Prelude Therapeutics Inc Fair Value Disclosure
5. Fair Value of Financial Instruments
Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The Company follows the provisions of ASC Topic 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:
The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis:
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Fair value measurement at reporting date using |
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(in thousands) |
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Quoted prices |
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Significant |
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Significant |
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December 31, 2025: |
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Assets: |
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Cash equivalents |
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Money market funds |
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$ |
21,620 |
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$ |
— |
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$ |
— |
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U.S. government securities |
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— |
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12,461 |
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— |
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Marketable securities |
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Corporate debt securities |
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— |
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31,027 |
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— |
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U.S. government securities |
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— |
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36,931 |
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— |
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Total |
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$ |
21,620 |
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$ |
80,419 |
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$ |
— |
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December 31, 2024: |
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Assets: |
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Cash equivalents (Money Market Funds) |
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$ |
11,246 |
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$ |
— |
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$ |
— |
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Marketable securities |
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Corporate debt securities |
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— |
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70,076 |
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— |
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U.S. government securities |
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— |
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51,064 |
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— |
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Total |
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$ |
11,246 |
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$ |
121,140 |
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$ |
— |
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 10, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 17, 2022 | |
| 2020 | Mar 16, 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.