Note 12. Fair Value

Cash and cash equivalents are carried at fair value. Financial instruments, including accounts receivable, accounts payable, and accrued expenses are carried at cost, which approximates fair value given their short-term nature. Our remaining fair value measures are discussed below.

Financial Instruments with Fair Value Measurements on a Recurring Basis

The fair value hierarchy for financial instruments measured at fair value on a recurring basis as of June 30, 2026 was as follows:

The fair value hierarchy for financial instruments measured at fair value on a recurring basis as of December 31, 2025 was as follows:

There were no transfers between Level 1, Level 2, or Level 3 during any of the periods above.

Changes in the fair value of our Level 3 financial instruments during the six months ended June 30, 2026 were as follows:

Changes in the fair value of our Level 3 financial instruments during the six months ended June 30, 2025 were as follows:

Valuation of Notes Payable and Convertible Notes Payable

Our notes payable and convertible notes payable are categorized within Level 3 of the fair value hierarchy. The 2019 MD Loan and 2019 Cecil Loan are carried at the greater of principal plus accrued interest or the value of certain “phantom shares” (see Note 8) which approximates fair value. The 2022 MD Loan, 2022 DHCD Loan, and 2025 SSCP Notes are carried at amortized cost, which approximates fair value due to our credit risk and market interest rates.

The 2024 SSCP Notes are carried at their amortized cost of $10.4 million and $9.3 million as of  June 30, 2026 and  December 31, 2025, respectively. As of  June 30, 2026 and  December 31, 2025, amortized cost did not approximate fair value and the fair value of the 2024 SSCP Notes, excluding the SSCPN Derivative Liabilities pertaining to the 2024 SSCP Notes, was approximately $10.1 million and $8.2 million, respectively.

The SSCPN Derivative Liabilities met the requirements to be separated from the SSCP Notes as derivative instruments measured at fair value. We estimate the fair value of the SSCP Notes with and without the SSCPN Derivative Liabilities and calculate the difference as the implied fair value of the SSCPN Derivative Liabilities. The valuation model consists of a discounted cash flow model and a Black-Scholes option-pricing model with probability weights for the occurrence of (i) a change of control transaction, (ii) default of the Company, or (iii) held to maturity. These estimates require significant judgment. The carrying amount may fluctuate significantly and the actual settlement amount may be materially different from the estimated fair value. The unobservable valuation inputs were as follows:

Valuation of the Common Stock Warrant Liabilities

Pursuant to a loan with Avenue Venture Opportunities Fund, L.P. (“Avenue”), which we repaid in 2024, we issued a warrant to purchase 150,000 shares of our common stock at $4.6014 per share (the “2023 Avenue Warrant”). The 2023 Avenue Warrant, as amended, is classified as a liability and carried at fair value. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of (i) settlement of the instrument upon a change of control transaction, (ii) dissolution of the Company, or (iii) held to expiration. These estimates require significant judgment. The carrying amount may fluctuate significantly and the actual settlement amount may be materially different from the estimated fair value. The unobservable valuation inputs were as follows:

Pursuant to an underwritten public offering in June 2023, we issued warrants to purchase 2,500,000 shares of our common stock at $22.00 per share (the “Tranche A Warrants”). The Tranche A Warrants expired unexercised in June 2026. The Tranche A Warrants were classified as a liability and carried at fair value. We estimated the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of (i) acceptance of a new drug application (“NDA”) by the U.S. Food and Drug Administration (“FDA”) for CNM-Au8, (ii) settlement upon a fundamental transaction, (iii) dissolution of the Company, and (iv) held to expiration. These estimates required significant judgment. The unobservable valuation inputs were as follows:

Pursuant to a registered direct public offering in October 2024, we issued warrants to purchase 1,546,914 shares of our common stock at $4.82 per share (the “2024 Common Warrants”). The 2024 Common Warrants are classified as a liability and carried at fair value. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of (i) dissolution of the Company and (ii) held to maturity. These estimates require significant judgment. The carrying amount may fluctuate significantly and the actual settlement amount may be materially different from the estimated fair value. The unobservable valuation inputs were as follows:

Pursuant to a registered direct public offering in January 2026, we issued warrants to purchase 1,114,000 shares of our common stock at $6.00 per share (the “Series A Warrants”). The exercise price of the Series A Warrants will increase to $7.00 per share if (i) the Series A Warrant is exercised prior to our public announcement of the FDA’s posted action date under the Prescription Drug User Fee Act for our NDA for CNM-Au8 (the “Series A Trigger Announcement”), or (ii) the VWAP of our common stock equals or exceeds $10.00 on the Series A Price Measurement Date, as defined below. The “Series A Price Measurement Date” means (A) the trading day on which the Series A Trigger Announcement is made, if such announcement is made prior to 9:00 a.m. (New York City time) on such trading day, or (B) the first trading day immediately following the day on which the Series A Trigger Announcement is made, if such announcement is made at or after 9:01 a.m. (New York City time) on a trading day or on a day that is not a trading day.

The Series A Warrants are classified as a liability and carried at fair value. We estimate the fair value using a Monte Carlo simulation with estimates for (i) the probability of the Series A Trigger Announcement (ii) the expected stock price increase if the Series A Trigger Announcement occurs, and (iii) the expected stock price decrease if the Series A Trigger Announcement does not occur. These estimates require significant judgment. The carrying amount may fluctuate significantly and the actual settlement amount may be materially different from the estimated fair value. The unobservable valuation inputs were as follows:

Pursuant to a registered direct public offering in January 2026, we issued warrants to purchase 2,599,333 shares of our common stock at $6.00 per share (the “Series B Warrants”). The exercise price of the Series B Warrants will increase to (i) $10.00 per share if the VWAP of our common stock equals or exceeds $20.00 on the Series B Price Measurement Date, or (ii) $12.50 per share if (A) the VWAP of our common stock equals or exceeds $25.00 on the Series B Price Measurement Date, or (B) the Series B Warrant is exercised prior to our public announcement of receipt of written approval from the FDA of our NDA for CNM-Au8 in ALS, which announcement shall be made promptly after receipt of such approval (the “Series B Trigger Announcement”). The “Series B Price Measurement Date” means (A) the trading day on which the Series B Trigger Announcement is made, if such announcement is made prior to 9:00 a.m. (New York City time) on such trading day, or (B) the first trading day immediately following the day on which the Series B Trigger Announcement is made, if such announcement is made at or after 9:01 a.m. (New York City time) on a trading day or on a day that is not a trading day.

The Series B Warrants are classified as a liability and carried at fair value. We estimate the fair value using a Monte Carlo simulation with estimates for (i) the probability of the Series B Announcement (ii) the expected stock price increase if the Series B Trigger Announcement occurs, and (iii) the expected stock price decrease if the Series B Trigger Announcement does not occur. These estimates require significant judgment. The carrying amount may fluctuate significantly and the actual settlement amount may be materially different from the estimated fair value. The unobservable valuation inputs were as follows: