v3.26.1
Fair Value
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value . Fair Value

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):

 

 

 

June 30, 2026

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

76

 

 

$

—

 

 

$

—

 

 

$

76

 

Commercial paper

 

 

—

 

 

 

22,982

 

 

 

—

 

 

 

22,982

 

Total cash equivalents

 

 

76

 

 

 

22,982

 

 

 

—

 

 

 

23,058

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

—

 

 

 

4,675

 

 

 

—

 

 

 

4,675

 

U.S. government debt and agency
   securities

 

 

—

 

 

 

14,069

 

 

 

—

 

 

 

14,069

 

Total short-term investments

 

$

—

 

 

 

18,744

 

 

$

—

 

 

$

18,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets subject to fair value
   measurements on a recurring basis

 

$

76

 

 

$

41,726

 

 

$

—

 

 

$

41,802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Milestone liability

 

 

—

 

 

 

—

 

 

 

14,362

 

 

 

14,362

 

Total liabilities subject to fair value
   measurements on a recurring basis

 

$

—

 

 

$

—

 

 

$

14,362

 

 

$

14,362

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2025

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

17,299

 

 

$

—

 

 

$

—

 

 

$

17,299

 

U.S. government debt and agency
   securities

 

 

—

 

 

 

2,541

 

 

 

—

 

 

 

2,541

 

Commercial paper

 

 

—

 

 

 

32,314

 

 

 

—

 

 

 

32,314

 

Total cash equivalents

 

 

17,299

 

 

 

34,855

 

 

 

—

 

 

 

52,154

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

—

 

 

 

5,209

 

 

 

—

 

 

 

5,209

 

U.S. government debt and agency
   securities

 

 

—

 

 

 

13,846

 

 

 

—

 

 

 

13,846

 

Total short-term investments

 

 

—

 

 

 

19,055

 

 

 

—

 

 

 

19,055

 

Total assets subject to fair value
   measurements on a recurring basis

 

$

17,299

 

 

$

53,910

 

 

$

—

 

 

$

71,209

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Sermonix pre-funded warrant

 

$

—

 

 

$

—

 

 

$

37,488

 

 

 

37,488

 

Milestone liability

 

 

—

 

 

 

—

 

 

 

15,116

 

 

 

15,116

 

Total liabilities subject to fair value
   measurements on a recurring basis

 

$

—

 

 

$

—

 

 

$

52,604

 

 

$

52,604

 

 

U.S government debt and agency securities and commercial paper are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.

Due to a contingent redemption right exercisable if the Company failed to obtain stockholder approval permitting the exercise of the Sermonix Pharmaceuticals, Inc. (“Sermonix”) Pre‑Funded Warrant under Nasdaq Rule 5635(a) within one year of issuance, the warrant was classified as a liability pursuant to ASC 480 as of December 31, 2025. As of December 31, 2025 the Company determined the fair value of the Sermonix Pre-Funded Warrant based on the fair value of the Company’s common stock, adjusted for a discount for lack of marketability, and classified it as Level 3 due to the use of unobservable market data for identical or similar liabilities. Following receipt of stockholder approval on March 18, 2026, the redemption right lapsed and the Sermonix Pre‑Funded Warrant met the criteria for equity classification. Accordingly, the Company remeasured the warrant to fair value immediately prior to reclassification and reclassified the warrant to equity as of March 18, 2026. Following reclassification, the Sermonix Pre‑Funded Warrant is no longer subject to recurring fair value measurement.

The key inputs into the fair value of the Sermonix Pre-Funded Warrant at December 31, 2025 were as follows:

 

 

 

Sermonix Pre-Funded Warrant

 

 

 

 

 

December 31, 2025

 

Fair Value of Common Stock

 

 

 

$

7.57

 

Volatility

 

 

 

 

97.0

%

Risk-free rate

 

 

 

 

3.7

%

Dividend Yield

 

 

 

 

0.0

%

Holding period years

 

 

 

 

0.20

 

 

As of December 31, 2025 and June 30, 2026, Level 3 liabilities include the milestone payable to Sermonix pursuant to the Company’s license agreement executed on December 18, 2025 (the “Milestone Liability”). The Milestone Liability is classified as a liability under ASC 480 as the Company is contingently obligated to settle the milestone through the transfer of assets or issuance of a variable number of equity shares with a value equal to a fixed monetary amount.

