The event opened with Converge Managing Director Todd Applebaum identifying the natural tension between CMC and Finance leaders that arises mostly from differences in perspective and language between these functions.
- CMC programs are capital and resource intensive: CMC programs are strategic for emerging biotech companies. They are often essential for reaching the next critical value-generating inflection point. CMC programs require timely and sufficient funding, often tens of millions of dollars, throughout the research, process design, and drug development phase.
- Programs face significant uncertainty: CMC programs face technical and execution uncertainty, including unpredictability from outsourcing services to CDMOs, CMOs, test labs, and external partners. CMC programs are also significantly impacted with fluctuation in the cost for materials, services, and logistics. In some cases, programs can accelerate or slow down due to clinical study outcomes and/or evolving regulatory decisions.
- Business and capital environments evolve: There are uncertainties that run through the business and capital environment, impacting the availability of capital at any given time, which in turn forces CMC programs to shift and accommodate. Financial uncertainties involve strategic business changes from shifting priorities, as well as geopolitical factors such as foreign and trade policies, recession, and pandemics.
In this kind of a volatile environment, the CMC and Finance teams need to be in sync with each other.
Our guest speaker, Hugh Wight, a manufacturing executive with 20+ years of experience in pharmaceutical and biologics development, validation, and quality assurance, along with Converge Consultant Ash Pandit, shared a ‘CMC-Finance Bridge’ approach that proves effective in opening a connection between CMC and Finance. The CMC-Finance Bridge uses a CMC program management toolkit and project plans, combined with roles and responsibilities for CMC and Finance, and communications processes that allow the FP&A team to quickly integrate new information from CMC. Hugh and Ash presented a version of the Bridge using MS Project to build the CMC project plan, which then fed an automated CMC-FP&A bridge between the project plan and budgeting spreadsheets.
Hugh described the four phases of building the CMC-Finance Bridge as:
- Prep Phase: The CMC and Finance teams meet independently to develop their own understanding of key initiatives, operational risks, and critical milestones. Then, the teams come together to share information and agree on key elements, structures, and terminology for aligning project plans and financial forecast.
- Build Phase: This phase involves building project plans to translate the program into financial and budgetary terms. A dedicated CMC Program Manager leverages PM tools and language across multiple programs, translating CMC plans into financial forecasts for FP&A.
- Reconcile Phase: The teams come together to assess and reconcile operating and spending plans. Basic automation helps translate from technical to financial terms and back.
- In-Life Phase: Once the initial budget is approved and endorsed, it enters the in-life phase of maintenance and reforecasting to keep the budgetary plans current as the CMC landscape changes.
The CMC-Finance Bridge allows real-time impact assessment of changes in the CMC plan or strategy on financial forecasts. It provides the ability to view data by financial accounts, project phases, or functional departments, and serves as a single source of truth to align CMC and Finance baselines. It also enables scenario analysis to understand repercussions of changes in the financing environment and lead times on critical raw materials, equipment or other resources.