Support for Your Life Sciences Company at Every Stage of its Journey

There are four main stages to the life sciences business journey — innovation, focus, growth, and exit. At each stage, your company’s needs are different. That’s why understanding where you are in your journey and where to focus your attention is important.

It’s also why you need to determine your role and what role you want to supplement with professional resources to help augment your journey.

What are the four main business lifecycle stages?

1. Innovation stage

You and several friends had an idea to launch a wellness app and are already developing it. To say you’re operating on a shoestring budget would be a generous statement. You know there’s a real market for your innovation but don’t know what step to take next. Now what?

You’re currently in the innovation phase, transitioning your idea into an incorporated business. In this stage, the company needs to secure funding and identify seed capital to continue app development and testing. Additionally, you’re inquiring about business formation and any available state or federal tax credits.

One of our clients found themselves in a remarkably similar situation. What began as a grad school project soon became a fully operational business. They initially used LegalZoom to draft their articles of incorporation and choose an entity type. When they enlisted our services, we helped them understand the tax implications for the business and investors between a partnership or limited liability company (LLC) and a C-corporation. Ultimately, they opted to convert to a C-corporation so as to avoid pass through tax implications, which made it easier to raise capital and potentially qualify for Qualified Small Business Stock treatment (Section 1202 stock).

Furthermore, we provided them with insights into various aspects of research and development (R&D) tax credits. We explained how elements of a development contract affect whether an expense qualifies for R&D purposes and how their entity could use these credits to offset employer payroll taxes.

As their entrepreneurial journey continued with several subsequent funding rounds, they needed help managing capitalization tables as well.

Starting and forming a business is a journey filled with nuances. From selecting the right entity type to understanding the implications of tax credits, every decision can iterate the downstream decision points. It's essential to navigate these complexities with informed guidance to lay a strong foundation for your business. Paul Carlson, Principal, CLA, Health Care Life Sciences

2. Focus stage

You are a vascular surgeon. You’ve been working on a device that improves surgical outcomes. You have a commercialized product and sales are doing extremely well. Progress is made daily and your business is coming together much quicker than you expected. You’re swimming in rapid waters and don’t know which way is up. Now what?

Life science can oftentimes start with a doctor who has an idea. We can then get started with the end in mind and help them along their entire journey. Brent Terhaar, Principal, CLA, Health Care Life Sciences

We often see this type of company led by a physician or scientist. While very good at the clinical or scientific aspects, as the company grows it’s sometimes wiser to outsource aspects of the business, such as having an outsourced finance and accounting, bookkeeping, payroll help, plus cashflow management. It’s during the focus stage that more detailed business and financial acumen is needed. Time is money so determining what makes the most sense (and cents) to do in-house versus outsourcing is an important decision.

3. Growth stage

You have a biomarker test for cancer. Your initial market was the United States and sales have been growing at a fast clip. There is now interest and opportunities emerging globally. You’re not prepared for anything overseas yet. Now what?

In this situation, the company should develop a go-to-market strategy and use global advisory services for opportunities arising overseas. For global advisory services, the company needs roadmaps for key countries, assistance establishing the business/entity, and assistance with cybersecurity and data privacy, as those laws vary from U.S. law. For global outsourcing services, the company needs nuts-and-bolts help — finance and accounting, CFO support, controller services — and tax compliance (federal, state, local, international) and accounting advisory.

For a life science company, navigating the decision points between international and U.S. business operations is particularly complex. It involves understanding regulatory requirements, intellectual property protections, and funding landscapes. Brent Terhaar, Principal, CLA, Health Care Life Sciences

4. Exit stage

You are a biopharma scientist now running a startup on your discovery. You’ve gained FDA approval on your drug, and it has a rosy outlook. You’ve already had a major pharmaceutical company express interest in acquiring your asset. Now what?

Selling your business can be a rewarding and exciting experience, but it can also bring some challenges and uncertainties. How do you know you’re getting a good deal? How do you keep your employees motivated and loyal during and after the transition? How do you work effectively with the new owners and integrate your operations smoothly?

Preparing a business for a succession event involves meticulous planning and strategic foresight. For private business owners, building value is a critical component. This can be achieved through enhancing operational efficiencies, diversifying revenue streams, and investing in innovation. It's also essential to establish robust governance structures and develop a strong management team to support continuity.

If you’ve been building value in your company or need a better handle on valuation, you’ll want to have a clear succession strategy, including deal management, consulting, transaction support, and even tax-wealth advisory.

How CLA can help with your business journey

At each stage of your company’s journey — from start-up to exit — you’ll need to make decisions about your business and finances. Time is money. Capital may be tight. Opportunities abound. This is where CLA can help. Our life sciences practice serves more than 1,000 companies — from biopharma to digital health and medical devices to laboratory instruments and services.

Our services span outsourcing, consulting, tax, assurance and wealth advisory — both domestically and globally. We can:

• Help you uncover blind spots
• Provide day-to-day support
• Assist with business formation
• Launch into new markets
• Comply with complex tax regulations
• Understand your company’s valuation
• Assess deals and prepare for any succession or exit strategy you may have

It’s a one-stop shop regardless of where your company is on its journey. When you work with CLA, you get all of CLA.

Contact us

Get support for your life sciences company from start-up to exit. Complete the form below to connect with CLA.