The 2016 J.P. Morgan Healthcare Conference has concluded, and while the market backdrop for this year’s event was noticeably less positive than it has been in recent years, the conference was nevertheless rich with important lessons. We polled our team on what struck them most about the event, and what guidance they’d offer to companies attending future conferences. We found their responses illuminating, and we think you will, too. Enjoy.
Despite the significant number of companies that went public in the life sciences sector over the last couple of years, I was surprised by the number of really interesting biotech companies that are still private. While the IPO market doesn’t look great right now, when it opens, there will be some great companies ready to go public. That could help lead to another extended period of time for companies to go public.
We saw a noticeable shift in tech companies’ attitude about being classified as a healthcare company. Healthcare is a relatively more defensible industry than consumer or tech sectors in rough markets like this one. Management teams have found that investors in pure technology or consumer-sector companies are quick to sell their stock, given that they often don’t have a firm grasp on the industry trends or drivers.
It’s too early to give up on the IPO market for 2016. While the overall market conditions have been challenging to say the least, we saw many interesting companies who may still consider the IPO market.
Stick to your story even when the market is volatile and heading down. Market moves to the downside and the increased volatility in the biotech sector have been disconcerting to investors since the beginning of the year, and particularly during the J.P. Morgan conference. But remember, the buy side still wants an update on your company’s programs and the progress you are making on clinical development or commercialization.
I even encountered some investors during the conference who were gleeful with the market downturn because they believe it will provide an opportunity to invest in good companies that they considered to be a little bit overvalued at the end of last year. Regardless of market conditions, investors need to check in on your fundamentals and will make appropriate investment actions at the time they choose. Management teams can’t control the market but they can keep their companies focused on the key objectives that will ultimately drive value for their shareholders.
I learned that securing a place to “be” in advance of the conference is key to maximizing the effectiveness and efficiency of your meetings, as well as minimizing the drain on management’s time and energy. Westwicke secures a block of rooms for our clients, and those who take advantage of it are always thankful they did. It is quiet and provides a confirmed venue for meetings, rather than jockeying for space in a crowded lobby, bar or coffee shop. In addition, it provides a place with Wi-Fi and cell reception to take care of additional business that inevitably arises during the conference.
- Divide and conquer. It’s not necessary for the entire management team to participate in every meeting. The CEO should attend the most important investor meetings, but doesn’t have to attend them all. The CFO can handle some investor meetings leaving the CEO to focus on important customer or business development meetings.
- Pre-announce early. Companies are increasingly pre-announcing fourth-quarter results before J.P. Morgan, even if results are in-line with consensus. It allows management to be able to discuss fourth-quarter results during investor meetings. Historically companies release the press release on Monday morning. However we think it is better to issue the press release on Sunday morning. This gives your covering analysts time to see the PR on Sunday and management can answer their questions before they have to get a note out on Monday morning. This gives management has the ability to better control the message.
The risk of getting lost in the sea of meetings over the course of the conference is extremely high, so focus the last five minutes of each of your meetings on three key themes/takeaways that you want investors to remember about your story as they review the many meetings they attended. These three key themes should be concise; you want to be able to share them easily throughout the week, not only in the closing minutes of your formal one-on-one or group meetings, but also in the more conversational settings during the many social events that happen outside of the conference.
We suggest planning ahead, taking into consideration scarcity value and strategic goals (i.e. maximizing exposure, building new sell-side analyst relationships, developing investment banking relationships, and/or corporate BD, etc.). The more you can define and create limits and priorities on which meetings you want to take in advance, the more productive your schedule will be. We suggest allocating one to three days of meetings limited to your strategic priorities, and suggest that management teams split up to allocate time efficiently.
The things that make J.P. Morgan run smoother with less hassle are the little things:
- Good planning ahead of time. Use the meeting slots to connect with people or companies that are harder to get time with. Why meet with a company that you could see almost any time?
- Leave time in between the meetings. Running late seems to always add extra stress so don’t underestimate the amount of time spent talking to people on the street or how long it takes to catch an elevator up to a room.
- Sometimes the events that you don’t want to attend can be the best for networking and often the most fun.
After a full and exhilarating week, I came away with one truth. Yes, the equities market has started 2016 in a terrible manner and we all wish the backdrop were more encouraging to companies looking for capital to grow their business. With that said, there is still a great deal of capital looking to be deployed into well-run healthcare companies.
Valuation is the barrier to get over if companies want that capital. Every company is unique and every business model and management team is different. Let Westwicke provide you with guidance and access to some of those sources of capital.