Drug Development• This is not for the faint of heart or the

poor!• It always takes longer and costs more

than projected!• If they tell you they only need another

$X million throw them out!

Macro Issues

• Funding is difficult to come by• Investors expect results from R&D• Pipe lines have holes• Revenue cliff• Goal approved drug/marketable product

Lesson Learned

• Is the Finance role much different in a manufacturing environment than an R&D organization?

• Edgcomb metals Plant manager put his best people on Inventory Management

Recommendation #1

• In order to support the R&D project teams as a finance resource and business partner– Put your best finance people on the R&D area• External reporting• Internal reporting

– Increased emphasis– Assist R&D with putting together and accurate projection– Monitor monthly activity

» Actual $ spent plus ESTIMATE to complete = total spend

Recommendation #2• Engage with R&D leaders – Finance must attend the project meetings and

issue a report to controller/CFO• Finance understands the big picture as funds move

from R to D to CMC to Regulatory to Marketing• Changes in direction cause changes in spending• When to pull the plug!• Provide real feedback on $ spent

Recommendation #3• Finance Department’s role as an advisor to

R&D on business decisions– Cash is limited.– Every project cannot be funded.– Existing projects must be managed• Expectations must be set with respect to cost• “What if” scenarios need to be addressed.

– Additional trials, managing vendors

Recommendation #4Enhancing Financial Planning Systems

• Finance must drive the planning process.– Start with excel before moving to complicated

software.– Top down to kick off the process– Bottom up approach to provide a roadmap• Pre-fill the budget amounts to get the process started.

Example 1Top Down Approach

Assumption – 2 year’s of Cash on hand

Description $Anidulafungin 10,000,000Dalbavancin 5,000,000Marketing 5,000,000G&A 5,000,000Total 25,000,000

Example of bottom up(000’s)

Dalbavancin Q1 Q2 Q3 Q4 Total

Clinical Trial $ 700 $700 $700 $700 $2,800

Toxicology $200 $200 $200 $200 $800

CMC $250 $250 $250 $250 $1,000

Travel $100 $100 $100 $100 $400

$5,000

Recommendation #5• Finance must manage the Budget and Forecasting

process– Buckets, Ranges and Cushions – One cost center per project

• Gl accounts – not too many and not to few

– Provide hard copy summary to R & D combined with an end of month meeting to discuss results.

– Rolling forecasts • Monthly preferred • Quarterly at a minimum• Prior year carryovers.

Recommendation #6 Assessing the Economics of an R&D

• Engage ex FDA consultants to review:– Preclinical– Clinical– CMC– NDA

• Perform a robust marketing study for the target.– Start with the end in mind.

Recommendation #7 Cost Management and Bench Marking

• Cost per patient– How does it compare to other studies?– How does it compare to other companies?

• Bring major vendors into the office quarterly.• Prevent cost over runs before they occur.

Recommendation #8 Accounting for Clinical Grants & Internal

Development

• Assign a specific person to monitor– Excel templates.– Time sheets– External review by a third party.