In the rapidly evolving and competitive biotech industry where innovation and financial performance are inextricably linked, savvy CFOs must adopt a long-term perspective to navigate the complex, often decade-long journey of drug commercialization.
From discovery stages to market launch, development timelines require strategic financial planning and adaptability at every stage. Within this frequently prolonged development cycle, an often-overlooked tool emerges as a critical lever for success: the optimization of clinical trial contracting.
Optimizing clinical trial contracting can serve as a catalyst for accelerating innovation, reducing costs, and boosting revenue. As biotech companies scale, the volume and complexity of legal work increases, requiring strategic planning to enable and execute the multijurisdictional clinical trial contracting process efficiently.
For early-stage biotechs, in particular, effective clinical trial contracting is mission-critical to accelerating the initiation of trials and expediting patient enrollment. This efficiency not only benefits patients by providing earlier access to potentially life-changing treatments but also sets the foundation for generating the efficacy and safety data needed to obtain regulatory approval and gain market access.
The financial implications of speeding up the contracting process are also significant. Accelerating revenue realization by reducing time-to-market can mitigate losses of up to $8 million a day associated with trial delays and budget overruns. Moreover, efficient contracting practices established early can help manage and stretch limited resources over the long development cycle, facilitating more predictable cash flow projections crucial for long-term financial planning.
The Expanding Role of CFOs in Legal Operations
As biotech companies face increasing pressure to innovate while managing costs, CFOs are stepping beyond their traditional financial roles to become strategic partners in operational efficiency. By maximizing the high-yield revenue opportunity in clinical trial contracting and legal operations, CFOs can drive cost savings through process optimization and vendor management.
Starting legal operations planning early in a biotech company's journey is crucial. Implementing legal and contracting templates, playbooks, and technologies with a focus on return on investment can lay the groundwork for efficient operations and scalability, and guide hiring and resourcing decisions as pipeline programs move through later clinical stages.
One recent example of a clinical-stage biopharmaceutical company illustrates the challenges and opportunities in optimizing clinical trial contracting. This company, which develops a novel class of medicines for diseases that are underserved by existing therapeutics, needed to quickly scale clinical trials across several hundred sites and numerous geographies.
The company's existing contracting model was split between Clinical Research Organizations (CROs) - perceived as lacking the necessary contract negotiation expertise - and a large law firm as the escalation and enablement partner. However, the law firm was seen by the company as an expensive and overly risk-averse solution. The company had additional pipeline drug candidates that would soon be moving into clinical development in similar jurisdictions and with comparable sites, and further dependence on a law firm would become prohibitively expensive.
In the search for an optimized clinical contract process, the company recognized the value of the cumulative efficiency gains of investing in building a scalable, repeatable contracting model to support the company’s growth trajectory, versus further committing operating expense and brute force at the problem to simply get the work done.
Instead, by investing in a flexible and scalable model, this company was able to work with a third party partner to integrate the talent, expertise and technology needed to develop contract templates and interactive playbooks to support their long-term strategy, while at the same time benefitting from an immediate capacity lift and jurisdictional expertise to streamline their high-volume contracting for clinical trial agreements (CTAs) and participant-facing documents supporting multi-year and multi-site clinical studies.
The solution in practice? A quickly deployed SWAT team comprising subject matter experts for quick-start CTA contracting across multiple study sites and geographies immediately impacting day-to-day operations while also bringing enablement expertise. With the contract review and negotiation process, reusable contract “artifacts” such as contract templates and playbooks detailing company risk positions and negotiating tactics, were developed.
The resulting reduction in contracting cycle time meant the company was able to deliver their technology to patients faster, address revenue leaks often associated with delayed site start-up, and forecast more efficient and predictable trials, all while building a clear roadmap for scalable contracting in the future.
Fast-Moving Trends: A GenAI-enabled Clinical Trials Contracting Process
With GenAI transforming clinical trial contracting, a fresh wave of opportunity lies in the near-term sights to further capture efficiencies and a better stakeholder experience. AI-powered approaches promise to automate routine contract generation and review, analyze historical data to optimize pricing and terms, predict potential bottlenecks and risks, and enhance compliance with regulatory requirements. However, implementing AI-integrated processes starts with process design and rationalization. As an immediate no-regrets step to avoid throw-away costs, prioritize making your knowledge assets (templates, clause libraries, contract repositories) AI-ready.
As organizations mature, AI-driven solutions can offer more advanced benefits. GenAI's language-centric nature makes it ideal for revolutionizing contracting processes, especially in biotech clinical trials. As adoption accelerates, companies can benefit from partnering with specialized service providers who invest in cutting-edge AI solutions, rather than making risky fixed investments in this rapidly evolving field.
Allocation of Resources is King
Allocation of resources is everything when it comes to creating an effective contracting ecosystem. Look to align work nature with necessity, capacity, talent, and expertise. Integrate technology to enhance speed, efficiency, and scalability, tailoring approaches to different contract types, from complex multi-jurisdictional agreements to lower-risk contracts.
Creating space to think about resourcing and seeking external help can be valuable, not just for legal teams, but for CFOs in biotech. External partners can provide hidden benefits such as project management, accountability, and credibility with the business. They can also help navigate the challenges of implementing and maintaining technology solutions.
As the biotech industry continues to evolve, clinical trial contracting is emerging as a critical strategic lever for driving innovation and financial performance. By treating clinical contracting as a powerful strategic tool rather than a back-office function, and by aligning legal operations with business needs, CFOs can play an outsized role in accelerating time-to-market, reducing risks, and significantly impacting their company's bottom line.
Factor specializes in providing biotech companies with the legal frameworks and operational processes that characterize mature contracting functions and teams. By integrating talent, expertise, and technology, we empower biotechs to not only accelerate trial timelines but also set the stage for sustainable growth and innovation, ensuring that groundbreaking treatments reach those in need with unprecedented speed and efficiency. Our flexible model provides clients with a range of options from enabling the in-house teams to design, build, scale and execute high-performance in-house contracting functions; through to Factor-operated contracting operations supporting the client’s business.
Originally published in The CenterWatch Monthly via CenterWatch online
