Impact on Capital Structure & Debt Levels
The Q2 2025 release shows that 60 Degrees Pharma (SXTP) is operating with a very thin balance sheet – the company now holds roughly $1.97 million in cash, which only pushes its cash‑runway out to mid‑March 2026. The press release does not mention any new borrowings or debt‑related financing, and the firm has not disclosed any existing term‑loans or revolving credit facilities. Consequently, the capital structure remains equity‑centric and essentially unleveraged. The modest cash balance and the absence of debt mean that the firm’s leverage ratio (debt‑to‑equity) stays near zero, keeping financial‑risk metrics (e.g., interest‑coverage, leverage) flat at current low‑level values.
Because the cash runway is limited to just over a year, the company will soon need to raise additional capital if it wants to fund growth, expand its pipeline, or cover any further supply‑chain disruptions. In the near term, this will likely be achieved through equity issuance (potential dilution) rather than debt, given the current lack of borrowing capacity and the desire to avoid adding interest‑service obligations. If the firm does decide to tap the debt markets, any new leverage would immediately shift its capital‑structure profile, increasing the debt‑to‑equity ratio and exposing the stock to higher interest‑rate and refinancing risk.
Trading Implications
- Short‑term: The cash‑runway constraint caps upside until the next financing round. Expect the stock to trade in a tight range with modest upside potential, unless the company announces a clear, non‑dilutive financing plan.
- Medium‑term: Watch for equity‑raising announcements (e.g., secondary offerings, private placements) or debt‑issuance signals. A successful capital raise that adds cash without excessive dilution could improve the balance‑sheet outlook and support a higher valuation. Conversely, a failure to secure financing may pressure the price lower as runway concerns intensify.
- Actionable: Maintain a neutral‑to‑light‑defensive stance until the company confirms its next funding source. If equity issuance is announced, consider the dilution impact versus the cash‑runway benefit; if debt is taken on, reassess leverage risk and adjust position size accordingly.