Biotech companies, like any company, need stellar investor relations to attain a fair market valuation. However, with biotech investor relations, the company’s market value is not just based on potential future profits and existing cash flow. In fact, biotech companies are expected to have longer term profit horizons and can get help from services offered from LifeSci Advisors. It is essential to understand how to relate to investors and follow strict rules to be successful at this endeavor.
Because biotech’s main profit generator is technology that has yet to 100% vetted in the real world, it’s important to be able to validate claims about its value. The technology may be worth a huge windfall, and this needs to be explained to investors in a way that the everyday person can understand. On the other hand, you don’t want the language to be too simple. It needs to respect the intelligence of a respected future partner, so to speak.
On the other hand, biotech investors are often doctors, scientists and other professionals qualified to assess the data on a deeper level.
Points to cover with potential investors include:
-The background of the technology
-Why this technology won’t be duplicated in the near future
-What makes your company unique
Backing up your claims is important and should be related and supported with easy to understand evidence and live testimonials if possible. A cohesive company story that grabs attention and develops interest becomes the foundation of company’s presentations.
There is rarely a great return on investment without substantial risk, and biotech is one of the riskiest investments on the market. Biotech investor relations must develop trust and build it up over time. There are multiple stages to taking a biotech product to the market. These include:
Issues with developing the product itself. How many drug trials have led to lackluster results? What were the safety issues involved? The side effects?
Regulatory agency risk. Getting global regulator approval can take years, and many companies never receive it.
Market risk. How do you convince the public to choose your product out of the sea of options available to them? How do you convince medical professionals and pharmaceutical sales people to represent it? It may also be necessary to have it covered by insurance companies.
All of these factors need to be taken in to consideration to repeatedly convince investors to get on board and stay on board to get this product to market. The potential opportunities are huge.
It’s common knowledge that big pharmaceutical companies make billions in revenue every year, yet even newer, smaller businesses can hit a home run in record time. While it’s important in biotech investor relations to communicate the risks and the company story, it is just as vital to lay out the path to great profitability.
Biotech investors are a savvy group in general, and they understand that there may be a period or two of loss as the company enters into multiple rounds of capital raising in the market. Yet with a clear path, solid valuations and an incredible product, these relations can continue to provide the basis of solid future.