The Company determines the fair value of the Milestone Liability based on the probability weighted present value of the net milestone payment and classifies as Level 3 due to the use of unobservable market data for identical or similar liabilities. The key inputs into the fair value of the Milestone Liability at December 31, 2025 and at June 30, 2026 were as follows:

 

 

 

Milestone Liability

 

 

 

June 30, 2026

 

 

December 31, 2025

 

Weighted Average Cost of Capital

 

 

11.0

%

 

 

11.0

%

Probability

 

 

43.9

%

 

 

43.9

%

 

Below is a summary of the change in fair value of the Sermonix Pre-Funded Warrant and the Milestone Liability from December 31, 2025 to June 30, 2026:

 

 

 

Sermonix
Pre-Funded
Warrant

 

 

Milestone
Liability

 

December 31, 2025

 

$

37,488

 

 

$

15,116

 

Change in fair value

 

 

16,320

 

 

 

(929

)

Reclassified to equity

 

 

(53,808

)

 

 

—

 

March 31, 2026

 

$

—

 

 

$

14,187

 

Change in fair value

 

 

—

 

 

 

175

 

June 30, 2026

 

$

—

 

 

$

14,362

 

The fair value of the Level 3 liabilities may change significantly as additional data is obtained. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods.

The following tables reflect the Company’s financial asset balances measured at fair value on a recurring basis (in thousands):

 

 

 

June 30, 2026

 

 

 

Level

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair
Value

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

1

 

$

76

 

 

$

—

 

 

$

—

 

 

$

76

 

Commercial paper

 

2

 

 

22,985

 

 

 

—

 

 

 

(3

)

 

 

22,982

 

Total cash equivalents

 

 

 

$

23,061

 

 

$

—

 

 

$

(3

)

 

$

23,058

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

2

 

 

4,676

 

 

 

—

 

 

 

(1

)

 

 

4,675

 

U.S. government debt and agency
   securities

 

2

 

 

14,074

 

 

 

—

 

 

 

(5

)

 

 

14,069

 

Total short-term investments

 

 

 

$

18,750

 

 

$

—

 

 

$

(6

)

 

$

18,744

 

 

 

 

December 31, 2025

 

 

 

Level

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair
Value

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

1

 

$

17,299

 

 

$

—

 

 

$

—

 

 

$

17,299

 

U.S. government debt and agency
   securities

 

2

 

 

2,541

 

 

 

—

 

 

 

—

 

 

 

2,541

 

Commercial paper

 

2

 

 

32,319

 

 

 

—

 

 

 

(5

)

 

 

32,314

 

Total cash equivalents

 

 

 

$

52,159

 

 

$

—

 

 

$

(5

)

 

$

52,154

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

2

 

 

5,210

 

 

 

—

 

 

 

(1

)

 

 

5,209

 

U.S. government debt and agency
   securities

 

2

 

 

13,844

 

 

 

2

 

 

 

—

 

 

 

13,846

 

Total short-term investments

 

 

 

$

19,054

 

 

$

2

 

 

$

(1

)

 

$

19,055

 

 

All the commercial paper, U.S. government debt and agency securities, U.S. treasury bills, and corporate bonds designated as short-term investments have an effective maturity date that is equal to or less than one year from the respective balance sheet date.

As of June 30, 2026, the Company does not intend to sell any securities in unrealized loss positions, and it is not more-likely-than-not that the Company will be required to sell such securities prior to the recovery of the amortized cost basis. Based on the Company's assessment, the Company concluded all impairments as of June 30, 2026 to be due to factors other than credit loss, such as changes in interest rates. A credit loss allowance was not recognized and the unrealized losses for available-for-sale securities were recorded in other comprehensive loss.