Is 2024 the Year of Lean, Fractional C-Suites?

Pictured: Collage of part-time executives collaborating/Nicole Bean for BioSpace

It’s no secret that funding is harder to come by in the biotech industry these days. Until companies can generate strong scientific data, they are often on their own to bootstrap. In response, some have trimmed down their C-suites and put executive hires on the backburner for now.

Running lean isn’t a new phenomenon—it’s always been popular for its cash-savings advantages. Atul K. Tandon, the president & CEO of antibody firm NeoBiotechnologies, told BioSpace he chose years ago to staff a lean C-suite team that lacks executives in marketing and finance. But the approach is now growing in popularity as a way to target biotechs’ limited resources in the current funding climate. New startups are also exploring part-time executive functions in what’s known as a fractional C-suite.

Tandon said the lean format gives employees more autonomy in their roles, thereby allowing and encouraging them to take on greater responsibilities. Each time the team has had an opportunity to expand, Tandon and his colleagues— a scientific director, a business development and strategic partnerships leader and an operations officer—assess whether they can absorb further responsibilities and mostly find that they can, he said, adding that this has led to unintended positive outcomes, like retention.

“I am proud of the low turnover we have at NeoBiotechnologies, and I believe this freedom to operate has been instrumental in that,” Tandon said.

The capital saved from forgoing C-suite expansion was funneled into NeoBiotechnologies’ IP efforts, such as developing more antibodies and completing extensive validation on its properties, Tandon shared. The firm currently banks more than 10,000 monoclonal antibodies for cancer research and diagnostic use, he added. However, the tides may be turning as the firm gets ready to launch a direct-to-consumer product line. The most needed exec to take the company to the next level is that full-time marketing role, Tandon said.

“Traditionally, we have always operated as a lean start-up,” he said, but now that he’s working 12 to 14 hours per day, it’s time to break out of the lean model. “It’s impossible to do it all.”

Tandon’s predicament is exactly where a fresh C-suite approach by Portal Innovations, a life sciences venture capital firm, could come in. Fractional C-suites involve hiring executive talent like CEOs, COOs and CFOs on a part-time, contract basis. The model has exploded across industries because of its flexibility for both companies and executive employees.

After gaining experience as a fractional executive herself with part-time contracted roles as a senior executive with Dimension Inx., head of operations and a senior advisor with Reax Biotechnologies and CEO of ClostraBio, Managing Director Ritu Shah launched the Ex^3 fractional C-suite model for life science clients at Portal.

The way the structure works, she said, is that fractional C-suite candidates match with biotechs who are in need of the candidate’s experience. From there, the parties determine how much time the executive candidate can devote to the role, such as 25 or 50% of their total working hours. The fractional executive is paid as a contractor without various insurance add-ons, which gives executives freedom to work for multiple organizations.

“Biotechs definitely don’t have as much money as they used to,” Shah said. “Investors definitely aren’t giving as large of investments” as they were just five years ago when she transitioned into the biotech industry after decades in Big Pharma.

This fractional model, she argued, helps biotechs focus on completing the necessary tasks, like gathering preclinical or human data, to launch their Series A or B rounds and snag investors in the harsh funding climate. But like any variety of lean model, the greatest perk of the fractional C-suite starts at the bottom line. From calculations that Shah has run with Portal, fractional C-suite hires help biotechs save between 25 and 40% of the cost of a traditional C-suite hire.

Working with leaders on a part-time basis also allows both the company and executive to ensure that the arrangement is mutually agreeable before the role transitions to full time, Shah said. She’s currently in the process of growing Portal’s larger talent network to create bundled services for biotechs seeking C-suite support with operations expanding from the Midwest to Boston, Houston and Atlanta. “It gives the biotech and the individual [the opportunity] to see if this is a good fit.”

This model is also a good sign to investors that biotechs are taking their resources seriously and preserving them, she added.

“[This] started because dollars were harder to get, but I think it’s going to be around for the long-term because investors want to see more data,” she told BioSpace. “They want to see companies go further before making bullish investments.”

Karen Fischer is a freelance science writer based in New Mexico. Reach her at kfischerwrites.com.