Fair Value of Financial Instruments |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments | 2. Fair Value of Financial Instruments
The carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, U.S. government-backed securities with maturity dates up to one year, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities.
Money market funds included in cash and cash equivalents and U.S. government-backed securities are measured at fair value based on quoted prices in active markets, which are considered Level 1 inputs.
During the three months ended March 31, 2026, the Company agreed to modify certain outstanding warrants, subject to stockholder approval. Since there was a contingency in the terms of settlement, the Company recognized a warrant liability as of March 31, 2026. The warrant liability is measured at fair value using the Black-Scholes option pricing model. The fair value is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs. The change in fair value is recognized in earnings. On June 15, 2026, at the Company’s Annual Meeting of Stockholders, the stockholders approved the repricing of the warrants underlying this warrant liability, after which the warrants met all requirements for classification as equity. On that date, the Company remeasured the warrant liability at fair value and recognized the change in fair value in earnings. In the three and six months ended June 30, 2026, the Company recognized the change in fair value of the warrant liability of $2.4 million and $1.8 million, respectively. There was no warrant liability outstanding as of June 30, 2026. See Note 6. Sale of Common Stock and Warrants.
The Company’s investment in shares of AlloTera Therapeutics common stock is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs. The fair value is estimated using a combination of valuation techniques, including an adjusted enterprise valuation method and a backsolve method, which incorporates information from recent financing transactions and the Company’s assessment of the underlying enterprise value of AlloTera Therapeutics. Significant unobservable inputs used in these valuations include assumptions related to the enterprise value of AlloTera Therapeutics discounts for lack of marketability, the capital structure of the investee, and the probability and timing of potential liquidity events. The fair value of the AlloTera Therapeutics investment is reassessed each reporting period based on updated assumptions and available market information with the change in fair value recognized in earnings.
A contingent liability arose in May 2025 when the Company agreed to transfer some of the proceeds from the sale or liquidation of shares in AlloTera Therapeutics, if such event occurs, to certain holders of Secured Notes and Convertible Bridge Notes as part of the terms to restructure and convert their debt to equity. The valuation of the contingent liability is based on assumptions that are consistent with those used in valuing the related AlloTera Therapeutics investment, including the expected distribution of proceeds upon a liquidity event. The fair value of the contingent liability is reassessed each reporting period with the change in fair value recognized in earnings. See Note 4. Debt, Net.
There were no material changes in the valuation techniques or significant unobservable inputs used to measure these Level 3 instruments during the six months ended June 30, 2026.
The following table presents the Company’s assets and liabilities which were measured at fair value at December 31, 2025 and June 30, 2026:
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