How to make your clinical trials assets and not liabilities
Not all commercial nutrition clinical trials are created equally… and some could even do more harm than good
I put out a post about this recently, but I think there’s much more nuance and useful context I can add, specifically relating to a checklist of things that, if I were in your position as a decision maker within a nutrition products/ingredient, I would look out for.
Hopefully, this will provide a useful framework that:
#1 Will show you the real value that clinical trials can provide and why they can and should be viewed as an asset
#2 Which are the key points that differentiate asset clinical trials from liability clinical trials
Let’s begin…
Why would you classify clinical trials as an asset?
As I’m sure you know, assets provide cash flow (income) and have value in and of themselves…liabilities, by contrast, reduce cash flow.
When clinical trials are done right, they increase knowledge, like, and trust in the company as a whole and in the particular product.
How (good) clinical trials justify a higher margin
More specifically, in a competitive marketplace, buyers trust your product more than your competitors, which allows you to charge premium pricing, in turn yielding higher margins and greater profitability.
Sounds great, right?
But a baked-in assumption here that we’re coming across more and more is that any evidence is better than no evidence.
This is something that I’m increasingly firming against.
More and more companies, consumers, and investors are becoming scientifically aware, both due to increased scientific due diligence within companies in this field and due to AI providing increasingly accurate (although not perfect) summaries of scientific literature.
In short, people can tell good studies from bad, and there is increasingly nowhere to hide.
You can justify a higher margin only if the scientific leads from your buyers are impressed by the trials…
Not if they can turn it into Swiss cheese with a few pointed comments/questions
You NEED serious confidence that the study you’re commissioning is something that you are going to be proud standing behind when due diligence comes.
For many of you reading this, if R&D is a large part of your role, the studies you leave behind are, in large part, your legacy and credibility.
How can clinical trials increase a company’s valuation?
The area where I think this has been underappreciated among senior management is the ability of these assets to increase the company’s valuation when raising capital and selling the company.
A company that sells products that claim to improve health without evidence is…
flaccid.
A funny choice of words, I know, but let me explain.
Investors have historically asked about unit economics, growth rates, and revenue multiples when it comes to valuations.
This is useful because these are numbers that can be easily measured, tracked and improved within weeks.
But, at a certain point in the business, there are diminishing returns to increasing advertising spend and paying more for larger booths at Vitafoods.
Your competitors will also have good unit economics, and whilst you might have a nice website and some pretty colours… that doesn't count for much in terms of brand credibility.
This is what I mean by flaccid… there’s not much structure or credibility behind the numbers.
Well-designed clinicals become the card in your hand that allows you to negotiate based on this brand's credibility, leveraging higher revenue multiples in valuation.
So what differentiates a study you want to show off in your deck from one you want to hide in due diligence, and what could add millions vs take it away?
What makes a great commercial clinical trial?
Rigorous conduct with appropriate controls
Why it matters: it defines what participants should and shouldn’t do during the intervention, so the result reflects the product, not their behaviour.
Without it: the results could be pinned on anything but your product.
Placebo-controlled design
Why it matters: it isolates your product’s true effect against the placebo effect.
Without it: buyers and investors read the study as weak evidence because they don’t know if it’s an expectation effect instead of your supplement actually doing the work.
Relevant endpoints, measured at the right times
Why it matters: It captures the changes you’d expect to see, making the evidence convincing.
Without it: you're left with a study which shows no significant results… not exactly great for building trust.
Validated outcome measures
Why it matters: Defensible data beats unvalidated self-reported questionnaires.
Without it: the brand looks unscientific, and credibility (and valuation) takes the hit.
In summary
The right trial can buy credibility, which changes how both customers and investors view your products and your company (and its valuation), and, unfortunately, the wrong trial can do the opposite.
If you’re interested in what an “Asset” trial delivered within the next 12 months might look like for your products or ingredients… let me know, and Dr Tom Jameson and I would be happy to discuss.
You can chat with both of us here…