A chief financial officer in the life sciences needs to develop their skills beyond technical expertise. Catherine Moukheibir shares her advice for CFOs in biotech drawing from her experience being one and hiring people for that position.
Catherine Moukheibir’s career in biotech spans two decades. She has been a chief financial officer (CFO) twice, and has overseen the hiring of CFOs numerous times in her capacity as a chief executive officer (CEO), board member, and chair of the audit committee in numerous life sciences companies.
Her most recent executive role was as CEO and chair of the French biotech MedDay Pharmaceuticals, while her most memorable experience as a CFO was at Belgium’s Movetis, where she oversaw the company’s listing on Euronext and acquisition by Shire in 2010. Currently, she serves on the board of directors of Asceneuron, Biotalys, CMR Surgical, Ironwood Pharmaceuticals, DNA Script, and Orphazyme.
In your experience, how do the roles of CFO and CEO compare?
As in any position, if you’ve done the job yourself, it’s easier to be able to be a good role model for those who are doing the job at the moment, to guide and mentor them, and also to ask them the questions that you need to have answers to as a CEO, which are different than the ones you need to know when you are a CFO.
If you are a CFO, then in addition to the standard financial reporting, which is at the core of a CFO role, you have the responsibility for risk and audit under the oversight of the audit committee and the CEO. So there’s another dimension beyond the financial reporting that includes control, risk, insurance, etc.
The CFO normally is the right hand of the CEO or the chair, if it is an executive chair. And as the right hand, the CFO is more like a first among equals type. Among the whole plethora of various C-roles, the CFO and the CEO are very much a very close-knit collaborative team that collaborate on financing and executing the strategy, on scenario-playing different ways to fund it, different ways to assess risk around it, etc. So, being a CFO is extremely good training for the next step, which usually is CEO.
Normally, the C-suite is composed of specialists in our sector, which is life sciences. So typically in a biotech company, in the C-suite you are going to have science people, clinical people, medical people, finance people, possibly marketing people, and possibly operations people. But beyond the technical specialty of these heroes, all of them have the common denominator that they spend money. And the person who keeps the money is ultimately the CFO. So more than the others, the CFO needs to have a complete transversal view of the various functions in the C-suite. Think about it as a matrix: the CFO and the CEO are the horizontals and then the other C-suites are the verticals.
What is the typical path that brings people to the CFO position?
The traditional way to become a CFO is to be a chartered financial analyst (CFA)-trained person, or a research analyst from the industry who decides to move to the corporate side. Those are usually the entry points for CFO roles because they have the technical training and the financial modeling training. And then you have more the strategy type, what I call the capital markets CFO, and this is what I was.
The capital markets CFO has the training required to be able to read, understand, and sign off on the accounts but is not an accountant by training. It’s more a strategy and funding person, so the job of that kind of CFO is, for example, to raise money, to speak to investors and analysts, to join up the strategy of a company to its funding needs. That’s the kind of CFO I was. When you do that, you need to have another person with you, like a head of treasury or a head of finance, who is responsible for accounting and control and auditing. That’s the typical setup. All the companies that I know of need to have both functions, but the weight of the function varies depending on the stage of development of the company and what they’re trying to do.
For example, a private company that is trying to go public, that’s trying to do an IPO, clearly needs a capital markets CFO. Before that, it usually has somebody who is a CFA doing the finance function. Usually the capital markets CFO is an add-on to a more traditional CFA type.
There is a very healthy dose of serendipity as well. I got my first engagement as a CFO without ever having planned it. I came out of banking and into that job because I was asked to do it by a company that used to be my client at the bank. So I didn’t wake up one day and say, I think the next step of my career should be a CFO. Not at all. And if you go take a job that way, then you better lay aside a healthy chunk of time to learn the technical parts that you don’t necessarily know.
What do you look for in a CFO when you are hiring one?
Everybody who presents for the CFO role at any company, no matter what the stage, presents with an educational and professional pedigree that legitimizes their application for a CFO role. They all have the right finance toolbox. They all have the right experience. So for me, the real difference, what I really look for, is a fit with the corporate culture and team spirit. Will this person be able to gel with the rest of the executive team and with the finance function that is in existence?
You want to make sure the person coming in has a degree of mentorship ability, a degree of self-confidence without arrogance, a degree of wanting to teach their team, a degree of humility, a degree of respect for the rest of the team that will make them function properly as part of that team. They have to have respect for their colleagues and their technical knowledge, and they have to have the ability to work with them even though they may not know about finance.
For example, CSOs are very brilliant at the science, that’s why they’re the CSO, but they often don’t really understand cost control. So the CFO’s job is to be able to work with the scientific people, to show them the reason why they need to keep clear records, to stick to budgets, to come up with a budget to begin with. They need to be realistic and they need to be within an overall strategy. These two functions, science and finance, are at loggerheads. A good CFO will know how to bridge that gap, will know how to say, “I don’t necessarily understand everything you’re doing, and you don’t necessarily understand everything I’m doing, but let’s find the common ground so that I can help you do your job and you can help me do my job.” Not every CFO does that.
There are lots of very highly technically skilled CFO’s around but a considerably smaller number of people who can actually slot into an organization that they did not grow up in, and really function well. To me this has always been the biggest hurdle.
What advice would you give somebody who has the ambition to enter that career path?
Gain the trust of the board. Because the CFO, just like the CEO, is a very important part of the management team that is a recurring presence with the board and with the audit committee. Being able to function as an equal requires a degree of maturity, self-confidence and understanding of the broader strategic implications and processes of a company that again, go beyond those of any other member of the management team. That link of confidence that is mutual is the only way to be able to navigate issues.
Any company, from the biggest to the smallest, at some point will have money discussions, budgets that need to be changed, funds that need to be raised, capital allocations that need to be made, structural decisions that need to be done. All kinds of things. The only way you can manage change is if there is a climate of trust among all principals concerned, so that the probity and the advice and the knowledge of the presenters, meaning the CFO in this case, is never called into question. That way we can focus on the content, the substance, and not the form. But that is easier said than done.