LeonaBio, Inc. Fair Value Disclosure
4. Fair Value
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):
|
|
December 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market fund |
|
$ |
17,299 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,299 |
|
U.S. government debt and agency |
|
|
— |
|
|
|
2,541 |
|
|
|
— |
|
|
|
2,541 |
|
Commercial paper |
|
|
— |
|
|
|
32,314 |
|
|
|
— |
|
|
|
32,314 |
|
Total cash equivalents |
|
|
17,299 |
|
|
|
34,855 |
|
|
|
— |
|
|
|
52,154 |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
— |
|
|
|
5,209 |
|
|
|
— |
|
|
|
5,209 |
|
U.S. government debt and agency |
|
|
— |
|
|
|
13,846 |
|
|
|
— |
|
|
|
13,846 |
|
Total short-term investments |
|
|
— |
|
|
|
19,055 |
|
|
|
— |
|
|
|
19,055 |
|
Total assets subject to fair value |
|
$ |
17,299 |
|
|
$ |
53,910 |
|
|
$ |
— |
|
|
$ |
71,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sermonix Pre-Funded Warrant |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
37,488 |
|
|
|
37,488 |
|
Milestone Liability |
|
|
— |
|
|
|
— |
|
|
|
15,116 |
|
|
|
15,116 |
|
Total liabilities subject to fair value |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
52,604 |
|
|
$ |
52,604 |
|
|
|
December 31, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market fund |
|
$ |
30 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
30 |
|
U.S. government debt and agency |
|
|
|
|
|
10,299 |
|
|
|
— |
|
|
|
10,299 |
|
|
Commercial paper |
|
|
|
|
|
19,393 |
|
|
|
— |
|
|
|
19,393 |
|
|
Total cash equivalents |
|
|
30 |
|
|
|
29,692 |
|
|
|
— |
|
|
|
29,722 |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
— |
|
|
|
1,445 |
|
|
|
— |
|
|
|
1,445 |
|
U.S. government debt and agency |
|
|
— |
|
|
|
1,392 |
|
|
|
— |
|
|
|
1,392 |
|
Total short-term investments |
|
$ |
— |
|
|
|
2,837 |
|
|
$ |
— |
|
|
$ |
2,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets subject to fair value |
|
$ |
30 |
|
|
$ |
32,529 |
|
|
$ |
— |
|
|
$ |
32,559 |
|
U.S government debt and agency securities and commercial paper are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.
The fair value of the Sermonix Pre-Funded Warrant (see Note 3) was determined based on the fair value of the Company’s common stock, adjusted for a discount for lack of marketability, and was classified as Level 3 due to the use of unobservable market data for identical or similar liabilities. The fair value of the Milestone Liability was determined based on the probability weighted present value of the net milestone payment and was classified as Level 3 due to the use of unobservable market data for identical or similar liabilities. The key inputs into the fair value of the Sermonix Pre-Funded Warrant and Milestone Liability at issuance and at December 31, 2025 were as follows:
|
|
Sermonix Pre-Funded Warrant |
|
|||||
|
|
December 31, 2025 |
|
|
December 18, 2025 |
|
||
Fair Value of Common Stock |
|
$ |
7.57 |
|
|
$ |
6.72 |
|
Volatility |
|
|
97.0 |
% |
|
|
97.0 |
% |
Risk-free rate |
|
|
3.7 |
% |
|
|
3.6 |
% |
Dividend Yield |
|
|
0.0 |
% |
|
|
0.0 |
% |
Holding period years |
|
|
0.20 |
|
|
|
0.30 |
|
|
|
|
|
|
|
|
||
|
|
Milestone Liability |
|
|||||
|
|
December 31, 2025 |
|
|
December 18, 2025 |
|
||
Weighted Average Cost of Capital |
|
|
11.0 |
% |
|
|
11.00 |
% |
Probability |
|
|
43.9 |
% |
|
|
43.9 |
% |
There were no transfers of financial instruments between Level 1, Level 2, and Level 3.
The following table sets forth a summary of the changes in the fair value of the Sermonix Pre-Funded Warrant and Milestone Liability for the year ended December 31, 2025 (in thousands):
|
|
Sermonix Pre-Funded Warrant |
|
|
Milestone Liability |
|
||
December 31, 2024 |
|
$ |
— |
|
|
$ |
— |
|
Issuance |
|
|
32,909 |
|
|
|
15,116 |
|
Change in fair value |
|
|
4,579 |
|
|
|
— |
|
December 31, 2025 |
|
|
37,488 |
|
|
|
15,116 |
|
The fair value of the Level 3 liabilities may change significantly as additional data is obtained. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods.
The following tables reflect the Company’s financial asset balances measured at fair value on a recurring basis (in thousands):
|
|
December 31, 2025 |
|
|||||||||||||||
|
|
Level |
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market fund |
|
1 |
|
$ |
17,299 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,299 |
|
U.S. government debt and agency |
|
2 |
|
|
2,541 |
|
|
|
— |
|
|
|
— |
|
|
|
2,541 |
|
Commercial paper |
|
2 |
|
|
32,319 |
|
|
|
— |
|
|
|
(5 |
) |
|
|
32,314 |
|
Total cash equivalents |
|
|
|
$ |
52,159 |
|
|
$ |
— |
|
|
$ |
(5 |
) |
|
$ |
52,154 |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
2 |
|
|
5,210 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
5,209 |
|
U.S. government debt and agency |
|
2 |
|
|
13,844 |
|
|
|
2 |
|
|
|
— |
|
|
|
13,846 |
|
Total short-term investments |
|
|
|
$ |
19,054 |
|
|
$ |
2 |
|
|
$ |
(1 |
) |
|
$ |
19,055 |
|
|
|
December 31, 2024 |
|
|||||||||||||||
|
|
Level |
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market fund |
|
1 |
|
$ |
30 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
30 |
|
U.S. government debt and agency |
|
2 |
|
|
10,297 |
|
|
|
2 |
|
|
|
— |
|
|
|
10,299 |
|
Commercial paper |
|
2 |
|
|
19,394 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
19,393 |
|
Total cash equivalents |
|
|
|
$ |
29,721 |
|
|
$ |
2 |
|
|
$ |
(1 |
) |
|
$ |
29,722 |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
2 |
|
|
1,445 |
|
|
|
— |
|
|
|
— |
|
|
|
1,445 |
|
U.S. government debt and agency |
|
2 |
|
|
1,392 |
|
|
|
— |
|
|
|
— |
|
|
|
1,392 |
|
Total short-term investments |
|
|
|
$ |
2,837 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,837 |
|
All the commercial paper and U.S. government debt and agency securities designated as short-term investments have an effective maturity date that is equal to or less than one year from the respective balance sheet date.
As of December 31, 2025, the Company does not intend to sell any securities in unrealized loss positions, and it is not more-likely-than-not that the Company will be required to sell such securities prior to the recovery of the amortized cost basis. Based on the Company's assessment, the Company concluded all impairments as of December 31, 2025 to be due to factors other than credit loss, such as changes in interest rates. A credit loss allowance was not recognized and the unrealized losses for available-for-sale securities were recorded in other comprehensive loss
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Mar 23, 2023 | |
| 2021 | Mar 28, 2022 | |
| 2020 | Mar 25, 2021 | |
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.