Is Replimune Group (NASDAQ:REPL) A Risky Investment?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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. As with many other companies Replimune Group, Inc. (NASDAQ:REPL) makes use of debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Replimune Group Carry?

The chart below, which you can click on for greater detail, shows that Replimune Group had US$46.4m in debt in March 2025; about the same as the year before. But on the other hand it also has US$483.8m in cash, leading to a US$437.4m net cash position.

How Strong Is Replimune Group's Balance Sheet?

We can see from the most recent balance sheet that Replimune Group had liabilities of US$62.4m falling due within a year, and liabilities of US$73.1m due beyond that. On the other hand, it had cash of US$483.8m and US$3.73m worth of receivables due within a year. So it can boast US$352.0m more liquid assets than total liabilities.

This surplus strongly suggests that Replimune Group has a rock-solid balance sheet (and the debt is of no concern whatsoever). With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Succinctly put, Replimune Group 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 Replimune Group'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.

Check out our latest analysis for Replimune Group

Given its lack of meaningful operating revenue, Replimune Group shareholders no doubt hope it can fund itself until it has a profitable product.

So How Risky Is Replimune Group?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year Replimune Group had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of US$199m and booked a US$247m accounting loss. But at least it has US$437.4m on the balance sheet to spend on growth, near-term. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 4 warning signs for Replimune Group (2 are concerning) you should be aware of.

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.