Summit Therapeutics Inc. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our primary exposures to market risk are liquidity risk and foreign currency risk. Liquidity Risk We have funded our operations since inception primarily through the issuance of equity and debt securities. We have also received funding from our license, collaboration, and commercialization arrangements, for example, our license and commercialization agreement with Eurofarma, as well as philanthropic, non-government and not-for-profit organizations and grant funding from government entities, including BARDA, CARB-X, Innovate UK, Wellcome Trust and a number of not-for-profit organizations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. Foreign Currency Risk Foreign currency risk refers to the risk that the value of a financial commitment or recognized asset or liability will fluctuate due to changes in foreign currency rates. Our net loss and financial position, as expressed in U.S. dollar, are exposed to movements in foreign exchange rates against the pounds sterling and the euro. The main trading currencies are pounds sterling, the U.S. dollar, and the euro. We are exposed to foreign currency risk as a result of operating transactions and the translation of foreign bank accounts. We monitor our exposure to foreign exchange risk. Exposures are generally managed through natural hedging via the currency denomination of cash balances and any impact currently is not material to us. Interest Rate Risk We do not hold any derivative instruments, or other financial instruments, that expose us to material interest rate risk. Credit Risk We consider all of our material counterparties to be creditworthy. We consider the credit risk for each of our counterparties to be low and do not have a significant concentration of credit risk at any of our counterparties. We had $1.5 million of accounts receivable outstanding at December 31, 2021, due primarily from BARDA. This amount was collected subsequent to the period end. We also have a $15.7 million of research and development tax credits outstanding at December 31, 2021. Given that these receivables related to U.K. research and development tax credit cash rebate regimes and given our history of collection, it is highly unlikely that these amounts will not be collected. Item 8. Financial Statements and Supplementary Data The financial statements required to be filed pursuant to this Item 8 are included to this Report. An index of those financial statements is found in Item 15. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 83