We’re Not Worried About Fennec Pharmaceuticals’ (NASDAQ:FENC) Cash Burn

There’s no doubt that money can be made by owning shares of unprofitable businesses. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.

So, the natural question for Fennec Pharmaceuticals (NASDAQ:FENC) shareholders is whether they should be concerned by its rate of cash burn. 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). Let’s start with an examination of the business’ cash, relative to its cash burn.

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When Might Fennec Pharmaceuticals Run Out Of Money?

A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. As at March 2026, Fennec Pharmaceuticals had cash of US$40m and no debt. Looking at the last year, the company burnt through US$5.8m. That means it had a cash runway of about 7.0 years as of March 2026. Notably, however, analysts think that Fennec Pharmaceuticals will break even (at a free cash flow level) before then. If that happens, then the length of its cash runway, today, would become a moot point. Depicted below, you can see how its cash holdings have changed over time.

View our latest analysis for Fennec Pharmaceuticals

How Well Is Fennec Pharmaceuticals Growing?

Happily, Fennec Pharmaceuticals is travelling in the right direction when it comes to its cash burn, which is down 65% over the last year. This reduction was no doubt supported by its strong revenue growth of 65% in the same period. Considering these factors, we’re fairly impressed by its growth trajectory. While the past is always worth studying, it is the future that matters most of all. So you might want to take a peek at how much the company is expected to grow in the next few years.

Can Fennec Pharmaceuticals Raise More Cash Easily?

There’s no doubt Fennec Pharmaceuticals seems to be in a fairly good position, when it comes to managing its cash burn, but even if it’s only hypothetical, it’s always worth asking how easily it could raise more money to fund growth. Companies can raise capital through either debt or equity. Many companies end up issuing new shares to fund future growth. By looking at a company’s cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year’s cash burn.

Fennec Pharmaceuticals’ cash burn of US$5.8m is about 1.7% of its US$339m market capitalisation. That means it could easily issue a few shares to fund more growth, and might well be in a position to borrow cheaply.

Is Fennec Pharmaceuticals’ Cash Burn A Worry?

As you can probably tell by now, we’re not too worried about Fennec Pharmaceuticals’ cash burn. In particular, we think its revenue growth stands out as evidence that the company is well on top of its spending. And even its cash burn reduction was very encouraging. There’s no doubt that shareholders can take a lot of heart from the fact that analysts are forecasting it will reach breakeven before too long. After considering a range of factors in this article, we’re pretty relaxed about its cash burn, since the company seems to be in a good position to continue to fund its growth. An in-depth examination of risks revealed 2 warning signs for Fennec Pharmaceuticals that readers should think about before committing capital to this stock.

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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.