The Need for Expertise in Biotech Investor Relations

The biotech sector is notorious for its high-risk, high-reward nature. This volatility can be a major turnoff for many investors, which is why it’s essential for biotech companies to have a skilled team in charge of investor relations with extensive experience like our team here at Futurist Society.

An effective investor relations team can help to communicate a biotech company’s story in a clear and concise way, while also managing expectations among shareholders. They can also initially help to identify potential investors and cultivate relationships with them.

At Futurist Society, we have over multiple decades of public market experience working with biotech companies and we understand the importance of having a strong investor relations team in place. Our goal as a Biotech Investor Relations Firm is always to achieve a fair market valuation through the establishment of expertise and credibility for your organization.

We’re proud to have helped countless biotech companies achieve their goals and we look forward to helping you too. Contact us today to learn more about our services.

Expert Role of IR for Biotech Companies

An effective IR team can help a company navigate the treacherous waters of the biotech sector, and can also help to build trust with investors. By communicating regularly with investors and providing accurate information, a biotech company can minimize the volatility of its stock price and give itself the best chance for longevity in today’s public markets.

Every successful biotech company needs an IR team that has developed a deep understanding of the industry, as well as of the needs and concerns of investors. With this they will be able to provide a process of clear and concise information about the company, its products, and its strategy.

Corporate Communications

A biotech’s IR team is responsible for creating and executing a communications plan that aligns with the company’s goals. This plan will include regular updates to investors, as well as key outreach initiatives such as investor days, roadshows, and conference presentations.

The communications strategy should be tailored to the specific needs of the biotech industry, and should take into account the unique challenges and opportunities that companies in this sector face. It is also important to identify and engage with the right investors, as well as to keep them informed about key developments at the company.

An effective IR team can help a biotech company to prosper in the public markets, by communicating with investors and providing accurate information. By having a deep understanding of the industry and the needs of investors, they can create a communications plan that aligns with the company’s goals. This will help to build trust with investors and minimize volatility, giving the biotech company the best chance for longevity in today’s markets.

Manage Investor Relationships

The biotech sector is one of the most volatile and challenging industries in which to operate. Companies in this sector face many unique challenges, including a high risk of failure, a long product development cycle, and significant regulatory hurdles.

An expert biotech IR firm will understand how to develop and manage relationships with the investment community, including institutional investors, analysts, and the media. By cultivating good relationships with these groups, the IR team can help to generate interest in the company’s stock and increase its visibility.

In order to be successful in biotech investor relations, it is important to build a relationship with investors. This involves communicating regularly with them and providing them with up-to-date information about the company. It is also important to be responsive to any questions they may have.

Study Market Data & Identify Key Trends

Biotech is constantly in a state of research and development. In addition to the stock market and economic changes, IR firms must be aware of the market data surrounding clinical trial updates and drug approvals for competitors and other organizations within their niche.

A successful IR team is constantly monitoring the market and has a deep understanding of the analytical information surrounding their company and the biotech sector as a whole. They will use this information to provide accurate updates to investors, and to help guide the company’s long-term strategic planning.

The IR team must also be able to interpret and act on this information. This includes keeping track of stock price movements, volume trends, and analyst ratings. By doing this, the IR team can better understand how the market is reacting to the company’s news and make informed decisions about its communications strategy.

Know The Cash Flow

Biotechnology companies are valued based on their projected profitability compared to cash flows and other possible investments, whereas in every other sector, firms are evaluated against their anticipated profit margins over the longer term. And that future is rife with uncertainty.

The biotech business model is predicated on successful development and FDA approval of products, translating into hefty royalty streams down the line. But product launches are risky and can easily flop. And even if a product does well, it can take years for a biotech to see any real profits from it. So, you not only have to forecast out peak sales to patients and margins years into the future, you also have to estimate a company’s chances of success with its product development.

Biotech Burn Rates & Communicating Risk

A biotech company’s cash flow is usually determined by projecting out its burn rate—the rate at which it spends cash on R&D and operations—over the time frame it expects to be in business. And you need to do this even if you’re not yet profitable. That’s because most biotechs are valued based on their projected cash flows, which can be quite different from their actual profits (or losses) in any given year.

