David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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 REGENXBIO Inc. (NASDAQ:RGNX) does use debt in its business. But the real question is whether this debt is making the company risky.

When Is Debt Dangerous?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is REGENXBIO's Debt?

The image below, which you can click on for greater detail, shows that at June 2025 REGENXBIO had debt of US$194.0m, up from US$73.2m in one year. But on the other hand it also has US$323.3m in cash, leading to a US$129.3m net cash position.

How Strong Is REGENXBIO's Balance Sheet?

The latest balance sheet data shows that REGENXBIO had liabilities of US$119.5m due within a year, and liabilities of US$247.8m falling due after that. On the other hand, it had cash of US$323.3m and US$38.5m worth of receivables due within a year. So its total liabilities are just about perfectly matched by its shorter-term, liquid assets.

Having regard to REGENXBIO's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the US$493.5m company is short on cash, but still worth keeping an eye on the balance sheet. Despite its noteworthy liabilities, REGENXBIO boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if REGENXBIO can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Over 12 months, REGENXBIO reported revenue of US$156m, which is a gain of 75%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is REGENXBIO?

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 REGENXBIO lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of US$91m and booked a US$176m accounting loss. But the saving grace is the US$129.3m on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. REGENXBIO's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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.