v3.26.1
Fair Value Measurements
 8 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 3. Fair Value Measurements

The following tables present information about financial assets and liabilities that have been measured at fair value and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value for each of the periods indicated (in thousands):

 

 

As of December 31, 2025

 

 

Total

 

Level 1

 

Level 2

 

Level 3

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

61,211

 

$

61,211

 

$

—

 

$

—

Corporate debt securities

 

 

53,969

 

 

—

 

 

53,969

 

 

—

U.S. government agency securities

 

 

16,903

 

 

—

 

 

16,903

 

 

—

Total assets

 

$

132,083

 

$

61,211

 

$

70,872

 

$

—

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability

 

$

5,020

 

$

—

 

$

—

 

$

5,020

Total liabilities

 

$

5,020

 

$

—

 

$

—

 

$

5,020

 

 

 

As of April 30, 2025

 

 

Total

 

Level 1

 

Level 2

 

Level 3

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

98,644

 

$

98,644

 

$

—

 

$

—

Corporate debt securities

 

 

75,243

 

 

—

 

 

75,243

 

 

—

U.S. government agency securities

 

 

13,759

 

 

—

 

 

13,759

 

 

—

Total assets

 

$

187,646

 

$

98,644

 

$

89,002

 

$

—

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability

 

$

6,440

 

$

—

 

$

—

 

$

6,440

Total liabilities

 

$

6,440

 

$

—

 

$

—

 

$

6,440

 

 

 

As of April 30, 2024

 

 

Total

 

Level 1

 

Level 2

 

Level 3

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

11,143

 

$

11,143

 

$

—

 

$

—

Corporate debt securities

 

 

130,423

 

 

—

 

 

130,423

 

 

—

U.S. government agency securities

 

 

48,189

 

 

—

 

 

48,189

 

 

—

Total assets

 

$

189,755

 

$

11,143

 

$

178,612

 

$

—

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximated fair value because of the immediate or short-term maturity of these financial instruments. For fair value information related to the Company's debt facilities, refer to Note 13, Indebtedness.

Derivative Liability

The estimated fair value of the derivative liability as of December 31, 2025 relates to the PSA that the Company, as guarantor, and KalVista Pharmaceuticals Limited, a wholly owned subsidiary of the Company (the “Subsidiary”), entered into with DRI in November 2024 and was determined using Level 3 inputs. Refer to Note 14, Purchase and Sale Agreement, for a description of the PSA. The fair value measurement of the derivative liability is sensitive to changes in the unobservable inputs used to value the financial instrument. Changes in the inputs could result in changes to the fair value of each financial instrument.

The embedded derivative liability associated with the royalty obligation contained in the PSA, as discussed further in Note 14, Purchase and Sale Agreement, is measured at fair value using an option pricing Monte Carlo simulation model and is included as a component of the royalty obligation in the consolidated balance sheets. The embedded derivative liability is subject to remeasurement at the end of each reporting period, with changes in fair value recognized as a component of other income, net, in the consolidated statements of operations and comprehensive loss. The assumptions used in the option pricing Monte Carlo simulation model incorporates certain Level 3 inputs including: (1) the risk-adjusted discount rate and (2) the probability of a change in control occurring during the term of the instrument.

The Company recorded $4.4 million for the initial fair value of the derivative liability upon the closing of the PSA and subsequently recorded an incremental $2.0 million when the $22.0 million drawdown was recorded by the Company. The initial fair value allocated to the derivative liability was recorded against the royalty obligation as a debt discount, which is being amortized in interest expense in the consolidated statements of operations and comprehensive loss over the expected term using the effective interest method. The embedded derivative is subsequently remeasured at fair value each reporting period, with the change in fair value being recorded as a component of other income, net in the consolidated statements of operations and comprehensive loss. For the eight-month period ended December 31, 2025 and twelve months ended April 30, 2025, the Company recognized $3.4 million decrease and $1.7 million increase, respectively, as a component of other income, net as the change in fair value for the embedded derivative liability, recorded as a component of the royalty obligation in the consolidated balance sheets. Refer to Note 14, Purchase and Sale Agreement, for details regarding the valuation methodology related to the embedded derivative and its related inputs.

Marketable Securities

The objectives of the Company’s investment policy are to ensure the safety and preservation of invested funds, as well as to maintain liquidity sufficient to meet cash flow requirements. The Company invests its excess cash in securities issued by financial institutions, commercial companies, and government agencies that management believes to be of high credit quality in order to limit the amount of its credit exposure. The Company has not realized any material losses from its investments.

Management evaluated the unrealized losses in AFS debt securities as of December 31, 2025. The Company believes that the unrealized losses on AFS debt securities represent a temporary decline that is primarily attributable to interest rate changes. It is not considered likely that the Company will be required to sell the investments before full recovery of the amortized cost basis of the AFS debt securities, which may be at maturity. As a result, no allowance was recorded.

For the eight-month period ended December 31, 2025 and twelve months ended April 30, 2025 and 2024 the Company recorded $1.2 million, $1.6 million, and $1.3 million in realized gains, respectively.

The following tables summarize the fair value of the Company’s marketable securities by type for each of the periods indicated (in thousands):

 

 

As of December 31, 2025

 

 

Amortized Cost

 

Gross
Unrealized Gains

 

Gross
Unrealized Losses

 

Fair Market Value

Corporate debt securities

 

$

53,896

 

$

92

 

$

(19)

 

$

53,969

U.S. government agency securities

 

 

16,855

 

 

48

 

 

—

 

 

16,903

Total

 

$

70,751

 

$

140

 

$

(19)

 

$

70,872

 

 

 

As of April 30, 2025

 

 

Amortized Cost

 

Gross
Unrealized Gains

 

Gross
Unrealized Losses

 

Fair Market Value

Corporate debt securities

 

$

74,150

 

$

1,093

 

$

—

 

$

75,243

U.S. government agency securities

 

 

13,594

 

 

165

 

 

—

 

 

13,759

Total

 

$

87,744

 

$

1,258

 

$

—

 

$

89,002

 

 

 

As of April 30, 2024

 

 

Amortized Cost

 

Gross
Unrealized Gains

 

Gross
Unrealized Losses

 

Fair Market Value

Corporate debt securities

 

$

130,099

 

$

600

 

$

(276)

 

$

130,423

U.S. government agency securities

 

 

48,228

 

 

83

 

 

(122)

 

 

48,189

Total

 

$

178,327

 

$

683

 

$

(398)

 

$

178,612

 

The following table summarizes the scheduled maturity for the Company’s marketable securities at December 31, 2025 (in thousands):

Maturing in one year or less

 

$

24,169

Maturing after one year through two years

 

 

39,390

Maturing after two years through four years

 

 

7,313

Total

 

$

70,872