Skysis | CASE STUDY
Finance to Cash Flow Breakeven
01 | BACKGROUND
Skysis has worked with clients who require an assessment of both the time and aggregate investment required until the company reaches cash flow breakeven. The scope of these financing assessments has included one or multiple compounds in mid-stage clinical development, with each asset having the potential for multiple indications.
02 | CHALLENGE
These financing assessments are not simply modeling exercises, but require the development of a detailed commercial operating plan. The commercial operating plan should incorporate risk-adjusted outcomes for variables such as the product label, timing of regulatory approval, utilization and reimbursement expectations by payer class, and resourcing strategy. Very often, the clinical development plan costs and timeline are well vetted, but the company’s commercial assumptions are based on a patchwork of preliminary market research findings – dependent on the sole outcome of the target product profile being fully validated in clinical development.
03 | METHODOLOGY
Skysis’ commercial strategy professionals start these projects by taking inventory of all existing clinical and commercial assumptions. Skysis’ commercial professionals then develop multiple scenarios surrounding potential commercial outcomes. Each of these scenarios requires development of a commercial operating plan that details – by function or workstream – the timing, cost, and sequencing of key commercial activities, milestones, and resourcing requirements. A GAAP financial model is then built for each scenario, which provides clear visibility into both the working capital investment and operating losses that require financing to cash flow breakeven.
04 | OUTCOME
These financing assessments often provide Boards and management teams with insights into a company’s commercial readiness and typically inform Board level discussions regarding the overall commercial readiness of the company, the timing and amounts of expected future capital raises, and whether selling an asset might be preferable to holding and financing it through commercial launch.
