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    Here's Why We're Watching Cyclopharm's (ASX:CYC) Cash Burn Situation

    Simply Wall St·09/21/2026 20:00:36
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    We can readily understand why investors are attracted to unprofitable companies. 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 while the successes are well known, investors should not ignore the very many unprofitable companies that simply burn through all their cash and collapse.

    So should Cyclopharm (ASX:CYC) shareholders be worried about its cash burn? For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). Let's start with an examination of the business' cash, relative to its cash burn.

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    How Long Is Cyclopharm's 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. As at June 2026, Cyclopharm had cash of AU$12m and no debt. Looking at the last year, the company burnt through AU$19m. Therefore, from June 2026 it had roughly 8 months of cash runway. To be frank, this kind of short runway puts us on edge, as it indicates the company must reduce its cash burn significantly, or else raise cash imminently. Importantly, if we extrapolate recent cash burn trends, the cash runway would be noticeably longer. The image below shows how its cash balance has been changing over the last few years.

    debt-equity-history-analysis
    ASX:CYC Debt to Equity History September 21st 2026

    Check out our latest analysis for Cyclopharm

    How Well Is Cyclopharm Growing?

    At first glance it's a bit worrying to see that Cyclopharm actually boosted its cash burn by 30%, year on year. At least the revenue was up 12% during the period, even if it wasn't up by much. Considering both these factors, we're not particularly excited by its growth profile. Clearly, however, the crucial factor is whether the company will grow its business going forward. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.

    How Hard Would It Be For Cyclopharm To Raise More Cash For Growth?

    Since Cyclopharm has been boosting its cash burn, the market will likely be considering how it can raise more cash if need be. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. 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.

    Cyclopharm's cash burn of AU$19m is about 32% of its AU$60m market capitalisation. That's not insignificant, and if the company had to sell enough shares to fund another year's growth at the current share price, you'd likely witness fairly costly dilution.

    Is Cyclopharm's Cash Burn A Worry?

    Even though its cash runway makes us a little nervous, we are compelled to mention that we thought Cyclopharm's revenue growth was relatively promising. Considering all the measures mentioned in this report, we reckon that its cash burn is fairly risky, and if we held shares we'd be watching like a hawk for any deterioration. An in-depth examination of risks revealed 3 warning signs for Cyclopharm that readers should think about before committing capital to this stock.

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