Kuros Biosciences (VTX:KURN) Is In A Strong Position To Grow Its Business

Just because a business does not make any money, does not mean that the stock will go down. By way of example, Kuros Biosciences (VTX:KURN) has seen its share price rise 469% over the last year, delighting many shareholders. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

Given its strong share price performance, we think it's worthwhile for Kuros Biosciences shareholders to consider whether its cash burn is concerning. 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. Let's start with an examination of the business' cash, relative to its cash burn.

Check out our latest analysis for Kuros Biosciences

How Long Is Kuros Biosciences' Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. In June 2024, Kuros Biosciences had CHF14m in cash, and was debt-free. Looking at the last year, the company burnt through CHF3.3m. That means it had a cash runway of about 4.4 years as of June 2024. There's no doubt that this is a reassuringly long runway. The image below shows how its cash balance has been changing over the last few years.

How Well Is Kuros Biosciences Growing?

Happily, Kuros Biosciences is travelling in the right direction when it comes to its cash burn, which is down 58% over the last year. And it is also great to see that the revenue is up a stonking 157% in the same time period. Overall, we'd say its growth is rather impressive. In reality, this article only makes a short study of the company's growth data. You can take a look at how Kuros Biosciences is growing revenue over time by checking this visualization of past revenue growth.

Can Kuros Biosciences Raise More Cash Easily?

While Kuros Biosciences seems to be in a decent position, we reckon it is still worth thinking about how easily it could raise more cash, if that proved desirable. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Many companies end up issuing new shares to fund future growth. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate).

Kuros Biosciences has a market capitalisation of CHF851m and burnt through CHF3.3m last year, which is 0.4% of the company's market value. So it could almost certainly just borrow a little to fund another year's growth, or else easily raise the cash by issuing a few shares.

So, Should We Worry About Kuros Biosciences' Cash Burn?

As you can probably tell by now, we're not too worried about Kuros Biosciences' cash burn. For example, we think its revenue growth suggests that the company is on a good path. But it's fair to say that its cash burn reduction was also very reassuring. Taking all the factors in this report into account, we're not at all worried about its cash burn, as the business appears well capitalized to spend as needs be. On another note, we conducted an in-depth investigation of the company, and identified 3 warning signs for Kuros Biosciences (2 are a bit unpleasant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies with significant insider holdings, and this list of stocks growth stocks (according to analyst forecasts)

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.