NOTE 5 - FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value on a recurring basis in its condensed consolidated financial statements. The fair value hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

Equity Investments and Forward Contract Liabilities

In January 2024, the Company and its wholly-owned subsidiary, TG Cell Therapy, Inc. (TG Cell), entered into a License Agreement (the Precision License Agreement) with Precision. Under the Precision License Agreement, Precision granted the Company certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize Precision’s allogeneic CAR T therapy, azer-cel, for the treatment of autoimmune and other non-oncology diseases and conditions.

Upon execution of the Precision License Agreement, the Company made an upfront payment to Precision of $7.5 million, comprised of (i) $5.25 million in cash and (ii) $2.25 million (the Upfront Precision Stock Payment), as an equity investment, for the purchase of 2,920,816 shares of Precision’s common stock at a price of $0.77 per share. The Company paid a premium for the shares, which was recorded in research and development expense as part of the cost of the Precision License Agreement. Precision subsequently implemented a 30-to-1 reverse stock split in February 2024.

On January 7, 2025, the Company made a one-time payment to Precision equal to $2.5 million (the Deferred Precision Stock Payment), as an equity investment, for the purchase of 220,712 shares of Precision common stock calculated by dividing the Deferred Precision Stock Payment by 200% of the weighted average share price of the Precision common stock for the thirty (30) trading days preceding the payment date. The Deferred Precision Stock Payment, which had previously been classified as a forward contract liability in Other Current Liabilities as of December 31, 2024, was then reclassed to equity investments at its fair market value of $1.4 million on the date the payment was made to Precision.

On  February 23, 2026,  the Company achieved Milestone Event 1 (as defined in the Precision License Agreement) and made a one-time payment to Precision equal to $7.5 million comprised of (i) $5.25 million in cash and (ii) $2.25 million (the Milestone 1 Stock Payment), as an equity investment, for the purchase of 201,504 shares of Precision’s common stock calculated by dividing the Deferred Precision Stock Payment by 200% of the weighted average share price of the Precision common stock for the thirty (30) trading days preceding the payment date. The Milestone 1 Stock Payment, which was classified as a forward contract liability in Other Current Liabilities as of  December 31, 2025, was reclassed to equity investments at its fair market value of $0.8 million on the date the payment was made to Precision. The shares purchased with the Milestone 1 Stock Payment, the Upfront Precision Stock Payment and the Deferred Precision Stock Payment and are collectively known as the Precision Shares. All Precision Shares are recognized at fair market value as of March 31, 2026, and are classified as an equity investment and included within long-term investments on the condensed consolidated balance sheet as of March 31, 2026.

The Company has $15.5 million aggregate principal amount of 5% convertible notes outstanding, which are convertible at the option of the holder into common stock at a conversion price of $1,125 per share. The Company does not have a cash repayment obligation associated with these notes. The notes are classified within other current liabilities on the Company’s consolidated balance sheet as of March 31, 2026.

The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts receivable, accounts payable and loan payable. As of March 31, 2026 and December 31, 2025, the fair values of cash and cash equivalents, restricted cash, accounts receivable, and loan and interest payable approximate their carrying value. The carrying value of the loan payable on the Company’s balance sheet is estimated to approximate its fair value as the interest rate approximates the market rate for loans with similar terms and risk characteristics.

The Company’s equity investments classified as Level 1 were valued using their respective closing stock prices on the Nasdaq Stock Market, which represent unadjusted quoted prices in active markets for identical instruments. The Company did not experience any transfers of financial instruments between the fair value hierarchy levels during the three months ended  March 31, 2026.

The Company’s forward contract liabilities classified as Level 2 were valued using Precision’s closing stock price on the Nasdaq Stock Market as of March 31, 2026.

The Company’s Level 3 instrument amounts represent the fair value of the convertible notes and related accrued interest, as certain inputs to determine fair value were unobservable.

The following tables provide the fair value measurements of applicable financial assets and liabilities as of March 31, 2026 and December 31, 2025:

The change in the fair value of the Level 1 assets and Level 2 and Level 3 liabilities is recognized in other (income) expense in the accompanying condensed consolidated statements of operations.