The second quarter of 2022 was the weakest quarter for healthcare and biotech IPOs in more than five years. Some media headlines have predicted that it marked the bottom of the biotech market.
The XBI biotech index fund, which serves as an index for many companies that are eyeing a public debut, peaked in January 2021 followed by a fairly steady 16-month decline. But now, the XBI is on the rise. While it’s too soon to know if the XBI rise that kicked off in July 2022 will continue to mirror the rise that drove its 2021 peak, the climb appears to be signaling a comeback of healthcare and biotech IPOs.
If you’re watching the fund, you might now be considering reviving your plans to take your company public.
Whether your planned listing date is six or 16 months away, communications play a critical role in a successful IPO — up to and beyond listing day — and need to be executed with precision. The financials are important, but any business is much more than a balance sheet. Investors care about the story behind the company, what’s driving success quarter over quarter and year over year, the priorities informing your business, the core values of your company, the quality metrics, and the leadership team powering the mission forward.
For biotech and healthcare companies considering the public markets in 2023, the time to execute on IPO-readiness communications efforts is now. Quality communications plans ensure business value drivers are understood, accurately reflect potential market impact, and highlight corporate leadership. Learn key communications approaches for your biotech IPO and how to communicate effectively during the process.
What do audiences look for to evaluate a company approaching a public transaction?
Quality and efficient execution on a clear mission – As a biotech selling a potential therapy, healthcare-related technology, or other high-stakes idea or product, credibility is key. Although your company’s path forward may not always unfold exactly as planned, showing that your team can come together behind a mission and adapt to whatever comes up inspires confidence in the ability to deliver on corporate and financial objectives.
The right team and the right approach – A company’s CEO, and in some cases other members of the senior management team, can have the power to make or break the future of a company, especially around a closely watched IPO. Even with the best business plan and strong capital support, it’s critical to demonstrate and communicate how and why a company’s leadership team includes the right people. That team has to demonstrate targeted expertise, relevant backgrounds, and ability to communicate the vision and steer the ship forward, even through the roughest of waters.
Validated market needs – By clearly communicating the market need, you are signaling the potential for your company’s initial stage of growth. While anecdotal evidence can provide meaningful context for the corporate story, it’s important to also provide facts that support your market assumptions. Tell the story and sell the dream, but back it up with facts.
Financial strength and transparency – Be transparent about where and how far your current funding can take you with runway estimates, while also providing yourself some cushion to under-promise and over-deliver. Since many biotech companies have no revenue or profit yet, your milestones and ongoing events will serve as a means to keep Wall Street engaged and interested. It will also provide them with a benchmark to rate your execution capabilities and potentially increase your company valuation.
Strong partnerships and relationship building across industry – A company’s working relationships, especially with key public and/or private institutions, can speak volumes about its potential. Entering into industry collaborations may serve as concept validation of your idea, technology, product, etc., but productive and long-term partnerships can also provide objective, third-party support for your business and mission. And when dollar amounts associated with these partnerships can be communicated, those can become an important benchmark for the financial potential of your business.
What does your communications planning need to include for IPO-readiness?
Investor relations, capital markets and public communications guidance – An integrated strategy across these functions ensures effective and streamlined fundraising efforts and relationship building across financial audiences and stakeholders. A thoughtful approach to these areas not only helps to support your company’s ongoing operations, but also provides a strong foundation for your reputation as a public company starting on day one.
Messaging, media relationship building and storytelling – Strong messaging leverages all the core aspects of your business to tell a comprehensive and compelling story across all audiences. The media is a primary communications target that serves as an outlet to multiple key audiences (e.g., investors, healthcare providers, industry partners, patients, etc.), so it’s important to build those relationships early on and gain their support.
Executive presence and category thought leadership – Your company can demonstrate its leadership and subject matter expertise by showcasing your leadership via content, speaking engagements, and recognition opportunities. Regardless of audience or speaker, the core messages being delivered across these opportunities should always be consistent and build on the story you want people to understand about your brand.
Internal communications – In many ways, employees are a company’s greatest asset. It’s important that they not only feel included in the growth of the company they have contributed to but that they also receive clear communications to help them understand what an IPO means. An understanding of how an IPO positively impacts the future of the business and the details of the high-stakes process of becoming a publicly facing company empowers employees to be strong ambassadors for your brand. Before entering the IPO process and quiet period, communicate clearly and specifically about changes to communications protocol and strategy, including dealing with media requests and posting on social media.
Digital presence, branding and social media guidance – While earlier stage companies are understandably focused on developing their science, scaling the business and raising capital, it is important to remember that important constituencies are watching you. And you need to look your best. Developing a professional website with up-to-date content is key. To complement that, sharp-looking creative content that effectively conveys your story ensures greater engagement and helps develop an effective social media presence and strategy.
Issues management and scenario planning – The IPO process can be unpredictable and quite dependent on the actions and opinions of those outside of the company. As you plan for the IPO process and listing day, it’s imperative for you and your agency partner to consider the various scenarios — both positive and negative — that you may encounter to ensure you are prepared to respond to each of them appropriately.
Many communications professionals haven’t had first-hand experience with an IPO and knowing how it all works may not seem all that relevant to the day-to-day work that you do. Understanding the IPO timeline and process can be valuable in helping you create more effective communications strategies even when there’s no talk of an IPO taking place any time soon.
ICR Westwicke has helped hundreds of biotech companies with IPO communications strategy, from inception through listing day. Ready to start your planning to become a public company? Download our Insider’s Guide to Going Public.