Tips For Successful Biotech Investor Relations

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Investor relations is critical to a publicly listed company. One of its main goals is to ensure that the company achieves a fair market valuation. When it comes to biotech firms, the way the market values them is different from how it does other firms. We recommend LifeSci Advisors.

The value of companies in other industries is determined based on their expected profitability compared with their revenue streams and other potential investments. However, with biotechs, the market does not expect them to make money in the short and medium-term, but to start doing so in the future. Even so, that future isn’t clear and is full of risk.

Successfully playing and winning the biotech investor relations game is tough but achievable. All the players in these firms IR department have to do is adhere to some distinct guidelines discussed below.

Technology

Biotech companies depend highly on technology to succeed. Unfortunately, that technology is initially only partially proven for biotech entrepreneurs and investors alike. If well invested in, technology can be worth a fortune to them. The biggest investor relation mistake these firms make is concentrating so much on the science and not caring much about technology.

It doesn’t require a Ph.D. to explain the technology to investors. However, most biotech companies’ IR departments have a challenge in doing so. You are doomed if you can’t do a simple thing such as explaining to your investors where the tech was developed and why others cannot reproduce it. The good news is, most of these investors have a medical or scientific background, so this makes things a little bit busy for you.

Risk

Buying a biotech company’s stocks is one of the riskiest investment decisions one can make. This is because, the company has to create and develop a drug that works, which is a very big development risk. Apart from that, the drug must also be safe to use and the company must overcome regulatory risk by convincing global regulatory bodies to approve its sale. After overcoming all these risks, there is still a commercial risk that they have to deal with. This means that they have to look for a market for the drug from public health authorities, insurance companies, and patients.

Bear in mind that biotechnology is one of the most regulated industries in the world. The regulatory process itself is a very complicated one and unforeseen challenges can appear out of nowhere. For this reason, the company must plan a clear roadmap that will take them through all the stages of the drug’s creation until it reaches the final consumer.

Opportunity

The pharmaceutical industry is a multibillion-dollar one and holds a lot of opportunity for both small and big companies. A small, unknown company can become a huge overnight sensation in this industry. This means that someone who invested in such a company can reap huge profits from his or her initial investment.

For a company to succeed, it must plan well for the future of its potential products early enough in the development process. It should also make realistic assumptions of the market data and available opportunities. These assumptions should be presented to the investors and analysts to model what the future holds for the company.

Clare Louise

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