Bioscience CFOs on managing cash runway
Recently at the Finance & Accounting for Bioscience conference, finance leaders discussed their insights on cost management with strategic optimization.
“We keep it very simple because we are very cash conservative, so we have a weighted average max maturity of 18 months, but we’re definitely less than that,” explained Katie Capps, executive director of finance and controller at Enanta Pharmaceuticals. “We just invested in treasuries, commercial paper, money markets. We try to keep it very simple, but we have been using a self-managed fund through our bank just to have that access to capital … and we need to be able to pay down those funds as well.”
The cash optimization strategies emerging from successful bioscience companies reflect lessons learned from recent banking crises. The panelists reflected on the impact of the Silicon Valley Bank (SVB) collapse in March 2023, which led to diversification of their banking relationships and investment approaches. Daria Tarbaeva, director, assistant treasurer at GenMab, emphasized the importance of institutional diversification: “You probably should always have two at least. And as we all learned, two years ago with the SVB crisis, concentrating the fund bank is not a good idea.”
Money market funds have emerged as a particularly attractive vehicle for bioscience coffers, though some companies may underestimate their accessibility. “Sometimes money market funds are [positioned] by banks as exclusive instruments, but they aren’t,” Tarva said. “Basically, anyone can have access to a money market fund through JP Morgan or Morgan Stanley, and you can just buy it as a broader investment through their portal.”
The fee optimization aspect of management has become increasingly important as companies scrutinize every basis point. Panelists reported achieving money market fund fees around 20 basis points, significantly lower than the 50 basis points some companies accept without negotiation.
Cost management
On the cost management front, clinical trial expenses represent the largest cost category for bioscience companies. CFOs are implementing more rigorous oversight of contract research organization (CRO) relationships, moving away from unit-based billing toward milestone-based structures that provide better budget predictability.
“Milestone based billing is a good indication that you’re making sure that your CRO is staying on track with how you want this trial to progress,” Capps explained. “I’ve seen unit-based invoicing and that—from a budgetary and natural perspective—can be challenging to make sure those are staying on target, especially when there are change orders and all the other complications that go with clinical trials.”
The procurement function has evolved beyond traditional vendor management to include sophisticated competitive bidding platforms. Tarbaeva mentioned the online platform Scientist.com, which allows sponsors to put in services and receive multiple quotes from multiple vendors. “They are all pre-vetted by the platform to make sure they are in compliance with your terms and conditions that you set up front, and it saves time trying to go through contracts, but it also tries to get you the best price,” Tarbaeva said. “With the smaller organizations, we don’t necessarily have the staff to negotiate these things. So I think looking for those types of advantages is huge, and you can start small and then work bigger.”
Cross-functional accountability has become essential for effective cost management. Leading companies implement weekly review meetings for major projects, ensuring all departments understand budget implications and timeline dependencies. “We set up weekly meetings, which may have been a little bit overkill, but I think it was necessary,” Capps recalled regarding a $25 million lab buildout project.
But in the current market, external economic pressures, including potential tariffs and supply chain disruptions, ensure that finance professionals proactively monitor how suppliers pass through cost increases and maintain flexibility to switch vendors for non-critical services when necessary.
Quotes have been lightly edited for clarity.
link
