Fair Value Measurements

3 Months Ended

Mar. 31, 2026

4. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:


	March 31, 2026
	Level 1		Level 2		Level 3		Total
Financial assets
Cash equivalents:
Money market funds	$	—	$	213,724	$	—	$	213,724
Treasury bills		—		74,212		—		74,212
Total cash equivalents		—		287,936		—		287,936
Available-for-sale securities (Note 5):
Treasury bills		—		78,562		—		78,562
Government bonds		—		5,019		—		5,019
Total available-for-sale securities		—		83,581		—		83,581
Total financial assets	$	—	$	371,517	$	—	$	371,517

Financial liabilities
Derivative liabilities (Note 2):	$	—	$	—	$	3,350	$	3,350
Total financial liabilities	$	—	$	—	$	3,350	$	3,350


	December 31, 2025
	Level 1		Level 2		Level 3		Total
Financial assets
Cash equivalents:
Money market funds	$	—	$	51,333	$	—	$	51,333
Total cash equivalents		—		51,333		—		51,333
Available-for-sale securities (Note 5):
Treasury bills		—		72,932		—		72,932
Government bonds		—		55,018		—		55,018
Total available-for-sale securities		—		127,950		—		127,950
Total financial assets	$	—	$	179,283	$	—	$	179,283
Financial liabilities
Derivative liabilities (Note 2):	$	—	$	—	$	9,200	$	9,200
Total financial liabilities	$	—	$	—	$	9,200	$	9,200

As of March 31, 2026 and December 31, 2025, the fair values of the Company’s cash equivalents and available-for-sale securities were determined using Level 2 inputs.

The Company estimated the fair value of the derivative liabilities by using a Monte Carlo simulation forecasting the timing and likelihood of certain development milestone events being achieved and discounting the probability of adjusted payments using an appropriate discount rate based on market interest rates. The main assumptions when determining the fair value of the derivative liabilities are the timing and probability of achieving certain milestones, the estimated volatility of the Company’s common stock, and the discount rate. The estimated fair value presented is not necessarily indicative of an amount that could be realized in a current market exchange. The use of alternative inputs and estimation methodologies could have a material effect on these estimates of fair value.

The significant unobservable inputs used in valuing the developmental milestone derivative liabilities at each measurement date are as follows:


	March 31, 2026	December 31, 2025
Unobservable Input	Range	Range	Average
Probability of achieving certain development milestones	60.0%	40.0% - 100.0%	70.0%
Volatility	100.0%	98.0%	98.0%
Discount rate	3.8%	3.5% - 3.7%	3.6%
Timing of achieving certain development milestones	2.5 years	0.1 - 2.8 years	1.4 years

The following table presents a roll forward of activity associated with the Company’s derivative liabilities measured using Level 3 inputs:


	Developmental Milestone Derivative Liabilities
Fair value of derivative liabilities as of January 1, 2026	$	9,200
Change in fair value of derivative liabilities		1,650
Common stock issued as payment for developmental milestone consideration		(7,500	)
Fair value of derivative liabilities as of March 31, 2026	$	3,350

The Company recognized a $1.7 million loss for the change in fair value of derivative liabilities during the three months ended March 31, 2026 and 2025.

It is the Company's policy to recognize transfers between levels of the fair value hierarchy, if any, at the end of the reporting period. During the three months ended March 31, 2026, and the year ended December 31, 2025, there were no transfers between Level 1, Level 2, and Level 3.

As of March 31, 2026, and December 31, 2025, the Company's accounts payable, accrued expenses, and other current liabilities approximated their estimated fair values due to the short-term nature of these financial instruments.