ArQule is a Massachusetts-based biopharmaceutical company moving towards commercialization of a class of drugs called kinase inhibitors, which promises to help treat some rare cancers and other diseases. As the company’s CFO and one of its key strategic executives, Marc Schegerin has one overriding concern: ensuring the company keeps money flowing to its clinical trials as it lays the groundwork for product launch.
“We’re at an exciting stage where we’re seeing for the first time, internally, with pretty compelling evidence that our drug works in . . . patients who’ve exhausted existing therapies,” Schegerin said in a CFO Thought Leader podcast. “Our most important expense is adequate funding into the foreseeable future of everything our chief medical officer wants to do on the clinical side. It’s my job to ensure [these trials are] well funded and that we don’t run into a hiccup.”
The company launched in 1993 and is in a comfortable and secure financial position, Schegerin says. In June it raised $100 million in a common stock offering, the second such round it’s completed in the last year or so, and has a market capitalization of between $1 billion and $1.5 billion. “We’re relatively well funded for the next several years barring anything unexpected,” he says. “We’re small but very comfortable and secure in both our financing runway and our overhead.”
Winding path to job
Schegerin took a circuitous path to CFO. He has both MD and MBA degrees from Dartmouth and spent the first years of his professional career on the investment banking side, analyzing and funding biotech startups for Goldman Sachs and other Wall Street firms before switching roles and moving into the executive suite. Among the companies he worked for prior to joining ArQuel is Biogen, one of the largest biotech companies in the country.
Aside from overseeing financial operations at ArQuel, Schegerin serves as head of strategy, a role that relies heavily on his background in both investment banking and medicine. He relies on his finance team to manage the day-to-day financial operations, which allows him to keep his eye on the big picture and help the executive team decide which clinical trials to conduct based on their resources, the diseases that their drugs are best positioned to treat, and the markets they want to enter.
“We have a very strong finance team, and we’ve only made modest changes to it in the last year or two since I’ve been here,” he says. “We’ve retained and incentivized the people who have gotten us to this point in the finance group. There have been a couple of key promotions, including the controller.”
He’s also added staff to help the finance team adopt new software and bring in-house innovative approaches to the accounting function, as well as an assistant controller.
Focus on trials
On the strategic side, Schegerin's main focus is on allocating resources to advance the drugs they intend to take to market.
“We don’t have funds to do studies on all the possible diseases in which this drug could work, so we have to choose,” he says. ”And it’s not immediately obvious that you should choose an indication that’s larger but more crowded. [It might be better to choose] a smaller indication where we can be first and best. That decision requires tactical analysis but it also requires strategic thinking that goes beyond the numbers."
To Schegerin, strategic thinking means "teasing out how much money we have, how much we would need, when we spend it, what is the endgame, [and] where can we have the biggest impact for the most patients." This is where his team spends much of its energy, "thinking, down the road, where we can have the biggest impact. You have to decide now, because you have to start a trial in disease X as opposed to disease Y.”
Schegerin says the company is nearing critical inflection points for some of its drugs and will be looking at important decisions in the near future, primarily launch details, to help it take its lead drug to market. “When is the time to do it, earlier for less money or take the risk, progress it further, and potentially do a much richer deal with a larger partner?” he said. “We’re at a critical juncture and for me that was really exciting.”
Schegerin didn’t give a timeframe, but Bill Koski, an equity analyst that tracks the company, said on Seeking Alpha there’s a 70% chance it will be ready to launch its lead drug in the next 18 months.