Cash runway

Runway is cash and investments divided by the monthly net cash burn. The simple version uses the average burn of recent months; the useful version is a bottom-up forecast built from headcount, clinical and manufacturing contracts, and recurring costs, with the trial timelines and the readout dates attached, so the board can see cash at readout and runway after readout.

Companies usually communicate runway as the quarter in which they expect to fund operations to, such as into the second half of a given year. The gap between that guidance and an outside estimate from the filings comes from planned changes in spend, upcoming milestones, and the definition of cash used.

Runway drives the going-concern evaluation, the timing of the next raise, and the negotiating position in it. Raising with twelve months left is a different conversation from raising with four, which is why disciplined FP&A moves the date the money runs out and not just the accuracy of the books.