Fair Value Measurements

3 Months Ended

Mar. 31, 2025

3. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:


	March 31, 2025
	Level 1		Level 2		Level 3		Total
Financial assets
Cash equivalents:
Money market funds	$	—	$	194,192	$	—	$	194,192
Treasury bills		—		9,937		—		9,937
Total cash equivalents		—		204,129		—		204,129
Available-for-sale securities (Note 4):
Treasury bills		—		12,326		—		12,326
Government bonds		—		83,963		—		83,963
Total available-for-sale securities		—		96,289		—		96,289
Total financial assets	$	—	$	300,418	$	—	$	300,418

Financial liabilities
Derivative liabilities (Note 2):	$	—	$	—	$	4,800	$	4,800
Total financial liabilities	$	—	$	—	$	4,800	$	4,800


	December 31, 2024
	Level 1		Level 2		Level 3		Total
Financial assets
Cash equivalents:
Money market funds	$	—	$	18,088	$	—	$	18,088
Treasury bills		—		17,434		—		17,434
Total cash equivalents		—		35,522		—		35,522
Available-for-sale securities (Note 4):
Treasury bills		—		27,895		—		27,895
Government bonds		—		40,790		—		40,790
Total available-for-sale securities		—		68,685		—		68,685
Total financial assets	$	—	$	104,207	$	—	$	104,207
Financial liabilities
Derivative liabilities (Note 2):	$	—	$	—	$	3,150	$	3,150
Total financial liabilities	$	—	$	—	$	3,150	$	3,150

As of March 31, 2025 and December 31, 2024, the fair values of the Company’s cash equivalents and available-for-sale securities were determined using Level 2 inputs.

The Company estimated the fair value of the derivative liabilities by using a Monte Carlo simulation forecasting the timing and likelihood of certain development milestone events being achieved and discounting the probability adjusted payments using an appropriate discount rate based on market interest rates. The main assumptions when determining the fair value of the derivative liabilities are the timing and probability of achieving certain milestones, the estimated volatility of the Company’s common stock, and the discount rate. The estimated fair value presented is not necessarily indicative of an amount that could be realized in a current market exchange. The use of alternative inputs and estimation methodologies could have a material effect on these estimates of fair value.

The significant unobservable inputs used in valuing the developmental milestone derivative liabilities at each measurement date are as follows:


	March 31, 2025		December 31, 2024
Unobservable Input	Range	Average	Range	Average
Probability of achieving certain development milestones	28.0% - 70.0%	49.0%	28.0% - 70.0%	49.0%
Volatility	90.0%	90.0%	85.0%	85.0%
Discount Rate	3.9% - 4.1%	4.0%	4.2% - 4.3%	4.3%
Timing of achieving certain development milestones	0.8 - 3.4 years	2.1 years	1.0 - 3.7 years	2.3 years

The following table presents a roll forward of activity associated with the Company’s derivative liabilities measured using Level 3 inputs:


	Developmental Milestone Derivative Liabilities
Fair value of derivative liabilities as of January 1, 2025	$	3,150
Change in fair value of derivative liabilities		1,650
Fair value of derivative liabilities as of March 31, 2025	$	4,800

The Company recognized a loss of $1.7 million for the change in fair value of the derivative liabilities during the three months ended March 31, 2025. No gain or loss was recognized during the three months ended March 31, 2024.

It is the Company's policy to recognize transfers between levels of the fair value hierarchy, if any, at the end of the reporting period. During the three months ended March 31, 2025 and the year ended December 31, 2024, there were no transfers between Level 1, Level 2, and Level 3.

As of March 31, 2025 and December 31, 2024, the Company's accounts payable, accrued expenses, and other current liabilities approximated their estimated fair values due to the short term nature of these financial instruments.