v3.26.1
Note 6 - Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

Note 6 – Fair Value Measurements

 

The Company follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing 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 a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

 

As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

 

 

Level 1:

Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

 

Level 2:

Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

 

Level 3:

Unobservable inputs that reflect the reporting entity’s own assumptions.

 

The carrying amounts of the Company’s cash, restricted cash, other current assets, accounts payable and accrued liabilities are generally considered to be representative of their fair value because of the short-term nature of these assets and liabilities.

 

The carrying value of the prepaid forward obligation (See Note 9 - Prepaid Forward Obligation) approximates its fair value. The Company estimated the fair value of the prepaid forward obligation using Level 3 inputs, including internally developed financial forecasts and management's estimate of probability of success related to product candidates, and determined that the effective interest rate in the obligation approximates market rates for loans with similar terms and risk characteristics. 

 

The Company estimated the fair value of long-term debt (see Note 10 - Long-Term Debt) using the income approach with Level 3 inputs. The Company estimated fair value based on publicly available data reported in the financial statements of publicly traded venture lending companies. Based on a reasonable range of yields for debt instruments of similar tenor in a similar industry, the Company determined that the carrying value of the long-term debt on the Company's balance sheet approximates its fair value.

 

No transfers between levels have occurred during the periods presented.

 

Assets measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of March 31, 2026 are as follows (in thousands):

 

           

Fair Value Measurements Using

  
           

Quoted Prices

    

Significant

  
           

in Active

    

Other

  
   

Balance as of

    

Markets for

    

Observable

  
   

March 31,

    

Identical Assets

    

Inputs

  
   

2026

    

(Level 1)

    

(Level 2)

  

Assets:

                        

Cash equivalents

                        

Money market funds

   $ 4     $ 4     $ —  

U.S. government

     9,439       9,439       —  

Total cash equivalents

     9,443       9,443       —  

Marketable securities

                        

U.S. government

     24,805       24,805       —  

Corporate bonds

     3,549       —       3,549  

Commercial paper

     1,435       —       1,435  

Certificates of deposit

     517       —       517  

Total marketable securities

     30,306       24,805       5,501  

Total assets at fair value

   $ 39,749     $ 34,248     $ 5,501  

 

Assets measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of December 31, 2025 are as follows (in thousands):

 

           

Fair Value Measurements Using

  
           

Quoted Prices

    

Significant

  
           

in Active

    

Other

  
   

Balance as of

    

Markets for

    

Observable

  
   

December 31,

    

Identical Assets

    

Inputs

  
   

2025

    

(Level 1)

    

(Level 2)

  

Assets:

                        

Cash equivalents

                        

Money market funds

   $ 39,618     $ 39,618     $ —  

Marketable securities

                        

Corporate bonds

     6,058       —       6,058  

Commercial paper

     1,695       —       1,695  

Certificates of deposit

     1,958       —       1,958  

Total marketable securities

   $ 9,711     $ —     $ 9,711  

Total assets at fair value

   $ 49,329     $ 39,618     $ 9,711  

 

The Company’s investments in U.S. government bonds and money market funds are measured based on publicly available quoted market prices for identical securities as of  March 31, 2026 and December 31, 2025. The Company's investments in corporate bonds, commercial paper and certificates of deposits are measured based on quotes from market makers for similar items in active markets.