Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We
invest our excess cash in investment-grade, interest-bearing securities. The
primary objective of our investment policy is to preserve principal and liquidity. To achieve this objective, our investment policy
allows for investments in domestic money market certificates, certificates of deposit, money market funds, bonds or commercial
papers, and establishes diversification and credit quality requirements and limits investments by maturity and issuer.
At September 30, 2023 and 2022, the majority of our excess cash was held
in a JP Morgan Chase Prime Money Market Fund. The average amount
invested at any given time throughout the year ended September 30, 2023 was $138.4 million (high: $145.4 million; low: $129.5
million) and the average rate of return was 4.69%. A hypothetical
100 basis point change in interest rates during any of the periods presented would not have a material impact on the fair market
value of our cash and cash equivalents as of September 30, 2023 and 2022 and would impact our net loss by approximately $1.4 million.
To date, we have not experienced a loss of principal on any of our investments and as of September 30, 2023 we did not have any
allowance for credit losses from our cash and cash equivalents.
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Foreign Exchange Risk
We face foreign exchange risk as a result of entering
into transactions denominated in currencies other than U.S. dollars and as a result of the existence of sales and tax incentive
receivables denominated in other than U.S. dollars. Due to the uncertain timing of expected payments in foreign currencies, we
do not utilize any forward exchange contracts. All foreign transactions settle on the applicable spot exchange basis at the time
such payments are made. Volatile market conditions and supply chain shortages may result in significant changes in exchange rates,
and in particular a change in foreign currencies values relative to the U.S. dollar may affect our operating expenses as expressed
in U.S. dollars. An adverse movement in foreign exchange rates could have a material effect on payments made to foreign suppliers.
For the year ended September 30, 2023, a majority of
our expenses were denominated in U.S. dollars. A hypothetical 10% change in foreign exchange rates applied to foreign currency
transactions for the year ended September 30, 2023 would not have had a material impact on our consolidated financial statements.
At
September 30, 2023, we held net assets of $5.0 million (AUD $7.8 million) denominated in Australian dollars. A
hypothetical 10% change in foreign exchange rates at September 30, 2023 would result in a change in reported net assets of +/-
$0.5 million.
Inflation Risk
Inflation generally may affect us by
increasing our cost of labor and clinical trial costs. We do not believe that inflation has had a material impact on our results
of operations during the periods presented.
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