Scaling Smart: Governance and Operational Pitfalls for Emerging Life Sciences Companies
Small and mid-cap life sciences companies often operate with a mix of urgency and ambition. Whether they’re advancing through clinical milestones, preparing for commercialization, or contemplating a public offering, these companies need to scale fast —but scaling smart is the real challenge.
In this stage of growth, governance and operational infrastructure can either serve as a launchpad or become a potential liability. In this post, we highlight key pitfalls and practical strategies—illustrated with anonymized case insights—for building resilient, right-sized governance frameworks that support both innovation and execution.
1. The Governance Gap: When Structure Doesn’t Keep Pace with Growth
Governance often lags behind operational maturity. That gap becomes increasingly visible as companies seek to attract institutional capital, initiate partnerships with Big Pharma, or prepare for late-stage trials.
Client insight:
We worked with a late-stage oncology company that had raised over $100 million in private financing, yet lacked formal board committee structures and had no independent directors. As the company pursued a strategic partnership with a global pharma, the lack of defined governance protocols raised diligence concerns. We helped them establish charters, refresh board composition, and align their oversight practices with investor expectations—without disrupting their momentum.
Smart scaling tip:
Introduce board and committee charters early—even in a lightweight form—and define clear responsibilities. Consider bringing on at least one independent director with operational or regulatory experience. Periodic board evaluations, even informal ones, can highlight where capacity or capability is lacking.
2. Compliance and Risk: Not Just for Public or Commercial-Stage Companies
Clinical-stage companies often assume compliance can wait until the commercial phase—but regulatory, reputational, and operational risks begin much earlier.
Client insight:
A diagnostics client preparing for their first FDA submission discovered during a mock audit that several key SOPs and clinical documentation protocols were insufficiently formalized. We worked with their leadership to implement a streamlined compliance framework that satisfied FDA and investor requirements—while still remaining practical for a lean team.
Smart scaling tip:
Build a fit-for-purpose compliance framework early. A part-time compliance officer or outside advisor can help develop core policies, design training for key personnel, and establish reporting protocols—without adding unnecessary bureaucracy. Governance around clinical trials, IP management, and partner relationships should be included in board oversight.
3. Operating at Speed Without Breaking Things
Fast-growing life sciences companies often stretch their internal bandwidth too thin—especially across legal, finance, and compliance functions.
Client insight:
A biotech firm advancing multiple programs simultaneously had outsourced key functions to consultants—but lacked centralized oversight of contracts and vendor obligations. When negotiating a regional licensing deal, they faced delays due to unclear IP ownership and inconsistent documentation. By implementing a cross-functional operations review process and consolidating oversight under a fractional COO, the company avoided further delays and improved transparency across teams.
Smart scaling tip:
Clarify roles, create simple processes for decision-making and reporting, and invest in systems that reduce dependence on any single individual. A strong general counsel or COO—whether full-time or fractional—can bring operational discipline without slowing innovation.
4. Preparing for Strategic Milestones: Think Ahead, Details Matter
Big milestones—like IPOs, acquisitions, or late-stage financing—demand governance readiness. Gaps in structure or documentation can slow transactions, reduce valuations, or even derail a deal.
Client insight:
A gene therapy company preparing for an S-1 filing realized late in the process that board minutes were inconsistently recorded, option grants were not properly approved, and several IP assignments had not been finalized. Our team led a governance cleanup process, coordinated with outside counsel, and helped establish diligence-ready systems and processes for underwriter and SEC review.
Smart scaling tip:
Governance and operations should be aligned with your strategic trajectory. Start building public-company discipline early: disclosure controls, investor communications, equity plans, and D&O insurance should be reviewed proactively. If a strategic partnership is likely, ensure your data, IP, and compliance functions can withstand deep diligence.
Conclusion: Build for What’s Next, Not Just for Now
For small and mid-cap life sciences companies, governance and operational infrastructure don’t need to be heavy—but they do need to be intentional. The companies that scale successfully are the ones that invest early in the right foundations, avoid common pitfalls, and treat governance not as a formality, but as a strategic advantage.
At GC Legal Advisors, we work closely with life sciences leaders to design pragmatic, scalable frameworks that support growth, mitigate risk, and create enterprise value. If your company is entering a new stage of development, let’s talk about how to scale smart—without slowing down.