Warren Buffett famously said, 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Quince Therapeutics, Inc. (NASDAQ:QNCX) does use debt in its business. But should shareholders be worried about its use of debt?

Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Quince Therapeutics Carry?

As you can see below, at the end of September 2025, Quince Therapeutics had US$17.5m of debt, up from US$14.9m a year ago. Click the image for more detail. But it also has US$26.3m in cash to offset that, meaning it has US$8.77m net cash.

How Healthy Is Quince Therapeutics' Balance Sheet?

According to the last reported balance sheet, Quince Therapeutics had liabilities of US$26.0m due within 12 months, and liabilities of US$82.8m due beyond 12 months. On the other hand, it had cash of US$26.3m and US$995.0k worth of receivables due within a year. So it has liabilities totalling US$81.6m more than its cash and near-term receivables, combined.

While this might seem like a lot, it is not so bad since Quince Therapeutics has a market capitalization of US$197.7m, and so it could probably strengthen its balance sheet by raising capital if it needed to. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. While it does have liabilities worth noting, Quince Therapeutics also has more cash than debt, so we're pretty confident it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Quince Therapeutics's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Given its lack of meaningful operating revenue, Quince Therapeutics shareholders no doubt hope it can fund itself until it has a profitable product.

So How Risky Is Quince Therapeutics?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months Quince Therapeutics lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through US$39m of cash and made a loss of US$57m. Given it only has net cash of US$8.77m, the company may need to raise more capital if it doesn't reach break-even soon. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.