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Fair Value of Financial Assets and Liabilities
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Assets and Liabilities Fair Value of Financial Assets and Liabilities
The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires certain assets and liabilities to be reflected at their fair value and others to be reflected on another basis, such as an adjusted historical cost basis. In this note, the Company provides details on the fair value of financial assets and liabilities and how it determines those fair values.
Financial Instruments Measured at Fair Value on the Condensed Consolidated Balance Sheets
Certain of the Company's financial instruments are measured at fair value on the condensed consolidated balance sheets on a recurring basis. The fair values of these instruments are based on valuations that include inputs that can be classified within one of three levels of a hierarchy established by GAAP. See Fair Value Measurements in Note 2, "Summary of Significant Accounting Policies," for a description of the type of valuation information ("valuation inputs") that qualifies a financial asset or liability for each level.
Financial assets and liabilities measured at fair value on a recurring basis on the condensed consolidated balance sheets at September 30, 2025 and December 31, 2024 were as follows:
Fair Value Measurement Using:
Balance Sheet ClassificationType of InstrumentLevel 1Level 2Level 3Total
September 30, 2025
Assets:
Cash and cash equivalents
Money market funds$169,846 $— $— $169,846 
Marketable securitiesU.S. treasury bills— 14,998 — 14,998 
Marketable securities
U.S. treasury bonds
— 60,371 — 60,371 
Other current assets
Money market funds
250 — — 250 
Other non-current assetsMoney market funds2,984 — — 2,984 
Total assets$173,080 $75,369 $— $248,449 
Liabilities:
Derivative liability, current
Written put option, current
$— $— $22,010 $22,010 
Notes payable
Notes payable, non-current
— — 268,270 268,270 
Total liabilities$— $— $290,280 $290,280 
December 31, 2024
Assets:
Cash and cash equivalents
Money market funds$38,967 $— $— $38,967 
Marketable securitiesU.S. treasury bills29,707 282,590 — 312,297 
Marketable securities
U.S. treasury bonds
— 74,560 — 74,560 
Other non-current assetsMoney market funds3,133 — — 3,133 
Total assets$71,807 $357,150 $— $428,957 
Liabilities:
Forward contract liabilityForward contract, current$— $— $71,500 $71,500 
Derivative liability, current
Written put option, current
— — 13,210 13,210 
Total liabilities$— $— $84,710 $84,710 
There were no securities transferred between Level 1, 2, and 3 during the three and nine months ended September 30, 2025 or 2024.
The following is a description, including valuation methodology, of the financial assets and liabilities measured at fair value on a recurring basis:
Cash and Cash Equivalents, Other Current Assets, and Other Non-Current Assets
Financial assets measured at fair value on a recurring basis classified within cash and cash equivalents, other current assets, and other non-current assets at September 30, 2025 consisted of cash invested in short-term money market funds that are readily convertible to known amounts of cash and redeemable daily at the election of the Company. The carrying value for these financial assets approximates fair value because the near term maturities of the money market fund's underlying security holdings result in an insignificant change in value related to changes in interest rates. When quoted prices are available in an active market, these assets are classified in Level 1 of the fair value hierarchy.
Marketable Securities
At September 30, 2025, the fair values of the Company’s Level 2 debt securities are obtained from quoted market prices of debt securities with similar characteristics, quoted prices from identical assets in inactive markets, or discounted cash flows to estimate fair value. The Company's Level 2 marketable securities consisted of off-the-run U.S. treasury bills and U.S. treasury bonds.
Forward Contract and Derivative Liability
In connection with the amendment, dated as of May 1, 2024 (the "Knopp Amendment"), to the Membership Interest Purchase Agreement, dated as of February 24, 2022 (as amended, the "Knopp Agreement"), entered into with Knopp Biosciences, LLC ("Knopp"), Knopp has the option to request a one-time cash true-up payment from the Company in December 2025, as defined in the Knopp Agreement (the "2025 Additional Consideration True-Up"). See Note 11, "License, Acquisitions and Other Agreements," for further details.
