Definium Therapeutics, Inc. Fair Value Disclosure
The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
The Company's credit facility bears variable interest rates, and the carrying amount of the Company's credit facility approximates fair value because interest rates approximate the current rates available to the Company.
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 (in thousands) and the fair value hierarchy of the valuation techniques utilized. The Company classifies its assets and liabilities as either short- or long-term based on maturity and anticipated realization dates.
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As of December 31, 2025 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Financial assets: |
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Cash equivalents |
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$ |
255,280 |
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$ |
— |
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$ |
— |
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$ |
255,280 |
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U.S. agency bonds |
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— |
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153,756 |
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— |
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153,756 |
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Total |
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$ |
255,280 |
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$ |
153,756 |
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$ |
— |
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$ |
409,036 |
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Financial liabilities: |
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DDSU Liability |
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$ |
2,608 |
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$ |
— |
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$ |
— |
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$ |
2,608 |
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2022 USD Financing Warrant Liability |
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— |
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— |
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40,905 |
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40,905 |
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Total |
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$ |
2,608 |
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$ |
— |
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$ |
40,905 |
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$ |
43,513 |
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As of December 31, 2024 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Financial assets: |
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Cash equivalents |
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$ |
271,537 |
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$ |
— |
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$ |
— |
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$ |
271,537 |
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Financial liabilities: |
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DDSU Liability |
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$ |
1,148 |
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$ |
— |
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$ |
— |
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$ |
1,148 |
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2022 USD Financing Warrant Liability |
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— |
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— |
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24,010 |
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$ |
24,010 |
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Total |
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$ |
1,148 |
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$ |
— |
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$ |
24,010 |
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$ |
25,158 |
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There were no transfers into or out of Level 1, Level 2, or Level 3 during the years ended December 31, 2025 and 2024.
The Company's cash equivalents includes a U.S. government money market fund which invests in highly liquid securities that are issued or guaranteed by the U.S. government or by U.S. government agencies and instrumentalities, and are measured at fair value in accordance with the fair value hierarchy.
The Company's U.S. agency bonds are classified as Level 2 in the fair value hierarchy as they are valued using observable inputs, including market yields and spreads, in the absence of active market quotes for identical securities.
The fair value of the warrant liability is measured at fair value on a recurring basis. The 2022 USD Financing Warrants (as defined below in Note 8) are classified as Level 3 in the fair value hierarchy and are determined using the Black-Scholes option pricing model using the following assumptions:
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As of December 31, |
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2025 |
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2024 |
Share price |
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$13.39 |
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$6.96 |
Expected volatility |
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74.32% |
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90.70% |
Risk-free rate |
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3.44% |
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4.18% |
Expected life |
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1.75 years |
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2.75 years |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Mar 6, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Mar 28, 2022 | |
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.