ARTICLE | March 13, 2023
Authored by RSM US LLP
As your biopharma business grows and enters the preclinical phase, the work of high-throughput screening and high-content screening is done. You have one or more lead candidates. As you optimize your therapeutic and continue testing, you are still heavily involved in lab work but are angling toward human trials.
It is time to prepare for the clinical stage of your biopharma journey. Just as importantly, though, it is time to begin your transition from being a research and development operation to eventually becoming a fully realized business.
“A lot of people start this because a researcher came out of an academic setting with a good idea, so they’re starting to spin up a company without really having a full executive team or a complete back office.”
Mike Romano, Partner, Finance and Accounting Outsourcing Consulting Practice, RSM US LLP
Key considerations for preclinical success
Your research and lab support professionals are still among your core resources. But the company will need to establish more formalized administrative functions, update information systems and have access to sufficient resources to support the upcoming clinical trials. You will also need those resources and tools to build a foundation capable of handling rapid business growth and new operational challenges beyond the lab. Considerations include the following:
Office planning and back office
- Your idea is becoming reality and moving beyond just science. Identify key functions that you might need to fill now, including finance/accounting, procurement, basic reporting, human resources and information technology.
- Determine how to scale staff as your operations grow and expand. How fast do you want to grow? How fast can you grow?
- Consider where to locate the company. Does your current location give you adequate access to talent and other resources you need? If not, where could you move? Do you want all your staff on-site, or should you consider a hybrid work environment?
- Begin to build a back-office technology infrastructure. Determine what tools you need and try to ensure that they can evolve and grow as your business does.
- Find the appropriate balance between investment in administrative capabilities and the core focus of investing in clinical development.
Contracts and financing
- Form partnerships with third parties that understand your business and will be able to support you as you grow.
- Carefully vet third-party providers/vendors and be aware of risks they could pose to your image or operations. Ensure that they are mindful of their compliance with regulations; their environmental, social and governance commitments; and other matters of concern to you, your investors and the public.
- Develop an equity story to help drive your series A financing efforts and beyond.
- Seek alternative funding sources through engagement with collaborators and out-licensing certain aspects of your intellectual property.
- For additional alternative funding, consider applying for grants from the government, government agencies or other nonprofit organizations.
- Determine the technical accounting support you might need to ensure that complex transactions and significant events are properly recorded.
- Establish what tax structure and/or entity structure you want, particularly if you are forming an exit plan to hand off the company.
- Identify a qualified audit provider with the right expertise and willingness to invest in the relationship and grow with the organization.
- Consider enterprise resource planning and related systems that meet current demands but are also scalable to meet expected organizational growth.
- Gain assurance that third-party IT providers have consistently strong data protection and cybersecurity capabilities.
- Implement controls to protect your intellectual property, especially in collaborative environments where research is shared.
- Ensure you have a good understanding of your infrastructure, with security protocols for remote or decentralized work arrangements.
- Promote the extension of security controls to the cloud.
“If successful, companies tend to go from being very small to a relatively complex organization pretty fast. You want to spend as much as possible on the science, but you also need to start laying the groundwork to support your growth.”
tiKeith DePhillips, National Life Sciences Leader, Managed IT Services, RSM US LLPtle
Be ready for transformative events
You are preparing to enter a new stage as you approach trials. You need to lay an appropriate and scalable administrative foundation to ensure your organization has a scalable infrastructure to support what’s to come, including potential acquirers or collaborative partners.
- Explore potential collaboration or co-licensing deals.
- Do you need to in-license or acquire intellectual property to progress your research?
- Consider whether you want to out-license or sell your intellectual property.
- Gear up for clinical trials.
Explore all four stages of the biopharma lifecycle
Scale up your people and your infrastructure as you enter your trial.
Manage your cash as you work through the trial.
Formalize a commercial launch plan and team.
Effectively manage your gross margin, access, and supply.
This article was written by RSM US LLP and originally appeared on Mar 13, 2023.
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