Operations processes

In startups and new organisations, very few people usually end up covering many quite different activities and roles. Especially in the supporting functions it can be difficult to hire people with the specific experiences, for example to support drug discovery and development in small and fast-growing settings. This guide is intended as a starting point to support discussions on how best to set things up. I will add topics over time.

Types of contracts in drug discovery and development

For small companies, a significant amount of work may be carried out at least initially with CROs (e.g. before in-house capacity is put in place or scaled sufficiently). This can often constitute a large, if not the biggest, part of drug discovery spend besides in-house FTE. In new and growing companies, as processes are set up, it’s useful to understand the different types of contracts, PO and invoicing scenarios, as these can often have implications for both operational management and smooth implementation of programmes as well as financial analysis and planning.

Operations considerations

• There can be a large number of different CROs used for different types of study

• To set the legal framework, an MSA is often - but not always, depending on the work - put in place with the respective CRO. This MSA often remains in place for many years (NB attention must be paid to expiration dates: contract management!).

• Multiple different programmes will need CROs to carry out a similar type of work, for example in vivo studies to test drug efficacy. Some of these studies are generic (i.e. multiple programmes use the same CRO for the same type of study), some are very specific to the type of study or the disease.

• Some larger CROs offer many quite different drug discovery services, types of studies and analyses.

• The piece of work for a CRO to carry out - unless for an off-the-shelf, routine, usually smaller study - is usually captured in a carefully agreed study plan/work order (either term is used) that is developed between the programme lead/expert, together with the experts at the CRO. The agreed study plan usually needs a formal sign-off from the side of the company or organisation.

• For large/costly/long-term work orders, before a contract is signed, a programme manager might look it over, for example to check that the payment schedule makes sense and to incorporate this into programme budget reforecasting.

• A PO should only be issued once the study plan or work order is agreed.

Programme management and financial planning considerations

• Responding to data all the time, the timing of any work needed for individual programmes frequently changes and work sometimes has to be repeated. Set up and study conditions are specific to each programme and type of study. All this contributes to a significant degree to uncertainty and risk, including in terms financial planning, which must be accounted for in projections.

• For larger studies (e.g. in vivo efficacy studies) it is virtually impossible to know exactly what will be needed when and for which programme. This must be taken into account in budget planning and approval, and during the annual budgeting process.

• Study set up, scope, costs, deliverables and milestones are specific to each programme and often not known much in advance (although a rough estimate of cost and timing should be possible). This is only settled when the science dictates it (when the specific data is needed to make the next decision in the programme).

• This uncertainty or risk is one of the primary drivers of the need for regular budget reforecasting in drug discovery and development.

The below overview tries to capture relevant types of contracts to enable consideration, from an operational perspective, of what supporting processes (including programme implementation, portfolio governance and financial planning) might ideally look like. It captures the most common or “best” options with a blatant bias for efficiency. It is not comprehensive!

Whether you find this helpful or have feedback, questions or additional thoughts, I would love to hear from you: consult@steffisuhr.com