AbCellera Biologics Inc. 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk. Concentration of Credit Risk For the three months ended March 31, 2020, three of our partners accounted for 51%, 12%, and 11% of research fees revenue and five partners accounted for the remaining 26% of research fees revenue. For the three months ended March 31, 2021, three of our partners accounted for 36%, 24% and 20% of our research fees revenue and seven partners accounted for the remaining 20% of research fees revenue. For the three months ended March 31, 2021 we recognized a clinical milestone payment and royalty revenues, totaling $173.8 million, exclusively from our partnership with Lilly. Our partnership with Lilly constituted one of the partnerships that generated 10% or more of our consolidated revenues during the one or more periods described above. With respect to the other partners, we do not believe the loss of any one or more of such partners would have a material adverse effect on us and our subsidiaries taken as a whole. Interest Rate Risk As of March 31, 2021, we had a cash and cash equivalents balance of $685.8 million, a majority of which was maintained in bank accounts and term deposits. Our primary exposure to market risk is to interest income volatility, which is affected by changes in the general level of interest rates. As such rates are at a near record low, a 10% change in the market interest rates would not have a material effect on our business, financial condition or results of operations. Foreign Currency Risk We are exposed to financial risks as a result of exchange rate fluctuations between the U.S. dollar and the Canadian dollar and the volatility of these rates. In the normal course of business, we earn revenue denominated in U.S. dollars and we incur expenses in Canadian denominated, U.S. denominated and Australian denominated dollars. Our reporting currency is the U.S. dollar. We hold a majority of our cash in U.S. dollars. To date, we have not entered into any hedging arrangements with respect to foreign currency risk. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency exchange rates.