ARROWHEAD PHARMACEUTICALS, INC.ARWR
ARROWHEAD PHARMACEUTICALS, INC. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date using the exit price. Accordingly, when market observable data are not readily available, the Company’s own assumptions are used to reflect those that market participants would be presumed to use in pricing the asset or liability at the measurement date.
Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the level of judgment associated with inputs used to measure their fair values and the level of market price observability, as follows:
Level 1 Unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date.
Level 2 Pricing inputs are other than quoted prices in active markets, which are based on the following:
• Quoted prices for similar assets or liabilities in active markets;
• Quoted prices for identical or similar assets or liabilities in non-active markets; or
• Either directly or indirectly observable inputs as of the reporting date.
Level 3 Pricing inputs are unobservable and significant to the overall fair value measurement, and the determination of fair value requires significant management judgment or estimation.
In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Thus, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) and unobservable (Level 3). The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset or liability.
The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2, or from Level 2 to Level 3. The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused the transfer. At September 30, 2025 and 2024, the Company did not have any financial assets or financial liabilities based on Level 3 measurements.
The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicate the fair value hierarchy of the valuation techniques utilized by the Company:
| September 30, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Available-for-sale securities | |||||||||||||||||||||||
| U.S. government and agency securities | $ | — | $ | 150,695 | $ | — | $ | 150,695 | |||||||||||||||
| Certificate of deposits | — | 12,019 | — | 12,019 | |||||||||||||||||||
| Municipal securities | — | 7,046 | — | 7,046 | |||||||||||||||||||
| Commercial notes | — | 13,801 | — | 13,801 | |||||||||||||||||||
| Corporate debt securities | — | 509,257 | — | 509,257 | |||||||||||||||||||
| Total available-for-sale securities | — | 692,818 | — | 692,818 | |||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||
| Money market instruments | 64,460 | — | — | 64,460 | |||||||||||||||||||
| Term deposit | — | 134,357 | — | 134,357 | |||||||||||||||||||
| Certificate of deposits | — | 3,001 | — | 3,001 | |||||||||||||||||||
| Corporate debt securities | — | 16,182 | — | 16,182 | |||||||||||||||||||
| Total cash equivalents | 64,460 | 153,540 | — | 218,000 | |||||||||||||||||||
| Total financial assets | $ | 64,460 | $ | 846,358 | $ | — | $ | 910,818 | |||||||||||||||
| September 30, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Available-for-sale securities | |||||||||||||||||||||||
| U.S. government and agency securities | $ | — | $ | 160,723 | $ | — | $ | 160,723 | |||||||||||||||
| Commercial notes | — | 179,714 | — | 179,714 | |||||||||||||||||||
| Corporate debt securities | — | 237,839 | — | 237,839 | |||||||||||||||||||
| Total available-for-sale securities | — | 578,276 | — | 578,276 | |||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||
| Money market instruments | 66,966 | — | — | 66,966 | |||||||||||||||||||
| Total cash equivalents | 66,966 | — | — | 66,966 | |||||||||||||||||||
| Total financial assets | $ | 66,966 | $ | 578,276 | $ | — | $ | 645,242 | |||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 25, 2025 | Showing above |
| 2024 | Nov 26, 2024 | |
| 2023 | Nov 29, 2023 | |
| 2022 | Nov 28, 2022 | |
| 2021 | Nov 22, 2021 | |
| 2020 | Nov 23, 2020 | |
| 2019 | Nov 25, 2019 | |
| 2018 | Dec 11, 2018 | |
| 2017 | Dec 12, 2017 | |
| 2016 | Dec 14, 2016 | |
| 2015 | Dec 14, 2015 | |
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.