KIORA PHARMACEUTICALS INCKPRX
KIORA PHARMACEUTICALS INC Fair Value Disclosure
Fair Value
Short-term Investments
The following table summarizes short-term investments as of December 31, 2025:
| Unrealized | ||||||||||||||||||||||||||
| Amortized Cost | Gains | Losses | Estimated Fair Value | |||||||||||||||||||||||
| Government Agency Securities | $ | 5,171,407 | $ | 4,633 | $ | — | $ | 5,176,040 | ||||||||||||||||||
| Corporate Debt Securities | 3,211,460 | 5,013 | (1) | 3,216,473 | ||||||||||||||||||||||
| Total Short-term Investments | $ | 8,382,867 | $ | 9,646 | $ | (1) | $ | 8,392,513 | ||||||||||||||||||
The following table summarizes the maturities of the Company's short-term investments at December 31, 2025:
| Amortized Cost | Estimated Fair Value | |||||||||||||
| Due in one year or less | $ | 8,382,867 | $ | 8,392,513 | ||||||||||
| Total Short-term Investments | $ | 8,382,867 | $ | 8,392,513 | ||||||||||
The following table shows the Company's available-for-sale investments' gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous loss position, at December 31, 2025:
| Less than 12 months | ||||||||||||||||||||
| Count | Fair Value | Unrealized Losses | ||||||||||||||||||
| Corporate Debt Securities | 1 | $ | 76,056 | $ | (1) | |||||||||||||||
| Total | 1 | $ | 76,056 | $ | (1) | |||||||||||||||
The following table summarizes short-term investments as of December 31, 2024:
Unrealized | ||||||||||||||||||||||||||
Amortized Cost | Gains | Losses | Estimated Fair Value | |||||||||||||||||||||||
| US Treasuries | $ | 92,273 | $ | 40 | $ | — | $ | 92,313 | ||||||||||||||||||
| Government Agency Securities | 18,517,164 | 28,008 | (4,621) | 18,540,551 | ||||||||||||||||||||||
| Corporate Debt Securities | 4,058,879 | 5,901 | (2,107) | 4,062,673 | ||||||||||||||||||||||
| Asset Backed Securities | 301,844 | 2,379 | — | 304,223 | ||||||||||||||||||||||
| Total Short-term Investments | $ | 22,970,160 | $ | 36,328 | $ | (6,728) | $ | 22,999,760 | ||||||||||||||||||
The following table summarizes the maturities of the Company's short-term investments at December 31, 2024:
| Amortized Cost | Estimated Fair Value | |||||||||||||
| Due in one year or less | $ | 21,659,580 | $ | 21,688,074 | ||||||||||
| Due in one to five years | 1,310,580 | 1,311,686 | ||||||||||||
| Total Short-term Investments | $ | 22,970,160 | $ | 22,999,760 | ||||||||||
The following table shows the Company's available-for-sale investments' gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous loss position, at December 31, 2024:
| Less than 12 months | ||||||||||||||||||||
| Count | Fair Value | Unrealized Losses | ||||||||||||||||||
| Government Agency Securities | 4 | $ | 3,369,962 | $ | (4,621) | |||||||||||||||
| Corporate Debt Securities | 9 | 801,149 | (2,107) | |||||||||||||||||
| Total | 13 | $ | 4,171,111 | $ | (6,728) | |||||||||||||||
The Company reviews its investments each quarter to identify and evaluate investments that have an indication of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, any changes to the underlying credit risk of the investment, and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. The unrealized losses in the Company’s investments were caused by changes in interest rates resulting from changing economic conditions, and not from a decline in credit of their underlying issuers. The Company may be required to sell these investments prior to maturity to implement management strategies, however, it is not likely that the Company will sell these investments before recovery of their amortized cost basis. As such, the Company has classified these losses as temporary in nature.
Contingent Consideration
Each period the Company revalues its contingent consideration obligations associated with business acquisitions to their fair value. The estimate of the fair value of contingent consideration is determined by applying probability of success, discount rate, and updated timing of the payment. The outstanding payments relate to obligation from acquisitions made by the Company. Below is the list of obligations for each relevant transaction as of December 31, 2025 as follows:
| Acquisition | Milestone Achievement Condition | Contingent Consideration Payable | ||||||||||||
| Bayon | KIO-301 | |||||||||||||
| Successful completion of Phase 2 | $ | 1.0 | million | |||||||||||
| Successful completion of Phase 3 | $ | 4.0 | million | |||||||||||
| FDA approval | $ | 1.7 | million | |||||||||||
| Panoptes | KIO-104 | |||||||||||||
| Beginning of Phase 3 | $ | 4.8 | million | |||||||||||
| FDA approval | $ | 4.8 | million | |||||||||||
Changes in the fair value of contingent consideration are included within “Operating Expenses” in the Company's consolidated statements of operations and comprehensive income (loss). Below are the status of each transaction's contingent consideration:
Bayon: The Bayon acquisition closed on October 21, 2021. As of December 31, 2024, the Company recorded contingent consideration of $2.2 million. During the year ended December 31, 2025, the Company recorded a decrease in estimated fair value of $0.9 million. The estimated fair value of contingent consideration as of December 31, 2025 was $1.2 million.
