Spero Therapeutics, Inc. Fair Value Disclosure
3. Fair Value Measurements and Marketable Securities
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands):
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Fair Value Measurements at December 31, 2024 Using: |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Cash equivalents: |
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Money market funds |
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$ |
— |
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$ |
52,258 |
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$ |
— |
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$ |
52,258 |
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Total cash equivalents |
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— |
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52,258 |
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— |
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52,258 |
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Fair Value Measurements at December 31, 2023 Using: |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Cash equivalents: |
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Money market funds |
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$ |
— |
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$ |
75,628 |
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$ |
— |
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$ |
75,628 |
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Total cash equivalents |
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— |
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75,628 |
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— |
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75,628 |
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Excluded from the tables above is cash of $0.6 million and $0.7 million as of December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, there were no transfers between Level 1, Level 2 and Level 3 categories.
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.