Fair Value Measurements

6 Months Ended

Jun. 30, 2025

3. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of inputs that may be used to measure fair value are as follows:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3—Inputs are unobservable inputs for the asset or liability.

The Company’s cash equivalents consist of investments in U.S. government money market funds stated at carrying value, which approximates fair value and is based on quoted prices in active markets for identical securities. Cash is stated at carrying value, which approximates fair value due to its short-term nature. The Company classifies its investments in U.S. Treasury securities as Level 2 assets as these assets are not traded in an active market and have been valued through a third-party pricing service based on quoted prices for similar assets. The carrying values of the Company’s prepaid expenses, other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term nature.

The following table presents information about the Company’s financial assets and investments measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values:


	As of June 30, 2025:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market)	$	13,125	$	-	$	-	$	13,125
Current portion of investments in U.S. Treasury securities		-		97,413		-		97,413
Investments:
Non-current portion of investments in U.S. Treasury securities		-		19,613		-		19,613
	$	13,125	$	117,026	$	-	$	130,151


	As of December 31, 2024:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market)	$	17,636	$	-	$	-	$	17,636
Current portion of investments in U.S. Treasury securities		-		86,504		-		86,504
Investments:
Non-current portion of investments in U.S. Treasury securities		-		7,012		-		7,012
	$	17,636	$	93,516	$	-	$	111,152

Investments, which are classified as available-for-sale securities, consisted of the following as of June 30, 2025 and December 31, 2024:


	As of June 30, 2025:
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
U.S. Treasury securities	$	117,039	$	-	$	(13	)	$	117,026
	$	117,039	$	-	$	(13	)	$	117,026


	As of December 31, 2024:
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
U.S. Treasury securities	$	93,619	$	-	$	(103	)	$	93,516
	$	93,619	$	-	$	(103	)	$	93,516

All investments classified as available-for-sale securities held as of June 30, 2025 and December 31, 2024 had contractual maturities of less than two years. There have been no material realized gains or losses on investments classified as available-for-sale securities for the periods presented.

Aggregate fair values of investments classified as available-for-sale securities with unrealized losses and gains were as follows as of June 30, 2025 and December 31, 2024:


	June 30, 2025		December 31, 2024
Available-for-sale securities:
Due within one year	$	97,413	$	86,504
Due after one year through five years		19,613		7,012
	$	117,026	$	93,516

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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+ Details

Lexeo Therapeutics, Inc. 10-Q