Biotechnology · Pharmaceutical and life sciences
Programme-level spend and runway for biotechnology companies funded by milestones
A biotechnology company spends ahead of revenue for years. It is funded by equity rounds, grants and licensing deals, each with its own conditions. We cost each research programme and track spend against the milestones that release the next tranche. Runway then becomes a forecast by programme rather than a single number.
In one paragraph
Biologics and biosimilars developers, enzyme and industrial biotech firms, and platform and research-services companies are often pre-revenue, or turn over ₹5–150 crore. Their finance function serves investors, grant bodies and partners at the same time. Each asks a different question of the same spend. Founders, CFOs and finance leads need one set of books that can answer all three.
Founder and chief executive, or CFO where one is in place
The economics
How the money moves in this trade
Most biotechnology spend is people, consumables and outsourced studies directed at a few programmes, each with a long, uncertain path to value. Funding arrives in tranches. Equity rounds are tied to milestones, government and philanthropic grants carry utilisation conditions, and licensing or co-development deals pay upfront and on milestones. Each source expects to see its money spent on the work it was given for.
Accounting judgement is unusually consequential. Whether development cost is expensed or capitalised, how grant income is matched to the cost it funds, and when licensing income is recognised all change the reported result materially. Meanwhile the number that matters most to founders is how many months of work the cash will fund. That depends on programme plans that change with every experiment.
The problem
Where the numbers usually break down
Spend is not attributed to programmes
Salaries, consumables and shared equipment are recorded by nature, not by programme, so the board cannot see what each programme has cost or what the next stage will need.
Grant utilisation is reconstructed at reporting time
Expenditure eligible under a grant is identified only when the utilisation statement is due, and some of it cannot be evidenced after the fact.
Capitalisation decisions are undocumented
Development cost is expensed or capitalised without a written basis for when the criteria were met, which invites questions in audit and diligence.
Runway is a single number
Months of runway are calculated from total cash and average burn, ignoring planned studies, hiring and milestone-linked inflows that change the picture sharply.
Outsourced study costs are booked on invoice
Contract research and testing invoices arrive late and in lumps, so the cost of work already done is missing from the month in which it was performed.
What we do
The work, and the result each part produces
Programme cost reporting
People, consumables, equipment time and outsourced studies attributed to each research programme on a stated basis, monthly.
The board sees spend by programme and stage, not by expense head.
Grant and funding-condition tracking
Eligible spend tagged to each grant as it is incurred, with utilisation statements prepared from the ledger rather than reconstructed.
Grant reports are ready when due and supported by evidence.
Capitalisation and revenue-recognition papers
Written positions on development-cost capitalisation, grant income and licensing receipts, for review by your statutory auditor.
Judgement calls are documented before audit and diligence ask for them.
Runway forecast by programme
Cash forecast built from programme plans, hiring, study commitments and expected milestone inflows, with scenarios for delay.
Runway reflects the plan, and the effect of a delayed milestone is known in advance.
Accruals for outsourced work
Contract research, testing and manufacturing commitments tracked by purchase order and accrued as work is performed.
Monthly cost reflects the work done that month.
Investor and board reporting
A standard monthly pack covering spend against budget, programme progress in financial terms, runway and funding position.
Board meetings discuss decisions, not reconciliations.
Where we start
The first steps of an engagement
Ledger, grants and study contracts
We ask for the general ledger, payroll by person, each grant sanction letter with its eligible-cost rules, outsourced study contracts and purchase orders, and the board's current programme plan.
Spend re-cut by programme
We re-cut recent spend by programme and stage and tag the grant-eligible portion. Outsourced work already performed but not yet invoiced is identified at the same time.
Grant tagging at entry
Each expense is tagged to a programme and, where relevant, a grant when it is booked. Utilisation statements then come from the ledger rather than being rebuilt later.
Programme spend and runway pack
The first pack shows spend by programme against budget, grant utilisation to date, and a runway forecast under base and delayed-milestone scenarios.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Spend by programme and stage, against budget
- Grant spend tagged and utilisation evidenced
- Runway under base and delayed-milestone scenarios
- Committed but unbilled outsourced study cost
- Capitalised development cost, with the basis documented
- Funding tranches received against milestones met
Who it suits
Written for, and not the right fit for
- You need a valuation report for a share issue or a regulatory filing — that is signed by an independently engaged registered valuer or merchant banker.
- You need advice on clinical, scientific or regulatory strategy; that sits with your scientific and regulatory advisers.
- Venture-funded biotechnology companies reporting to investors and a board.
- Research-stage firms holding government or philanthropic grants with utilisation conditions.
- Companies preparing for a funding round or a licensing negotiation.
Services
Services this work draws on
Fractional CFO services
Senior financial leadership on the days you need it, not a full-time hire.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗Banking, funding and due diligence
Information a lender or investor can verify without a reconstruction.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
We are too early for a CFO. What would the work involve?
At the early stage it's mostly programme cost, grant tracking and a runway forecast the board can trust. That's a few days a month, not a full-time role, and it scales as the funding does.
Should we capitalise our development costs?
Only when the accounting criteria are met and you can show they were. We document the facts and a recommended position; your statutory auditor forms an independent view.
Who signs a grant utilisation certificate?
Where the grant requires a chartered accountant's certificate, an independently engaged CA signs it; some grant bodies expect that to be your statutory auditor. We prepare the utilisation statements and the ledger evidence behind them.
5th Quadrant performs accounting, programme costing, grant tracking, forecasting and reporting work. Statutory audit, grant utilisation certificates that require a chartered accountant's signature and statutory valuations are performed by independently engaged licensed professionals. Scientific, clinical and regulatory matters sit with your own advisers and the relevant authorities. Full detail is on our Professional Scope page.
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