Is Syndax Pharmaceuticals (NASDAQ:SNDX) Using Too Much Debt?

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. Importantly, Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Syndax Pharmaceuticals's Net Debt?

As you can see below, at the end of December 2024, Syndax Pharmaceuticals had US$343.7m of debt, up from none a year ago. Click the image for more detail. But it also has US$582.9m in cash to offset that, meaning it has US$239.2m net cash.

A Look At Syndax Pharmaceuticals' Liabilities

We can see from the most recent balance sheet that Syndax Pharmaceuticals had liabilities of US$103.5m falling due within a year, and liabilities of US$333.1m due beyond that. Offsetting this, it had US$582.9m in cash and US$13.9m in receivables that were due within 12 months. So it can boast US$160.1m more liquid assets than total liabilities.

This short term liquidity is a sign that Syndax Pharmaceuticals could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Syndax Pharmaceuticals 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 ultimately the future profitability of the business will decide if Syndax Pharmaceuticals can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

View our latest analysis for Syndax Pharmaceuticals

In the last year Syndax Pharmaceuticals managed to produce its first revenue as a listed company, but given the lack of profit, shareholders will no doubt be hoping to see some strong increases.

So How Risky Is Syndax Pharmaceuticals?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that Syndax Pharmaceuticals had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of US$275m and booked a US$319m accounting loss. However, it has net cash of US$239.2m, so it has a bit of time before it will need more capital. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 2 warning signs for Syndax Pharmaceuticals that you should be aware of before investing here.

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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.