In Clinical Development, Capital Efficiency is a Must (No Matter the Fundraising Climate)

By Réne Stephens, Managing Director

The annual Summit for Clinical Ops Executives (SCOPE) revealed wide-ranging insights about trends and challenges in clinical development. I had the opportunity to lead an expert panel on the macro factors affecting clinical resourcing and program execution primarily in the biotech space. Below are some takeaways and considerations for companies needing to readjust the allocation of their clinical spend in 2024.

The Resurgence of Site Networks. Among the hottest topics was the noted rise in funding of Site Networks, sometimes known as Site Management Organizations (SMOs). Site Networks have become an attractive investment for several reasons, one of which (from the business perspective) is the opportunity to streamline business operations and optimize models for efficiencies and returns. Site related costs are increasing, and sites are becoming more astute relative to understanding their operating costs, which does translate into higher PI Grants in trials.  When looked at from the angle of data that historically shows the “one and done” trend, this is not a bad thing. Sites that can remain financially viable ultimately translates into a bigger funnel of potential patients and participants in the clinical trial ecosystem. It’s a win-win even amidst rising costs as the expected result of better site performance equals (optimally) improvements in recruitment, retention, data entry, and other key areas of performance.

Delayed Study Starts Linked to Funding Challenges. On the whole, actual study starts compared to planned starts trended downward throughout 2023, largely attributed to financing constraints. On top of the consequences linked to “traditional” start-up delays (i.e. feasibility and site activation, budgeting and contracting, regulatory approval, etc.), funding challenges add to ripple effects felt throughout an organization and the industry. These include tighter management of cash runways, delayed hiring and reductions in force. Re-starting a delayed trial when funding is secured isn’t like flipping a switch, and sponsors should keep that in mind as they plan to meet milestones for trial delivery.

Impartial advisors can help sponsors make good decisions in compressed timeline situations like this, including the need to reexamine outsourcing strategies and/or renegotiate existing agreements with Clinical Research Organizations (CROs) or other suppliers.

Staffing Dynamics. Constraints on spending reverberated across the clinical development spectrum, including staffing decisions. Even in the best of times, the complex work of planning and executing multi-phase studies typically exceeds the capacity of internal resources in smaller companies. While our audience poll revealed cautious optimism for funding and hiring in 2024, we’d contend that reducing fixed costs by leveraging outsourced specialists is the right approach irrespective of cash reserves.  

Positive Economic and Industry Sentiment: As noted, our audience poll revealed cautious optimism for funding and hiring this year. Thus far in 2024 the optimism appears directionally positive, with several biotech IPOs and private company financings announced. That said, recent news and volatility in the XBI (as at least one indicator) suggest we aren’t quite clear of the “biotech winter.”

Beyond the capital raise, smart and efficient allocation is a must. This is where strategic outsourcing experts can make a difference by examining your spend and identifying ways to cut costs, uphold performance, and get a better handle on forecasting and accrual management to minimize surprises.

This is the work of Danforth’s Clinical Business Operations practice, comprising experts in the areas of vendor identification and selection (for CMC/manufacturing, preclinical, and clinical), performance-based contract structure and negotiation, supplier governance, and clinical finance management. Click here to learn more about how we can help.