Company: CYTK
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0000950170-25-029206
Chunk: 17

Company: CYTOKINETICS INC
Filing Date: 2025-02-27
Form: 10-K
Item: Item 7A
Chunk 17
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We are exposed to market risks in the ordinary course of our business. These risks primarily include risk related to interest rate sensitivities.

Interest Rate Risk

We are exposed to market risk related to changes in interest rates. As of December 31, 2024, our cash and investments totaled $1221.1 million, comprising U.S. Treasury securities, U.S. and non-U.S. government agency bonds, commercial paper, a global portfolio of corporate debt, money market funds, and repurchase agreements backed by U.S. Treasury securities.

Our investments are subject to interest rate risk and could fall in value if market interest rates increase. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 1% increase in market interest rates would result in a decline in the value of our investments of approximately $6.1 million and $2.4 million as of December 31, 2024 and December 31, 2023, respectively. 

In addition, we have elected the fair value option for certain liabilities. The fair value of the liabilities related to 2024 RP OM Loan Agreement, the RP CK-586 RPA, and the derivatives of the RP Multi Tranche Loan Agreement will increase as market interest rates decrease. In addition, the fair value of the liabilities may fluctuate based upon changes in the Company’s credit rating. Changes in the interest rate environment and the credit rating of the Company could have an effect on our future earnings. For example, a hypothetical 1% decrease in the discount rates used to measure the 2024 RP OM Loan Agreement, the RP CK-586 RPA, and the derivatives of the RP Multi Tranche Loan Agreement would result an increase in the fair value, and the recognition of a loss, of approximately $5.4 million as of December 31, 2024. In 2024, we recognized a loss on the change in the estimated fair value of liabilities of approximately $19.6 million, primarily due to changes in the discount rates used to measure the 2024 RP OM Loan Agreement and the RP CK-586 RPA. The discount rates ranged from 10% to 18% as of December 31, 2024, compared to 14% to 18% as of June 30, 2024, resulting in an increase in the estimated fair value of the liabilities.

We had $21.1 million under 2026 Notes with a fixed rate of