6. Fair Value Measurements

Fair Value of Aevitas

The Company valued its retained investment in Aevitas, which is accounted for as an equity method investment for which the Company elected the fair value option, and estimated the fair value to be $2.6 million based on a per share value of $0.328. The following inputs were utilized to derive the value: risk free rate of return of 3.7%, volatility of 80% and a discount for lack of marketability of 39.7%.

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Common Stock Warrant Liabilities

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The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity. For warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

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Checkpoint

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On December 16, 2022, Checkpoint closed on an offering for the sale of shares of its common stock and pre-funded warrants (the “Checkpoint December 2022 Registered Direct Offering”). The common stock and the pre-funded warrants were sold together with December 2022 Common Stock Warrants. Checkpoint also issued the placement agent warrants to purchase up to 104,046 shares of common stock with an exercise price of $5.406 per share (the “December 2022 Placement Agent Warrants”). Checkpoint deemed the December 2022 Common Stock Warrants and 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 Common Warrants and December 2022 Placement Agent Warrants were recorded at the time of closing at a fair value, determined by using the Black-Scholes Model.

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In October 2023, Checkpoint entered into the October 2023 Inducement with a holder of certain of its existing warrants to exercise for cash an aggregate of 6,325,354 shares of Checkpoint’s common stock at a reduced exercise price of $1.76 per share. Included in the exercise were the entirety of the December 2022 Common Stock Warrants. Checkpoint revalued the December 2022 Common Stock Warrants on October 4, 2023, resulting in a fair value of $3.1 million. Checkpoint also revalued the December 2022 Common Stock Warrants and December 2022 Placement Agent Warrants at each reporting period in 2023, and the decrease in the fair value of the common stock warrant liability throughout the year resulted in an offsetting gain on common stock warrant liabilities in the Statements of Operations. Since the December 2022 Placement Agent Warrants issued in the December 2022 Registered Direct Offering were not included in the October 2023 Inducement and have not been exercised, they will continue to be revalued at each reporting period for as long as

they remain outstanding. Checkpoint revalued the warrants at December 31, 2024 and 2023, resulting in a fair value of approximately $0.2 million and $0.1 million, respectively.

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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 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”, collectively 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. In connection with the Avenue January 2023 Registered Direct Offering (see Note 13) in January 2023, the down-round price protection feature was triggered and the exercise price for the October 2022 Warrants was permanently adjusted to $116.25, which was the offering price for the Avenue Registered Offering in January 2023. The Black-Scholes model was used to value the October 2022 Warrants and January 2023 Warrants as of December 31, 2024 and 2023.

For the years ended December 31, 2024 and 2023, the decrease in the fair value of the Avenue Warrants resulted in a decrease in common stock warrant liabilities of $0.2 million and $4.3 million, respectively, with an offsetting gain recorded in the 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 Avenue 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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Urica’s outstanding contingently issuable placement agent warrants were exchanged at the time of the exchange of the Urica 8% Cumulative Convertible Class B Preferred Stock on June 27, 2024 (see Note 9) for 202,834 warrants to purchase Fortress common stock at an exercise price of $1.68. The Fortress common stock warrants have a five-year life, expiring on June 27, 2029. The Company determined the placement agent warrants met the criteria for equity classification. At December 31, 2024 and 2023, the value of Urica’s contingent payment warrant was nil and $0.2 million, respectively, and was recorded on the consolidated balance sheet.

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