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As the United States biotechnology industry continues to expand, the sector’s financial outlook continues its gradual improvement. In 2024, investors are providing increased funding to United States biotechs. That said, more stringent approval criteria are in place. Newer companies, and those without concrete clinical trial data, may find it difficult to obtain their research and operations funding.
Venture capital investments, along with follow-on funding, have been especially strong in 2024. Mergers and acquisitions also continue at an impressive pace. Although these are encouraging trends, initial public offerings (or IPOs) haven’t yet returned to normal levels. Larger-scale economic issues can also fuel a climate of uncertainty.
Overall, however, United States biotechnology firms are optimistic about their future growth prospects. That said, company CEOs and executives should ensure they are well positioned to navigate complex financial challenges. Lack of a proactive strategy can negatively impact the respective company’s forward progress.
Leen Kawas’ Keen Awareness of the United States Biotech Industry
Leen Kawas is Propel Bio Partners’ Managing General Partner. Based in Los Angeles, this steadily expanding biotech-focused venture capital firm works with start-up and early-stage businesses. These fledgling companies typically need financial, technical, and operations guidance. Although Leen Kawas welcomes all candidate pitches, she especially encourages female and minority founders to apply.
Prior to Leen Kawas’ Propel Bio Partners role, she capably served as biotech Athira’s Chief Executive Officer (or CEO). While there, she excelled in the management of multiple drug development cycles. In September 2020, Leen Kawas also successfully managed Athira’s IPO.
Leen Kawas’ well-rounded biotechnology expertise equips her to deliver informed insights on diverse biotech issues. She recommended that biotech leaders address three financial issues impacting their respective companies’ forward progress.
3 Financial Concerns for United States Biotechnology Leaders
Effective biotech leaders are well equipped to handle technological, financial, and organizational challenges that may arise. Specifically, Leen Kawas detailed three financial issues that merit United States’ biotech leaders’ attention.
Maximization of Appropriate Technology
Biotech leaders acknowledge the importance of remaining current with industry advancements. This knowledge can enable them to proactively identify and pursue new research avenues and business opportunities. Smart use of technology also helps drive more efficient clinical trial execution and achieve better hiring outcomes. Together, these positive developments place the biotech in a stronger competitive position.
Clinical Trial Advancements
In 2024, artificial intelligence (or AI) and machine learning (a form of AI) are playing ever-larger roles in clinical trials. Decentralized clinical trials are also taking place more often. Together, these technological advancements can produce multiple benefits. Notably, more efficient clinical trials result in lower costs and generate higher-integrity data.
In addition, AI and machine learning algorithms can accurately analyze extremely large datasets. These analyses can help pinpoint patterns and trends that traditional data evaluation methods would overlook. In turn, the intensive data analysis opens the door to highly targeted (and often effective) treatment interventions. This can help drive better trial efficiencies and patient outcomes.
Diverse Patient Population Recruitment
Clinical trial managers have historically found it difficult to convince diverse patients to participate in clinical trials. Many minority and otherwise underserved patients say they have never been asked to participate in a trial. In a related issue, targeted patients often decline to participate. They say clinical trial management teams often don’t reflect real-life patient demographics.
By harnessing digital platforms and tools, trial sponsors are often able to target a wider patient range (including those in underserved groups). In addition, biomarkers highlight patients more likely to see benefits from a specific therapy. Therefore, trial sponsors can target populations more likely to see positive outcomes from targeted treatments.
What Investors Want to See
Finally, biotech clinical trial sponsors should understand that investors increasingly want to support companies known for their innovation. Maintaining a commitment to utilize the best available technology helps draw investors’ interest (and ideally their funding dollars).
Efficient Clinical Trial Capital Allocation
Biotech leaders should ensure that the clinical trial sponsor efficiently allocates capital during each trial phase. A well-planned trial structure, including optimal methodology and endpoint selection, helps reduce the chances of expensive delays. Good trial design also helps decrease the need for unexpected trial arm additions. Again, good planning increases the likelihood of quality data generation, a strong factor in regulatory approval.
Patient Recruitment and Retention
Clinical trial patient recruitment (and retention) also figure into efficient capital usage. When the trial sponsor utilizes targeted patient recruitment strategies, and takes steps to keep patients engaged throughout the trial duration, dropout rates will be reduced. In turn, this helps keep the trial on schedule and within a preset budget.
Finally, keeping the lines of patient communication open helps build patient trust and fosters a stronger commitment. This increases the trial’s efficiency and leads to more successful outcomes.
Optimal Clinical Trial Management
As with any longer-term venture, good clinical trial project management increases the chances of timeline and budgetary compliance. The clinical trial sponsor should implement rigorous project management practices designed to gauge ongoing progress. When issues arise, quickly identifying them can spur a timely resolution and optimal resource allocation.
What Investors Want to See
With intensive competition for investment dollars, investors expect successful candidates to show a favorable return on investment. Biotechs that aggressively integrate capital efficiency maximization strategies raise their chances of obtaining more investment dollars. Other investors may also take note of these successful outcomes.
Realization of CRO Partnership Investment Benefits
Biotechs often partner with contract research organizations (or CROs) that conduct clinical trials on the biotech’s behalf. Leen Kawas noted that a CRO partnership provides the biotech with three key benefits. These advantages can make the biotech a more desirable investment target.
First, the CRO partnership enables the biotech to access the CRO’s proven expertise and research capabilities. This makes the investment less risky, as investors can easily see how their funds will be utilized.
Next, a CRO partnership facilitates the development of a well-structured study and a robust implementation plan. Biotechs, especially early-stage companies, often find it difficult to accomplish these goals without expert guidance.
Finally, a productive CRO partnership can help decrease a clinical trial’s duration and cost. The CRO’s effective clinical trial operation, and avoidance of quality problems that could affect the trial’s outcome, are also key to a positive result. Together, these factors spur capital efficiencies and lead to an improved return on investment.
Why Effective Biotech Financial Leadership is Key
Optimal application of technology can help facilitate a successful clinical trial and a productive hiring campaign. Leen Kawas noted that prudent use of available resources, and effective project management modalities, can help accomplish the stated goal while satisfying return-focused investors.
Written in partnership with Tom White
