We recently hosted a luncheon for biotech execs where our special guest speaker was Ed Baxter, senior managing director of Evercore’s corporate advisory business, focused on life sciences and healthcare. Ed has broad experience in biotech and life sciences investment banking and M&A at a variety of firms from boutiques to bulge brackets. Here are his key thoughts and takeaways on raising capital for the sector and where it may be headed.
The Westwicke Blog is designed to deliver information and insights into the ever-changing world of investor relations and the capital markets, with a specific focus on the healthcare industry.
I have always found it interesting to discover what is on people’s minds in the moment and to delve into what keeps them up at night. So, I thought it would be useful to share the questions I have received recently from a mix of public and private biotech management teams, along with my responses.
Development-stage healthcare companies typically need to raise money every one to two years. As they grow, they typically attract larger and more varied forms of financing until the time comes for them to either be acquired or go public. Many companies will opt to run a dual-track strategy at such a time to maximize the value that has been created.
But what if the market isn’t quite ready for your IPO, as we saw throughout most of 2016? How can you keep your development engine running while waiting for the right market conditions to make your debut as a public company?
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.
The goal of exemplary investor relations at any publicly listed company should be the achievement of a fair market valuation. However, for those working in an IR function for a biotech firm, it’s important to understand that how the market values your company will be quite different from how it values any other.
While companies in every other industry are valued based on their expected profitability compared with cash flows and other potential investments, biotechs are typically expected to lose money in the short- and medium-term, attaining profitability only a long time into the future. And that future is subject to a substantial amount of risk.
At-The-Market (ATM) offerings represent a way for public companies to sell shares and raise capital while creating little disruption in the marketplace. Like their abbreviated namesake, they can be drawn upon intermittently and at will as long as there is enough trading liquidity on a daily basis.
Since ATMs essentially supply secondary market demand for a company’s stock with newly issued shares, they can be confidentially utilized at almost any time. This is where a strategic investor relations program comes in, because such institutional demand can be fostered only by the active engagement of investors through a mixture of non-deal road shows, conference attendance, one-on-one conference calls, quarterly earnings calls, an engaging content-rich website, news releases, and even investor days.
Why would anyone invest in in a biotech or biopharma company? After all, most are development-stage companies based on complicated science that consume cash voraciously, have no revenue or earnings, and need to sell a dream that could be years away from commercialization.
The risks are enormous. Yet they attract investors because the payoff can be huge. Here are the 10 must-do items that all public biotech companies should address in an effective IR program in order to attract the right investors.
Hosting the quarterly financial call is a basic task of a public company. Not all investor calls are as effective as they could be, and some can be downright dull and unprofessional.
How, then, should you prepare for an effective earnings call?
Here is a list of 10 do’s and don’ts that will help you get the most out of your quarterly calls:
Last year was a record for biotechnology IPOs, with some 82 companies raising a combined $5.5 billion. Not all IPOs are created equal, however. A good IPO is one that benefits all stakeholders and leaves the door open to future mutually beneficial collaboration.
What, then, are the secrets of successful IPOs?
Let’s start with one of the basics. The success of an IPO is judged first on whether or not participating investors make money on the transaction, and secondarily, on whether the listing company raises the funds it was seeking.
In the months that follow the successful completion of an initial public offering (IPO), some companies have a hard time striking a balance between under- and over-communicating. This happens, in part, because the final week of the IPO road show is one of the most frenetic and adrenalin-pumping periods in the careers of any management team, and being back in the office after so much excitement can feel like a letdown.
To fill that void, some management teams react by getting right back out there (once the 25-day quiet period has expired) to tell their story to the same or new investors all over again. At Westwicke, we advise rethinking that strategy and taking a more balanced approach. Consider these tips and real-life scenarios from the field to help you determine the right mix.