Investor Relations: The Evolution of a Compelling Biotech Deck
The story of development-stage biotech companies is one of continuous fundraising. Not until approved products generate enough revenue to ensure a degree of self-sufficiency can you take a break from raising capital.
This process can take many years and many companies won’t make it. Either they’ll be acquired along the way or their product will fail one or more clinical trials.
As a company executive, near-constant fundraising requires you to tell your story again and again in order to update existing investors and persuade new institutions to invest. A cogent and convincing corporate deck is absolutely essential to your effort. Slides must reflect where the company stands at this very minute in its maturation process.
Consequently, I thought it would be useful to outline exactly how that deck should evolve over time, based on my client experience, so that you can think about whether your own deck is doing the work necessary for success.
Pre-Public Companies: Share the Promise
Decks for non-public companies conducting private rounds of financing are typically short on data and long on promise. If you haven’t yet raised substantial sums of money, you likely won’t have the kind of data that can convince investors that your potential drug product works. Instead, you will lean heavily on management experience and pre-clinical data.
In short, investors will need to take more on trust. To cultivate that trust, share information about the people and institutions who participate in your enterprise to confer credibility to the outside world about strategy and approach. These might be board members, early-stage investors, and key members of management and partners (if any).
Even early decks like these should clearly discuss the development pipeline and, at least qualitatively, include some detail on the target market, such as potential size.
It’s easy for these decks to get too scientific and include too much pre-clinical data. Resist the temptation to make them overly technical. Keep the deck short and produce back-up slides for those who want to delve into your science in a more in-depth fashion.
As with any deck, you need to include a slide on future achievable milestones so that investors know what to expect in the months and years ahead. Companies will and should be judged on these, so be realistic. Don’t overpromise.
You will need to demonstrate that you have sufficient catalysts upon which you will be able to raise additional funding in the future. Investors know that their dollars alone are unlikely to catapult a company all the way to profitability or a sale.
Newly Public: Ditch the Old, Add the New
After you’ve made your way through the IPO process, you should probably ditch the scientific advisory board and management slides. All of these are a matter of public record now that your company is listed.
What investors now care about is the progress you’re making toward getting potential drug products approved and eventually sold. If pre-clinical data has been superseded by clinical data, eliminate it. By all means, summarize it in a bullet point, but otherwise demote it to a back-up slide in the deck’s appendix.
Your slides should clearly present your lead product candidates, detailing what stage of development they are in and what the next steps are in developing them further. Corporate strategy should be defined so that investors know whether to expect product acquisitions, partnering announcements or whether you intend to start building your own commercial team.
Presentations and pronouncements will be followed by covering analysts and the market more generally. They will notice changes made to the deck, however subtle.
At this stage, you also should also be sure to provide guidance in terms of cash runway on a financial slide (or even two).
Mature Public: Contextualize the Good and the Bad
If you are a maturing public company, you have probably already announced first clinical data. You may have an ATM (at-the-market offering) in place and completed a follow-on. You’re now building up to an all-important value inflection point that every biotech entrepreneur and investor hopes for. This is the big data announcement. Your company may actually have more than one.
Importantly, your deck should now convey sufficient information to enable the market to accurately discern the results when they come out and understand just how good or bad the data is for your prospects.
Analysts should know what to look for: What constitutes success? What represents a mixed result? And what signals failure?
They should also know what your company plans to do in each of these scenarios and just how much further existing cash resources will take you. Ideally, your firm will have hedged its bets prior to the un-blinding of any data. The old adage holds here: Plan for the best but prepare for the worst.
By now your deck will be supplemented by detailed descriptions of pivotal trials underway and progress made to date.
Let me finish with three pieces of general advice for corporate decks:
- Assume that your audiences have little to no knowledge of your underlying science.
- Do not overwhelm would-be investors with acronyms. They may smile and nod at the appropriate moments, but they will not understand your investment thesis.
- Try to tell a compelling story that answers fundamental questions, such as: Why are your potential drug products important? Why do current therapies fail? Why are you likely to succeed? And, most importantly, why should anyone be buying your stock now?
The importance of successful storytelling cannot be overstated when it comes to raising money from investors. If you would like to learn more about how to get it right, contact us.
ICR Westwicke is the largest healthcare focused investor relations firm in the country. We provide customized investor relations programs and independent capital markets advice to small and mid-cap healthcare companies.
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