Panoptes: The Panoptes transaction closed December 18, 2020. As of December 31, 2024, the Company recorded contingent consideration of $2.0 million. During the year ended December 31, 2025, the Company recorded a decrease in estimated fair value of $0.3 million. The estimated fair value of contingent consideration as of December 31, 2025 was $1.7 million.
Jade: During the year ended December 31, 2024, the Company fully reduced the contingent consideration liability related to KIO-201 of approximately $0.8 million as a result of the strategic decision to cease continued development or partnership leading to commercialization. As of December 31, 2024, the fair value of contingent consideration for this acquisition was zero.
The Company initially values contingent consideration related to business combinations using a probability-weighted calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows for certain milestones. Key assumptions used to estimate the fair value of contingent consideration include projected financial information, market data and the probability and timing of achieving the specific targets as discussed above. After the initial valuation, the Company generally uses its best estimate to measure contingent consideration at each subsequent reporting period using the following unobservable Level 3 inputs:
| Valuation Technique | Unobservable Inputs | December 31, 2025 | December 31, 2024 | ||||||||||||||||||||
| Discounted cash flow | Payment discount rate | 14.3% | 15.1% | ||||||||||||||||||||
| Bayon | Payment period | 2027 - 2030 | 2027 - 2029 | ||||||||||||||||||||
| Panoptes | Payment period | 2029 - 2031 | 2027 - 2028 | ||||||||||||||||||||
| Bayon | Probability of Success for milestones | 25% - 45% | 48% - 77% | ||||||||||||||||||||
| Panoptes | Probability of Success for milestones | 30% - 33% | 30% - 33% | ||||||||||||||||||||
Significant changes in these assumptions could result in a significantly higher or lower fair value. The contingent consideration reported in the above table is adjusted quarterly based upon the passage of time or the anticipated success or failure of achieving certain milestones. The decrease in contingent consideration of $1.3 million as of December 31, 2025 was primarily driven by an increased discount period and changes to the development plan which lowered the probability of success to align with a focus initially on a single indication for KIO-301. This reduced probability of success is solely based on the strategic shift in the order in which indications are to be pursued and is completely independent of KIO-301's potential pathway to approval in retinitis pigmentosa. The decrease was recorded as a change in fair value of contingent consideration of $(1.3) million within the consolidated statements of operations and comprehensive income (loss).
At December 31, 2025 and 2024, the Company had no other assets or liabilities that are subject to fair value methodology and estimation in accordance with U.S. GAAP.
In-process R&D
The Company records in-process R&D projects acquired in asset acquisitions that have not reached technological feasibility and which have no alternative future use. For in-process R&D projects acquired in business combinations, the Company capitalizes the in-process R&D project as an indefinite-lived intangible
asset and evaluates this asset annually for impairment until the R&D process has been completed. Once the R&D process is complete, the Company amortizes the R&D asset over its remaining useful life.
ASC 350 allows an entity to first assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not (that is, a likelihood of more than 50 percent) that an indefinite-lived intangible asset is impaired. If it is more likely than not that the asset is impaired, the entity must calculate the fair value of the asset and record an impairment charge if the carrying amount exceeds fair value. If an entity concludes that it is not more likely than not that the asset is impaired, no further action is required. An indefinite-lived intangible asset should be tested for impairment if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If such events or changes have occurred, a quantitative assessment is required.
If an entity bypasses the qualitative assessment or determines from its qualitative assessment that an indefinite-lived intangible asset is more likely than not impaired, a quantitative impairment test should be performed. The quantitative impairment test compares the fair value of an indefinite-lived intangible asset with the asset’s carrying amount. If the fair value of the indefinite-lived intangible asset is less than the carrying amount, an impairment loss should be recognized in an amount equal to the difference in accordance with ASC 350-30-35-19.
The Company values in-process R&D related to asset acquisitions using the Income Approach which measures the value of an asset by the present value of its future economic benefits. These benefits can include earnings, cost savings, tax deductions, or proceeds from its disposition. Value indications are developed by discounting expected cash flows at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation, and risks associated with the particular investment. The selected discount rate is the Company’s weighted average cost of capital (“WACC”), which provides an expected rate of return based on the Company’s capital structure, market capitalization reconciliation, the required yield on the Company’s equity, and the required yield on the interest-bearing debt of which there is currently none.
Management completed, with the assistance of a third party valuation firm, a quantitative assessment of in-process R&D as of December 31, 2025 and previously as of August 31, 2025 and 2024, the Company's historical annual impairment test date, which includes the following unobservable Level 3 inputs:
| Valuation Technique | Unobservable Inputs | December 31, 2025 | December 31, 2024 | ||||||||||||||||||||
| Multi-Period Excess Earnings Method | Payment discount rate | 39.5% | 43.0% | ||||||||||||||||||||
| KIO-104 | Probability of success for next development phase | 17% to 36% | 17% to 36% | ||||||||||||||||||||
| KIO-301 | Probability of success for next development phase | 23% to 43% | 23% to 43% | ||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 25, 2026 | Showing above |
| 2024 | Mar 25, 2025 | |
| 2023 | Mar 25, 2024 | |
| 2022 | Mar 23, 2023 | |
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.