Accelerating the biotech journey

Evolving the finance function

Bringing a new drug to market is a huge achievement. Early-stage companies tend to direct their attention to the resourcing, development, and enhancement of a new therapy or technology. The goal is to ensure a proper focus on the many details of the drug’s safety and efficacy, which companies will have to test before submitting a new drug application to the US Food and Drug Administration (FDA) and undergoing regulatory review. All of this requires ample time, resources, and knowledge.

But development of lifesaving technologies is only part of what biotech companies take on. At any point along the journey from development to commercialization, there are various key considerations across the organization that require coordination to address efficiently and effectively. As a biotech company evolves through its drug development life cycle, the finance function must also evolve and develop new capabilities to support the scaling of the broader organization.

For the finance organization, this journey from awaiting clinical data to a commercial launch or other significant company life cycle events can occur quickly. If the finance organization has not undertaken strategic planning and developed a commercialization road map based on key business milestones (e.g., NDA filing, IPO, approval, launch), the company may be woefully unprepared at the time of drug approval. Complicating matters further, there can be several scenarios under consideration due to the uniqueness of the company’s technologies and complexities within the identified market, such as launch distribution channel design, commercial contracting strategies, and inventory costing methodologies. At the same time, investors expect the finance organization to meet the extensive financial planning and reporting requirements of the rapidly growing company. “Turning on” these detailed and complex processes—from distribution and channel design to revenue recognition—can give pause to even the most seasoned financial professionals and sophisticated investors.

By taking a holistic view of future needs, finance teams can improve the coordination of processes and technological investments. And, similar to the clinical research, a phased approach can help biotech companies build their financial and commercial capabilities so they can validate them before going live. Along the way, companies may notice the lack of an important competency or technology—but once identified, they’ll have the appropriate context for deciding how to proceed. In that spirit, here are some key finance and accounting considerations to put on any emerging biotech company’s preflight checklist.

Examples of timing for product launch readiness

An emerging growth biotech company’s finance organization typically has several important activities to accomplish in advance of a product launch.

The considerations outlined here represent just a subset of the business processes that an emerging growth biotech company should consider developing along its journey from discovery to commercialization. In general, finance organizations should start evaluating and determining commercialization activities around 18-plus months before product launch.

To stay on track, bear in mind that developing core finance and accounting processes doesn’t necessarily mean automating or hiring third parties. Companies should consider developing a plan to acquire the competencies they need at the appropriate points along the journey. Then they can layer in processes or technology along the way. With this plan as the compass, emerging growth biotech companies can develop the infrastructure needed for an effective launch and beyond.

In flight: Enhancements needed for public companies

Going public via a traditional IPO or special purpose acquisition company (SPAC) merger is a step that many emerging growth biotech companies take during the journey to commercialization. For these companies, it’s imperative to elevate people, processes, and technology to support the demanding governance and reporting environment of a public company. That means expanded capabilities that typically include:

• Budgeting, forecasting, and investor relations
• Financial reporting
  
• Sarbanes-Oxley and internal controls
  
• Tax planning and strategy
  
• Governance
  
• Expanded information technology