Fair Value Measurements

6 Months Ended

Jun. 30, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3. Fair Value Measurements

The fair value of the Company's financial instruments reflects the amounts that the Company estimates that it would receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company discloses and recognizes the fair value of the assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active.

Level 3 - Inputs that are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company's financial instruments are carried in the accompanying consolidated balance sheets at amounts that approximate fair value.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the three months ended June 30, 2025 and year ended December 31, 2024.

The Company elected the fair value option for the EIB Loan guaranteed by the Company in connection with the EryDel Acquisition. The Company adjusted the EIB Loan to fair value through the change in fair value of debt in the accompanying consolidated statements of operations and comprehensive loss. Subsequent unrealized gains and losses on items for which the fair value option is elected are reported in earnings. The Company will break out any change in value due to credit loss in accumulated other comprehensive loss. For the three and six months ended June 30, 2025 and year ended December 31, 2024, there was no change in value due to credit loss.

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of June 30, 2025 and December 31, 2024 are presented in the following tables (in thousands):

	Fair Value Measurements as of June 30, 2025
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	15,999	$	15,999	$	—	$	—
Government and agency notes		17,882		—		17,882		—
Total Assets	$	33,881	$	15,999	$	17,882	$	—
Liabilities:
Contingent consideration		59,147		—		—		59,147
Long-term debt		16,989		—		—		16,989
Common Warrants		11,846		—		—		11,846
Pre-Funded Warrants		3,298						3,298
Total	$	91,280	$	—	$	—	$	91,280

	Fair Value Measurements as of December 31, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	3,702	$	3,702	$	—	$	—
Government and agency notes		34,572		—		34,572		—
Total Assets	$	38,274	$	3,702	$	34,572	$	—
Liabilities:
Contingent consideration		56,691		—		—		56,691
Long-term debt		14,321		—		—		14,321
Total	$	71,012	$	—	$	—	$	71,012

The Company classifies government and agency notes as Level 2 investments as the Company uses quoted prices for similar assets sourced from certain third-party pricing services. The third-party pricing services generally utilize industry standard valuation models for which all significant inputs are observable, either directly or indirectly, to estimate the price or fair value of the securities. The primary input generally includes reported trades of or quotes on the same or similar securities. The Company does not make additional judgments or assumptions made to the pricing data sourced from the third-party pricing services.

Level 3 Liabilities

Contingent Consideration

The following table reflects the changes in present value of acquisition related accrued earnouts of contingent consideration liability using significant unobservable inputs (Level 3) for the six months ended June 30, 2025 and 2024:

	2025		2024
Beginning contingent consideration balance, December 31	$	56,691	$	57,706
Change in fair value of contingent consideration		2,456		4,765
Ending contingent consideration balance, June 30	$	59,147	$	62,471

To estimate the fair value of the contingent consideration, the Company used a probability-weighted discounted cash flow model with an expected present value valuation technique with significant unobservable fair value inputs and is therefore classified as a Level 3 measurement. The estimates of fair value are uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of the expected timing of milestone completion dates, probability of achievement, and

discount rate. The change in the fair value of the contingent consideration is primarily driven by the passage of time related to the contingent consideration earnout.

The following table summarizes the assumptions used in the valuation of the contingent consideration (in thousands except for percentages):

	June 30, 2025		December 31, 2024
Expected timing of milestones completion dates	2026 - 2038		2026 - 2038
Discount rate	14.6	%	14.5	%
Probability of achievement	1% - 56.5	%	1% - 56.5	%

Long-term Debt

The following table presents the changes in the fair value of the Level 3 EIB Loan for the six months ended June 30, 2025 and 2024:

	(in thousands)
Balance as of December 31, 2023	$	13,429
Change in fair value		803
Due to foreign currency translation		(398	)
Balance as of June 30, 2024	$	13,834
	(in thousands)
Balance as of December 31, 2024	$	14,321
Change in fair value		945
Interest payment		(117	)
Due to foreign currency translation		1,840
Balance as of June 30, 2025	$	16,989

To estimate the fair value of the EIB Loan, the Company used an expected present value valuation technique with significant unobservable inputs resulting in classification as a Level 3 measurement. The estimate of fair value is uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of discount rate which includes the credit quality of the Company and credit spreads for comparable debt.

The following table summarizes the assumptions including the unobservable inputs related to the Company's long-term debt (in thousands except for percentages):

	June 30, 2025			December 31, 2024
Discount rate		13	%		13	%

Warrants

During the six months ended June 30, 2025, the Company issued common and pre-funded warrants which are classified as liabilities based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480. The Company estimates the fair value of the common and pre-funded warrants utilizing the Black-Scholes option pricing model, which is dependent upon several level 3 inputs that are not observable in active markets, such as expected term, volatility, risk-free interest rate, and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine.

As of June 30, 2025, the aggregate fair value of the outstanding warrant liability was approximately $15.1 million.

The following table summarizes key inputs used in the valuation of the liability classified warrants as of the issuance date and as of June 30, 2025:

	As of issuance date			As of June 30, 2025
Expected term	5.0 years			4.95 years
Common stock market price	$	1.20		$	1.65
Common warrants exercise price	$	1.20		$	1.20
Pre-Funded warrants exercise price	$	0.001		$	0.001
Risk-free interest rate		3.97	%		3.79	%
Expected volatility		108.35	%		108.78	%

The following table presents the changes in the fair value of the Level 3 liability classified warrants for the six months ended June 30, 2025:

	(in thousands)
Balance as of December 31, 2024	$	—
Issuance of warrants		10,680
Change in fair value of warrants		4,464
Balance as of June 30, 2025	$	15,144