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FAIR VALUE | 9 Months Ended
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Sep. 30, 2025
Fair Value Disclosures [Abstract] |
FAIR VALUE | FAIR VALUE Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value. The inputs used in measuring the fair value of cash and cash equivalents are considered to be Level 1 in accordance with the three-tier fair value hierarchy. The fair market values are based on period-end statements supplied by the various banks and brokers that held the majority of our funds. The fair value of short-term financial instruments (primarily accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities) approximate their carrying values because of their short-term nature. The New Credit Facility bears an interest rate that fluctuates with the changes in SOFR and because the variable interest rate approximates market borrowing rates available to the Company, the carrying value of the New Credit Facility approximated its fair value at September 30, 2025. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Alimera Contingent Value Rights Agreement On September 16, 2024, prior to consummation of the Alimera Acquisition, the Company entered into a CVR pursuant to which holders of Alimera Common Stock, as well as holders of Alimera Warrants, Alimera Options, Alimera PSUs, Alimera RSAs and Alimera RSUs, may become entitled to contingent cash payments per CVR (each, a “Milestone Payment”), such payments being contingent upon, and subject to, the achievement of: (i) $140.0 million in net revenue (the “2026 Milestone”) on third party sales of ILUVIEN and YUTIQ for the Company’s 2026 fiscal year (the “2026 Net Revenue”) and/or (ii) $160.0 million in net revenue (the “2027 Milestone” and together with the 2026 Milestone, the “Milestones”) on third party sales of ILUVIEN and YUTIQ for the Company’s 2027 fiscal year (the “2027 Net Revenue”). Each CVR entitles the holder (the “Holder”) to receive a Milestone Payment upon satisfaction of the applicable Milestones. The Milestone Payment for each CVR will equal the product (rounded to the nearest 1/100 of $0.01) of (i) $0.25 multiplied by a fraction (not exceeding one), the numerator of which is the amount, if any, by which the 2026 Net Revenue exceeds $140.0 million and the denominator of which is $10.0 million (subject to adjustment for the exercise price of applicable Alimera Options) and/or (ii) $0.25 multiplied by a fraction (not exceeding one), the numerator of which is the amount, if any, by which the 2027 Net Revenue exceeds $160.0 million and the denominator of which is $15.0 million (subject to adjustment for the exercise price of applicable Alimera Options). If a Milestone is attained, the distributions in respect of the CVRs will be made on or prior to the date that is fifteen (15) business days following the filing by the Company of its audited financial statements with the SEC on Form 10-K in respect of the applicable year in which such Milestone has been achieved, and will be subject to a number of deductions, exceptions and limitations, including, but not limited to, certain taxes. The fair value of the CVR liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The Company utilizes a Monte Carlo simulation model to estimate the fair value of the CVR liability. For each simulated path of future revenue, the payments to the CVR holders were calculated based on the contractual terms of the rights. The average payments from all simulated paths are then discounted to present value at an estimated cost of debt. The CVR liability had an estimated fair value of $3.5 million as of September 30, 2025, and is classified as non-current contingent consideration in the Company's unaudited condensed consolidated balance sheet. The following table presents the changes in the CVR liability classified as Level 3 for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Beginning balance | $ | 6,000 |  |  | $ | — |  |  | $ | 9,000 |  |  | $ | — |
Change in fair value | (2,523) |  |  | 8,700 |  |  | (5,523) |  |  | 8,700 |
Ending balance | $ | 3,477 |  |  | $ | 8,700 |  |  | $ | 3,477 |  |  | $ | 8,700 |
Money Market Funds Money market funds are readily convertible into cash and the net asset value of each fund on the last day of the reporting period is used to determine its fair value. Money market funds are included in Cash and cash equivalents within the unaudited condensed consolidated balance sheet, and is classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments. The fair value of the money market funds as of September 30, 2025 was approximately $168.0 million. Interest Rate Swap The fair value of the interest rate swap is estimated based on the present value of projected future cash flows using the SOFR forward rate curve (see Note 6 “New Credit Agreement” to the notes to the condensed consolidated financial statements (unaudited)). The model used to value the interest rate swap includes inputs of readily