Case Study: Managing Cash Burn and Building a Healthy Runway for Seed-Stage Success

Overcoming Financial and Operational Challenges

A VC-backed, seed-stage life sciences company, operating in both the UK and US, needed to build a cohesive operating and financial model to reflect its true runway. Previously relying on a fractional CFO and external advisors for tax and compliance, the business required a unified financial strategy to better manage cash flow, compliance, and capital calls.

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FD’s Approach

FD delivered a comprehensive solution that aligned financial management, tax strategy, and compliance under one integrated approach.

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Establishing a Scalable International Structure

With transatlantic operations, the company needed a financial framework built for cross-border growth.

• Transfer Pricing Optimization: Designed and implemented a tax-efficient inter-company structure, ensuring the appropriate allocation of IP returns, funding, and transfer pricing between the US parent and UK subsidiary.

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Optimising Tax Strategy & Compliance

FD helped restructure the company’s tax and compliance posture to reduce inefficiencies and align with long-term goals.

• Tax Structuring: Positioned the company as a UK entrepreneurial entity to maximize R&D tax credits and improve tax efficiency.
• Seamless Compliance: Integrated US and UK tax obligations, reducing external dependencies and improving operational consistency.

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Strengthening Financial Management & Cash Flow

A robust financial model was essential to guide the company through burn-heavy phases of drug development.

• Financial Assessment: Identified compliance gaps across US tax, UK tax, VAT, and R&D credits.
• Scenario Planning: Developed 3-, 6-, 12-, and 18-month projections, including daily cash flow modeling.
• Cash Flow Optimization: Improved working capital forecasting and mapped out cash needs under different growth and funding scenarios.
• Data-Driven Decision-Making: Embedded financial insights into strategic planning, enabling more informed decisions.

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Enhancing Operational Efficiency & Investor Readiness

To maintain agility and prepare for growth, the company required a lean but effective finance function and strong investor reporting.

• Outsourced Finance Team: Delivered ongoing financial reporting and controls for a fixed monthly fee, increasing efficiency.
• Capital Raise Support: Built financial projections and scenario analysis to support investor updates, contributing to a successful £5.5M raise in Q4 2024.

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Maximising R&D Tax Credits

FD significantly enhanced the company's ability to claim R&D tax credits, improving its cash runway.

• Restructured for Higher Claims: Increased R&D tax claims from £60K in 2020 (via previous advisor) to £280K in 2021.
• Ongoing Tax Benefits: Filed successful R&D claims for 2022 and 2023, each yielding over £1M.

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The Outcome: Comprehensive Solutions for Financial Stability

FD’s strategic and integrated support enabled the company to scale confidently with a longer runway and stronger operational controls.

• Risk Mitigation: Addressed key financial risks, enhancing investor confidence.
• Operational Alignment: Streamlined financial processes so leadership could focus on core innovation.
• R&D-Driven Runway: Secured over £2.5M in R&D tax credits from 2020–2023, significantly extending financial viability.
• Cost Efficiency: Delivered impactful results with a cost-conscious, startup-friendly approach.

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