v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements

7. Fair Value Measurements

The Company measures and reports certain financial instruments at fair value on a recurring basis and evaluates its financial instruments subject to fair value measurements on a recurring and nonrecurring basis to determine the appropriate level in which to classify them in each reporting period.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company categorizes its financial assets and liabilities measured and reported at fair value in the financial statements on a recurring basis based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs used to determine the fair value of financial assets and liabilities, are as follows:

•
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
•
Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
•
Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Each major category of financial assets and liabilities measured at fair value on a recurring basis is categorized based upon the lowest level of significant input to the valuations. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company determined that certain investments in debt securities classified as available-for-sale securities were Level 1 financial instruments.

Additional investments in corporate debt securities, commercial paper, and asset-backed securities are considered Level 2 financial instruments because the Company has access to quoted prices but does not have visibility to the volume and frequency of trading for all of these investments. For the Company’s investments, a market approach is used for recurring fair value measurements and the valuation techniques use inputs that are observable, or can be corroborated by observable data, in an active marketplace.

The fair value of these instruments as of March 31, 2026 and December 31, 2025 was as follows (in thousands):

 

 

 

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total

 

As of March 31, 2026

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury money market funds

 

$

38,235

 

 

$

—

 

 

$

—

 

 

$

38,235

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

 

 

163,981

 

 

 

—

 

 

 

—

 

 

 

163,981

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Royalty purchase and sale agreement derivative

 

 

—

 

 

 

—

 

 

 

374

 

 

 

374

 

As of December 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury money market funds

 

$

32,210

 

 

$

—

 

 

$

—

 

 

$

32,210

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

 

 

205,522

 

 

 

—

 

 

 

—

 

 

 

205,522

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Royalty purchase and sale agreement derivative

 

 

—

 

 

 

—

 

 

 

362

 

 

 

362

 

 

The Company did not transfer any assets measured at fair value on a recurring basis to or from Level 1, Level 2, and Level 3 during the three months ended March 31, 2026 and 2025.

Royalty Purchase and Sale Agreement Derivative Liability

The derivative liability arose from the royalty purchase and sale agreement entered on October 29, 2025, as further described in Note 9. Commitments and Contingencies, under which the Company has the option to prepay the Purchaser (as defined below) and the Purchaser may require the Company to remunerate proceeds of $4.0 million upon a Change of Control (as defined below) prior to approval of MOLBREEVI by the FDA on or before March 31, 2027. The fair value of the derivative liability is estimated utilizing a probability-adjusted discounted cash flow approach and is performed quarterly with gains and losses included within change in fair value of the derivative liability in the consolidated statements of comprehensive loss. This obligation would be settled in cash. As of March 31, 2026, the Company assessed a 20% probability that a Change of Control would occur prior to the Closing Date (as defined below) of the royalty purchase and sale agreement and a 50% probability that the Purchaser would exercise its right to the prepayment, which would terminate the royalty purchase and sale agreement. After taking into consideration the probability of repayment, which was unchanged since December 31, 2025, the time value of money, and the counterparty credit risk, the estimated fair value of the put option derivative liability was determined to be $374 thousand as of the March 31, 2026 measurement date.

The derivative liability has been classified as a Level 3 recurring liability as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market. If different assumptions were used for the inputs to the valuation approach, the estimated fair value could be significantly different than the fair value the Company determined. The derivative liability is expected to either be settled or absolved within twelve months and is therefore classified as a current liability in the consolidated balance sheet.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments annually or whenever events or circumstances indicate that the carrying value of those assets may not be recoverable. These assets and liabilities can include acquired IPR&D and other long-lived assets that are written down to fair value if they are impaired.

During the three months ended March 31, 2026 and 2025, the Company experienced a decrease of approximately $0.3 million and an increase of approximately $0.4 million, respectively, in the carrying value of IPR&D due to foreign currency translation.