Launching a new division in a biopharmaceutical organization is not for the faint of heart. Companies in this market must navigate a series of daunting challenges, including extensive upfront investments in research and development before a product can even be submitted for FDA testing. Quite simply, it can take years to bring a product to market – let alone generate the revenue required to become cash flow positive.
Access to the capital needed to finance these investments is therefore always front of mind for these entrepreneurs. Traditional finance frequently is not an option, given the lack of positive cash flow, low net worth, and still-developing operations plans.
This was precisely the circumstance one biopharmaceutical company faced recently. The company was in the process of developing new technology to solve common problems with drug delivery and efficacy. The technology needed to conform to FDA Current Goods Manufacturing Process (cGMP) protocols so it could be then licensed to contract development and manufacturing organizations (CDMOs).
As the company sought to build out its state-of-the-art research facility, financing critical infrastructure investments would be required to allow the company to develop this technology and bring it to market.
First American Equipment Finance has been a long-time participant in the healthcare industry and fully understands the challenges biopharmaceutical startups face. Because First American takes a long-term approach to building its client relationships, it is able to look past a company’s financial statements and instead focus on the value the company can deliver over the long run.
For this company, First American quickly customized a 36-month Dollar Buyout lease that bundled together equipment hardware, software and installation costs into a single lease package.
Cash flow is now stabilized for this company, thanks to the predictable monthly lease expense and known cost of ownership of the asset at the end of the lease. Best of all, with the necessary equipment in place, this company is now poised to complete the development of their ground-breaking technology and help bring important new drugs to market.