Annexon, Inc. Fair Value Disclosure
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
On a recurring basis, the Company measures certain financial assets and liabilities at fair value. The following tables summarize the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
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December 31, 2025 |
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Valuation |
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Amortized |
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Gross |
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Gross |
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Aggregate |
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Assets: |
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Cash equivalents: |
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Money market funds |
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Level 1 |
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$ |
116,181 |
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$ |
— |
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|
$ |
— |
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$ |
116,181 |
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Government bonds |
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Level 2 |
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43,844 |
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13 |
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|
|
— |
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43,857 |
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Total cash equivalents |
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160,025 |
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13 |
|
|
|
— |
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160,038 |
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Short-term investments: |
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Government bonds |
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Level 2 |
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76,252 |
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42 |
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|
|
— |
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76,294 |
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Total short-term investments |
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76,252 |
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42 |
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|
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— |
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76,294 |
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$ |
236,277 |
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|
$ |
55 |
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|
$ |
— |
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$ |
236,332 |
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December 31, 2024 |
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Valuation |
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Amortized |
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Gross |
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Gross |
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Aggregate |
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Assets: |
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Cash equivalents: |
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||||
Money market funds |
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Level 1 |
|
$ |
31,680 |
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|
$ |
— |
|
|
$ |
— |
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|
$ |
31,680 |
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Government bonds |
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Level 2 |
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|
15,167 |
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|
|
— |
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|
|
— |
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|
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15,167 |
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Total cash equivalents |
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46,847 |
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— |
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— |
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46,847 |
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Short-term investments: |
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Government bonds |
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Level 2 |
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|
262,424 |
|
|
|
98 |
|
|
|
(3 |
) |
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|
262,519 |
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Total short-term investments |
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|
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262,424 |
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|
|
98 |
|
|
|
(3 |
) |
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|
262,519 |
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|
|
|
|
$ |
309,271 |
|
|
$ |
98 |
|
|
$ |
(3 |
) |
|
$ |
309,366 |
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All of the investments held as of December 31, 2025 had original maturities of less than two years. As of December 31, 2025, all of the investments are scheduled to mature in 12 months. During the year ended December 31, 2025, the Company did not recognize any credit losses. The Company determined that the decline in fair value of debt securities was not due to credit-related factors, and no allowance for expected credit losses was recorded as of December 31, 2025. There were nominal unrealized losses as of December 31, 2025, and no unrealized losses have been in the loss position for more than 12 months. However, the Company is planning to hold these securities until maturity and expects to recover the amortized cost basis.
For the years ended December 31, 2025 and 2024, the Company recognized no material realized gains or losses on financial instruments.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 30, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 26, 2024 | |
| 2022 | Mar 6, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 25, 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.