The Principle Assets Of Successful Biotech Investor Relations
It is the goal of any public company to attain fair market valuation with the help of outstanding investor relations. For a biotech firm, the market value is determined in a different way than other types of companies. Firms from other industries are valued according to their potential profitability in relation to cash flows among other investments. However, a biotech company generally loses money during the short and medium term hence its profitability is only possible in the long run. Moreover, the future holds a lot of uncertainties. For this matter, biotech investor relations (check out lifesci advisors for help in this area) must follow specific guidelines to successfully play and win the game.
A biotech company requires sufficient financial resources in the form of liquid money. Sometimes, there is a need to raise cash from capital markets to fund the development pipeline. Thus, it is crucial to plan a corporate lifecycle with various milestones that will create value for the sequential capital raises. Biotech investors expect the firms to start generating funds after announcing the positive phases 2 and 3 of clinical data. Moreover, they must be able to file ATM (at the market) financing facilities during the first public listing anniversary. The biotech management team should put in place the right documents so as to comply with the biotech guidelines.
Technology is worth fortune for both biotech entrepreneurs and investors. However, many firms make a mistake of putting too much emphasis on science and unproven technologies. There must be substantial claims and explanations of any technology: how it is developed and why it makes it special from the rest. Fortunately, many biotech investors are medical specialists so they got the right medical and scientific backgrounds. However, investment and technological stories must be consistent, compelling, and precise.
A product opportunity is a great sensation in the pharmaceutical industry. That’s why biotech firms have to create a credible description of the market opportunity for the potential product. Without credibility, the firm is likely to meet stiff competition while the market data becomes challenging. It is okay to use big numbers as long as they represent the opportunity. However, it is good to prepare for the defense of the hypotheses and share the calculations. The public valuation of a biotech company depends on a number of forwarding projections in regards to the possible amount of peak and average sales. These estimates are fundamental, implicitly and explicitly, for analysts and investors when modelling what the future holds.
The stock of a biotech firm is a highly risky investment in public markets. In the beginning, the companies have to deal with developmental risks such as developing a drug product that really works. It must also follow the right safety measures. Then there is the regulatory risk of convincing the global regulators to finally approve the drug for sale. Another risk is the commercial aspect whereby the insurance companies come in to cover the drug for patients to buy in public health facilities.
The steps leading to the regulation are full of uncertainties. It is up to the biotech company to lay out a comprehensible roadmap through approval while offering indisputable business plans for the product.