Fair value of financial instruments |
3 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2026 | |||||||||||||
| Fair value of financial instruments | |||||||||||||
| Fair value of financial instruments | 14. Fair value of financial instruments Pursuant to the accounting guidance for fair value measurement and its subsequent updates, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance establishes a hierarchy for inputs used in measuring fair value that minimizes the use of unobservable inputs by requiring the use of observable market data when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on active market data. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy is broken down into the three input levels summarized below:
For the three months ended March 31, 2026 and 2025, there were no financial instruments measured at fair value on a recurring or non-recurring basis. The carrying amounts of certain financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short-term nature of such instruments. Refer to Note 6, “Debt,” for disclosure of the fair value of the 2029 Convertible Notes and Note 11, “Royalty Financing Obligation,” for disclosures about the royalty financing obligation. The estimated fair value of the royalty financing obligations is based on the Company’s current estimates of future payments to RTW over the estimated term of the obligation, which are considered Level 3 inputs. |