v3.26.3
Fair Value Measurements
 9 Months Ended
Sep. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements

7. Fair value measurements

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy:

 

 

 

 

 

September 30, 2026

 

 

 

Valuation
Hierarchy

 

Amortized Cost

 

 

Gross
Unrealized
Holding Gains

 

 

Gross
Unrealized
Holding Losses

 

 

Estimated
Fair Value

 

 

 

 

 

(in thousands)

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

Level 1

 

$

30,412

 

 

$

-

 

 

$

-

 

 

$

30,412

 

U.S. government and agency securities

 

Level 2

 

 

3,405

 

 

 

-

 

 

 

(1

)

 

 

3,404

 

Corporate debt securities

 

Level 2

 

 

4,212

 

 

 

-

 

 

 

-

 

 

 

4,212

 

Total cash equivalents

 

 

 

 

38,029

 

 

 

-

 

 

 

(1

)

 

 

38,028

 

Short-term marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency securities

 

Level 2

 

 

54,477

 

 

 

-

 

 

 

(64

)

 

 

54,413

 

Corporate debt securities

 

Level 2

 

 

26,250

 

 

 

-

 

 

 

(39

)

 

 

26,211

 

Total short-term marketable securities

 

 

 

 

80,727

 

 

 

-

 

 

 

(103

)

 

 

80,624

 

Total financial assets

 

 

 

$

118,756

 

 

$

-

 

 

$

(104

)

 

$

118,652

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

Level 3

 

$

40,647

 

 

$

-

 

 

$

-

 

 

$

40,647

 

Total short-term financial liabilities

 

 

 

 

40,647

 

 

 

-

 

 

 

-

 

 

 

40,647

 

Long-term financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

Level 3

 

 

54,710

 

 

 

-

 

 

 

-

 

 

 

54,710

 

Success payment liabilities

 

Level 3

 

 

16,566

 

 

 

-

 

 

 

-

 

 

 

16,566

 

Total long-term financial liabilities

 

 

 

 

71,276

 

 

 

-

 

 

 

-

 

 

 

71,276

 

Total financial liabilities

 

 

 

$

111,923

 

 

$

-

 

 

$

-

 

 

$

111,923

 

 

 

 

 

 

 

December 31, 2025

 

 

 

Valuation
Hierarchy

 

Amortized Cost

 

 

Gross
Unrealized
Holding Gains

 

 

Gross
Unrealized
Holding Losses

 

 

Estimated
Fair Value

 

 

 

 

 

(in thousands)

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

Level 1

 

$

63,000

 

 

$

-

 

 

$

-

 

 

$

63,000

 

U.S. government and agency securities

 

Level 2

 

 

6,528

 

 

 

-

 

 

 

-

 

 

 

6,528

 

Total cash equivalents

 

 

 

 

69,528

 

 

 

-

 

 

 

-

 

 

 

69,528

 

Short-term marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency securities

 

Level 2

 

 

65,082

 

 

 

29

 

 

 

-

 

 

 

65,111

 

Corporate debt securities

 

Level 2

 

 

1,402

 

 

 

-

 

 

 

(1

)

 

 

1,401

 

Total short-term marketable securities

 

 

 

 

66,484

 

 

 

29

 

 

 

(1

)

 

 

66,512

 

Total financial assets

 

 

 

$

136,012

 

 

$

29

 

 

$

(1

)

 

$

136,040

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

Level 3

 

$

40,200

 

 

$

-

 

 

$

-

 

 

$

40,200

 

Total short-term financial liabilities

 

 

 

 

40,200

 

 

 

-

 

 

 

-

 

 

 

40,200

 

Long-term financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

Level 3

 

 

83,518

 

 

 

-

 

 

 

-

 

 

 

83,518

 

Success payment liabilities

 

Level 3

 

 

19,238

 

 

 

-

 

 

 

-

 

 

 

19,238

 

Total long-term financial liabilities

 

 

 

 

102,756

 

 

 

-

 

 

 

-

 

 

 

102,756

 

Total financial liabilities

 

 

 

$

142,956

 

 

$

-

 

 

$

-

 

 

$

142,956

 

The Company measures the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities. The Level 2 marketable securities include U.S. government and agency securities and corporate debt securities and are valued based on either recent trades of securities in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

There were no available-for-sale debt securities in a material loss position as of September 30, 2026 and December 31, 2025. The Company determined that there was no material change in the credit risk of the investments during the three months ended September 30, 2026. As such, an allowance for credit losses has not been recognized. As of September 30, 2026, the Company does not intend to sell such securities, and it is not more-likely-than-not that the Company will be required to sell the securities prior to the recovery of the amortized cost basis.

