Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Our exposure to market risk is limited primarily to interest income sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because a significant portion of our investments are in interest bearing cash accounts consisting of short-term debt securities issued by the U.S. government. The primary objective of our investment activities is to preserve principal. We adhere to an investment policy that requires us to limit amounts invested in securities based on credit rating, maturity, industry group and investment type and issuer, except for securities issued by the U.S. government. We do not have any derivative financial instruments or foreign currency instruments. As of December 31, 2023, we had $199.0 million invested in marketable securities with a maturity date of less than one year. As such we believe that we are not exposed to any material market risk. If interest rates had varied by 1% in the year ended December 31, 2023, the fair value of our investment portfolio would increase or decrease by approximately $0.4 million.
102
Table of Contents
Inflation Risk
Inflation has not had a material effect on our business, financial condition or results of operations during the years ended December 31, 2023, 2022, or 2021.
Foreign currency exchange risk
In addition to our existing foreign operations, we acquired and established newly formed foreign subsidiaries to consummate our acquisition of worldwide rights in Proleukin ® in the second quarter of 2023. As a result, our financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we distribute Proleukin ® . Our operating results could be exposed to changes in foreign currency exchange rates between U.S. dollar and various foreign currencies, the most significant of which is the pound sterling. When the U.S. dollar strengthens against these currencies, the relative value of sales made in the respective foreign currency decreases. Conversely, when the U.S. dollar weakens against these currencies, the relative value of such sales increase.
All of our product sales during the year ended December 31, 2023 were denominated in foreign currencies; however, foreign currency transaction gain was immaterial for the year ended December 31, 2023. No foreign currency exchange risk existed for the year ended December 31, 2022 or 2021.
Item 8. Financial Statements and Supplementary Data
Financial Statements are referred to in Item 15, listed in the Index to Financial Statements as a part of this Annual Report on Form 10-K, and are incorporated herein by this reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.