Equillium, Inc. Fair Value Disclosure
3. Fair Value of Financial Instruments
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 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—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3—Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and short-term investments. Cash equivalents consisted of money market funds and short-term investments consisted of U.S. treasury securities. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bid and/or offers.
The following tables summarize the Company’s assets that require fair value measurements on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):
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Fair Value Measurements Using |
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Quoted Prices in |
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Significant |
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Significant |
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Active Markets |
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Other |
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Unobservable |
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December 31, |
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for Identical |
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Observable |
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Inputs |
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2025 |
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Assets (Level 1) |
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Inputs (Level 2) |
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(Level 3) |
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Assets: |
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Money Market funds (a) |
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$ |
29,733 |
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$ |
29,733 |
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$ |
- |
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$ |
- |
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Total assets at fair value |
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$ |
29,733 |
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$ |
29,733 |
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$ |
- |
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$ |
- |
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Fair Value Measurements Using |
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Quoted Prices in |
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Significant |
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Significant |
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Active Markets |
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Other |
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Unobservable |
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December 31, |
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for Identical |
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Observable |
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Inputs |
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2024 |
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Assets (Level 1) |
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Inputs (Level 2) |
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(Level 3) |
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Assets: |
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Money Market funds (a) |
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$ |
14,457 |
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$ |
14,457 |
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$ |
- |
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$ |
- |
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U.S. treasury securities (b) |
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4,490 |
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4,490 |
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- |
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- |
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Total assets at fair value |
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$ |
18,947 |
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$ |
18,947 |
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$ |
- |
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$ |
- |
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(a) Money Market funds included in cash and cash equivalents in the consolidated balance sheets, are valued at quoted market prices in active markets.
(b) U.S. treasury securities included in short-term investments in the consolidated balance sheet as of December 31, 2024, are recorded at fair market value, which is determined based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable. There were no short-term investments as of December 31, 2025.
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable, and accrued liabilities, approximate fair value due to their short maturities.
The Company did not hold any Level 1, 2 or 3 financial liabilities that are recorded at fair value on a recurring basis as of December 31, 2025 or 2024.
Historical Timeline
| Fiscal Year | Filed | |
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| 2025 | Mar 25, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2023 | Mar 25, 2024 | |
| 2022 | Mar 23, 2023 | |
| 2021 | Mar 23, 2022 | |
| 2020 | Mar 24, 2021 | |
| 2019 | Mar 26, 2020 | |
| 2018 | Mar 27, 2019 | |
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.