How to build a biotech cash runway model
For a biotech, cash runway should be measured to the next value-creating milestone, not to zero. The simple formula (cash ÷ monthly burn) gives months until the money runs out; the useful number is months of cash remaining after the next readout, IND or partnering decision, in base and downside cases. A company with 18 months of cash and a Phase 2 readout in month 12 is well positioned; the same 18 months with the readout in month 20 means raising before the data that sets the price.
Why "months of runway" alone misleads
Biotech spending is driven by trial activity, manufacturing and hiring, and funding is tied to milestones. Burn is lumpy (CRO prepayments, quarterly invoices, batch costs) and timing risk is operational: enrollment, manufacturing and regulatory dates slip. A single runway number hides both.
What the model has to contain
| Component | Why it matters |
|---|---|
| OpEx forecast by program, closed months locked to actuals | Anchors the base case in what already happened |
| Clinical spend driven by enrollment | A slipped readout moves the cost curve instead of leaving the budget in place |
| Headcount tied to milestones | Hires behind a delayed event slip with it |
| CapEx and working-capital timing | CRO prepayments and invoice lumps make cash lumpier than expense |
| Financing events | Planned round size and earliest/latest close, debt, partnership milestone payments, grants |
| Development milestones | The dates runway is measured against |
Three cases, not one
- Base: the approved operating plan.
- Downside: the readout slips one to two quarters, enrollment runs slow, a batch fails release. Burn continues while the milestone recedes. This is the case that drives decisions: it gives the latest date to raise, partner or cut.
- Upside: data comes early or is strong enough to pull partnering forward.
A probabilistic version (a Monte Carlo simulation over enrollment, timing and spend ranges) turns the three cases into a distribution, such as "80% chance of at least 6 months of cash past the readout".
The levers, ranked by months bought
| Lever | Typical size | Note |
|---|---|---|
| Pause or deprioritize a secondary program | Largest | Most painful; often the real decision |
| Move open roles behind the readout | Medium | Most common, least visible |
| Renegotiate CRO payment terms or milestone timing | Small to medium | Moves cash without moving expense |
| Reduction in force | Medium | Model one-time severance and ramp-down, not a step change |
| Non-dilutive money (grants, partner reimbursement) | Varies | Arrives on someone else's schedule |
What to show the board
- Months of runway past each major milestone, base and downside. One table.
- The cash curve for all three cases on one chart, milestones marked.
- The levers, ranked by months bought in the downside, with the cost of each.
Spreadsheet or software?
A single-program company can run this in a workbook. It becomes hard when clinical spend, headcount and the OpEx forecast live in separate files, so each scenario is a rebuild. Generic FP&A tools (Adaptive Planning, Anaplan, Jirav, Mosaic) can model runway but need clinical drivers built by hand; clinical-finance tools (Condor, Auxilius) model trial spend but not the whole company.
How Exigyn handles it: the runway is computed from the same connected model as the OpEx forecast, headcount and clinical spend, with closed months locked to actuals. Scenarios, milestones and financing events are first-class; the Board Room view ranks levers (program pauses, hiring moves, RIF with severance) by months of runway bought; and a probabilistic runway simulation shows the range, not just the line. Try it on a sample biotech →
FAQ
What is a good cash runway for a biotech?
Investors commonly look for at least 12 months of cash past the next major data readout, so the company can raise on the data rather than before it. The right number depends on the financing environment and how binary the readout is.
How do you calculate burn rate for a biotech?
Net cash used in operating and investing activities per month, averaged over a period long enough to smooth CRO invoice lumps (usually a trailing quarter), and forecast forward from the operating plan rather than extrapolated from history.
Should runway include planned financings?
Show it both ways: runway on cash in hand (the conservative number boards and auditors use for going-concern assessments) and runway including committed or highly probable financing, clearly labeled.
How often should the runway model be updated?
Monthly after close, and immediately when a milestone date, enrollment curve or financing assumption changes.
Exigyn ships with a preloaded sample biotech company: runway, clinical accruals, headcount and budget vs. actuals in one model. Free 14-day trial, no credit card.
