v3.26.1
Fair Value
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value
3.
Fair Value

The Company accounts for its financial assets and liabilities using fair value measurements. The authoritative accounting guidance defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, and indicates the level of the fair value hierarchy utilized to determine such fair value:

 

 

 

Fair Value Measurements as of June 30, 2026

 

 

 

(in thousands)

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Fair Value

 

Cash equivalents

 

$

16,872

 

 

$

—

 

 

$

—

 

 

$

16,872

 

Total current assets

 

$

16,872

 

 

$

—

 

 

$

—

 

 

$

16,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Top-up Shares

 

$

—

 

 

$

—

 

 

$

5,730

 

 

$

5,730

 

Total current liabilities

 

$

—

 

 

$

—

 

 

$

5,730

 

 

$

5,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements as of December 31, 2025

 

 

 

(in thousands)

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Fair Value

 

Cash equivalents

 

$

26,614

 

 

$

—

 

 

$

—

 

 

$

26,614

 

Total

 

$

26,614

 

 

$

—

 

 

$

—

 

 

$

26,614

 

 

As of June 30, 2026, the Company had $16.9 million in cash equivalents, and did not hold any marketable securities. The Company measures the cash equivalents that are invested in money market funds using Level 1 inputs for identical securities. As of December 31, 2025, the Company had $26.6 million in cash equivalents, and did not hold any marketable securities. For each of the three and six months ended June 30, 2026 and 2025, there were no transfers between Levels 1, 2 or 3.

 

The Top-Up Obligation with Ascendant is measured at fair value on a recurring basis and is classified as a Level 3 liability because the valuation incorporates significant unobservable inputs, including estimates regarding the probability and timing of achieving specified clinical and financial milestones and assumptions regarding the Company's future stock price. The initial fair value of the Top-Up Obligation was recognized as consideration for the acquired license and recorded within research and development license expense. The change in fair value of the Top-Up Obligation is recognized in other income (expense), net in the accompanying condensed consolidated statements of operations.

 

The Company estimates the fair value of the Top-Up Obligation using a Monte Carlo simulation model, which incorporates both observable market data and significant unobservable inputs. Changes in these assumptions could result in materially different fair value measurements. Significant assumptions used in the model include the following:

 

 

 

Top-up Shares

Stock price

 

$29.85 - $31.56

Equity Volatility

 

110%

Probability of milestone achievement

 

20%

Time to exercise (years)

 

0.2 to 0.3

 

Nonrecurring Fair Value Measurements

 

In addition to assets and liabilities recorded at fair value on a recurring basis, the Company's assets and liabilities are also subject to nonrecurring fair value measurements. In connection with the private placement securities purchase agreement and the License Agreement with Ascendant Health (as described below) entered into on April 30, 2026, the Company issued the May 2026 Pre-Funded Warrants, May 2026 Common Stock Warrants, and Ascendant Pre-Funded Warrants (as described below), each of which was initially classified as a liability and measured at fair value, as share settlement was contingent upon stockholder approval in accordance with the listing standards of the Nasdaq Stock Market (the “Issuance Stockholder Approval”), which was outside the Company's control. On June 1, 2026, the Issuance Stockholder Approval was obtained and the instruments were reclassified to permanent equity, after which they are no longer subject to remeasurement.

 

The initial fair value of the May 2026 Pre-Funded Warrants and May 2026 Warrants, and all subsequent changes in the fair value of the liability-classified instruments through the date of the Issuance Stockholder Approval, were recognized within other income (expense), net in the accompanying condensed consolidated statements of operations. The initial fair value of the Ascendant Pre-Funded Warrants was recognized as consideration for the acquired license and recorded within research and development license expense. The change in fair value of the Ascendant Pre-Funded Warrants is recognized in other income (expense), net in the accompanying condensed consolidated statements of operations.

 

The Company estimated the fair value of the May 2026 Pre-Funded Warrants and Ascendant Pre-Funded Warrants using the Company's publicly-traded stock price at the valuation date, which is a Level 1 input. The Company estimated the fair value of the May 2026 Warrants using the Black-Scholes option pricing model, which incorporates both observable market data and significant unobservable inputs. Changes in these assumptions could result in materially different fair value measurements. Significant assumptions include the following:

 

 

 

May 2026 Warrants

Risk-free interest rate

 

4.04% - 4.13%

Expected dividend yield

 

0%

Expected volatility

 

110.00%

Expected term (yrs)

 

4.9 to 5.0

 

The following table shows the rollforward of the Top-up Share Obligation and liabilities associated with the Ascendant Pre-Funded Warrants, May 2026 Pre-Funded Warrants, and May 2026 Warrants:

 

(In thousands)

 

Ascendant Top-up Shares

 

 

Ascendant Pre-Funded Warrants

 

 

May 2026 Warrants and Pre-Funded Warrants

 

 

Total

 

Balance at January 1, 2026

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Initial recognition of financial instrument

 

 

3,650

 

 

 

16,469

 

 

 

117,559

 

 

 

137,678

 

Changes in fair value recognized in earnings

 

 

2,080

 

 

 

(3,194

)

 

 

(23,373

)

 

 

(24,487

)

Reclassification to equity

 

 

—

 

 

 

(13,275

)

 

 

(94,186

)

 

 

(107,461

)

Balance at June 30, 2026

 

$

5,730

 

 

$

—

 

 

$

—

 

 

$

5,730