Karyopharm Therapeutics Inc. Fair Value Disclosure
6. Fair Value Measurements
Financial instruments, including cash, cash equivalents, accounts receivable, net, other current assets, other assets, restricted cash, accounts payable, and accrued expenses, are presented at amounts that approximate fair value as of December 31, 2025 and 2024.
Items classified as Level 2 consist of corporate debt securities, commercial paper, and U.S. government and agency securities. We estimate the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs. We validate the prices provided by our third-party pricing sources by understanding the models used, obtaining market values from other pricing sources and analyzing pricing data in certain instances.
The following tables present information about our financial assets that have been measured at fair value and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
|
|
As of December 31, 2025 |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
37,224 |
|
|
$ |
37,224 |
|
|
$ |
— |
|
|
$ |
— |
|
U.S. government and agency securities |
|
|
7,306 |
|
|
|
— |
|
|
|
7,306 |
|
|
|
— |
|
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
|
3,204 |
|
|
|
— |
|
|
|
3,204 |
|
|
|
— |
|
|
|
$ |
47,734 |
|
|
$ |
37,224 |
|
|
$ |
10,510 |
|
|
$ |
— |
|
|
|
As of December 31, 2024 |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
46,990 |
|
|
$ |
46,990 |
|
|
$ |
— |
|
|
$ |
— |
|
Commercial paper |
|
|
5,072 |
|
|
|
— |
|
|
|
5,072 |
|
|
|
— |
|
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
|
39,091 |
|
|
|
— |
|
|
|
39,091 |
|
|
|
— |
|
Commercial paper |
|
|
3,166 |
|
|
|
— |
|
|
|
3,166 |
|
|
|
— |
|
U.S. government and agency securities |
|
|
3,979 |
|
|
|
— |
|
|
|
3,979 |
|
|
|
— |
|
|
|
$ |
98,298 |
|
|
$ |
46,990 |
|
|
$ |
51,308 |
|
|
$ |
— |
|
In certain cases where there is limited activity or less transparency around inputs to valuation, the related assets or liabilities are classified as Level 3. The following liabilities are measured at fair value at the end of each reporting period, with changes in fair value recognized as a component of other income (expense), net on our consolidated statements of operations. See Note 10, “Long-Term Obligations”, to our consolidated financial statements for further discussion of the following Level 3 liabilities:
The following table sets forth a summary of the changes in the estimated fair value of the liabilities described above, which are all classified as Level 3 (in thousands):
|
|
HCRx Derivative |
|
|
Convertible Notes Derivatives |
|
|
May 2024 Warrants |
|
|||
Balance as of December 31, 2023 |
|
$ |
2,800 |
|
|
$ |
— |
|
|
$ |
— |
|
Initial recognition |
|
|
— |
|
|
|
28,877 |
|
|
|
23,284 |
|
Change in fair value |
|
|
(2,800 |
) |
|
|
(15,189 |
) |
|
|
(10,702 |
) |
Balance as of December 31, 2024 |
|
|
— |
|
|
|
13,688 |
|
|
|
12,582 |
|
De-recognition of derivative in 2029 Notes |
|
|
— |
|
|
|
(7,377 |
) |
|
|
— |
|
Initial recognition of derivative in New 2029 Notes |
|
|
— |
|
|
|
14,697 |
|
|
|
— |
|
Initial recognition of derivative in 2028 Notes |
|
|
— |
|
|
|
8,793 |
|
|
|
— |
|
Change in fair value |
|
|
— |
|
|
|
(2,346 |
) |
|
|
1,639 |
|
Balance as of December 31, 2025 |
|
$ |
— |
|
|
$ |
27,455 |
|
|
$ |
14,221 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 17, 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.