Prime Medicine, Inc. Fair Value Disclosure
| December 31, 2024 | ||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | — | $ | 178,212 | $ | — | $ | 178,212 | ||||||||||||||||||
| Corporate debt securities | — | 3,793 | — | 3,793 | ||||||||||||||||||||||
| Short-term investments: | ||||||||||||||||||||||||||
| U.S. Treasury and government securities | — | 2,998 | — | 2,998 | ||||||||||||||||||||||
| Related party short-term investment: | ||||||||||||||||||||||||||
| Beam equity securities | 4,968 | — | — | 4,968 | ||||||||||||||||||||||
| Total cash equivalents and investments | $ | 4,968 | $ | 185,003 | $ | — | $ | 189,971 | ||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | — | $ | 24,209 | $ | — | $ | 24,209 | ||||||||||||||||||
| Short-term investment: | ||||||||||||||||||||||||||
| U.S. Treasury and government securities | — | 74,639 | — | 74,639 | ||||||||||||||||||||||
| Related party short-term investment: | ||||||||||||||||||||||||||
| Beam equity securities | 5,452 | — | — | 5,452 | ||||||||||||||||||||||
| Total cash equivalents and investments | $ | 5,452 | $ | 98,848 | $ | — | $ | 104,300 | ||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| (in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
| Short-term investments in debt securities: | ||||||||||||||||||||||||||
| U.S. Treasury and government securities | $ | 2,997 | $ | 1 | $ | — | $ | 2,998 | ||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||||
| (in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
| Short-term investments in debt securities: | ||||||||||||||||||||||||||
| U.S. Treasury and government securities | $ | 74,654 | $ | 7 | $ | (22) | $ | 74,639 | ||||||||||||||||||
| (in thousands) | December 31, 2024 | December 31, 2023 | ||||||||||||
| Due within one year | $ | 2,998 | $ | 74,639 | ||||||||||
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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.