There's no doubt that money can be made by owning shares of unprofitable businesses. For example, although Amazon.com made losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.
So, the natural question for (NASDAQ:BCYC) shareholders is whether they should be concerned by its rate of cash burn. For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.
A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. When Bicycle Therapeutics last reported its March 2025 balance sheet in May 2025, it had zero debt and cash worth US$793m. In the last year, its cash burn was US$182m. That means it had a cash runway of about 4.4 years as of March 2025. A runway of this length affords the company the time and space it needs to develop the business. The image below shows how its cash balance has been changing over the last few years.
Check out our latest analysis for Bicycle Therapeutics
Notably, Bicycle Therapeutics actually ramped up its cash burn very hard and fast in the last year, by 112%, signifying heavy investment in the business. As if that's not bad enough, the operating revenue also dropped by 38%, making us very wary indeed. Considering these two factors together makes us nervous about the direction the company seems to be heading. While the past is always worth studying, it is the future that matters most of all. So you might want to take a peek at how much the company is expected to grow in the next few years.
While Bicycle Therapeutics seems to be in a fairly good position, it's still worth considering how easily it could raise more cash, even just to fuel faster growth. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Commonly, a business will sell new shares in itself to raise cash and drive growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn.
