1. Develop a Rock-Solid Budget
Budgeting is the crucial first step, and to develop an effective budget, you need to include the full scope of the potential trial. Testing a new drug in a small Phase I study is different in size and complexity from running a full-scale Phase III trial with hundreds of patients, and the budget should reflect that.
Consider all trial-related costs. That includes personnel and site costs, the cost of recruiting and retaining patients, and the cost of communicating your interim and final results to stakeholders and regulators. You’ll also need to include expenditures for data management and analysis, laboratory and testing, and fees you pay to contract research organizations (CROs)
Even the best-planned budget can’t anticipate everything, so the final step is to build a cushion for the unexpected. Clinical trials are notorious for surprises, so setting aside 10-20% of your budget for contingencies is just smart planning.
2. Master Cost Management
Once you have established your budget, the real challenge lies in sticking to it. Historical data can provide a vital guide, helping you to estimate costs—and when they might occur— more accurately.
At Scrubbed, we recommend you implement real-time budget tracking tools that help you continuously monitor spending and compare actual costs to the budget so that you can detect and address any overspending before it becomes an issue. We also help clients deploy categorized expense tracking to give visibility into spending patterns and make it easier to identify where cost-saving measures can be implemented.
In addition to being good practice, well-structured financial reports that lay out your cost management approach are more appealing to potential investors as they demonstrate your ability to master the details and substantiate your assumptions.
3. Tap into Tax Credits and Incentives
Research and Development (R&D) tax credits and other incentives offer biotech and life sciences companies a valuable way to offset clinical trial costs, reduce tax liabilities, and reinvest savings into research. Different countries will offer different incentives with specific eligibility standards. So, the first step is to understand how your clinical trials fit with the eligibility criteria of tax incentives and any other government or private grants and subsidies.
We recommend working with an experienced tax professional to help you identify and maximize eligible incentives and to ensure that your audits are compliant and align with tax guidelines.
Used strategically, credits and incentives can help you to reduce tax payments, improve cash flow and reduce the need for external funding.
4. Mitigate Financial Risks
Clinical trials carry significant scientific, operational, and financial risks. While the first two are unavoidable if you are to make progress, you can mitigate financial risks through thoughtful planning.
We’ve already talked about setting aside 10-20% of the budget for unexpected costs, such as delays or protocol changes, but it’s also important to consider insurance coverage. Clinical trial insurance can help protect against legal claims, liabilities, and cancelations. Financial scenario planning can also help you prepare for different outcomes and identify any areas of particular concern for your trial.
Another financial risk mitigation strategy is to diversify your funding sources– don’t put all your eggs in one basket! If you seek funding across different equity, grants, partnerships, and debt, you improve your ability to keep the trial on track if one source falls through. If your company has already secured Series A funding, an effective, diversified, investment strategy can also maximize those funds.
Strong financial planning provides a safety net for clinical trials, allowing you to concentrate on smoother execution.
5. Track and Document Everything
Clinical trials require consistent recordkeeping to meet regulations and build trust with stakeholders. You should implement robust systems and processes to ensure that you retain all trial-specific documentation.
Comprehensive financial records will include detailed budget reports along with invoices, receipts, and payroll records. We recommend reviewing financial reporting regularly to allow you to spot any discrepancies and address them as quickly as possible.
At Scrubbed, we help our clients set up processes to ensure robust audit trails and track any changes to documentation. We also recommend adherence to Good Clinical Practice (GCP) standards and keeping up with regulatory filings to help promote transparency, compliance, and accountability.
Financial Planning for Smoother Trials
Effective financial planning is essential to successful clinical trials. From managing costs and mitigating risks to leveraging available tax credits and incentives, the financial landscape can quickly become complex. Partnering with a specialist provider with in-depth knowledge of how to treat clinical trials can help you maximize your budget, take full advantage of R&D tax credits, and implement best practices for financial management. With the financial and tax details taken care of, you can focus on the scientific and operational success of your trial. The right financial guidance will help you minimize costly surprises and ensure the long-term viability of your research efforts.
How Scrubbed Can Help
Our team of experts understands the complex and often unpredictable nature of the biotech and life sciences industries and can provide the financial insight and support you need to succeed. Whether you are developing new pharmaceuticals, medical equipment, or gene therapies, we can provide a complete suite of biotechnology accounting, finance, and tax services to help you streamline your processes and increase operational efficiencies. By partnering with Scrubbed, life sciences and biotechnology companies can benefit from the flexibility, scalability, and cost-effectiveness of outsourcing and focus on their core business of advancing scientific innovation.
Contact us to discuss your clinical trial financial planning needs