Non-GAAP measures

Public biotechs often present non-GAAP net loss or non-GAAP operating expenses that exclude stock-based compensation, acquired IPR&D charges, fair-value changes on warrants and contingent consideration, and restructuring costs. The goal is to show the operating cost base that drives cash burn.

Regulation G and Item 10(e) of Regulation S-K require that any non-GAAP measure be reconciled to the most directly comparable GAAP measure, presented with no greater prominence than the GAAP figure, and not used to exclude normal recurring cash expenses. The SEC staff comments frequently on measures that stray, particularly those that remove cash costs or that present a measure per share.

For a private company the same adjustments appear in the board deck as adjusted burn or cash operating expenses, with no regulatory rule but the same discipline: reconcile to GAAP and be consistent from quarter to quarter.