Biotech firms, on the whole, lose money. In fact, most have to go back to the capital markets again and again to raise cash for the next stage of their development pipeline. As a result, creating an event landscape that allows for sequential capital raises is important in developing an event environment conducive to successive capital calls.

Now, investors generally expect biotech firms to raise cash after the publication of positive Phase 2 or Phase 3 clinical results. On the first anniversary of their public debut, it is also anticipated that biotechnology companies will file at-the-market (ATM) financing agreements. Within the investment sector, there are generally accepted standards, and a successful biotech management team will implement the necessary papers in order to follow best biotech practices.

Highlight Proprietary Technology

Technological assets are a biotech firm’s most valuable asset, though that technology is only partially demonstrated especially for those companies that are in pre-clinical stage.

When it comes to investor relations, the greatest blunder that biotech firms make is being too close to the science and too taken with the as-yet-unproven technology. Successful biotech investor relations understands how to explain your technology and highlight the value in a beneficial way that is attractive to investors. It is important to remember that the average biotech investor does not have a Doctorate degree.

Your investor relations team should be able to translate the technology into language that is easily understandable, and can also create materials that help to explain the technology in more detail. They should also be prepared to answer questions about the technology from investors, analysts, and the media. By doing this, the IR team can help to build trust with investors and highlight the value of the company’s technology.

Understand Risk

The biotech sector can be a treacherous place for companies to operate. In order to be successful in investor relations, it is important for the IR team to have a deep understanding of the risk involved in the company’s business.

They must be able to communicate this risk to investors in a clear and concise manner, and also be prepared to answer any questions about it. By doing this, the IR team can help to build trust with investors and minimize volatility.

Direct The Narrative of What You Can Control

There are many risks for biotech companies during development, clinical trials and FDA approval including the safety and efficacy of the products being created. The market is also highly volatile, and can be influenced by a number of factors such as political changes, economic conditions, and scientific breakthroughs.

All of these risks must be taken into account when developing the investor relations strategy. The IR team must be proactive in identifying potential risks and communicating them to investors. This will help to ensure that investors have a full understanding of the company and its prospects.

There are few industries that are as strictly regulated as biotechnology. Every stage of the regulatory procedure has the potential to introduce unforeseen difficulties. While developing a compelling and understandable path through development and approval, biotech firms must also provide a waterproof business plan for the completed product.

Identify Opportunity

Biotech and pharmaceutical drug development is a multi-billion dollar industry meaning small companies with major breakthroughs can have unmatched gains in the market for the company and investors in multiples of their initial investment.

Biotechnology firms must therefore describe in reasonable detail the market space for their potential drug substances. Credibility is paramount here. You will almost certainly encounter rivalry, and your data and assumptions will be called into question. If you need to employ big numbers to convey the opportunity you’re looking for, don’t hesitate; just be ready to back up your story with credible reasoning.

Monitor The Competition

It is also important for the IR team to be aware of the competition in the sector. Investors will want to know how the company’s products compare to those of its rivals, and what advantages it has. The IR team must be able to articulate this information in a clear and concise manner.

Initially the higher your peak sales or average sales, the greater your company’s value will be. A multiple of forward projections of how much your products’ peak or average sales may be is needed to determine this. You’ll need to provide these numbers in some fashion, either directly or indirectly, for analysts and investors to generate a forecast of what your business could be worth.

Understand Market Conditions

It is also important to be aware of the current market conditions and how they could impact the company’s prospects. The IR team must be prepared to answer any questions about the company’s future in a volatile market.

By taking all of these factors into account, the IR team can develop a well-informed investor relations strategy that will help to build trust with investors. By doing so, the company can minimize volatility and maximize its chances of succeeding.

Summary

A well-run IR team is essential for any biotech company looking to succeed in today’s public markets. By communicating regularly with investors and providing accurate information, a biotech company can minimize the volatility of its stock price and give itself the best chance for longevity.

The bottom line is that a good investor relations team can be the difference between success and failure for a biotech company. If you’re on the search for a biotech investment, it’s important to do your homework and make sure that the company has a strong team in charge of investor relations.

Futurist Society has specialists that can help you navigate all phases of your company’s life cycle, whether it be private or public biotechs. Please contact us if you’d want to talk about how we might assist your organization.