6. Fair Value Measurements

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Common Stock Warrant Liabilities

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Checkpoint

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At March 31, 2024 and December 31, 2023, the Checkpoint warrant liability relates to the placement agent warrants from a registered direct offering completed in December 2022 (the “December 2022 Placement Agent Warrants”). Checkpoint deemed the December 2022 Placement Agent Warrants to be classified as liabilities on the balance sheet as they contain terms for redemption of the underlying security that are outside its control. The December 2022 Placement Agent Warrants were recorded at the time of closing at a fair value determined by using the Black-Scholes model. Checkpoint will revalue the December 2022 Placement Agent Warrants at each reporting period thereafter for as long as they remain outstanding. At March 31, 2024 and December 31, 2023, the liability associated with the December 2022 Placement Agent Warrants was $0.1 million.

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A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the warrant liability that are categorized within Level 3 of the fair value hierarchy was as follows:

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Avenue

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Avenue had previously issued freestanding warrants to purchase shares of its common stock in connection with financing activities in October 2022 (the “October 2022 Warrants”) and January 2023 (the “January 2023 Warrants”, and together with the October 2022 Warrants, the “Avenue Warrants”).  The Avenue Warrants are classified as liabilities on the balance sheet as they contain terms for redemption of the underlying security that are outside of its control. The Black-Scholes model was used to value the Avenue Warrants, at the time of issuance and when re-measured at each financial reporting date, up to exercise or expiration of the warrants, with any changes in fair value being recognized in change in fair value of warrant liabilities, a component of other income (expense) in the unaudited condensed consolidated statements of operations.

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In January 2024, Avenue entered in a warrant inducement for the immediate exercise of certain outstanding warrants, including the January 2023 Warrants (see Note 13). Avenue revalued the January 2023 Warrants on January 5, 2024, resulting in a fair value of $0.3 million. Since no October 2022 Warrants were exercised or amended in the January 2024 warrant inducement transaction, they were revalued at March 31, 2024, and the $0.1 million increase in the fair value of the common stock warrant liability resulted in an offsetting loss on common stock warrant liabilities in the unaudited condensed consolidated statements of operations.

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A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the warrant liability that are categorized within Level 3 of the fair value hierarchy was as follows:

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Urica

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The fair value of Urica’s contingently issuable placement agent warrants in connection with Urica’s first close of its preferred offering in December 2022 was measured using a Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring Urica’s warrant liability that are categorized within Level 3 of the fair value hierarchy was as follows:

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At March 31, 2024 and December 31, 2023 the value of Urica’s contingent payment warrant was approximately $0.2 million.