Fair Value Measurements

6 Months Ended

Jun. 30, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The Company’s fair value hierarchy for its financial instruments measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, were as follows (in thousands):

	Fair Value Measurements
As of June 30, 2025	Total		Level 1		Level 2		Level 3
Assets:
Money market funds (included in cash equivalents)	$	77,042	$	77,042	$	—	$	—
Total fair value of assets	$	77,042	$	77,042	$	—	$	—

	Fair Value Measurements
As of December 31, 2024	Total		Level 1		Level 2		Level 3
Assets:
Money market funds (included in cash equivalents)	$	1,009	$	1,009	$	—	$	—
Total fair value of assets	$	1,009	$	1,009	$	—	$	—
Liabilities:
Derivative liabilities (including $995 for a related party)	$	1,042	$	—	$	—	$	1,042
Tranche liability (including $331 for a related party)		365		—		—		365
Total fair value of liabilities	$	1,407	$	—	$	—	$	1,407

The Company classifies its money market funds as Level 1 assets under the fair value hierarchy as these assets have been valued using quoted market prices in active markets without any valuation adjustment. The Company classifies its derivative liabilities and tranche liability as Level 3 liabilities under the fair value hierarchy as these liabilities have been valued using pricing models with unobservable inputs supported by little or no market activity that are significant to the fair value of the liabilities. The carrying amounts of prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate their fair value due to their short-term maturities. During the periods presented, the Company has not changed the manner in which it values liabilities that are measured at estimated fair value using Level 3 inputs. There were no transfers within the hierarchy for any period presented.

The Company issued the following financial instruments to be accounted for at fair value on a recurring basis: derivative liabilities embedded in convertible promissory notes, and the tranche liability related to the convertible note financing (Note 7).

The Company estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis. The Company estimated that the embedded change of control feature fair values were minimal based on the low probability of the change of control events during the six months ended June 30, 2025 and 2024.

The following assumptions were used to determine the estimated fair value of the derivative liabilities related to the redemption features as of the issuance dates for the six months ended June 30, 2025:

	At Issuance Date (January 10, 2025)
Expected term (in years)	0.2 – 0.3
Probability of achievement	0.0% – 80.0%
Discount rate	8.50%

The following assumptions were used to determine the estimated fair value of the derivative liabilities related to the redemption features as of the issuance date and as of December 31, 2024:

	Issuance Dates	December 31, 2024
Expected term (in years)	0.4 – 1.3	0.2 – 0.4
Probability of achievement	0.0% – 90.0%	0.0% – 80.0%
Discount rate	9.5% – 18.7%	9.0%

As all outstanding convertible promissory notes, other than the AlloVir Note, were converted on March 18, 2025, in connection with the closing of the Merger, the derivative liabilities expired and their fair values were minimal at the time of conversion.

The fair value of the tranche liability related to the convertible promissory notes issued in October and November 2024 was estimated using the probability weighted model with the following Level 3 input assumptions: the timing of issuing convertible notes and notes conversion, probabilities of conversion scenarios, the estimated fair value of the Company’s shares into which the note was convertible and a discount rate. The significant assumptions were as follows as of December 31, 2024:

	December 31, 2024
Expected term (in years)	0.2 - 0.4
Probability of achievement	0.0% - 80.0%
Discount rate	9.0%

In March 2025, the Company and other noteholders entered into an acknowledgment of conversion and termination agreement to cancel all unfunded tranches and the tranche liability expired unexercised.

The following table provides a roll-forward of the aggregate fair values of the Company’s outstanding Level 3 financial instruments during the six months ended June 30, 2025 and 2024 (in thousands):

	Derivative liabilities			Tranche liability
Balance as of December 31, 2023	$	—		$	—
Initial fair value at issuance		2,132			—
Change in fair value		(311	)		—
Balance as of June 30, 2024	$	1,821		$	—
Balance as of December 31, 2024	$	1,042		$	365
Initial fair value at issuance		187			—
Change in fair value		(1,229	)		(365	)
Balance as of June 30, 2025	$	—		$	—