Solene Oncology, a hypothetical biotech company, has $12 million in the bank and expects its Phase 2 readout, when the team will have the trial results, in 18 months. The finance team needs to know when cash will fall below the amount it wants to keep on hand. That date helps determine when financing needs to close, and how much earlier the team needs to start.
A biotech funding strategy starts with the work needed to reach the next milestone.
Solene’s case shows how a promising Phase 1 result can change the development plan. Enrollment is expected to accelerate, manufacturing costs are rising, and the original budget leaves out additional regulatory work. The cash balance is the same. The plan it needs to cover is different.
Start With the Next Meaningful Milestone
Solene’s board wants to fund the program through the Phase 2 readout. That means budgeting through data analysis and reporting, along with the clinical, manufacturing, regulatory, and operating work that gets the company there. If the model ends when the last patient visit is complete, it leaves out the cost of getting the result the board is waiting for.
The same approach applies to a preclinical program, an IND submission, or preparation for a later-stage trial. For each milestone, list the work that must be finished, who owns it, and when the company expects to pay for it. Have the clinical and finance leads review the same timeline, so a change in one plan shows up in the other.
Translate the Milestone Into Cash Requirements
Here’s how Solene’s current estimates stack up. The amounts are illustrative and assume no new financing or other cash inflows.
| Funding item | Estimated amount |
|---|---|
| Operating costs over 18 months | $9 million |
| Clinical and development costs | $4 million |
| Additional regulatory and manufacturing costs, plus contingency | $5 million |
| Total cash needed through the Phase 2 readout, including contingency | $18 million |
| Less: current cash available | $12 million |
| Projected funding gap | $6 million |
The $6 million gap includes the contingency built into the $18 million estimate. It doesn’t tell Solene when it will need the money or how much it should ultimately raise. In the working model, split the $5 million line into expected costs and contingency for unexpected spending. Show the board’s minimum cash balance separately: that’s the amount it wants left in the bank. If the estimate doesn’t already account for that minimum, factor it into the financing requirement without counting it twice.
Check Runway Month by Month
A biotech funding strategy needs a calendar as well as a budget. Average monthly burn is a useful starting point, but payroll, clinical site invoices, and manufacturing deposits may fall in very different months. If a manufacturer moves its deposit from month nine to month six, Solene may need to close financing earlier even though the total program cost hasn’t changed.
Put expected payments into the months they are due and calculate the closing cash balance each month. Identify the first month cash is projected to fall below the board’s minimum. Work backward from there to allow time for investor outreach, diligence, and closing. If the company would breach its minimum before a realistic close, the board needs to consider which commitments it can defer and which other funding options it can pursue.
For a broader look at using assumptions and scenarios to guide decisions, see our guide to how financial models support startup growth decisions.
Stress-Test the Plan Before the Readout
Solene should compare a few versions of the same monthly cash forecast:
- Base case: Enrollment and spending follow the current plan, and the readout comes in about 18 months.
- Slower enrollment: The readout moves later. The team updates the months affected and adds the operating and trial costs that continue during the delay.
- Faster enrollment: The schedule holds or improves, but site, testing, or supply payments fall earlier. The team checks whether that brings forward the date it needs financing.
Compare the projected readout date, cash required, and first month below the minimum in each case. Keep the drivers visible. “Enrollment is two months behind plan” tells the board what to ask the clinical team and what to change in the forecast.
Time the Raise and Choose Capital That Fits
A biotech funding strategy should explain which sources of capital could cover the gap and when the money would actually be available. An equity round affects ownership. Grants and research contracts may cover specific work rather than general operating costs. Debt adds repayment obligations and may carry conditions that affect how much cash the company needs to retain. A partnership or licensing deal may fund development while committing future rights or economics.
The key is to match the source to the costs it can cover and the date those costs fall due. A potential award or deal can sit in a scenario. Keep it out of the base cash forecast until the team has a sound basis for relying on the amount and timing.
An investor-facing plan should say what the raise is intended to deliver. “This financing is intended to fund the program through the Phase 2 readout” gives investors a clear outcome. The supporting model should show the work involved, its cost, and the assumptions that could move the date.
Plan for What Happens After the Readout
The budget to get the result and the budget to act on it are separate decisions. If the data supports further study in a particular patient group, Solene may need more sites, additional testing, and manufacturing capacity. The team can outline those next-stage costs before the readout while keeping them separate from the $18 million estimate.
Our guide to how a business plan supports better business decisions explains how to connect that funding decision to the company’s broader plan.
Build that next-stage decision into the biotech funding strategy. When enrollment, vendor quotes, or regulatory plans change, update the cash forecast and revisit the financing date with the board. A budget approved months ago is only useful if it still reflects the work the team expects to do.
A Short Checklist for the Board
Before signing off on a biotech funding strategy, the board should be able to answer four questions:
- What result are we funding, and what work has to be finished to get it?
- How much cash do we need, and in which month do we fall below our minimum?
- What changes if enrollment slips or major payments arrive earlier?
- Which funding options can close in time, and what will we need to fund after the readout?
For Solene, the $6 million gap is the starting point. The monthly forecast gives the team something it can act on: a date by which capital needs to be available and a clear explanation of what it will pay for.
Byte Advisory helps biotech and medtech teams connect development plans with financial forecasts and investor materials. If you’re preparing for a raise, we can help you turn the next milestone into a cash plan your team can use.