Author: hkaraman

Background

A private, clinical stage gene therapy company engaged Danforth Health’s Clinical Business Operations team to examine and resolve challenges related to the expenses of five clinical studies being managed by one Clinical Research Organization (CRO).

Danforth Health’s Role

Applying specialized expertise in clinical contracting, including clinical study accruals and related forecasting, the team identified multiple areas to avoid both over-payments and under-accruals. Findings included the following:

• Out-of-scope activities were being performed and were omitted from monthly accrual and forecasting reports. The Danforth team requested accrual data for all activities, including bookkept change notices, avoiding under-accrual of $900,000.
• Inflation cost of $2 million across trials was not included in the Statement of Work, budgets or month-end accrual reports. The Danforth team investigated the impact of inflation on study budgets to avoid under-accrual of $400,000.
• No detail was being provided for investigator grants. The Danforth team performed an audit of investigator grant payments, ultimately uncovering $200,000 in potential over-payments. Specifically, the audit revealed the following:
  • Lack of internal controls for duplicate visits (same subject and date); estimated overpayment of $52,000.
  • Internal control/process to update (reverse/pay) not functioning; estimated overpayment of $3700.
  • Payments made to sites for invoices lacking proper detail or supporting information (for example, a $57,000 hospital stay).
  • Payments made to sites for invoices that appear to be for same service/same time period or duplicate items on same invoice; estimated overpayment of $25,000.
  • Invoices pending approval and periodic site fees excluded from accrual file, resulting in under-accrual.
  • Numerous visits in Electronic Data Capture (EDC) had not been paid due to insufficient data and lack of CRO follow-up to ensure complete and accurate data entry from the sites.
  • Internal controls and processes not working as described, including visits deleted from EDC after payment without a credit being issued to site for “deleted” visits; estimated over-payment of $4700.
  • Payments to sites for visits and site costs in two different file layouts, lacking fields to cross-check and flag duplicates; estimated overpayment of $3700.

Based on these returns, the client has implemented Danforth’s custom-designed clinical finance tool as a long-term remedy to better predict clinical study spend and forecasting going forward.

Results

Implementing improved practices has led to a better understanding of the client’s clinical study liabilities/accruals and payments with more predictable forecasting. This methodology can also lead to improved relationships with CROs and sites by identifying trends and mitigating conflicts. 

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For early-stage life science companies, selecting the right Contract Research Organization (CRO) is one of the most critical decisions in clinical development. At Danforth Health, having supported over 1,500 life science companies, we’ve found that what’s often overlooked is not who you choose, but how you structure the CRO contract. This foundational step can make or break the success of your clinical partnership. Implementing CRO contract best practices can help safeguard your investment, enforce accountability, and improve study outcomes. 

CRO Contract Best Practices Tip #1: Build Expectations Into the RFP 

One of the most overlooked CRO contract best practices is integrating key terms and expectations into the Request for Proposal (RFP), not just the final contract. By requiring CROs to respond to your proposed terms in the RFP stage, you filter out vendors unwilling or unable to meet your standards, giving you leverage before negotiations begin. 

CRO Contract Best Practices Tip #2: Document the Selection Process for FDA Readiness 

If your study comes under FDA review, you’ll need to justify your CRO selection. A best practice is to document your selection criteria, questions posed during the RFP process, and the responses received. This supports audit-readiness and demonstrates a thorough vetting process. 

CRO Contract Best Practices Tip #3: Tie Payments to Performance with Milestone-Based Models 

A key CRO contract best practice is to move away from time-based billing in favor of milestone-based payments. This aligns incentives with outcomes and helps ensure that deliverables, not delays, determine compensation. You can even include “earn-back” clauses to reward high-performing CROs with full contract value if they exceed expectations. 

CRO Contract Best Practices Tip #4: Include Consequences for Missed KPIs 

Defining Key Performance Indicators (KPIs) in your contract is only half the battle. A top CRO contracting best practice is to tie those KPIs to consequences, refunds, penalty clauses, or renegotiation triggers, so that performance has real weight. This sets clear expectations and helps both sides stay accountable. 

CRO Contract Best Practices Tip #5: Protect Yourself with Sponsor-Only Termination Rights 

Your contract should include termination for convenience, but that right should rest solely with the sponsor. Allowing the CRO to unilaterally terminate could jeopardize your clinical program. Fair terms for non-payment termination are reasonable, but they should include buffers, such as requiring two consecutive late payments before termination is permitted. 

CRO Contract Best Practices Tip #6: Define and Control Change Order Authorization 

One final best practice: don’t let change requests become liabilities. Specify who within your organization is authorized to approve change orders, and make clear that only approved, signed change orders, not informal requests, can result in billing. This avoids scope creep and financial surprises. 

A well-structured CRO contract isn’t just a safety net; it’s a strategic framework for clinical success. Embedding CRO contract best practices throughout the selection and negotiation process helps ensure alignment, reduce risk, and maximize outcomes. 

At Danforth Health, we support life science companies in building smart, performance-driven contracts that protect their investment and accelerate clinical execution. Need help designing your CRO strategy? Contact our team today. 

