Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks that may result from changes in interest rates and foreign currency exchange rates.
Interest Rate Risk
Investments in marketable securities
As of December 31, 2025 and 2024, we had cash, cash equivalents and marketable securities of $1.0 billion and $992 million, respectively. This consisted of interest-bearing money market accounts and investments in corporate notes and U.S. government securities, which create an exposure to interest rate risk. A hypothetical 100 basis point increase in interest rates as of December 31, 2025 and 2024 would not have resulted in a material effect on the fair market value of our cash, cash equivalents and marketable securities. In addition, a hypothetical 100 basis point decrease in interest rates as of December 31, 2025 and 2024 would not result in a material effect on income in the respective ensuing year.
Long-term debt
As of December 31, 2025 and 2024, we had outstanding debt with a carrying value of $99 million and $48 million, respectively, bearing interest at a rate equal to the greater of (i) 10.45% or (ii) the prime rate plus 1.95%. A hypothetical 100 basis point increase in the prime rates as of December 31, 2025 and 2024 would not have resulted in a material effect on the fair market value of our debt. In addition, a hypothetical 100 basis point increase in the prime rates as of December 31, 2025 and 2024 would not result in material impact to our income in the respective ensuing year.
Foreign Currency Exchange Risk
We do not have any foreign currency forward or cross currency swap contracts. We are exposed to foreign currency exchange rate risk inherent in our contracts with research institutions, CROs, and CMOs as certain services are performed by them outside the U.S. and billed in other currencies. A hypothetical 20% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates as of December 31, 2025 and 2024, respectively would not result in material impact to our financial position or income in the respective ensuing year.
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