Fair Value Measurements

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value (in thousands):

	Fair Value Measurements at June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	62,394	$	—	$	—	$	62,394
U.S. Treasury bills		—		19,813		—		19,813
Short-term investments:
U.S. Treasury bills, government securities,    and government agency securities		—		225,975		—		225,975
	$	62,394	$	245,788	$	—	$	308,182

	Fair Value Measurements at December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	23,441	$	—	$	—	$	23,441
U.S. Treasury bills		—		23,832		—		23,832
Short-term investments:
U.S. Treasury bills and government securities		—		77,309		—		77,309
	$	23,441	$	101,141	$	—	$	124,582
Liabilities
Series B preferred stock tranche right liability	$	—	$	—	$	4,200	$	4,200
	$	—	$	—	$	4,200	$	4,200

Money market funds are highly liquid and actively traded marketable securities that generally transact at a stable $1.00 net asset value representing its estimated fair value. During the year ended December 31, 2023 and the three and six months ended June 30, 2024, there were no transfers between Level 1, Level 2 and Level 3.

The Company classifies its U.S. Treasury securities as short-term because they are available to be converted into cash to fund current operations. The fair value of the Company’s U.S. Treasury bills, government securities, and government agency securities are classified as Level 2 because they are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency and U.S. Treasury securities.

The underlying securities held in the money market funds held by the Company are all government backed securities.

Short-term investments consisted of the following (in thousands):

	June 30, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-term investments:
U.S. Treasury bills, government securities,    and government agency securities	$	226,158	$	—		(183	)		225,975
	$	226,158	$	—		(183	)		225,975

	December 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-term investments:
U.S. Treasury bills and government securities	$	77,305	$	4	$	—	$	77,309
	$	77,305	$	4	$	—	$	77,309

The contractual maturities of the Company’s short-term investments in available-for-sale debt securities held were as follows (in thousands):

	June 30, 2024		December 31, 2023
Due within one year	$	220,468	$	77,309
Due between one and two years		5,507		—
	$	225,975	$	77,309

As of June 30, 2024, all investments in an unrealized loss position were in this position for less than 12 months. The Company evaluated its securities for potential other-than-temporary impairment and considered the decline in market value to be primarily attributable to current economic and market conditions. Additionally, the Company does not intend to sell the securities in an

unrealized loss position and does not expect it will be required to sell the securities before recovery of the unamortized cost basis. Given the Company’s intent and ability to hold such securities until recovery, and the lack of a significant change in credit risk for these investments, the Company does not consider these investments to be impaired as of June 30, 2024. The Company did not recognize any credit losses during both the three and six months ended June 30, 2024.

Valuation of Preferred Stock Tranche Right Liability

The Series A and Series B preferred stock tranche right liabilities in the table above are composed of the fair value of obligations to issue Series A convertible preferred stock and Series B convertible preferred stock, respectively (see Note 6), either upon achievement of certain specified milestones, upon the waiver of such milestone achievement by a majority vote of the respective series convertible preferred stockholders or in relation to the Series B convertible preferred stock, upon a shareholder exercising its right to early exercise the tranche right. The fair value of the tranche right liability was determined based on significant inputs not observable in the market, which represented a Level 3 measurement within the fair value hierarchy. The fair value of the tranche right liabilities were determined using a Contingent Forward Analysis, which is a scenario-based lattice model that accounts for the different possible milestone scenarios and their associated probabilities, as estimated by the Company. The valuation model considered the probability of closing the tranche, the estimated future value of the Convertible Preferred Stock to be issued at each closing and the investment required at each closing. Future values were converted to present value using a discount rate appropriate for probability-adjusted cash flows. The risk-free rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining estimated time to each tranche closing.

Series A Preferred Stock Tranche Right Liability

The following tables provide a roll-forward of the aggregate fair value of the Company’s Series A preferred stock tranche right liability during the six months ended June 30, 2023, for which fair value is determined using Level 3 inputs (in thousands):

	Series A Preferred Stock Tranche Right Liability
Balance as of December 31, 2022	$	10,435
Change in fair value of Series A preferred stock tranche    right liability		1,030
Settlement of Series A preferred stock tranche right    liability upon waiver of milestone		(11,465	)
Balance as of June 30, 2023	$	—

Series B Preferred Stock Tranche Right Liability

The significant unobservable inputs used in the valuation model to measure the Series B preferred stock tranche right liability that is categorized within Level 3 of the fair value hierarchy as of December 31, 2023 are as follows:

	Second Tranche Milestone
Probability of meeting Series B milestone		80	%
Milestone achievement date	12/31/2024
Risk-free rate		4.79	%
Expected value of Series B if milestones are not met	$	0.84

The following tables provide a roll-forward of the aggregate fair value of the Company’s Series B preferred stock tranche right liability during the six months ended June 30, 2024, for which fair value is determined using Level 3 inputs (in thousands):

	Series B Preferred Stock Tranche Right Liability
Balance as of December 31, 2023	$	4,200
Change in fair value of Series B preferred stock    tranche right liability		7,390
Settlement of Series B preferred stock tranche right    liability upon waiver of milestone		(11,590	)
Balance as of June 30, 2024	$	—