Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3. Fair Value Measurements

The following fair value hierarchy table presents information about each major category of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):

	September 30, 2024
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Cash equivalents	$	334,181	$	—	$	—	$	334,181
Liabilities:
Warrant liability	$	—	$	—	$	613	$	613

	December 31, 2023
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Cash equivalents	$	21,061	$	—	$	—	$	21,061
Liabilities:
Convertible promissory notes embedded derivative liability	$	—	$	—	$	18,183	$	18,183
Warrant liability		—		—		229		229
Total liabilities	$	—	$	—	$	18,412	$	18,412

As of September 30, 2024, the Company revalued the warrant liability using its publicly traded stock price under the Black-Scholes valuation method. The valuation of warrant liabilities as of September 30, 2024 resulted in an increase in warrant liability of $0.4 million from $0.2 million as of December 31, 2023 to $0.6 million as of September 30, 2024.

Cash Equivalents

Cash equivalents include U.S. government obligation money market mutual funds that have a maturity of three months or less from the original acquisition date. The Company’s cash equivalents are classified using Level 1 inputs within the fair value hierarchy because they are valued using quoted market prices.

Convertible Promissory Notes Embedded Derivative Liability

The Company’s Convertible Promissory Notes (as defined in Note 5) contained equity conversion options, and certain repayment features, that were identified as a single compound embedded derivative requiring bifurcation from the Convertible Promissory Notes. The Company estimated the fair value of the convertible promissory note embedded derivative liabilities on issuance using a with-and-without scenario analysis. The estimated probability and timing of underlying events triggering the conversion and liquidity repayment features as well as discount rates, volatility and share prices are inputs used to determine the estimated fair value of the embedded derivative. The Convertible Promissory Notes and related embedded derivative liability converted into Series D-1 Redeemable Convertible Preferred Stock on February 1, 2024.

Warrant Liability

As of September 30, 2024, warrants representing 31,690 shares of common stock were outstanding. These warrants are classified as a liability since the warrants meet the classification requirements for liability accounting pursuant to ASC 815. This liability is subject to remeasurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized in the Company’s condensed statements of operations. The Company classifies the warrant liability within Level 3 of the fair value hierarchy as the assessed fair value is based on both observable and unobservable market inputs including the Company's stock price, risk-free rate, and volatility.