TG THERAPEUTICS, INC. Fair Value Disclosure
NOTE 5 – FAIR VALUE MEASUREMENTS
The Company measures certain financial assets and liabilities at fair value on a recurring basis in its financial statements. The fair value hierarchy ranks the quality and reliability of inputs, or assumptions, used to determine fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:
| ● | Level 1 – quoted prices in active markets for identical assets and liabilities; |
| ● | Level 2 – inputs other than Level 1 quoted prices that are directly or indirectly observable; and |
| ● | Level 3 – unobservable inputs for which market data are not available. |
Equity Investments and Forward Contract Liabilities
In January 2024, the Company and its wholly-owned subsidiary, TG Cell Therapy, Inc., (TG Cell) entered into a License Agreement (the Precision License Agreement) with Precision. Under the agreement, Precision granted the Company certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize Precision’s allogeneic CAR T therapy, azer-cel, for the treatment of autoimmune and other non-oncology diseases and conditions.
Upon execution of the Precision License Agreement, the Company made an upfront payment to Precision of $7.5 million, comprised of (i) $5.25 million in cash and (ii) $2.25 million (the Upfront Precision Stock Payment), as an equity investment, for the purchase of 2,920,816 shares of Precision’s common stock at a price of $0.77 per share. The Company paid a premium for the shares, which was recorded in research and development expense as part of the cost of the Precision License Agreement. Precision subsequently implemented a 30-to-1 reverse stock split in February 2024.
On January 7, 2025, the Company made a one-time payment to Precision equal to $2.5 million (the Deferred Precision Stock Payment), as an equity investment, for the purchase of 220,712 shares of Precision common stock calculated by dividing the Deferred Precision Stock Payment by 200% of the weighted average share price of the Precision common stock for the thirty (30) trading days preceding the payment date. The Deferred Precision Stock Payment, which had previously been classified as a forward contract liability in other current liabilities as of December 31, 2024, was reclassified to equity investments at its fair market value of $1.4 million on the date the payment was made to Precision.
All Precision shares held are recognized at fair market value as of December 31, 2025, and are classified as an equity investment and included within long-term investments on the consolidated balance sheets as of December 31, 2025.
The Precision License Agreement also includes a milestone payment upon the achievement of a clinical and regulatory milestone event (Milestone Event 1). Upon achievement of Milestone Event 1, the Company is required to make a one-time payment to Precision equal to $2.3 million (the Milestone 1 Precision Stock Payment), in exchange for shares of Precision common stock (rounded down to the nearest whole share) calculated in the same manner as the Deferred Precision Stock Payment. While Milestone Event 1 has not been achieved, the obligation was recognized in research and development license fees upon execution of the agreement and is classified as a forward contract liability measured at its fair market value. In accordance with ASC 321, the Milestone 1 forward liability was recorded at $1.4 million in other current liabilities on the Company’s consolidated balance sheets as of December 31, 2025.
5% Notes
At the time of the Company's merger (the Company was then known as Manhattan Pharmaceuticals, Inc. (Manhattan)) with Ariston Pharmaceuticals, Inc. (Ariston) in March 2010, Ariston issued $15.5 million of -year 5% notes payable (the 5% Notes) in satisfaction of several prior note payable issuances. The 5% Notes and accrued and unpaid interest thereon are convertible at the option of the holder into common stock at the conversion price of $1,125 per share. The Company has no obligations associated with the 5% Notes other than the conversion feature. The 5% Notes are recognized in other current liabilities on the Company’s consolidated balance sheets as of December 31, 2025, as the notes are currently convertible and therefore classified as short-term obligations.
The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts receivable, accounts payable and loan payable. As of December 31, 2025 and 2024, the fair values of cash and cash equivalents, restricted cash, accounts receivable, and loan and interest payable approximated their carrying value due to their short term nature. The carrying value of the loan payable on the Company’s balance sheet is also estimated to approximate its fair value, as the interest rate is aligned with market rates for instruments with similar terms and risk characteristics.
The following tables provide the fair value measurements of applicable financial assets and liabilities as of December 31, 2025 and 2024:
| Financial liabilities at fair value as of December 31, 2025 | ||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Equity Investments | $ | 1,323 | $ | — | $ | — | $ | 1,323 | ||||||||
| Total Assets | $ | 1,323 | $ | — | $ | — | $ | 1,323 | ||||||||
| Forward Contract Liabilities | — | 1,412 | — | 1,412 | ||||||||||||
| 5% Notes | $ | — | $ | — | $ | 689 | $ | 689 | ||||||||
| Total | $ | — | $ | 1,412 | $ | 689 | $ | 2,101 | ||||||||
| | Financial liabilities at fair value as of December 31, 2024 | |||||||||||||||
| | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| | | | | | ||||||||||||
| Equity Investments | $ | 371 | $ | — | $ | — | $ | 371 | ||||||||
| Total Assets | $ | 371 | $ | — | $ | — | $ | 371 | ||||||||
| Forward Contract Liabilities | $ | — | $ | 3,129 | $ | — | $ | 3,129 | ||||||||
| 5% Notes | $ | — | $ | — | $ | 661 | $ | 661 | ||||||||
| Total Liabilities | $ | — | $ | 3,129 | $ | 661 | $ | 3,790 | ||||||||
The Company's equity investments classified as Level 1 were valued using their respective closing stock prices on the Nasdaq Stock Market, which represents unadjusted quoted prices in active markets for identical instruments. The Company did not experience any transfers of financial instruments between the fair value hierarchy levels during the year ended December 31, 2025 and 2024.
The Company's forward contract liabilities classified as Level 2 were valued using Precision's closing stock price on the Nasdaq Stock Market.
The Company's Level 3 instrument amounts represent the fair value of the 5% Notes and related accrued interest, as certain inputs to determine fair value were unobservable.
The change in the fair value of the Level 1 assets and Level 2 and Level 3 liabilities is recognized in other (income) expense in the accompanying consolidated statements of operations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 16, 2017 | |
| 2015 | Mar 15, 2016 | |
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.