v3.25.4
Fair Value of Financial Assets and Liabilities
 3 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Assets and Liabilities

3. Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial assets and liabilities that were subject to fair value measurement on a recurring basis as of December 31, 2025 and September 30, 2025, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:

 

 

Fair Value Measurements as of December 31, 2025 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

(in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

35,905

 

 

$

—

 

 

$

—

 

 

$

35,905

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury notes

 

 

204,467

 

 

 

—

 

 

 

—

 

 

 

204,467

 

 

$

240,372

 

 

$

—

 

 

$

—

 

 

$

240,372

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Series 1 nonconvertible preferred stock

 

$

—

 

 

$

—

 

 

$

1,311

 

 

$

1,311

 

 

$

—

 

 

$

—

 

 

$

1,311

 

 

$

1,311

 

 

 

 

Fair Value Measurements as of September 30, 2025 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

(in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

11,580

 

 

$

—

 

 

$

—

 

 

$

11,580

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury notes

 

 

156,566

 

 

 

—

 

 

 

—

 

 

 

156,566

 

 

$

168,146

 

 

$

—

 

 

$

—

 

 

$

168,146

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Series 1 nonconvertible preferred stock

 

$

—

 

 

$

—

 

 

$

1,311

 

 

$

1,311

 

 

$

—

 

 

$

—

 

 

$

1,311

 

 

$

1,311

 

During the three months ended December 31, 2025 and 2024, there were no transfers between Level 1, Level 2 and Level 3.

The fair value of Level 1 instruments are valued using quoted prices in active markets. The fair value of Level 2 instruments classified as marketable securities are typically determined through third-party pricing services. The pricing services use many observable market inputs to determine value, including reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, and current spot rates.

The 1,930 outstanding shares of Series 1 nonconvertible preferred stock as of December 31, 2025 and September 30, 2025 are measured at fair value. These outstanding shares are financial instruments that might require a transfer of assets because of the liquidation features in the contract and are therefore recorded as liabilities and measured at fair value. The fair value of the outstanding shares is based on significant inputs not observable in the market, which represent a Level 3 measurement within the fair value hierarchy. The Company utilizes a probability-weighted valuation model which takes into consideration various outcomes that may require the Company to transfer assets upon liquidation. Changes in the fair values of the Series 1 nonconvertible preferred stock are recognized in other income (expense) in the condensed consolidated statements of operations.

The recurring Level 3 fair value measurements of the Company’s outstanding Series 1 nonconvertible preferred stock using probability-weighted discounted cash flow include the following significant unobservable inputs:

 

 

 

Range

 

 

 

December 31,

 

September 30,

 

Unobservable Input

 

2025

 

2025

 

Probabilities of payout

 

0%-65%

 

0%-65%

 

Discount rate

 

8.25%

 

8.25%

 

 

There were no changes in the fair value of nonconvertible preferred stock during the three months ended December 31, 2025 and 2024.

In April 2023, the Company entered into a royalty sale agreement with an affiliate of OMERS, pursuant to which the Company was paid a $200,000 cash purchase price in exchange for 54.5% of future quarterly royalty payments on net sales of MAVYRET/MAVIRET, after June 30, 2023, through June 30, 2032, subject to a cap on aggregate payments equal to 1.42 times the purchase price. The Company accounted for the upfront payment as a liability related to the sale of future royalties. The carrying value of the liability related to the sale of future royalties approximates fair value as of December 31, 2025 and is based on current estimates of future royalties expected to be paid to OMERS over the next 7 years, which are considered Level 3 inputs. See Note 7 for a rollforward of the liability.