Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price. For example, Nurix Therapeutics (NASDAQ:NRIX) shareholders have done very well over the last year, with the share price soaring by 130%. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

So notwithstanding the buoyant share price, we think it's well worth asking whether Nurix Therapeutics' cash burn is too risky. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.

Check out our latest analysis for Nurix Therapeutics

How Long Is Nurix Therapeutics' Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. In May 2024, Nurix Therapeutics had US$443m in cash, and was debt-free. In the last year, its cash burn was US$106m. That means it had a cash runway of about 4.2 years as of May 2024. There's no doubt that this is a reassuringly long runway. You can see how its cash balance has changed over time in the image below.

How Well Is Nurix Therapeutics Growing?

It was fairly positive to see that Nurix Therapeutics reduced its cash burn by 34% during the last year. And operating revenue was up by 2.2% too. Considering the factors above, the company doesn’t fare badly when it comes to assessing how it is changing over time. Clearly, however, the crucial factor is whether the company will grow its business going forward. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.

How Hard Would It Be For Nurix Therapeutics To Raise More Cash For Growth?

We are certainly impressed with the progress Nurix Therapeutics has made over the last year, but it is also worth considering how costly it would be if it wanted to raise more cash to fund faster growth. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund 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).