The Finance and Accounting for Bioscience Companies East conference concluded this week and comprised two days of sessions with senior executives, subject matter experts, and leaders from across the discipline. As we’ve written, leaders highlighted shared challenges, discussed opportunities, and shared their optimism for bright days ahead for the industry.
Erin Warner Guill, the President and Chief Operating Officer at Auxilius, ended Day 1 with a clear message: finance is part of the cure. In a workshop session, she described the unique challenges that plague clinical R&D finance – an intensive accruals process, opaque outsourcing, a lack of visibility and data for effective forecasting, and more – while offering tangible takeaways and considerations.
First, she focused on the upstream: as organizations enter into the CRO procurement and assessment phase (whether their first or one of many), Erin advised the audience to do their homework, from reading the protocol and understanding the study to comparing proposals from vendors down to their underlying assumptions. While finance leaders are often overshadowed by ClinOps colleagues during procurement activities, finance can be an incredible value-add throughout the process by analyzing fundamentals and identifying the optimal intersection of capabilities, cost, and timeline.
She also shared strategies on optimizing contracts (unit-based contracts with milestone-based payments) and utilizing KPIs as an early warning system for CRO performance throughout the study. More on those topics here and here.
She then turned to the finance side of the trial itself, namely nailing the forecast and accruals. She recommended utilizing clinical drivers and historical data (if available) to build and maintain a more robust forecast – and commiserated with sponsors on how confounding investigator and site contracts can be to the forecast. She encouraged sponsors to take control of the site contracts if possible, to update the per patient spend as the site contracts come in, and to update their forecast as enrollment happens and the site mix takes shape.
She broached the sore subject of trial accruals, debated accrual data sources (internal forecast vs vendor estimate), and polled the auditors in the audience on their views (opinions vary by firm and even by partner). A live poll found that most sponsors in the audience accrue for Out-of-Scope costs that haven’t yet been contracted, though it was a near tie.
Finally, she concluded the session by discussing stakeholder alignment and vendor accountability (the latter of which was polled in a separate session on Day 2 as the most pressing challenge for the audience). Friction in vendor relationships often arises from the dynamic nature of trials, the lack of communication between parties, and the differences in data and reporting (sometimes even month to month on the same project). Vendor accountability tips from Erin and the audience included:
Treat every change order is a contracting moment
Your rock solid historical and forecasted view gives you credibility in the convo
Understand drivers of change orders at a granular level
Get in the Change Notification workflow and distribution email