As 2016 draws to a close, we look back on two and half years of Perlara spending. Let’s begin with burn rate. This figure shows our monthly burn since first cash inflows in April 2014:
In 2014, we completed model validation and assay development for our lead discovery program. In 2015, we completed a 50,000-compound, two-species HTS campaign in which we discovered a novel chemical lead series with pharmaceutical properties suitable for mouse validation.
Our 2015 monthly burn averaged $129,869 for a team of six full-time employees, and half a dozen consultants and CROs. In 2016 we’re averaging $169,362 per month as we hired more scientists in the lab and our CRO spend increased.
Top-Down Perlara Spending
Here’s another way to look at it. We’ve raised ~$4.7 million so far. Counting down from that, with our burn rate, you can see our runway. But don’t be scared! We’ve raised more money recently, and have our first revenue in Q4.
Rise of the CROs
The increase in 2016 monthly burn is attributable to one main cost…Contract Research Organizations. The first two years we were focused on R&D to identify molecules that could become therapeutic agents. Most costs were in our lab at QB3 where our senior scientists (Nina, Sangeetha, and Tom) worked hard. Once we identified molecules, the next step in drug discovery is to test on mice.
The mouse step to research is extremely expensive. This is a motivation for the Perlara platform–to reduce the number of unqualified drug candidates into the mouse phase, reducing the costs of drug discovery.
We’ve become friends with Vium (formerly Mousera) as our partner for mouse studies. We’ve also worked with Aravasc to develop the formulations used with the mice. Take a look at the CRO spend since August 2015:
Service Agreements
Another big cost that comes about in year 3 is service agreements. We bought a lot of equipment to get Perlara up and running (aka Perlstein Lab in the early years). Much of the equipment came with a 1-2 year warranty or service plan. Year 3 required us to begin buying extensive service plans to maintain our workflow and limit the number of disruptions due to malfunctioning equipment.
We decided to spend money on service agreements, to the tune of $48,000 so far in 2016. The alternative approach includes hoping something doesn’t break down. Once it does, service rates begin around $200/hr plus the cost of the expensive repair parts.
Legal
A cost that is tough to budget for is legal expenses, but it is clear that costs increase as we get closer to product, mainly more time with lawyers to evaluate and protect our IP. There are also costs for creating and reviewing contracts and agreements with consultants and employees. You might come across immigration lawyer costs and if you’re raising money, you’ll pay to have your investment docs created and the cap table continuously updated.
Take a look at our legal costs for the past 2.5 years:
Finally, looking just at 2016, here’s a broader view of how the Perlara burn breaks down:
You can see how this compares to 2015 and 2014.
- Overhead includes rent, insurance, subscriptions to the softwares and apps we use, office expenses and waste fees.
- Other includes legal, consultants, the service agreements, travel to conferences, and web/marketing.
Thank you to Tom Ruginis, our Finance and Operations advisor, and HappiLabs our Virtual Lab Manager for keeping this data organized and analyzable.
Leave no disease behind!
