Zenas BioPharma, Inc. Fair Value Disclosure
3.Fair Value Measurements
The following table presents information about the Company’s assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value (in thousands):
As of December 31, 2025 | ||||||||||||
Description | | Total Carrying Value | Quoted Prices in Active Market | | Significant Other Observable Inputs | | Significant Other Observable Inputs | |||||
Assets: | ||||||||||||
Cash | $ | 13,038 | $ | 13,038 | $ | — | $ | — | ||||
Money market funds | 97,603 | 97,603 | — | — | ||||||||
Short-term investments: | ||||||||||||
Commercial paper | 5,959 | — | 5,959 | — | ||||||||
Corporate debt securities | 44,299 | — | 44,299 | — | ||||||||
Government securities | 182,293 | 182,293 | — | — | ||||||||
Long-term investments: | ||||||||||||
Corporate debt securities | 1,467 | — | 1,467 | — | ||||||||
Government securities | 15,805 | 15,805 | — | — | ||||||||
Total assets | $ | 360,464 | $ | 308,739 | $ | 51,725 | $ | — | ||||
As of December 31, 2024 | ||||||||||||
Description | | Total Carrying Value | Quoted Prices in Active Market | | Significant Other Observable Inputs | | Significant Other Observable Inputs | |||||
Assets: | ||||||||||||
Cash | $ | 19,070 | $ | 19,070 | $ | — | $ | — | ||||
Money market funds | 300,672 | 300,672 | — | — | ||||||||
Short-term investments: | ||||||||||||
Commercial paper | 3,315 | — | 3,315 | — | ||||||||
Corporate debt securities | 8,601 | — | 8,601 | — | ||||||||
Government securities | 19,108 | 19,108 | — | — | ||||||||
Total assets | $ | 350,766 | $ | 338,850 | $ | 11,916 | $ | — | ||||
There have been no material impairments of our assets measured and carried at fair value during the years ended December 31, 2025 and 2024. In addition, there have been no changes in valuation techniques as of December 31, 2025 and 2024. The fair value of Level 1 instruments classified as money market funds and government securities are valued using quoted market prices in active markets. The fair value of Level 2 instruments classified as short-term investments was determined using other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date and fair value is determined using models or other valuation methodologies. There were no transfers between levels during the years ended December 31, 2025 and 2024.
The short and long-term investments are classified as available-for-sale securities. As of December 31, 2025, the remaining contractual maturities of the available-for-sale securities were 1 to 15 months, and the balance in the Company’s accumulated other comprehensive income was comprised solely of activity related to the Company’s available-for-sale securities. There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities during the years ended December 31, 2025 and 2024. As a result, the Company did not reclassify any amounts out of accumulated other comprehensive income for the same period. The Company had a limited number of available-for-sale securities in insignificant loss positions as of December 31, 2025, which the Company does not intend to sell and has concluded will not be required to sell before recovery of amortized cost for the investment maturity.
The following table summarizes the available-for-sale securities (in thousands):
As of December 31, 2025 | |||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||
Commercial paper | $ | 5,957 | $ | 2 | $ | — | $ | 5,959 | |||
Corporate debt securities | 45,740 | 28 | (2) | 45,766 | |||||||
Government securities | 197,939 | 162 | (3) | 198,098 | |||||||
Total | $ | 249,636 | $ | 192 | $ | (5) | $ | 249,823 | |||
As of December 31, 2024 | |||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||
Commercial paper | $ | 3,311 | $ | 4 | $ | — | $ | 3,315 | |||
Corporate debt securities | 8,589 | 12 | — | 8,601 | |||||||
Government securities | 19,093 | 17 | (2) | 19,108 | |||||||
Total | $ | 30,993 | $ | 33 | $ | (2) | $ | 31,024 | |||
Certain short-term debt securities with original maturities of less than 90 days are included in cash and cash equivalents on the consolidated balance sheets and are not included in the table above.
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.