CRESCENT BIOPHARMA, INC. Fair Value Disclosure
| December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Money market funds | $ | 124,522 | $ | — | $ | — | $ | 124,522 | |||||||||||||||
| Total Assets | $ | 124,522 | $ | — | $ | — | $ | 124,522 | |||||||||||||||
| Description | 2025 | 2024 | |||||||||
| Beginning balance | $ | 61 | $ | — | |||||||
| Change in fair value | 4,297 | 61 | |||||||||
| Issuance of warrant | (4,358) | — | |||||||||
| Ending balance | $ | — | $ | 61 | |||||||
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.