Is ABIONYX Pharma (EPA:ABNX) Using Debt In A Risky Way?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, ABIONYX Pharma SA (EPA:ABNX) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is ABIONYX Pharma's Debt?

As you can see below, at the end of June 2025, ABIONYX Pharma had €2.63m of debt, up from €1.36m a year ago. Click the image for more detail. But it also has €3.38m in cash to offset that, meaning it has €741.0k net cash.

A Look At ABIONYX Pharma's Liabilities

According to the last reported balance sheet, ABIONYX Pharma had liabilities of €3.88m due within 12 months, and liabilities of €3.68m due beyond 12 months. Offsetting these obligations, it had cash of €3.38m as well as receivables valued at €1.69m due within 12 months. So its liabilities total €2.50m more than the combination of its cash and short-term receivables.

Having regard to ABIONYX Pharma's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the €132.5m company is short on cash, but still worth keeping an eye on the balance sheet. Despite its noteworthy liabilities, ABIONYX Pharma boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine ABIONYX Pharma's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for ABIONYX Pharma

Over 12 months, ABIONYX Pharma made a loss at the EBIT level, and saw its revenue drop to €4.3m, which is a fall of 11%. We would much prefer see growth.

So How Risky Is ABIONYX Pharma?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year ABIONYX Pharma had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through €3.7m of cash and made a loss of €4.6m. Given it only has net cash of €741.0k, the company may need to raise more capital if it doesn't reach break-even soon. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 4 warning signs for ABIONYX Pharma (3 shouldn't be ignored!) that you should be aware of before investing here.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.