IMMUNIC, INC.IMUX
IMMUNIC, INC. Fair Value Disclosure
Fair Value
The following fair value hierarchy table present information about each major category of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):
| Fair Value Measurement at December 31, 2025 | |||||||||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Money market funds | $ | 9,244 | $ | 9,244 | $ | — | $ | — | |||||||||||||||
| Total assets at fair value | $ | 9,244 | $ | 9,244 | $ | — | $ | — | |||||||||||||||
| Fair Value Measurement at December 31, 2024 | |||||||||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Money market funds | $ | 14,751 | $ | 14,751 | $ | — | $ | — | |||||||||||||||
| Total assets at fair value | $ | 14,751 | $ | 14,751 | $ | — | $ | — | |||||||||||||||
There were no transfers between Level 1, Level 2 or Level 3 assets during the periods presented.
For the Company’s money market funds which are included as a component of cash and cash equivalents on the consolidated balance sheet, realized gains and losses are included in interest income on the consolidated statements of operations.
Our money market fund account is held in our bank in the U.S. and was earning interest at a rate of 3.6% in a U.S. Government money market fund.
The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of December 31, 2025. The Company has not historically experienced any credit losses with balances in excess of FDIC limits.
The Company recorded tranche rights of $23.6 million at January 8, 2024 as a result of the January 2024 Financing (see note 6). The fair value measurement of the tranche rights associated with the January 2024 Financing was classified as Level 3 under the fair value hierarchy. The fair value of the tranche rights was determined using a Black Scholes Option Pricing Model. The inputs to this model included a risk-free rate range of 3.93%-4.36%, a stock price volatility range of 105-115%, an expected dividend rate of 0% and remaining term of 1.81-4.81 years. This liability was revalued on March 4, 2024, upon stockholder approval to increase its authorized shares of common stock from 130 million to 500 million, which resulted in the reclassification of the tranche rights from a liability to equity. This revaluation resulted in an increase in the tranche rights liability of $4.8 million using a Black Scholes Option Pricing Model. The inputs to this model as of the date of the reclassification included a risk-free rate range of 4.16%-4.63%, a stock price volatility range of 90-105%, an expected dividend rate of 0% and remaining term of 1.66-4.66 years. The inputs used in the determination of fair value of the liability are level 3 inputs. A rollforward of the fair value of the tranche rights is as follows (in thousands):
| December 31, 2023 | $ | — | |||
| Fair value as of January 8, 2024 | $ | 23,600 | |||
| Change in fair value through March 4, 2024 | $ | 4,796 | |||
| Reclassification to equity in March 2024 | $ | (28,396) | |||
| December 31, 2024 | $ | — | |||
The Company recorded a SARs liability of $0.8 million as of December 31, 2025 as a result of the grant of up to 35 million SARs (see note 7). The fair value of the SARs liability was classified as Level 3 under the fair value hierarchy. A rollforward of the fair value of the SARs liability is as follow (in thousands)
| Fair value of SARs liability at December 31, 2024 | $ | — | |||
| Change in fair value of SARs liability | 809 | ||||
| Fair value of SARs liability at December 31, 2025. | $ | 809 | |||
The Company utilized a Monte Carlo simulation model in conjunction with a Probability-Weighted Expected Return Model (“PWERM”) to estimate the fair value of the SARs liabilities. This valuation model incorporates various assumptions, including stock price volatility, risk-free interest rate, corporate transaction probability and the expected term of the underlying equity instruments and SARs.
The following table summarizes the key assumptions used in estimating the fair value of the SARs at issuance and on December 31, 2025:
| July 7, 2025 | December 31, 2025 | ||||||||||
| Expected term (years) | 1.0-2.9 | 1.0-2.4 | |||||||||
| Risk-free interest rate | 4.17%-4.38% | 3.64%-4.11% | |||||||||
| Stock price volatility | 85%-115% | 65%-115% | |||||||||
| Probability (1) | 50%-50% | 50%-50% | |||||||||
| Dividend rate | — | % | — | % | |||||||
(1) Scenario probability was based on timing expectations of the Company that a corporate transaction occurring was estimated at 50%; and a corporate transaction not occurring at 50%.
The carrying amounts of other current assets and prepaid expenses, accounts payable, accrued expenses, and other current liabilities approximate their fair values due to their short-term nature. The fair value and book value of the money market funds presented in the table above are the same.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 4, 2019 | |
| 2017 | Mar 13, 2018 | |
| 2016 | Mar 7, 2017 | |
| 2015 | Mar 8, 2016 | |
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.