As of September 30, 2026, all marketable securities had an effective maturity date of two years or less. Investments in securities with maturities of less than one year, or those for which management intends to use to fund current operations, are included in current assets and classified as available-for-sale. As of September 30, 2026 and December 31, 2025, the balance in accumulated other comprehensive income (loss) included net unrealized gains (losses) related to the Company’s available-for-sale debt securities.

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities:

 

 

 

Contingent
Consideration

 

 

Cobalt
Success Payment
Liability

 

 

Harvard
Success Payment
Liability

 

 

 

(in thousands)

 

Balance as of December 31, 2025

 

$

123,718

 

 

$

17,875

 

 

$

1,363

 

Changes in fair value – expense (gain)

 

 

10,745

 

 

 

(1,823

)

 

 

(489

)

Balance as of March 31, 2026

 

 

134,463

 

 

 

16,052

 

 

 

874

 

Changes in fair value – expense

 

 

16,362

 

 

 

7,167

 

 

 

384

 

Balance as of June 30, 2026

 

 

150,825

 

 

 

23,219

 

 

 

1,258

 

Changes in fair value – gain

 

 

(55,468

)

 

 

(7,629

)

 

 

(282

)

Balance as of September 30, 2026

 

$

95,357

 

 

$

15,590

 

 

$

976

 

 

Contingent consideration

The Company utilizes significant estimates and assumptions it believes would be made by a market participant in determining the estimated fair value of the Cobalt Contingent Consideration at each balance sheet date. The fair value of the Cobalt Contingent Consideration was determined based on the estimated probability and timing of the specified development milestone payments and the estimated probability, timing, and amount of potential payments to the Company from business development transactions involving the fusogen technology, as well as the applicable discount rates. The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due. The Company assesses these estimates on an ongoing basis as additional data impacting the assumptions are obtained.

The fair value of the Cobalt Contingent Consideration was calculated using the following unobservable inputs:

 

 

 

September 30, 2026

 

December 31, 2025

Unobservable Input

 

Range

 

Weighted-Average

 

Range

 

Weighted-Average

Discount rates

 

17.3% – 19.1%

 

18.2%

 

10.6% – 12.1%

 

11.6%

Probability of occurrence

 

0.3% – 65.0%

 

20.5%

 

1.0% – 60.0%

 

27.4%

The weighted-average unobservable inputs were calculated based on the relative value of the specified development milestones and potential payments to the Company from business development transactions involving the fusogen technology. The estimated fair value of the Cobalt Contingent Consideration may change significantly as development progresses and additional data are obtained, impacting the assumptions used to estimate the fair value of the liability, including the probability and timing of the specified development milestones and potential payments to the Company from business development transactions involving the fusogen technology. In evaluating the fair value assumptions, judgment is required to interpret the market data used to develop the estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions, inputs, and/or different valuation techniques could result in materially different fair value estimates.

Success payments

The Company utilizes significant estimates and assumptions in determining the estimated fair value of the success payment liabilities and the associated expense or gain at each balance sheet date. The estimated fair value of the Cobalt Success Payment and Harvard Success Payment liabilities was determined using a Monte Carlo simulation methodology, which models the estimated fair value of the liability based on several key assumptions, including the expected volatility, remaining term, risk-free interest rate, estimated number and timing of valuation measurement dates on the basis of which payment may be triggered, and, for the Cobalt Success Payment, the Company’s market capitalization, and, for the Harvard Success Payments, the per share fair value of the Company’s common stock. The potential Cobalt Success Payment is payable in cash or stock, and the potential Harvard Success Payments are payable in cash.

The fair values of the Cobalt Success Payment and Harvard Success Payments were calculated using the following unobservable inputs:

 

 

 

September 30, 2026

 

December 31, 2025

Unobservable Input

 

Cobalt

 

Harvard

 

Cobalt

 

Harvard

Expected stock price volatility

 

95.0%

 

95.0%

 

77.5%

 

77.5%

Expected term (years)

 

12.4

 

4.5

 

13.1

 

5.2