Design Therapeutics, Inc. Fair Value Disclosure
4. Fair Value Measurements
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 non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. 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:
Level 1: Observable inputs such as quoted prices in active markets.
Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The carrying value of the Company’s cash, accounts payable and accrued liabilities are considered to be representative of their respective fair values due to the short-term nature of those instruments. The Company’s investment securities, which may include money market accounts, money market funds, certificates of deposits, U.S. Treasury securities, and high quality, marketable debt instruments of corporations and government sponsored enterprises, are measured at fair value in accordance with the fair value hierarchy. None of the Company’s non-financial assets or liabilities are recorded at fair value on a non-recurring basis and no transfers between levels have occurred during the periods presented.
The following table summarizes the Company’s financial instruments measured at fair value on a recurring basis at December 31, 2025 and 2024 (in thousands):
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Fair Value Measurement at End of Period Using: |
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Quoted Prices |
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In Active |
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Markets |
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Significant |
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For |
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Other |
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Significant |
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Identical |
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Observable |
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Unobservable |
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Assets |
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Inputs |
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Inputs |
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Total |
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(Level 1) |
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(Level 2) |
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(Level 3) |
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As of December 31, 2025: |
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Assets: |
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Money market funds(1) |
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$ |
15,141 |
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$ |
15,141 |
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$ |
— |
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$ |
— |
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U.S. Treasury securities |
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187,998 |
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187,998 |
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— |
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— |
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U.S. Government agency securities |
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14,991 |
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— |
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14,991 |
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— |
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Total |
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$ |
218,130 |
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$ |
203,139 |
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$ |
14,991 |
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$ |
— |
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As of December 31, 2024: |
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Assets: |
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Money market funds(1) |
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$ |
20,800 |
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$ |
20,800 |
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$ |
— |
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$ |
— |
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Certificates of deposit |
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2,898 |
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2,898 |
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— |
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— |
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U.S. Treasury securities |
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197,528 |
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197,528 |
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— |
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— |
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U.S. Government agency securities |
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22,488 |
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— |
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22,488 |
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— |
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Total |
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$ |
243,714 |
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$ |
221,226 |
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$ |
22,488 |
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$ |
— |
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Interest bearing money market accounts and certificates of deposit are valued at amortized cost, which approximates fair value. The Company obtains the fair value of its available-for-sale debt securities from a professional pricing service. Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data and include our investments in marketable debt instruments of government sponsored enterprises.
Historical Timeline
| Fiscal Year | Filed | |
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| 2025 | Mar 9, 2026 | Showing above |
| 2024 | Mar 10, 2025 | |
| 2023 | Mar 19, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2021 | Mar 10, 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.