Aldeyra Therapeutics, Inc. Fair Value Disclosure
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are performed in a manner to maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820, Fair Value Measurements, establishes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
Level 1 – Quoted prices in active markets that are accessible at the market date for identical unrestricted assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs for which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following table presents information about the Company’s assets measured at fair value at December 31, 2025 and December 31, 2024:
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December 31, 2025 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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|
|
|
|
|
|
|
|
|
|
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Money market funds (a) |
|
$ |
40,474,518 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
40,474,518 |
|
Total assets at fair value |
|
$ |
40,474,518 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
40,474,518 |
|
|
|
December 31, 2024 |
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|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
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|
Total |
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Assets: |
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|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds (a) |
|
$ |
30,793,079 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
30,793,079 |
|
U.S. government agency securities (b) |
|
|
46,624,180 |
|
|
|
— |
|
|
|
— |
|
|
|
46,624,180 |
|
Total assets at fair value |
|
$ |
77,417,259 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
77,417,259 |
|
There were no liabilities measured at fair value at December 31, 2025 or December 31, 2024.
Financial instruments including clinical trial prepayments to contract research organizations and accounts payable are carried in the consolidated financial statements at amounts that approximate their fair value based on the short maturities of those instruments. The carrying amount of the Company’s term loan under the Hercules Credit Facility (as defined in Note 9) approximates market rates currently available to the Company.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Mar 17, 2022 | |
| 2020 | Mar 11, 2021 | |
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.