In life sciences, cash is more than king – it is oxygen. Your company might have promising Phase II results and valuable intellectual property, but without careful cash flow management, even the most promising molecule won’t make it to market.

The peculiarities of life sciences cash flows are striking. Operating cash flows often remain negative for years (sometimes decades), whilst financing cash flows show repeated capital injections. This pattern would spell disaster in traditional industries, yet it’s often a sign of progress in biotech. The key? Understanding how to read these signals.

Let’s tackle a common scenario: you have just signed a massive licensing deal with milestone payments. Your operating cash flows might swing from deeply negative to wildly positive overnight. But how do you forecast and manage these irregular cash injections? The answer lies in sophisticated cash flow analysis techniques unique to our industry.

Watch for our next post on spotting red flags in life sciences financial statements. Ready to dive deeper into cash flow management? Join our workshop.