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Fair Value Measurements and Financial Instruments
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements and Financial Instruments Fair Value Measurements and Financial Instruments
Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

As of March 31, 2026As of December 31, 2025
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:
Money market funds(1)
$321,103 $— $— $321,103 $383,568 $— $— $383,568 
Available for sale debt securities(2)
— — 21,900 21,900 — — 18,800 18,800 
Total current assets$321,103 $— $21,900 $343,003 $383,568 $— $18,800 $402,368 
Equity securities173,270 — — 173,270 171,312 — — 171,312 
Available for sale debt securities(2)
— — 406,800 406,800 — — 419,000 419,000 
Total non-current assets$173,270 $— $406,800 $580,070 $171,312 $— $419,000 $590,312 
Liabilities:
Cytokinetics Funding Commitments— — (11,000)(11,000)— — (9,100)(9,100)
Total non-current liabilities$— $— $(11,000)$(11,000)$— $— $(9,100)$(9,100)
(1)Recorded within Cash and cash equivalents on the condensed consolidated balance sheets.
(2)Related to the funded Cytokinetics Funding Arrangements.

For the first quarter of 2026 and 2025, we recognized losses of $20.5 million and $45.9 million, respectively, on equity securities still held as of March 31, 2026.
The tables presented below summarize the change in the combined fair value (current and non-current) of Level 3 financial instruments (in thousands):

For the Three Months Ended March 31, 2026
Debt SecuritiesFunding Commitments
Balance at the beginning of the period$437,800 $(9,100)
Changes in fair value(1)
(4,780)(1,900)
Redemptions(2)
(4,320)— 
Balance at the end of the period$428,700 $(11,000)
(1)Recorded within Losses on available for sale debt securities in the condensed consolidated statements of operations.
(2)Amount relates to the quarterly repayments on the Cytokinetics Commercial Launch Funding.

For the Three Months Ended March 31, 2025
Equity SecuritiesDebt SecuritiesFunding CommitmentsRoyalty at Fair Value
Balance at the beginning of the period$2,241 $751,700 $(12,080)$5,323 
Changes in fair value(1)
— 2,539 (5,820)— 
Sales(2)
— (510,553)— — 
Redemptions(3)
— (12,586)— — 
Balance at the end of the period$2,241 $231,100 $(17,900)$5,323 
(1)Recorded within Losses on available for sale debt securities in the condensed consolidated statements of operations.
(2)We provided funding of $300 million to MorphoSys in 2022 (“MorphoSys Development Funding Bonds”), which we sold in January 2025.
(3)Amount relates to the quarterly repayments on the MorphoSys Development Funding Bonds prior to the sale and the Cytokinetics Commercial Launch Funding.

Valuation Inputs for Recurring Fair Value Measurements

Below is a discussion of the valuation inputs used for financial instruments classified as Level 3 measurement as of March 31, 2026 and December 31, 2025 in the fair value hierarchy. As of March 31, 2026 and December 31, 2025, we did not have any financial instruments recorded at fair value using Level 2 inputs.

Cytokinetics Funding Arrangements and Cytokinetics Funding Commitments

We estimated the fair values of the funded Cytokinetics Funding Arrangements as of March 31, 2026 and December 31, 2025 by utilizing probability-adjusted discounted cash flow calculations using Level 3 inputs, including an estimated risk-adjusted discount rate and the probability that there will be a change of control event, which would result in accelerated payments. Developing a risk-adjusted discount rate and assessing the probability that there will be a change of control event over the duration of the Cytokinetics Funding Arrangements require significant judgment. Our estimate of the risk-adjusted discount rate could reasonably be different than the discount rate selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower. Our expectation of the probability and timing of the occurrence of a change of control event could reasonably be different than the timing of an actual change of control event, and if so, would mean that the estimated fair value could be significantly higher or lower than the fair value determined by us at any particular date.
We estimated the fair value of the Cytokinetics Funding Commitments as of March 31, 2026 and December 31, 2025 using a Monte Carlo simulation methodology that includes simulating the interest rate movements using a Geometric Brownian Motion-based pricing model. This methodology simulates the likelihood of future discount rates exceeding the counterparty’s assumed cost of debt, which would impact Cytokinetics’ decision to exercise its option to draw on each respective tranche. As of March 31, 2026 and December 31, 2025 this methodology incorporates Level 3 inputs, including the probability of a change of control event occurring during the investment term, an assumed interest rate volatility of 42.5% as of each date and an assumed risk-adjusted discount rate of 11.8% and 10.9%, respectively. We also assumed probabilities for the occurrence of each regulatory or clinical milestone, which impacts the availability of each future tranche of funding. Our estimate of expectation of the probability and timing of the occurrence of a change of control event, the risk-adjusted discount rate, the interest rate volatility and the probabilities of each underlying milestone could reasonably be different than the assumptions selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower.

Fair Value Disclosure of Financial Assets Not Measured at Fair Value

Financial royalty assets are not measured at fair value. Instead, they are measured and carried at amortized cost using the effective interest method on the condensed consolidated balance sheets. Financial royalty assets do not include our entire portfolio of investments, and specifically exclude the following:

1.development-stage product candidates where the funding was (i) expensed as upfront R&D upon acquisition (e.g., Trodelvy and Nurtec ODT) or (ii) expensed as ongoing R&D (e.g., our funding arrangement for litifilimab with Biogen); and
2.contractual funding arrangements (e.g., the Cytokinetics Funding Arrangements), which are accounted for as available for sale debt securities.

We used a Monte Carlo simulation under the option pricing framework to calculate the fair value of our portfolio of financial royalty assets for disclosure given the complexity of our royalty investments, which may include features such as milestone payments, royalty tiers, caps, and floors that could alter the cash flows based on future commercial, clinical or regulatory outcomes. The Monte Carlo model allows us to simulate a range of different outcomes based on various inputs, primarily the underlying projected product sales of each royalty bearing product, to project the cash flows, including royalty receipts and milestone payments, based on each of the simulated sales scenarios. The Monte Carlo methodology also takes volatility at the sales level into consideration. The fair value of financial royalty assets disclosed herein is classified as Level 3 within the fair value hierarchy since it is determined based on inputs that are both significant and unobservable.

As of March 31, 2026, the estimated fair values of the current and non-current portions of financial royalty assets were $0.8 billion and $23.9 billion, respectively. As of March 31, 2026, approximately 10% of the current portion and 6% of the non-current portion of the financial royalty assets was attributable to the legacy non-controlling interests.

As of December 31, 2025, the estimated fair values of the current and non-current portions of financial royalty assets were $0.9 billion and $23.4 billion, respectively. As of December 31, 2025, approximately 7% of the current portion and 7% of the non-current portion of the financial royalty assets was attributable to the legacy non-controlling interests.