Is SELLAS Life Sciences Group (NASDAQ:SLS) In A Good Position To Invest In Growth?

Just because a business does not make any money, does not mean that the stock will go down. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.

So should SELLAS Life Sciences Group (NASDAQ:SLS) shareholders be worried about its 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. Let's start with an examination of the business' cash, relative to its cash burn.

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Does SELLAS Life Sciences Group Have A Long Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. In March 2025, SELLAS Life Sciences Group had US$28m in cash, and was debt-free. Importantly, its cash burn was US$34m over the trailing twelve months. So it had a cash runway of approximately 10 months from March 2025. 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. Depicted below, you can see how its cash holdings have changed over time.

See our latest analysis for SELLAS Life Sciences Group

How Is SELLAS Life Sciences Group's Cash Burn Changing Over Time?

Because SELLAS Life Sciences Group isn't currently generating revenue, we consider it an early-stage business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. As it happens, the company's cash burn reduced by 5.2% over the last year, which suggests that management may be mindful of the risks of their depleting cash reserves. Clearly, however, the crucial factor is whether the company will grow its business going forward. So you might want to take a peek at how much the company is expected to grow in the next few years.

Can SELLAS Life Sciences Group Raise More Cash Easily?

Even though it has reduced its cash burn recently, shareholders should still consider how easy it would be for SELLAS Life Sciences Group to raise more cash in the future. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. 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).

SELLAS Life Sciences Group's cash burn of US$34m is about 19% of its US$177m market capitalisation. Given that situation, it's fair to say the company wouldn't have much trouble raising more cash for growth, but shareholders would be somewhat diluted.

Is SELLAS Life Sciences Group's Cash Burn A Worry?

Even though its cash runway makes us a little nervous, we are compelled to mention that we thought SELLAS Life Sciences Group's cash burn reduction was relatively promising. Summing up, we think the SELLAS Life Sciences Group's cash burn is a risk, based on the factors we mentioned in this article. On another note, SELLAS Life Sciences Group has 4 warning signs (and 3 which are significant) we think you should know about.

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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.