v3.26.1
Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Schedule of Assets and Liabilities Measured at Fair Value
The following table presents the hierarchy for our assets and liabilities measured at fair value (in thousands):
June 30, 2026December 31, 2025
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:
Short-term investments(1)
$146,279 $204,777 $— $351,056 $183,982 $374,612 $— $558,594 
Pelthos Series A Preferred Shares96,870 — — 96,870 106,262 — — 106,262 
Pelthos Common Shares42,390 — — 42,390 46,500 — — 46,500 
Derivative assets(2)
— 13,586 5,250 18,836 — 10,643 4,989 15,632 
     Total assets$285,539 $218,363 $5,250 $509,152 $336,744 $385,255 $4,989 $726,988 
Liabilities:
Contingent liabilities - CyDex$— $— $352 $352 $— $— $395 $395 
Contingent liabilities - Metabasis(3)
— 2,240 — 2,240 — 2,826 — 2,826 
Derivative liabilities— 824 — 824 — — — — 
     Total liabilities$— $3,064 $352 $3,416 $— $2,826 $395 $3,221 
(1) Excluding our investment in corporate equity securities and U.S. government securities, our short-term investments in marketable debt and equity securities are classified as available-for-sale securities based on management’s intentions and are classified within level 2 of the fair value hierarchy, as these investment securities are valued based on quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. We have classified marketable securities with original maturities of greater than one year as short-term investments based on our ability and intent to use any or all of those marketable securities to satisfy the liquidity needs of our current operations.
(2) Castle Creek Warrant is classified within Level 3 of the fair value hierarchy because significant valuation inputs are unobservable in the marketplace. All other derivative assets are classified within Level 2 of the fair value hierarchy because they are valued based on quoted prices for identical or similar instruments in markets that are not active, and on model-based valuation techniques for which all significant assumptions are observable in the market.
(3) In connection with our acquisition of Metabasis in January 2010, we issued Metabasis stockholders four tradable CVRs, one CVR from each of four respective series of CVR, for each Metabasis share. The CVRs entitle Metabasis stockholders to cash payments as frequently as every six months as cash is received by us from proceeds from the sale or partnering of any of the Metabasis drug development programs, among other triggering events. The liability for the CVRs is determined using quoted prices in a market that is not active for the underlying CVR. The carrying amount of the liability may fluctuate significantly based upon quoted market prices, and actual amounts paid under the agreements may be materially different than the carrying amount of the liability. During the three months ended June 30, 2026 and 2025, we recorded a change in the fair value of the Metabasis CVR liability that amounted to $(1.1) million and $0.1 million, respectively, to mark-to-market. During the six months ended June 30, 2026 and 2025, we recorded a change in the fair value of the Metabasis CVR liability that amounted to $(0.5) million and $1.9 million, respectively, to mark-to-market.
Schedule of Reconciliation of Level 3 Financial Instruments
A reconciliation of the level 3 financial instruments as of June 30, 2026 is as follows (in thousands):
Assets
Fair value of level 3 financial instruments as of December 31, 2025
$4,989 
Fair value adjustments to derivative assets261 
Fair value of level 3 financial instruments as of June 30, 2026
$5,250 
Liabilities
Fair value of level 3 financial instruments as of December 31, 2025
$395 
Payments to CVR holders and other contingent payments(50)
Fair value adjustments to contingent liabilities7 
Fair value of level 3 financial instruments as of June 30, 2026
$352