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Fair Value of Financial Instruments | 6 Months Ended
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Jun. 30, 2026
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The accounting standard for fair value measurements provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs, when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: •Level 1: Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; •Level 2: Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and •Level 3: Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts and other receivables, and accounts payable and accrued expenses approximate their respective fair values due to the short-term nature of such instruments. Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. The following table summarizes the conclusions reached regarding fair value measurements a s of June 30, 2026, and December 31, 2025 (in tho usands):
|  | Balance as of June 30, 2026 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Warrant liabilities |  | $ | 13,165 |  |  | $ | — |  |  | $ | — |  |  | $ | 13,165 |
CVR liability |  | 1,400 |  |  | — |  |  | — |  |  | 1,400 |
Total liabilities |  | $ | 14,565 |  |  | $ | — |  |  | $ | — |  |  | $ | 14,565 |
Securities: |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 59,971 |  |  | $ | 59,971 |  |  | $ | — |  |  | $ | — |
Corporate bonds |  | 54,887 |  |  | — |  |  | 54,887 |  |  | — |
Total assets |  | $ | 114,858 |  |  | $ | 59,971 |  |  | $ | 54,887 |  |  | $ | — |
|  | Balance as of December 31, 2025 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Warrant liabilities |  | $ | 9,575 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,575 |
CVR liability |  | 1,540 |  |  | — |  |  | — |  |  | 1,540 |
Total liabilities |  | $ | 11,115 |  |  | $ | — |  |  | $ | — |  |  | $ | 11,115 |
Securities: |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 97,132 |  |  | $ | 97,132 |  |  | $ | — |  |  | $ | — |
Corporate bonds |  | 79,352 |  |  | — |  |  | 79,352 |  |  | — |
Total assets |  | $ | 176,484 |  |  | $ | 97,132 |  |  | $ | 79,352 |  |  | $ | — |
Warrants The com mon stock warrant li abilities were recorded at fair value using the BSM option pricing model. The following assumptions were used in determining the fair value of the warrant liabilities valued using the BSM option pricing mode l as of June 30, 2026, and December 31, 2025:
|  | June 30, 2026 |  | December 31, 2025
Risk-free interest rate |  | 3.93% - 4.06% |  | 3.42% - 3.67%
Volatility |  | 57.26% - 60.24% |  | 57.28% - 66.70%
Dividend yield |  | — | % |  | — | %
Expected term (years) |  | 0.50 - 2.40 |  | 0.02 - 2.89
Weighted average fair value |  | $ | 5.20 |  |  | $ | 2.38 |
The following table is a reconciliation for the common stock warrant liabilities measured at fair val ue using Level 3 un observable inputs (in thousands):
Balance as of December 31, 2025 |  | $ | 9,575 |
Change in fair value measurement of warrant liabilities |  | 5,580 |
Warrants exercised |  | (1,990) |
Balance as of June 30, 2026 |  | $ | 13,165 |
For the six months ended June 30, 2026, the changes in fair value of the warrant liab ilities primarily resulted from changes in the discount rate and volatility. Contingent Consideration Contingent consideration liabilities relate to the Company's liabilities arising in connection with the CVRs. The contingent consideration is classified as Level 3 in the fair value hierarchy. The fair value is measured based on a Monte Carlo simulation or a scenario-based method, depending on the earn-out achievement objectives, utilizing projections about future performance. Significant inputs include volatility and projected financial information, including projections representative of a market participant's view of the expected cash payments associated with the agreed upon regulatory milestones based on probabilities of technical success, timing of the potential milestone events for the compounds, and estimated discount rates. The following table provides a reconciliation of the beginning and ending balances related to the contingent consideration liabilities for the CVRs (in thousands):
Balance as of December 31, 2025 |  | $ | 1,540 |
Change in fair value measurement of contingent consideration liabilities |  | (140) |
Balance as of June 30, 2026 |  | $ | 1,400 |
For the six months ended June 30, 2026, the changes in fair value of contingent consideration primarily resulted from changes in market data and revenue projections. Embedded Derivative The fair value of the embedded derivative is classified as Level 3 in the fair value hierarchy and had no value at June 30, 2026 and December 31, 2025. The liability associated with the embedded derivative represented the fair value of the mandatory redemption provision in the Credit Agreement. During the six months ended June 30, 2026, all outstanding obligations under the Credit Agreement were paid off which represented a triggering event. The embedded derivative was then re-valued, and extinguished together with the debt (see Note E). The fair value was determined using a Black-Derman-Toy (“BDT”) binomial lattice model in conjunction with a discounted cash flow methodology. The valuation incorporates a discount rate derived from the risk-free rate, based on the US Treasury Daily Treasury Par Yield Curve. The quantitative information about the significant unobservable inputs used in the Level 3 fair value measurement for the embedded derivative includes a credit spread of 5.53%. The following table provides a reconciliation of the beginning and ending balances related to the embedded derivative (in thousands):
Balance as of December 31, 2025 |  | $ | — |
Change in fair value measurement of embedded derivative |  | 7,216 |
Extinguishments |  | (7,216) |
Balance as of June 30, 2026 |  | $ | — |
For the six months ended June 30, 2026, the changes in fair value of the embedded derivative resulted from a change in probability of a triggering event occurring.

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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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