MADRIGAL PHARMACEUTICALS, INC. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk Our exposure to market risk is confined to our cash, cash equivalents and marketable securities. We regularly review our investments and monitor the financial markets. We invest in high-quality financial instruments, primarily money market funds, U.S. government and agency securities, government-sponsored bond obligations and certain other corporate debt securities, with the effective duration of the portfolio less than 12 months and no security with an effective duration in excess of 24 months, which we believe are subject to limited credit risk. We currently do not hedge interest rate exposure. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, we believe that an immediate 10% change in interest rates would not have a material effect on the fair market value of our portfolio. We do not believe that we have any material exposure to interest rate risk or changes in credit ratings arising from our investments. In May 2022, we entered into a Loan Facility that has an interest rate that is linked to the prime rate. We do not believe that we have any material exposure to interest rate risk given the current principal amount of the loan. Capital Market Risk Although we receive product revenues from sales of Rezdiffra, we may in the future depend on funds raised through other sources. One potential source of funding is through equity offerings. Our ability to raise funds in this manner depends upon, among other things, capital market forces affecting our stock price. Effects of Inflation Inflation generally may affect us by increasing our cost of labor, clinical trial costs and manufacturing costs. We do not believe inflation has had a material effect on our business, financial condition or results of operations during the years ended December 31, 2024, 2023 or 2022. Should global inflation increase in the future, we expect increases in clinical trial, selling, labor and other operating costs. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases of our product. Our inability or failure to do so could adversely affect our business, financial condition and results of operations. 77 Table of Contents Item 8. Financial Statements and Supplementary Data. The information required by this Item 8 is included in our Financial Statements and Supplementary Data set forth in Item 15 of Part IV of this Annual Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.