observable market data, a Level 2 input. As described in further detail in Note 8 “Derivative Financial Instrument and Hedging Activity” to the notes to the condensed consolidated financial statements (unaudited). The model used to value the interest rate swap includes inputs of readily observable market data, a Level 2 input. As described in further detail in Note 8, the fair value of the interest rate swap was $2.2 million as of September 30, 2025, and was classified as a non-current asset. CG Oncology Equity Securities The Company currently holds 219,925 shares of common stock in CG Oncology (Nasdaq: CGON). The Company accounts for its investment in CG Oncology equity securities as an equity investment with a readily determinable fair value, as the securities are publicly traded on the Nasdaq Global Select Market. The fair value of the equity securities is based on its closing price on the Nasdaq and is classified within Level 1 of the fair value hierarchy because the equity securities are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments. The fair value of the CG Oncology equity securities as of September 30, 2025 was approximately $8.9 million based on a closing market price of $40.28 on September 30, 2025. The change in fair value of the equity securities is classified on the unaudited condensed consolidated statements of operations as unrealized (loss) gain on investment in equity securities for the three and nine months ended September 30, 2025 and 2024. Between 2013 and 2023, CG Oncology securities held by the Company were valued at zero under U.S. GAAP. Novitium Contingent Consideration In connection with the acquisition of Novitium, the Company may pay up to $46.5 million in additional consideration related to the achievement of certain milestones, such as milestones on gross profit of Novitium portfolio products over a 24-month period, regulatory filings completed during this 24-month period, and a percentage of net profits on certain products that are launched in the future. The discounted cash flow method used to value this contingent consideration includes inputs which are classified as Level 3 inputs, as the inputs are not based on readily available market data. In connection with the terms of the Novitium Merger Agreement, on December 12, 2023, the Company paid $12.5 million of cash consideration to the Company Members, defined as the holders of Novitium ownership interests in the Novitium Merger Agreement, as the holders of Novitium ownership interests, for the achievement of the “ANDA Filing Earn-Out,” as defined in the Agreement (Note 15 “Commitments and Contingencies” to the notes to the condensed consolidated financial statements (unaudited)). Furthermore, on February 22, 2024, the Company paid $12.5 million to Company Members upon the achievement of the “Gross Profit Earn-Out,” as defined in the Agreement (Note 17 “Related Party Transactions” to the notes to the condensed consolidated financial statements (unaudited)). In accordance with the terms of the Novitium Merger Agreement, the Company shall owe 20% of net profit generated by the sales of the 505(b)(2) products, to the Company Members, as defined within the agreement. The payments are due on a quarterly basis, within 45 calendar days of of each quarter end, until the earlier to occur of (i) the sum of all such payments being equal to $21.5 million in the aggregate and (ii) the tenth anniversary of the FDA approval of the applicable 505(b)(2) product (the "505(b)(2) Earn-Out"). During the three months ended September 30, 2025, the Company has paid approximately $26 thousand for payment of the 505(b)(2) Earn-Out to the Company Members. The fair value of the contingent consideration was approximately $8.0 million and $10.9 million as of September 30, 2025 and December 31, 2024, respectively, and is reflected as a current and non-current accrued contingent consideration liability in the unaudited condensed consolidated balance sheets. The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs as of September 30, 2025:
Payment Type |  | Valuation Technique |  | Unobservable Input |  | Assumptions
Profit-based milestone payments |  | Probability-weighted discounted cash flow |  | Discount rate |  | 12.0%
|  |  |  | Projected fiscal years of payments |  | 2025-2034
The following table presents the changes in contingent consideration balances classified as Level 3 for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Beginning balance | $ | 12,572 |  |  | $ | 11,933 |  |  | $ | 10,854 |  |  | $ | 23,984 |
Payment of Gross-Profit earn-out | (26) |  |  | — |  |  | (26) |  |  | (12,500) |
Change in fair value | (4,581) |  |  | 825 |  |  | (2,863) |  |  | 1,274 |
Ending balance | $ | 7,965 |  |  | $ | 12,758 |  |  | $ | 7,965 |  |  | $ | 12,758 |