Clinical trial financial accruals require close coordination between clinical operations and finance departments. Unfortunately, many organizations suffer from misaligned processes, unclear roles, and inconsistent reporting.  

Why the Disconnect Around Clinical Trial Financial Accruals Exists 

Clinical and finance teams often work with different goals in mind. Clinical staff prioritize patient recruitment, site performance, and trial timelines. Finance teams, on the other hand, are focused on budget accuracy, cash flow, and monthly close deadlines. 

This misalignment creates situations where: 

• Clinical teams don’t report activities on time, leading to under-accrual. 
• Finance teams request cost estimates without understanding how studies are operationalized. 
• No one takes ownership of reconciling trial progress with financial reports. 

When both clinical and finance teams understand the goals of clinical trial financial accruals, collaboration becomes more effective. 

Consequences of Poor Collaboration 

Inaccurate Financial Reporting: Without timely and accurate input from clinical teams, finance departments may guess or delay their accruals, affecting external audits or investor confidence. 

Budget Overruns: Lack of transparency can cause clinical programs to exceed budgets before leadership realizes there’s a problem. 

Operational Bottlenecks: Time wasted on chasing down data or correcting accrual errors takes valuable attention away from study execution. 

Strategies to Strengthen Cross-Functional Collaboration 

Establish Shared Language and Goals: Develop a basic financial literacy program for clinical teams and help finance staff understand how trials progress. Align on key metrics that matter to both sides, such as cost-per-visit or site activation timelines. 

Hold Regular Joint Planning Sessions: Don’t wait until a problem arises. Schedule recurring meetings where clinical and finance leads review trial milestones, spending to date, and accrual estimates. 

Use Integrated Systems and Tools: Centralized clinical trial management systems (CTMS) that feed into finance systems can reduce manual reporting errors and create a single source of truth. 

Define Roles and Responsibilities: Clearly outline who is responsible for reporting site activity, updating vendor timelines, and submitting forecasts. Remove the guesswork from collaboration. 

Document Accrual Assumptions: Create audit trails and documentation for how accruals were estimated. This provides transparency and allows for better review in future months or trials. 

The Result? 

Proactive collaboration around clinical trial financial accruals leads to more accurate budgets, greater cross-functional trust, and improved trial efficiency. Looking to bridge the gap between clinical and finance teams? Danforth Health provides fractional finance support tailored to biotech and life science companies. We help teams align around accruals, budgeting, and forecasting for greater operational efficiency. Contact us today. 

Too often, companies delay commercial strategy until late-stage development, assuming it’s a downstream task. However, the vast majority, 80–90% of drugs in development, must prioritize biotech commercial planning much earlier than they think. Delaying commercial readiness can create compounding risks that threaten your funding, your timeline, and your launch success. 

Here’s what’s at stake when biotech commercial planning gets pushed too far down the road. 

1. Reduced Investor or Acquirer Interest 

Investors and acquirers today expect a robust early commercial strategy to accompany your clinical plan. Without a compelling commercial narrative, you risk being overlooked in favor of competitors who can clearly demonstrate product-market fit and growth potential. 

Biotech companies that delay commercial planning often struggle to: 

• Secure critical funding. 
• Attract interest from potential acquirers or partners. 
• Build credibility with key stakeholders. 

Biotech commercial planning isn’t a nice-to-have; it’s a prerequisite for investor confidence. 

 2. Misalignment with Market, Patients, and Payers 

If you wait too long to engage commercial functions, your development path may overlook critical market factors: 

• Is your product differentiated enough? 
• Will payers reimburse it? 
• Are you solving a true unmet need? 

Without early insights from market research and payer engagement, you risk launching a product that doesn’t resonate, or worse, one that doesn’t get covered. 

 3. Launch Delays 

A delayed start to commercial planning in biotech often creates major gaps: 

• Incomplete market understanding. 
• Lack of secondary data to support claims. 
• Underdeveloped KOL or HCP engagement plans. 

These gaps can delay your biotech product launch by months or even years, ultimately reducing the product’s lifetime value and competitive edge. 

 4. Costly Last-Minute Changes 

When commercial needs come into focus late, the resulting pivots are often expensive: 

• Retrofitting clinical trials. 
• Rushing to collect new data. 
• Overhauling messaging or branding at the eleventh hour. 

All of these emergency efforts drive up costs and reduce launch efficiency. By contrast, early biotech commercial planning allows you to integrate commercial considerations from the outset: saving time, money, and resources. 

 5. Underperformance at Launch 

Studies show that only 20–30% of first-time launchers meet or exceed commercial expectations. Why? It’s rarely the science. More often, it’s the absence of a well-structured, realistic commercial plan. 

Companies that invest in commercial readiness early are far better equipped to: 

• Navigate payer negotiations. 
• Educate physicians and patients. 
• Build internal capabilities that support long-term growth. 

The Takeaway: Plan Early, Win Bigger 

If you’re not developing a first-in-class or ultra-orphan drug, the market won’t give you much breathing room. For most companies, biotech commercial planning should begin in Phase 2 or earlier, not post-approval. 

