PLIANT THERAPEUTICS, INC. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We have operations both within the U.S. and abroad and we are exposed to market risks in the ordinary course of our business. These risks include fluctuations in interest rates and foreign currency exchange rates, and to a lesser extent, inflation risk. Interest rate fluctuation risk Our exposure to market risk for changes in interest rates relates primarily to our short-term investment portfolio. The primary objective of our short-term investment portfolio is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk. At December 31, 2023 and 2022, we had cash and cash equivalents, restricted cash and short-term investments of $495.7 million and $331.2 million, respectively, which consisted of cash, money market funds, U.S. Treasury securities, U.S. Government Agency securities, and highly rated investment grade corporate debt securities. Under the Oxford Loan Agreement, we had a $10.0 million term loan outstanding as of December 31, 2023 which is subject to the movement in interest rates, however the exposure to increased rates is capped at 2.0%. Due to the short-term maturities of our cash equivalents and short-term investments and the cap on the interest rate associated with the Oxford Loan Agreement, an immediate 100 basis point change in interest rates would not have a material effect on our financial condition. Foreign currency exchange risk Most of our operating expenses are denominated in U.S. dollars and, as a result, we have not experienced significant foreign currency transaction gains and losses to date. We have limited foreign currency exposure associated with our operating expenses. Our exposures are primarily limited to fluctuations in the Swiss Franc, Canadian dollar and Euro. We do not anticipate that foreign currency transaction gains or losses will be significant at our current level of operations. However, our operations may become subject to more significant fluctuations in foreign currency exchange rates in the future if we continue to contract with vendors outside of the U.S. and expand our operations internationally. Inflation risk To date, we do not believe that inflation has had a material effect on our business, financial condition, results of operations or future prospects. However, if current inflationary pressures are sustained for a prolonged period of time, the cost projections associated with our development plans may be impacted as well as the success of businesses from which we procure services, which could harm our business, results of operations, financial condition or future prospects. 85