What we chose to fund, and what the choice required

A development programme reached its planned review without meeting the predefined criterion supporting expansion. Scientific leadership did not recommend the next proposed step. The team had spent USD31 million over several years, and some colleagues argued for another attempt rather than close a programme to which they had committed much of their professional effort. The disagreement was understandable and needed a proper account of the alternatives.

I worked with the chief executive and scientific leadership to separate historical spending from the resources needed for a credible next question. The proposed next-year expansion required USD16 million. The available evidence did not support that proposal, and a smaller version designed mainly to fit the budget would not answer the intended question adequately. Finance did not decide clinical significance or participant safety. We explained the financial consequences of the scientific recommendation and the alternative plans put forward.

The board agreed not to fund the proposed expansion. At the same time, it approved USD2.6 million for closeout and transition, including the work identified by clinical, legal and people colleagues. Participant follow-up, records and contractual responsibilities were preserved according to the responsible teams' requirements. Twenty-two colleagues were affected: fourteen moved to other programmes and eight left with transition support included in the budget.

The difference between USD16 million and USD2.6 million was USD13.4 million less planned spending against that defined next-year proposal. It was not an immediate cash receipt, a recovery of the USD31 million already spent or a claim that the whole company cost base fell by the same amount. Redeployed colleagues continued to cost money in their new work, and the wider portfolio plan reflected that.

I would bring the closeout estimate into the original programme review framework earlier. Teams deserve to know that stopping responsibly is a funded option, not an instruction to disappear from the budget. The decision remained difficult, particularly for colleagues leaving the company. Its value was that the business could accept the evidence without abandoning the obligations created while obtaining it.

At 30 June 2026, Velmara held USD92 million in cash. The eighteen-month base plan forecast USD78 million of net cash use and a USD14 million closing balance before any new financing. A less favourable schedule, incorporating additional research and site costs and slower expected collaboration receipts, used USD96 million. That view exposed a USD4 million shortfall over the same period and made the financing question immediate enough to discuss.

Some shareholders preferred to wait for a later development readout that might support a better valuation. The chief executive saw merit in avoiding unnecessary dilution. I agreed that timing could affect terms, but argued that the operating plan should not rely on favourable evidence arriving before the cash conversation began. Scientific results and their interpretation were not under finance's control, and a financing process could take longer than the most comfortable plan assumed.

We prepared a proposal that compared the available capital, expected commitments and different timing cases. The board authorised an equity process, and a later round closed at USD60 million gross with USD3 million in transaction fees, producing USD57 million of net proceeds. Existing owners accepted dilution in exchange for additional funding capacity. The profile does not specify a valuation or imply that another enterprise would receive similar terms.

The new cash was added when the financing closed; it was not included in the June balance retrospectively. We then updated the event-based plan for current commitments rather than announce a universal number of extra months by dividing proceeds by last year's spending. A study expansion or supplier milestone could alter future cash use. The financing also did not demonstrate clinical success, approval prospects or the total funding needed to commercialise a medicine.

I would improve the initial investor discussion by showing the downside timetable alongside the preferred value story from the beginning. It helped directors assess the cost of waiting as a real choice, not a failure of confidence in the research. The resulting capital gave management more room to make portfolio decisions from evidence instead of from the pressure of an approaching cash constraint.

A period-end review initially suggested that external research spending was below plan. Clinical operations described substantial activity that did not fit that conclusion. Several supplier invoices had not arrived, and contract milestones did not always coincide with the work already performed. The apparent underspend therefore needed investigation before management treated it as capacity to commission more research.

I asked finance and the operating contract owners to review the relevant services using progress records, supplier confirmations and the terms of each engagement. The exercise identified USD3.8 million of incurred work missing from the initial estimate. Finance assessed the accounting treatment with the appropriate reporting specialists and increased the expense and liability estimate. No new work was authorised by making that correction, and the adjustment itself was not an immediate cash payment.