By prioritizing early market insight, stakeholder alignment, and strategic planning, your team can reduce risk and maximize the return on years of clinical effort. 

Need guidance on when and how to start your biotech commercial planning? 

Our team specializes in helping biopharma teams build commercial strategies that scale with development. Connect with us today. 

The BIOSECURE Act, currently making its way through Congress, has the potential to create significant disruption across the U.S. biotechnology industry.

If enacted, BIOSECURE Act compliance will become mandatory for federally funded biotech companies, requiring them to sever ties with several key Chinese biotechnology firms. This shift could impact everything from R&D to supply chains, creating legal, operational, and financial risks for unprepared organizations. 

To ensure business continuity and reduce exposure, biotech leaders must begin preparing now. Here are five essential steps to build a BIOSECURE Act compliance strategy: 

BIOSECURE ACT Compliance Step #1: Assess Business Risks and Compliance Exposure  

Start by evaluating your organization’s current ties to restricted Chinese entities. 

1. Review dependencies across R&D, manufacturing, supply chains, and data storage. 
2. Identify any use of Chinese-owned technology or services. 
3. Engage legal counsel to analyze contract language and assess regulatory and legal liabilities. 

Being proactive helps reduce compliance gaps and mitigate enforcement risks. 

BIOSECURE ACT Compliance Step #2: Secure Intellectual Property and Mitigate Contract Risks

Strengthening your organization’s IP protections is a key part of BIOSECURE Act compliance. 

1. Take inventory of trade secrets, patents, and licensing agreements. 
2. Determine where IP relies on Chinese technology or vendors and assess alternatives. 
3. Revisit vendor contracts to evaluate termination clauses, financial penalties, and compliance triggers. 

This step ensures long-term IP security and shields your organization from unexpected legal or operational interruptions. 

BIOSECURE ACT Compliance Step #3: Diversify Vendors and Storage Strategies  

Reducing overreliance on Chinese partners is essential for BIOSECURE Act readiness. 

1. Identify and qualify alternate CDMOs and CROs in the U.S., India, Latin America, or the EU. 
2. Conduct due diligence on vendor capacity, certifications, and regulatory compliance. 
3. Set up redundant warehousing and distribution strategies to avoid bottlenecks. 

Vendor diversification will help ensure uninterrupted operations as the act’s provisions come into force. 

BIOSECURE ACT Compliance Step #4: Plan for Financial Impact and Transition Costs  

Complying with the BIOSECURE Act may require strategic financial planning. 

1. Estimate the full cost of vendor transitions, infrastructure updates, and regulatory adjustments. 
2. Compare the costs and benefits of onshoring vs. outsourcing to approved international vendors. 
3. Explore government incentives like tax credits, loan guarantees, and grants to offset costs. 
4. Prepare for potential countermeasures from China, including restrictions on biotech materials. 

BIOSECURE ACT Compliance Step #5: Protect Employees and Strengthen Cybersecurity  

BIOSECURE Act compliance also includes preparing for geopolitical risks. 

1. Create contingency plans for employees traveling to China, especially those at heightened risk under national security laws. 
2. Monitor updates from the U.S. State Department regarding travel and international trade risk. 
3. Bolster cybersecurity defenses to safeguard sensitive IP and company data from potential cyber threats or espionage. 

Stay Ahead of BIOSECURE Act Developments 

Even before the BIOSECURE Act becomes law, taking action now gives your organization a competitive advantage. Track updates to the Biotechnology Companies of Concern List and FAR regulations, and monitor whether additional countries are added to future legislation. 

Danforth Health’s compliance and risk management experts can guide you through this evolving landscape with practical, customized support. Contact us today. 

Preparing for a capital raise? A dynamic pro forma cap table is a must.

Private life science companies are nearly always looking towards their next financing event. Whether seed stage or Series C, stakeholders must understand in advance how their post-raise ownership might change based on wide-ranging assumptions, including the amount of their investment and the company’s current valuation. A pro forma cap table is used to model various outcomes to inform decision-making and set proper expectations before the deal is done. But one size does not fit all.

Pro forma cap table templates and services are abundant online, but they produce static statements that fall short of revealing the most accurate picture in real time. They don’t account for the full range or complexity of possible inputs, such as dilution protection for current shareholders or pre-existing convertible notes. In contrast, Danforth offers a dynamic, customized pro forma cap table that can reveal all possible outcomes, in real time, with the assuredness required by company founders and leaders, directors, shareholders and prospective investors.

How We Help

• An expertly-built tool – Designed and customized by experts in financial planning and analysis with many decades of experience in modeling for life science financings and related negotiations.
• Dynamic capability – Inputs can be added or changed as new or existing shareholders make commitments, providing real-time data throughout the financing process.
• Flexible delivery – Clients can choose to run the tool themselves or have our team create and run the tool on their behalf as a managed service.  
• Fail-safe measures – Quality control is built into the tool to ensure accuracy and ease of use.
• Longer-term view – We understand the legal and other requirements that drive how to format, round and structure the pro-forma to transition smoothly from the pre-financing model to the pro forma cap table and ultimately to the post-financing cap table.