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.

By Saad Belcaid · myoProcess · April 2026

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:

The range matters more than the median. A 20-patient healthy-volunteer SAD/MAD small molecule in CNS runs ~$8–15M of direct trial spend. A 60–80 patient oncology Phase 1 with biomarker work, PK-rich sampling, and imaging runs $30–50M+. Therapeutic area drives nearly 3× variance in per-patient cost (Sertkaya et al., Clin Trials 2016: mean per-patient cost Phase 1 = $36,500; oncology & cardiovascular 2–3× that).

Pre-FIH load adds $10–20M that CFOs routinely bury in "R&D":

• GLP tox (rodent + non-rodent): $4–8M
• CMC / GMP supply for FIH: $3–10M (biologics high end)
• Regulatory + IND prep: $1–3M
• Internal FTE carry through IND review: $2–5M

Combined, the honest IND-filing-to-Phase-1-readout budget for a single clinical-stage asset is $40–55M for small molecules, $55–80M for biologics/cell therapy.

2. What the S-1s actually disclose (2023–2025 clinical-stage IPOs)

Pulled from SEC EDGAR S-1 / 424B4 filings and subsequent 10-Ks:

Two patterns jump out:

1. 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 ~$320M, vs. ~$180M for the 2020–21 window.
2. Use-of-proceeds allocations for "lead program through Phase 1/2 readouts" cluster at $120–200M — roughly 2–4× the Tufts baseline. The delta is explicit buffer; CFOs and underwriters are pricing in the slip case.

What this tells a private CFO: if the public comp raised $300M+ with a Phase 1 asset, your Series C needs to underwrite ~$150M minimum to credibly reach FIH data — assuming you want to IPO or strategic-exit from a position of strength rather than a financing corner.

3. Worked scenario — the $60M biotech

Implication: the "$60M at IND" founder-CEO narrative of "we're funded to readout" is structurally false at industry-norm timelines. The honest number is $90–125M to reach readout, which means a bridge or crossover round is required, not optional. The only question is whether the CFO triggers it at month 8 (from strength) or month 16 (from weakness).

4. Where the CRO math has shifted

• Pass-through % of total trial cost is rising. Medpace 2023 10-K: service revenue $1.89B, reimbursed costs $669M (~26% of reported). On biotech Phase 1 contracts specifically, pass-throughs are 35–55% of total program cost. Site fees, central lab, IRT, and translational assays are the drivers.
• CRO gross margins on biotech are ~25–30% (Medpace 2023: ~27% adjusted EBITDA margin; ICON segment disclosure consistent). 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. Medpace and ICON commentary on 2024 calls both flagged biotech customers pushing harder on milestone sequencing and cancellation protections as funding tightened.

What a sharp CFO pulls now

1. Rebuild the IND-to-readout budget from CRO line items, not top-down benchmarks. Demand pass-through line-item detail from the CRO proposal — site fees, central lab, IRT, translational, monitoring. If pass-throughs are <30% of total, the bid is under-scoped and you'll see change orders.
2. Model two runways in the board deck every quarter: base (protocol on time) and slip (+6 months, +20% pass-through). Report both. Investors are already running the slip case; showing you do too is credibility.
3. Tie 30–40% of CRO fees to milestones, not time elapsed. FPI, 50% enrolled, last patient in, database lock. This is now standard ask on Phase 1 contracts per 2023–24 CRO earnings commentary.
4. Trigger bridge conversations at the 18-month-of-runway mark, not 12. Crossover investors want 6+ months of diligence time; bankers want 9. The "12 months of cash" panic window is where you lose pricing leverage.
5. Benchmark your per-patient cost against Sertkaya et al. 2016 ($36.5K mean Phase 1, TA-adjusted). If your CRO bid is >2× the TA-adjusted benchmark, you're paying for scope your protocol doesn't need — or the CRO is pricing in risk you haven't surfaced.
6. Separate CMC/supply spend from clinical trial spend in internal reporting. Different risk profiles, different financing instruments (venture debt often covers CMC; not clinical). Lumping them hides the real clinical burn.
7. Put a hard cap on pass-through overruns in the MSA. Standard CRO template allows uncapped change orders; a 15% pass-through cap (with written re-approval above) is negotiable and saves $3–8M on a typical Phase 1.