Fair Value Measurements and Financial Instruments

3 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements and Financial Instruments

3. Fair Value Measurements and Financial Instruments

For a description of the fair value hierarchy and the Company’s fair value methodology, see Note 2 — Summary of Significant Accounting Policies in the Annual Report. There were no significant changes in these methodologies during the three months ended March 31, 2025. As of March 31, 2025, the Company’s highly liquid money market funds are included within cash equivalents.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 (in thousands):

	March 31, 2025
	Level 1		Level 2		Level 3		Total
Financial assets:
Money market funds(1)	$	3,686	$	—	$	—	$	3,686
Total financial assets	$	3,686	$	—	$	—	$	3,686
Financial liabilities:
Warrant liability, noncurrent		—		—		3,413		3,413
Total financial liabilities	$	—	$	—	$	3,413	$	3,413

	December 31, 2024
	Level 1		Level 2		Level 3		Total
Financial assets:
Money market funds(1)	$	3,300	$	—	$	—	$	3,300
Receivable from GCBP		—		—		4,961		4,961
Total financial assets	$	3,300	$	—	$	4,961	$	8,261
Financial liabilities:
CVR derivative liability	$	—	$	—	$	4,961	$	4,961
Warrant liability, noncurrent		—		—		5,668		5,668
Total financial liabilities	$	—	$	—	$	10,629	$	10,629

(1)Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets.

The carrying amounts of cash, accounts and note receivables, net, other receivables, accounts payable, due to related parties, CVR excess closing cash payable, and accrued liabilities approximate their fair values due to the short maturities.

During the three months ended March 31, 2025 and the year ended December 31, 2024, there were no transfers of fair value measurement between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and liabilities. As of March 31, 2025, the Company had fully settled the CVR liability and collected all outstanding amounts related to CVR receivables.

Receivable from GCBP and CVR Derivative Liability

The receivable from GC Biopharma Corp. (“GCBP”) and the corresponding CVR derivative liability relate to the asset purchase agreement with GCBP. The fair value of this receivable and derivative liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. These unobservable inputs include the probability of GCBP meeting its contractual payment obligations, the timing of cash flows, and the expected recovery rate of the receivable. The estimation process incorporates GCBP’s financial condition and market conditions that could impact its ability to fulfill obligations. Additionally, the selection of the discount rate (currently estimated at 5.05%) may fluctuate over time. The estimated fair value of the receivable from GCBP and CVR derivative liability was determined based on the anticipated amount and timing of projected cash flows to be received from GCBP pursuant to the GCBP asset purchase agreement discounted to their present values using an estimated discount rate of 5.05%. As of March 31, 2025, the Company has received a $5.0 million hold-back payment from GCBP and, after deducting expenses, distributed the net amount to the CVR Holders. The change in fair value of the receivable from GCBP and the corresponding CVR derivative liability was recorded in interest and other income, net on the condensed consolidated statement of operations and comprehensive income.

Warrant Liability

In October 2023, Catalyst entered into a Securities Purchase Agreement for a private placement with GNI USA (the “Private Placement”). The Private Placement closed immediately following the Contributions, on October 30, 2023. Upon closing of the Private Placement, the Company issued 811 shares of Convertible Preferred Stock and 811 Preferred Stock Warrants to purchase shares of Convertible Preferred Stock to GNI for an aggregate purchase price of approximately $5.0 million. The Preferred Stock Warrants are immediately exercisable at an exercise price of $4,915.00 per share of Convertible Preferred Stock and expire on October 30, 2033. The number of shares of Common Stock issuable upon exercise and conversion of the Preferred Stock Warrants is 540,666. The Company accounted for the Private Placement as a non-arm’s length transaction. The Preferred Stock Warrants were initially recognized at fair value upon issuance and the remaining proceeds from the Private Placement were allocated to the Convertible Preferred Stock.

The Preferred Stock Warrants are freestanding financial instruments classified as a warrant liability on the Company’s condensed consolidated balance sheet. The fair value of the Preferred Stock Warrants is subject to uncertainty due to unobservable inputs, including the expected volatility of the Company’s stock price, the likelihood of warrant exercise, and the estimated term of the warrants. Since there is limited market activity for the Preferred Stock Warrants, their fair value is determined using an option pricing model, which incorporates subjective inputs such as the Company’s stock price volatility, derived from historical and peer company data, as well as management’s expectations regarding future performance. As these assumptions evolve due to market conditions or company specific factors, the warrant liability may experience fluctuations. The Preferred Stock Warrants are revalued each reporting period with the change in fair value recorded as change in fair value of warrant liability in other income, net on the consolidated statement of operations and comprehensive income.

The fair value of the warrant liability is estimated based on the Black-Scholes option pricing model using the following weighted-average assumptions:

	March 31, 2025			December 31, 2024
Share price	$	7.72		$	12.10
Exercise price	$	4,915.00		$	4,915.00
Dividend yield		—	%		—	%
Risk-free interest		4.08	%		4.54	%
Term (years)	8.58			8.83
Expected volatility		83.00	%		83.00	%

The following table sets forth the changes in the estimated fair value of the Company’s Level 3 financial assets and liabilities (in thousands):

	Receivable			CVR derivative			Warrant
	from GCBP			liability			liability
Balance at December 31, 2024	$	4,961		$	4,961		$	5,668
Changes in fair value		39			39			(2,255	)
Change due to settlements		(5,000	)		(5,000	)		—
Balance at March 31, 2025	$	—		$	—		$	3,413

Financial Instruments

Cash equivalents and held-to-maturity debt securities consisted of the following (in thousands):

March 31, 2025	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Money market funds (cash equivalents)	$	3,686	$	—	$	—	$	3,686
Short-term bank deposits		14,846		—		—		14,846
Long-term certificates of deposit		21,367		—		—		21,367
Total financial assets	$	39,899	$	—	$	—	$	39,899
Classified as:
Cash and cash equivalents							$	3,686
Short-term bank deposits								14,846
Long-term certificates of deposit								21,367
Total financial assets							$	39,899

December 31, 2024	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Money market funds (cash equivalents)	$	3,300	$	—	$	—	$	3,300
Short-term bank deposits		14,858		—		—		14,858
Long-term certificates of deposit		24,568		—		—		24,568
Total financial assets	$	42,726	$	—	$	—	$	42,726
Classified as:
Cash and cash equivalents							$	3,300
Short-term bank deposits								14,858
Long-term certificates of deposit								24,568
Total financial assets							$	42,726

The fair value and amortized cost of the Company's held-to-maturity debt securities and redemption date were as follows:

	March 31, 2025
	Amortized Cost		Fair Value
Due in one year	$	14,846	$	14,846
Due in one to five years		21,367		21,367
Total	$	36,213	$	36,213

Interest income from the short-term bank deposits is recognized on an accrual basis over the term of the deposits. The accrued interest income for the three months ended March 31, 2025 and 2024 was $0.1 million and $0.1 million, respectively.

Interest income from the long-term certificates of deposit is recognized on an accrual basis over the term of the deposits. The accrued interest income for the three months ended March 31, 2025 and 2024 was $0.1 million and $0.1 million, respectively.