10 Tips for Enhancing Investor Interest in a Weak Market
By Jane M. Green and Angela Bitting
Capital formation in today’s market is particularly challenging for small-cap biotechnology and medical device companies due to the weakening of sector fundamentals and the pressures of macroeconomic events. As companies rethink their investor relations strategies for the fall conference season, here are 10 tips for enhancing investor interest.
- Clarify your investment thesis and strategic messages
Emphasize your great science and full pipeline, but also your strategies for maximizing the therapeutic and commercial potential of these assets. Show how you are converting nascent programs into real products that will compete in evolving markets. Distill key messages into a simple, direct “elevator pitch.” Keep your story fresh, but don’t change it each time the market takes a turn.
- Road-test your company story
Corporate presentations often reflect the CEO’s viewpoint. Broaden your perspective by rehearsing the presentation with selected members of your board of directors and, even better, with an interdisciplinary employee advisory group. This helps ensure that your story will be credible and coherent, capturing the most exciting aspects of your company’s future.
- Set realistic timelines for milestones
Eliminate timeline “creep” from your story and (re)set realistic expectations for deliverables. In difficult markets, success is sometimes rewarded and failure is always punished. Missed deadlines erode credibility. Make necessary adjustments once, sooner rather than later.
- Establish a measurable performance roadmap
Tell your investors what you are doing to do, how you are executing and what you have achieved. Emphasize the deliverables that are important and will advance the business. Always ask and answer the question: why should an investor care about this particular milestone?
- Understand changing market and therapeutic area paradigms
Don’t wait until Phase 3 to include market perspectives in your story. Investors will predict your competitive challenges. Explain that you are managing your company as a business, not as a research laboratory. If you don’t have strategic marketing in-house, hire the expertise. Don’t let the market pass you by.
- Show fiscal responsibility
Investors want companies to be two years ahead of where they are, but expend minimal resources to get there. Demonstrate spending control. Describe the value proposition for investments in your pipeline and how you measure returns on those investments. If investors respect your use of cash, your next financing will be more successful.
- Present a cohesive and coherent management strategy
Show investors your company operates with cross-functional communications and accountability. Investors often say they invest in management, but don’t pierce the surface to see how functional areas work together. Make shared performance goals and departmental commitment to execution clear points of differentiation.
- Introduce your management team
Encourage investors to visit your site and meet your team. Harness the passion of your CSO, CMO and other senior executives to communicate depth to the Street. Make sure your team understands investor needs and motives. Rehearse what’s public and what is confidential, but allow freedom of expression to add unique perspectives to your story.
- Respect your peers and competitors
Investors often hedge by buying baskets of stocks. If you denigrate a peer or competitor, you may insult your investor’s judgment. Find out what other companies your investors own and track their performance and news. Build relationships with prospective investors who own your peers and competitors. Today’s competitor may be tomorrow’s strategic partner, acquisition target or acquirer.
- Listen to your investors
Pay attention to the question behind the question. You can learn a lot about changing attitudes and expectations, and enrich your response, by understanding why a question is important before responding. Ask investors their opinion of a market trend or recent event. Show that you want a dialog, not just to dominate a 30 minute one-on-one meeting.
Stay in close touch with your investors. Make time to reach out in person or by phone, especially following key events. If you are traveling for business reasons, see an investor or two. Remember that you and your investors share a common goal: you are both managing a portfolio of assets and making tough decisions. Respect their work and they will reciprocate.
AUTHORS
Jane M. Green (jmgcommunications@yahoo.com) and Angela Bitting (a.bitting@comcast.net) are Bay Area independent communications and investor relations consultants.
