Summit Therapeutics Inc.SMMT

Summit Therapeutics Inc. Fair Value Disclosure

10-KFiled Mar 9, 20231 min read
Cash Equivalents and Fair Value Measurements
The following tables set forth the fair value of the Company's financial assets measured at fair value on a recurring basis and indicates the level within the fair value hierarchy utilized to determine such values:

Fair Value Measurements as of December 31, 2022 using:
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$60,783 $— $— $60,783 
U.S. Government treasury bills$— $225,730 $— $225,730 
Total financial assets$60,783 $225,730 $— $286,513 

The table above does not include cash at December 31, 2022 of $62,094. There were no cash equivalents held by the Company as of December 31, 2021. Cash at December 31, 2021 was $71,791.

The Company's financial instruments include cash and cash equivalents and restricted cash. Cash consists of non-interest-bearing deposits denominated in the U.S. dollar, British pound and Euro, while cash equivalents consists of interest-bearing money market fund deposits denominated in the U.S. dollar and U.S. treasury bills, and restricted cash consists of interest-bearing deposits denominated in the U.S. dollar.

The Company believes that the carrying amounts of prepaid expenses, other current assets, accounts payable, and accrued expenses approximates their fair values due to the short-term nature of those instruments. The carrying value of the Company’s promissory notes approximates its fair value due to the recent issuance of the notes in December 2022 when compared to market interest rates (which represents a Level 2 measurement).

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.

Other Available Disclosures

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