Sana Biotechnology, Inc. 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business, primarily related to interest rate sensitivities and the volatility of our common stock price. Interest Rate Risk As of September 30, 2022, we had cash, cash equivalents, and restricted cash of $173.9 million, which consisted of bank deposits and money market funds. We also had marketable securities of $348.2 million as of September 30, 2022. The primary objective of our investment activities is to preserve capital to fund our operations while earning a low-risk return. Because our marketable securities are primarily short-term in duration, we believe that our exposure to interest rate risk is not significant, and a hypothetical 10% change in market interest rates during any of the periods presented would not have had a significant impact on the total value of our portfolio. We had no debt outstanding as of September 30, 2022. Market capitalization and common stock price sensitivity We agreed to make a success payment to Cobalt, payable in cash or stock, based on our market capitalization, and success payments to Harvard, payable in cash, based on increases in the per share fair market value of our common stock. As of September 30, 2022, the estimated fair value of the Cobalt and Harvard success payment liabilities was $35.7 million. For the three and nine months ended September 30, 2022, we recorded an expense of $2.2 million and a gain of $66.8 million, respectively, related to the aggregate change in the estimated fair value of our success payment liabilities. Changes in our market capitalization and the fair value of our common stock as of each balance sheet date may have a relatively large change in the estimated fair value of the success payment liabilities and resulting expense or gain. See Item 1A. Risk Factors included in this Quarterly Report for a sensitivity analysis showing the impact that a hypothetical change in our market capitalization and common stock value would have had on our results for the year ended September 30, 2022. Foreign Currency We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we do contract with vendors that are located outside of the United States and may be subject to fluctuations in foreign currency rates. We may enter into additional contracts with vendors located outside of the United States in the future, which may increase our foreign currency exchange risk. Effects of Inflation Inflation generally affects us by increasing our cost of labor and laboratory consumables. We believe that inflation has not had a material effect on our financial statements. 32