Fair Value Measurements
The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. The following levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities:
•Level 1 – quoted prices in active markets for identical assets, which include U.S. treasury securities
•Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.), which include corporate debt securities
•Level 3 – significant unobservable inputs
The inputs or methodology used for valuing securities are not necessarily an indication of the credit risk associated with investing in those securities. The following tables provide the fair value measurements of applicable Company assets that
are measured at fair value on a recurring basis according to the fair value levels defined above as of December 31, 2025 and 2024. There were no transfers between Level 1 and Level 2 during the periods presented.
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| | Assets at Fair Value |
| As of December 31, 2025 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| | (in thousands) |
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| Cash and cash equivalents | $ | 34,326 | | | $ | — | | | $ | — | | | $ | 34,326 | |
| Short-term investments | 39,026 | | | 22,878 | | | — | | | 61,904 | |
| Restricted cash | 29,000 | | | — | | | — | | | 29,000 | |
| Total cash and cash equivalents, short-term investments and restricted cash | $ | 102,352 | | | $ | 22,878 | | | $ | — | | | $ | 125,230 | |
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| | Assets at Fair Value |
| As of December 31, 2024 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| | (in thousands) |
| | | | | | | |
| Cash and cash equivalents | $ | 66,656 | | | $ | — | | | $ | — | | | $ | 66,656 | |
| Short-term investments | 127,990 | | | 43,311 | | | — | | | 171,301 | |
| Restricted cash | — | | | — | | | — | | | — | |
| Total cash and cash equivalents, short-term investments and restricted cash | $ | 194,646 | | | $ | 43,311 | | | $ | — | | | $ | 237,957 | |
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The carrying amount of prepaid expenses and other assets, accounts payable and accrued expenses are generally considered to be representative of their respective fair values because of the short-term nature of those instruments. The fair value of the Oxford Term Loans (see Note 9) is determined under Level 2 in the fair value hierarchy and approximates carrying value as the loans bear interest at a rate that approximates prevailing market rates for instruments with similar characteristics.
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.