R&D Program Valuation and Prioritization - Keys to Being a Strategic Business Partner to the R&D Organization

2. It always takes longer and costs more than projected!

4. Lesson Learned Is the Finance role much different in a manufacturing environment than an R&D organization? Edgcomb metals  Plant manager put his best people on Inventory Management

5. Recommendation #1 In order to support the R&D project teams as a finance resource and business partner Put your best finance people on the R&D area External reporting Internal reporting Increased emphasis Assist R&D with putting together and accurate projection Monitor monthly activity Actual $ spent plus ESTIMATE to complete = total spend

6. Recommendation #2 Engage with R&D leaders Finance must attend the project meetings and issue a report to controller/CFO Finance understands the big picture as funds move from R to D to CMC to Regulatory to Marketing Changes in direction cause changes in spending When to pull the plug! Provide real feedback on $ spent

7. Recommendation #3 Finance Department’s role as an advisor to R&D on business decisions Cash is limited. Every project cannot be funded. Existing projects must be managed Expectations must be set with respect to cost “What if” scenarios need to be addressed. Additional trials, managing vendors

8. Recommendation #4Enhancing Financial Planning Systems Finance must drive the planning process. Start with excel before moving to complicated software. Top down to kick off the process Bottom up approach to provide a roadmap Pre-fill the budget amounts to get the process started.

9. Example 1Top Down Approach Assumption – 2 year’s of Cash on hand

10. Example of bottom up (000’s)

11. Recommendation #5 Finance must manage the Budget and Forecasting process Buckets, Ranges and Cushions One cost center per project Gl accounts – not too many and not to few Provide hard copy summary to R & D combined with an end of month meeting to discuss results. Rolling forecasts Monthly preferred Quarterly at a minimum Prior year carryovers.

12. Recommendation #6 Assessing the Economics of an R&D Engage ex FDA consultants to review: Preclinical Clinical CMC NDA Perform a robust marketing study for the target. Start with the end in mind.

13. Recommendation #7 Cost Management and Bench Marking Cost per patient How does it compare to other studies? How does it compare to other companies? Bring major vendors into the office quarterly. Prevent cost over runs before they occur.

14. Recommendation #8 Accounting for Clinical Grants & Internal Development Assign a specific person to monitor Excel templates. Time sheets External review by a third party.