Project colleagues were concerned that a larger accrued-cost figure would look like an overspend caused by their teams. I explained that the problem was the completeness of the original financial account, while separately asking whether the underlying activity remained within its approved scope. Those questions could have different answers. The executive report distinguished the estimate correction from a change in the research plan and retained the supporting evidence.

We introduced a more regular operating confirmation before the close and tracked subsequent invoices against the estimates. For a later defined set of contracts, the absolute estimate-to-invoice difference fell from USD1.2 million to USD430,000 over two comparable review cycles. The comparison described estimation performance within that set, not a reduction in research cost or proof that all company accruals were accurate. It also required continuing attention to changes in scope and timing.

I would ask for evidence in the language contract owners already use rather than send another finance form without explaining its purpose. The lasting improvement was a clearer relationship between activity, estimate and later invoice. It gave management a more credible account of what it had consumed and what cash might still be due, even when the payment ledger looked quieter than the research operation.

A collaboration proposal offered USD12 million upfront and up to USD48 million linked to specified later development events. The potential USD60 million total was commercially meaningful, but it entered internal discussion as though the whole amount would fund the current portfolio. The agreement did not make the later events certain, and the distinction mattered to the commitments management was considering.

I worked with business development and legal colleagues to set out the payment conditions, expected timing and continuing responsibilities. The cash plan included the USD12 million when received and kept the USD48 million in separately described scenarios. Accounting revenue recognition required its own assessment of the agreement; neither the headline total nor the receipt date settled that question by itself. Finance's management view did not replace the formal reporting analysis.

The negotiating team worried that separating the contingent amounts would make a strong transaction look smaller to the board. I supported presenting the full commercial opportunity, but with its components visible. The board could value the potential partnership and still ask whether the unconditional plan remained funded if none of the later payments arrived. We did not describe the maximum consideration as a forecast or assign a false certainty merely because the contract contained precise amounts.

The agreement proceeded, and USD12 million was received. We committed USD3.1 million of that cash to the near-term collaboration work identified in the operating plan, while treating the remainder within the wider company cash forecast. That allocation was not a calculation of accounting profit or unrestricted surplus: other responsibilities and company costs remained relevant. The future USD48 million had not been received at the point described.

I would agree the internal vocabulary before a negotiation reaches its final stage. Upfront receipt, potential consideration, expected cash and recognised revenue should not compete as interchangeable descriptions of success. A clear account allows commercial colleagues to explain the opportunity accurately while preventing the company from spending money that still depends on evidence and events it cannot promise.

The development team needed access to specialist manufacturing capacity for future study material, but the timing and scale of the next requirement depended on evidence still being developed. A supplier offered a USD9.6 million production commitment with limited cancellation flexibility. Reserving the entire amount immediately would secure the proposed slot but commit substantial cash before management knew whether that route remained appropriate.

Clinical supply and technical colleagues assessed what work could usefully begin without prejudging the later production decision. Procurement and legal colleagues then negotiated a separate USD1.4 million reservation and preparation arrangement. It supported defined readiness work and a time-limited capacity option; it did not buy the full production run or establish that the resulting material would be acceptable for use. Quality and technical responsibilities remained with their designated owners.

Some development leaders preferred the larger commitment because they feared losing schedule certainty. The supplier also wanted a firmer commercial order. I supported the smaller arrangement only after understanding the specific work and access it purchased, including the possibility that its cost would not be recovered if the programme changed direction. An inexpensive option would have been unhelpful if it left the actual delivery dependency unresolved.

The board approved the USD1.4 million commitment and retained a later decision on the proposed production spend. The USD8.2 million difference from the initial proposal was uncommitted at that point, not a saving earned or a budget removed permanently. The selected route accepted residual scheduling risk and required a review before the option expired. The company did not claim that a reservation replaced supplier qualification or a medical decision about the study.

I would make the expiry, deliverables and alternatives more prominent in the initial board paper. A decision point is useful only if the organisation knows what it must learn before reaching it. The case improved the sequence of commitment without pretending that flexibility is free. It also gave the technical team an explicit funding basis for preparation while the larger research question remained open.