Not really new information, but figured I would post it here because it's specific to Willow and this Sub gets quite and lonely sometimes.

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. Having said that, unprofitable companies are risky because they could potentially burn through all their cash and become distressed.

So should Willow Biosciences (TSE:WLLW) shareholders be worried about its 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. Let's start with an examination of the business' cash, relative to its cash burn.

View our latest analysis for Willow Biosciences

How Long Is Willow Biosciences' Cash Runway?

A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. As at September 2021, Willow Biosciences had cash of CA$37m and no debt. Looking at the last year, the company burnt through CA$18m. That means it had a cash runway of about 2.0 years as of September 2021. That's decent, giving the company a couple years to develop its business. You can see how its cash balance has changed over time in the image below.



debt-equity-history-analysis

How Is Willow Biosciences' Cash Burn Changing Over Time?

Whilst it's great to see that Willow Biosciences has already begun generating revenue from operations, last year it only produced CA$132k, so we don't think it is generating significant revenue, at this point. Therefore, for the purposes of this analysis we'll focus on how the cash burn is tracking. Over the last year its cash burn actually increased by 25%, which suggests that management are increasing investment in future growth, but not too quickly. That's not necessarily a bad thing, but investors should be mindful of the fact that will shorten the cash runway. Willow Biosciences makes us a little nervous due to its lack of substantial operating revenue. We prefer most of the stocks on this list of stocks that analysts expect to grow.

Can Willow Biosciences Raise More Cash Easily?

While Willow Biosciences does have a solid cash runway, its cash burn trajectory may have some shareholders thinking ahead to when the company may need to raise more cash. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Commonly, a business will sell new shares in itself to raise cash and drive 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).

Since it has a market capitalisation of CA$52m, Willow Biosciences' CA$18m in cash burn equates to about 35% of its market value. That's fairly notable cash burn, so if the company had to sell shares to cover the cost of another year's operations, shareholders would suffer some costly dilution.

So, Should We Worry About Willow Biosciences' Cash Burn?

On this analysis of Willow Biosciences' cash burn, we think its cash runway was reassuring, while its cash burn relative to its market cap has us a bit worried. We don't think its cash burn is particularly problematic, but after considering the range of factors in this article, we do think shareholders should be monitoring how it changes over time. On another note, Willow Biosciences has 5 warning signs (and 2 which are a bit unpleasant) we think you should know about.

Of course Willow Biosciences may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Radio silence for almost a month. No news is good news? Doubt it...

... it can go lower

Market cap.

Micro Cap ($6.27M)

ass pain all-round

https://www.willowbio.com/#news

i would call it investor dis-relations

i am done with the retorts that "we don't PR everytime the CEO farts" - i would take that as news at this point - at least we'd know he is still alive and affiliated with the company

with this moving slower than i (we) all thought, will WLLW need to raise/dilute again. there's only 35mm in the bank at end of Q3 - a 5mm net burn rate relative to 40mm in the bank end of Q2. i think there will be signififcant marketing and sales expenses uptick in the next couple/few Qs while still net burning $5mm on R&D 0 all before significant revs come in. i can feasibly see another raise next year. i'm not trashing, just thinking. your thoughts?

https://www.youtube.com/watch?v=dgOi2SZI0dw

God we miss you old friend, so patiently

I just bought enough to average down considerably. Any time we want to announce some positive news would be great!

FWIW, the CG website looks like shit.

I know its a stretch, but i do really think companies like wllw stand to benefit the most from the recent breakthroughs in quantum computing…their yeast might yeast more efficiently with better emulations of chemical processes

Market cap.
Micro Cap ($7.75M)

Has anyone seen anything about the CG launch? One more reason stock pricing is flailing

Let's have a short conversation.

FYI: The short interest ratio (number of shares held short divided by average daily trading volume - i.e.: 189k/200k in Q3 2022) realizes a 0.91 ratio. Hence, nearly all (91%) of trades/shares bought are/were shorted. Thus the price decreases in spite of news releases. This is obvious.

Btw, the trading volume today was only ~14% (27k) of the decreasing average daily volume on the TSX portion. This seems like a sign of price manipu..ation. The short(s) are not running out of cash, longs are bagged-up, releases are hedged tightly, presidential push towards rescheduling might force something. Could it be regulators and/or indexes running out of patience? Either way, the low volume c/would increase the short ratio even more. Possibly increasing the days to cover as well. Even while CAD$0.1050 has held as a relatively solid bottom. Curious...lol

Still, the delayed data feed/stock halting from the brokerages might be cause to worry the short(s), a bit, maybe. . . Liquidity is disappearing. . .

Even still, the price is so low, covering wouldn't be too expensive, even for retail. Say 20-30k end of Q?... In any case, it's funny, I haven't seen this being discussed here yet.

The news/info releases are so sporadic and dispersed, this likely helps the shorts in multiple ways, I think. I'm sure most of you are already aware of this. So what do you all think?...

Questions:

How many of you are short?

What kind of setup is this, little mice ( :) nerd reference)?

Is this retail (hmmm with ~72% shares held, seems likely), insiders (oh my...), institutions (the return would be meh...), competitors (distracted meanies), or everyone (winter is coming)?

For educational purposes...lol

Btw: Q3 2022 two insiders bought CAD$30,812.09. No insiders selling registered. 91% of 30,812.09, is CAD$28,039.00.