Burn rate

For a company with revenue, cash consumption is one fact among many. For a clinical stage biotech it is the fact, because there is no operating inflow to offset it and the date the cash runs out is a hard constraint on everything management can do.

Measure it on cash actually leaving the business rather than on the reported loss. Share based payment is a real cost to shareholders but it does not consume cash this quarter, while capitalised development spend and milestone payments consume cash without necessarily hitting the income statement in the same period.

Burn is lumpy, which is the part averages hide. A pivotal trial is not a straight line of spending, so a twelve month average understates the trough, and the trough is what forces a company to raise at a bad moment.

Definitions vary between companies, some netting off interest income, some stripping out one off items, some quoting gross rather than net. Read the definition before comparing two of them, because a difference in convention can look like a difference in discipline.