Celldex Therapeutics, Inc. Fair Value Disclosure
(4) Fair Value Measurements
The following tables set forth the Company’s financial assets and liabilities subject to fair value measurements:
| As of | | | | |||||||
December 31, 2025 | Level 1 | Level 2 | Level 3 | ||||||||
(In thousands) | |||||||||||
Assets: | |||||||||||
Money market funds and cash equivalents | $ | 19,115 |
| — | $ | 19,115 |
| — | |||
Marketable securities | 489,702 |
| — | 489,702 |
| — | |||||
$ | 508,817 | — | $ | 508,817 | — | ||||||
| As of | | | | |||||||
December 31, 2024 | Level 1 | Level 2 | Level 3 | ||||||||
(In thousands) | |||||||||||
Assets: | |||||||||||
Money market funds and cash equivalents | $ | 9,927 |
| — | $ | 9,927 |
| — | |||
Marketable securities | 696,925 |
| — | 696,925 |
| — | |||||
$ | 706,852 | — | $ | 706,852 | — | ||||||
The Company’s financial assets consist mainly of cash equivalents and marketable securities and are classified as Level 2 within the valuation hierarchy. The Company values its marketable securities utilizing independent pricing services which normally derive security prices from recently reported trades for identical or similar securities, making adjustments based on significant observable transactions. At each balance sheet date, observable market inputs may include trade information, broker or dealer quotes, bids, offers or a combination of these data sources.
Contingent consideration liabilities measured at fair value using Level 3 inputs were $0.0 million as of December 31, 2025 and December 31, 2024. The valuation technique used to measure fair value of the Company’s Level 3 liabilities, which consist of contingent consideration related to the acquisition of Kolltan Pharmaceuticals, Inc. (“Kolltan”) in 2016, is primarily an income approach. The significant unobservable inputs used in the fair value measurement of the contingent consideration are estimates including probability of success, discount rates and amount of time until the conditions of the milestone payment are met.
The Company did not have any transfers of assets or liabilities between the fair value measurement classifications during the years ended December 31, 2025 and 2024.
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.