrealized (Loss)

    

Fair Value

Money market funds

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$

125,549

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$

—

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$

—

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$

125,549

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The Company held seven positions that were in unrealized loss positions as of June 30, 2025. No impairment was recognized in 2025. As of June 30, 2025, the remaining contractual maturities of available-for-sale securities were less than one year, and the average maturity of investments upon acquisition was approximately six months. The accrued interest receivable on available-for-sale marketable securities was immaterial at June 30, 2025.