ACADIA PHARMACEUTICALS INC Fair Value Disclosure
4. Fair Value Measurements
The Company’s investments include cash equivalents, available-for-sale investment securities consisting of money market funds, U.S. treasury notes, and marketable debt instruments of corporations and government sponsored enterprises in accordance with the Company’s investment policy, and equity investments. The Company’s investment policy defines allowable investment securities and establishes guidelines relating to credit quality, diversification, and maturities of its investments to preserve principal and maintain liquidity. All investment securities have a credit rating of at least Aa3/AA- or better, or P-1/A-1 or better, as determined by Moody’s Investors Service or Standard & Poor’s.
The Company’s cash equivalents, available-for-sale investment securities, and equity securities are classified within the fair value hierarchy as defined by authoritative guidance. The Company’s investment securities and equity securities classified as Level 1 are valued using quoted market prices. The Company obtains the fair value of its Level 2 financial instruments from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and matrices and obtaining market values from other pricing sources. After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by these pricing services as of December 31, 2025 and 2024.
The Company has not transferred any investment securities between the classification levels.
The recurring fair value measurements of the Company’s cash equivalents, available-for-sale investment securities, and equity securities at December 31, 2025 and 2024 consisted of the following (in thousands):
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Fair Value Measurements at |
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December 31, 2025 |
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Quoted Prices |
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Significant |
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Significant |
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Assets |
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Money market fund |
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$ |
24,834 |
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$ |
24,834 |
|
|
$ |
— |
|
|
$ |
— |
|
U.S. Treasury notes |
|
|
430,551 |
|
|
|
430,551 |
|
|
|
— |
|
|
|
— |
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Government sponsored enterprise securities |
|
|
211,440 |
|
|
|
— |
|
|
|
211,440 |
|
|
|
— |
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Total |
|
$ |
666,825 |
|
|
$ |
455,385 |
|
|
$ |
211,440 |
|
|
$ |
— |
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|
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Fair Value Measurements at |
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December 31, 2024 |
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Quoted Prices |
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Significant |
|
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Significant |
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||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
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Money market fund |
|
$ |
151,555 |
|
|
$ |
151,555 |
|
|
$ |
— |
|
|
$ |
— |
|
U.S. Treasury notes |
|
|
245,903 |
|
|
|
245,903 |
|
|
|
— |
|
|
|
— |
|
Government sponsored enterprise securities |
|
|
190,501 |
|
|
|
— |
|
|
|
190,501 |
|
|
|
— |
|
Total |
|
$ |
587,959 |
|
|
$ |
397,458 |
|
|
$ |
190,501 |
|
|
$ |
— |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2017 | Feb 27, 2018 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.