For Preclinical Companies, it’s Not Too Soon (or Too Costly) for a CMO

By Ben Conway, Managing Director

Early-stage life science companies have to make careful choices in the name of capital efficiency. This affects their approach to hiring and the desire to keep high-salaried roles to a minimum. The key is to strike the right balance between capital allocation and securing the talent that is actually integral to value creation.

A company’s value derives entirely from its science and the success of its development strategy and programs, which originate well before entering the clinic. Why, then, do so many life science companies wait until clinical stage to seek the guidance of a chief medical officer (CMO)?

A recent survey of our client base, which totals 400+ life science companies, revealed that the triggering event for a company to enlist a CMO is the filing of an IND. The vast majority of companies in the preclinical phases of development, some 85%, elect not to engage a CMO, while the opposite is true among companies post-IND. There are two primary drivers behind this rationale.

#1 – Preclinical companies question the true need for a CMO in early stages. But when it comes to value creation, there’s arguably no role more important than a CMO.

Any sound development strategy should begin with the end in mind, and the insights of an accomplished CMO can ensure the right path at the outset – including creation of a target product profile and alignment of meaningful clinical objectives with a specific preclinical development pathway. Leadership at this level can enhance development efficiencies and shorten development timelines – ultimately saving precious capital. The absence of this leadership can result in a company pursuing the wrong indication with the wrong drug candidate along a development path to nowhere.

#2 – The role is viewed as cost-prohibitive until absolutely necessary. To be sure, CMOs command high salaries. However, preclinical companies are advantaged by the fact that they don’t need someone in the role full time in order to reap the benefits. Highly qualified clinicians with experience in wide-ranging therapeutic areas and technologies can be leveraged in a fractional or interim capacity, scaling their involvement up or down as needed. Their contributions can range from devising overarching clinical strategy to providing credibility for the due diligence process of prospective investors or partners.

The bottom line? Preclinical companies can afford the guidance of an experienced CMO, and the investment in a fractional resource upfront might spare them costly delays or missteps down the road.