Burn rate

Burn is the decrease in cash and investments over a period, excluding financing inflows. Operating cash burn, taken from the cash flow statement, is the cleanest measure: it removes non-cash items such as stock-based compensation, depreciation, and fair-value remeasurements that inflate the net loss, and it includes working-capital movements such as paying down accruals.

Net loss and burn diverge for predictable reasons. Stock compensation and IPR&D charges raise net loss without using cash. Upfront collaboration payments and grant receipts bring in cash without immediately raising revenue. CRO prepayments use cash before they become expense. A board that watches both numbers and understands the bridge between them is rarely surprised.

For guidance and for runway math, companies often use a trailing average of quarterly burn, since single quarters are lumpy with annual bonuses, milestone payments to licensors, and manufacturing campaigns.