The following table provides a roll forward of the fair value of the Company's forward contract and derivative liability related to the 2025 Additional Consideration (as defined in Note 11) and the 2025 Additional Consideration True-Up, respectively, for which fair value is determined by Level 3 inputs from December 31, 2024 to September 30, 2025:
Carrying Value
Fair value at December 31, 2024
$84,710 
Loss (Gain) on change in fair value of forward contract and derivative liability in other (expense) income, net
3,610 
Fair value at March, 31 2025
88,320 
Loss (Gain) on change in fair value of forward contract and derivative liability in other (expense) income, net
(10,924)
Settlement of 2025 Additional Consideration at fair value
(51,426)
Fair value at June 30, 2025
$25,970 
Loss (Gain) on change in fair value of derivative liability in other (expense) income, net
(3,960)
Fair value at September 30, 2025
$22,010 
The fair value of the remaining derivative liability recognized in connection with the Knopp Amendment was determined based on significant inputs not observable in the market, and therefore represents a Level 3 measurement within the fair value hierarchy. The valuation is based on a Monte Carlo simulation of Biohaven's share price, which requires judgment and assumptions regarding the volatility of Biohaven's share price, discounted to present value using a risk-free rate plus Biohaven-specific subordinate unsecured credit risk since potentially payable in cash. A summary of the unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability related to the 2025 Additional Consideration True-Up as of September 30, 2025 and the 2025 Additional Consideration and the 2025 Additional
Consideration True-Up as of December 31, 2024, presented on a weighted-average basis based on relative fair value, are as follows:
As of September 30, 2025
As of December 31, 2024
Time to payment and potential payment (years)
0.210.50
Volatility (annual)
85.0 %67.5 %
Discount rate
18.9 %12.0 %
Our expectations of the volatility of Biohaven's share price at the reporting date could be materially different than our actual future volatility, and if so, would mean the estimated fair value could be significantly higher or lower than the fair value determined. An increase in the derivative liability related to the 2025 Additional Consideration True-Up between the reporting date and settlement date of the derivative would have a material adverse effect on the Company's financial performance.
Note Purchase Agreement
On April 28, 2025, the Company entered into an NPA as described in further detail in Note 6, "Notes Payable." The Company elected to account for the NPA under the fair value option as permitted by ASC 825, "Financial Instruments."
The Company determined the fair value of the First Notes (as defined in Note 6) on April 28, 2025 was $255,880. The difference between the fair value at execution and the principal of $250,000 was due to a purchased loan commitment for the Second Notes (as defined in Note 6). The purchased loan commitment resulted in a $5,880 offsetting asset recorded at its fair value within other current assets on the condensed consolidated balance sheet. The following table provides a roll forward of the fair value of the First Notes for which fair value is determined by Level 3 inputs from April 28, 2025 to September 30, 2025:
Amount
Fair value at April 28, 2025
$255,880 
Loss on change in fair value reported in other (expense) income, net
1,190 
Fair value at June 30, 2025
$257,070 
Loss on change in fair value reported in other (expense) income, net
11,200 
Fair value at September 30,2025
$268,270 
The fair value of the First Notes represents the present value of estimated future payments under the NPA for the First Notes. The fair value of the First Notes is based on the cumulative probability of the various estimated payment scenarios. The fair value measurement is based on significant Level 3 unobservable inputs such as management's assumptions on the probability and timing of regulatory approvals for troriluzole and other product candidates, forecasted future revenue for troriluzole, probability and timing of an early redemption of all obligations under the NPA for the First Notes, and discount rate using a risk-free rate plus Biohaven-specific senior secured credit risk.
Actual probability and timing of regulatory approvals, future revenue for troriluzole, probability and timing of an early redemption event at the reporting date, and Biohaven-specific senior secured credit risk could be materially different than our assumptions, and if so, would mean the estimated fair value could be significantly higher or lower than the fair value determined. An increase in the liability related to the First Notes between the reporting date and settlement date of the liability would have a material adverse effect on the Company's financial performance.
At September 30, 2025, the difference between the aggregate fair value and the aggregate unpaid principal balance of the First Notes was $18,270.