Good CEOs and CFOs know that they only get a limited number of interactions with their buy-side and sell-side analysts each year. Analysts are busy people, with perhaps dozens of listed companies under coverage or on their watch lists. An earnings call is thus one of the few times that companies can have the undivided attention of their covering analysts and interested buy-siders. Use that time wisely. Here are some pointers to consider before you host your next biotech earnings call.
1. If You Have Nothing to Say, Say Nothing
They’re called earnings calls for a reason. If you’re not yet at the revenue-earning stage of your corporate cycle, think about whether or not you want to host a call at all. Yes, covering analysts will typically dial-in to hear what you have to say, but if you waste their time they may soon question the value of your calls and perhaps even delegate the task to a junior member of their team. For some development-stage biotechs, we recommend holding one earnings call per year near the beginning of the calendar year, when you can discuss your fourth-quarter financial results and set guidance for the coming year. Hold additional calls to focus on material business developments and clinical results.
2. Give Advanced Notice
Earnings season is a busy time for buy- and sell-side analysts. You will make things considerably easier for them if you give them advance notice of when you plan to hold your call and schedule individual follow-up calls with them well ahead of time. Once the press release has gone out announcing the time and date of your call — one week before the call is standard practice — follow up with an email asking your analysts if they’d like to schedule a time to chat afterward. This strategy should ensure the greatest possible audience in terms of quantity and quality.
3. The More You Say, the Less People Remember
It’s hard to pay attention to someone when you can only hear their voice, so be brief and be lively. Prepared remarks should last no more than 20 minutes. Don’t repeat your company’s strategy over and over again (unless it’s changed). Don’t read the release that you just issued. Don’t just repeat the achievements of the last quarter unless you’re giving more detail or providing new information. Analysts are listening to your call because they hope they will learn something new about you. Use earnings calls to provide updates and deliver news.
4. News Is Only News if it’s New
Be aware that news must be information investors have not heard before. Earnings calls are great times to trumpet new achievements, as long as timely disclosure requirements permit it. “Wow” your covering analysts with the targets you’re achieving and contextualize those accomplishments by explaining what they mean and how they impact the development of the company.
5. Tell it to Them Straight
Don’t pepper your earnings calls with fluff, clichés, jargon or so-called consultant-speak. Tell analysts the facts and tell them your take on those facts. If there’s bad news, don’t try and cover it up. The more vague you are about something, the more likely it is that analysts will ask questions about it in an attempt to decipher what it is you were trying to say — or trying not to say. Obfuscation of an issue is the surest way to bring attention to it. Analysts are looking for a clear strategy, which management can then deliver upon. They are looking for milestones by which they can judge your execution and performance. Provide these and make sure you meet them.
6. Dialogue Is Better Than Monologue
Earnings calls are one of the few occasions when companies can actually interact with their analysts. The experience will be a lot more rewarding for all involved if the encounter is truly interactive. There is nothing worse than listening to someone go on and on and on, regardless of how interesting we all think we are. Analysts want to be able to ask you questions and have you answer them. As such, they would like a substantial portion of your biotech earnings call allocated to Q&A. Let them ask their questions and channel your messaging and strategy into the answers you give. By all means, limit the number of consecutive questions an individual analyst may ask. But do not limit an analyst’s ability either to rejoin the queue to ask additional questions or to follow up with you at a later time.
7. Practice Makes Perfect
Please keep this in mind: analysts put their names and necks on the line when they recommend your stock and endorse you, your company, and your strategy. For them to take this valuable step for your company, they need to trust you. How you tell your story, including how you sound, is key to developing that trust with your analyst community. The way you sound will be interpreted as the way you run your company.
Do not rush. Do not sound unprepared. Do not sound uninformed. Do not sound casual. Prepare in advance, anticipate likely questions, and sound professional, polished, and in command.
Heed some of the above advice and you should be in a better position to host earnings calls that analysts want to listen to. Westwicke can help you in this regard. If you’d like to discuss your investor relations needs further, just get in touch.