The Pre-FIH Runway Gap
Why clinical-stage biotechs keep under-budgeting the walk from IND to Phase 1 readout — and the numbers a CFO should be modelling in 2026.
TL;DR
- The IND-to-Phase-1-readout walk costs more than most pre-IPO decks model. Tufts CSDD pegs median out-of-pocket Phase 1 cost at ~.3M per program (DiMasi et al., Journal of Health Economics 2016; inflated to 2024 dollars ≈ –34M). Add IND-enabling GLP tox and CMC carry-over and the pre-FIH-to-readout envelope is routinely –55M for a single small-molecule or biologic asset.
- Timeline slippage is the silent runway killer. BIO / Biomedtracker Phase 1 duration averages ~2.0 years from FPI to primary completion. CFOs plan for 12–15 months. Every extra quarter at –5M/mo clinical-stage burn is –15M of unbudgeted cash.
- Median clinical-stage biotech cash at Phase 1 entry is ~18–24 months of runway, below the 24–30 months public investors now demand post-2022 (Stifel / Jefferies biotech quarterly reports, 2023–2024). The gap is a structural financing trigger, not a one-off.
- CRO pass-throughs are now 35–55% of total trial cost, up from a historical ~30% — driven by site fees, central lab, and IRT (Medpace, ICON 10-Ks 2023). Direct service fees are no longer where the negotiation lives.
- The sharpest CFOs run two runway models in parallel: a base case tied to protocol-defined FPI-to-readout, and a “slip case” adding 6 months + 20% pass-through overrun. If the slip case breaches 12 months at readout, the bridge needs to be live today.
1. What the IND → Phase 1 readout actually costs
Published Phase 1 cost benchmarks sit in a surprisingly tight band once you normalize to 2024 dollars:
| Source | Phase 1 cost per program | Notes |
|---|---|---|
| Tufts CSDD / DiMasi 2016 (JHE) | .3M (2013 $) → ~ (2024 $) | Industry survey, capitalized excluded |
| JAMA Intern Med, Moore et al. 2018 | .5M median (pivotal-adjacent Phase 1) | ClinicalTrials.gov + FDA data |
| Deloitte “Measuring ROI in Pharma” 2023 | ~–40M Phase 1 loaded | Top-20 pharma; biotech typically 15–25% lower |
| Evaluate Pharma / BioPharma Catalyst | –50M range by TA | Oncology and rare disease skew high |
The range matters more than the median. A 20-patient healthy-volunteer SAD/MAD small molecule in CNS runs ~–15M of direct trial spend. A 60–80 patient oncology Phase 1 with biomarker work, PK-rich sampling, and imaging runs –50M+. Therapeutic area drives nearly 3× variance in per-patient cost (Sertkaya et al., Clin Trials 2016: mean per-patient cost Phase 1 = ,500; oncology & cardiovascular 2–3× that).
Pre-FIH load adds –20M that CFOs routinely bury in “R&D”:
- GLP tox (rodent + non-rodent): –8M
- CMC / GMP supply for FIH: –10M (biologics high end)
- Regulatory + IND prep: –3M
- Internal FTE carry through IND review: –5M
Combined, the honest IND-filing-to-Phase-1-readout budget for a single clinical-stage asset is –55M for small molecules, –80M for biologics/cell therapy.
2. What the S-1s actually disclose (2023–2025 clinical-stage IPOs)
| Company (ticker) | IPO | Cash post-IPO | Stated runway | Lead asset stage at IPO |
|---|---|---|---|---|
| Structure Therapeutics (GPCR) | Feb 2023 | ~ | Into 2026 | Phase 1 GSBR-1290 |
| Apogee Therapeutics (APGE) | Jul 2023 | ~ | Into 2027 | Pre-IND / Phase 1 biologics |
| CARGO Therapeutics (CRGX) | Nov 2023 | ~ | Into 2026 | Phase 2 (Phase 1 completed) |
| Kyverna Therapeutics (KYTX) | Feb 2024 | ~ | Into 2027 | Phase 1/2 CAR-T |
| Alto Neuroscience (ANRO) | Feb 2024 | ~ | Into 2026 | Phase 2b |
Clinical-stage IPOs in 2023–24 raised materially more than 2020–21 cohorts because the window required 3+ years of runway past Phase 1 readout. Median post-IPO cash in this cohort is ~. Use-of-proceeds allocations for “lead program through Phase 1/2 readouts” cluster at –200M — roughly 2–4× the Tufts baseline.
3. Worked scenario — the biotech
Setup: Private clinical-stage biotech. Single lead asset. cash at IND filing. Monthly burn currently .2M. Post-FIH burn expected to rise to .5M/mo.
Base case (protocol on time): Month 0–3: .6M → Month 3–18: .5M → Month 18–21: .0M. Total: ~.1M consumed. Cash at readout: −.1M.
Slip case (+6 months, +20% pass-through): Add (6 months) + (pass-through overrun). Total: ~ consumed → gap of .
The “ at IND” narrative of “we’re funded to readout” is structurally false at industry-norm timelines. The honest number is –125M to reach readout.
4. Where the CRO math has shifted
- Pass-through % of total trial cost is rising. On biotech Phase 1 contracts, pass-throughs are 35–55% of total program cost.
- CRO gross margins on biotech are ~25–30%. A CFO negotiating direct service fees is fighting over the smaller half of the budget.
- Milestone-tied payment structures are now negotiable where they weren’t pre-2023.
What a sharp CFO pulls now
- Rebuild the IND-to-readout budget from CRO line items, not top-down benchmarks. Demand pass-through line-item detail from the CRO proposal.
- Model two runways in the board deck every quarter: base (protocol on time) and slip (+6 months, +20% pass-through).
- Tie 30–40% of CRO fees to milestones, not time elapsed. FPI, 50% enrolled, last patient in, database lock.
- Trigger bridge conversations at the 18-month-of-runway mark, not 12. Crossover investors want 6+ months of diligence time.
- Benchmark your per-patient cost against Sertkaya et al. 2016 (.5K mean Phase 1, TA-adjusted).
- Separate CMC/supply spend from clinical trial spend in internal reporting.
- Put a hard cap on pass-through overruns in the MSA. A 15% pass-through cap is negotiable and saves –8M on a typical Phase 1.
Sources referenced
Tufts Center for the Study of Drug Development (DiMasi et al. 2016, Journal of Health Economics; Tufts Impact Reports 2022–2023); JAMA Internal Medicine (Moore et al. 2018); Sertkaya et al., Clinical Trials 2016; BIO / Biomedtracker Clinical Development Success Rates 2011–2020; SEC EDGAR S-1, 424B4, and 10-K filings for Structure Therapeutics, Apogee Therapeutics, CARGO Therapeutics, Kyverna Therapeutics, Alto Neuroscience (2023–2024); Medpace 2023 10-K; ICON plc 2023 Annual Report; Deloitte “Measuring the Return from Pharmaceutical Innovation” 2023.