CytomX Therapeutics, Inc. Fair Value Disclosure
4. Fair Value Measurements and Investments
In accordance with Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures, the Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:
The carrying amounts of the Company’s financial instruments, including restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. The Company’s financial instruments consist of Level I and Level II assets which consist primarily of highly liquid money market funds, some of which are included in restricted cash and U.S. Treasury securities that are included in cash equivalent or short-term investments.
The following tables set forth the fair value of the Company’s investments subject to fair value measurements on a recurring basis and the level of inputs used in such measurements:
|
|
|
|
December 31, 2024 |
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|||||||||
|
|
Valuation |
|
Amortized |
|
|
Unrealized |
|
|
Aggregate |
|
|||
|
|
|
|
(in thousands) |
|
|||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|||
Money market funds |
|
Level I |
|
$ |
28,313 |
|
|
$ |
— |
|
|
$ |
28,313 |
|
Restricted cash (money market funds) |
|
Level I |
|
|
1,027 |
|
|
|
— |
|
|
|
1,027 |
|
U.S. Treasury securities |
|
Level II |
|
|
72,503 |
|
|
|
27 |
|
|
|
72,530 |
|
Total |
|
|
|
$ |
101,843 |
|
|
$ |
27 |
|
|
$ |
101,870 |
|
|
|
|
|
December 31, 2023 |
|
|||||||||
|
|
Valuation |
|
Amortized |
|
|
Unrealized |
|
|
Aggregate |
|
|||
|
|
|
|
(in thousands) |
|
|||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|||
Money market funds |
|
Level I |
|
$ |
17,109 |
|
|
$ |
— |
|
|
$ |
17,109 |
|
Restricted cash (money market funds) |
|
Level I |
|
|
917 |
|
|
|
— |
|
|
|
917 |
|
U.S. Treasury securities |
|
Level II |
|
|
157,243 |
|
|
|
95 |
|
|
|
157,338 |
|
Total |
|
|
|
$ |
175,269 |
|
|
$ |
95 |
|
|
$ |
175,364 |
|
As of December 31, 2024, the remaining contractual terms of the U.S. Treasury securities are less than a year.
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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.