We Think Herantis Pharma Oyj (HEL:HRTIS) Needs To Drive Business Growth Carefully

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. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

So should Herantis Pharma Oyj (HEL:HRTIS) 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. The first step is to compare its cash burn with its cash reserves, to give us its ‘cash runway’.

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Does Herantis Pharma Oyj Have A Long 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. Herantis Pharma Oyj has such a small amount of debt that we’ll set it aside, and focus on the €4.6m in cash it held at June 2025. Importantly, its cash burn was €6.9m over the trailing twelve months. That means it had a cash runway of around 8 months as of June 2025. That’s quite a short cash runway, indicating the company must either reduce its annual cash burn or replenish its cash. The image below shows how its cash balance has been changing over the last few years.

See our latest analysis for Herantis Pharma Oyj

How Is Herantis Pharma Oyj’s Cash Burn Changing Over Time?

Because Herantis Pharma Oyj isn’t currently generating revenue, we consider it an early-stage business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. With the cash burn rate up 16% in the last year, it seems that the company is ratcheting up investment in the business over time. However, the company’s true cash runway will therefore be shorter than suggested above, if spending continues to increase. While the past is always worth studying, it is the future that matters most of all. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.

How Easily Can Herantis Pharma Oyj Raise Cash?

Given its cash burn trajectory, Herantis Pharma Oyj shareholders should already be thinking about how easy it might be for it to raise further cash in the future. Companies can raise capital through either debt or equity. Commonly, a business will sell new shares in itself to raise cash and drive 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.

Herantis Pharma Oyj has a market capitalisation of €51m and burnt through €6.9m last year, which is 14% 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.

So, Should We Worry About Herantis Pharma Oyj’s Cash Burn?

Even though its cash runway makes us a little nervous, we are compelled to mention that we thought Herantis Pharma Oyj’s cash burn relative to its market cap was relatively promising. Looking at the factors mentioned in this short report, we do think that its cash burn is a bit risky, and it does make us slightly nervous about the stock. On another note, Herantis Pharma Oyj has 6 warning signs (and 3 which are concerning) we think you should know about.

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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.