ENANTA PHARMACEUTICALS INC Fair Value Disclosure
3. Fair Value of Financial Assets and Liabilities
The following tables present information about the Company’s financial assets and liabilities that were subject to fair value measurement on a recurring basis as of September 30, 2025 and 2024 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:
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Fair Value Measurements at September 30, 2025 Using: |
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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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(in thousands) |
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Assets: |
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Cash equivalents: |
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Money market funds |
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$ |
11,580 |
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$ |
— |
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$ |
— |
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$ |
11,580 |
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Marketable securities: |
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U.S. Treasury notes |
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156,566 |
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— |
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— |
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156,566 |
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168,146 |
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— |
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— |
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168,146 |
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Liabilities: |
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Series 1 nonconvertible preferred stock |
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— |
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— |
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1,311 |
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1,311 |
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$ |
— |
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$ |
— |
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$ |
1,311 |
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$ |
1,311 |
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Fair Value Measurements at September 30, 2024 Using: |
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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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(in thousands) |
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Assets: |
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Cash equivalents: |
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Money market funds |
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$ |
33,448 |
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$ |
— |
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$ |
— |
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$ |
33,448 |
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Marketable securities: |
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U.S. Treasury notes |
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210,953 |
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— |
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— |
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210,953 |
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244,401 |
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— |
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— |
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244,401 |
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Liabilities: |
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Series 1 nonconvertible preferred stock |
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— |
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— |
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1,350 |
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1,350 |
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$ |
— |
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$ |
— |
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$ |
1,350 |
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$ |
1,350 |
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Cash equivalents as of September 30, 2025 and 2024 consist of money market funds that are readily convertible to cash and with less than 90 days until maturity.
During the years ended September 30, 2025, 2024, and 2023, there were no transfers between Level 1, Level 2 and Level 3.
The fair value of Level 1 instruments are valued using quoted prices in active markets. The fair value of Level 2 instruments classified as marketable securities were determined through third-party pricing services. The pricing services use many observable market inputs to determine value, including reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, and current spot rates.
The outstanding shares of Series 1 nonconvertible preferred stock as of September 30, 2025 and 2024 are measured at fair value. These outstanding shares are financial instruments that might require a transfer of assets because of the liquidation features in the contract and are therefore recorded as liabilities and measured at fair value. The fair value of the outstanding shares is based on significant inputs not observable in the market, which represent a Level 3 measurement within the fair value hierarchy. The Company utilizes a probability-weighted valuation model, which takes into consideration various outcomes that may require the Company to transfer assets upon liquidation. Changes in the fair values of the Series 1 nonconvertible preferred stock are recognized in other income (expense) in the consolidated statements of operations.
The recurring Level 3 fair value measurements of the Company’s outstanding Series 1 nonconvertible preferred stock using probability-weighted discounted cash flow include the following significant unobservable inputs:
Series 1 nonconvertible preferred stock |
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Range |
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September 30, |
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Unobservable Input |
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2025 |
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2024 |
Probabilities of payout |
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0%-65% |
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0%-65% |
Discount rate |
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8.25% |
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9.00% |
The following table provides a rollforward of the aggregate fair value of the Company’s outstanding Series 1 nonconvertible preferred stock for which fair value is determined by Level 3 inputs:
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Series 1 |
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(in thousands) |
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Balance, September 30, 2022 |
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$ |
1,423 |
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Change in fair value |
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— |
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Balance, September 30, 2023 |
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1,423 |
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Change in fair value |
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(73 |
) |
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Balance, September 30, 2024 |
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1,350 |
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Change in fair value |
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(39 |
) |
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Balance, September 30, 2025 |
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$ |
1,311 |
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In April 2023, the Company entered into a royalty sale agreement with an affiliate of OMERS, pursuant to which the Company was paid a $200,000 cash purchase price in exchange for 54.5% of future quarterly royalty payments on net sales of MAVYRET/MAVIRET, after June 30, 2023, through June 30, 2032, subject to a cap on aggregate payments equal to 1.42 times the purchase price. The Company accounted for the upfront payment as a liability related to the sale of future royalties. The carrying value of the liability related to the sale of future royalties approximates fair value as of September 30, 2025 and 2024 and is based on current estimates of future royalties expected to be paid to OMERS over the next 10 years, which are considered Level 3 inputs. See Note 8 for a rollforward of the liability.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 19, 2025 | Showing above |
| 2024 | Nov 27, 2024 | |
| 2023 | Nov 22, 2023 | |
| 2022 | Nov 23, 2022 | |
| 2021 | Nov 24, 2021 | |
| 2020 | Nov 25, 2020 | |
| 2019 | Nov 27, 2019 | |
| 2018 | Nov 29, 2018 | |
| 2017 | Dec 11, 2017 | |
| 2016 | Dec 9, 2016 | |
| 2015 | Dec 11, 2015 | |
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.