Accrued Licensor Payments On May 17, 2023, Alimera entered into a product rights agreement with EyePoint which granted Alimera an exclusive and sublicensable right and license under EyePoint’s and its affiliates’ interest in certain of EyePoint’s and its affiliates’ intellectual property to develop, manufacture, sell, commercialize and otherwise exploit certain products, including YUTIQ, for the treatment and prevention of uveitis in the entire world, except Europe, the Middle East and Africa, where the Company already has such rights pursuant to the New Collaboration Agreement, and except for China, Hong Kong, Macau, Taiwan, Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, South Korea, Thailand and Vietnam, where Ocumension holds a license from EyePoint. Pursuant to the agreement, Alimera paid EyePoint an upfront payment of $75.0 million and has also made four quarterly guaranteed payments to EyePoint totaling $7.5 million during the year ended December 31, 2024. The Company will also pay royalties to EyePoint from 2025 to 2028 at 30% of annual U.S. net sales of certain products (including YUTIQ and ILUVIEN) in excess of certain thresholds, beginning at $70.0 million in 2025, increasing annually thereafter. Upon making the quarterly payments in the aggregate amount of $7.5 million in 2024, the licenses and rights granted to the Company will automatically become perpetual and irrevocable. For the quarter ended December 31, 2024, the Company paid the final quarterly payment of $1.9 million. The present value of the remaining payments to EyePoint for years 2025 to 2028 will continue to be revalued at an appropriate discount rate for the Company at each reporting date until payments are settled. The fair value of the remaining future payments as of September 30, 2025 was approximately $4.1 million. The recurring Level 3 fair value measurements of the EyePoint royalty for which a liability is recorded include the following significant unobservable inputs as of September 30, 2025:
Payment Type | Valuation Technique | Unobservable Input | Assumptions
Annual royalty payments for US net revenues of sales of YUTIQ and ILUVIEN | Probability-weighted discounted cash flow | Discount rate | 11.5%
|  | Projected fiscal year of payment | 2028-2029
The following table presents the changes in accrued licensor payments classified as Level 3 balances for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Beginning balance | $ | 11,428 |  |  | $ | — |  |  | $ | 20,961 |  |  | $ | — |
Change in fair value | (7,366) |  |  | — |  |  | (16,899) |  |  | — |
Ending balance | $ | 4,062 |  |  | $ | — |  |  | $ | 4,062 |  |  | $ | — |
The following table presents our financial assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2025 and December 31, 2024, by level within the fair value hierarchy:
(in thousands) Description |  | Fair Value at September 30, 2025 |  | Level 1 |  | Level 2 |  | Level 3
Assets |  |  |  |  |  |  |  |
Money Market Fund |  | $ | 167,977 |  |  | $ | 167,977 |  |  | $ | — |  |  | $ | — |
Interest rate swap |  | $ | 2,232 |  |  | $ | — |  |  | $ | 2,232 |  |  | $ | — |
CG Oncology - Investment in equity securities |  | $ | 8,859 |  |  | $ | 8,859 |  |  | $ | — |  |  | $ | — |
Liabilities |  |  |  |  |  |  |  |
Contingent consideration, Novitium |  | $ | 7,965 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,965 |
Contingent Value Rights, Alimera |  | $ | 3,477 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,477 |
Accrued licensor payment |  | $ | 4,062 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,062 |
Description |  | Fair Value at December 31, 2024 |  | Level 1 |  | Level 2 |  | Level 3
Assets |  |  |  |  |  |  |  |
Money Market Fund |  | $ | 84,277 |  |  | $ | 84,277 |  |  | $ | — |  |  | $ | — |
Interest rate swap |  | $ | 4,897 |  |  | $ | — |  |  | $ | 4,897 |  |  | $ | — |
CG Oncology - Investment in equity securities |  | $ | 6,307 |  |  | $ | 6,307 |  |  | $ | — |  |  | $ | — |
Liabilities |  |  |  |  |  |  |  |
Contingent consideration, Novitium |  | $ | 10,854 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,854 |
Contingent Value Rights, Alimera |  | $ | 9,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,000 |
Accrued licensor payment |  | $ | 20,961 |  |  | $ | — |  |  | $ | — |  |  | $ | 20,961 |
Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis There are no financial assets or liabilities that are measured at fair value on a non-recurring basis. Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis There are no non-financial assets or liabilities that are measured at fair value on a recurring basis. Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis Long-lived assets, including property, plant, and equipment, right-of-use (“ROU”) assets, intangible assets, and goodwill, are measured at fair value on a non-recurring basis, and no such fair value impairment was recognized in the three and nine months ended September 30, 2025 and 2024.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (bbb)(1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 3: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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