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Fair Value of Financial Assets and Liabilities
 6 Months Ended
Jun. 30, 2025
Fair Value of Financial Assets and Liabilities [Abstract]  
Fair Value of Financial Assets and Liabilities

NOTE 4 – Fair Value of Financial Assets and Liabilities

 

The following table presents the Company’s assets and liabilities that are measured at fair value on June 30, 2025 and December 31, 2024:

 

   Fair value measured on June 30, 2025 
   Total at
June 30,
2025		   Quoted
prices
in active
markets
(Level 1)		   Significant
other
observable
inputs
(Level 2)		   Significant
unobservable
inputs
(Level 3)		 
Assets                
Investment in joint ventures  $36,819   $
—
   $
—
   $36,819 

 

   Fair value measured on December 31, 2024 
   Total at
December 31,
2024		   Quoted
prices
in active
markets
(Level 1)		   Significant
other
observable
inputs
(Level 2)		   Significant
unobservable
inputs
(Level 3)		 
Assets                
Investment in joint ventures  $36,819   $
—
   $
—
   $36,819 

 

Level 3 Measurement

 

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring basis for the three months ended June 30, 2025 and 2024:

 

Investment in joint ventures for the three months ended June 30, 2025 and 2024
 
   For the Three Months Ended
June 30,		 
   2025   2024 
Investment in joint ventures at fair value – beginning of period  $36,819   $36,819 
Change in fair value of investment in joint ventures   
-
    
-
 
Investment in joint ventures at fair value – end of period  $36,819   $36,819 

 

Investment in joint ventures for the six months ended June 30, 2025 and 2024
 
   For the Six Months Ended
June 30,		 
   2025   2024 
Investment in joint ventures at fair value – beginning of period  $36,819   $37,400 
Change in fair value of investments in joint ventures   
-
    (581)
Investment in joint ventures at fair value – end of period  $36,819   $36,819 

Investment in Joint Ventures

 

The Company has elected to measure the investment in joint ventures using the fair value option at each reporting date. Under the fair value option, bifurcation of an embedded derivative is not necessary, and all related gains and losses on the host contract and derivative due to change in the fair value will be reflected in other income (expenses), net in the unaudited condensed consolidated statements of operations and comprehensive loss. 

 

The value at which the Company’s investment in joint ventures is carried on its books is adjusted to estimated fair value at the end of each quarter, taking into account general economic and stock market conditions and those characteristics specific to the underlying investments.

 

Investment in Zylö Therapeutics 

 

In connection with the Company’s March 2020 underwritten public offering of shares of its common stock, on May 4, 2020, the Company purchased 120,000 shares of Zylö Therapeutics (“Zylö”) Class B common stock for $60,000. On December 8, 2021, the Company entered into a third amendment (the “Zylö Amendment”) to the Exclusive Sublicense Agreement with Zylö originally dated August 19, 2019 (as amended, the “Exclusive Sublicense Agreement”), pursuant to which the Company licensed its novel cannabinoid therapeutic, HT-005 for lupus patients, back to Zylö. Pursuant to the Zylö Amendment, on December 6, 2021, Zylö issued the Company 100,000 shares of its Class B common stock. In addition, pursuant to the Zylö Amendment, within 90 days following a sale by Zylö of all of its assets and rights related to HT-005 to a third-party (a “Sale”), Zylö shall pay the Company a low single digit percent of the net proceeds received by it attributable to HT-005 in the United States and Canada and their respective territories (collectively, the “Territory”) for the purposes of therapeutic uses related to lupus in humans (the “Field”). After the Sale, any and all rights of the Company pursuant to the Exclusive Sublicense Agreement, including all amendments thereto, shall terminate. Furthermore, pursuant to the Zylö Amendment, following the date of the first commercial sale of HT-005 in the Territory, in the Field, Zylö shall pay the Company (i) a low single digit percent of the Net Sales (as defined in the Exclusive Sublicense Agreement) of HT-005 in the event HT-005 is sold in the Territory and (ii) a low double digit percent of any royalty that Zylö receives through the sublicense to a third-party based on Net Sales of HT-005 in the Territory which payments shall continue in each country in the Territory until expiration of the last-to-expire Valid Claim (as defined in the Exclusive Sublicense Agreement). Zylö conducted a 409A valuation of their Class B common stock in February 2024, and as of June 30, 2025 and December 31, 2024, valued its share price at $0.167 and $0.167 per share, respectively. This value was ratified by Zylö’s board of directors in February 2024 and December 2023, respectively.

 

On February 23, 2024, the Company acquired 22,000 shares of Class B Common stock of Atticus Pharma, a subsidiary of Zylö Therapeutics, based upon a 1-for-10 ratio of current shares and was instructed, on July 3, 2024, that the 409A valuation of the shares was $79, or $0.0036 per share, pursuant to the February 2024 valuation ratified by Zylö’s board of directors.

 

The valuations reflect a probability-weighted present value of expected future investment returns considering certain possible outcomes and the rights of each class of Zylö’s and Atticus Pharma’s equity. The future values of the common stock under the various outcomes are discounted back to the valuation date at a risk-adjusted discount rate and probability weighted to determine the value for the Class B common stock. Significant unobservable inputs in the valuation include (i) probabilities of each scenario, (ii) timing of occurrence, (iii) future valuation; (iv) and the risk-adjusted discount rate.

 

The consolidated investment in Zylö was valued at $36,819 and $36,819 as of June 30, 2025 and December 31, 2024, respectively.