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We're Hopeful That OncoTherapy Science (TSE:4564) Will Use Its Cash Wisely

Simply Wall St · 01/08 22:25

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, although Amazon.com made losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.

So, the natural question for OncoTherapy Science (TSE:4564) shareholders is whether they should be concerned by its rate of 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. The first step is to compare its cash burn with its cash reserves, to give us its 'cash runway'.

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How Long Is OncoTherapy Science's Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. As at September 2025, OncoTherapy Science had cash of JP¥1.7b and no debt. Importantly, its cash burn was JP¥822m over the trailing twelve months. So it had a cash runway of about 2.0 years from September 2025. That's decent, giving the company a couple years to develop its business. The image below shows how its cash balance has been changing over the last few years.

debt-equity-history-analysis
TSE:4564 Debt to Equity History January 8th 2026

See our latest analysis for OncoTherapy Science

How Well Is OncoTherapy Science Growing?

OncoTherapy Science reduced its cash burn by 11% during the last year, which points to some degree of discipline. And arguably the operating revenue growth of 100% was even more impressive. It seems to be growing nicely. In reality, this article only makes a short study of the company's growth data. You can take a look at how OncoTherapy Science is growing revenue over time by checking this visualization of past revenue growth.

How Hard Would It Be For OncoTherapy Science To Raise More Cash For Growth?

While OncoTherapy Science seems to be in a decent position, we reckon it is still worth thinking about how easily it could raise more cash, if that proved desirable. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. 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 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.

OncoTherapy Science has a market capitalisation of JP¥7.8b and burnt through JP¥822m last year, which is 11% of the company's market value. As a result, we'd venture that the company could raise more cash for growth without much trouble, albeit at the cost of some dilution.

Is OncoTherapy Science's Cash Burn A Worry?

As you can probably tell by now, we're not too worried about OncoTherapy Science's cash burn. For example, we think its revenue growth suggests that the company is on a good path. Its weak point is its cash burn reduction, but even that wasn't too bad! Based on the factors mentioned in this article, we think its cash burn situation warrants some attention from shareholders, but we don't think they should be worried. On another note, OncoTherapy Science has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

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