We're Not Very Worried About Black Diamond Therapeutics' (NASDAQ:BDTX) Cash Burn Rate
We can readily understand why investors are attracted to unprofitable companies. 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, the natural question for Black Diamond Therapeutics (NASDAQ:BDTX) shareholders is whether they should be concerned by its rate of cash burn. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.
How Long Is Black Diamond Therapeutics' Cash Runway?
You can calculate a company's cash runway by dividing the amount of cash it has by the rate at which it is spending that cash. In June 2026, Black Diamond Therapeutics had US$111m in cash, and was debt-free. Importantly, its cash burn was US$33m over the trailing twelve months. That means it had a cash runway of about 3.4 years as of June 2026. 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.
View our latest analysis for Black Diamond Therapeutics
How Hard Would It Be For Black Diamond Therapeutics To Raise More Cash For Growth?
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. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.
Black Diamond Therapeutics has a market capitalisation of US$119m and burnt through US$33m last year, which is 28% of the company's market value. That's not insignificant, and if the company had to sell enough shares to fund another year's growth at the current share price, you'd likely witness fairly costly dilution.
So, Should We Worry About Black Diamond Therapeutics' Cash Burn?
Because Black Diamond Therapeutics is an early stage company, we don't have a great deal of data on which to form an opinion of its cash burn. We would undoubtedly be more comfortable if it had reported some operating revenue. However, it is fair to say that its cash runway gave us comfort. The bottom line is that we think its cash burn seems fairly reasonable, given it is still chasing growth. Taking a deeper dive, we've spotted 3 warning signs for Black Diamond Therapeutics you should be aware of, and 2 of them are a bit concerning.
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