POLICY ON INDIRECT COSTS FOR SPONSORED RESEARCH AND CONTRACT STUDIES

Effective Date: 2/17/2017
Applies to: All Sponsored Research Agreements (SRA), Contract Research Agreements (CRA), and Collaborative Research Agreements involving external academic or research institutions.

1. Purpose

This policy establishes TheWell Bioscience’s standard approach regarding indirect costs (also known as Facilities & Administrative (F&A) costs or overhead) in sponsored research, contract studies, and collaborative research agreements with academic institutions and research organizations.

The purpose of this policy is to ensure that research funding provided by TheWell Bioscience is primarily directed toward direct scientific activities that generate measurable research outcomes, while maintaining financial efficiency, sustainability, and alignment with industry standards for early-stage biotechnology companies.

2. Scope

This policy applies to all external research projects funded in whole or in part by TheWell Bioscience, including but not limited to:

  • Sponsored Research Agreements (SRA)
  • Contract Research Agreements (CRA)
  • Pilot feasibility studies
  • Product evaluation studies
  • Technology validation studies
  • Collaborative research supporting product development, validation, or translational application

3. Policy Statement

3.1 General Principle

TheWell Bioscience prioritizes funding direct research activities, including:

  • Personnel directly performing the research
  • Research materials and consumables
  • Experimental costs
  • Analytical services directly tied to project outcomes

Indirect costs that do not directly contribute to specific project deliverables must be minimized.

3.2 Standard Indirect Cost Policy

As a standard company policy:

  • TheWell Bioscience does not provide indirect cost reimbursement for contract research or sponsored research projects; or
  • Where indirect costs are required by institutional policy, TheWell Bioscience will cap indirect costs at the lesser of (i) 5% of total direct project costs or (ii) $5,000 per project.

Under no circumstances shall indirect costs exceed $5,000, regardless of the percentage calculation.

This cap applies irrespective of the institution’s published, federally negotiated, or standard Facilities & Administrative (F&A) rate.

3.3 Justification

This policy is based on the following operational and strategic considerations:

A. Industry Standard Practice for Commercial Sponsored Research
Many biotechnology and pharmaceutical companies, particularly small and mid-sized biotechnology firms, limit or do not pay full institutional indirect cost rates, especially for:

  • Pilot studies
  • Feasibility studies
  • Product validation studies
  • Technology evaluation collaborations

These projects are distinct from federally funded academic research and are primarily intended to evaluate specific commercial technologies.

B. Direct Project Benefit Alignment
TheWell Bioscience provides:

  • Proprietary materials, reagents, and technology platforms
  • Technical expertise and scientific guidance
  • Experimental design input and technical support

These contributions reduce institutional infrastructure burden compared to traditional investigator-initiated research.

C. Early-Stage Technology Development and Feasibility Studies
Most sponsored projects funded by TheWell Bioscience involve:

  • Early-stage validation
  • Pilot feasibility testing
  • Product optimization
  • Proof-of-concept studies

These projects operate under constrained development budgets and require efficient allocation of resources toward direct experimental outcomes.

D. Sustainability and Scalability of Academic Collaborations
Maintaining a low or capped indirect cost structure enables TheWell Bioscience to:

  • Support a greater number of academic collaborations
  • Expand partnerships across multiple institutions
  • Accelerate scientific validation and product innovation
  • Enable long-term collaborative relationship.

Excessive indirect costs would significantly limit the number of academic collaborations that can be supported.

4. Exceptions

Exceptions to this policy may be considered only under the following conditions:

  • Joint grant-funded programs where indirect costs are externally mandated
  • Special circumstances approved in writing by executive leadership

Any exception must be approved by:

  • CEO or authorized executive officer
  • Finance or Legal representative

5. Implementation

All sponsored research agreements initiated by TheWell Bioscience must include language consistent with this policy.

TheWell Bioscience representatives should communicate this policy early in discussions with academic partners to ensure transparency and alignment.

6. Contact

For questions regarding this policy, please contact:

TheWell Bioscience
[email protected] or [email protected]