Liminatus Pharma, Inc. Fair Value Disclosure
Note 8. Fair Value Measurements
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2025 and 2024 and indicates the fair value hierarchy of the valuation inputs the Company’s utilized to determine such fair value:
Description | | Level | | 2025 | | 2024 | ||
Assets: | $ | — | $ | — | ||||
Liabilities: |
|
| | |||||
Warrant liability |
| 3 | $ | 29,244 | $ | — | ||
Warrant Liability
Upon closing of the Mergers, Iris’ public and private placement warrants were converted into warrants of the Company, which entitle the holders to purchase shares of the Company’s common stock. The Company’s private placement warrants meet the requirements for liability classification. The fair value of the warrant liabilities were determined using observable data points, such as the fair value of the public warrants as of December 31, 2025 and 2024. The Company further considered specific unobservable inputs, such as the probability and timing of events and the expected equity value of the underlying shares.
The changes in fair value of Level 3 financial assets and liabilities for the year ended December 31, 2025 are as follows:
| Warrant liability | ||
Fair value as of January 1, 2025 | $ | — | |
Initial measurement at the Closing Date |
| 83,556 | |
Change in fair value |
| (54,312) | |
Fair value as of December 31, 2025 | $ | 29,244 | |
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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.