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Fair Value Measurements
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The following table sets forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):
December 31, 2024
Level 1Level 2Level 3Total
Financial assets:
Money market funds
$73,975 $— $— $73,975 
U.S. Treasury securities
— 226,271 — 226,271 
U.S. government agency securities
— 36,815 — 36,815 
Corporate debt securities
— 21,492 — 21,492 
Marketable equity security
30 — — 30 
Total financial assets
$74,005 $284,578 $— $358,583 
Financial liabilities:
Contingent consideration payable
$— $— $7,600 $7,600 
Success payment liabilities
$— $— $411 $411 
Total financial liabilities
$— $— $8,011 $8,011 
December 31, 2023
Level 1Level 2Level 3Total
Financial assets:
Money market funds
$62,075 $— $— $62,075 
U.S. Treasury securities
— 374,356 — 374,356 
U.S. government agency securities
— 48,750 — 48,750 
Corporate debt securities
— 59,606 — 59,606 
Total financial assets
$62,075 $482,712 $— $544,787 
Financial liabilities:
Success payment liabilities
$— $— $1,576 $1,576 
Total financial liabilities
$— $— $1,576 $1,576 
The Company measures the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities. The Company measures the fair value of marketable equity securities traded in active markets based on quoted prices of identical assets. The Level 2 marketable securities include U.S. Treasury securities, U.S. government agency securities and corporate debt securities, which are valued using third-party pricing sources. The pricing services applied industry standard valuation models. Inputs utilized include market pricing based on real-time trade data for the same or similar securities and other significant inputs derived from or corroborated by observable market data.
The Company’s contingent consideration payable is classified as a Level 3 financial instrument. The contingent consideration payable valuation was estimated using the Company’s common stock price and management’s assessment of the likelihood of achieving either (i) specified clinical milestones or (ii) certain regulatory approvals, which was determined to be approximately 95%.
The Company’s success payment liabilities are Level 3 financial instruments, which were estimated using Monte Carlo simulations through December 31, 2023. Monte Carlo simulations model the future movement of stock prices based on several key variables combined with empirical knowledge of the process governing the behavior of the stock price. The following variables were incorporated in the Monte Carlo simulation to determine the estimated fair value of the success payment liabilities: fair value of the Company’s common stock, expected volatility, the risk-free interest rate and the estimated number and timing of valuation measurement dates on the basis of which payments may be triggered. The computation of expected volatility was estimated based on available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption. As of December 31, 2024, success payment liabilities were estimated by management using its historical experience of the correlation of success payment fair values relative to the Company’s stock price.
The following assumptions were incorporated into the calculation of the estimated fair value of the Fred Hutch and Stanford success payment liabilities as of December 31, 2023:
Fred Hutch
Stanford
Fair value of common stock
$1.94$1.94
Risk-free interest rate
3.51% - 5.19%
3.51% - 5.19%
Expected volatility
80.0 %80.0 %
Expected term (in years)
0.46 - 3.97
0.46 - 5.75
The Company utilizes estimates and assumptions in determining the estimated contingent consideration payable and success payment liabilities and associated changes in fair value. A small change in the valuation of the Company’s common stock may have a relatively large change in the estimated fair value of the contingent consideration payable and success payment liabilities and associated changes in fair value. Additionally, a small change in Management’s assessment of the likelihood of achieving either (i) specified clinical milestones or (ii) certain regulatory approvals related to the estimated valuation of the contingent consideration payable may have a relatively large change in its estimated fair value.
The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities (in thousands):
Contingent Consideration Payable
Success Payment
Liabilities
Balance at December 31, 2022
$— $4,356 
Change in fair value (1)
— (2,780)
Balance at December 31, 2023
— 1,576 
Issuance
11,404 — 
Change in fair value (1)
(3,804)(1,165)
Balance at December 31, 2024
$7,600 $411 
__________
(1)The change in fair value of the contingent consideration payable subsequent to Closing Date is recorded in other income, net for the year ended December 31, 2024. Changes in the fair value of Fred Hutch and Stanford success payment liabilities are recorded as either other income, net or research and development expenses, depending on the period. (See Note 4, License, Collaboration, and Success Payment Agreements.)
In October 2022, the Company received non-voting PACT Series D convertible preferred stock with an estimated fair value of $2.9 million using the cost approach (See Note 4, License, Collaboration and Success Payment Agreements). Under this approach, the fair value of an asset is measured by the cost to reconstruct or replace such asset with another one of like utility. The fair value of PACT was estimated by using significant unobservable inputs, including an estimate of insignificant fair value associated with PACT intangible assets. Accordingly, the Company classified the fair value measurement of PACT preferred stock on October 1, 2022 as Level 3 under the fair value hierarchy. In June 2023, the Company performed a qualitative assessment of potential indicators of impairment of the PACT Series D convertible preferred stock investment, resulting in a $2.9 million impairment expense for the year ended December 31, 2023. See Note 7, Other Investments, for additional details regarding the PACT investment impairment.