A balance does not contain a timetable
An investor or director will often ask how many months of cash remain. The question is reasonable, especially in a company without marketed products. A simple answer can help orient the discussion, but it can also suggest a uniform spending pattern that the research plan does not contain. A development portfolio has supplier milestones, study activities, staffing decisions and possible receipts that occur on different schedules. I want the board to understand the events behind the cash forecast before relying on a single month as the boundary of what the company can do.
Velmara held USD92 million in cash at 30 June 2026. Its net operating cash use in 2025 had been USD54 million. Dividing one by a monthly average derived from the other would produce a number, but it would not describe the funded plan for the next eighteen months. The portfolio had changed, contractual payments were uneven and some expected collaboration receipts depended on timing. Historical use remained useful context for the company's scale. It did not replace the current account of what management intended to fund and when payments would be required.
Our eighteen-month base view forecast USD78 million of net cash use, leaving USD14 million before new financing. A downside view used USD96 million and therefore exposed a USD4 million gap against the same opening cash. The downside included additional research and site costs and slower expected collaboration receipts. It was a defined scenario, not a prediction that every adverse event would happen. Showing the two views together made the financing conversation concrete: management could describe which assumptions created the difference and what it might do if they changed.
The timing matters as well as the closing balance. An enterprise can have a manageable eighteen-month total and still encounter pressure earlier if a large payment precedes a receipt. We therefore examined the sequence within each scenario. The board did not need every supplier invoice in its papers, but it needed the material concentrations and dependencies. A favourable closing figure should not conceal a period when the company would rely on an uncommitted receipt or an unrealistic postponement of work. Finance's explanation should make that reliance visible while there is time to consider alternatives.
Compare complete schedules
It is easy to create a downside by adding a percentage to expense. That can be useful for a rough sensitivity, but it does not always explain the research consequence. A later readout may mean more site support, longer data work or a different sequence for the next programme commitment. Scientific and clinical leaders help determine which activities change and which must continue. Finance then connects those operating assumptions to contracts and cash. The exercise should not assume that a delay automatically permits all spending to stop until the desired information arrives.
We also considered receipts carefully. A collaboration payment may depend on an event, an agreed process or timing outside the company's unilateral control. Moving that receipt in a scenario does not imply a dispute or assert that the contract will fail. It tests whether the operating plan depends too heavily on one favourable schedule. I prefer a clearly described dependency to a collection of probabilities that nobody can explain. Where an estimate is uncertain, the board should understand the source of uncertainty and the decisions management could still take if it persists.
Some shareholders preferred to wait for a later development result before raising equity. A favourable result might support better terms and reduce dilution. That was a legitimate alternative, not an unreasonable objection to financial caution. I asked that it be compared with the cost of waiting if the result arrived later or was less favourable. The company would still have obligations, and a financing process would still require time. A plan that treated the preferred evidence and funding dates as fixed had already made an important risk decision without naming it.
The board authorised a financing process, and the later round closed at USD60 million gross. Transaction fees of USD3 million left USD57 million of net proceeds. Existing investors accepted dilution in exchange for additional funding capacity. We did not describe the gross announcement as the amount added to usable cash, and we did not rewrite the June cash balance as if the transaction had already closed then. The funding event had its own date and consequences, which belonged in the updated plan rather than the historical account.
Capital changes the choices, not the evidence
After the round, management still had to decide what work to fund. Additional cash did not establish that a programme would meet its development criteria or that an investigational medicine would be approved. It gave the company more room to obtain evidence and respond to it. That distinction affects how a CFO talks about financing success. A strong transaction is valuable, but it should not become an invitation to commit every dollar immediately or a reason to stop examining the assumptions that made the downside view necessary.
We updated the forecast using current programme decisions and contractual timing rather than announce a universal extension obtained by dividing USD57 million by an old monthly spending average. New research activity could change cash use; an earlier portfolio stop could change it differently. The available choices also had different consequences for people and scientific progress. A board needs to know what its resources can support, not merely how long the organisation might continue under an artificial assumption that every month resembles the last financial year.
I would improve the next financing discussion by bringing the less favourable schedule into the value narrative from the outset. It should not appear only when the finance function wants authority to begin a transaction. Investors and directors can then understand why the company is raising a particular amount and which decisions it intends to preserve. The plan should also identify what would cause management to revisit the financing timetable. A forecast is more useful when it names the events that could change the response than when it presents one reassuring date with false precision.
For a development company, runway is ultimately a description of funded activity under stated assumptions. It is not a measure of scientific merit or a promise that capital markets will provide the next round. The balance, the commitments, the sequence and the alternatives all belong in the account. Our USD92 million opening position looked different when set beside USD78 million and USD96 million of possible eighteen-month use. That comparison supported a timely choice about equity funding. The discipline I would carry to another board is to ask what the cash can actually support before accepting the comfort of a single number of months.