11 Ways to Get a Standing Ovation at Your Biotech IPO Roadshow
October 29, 2018
By John Pennett, CPA
“Our battered suitcases were piled on the sidewalk again; we had longer ways to go. But no matter, the road is life.” Jack Kerouac, On the Road.
Sandwiched between the filing of the registration statement and the company’s initial public offering (IPO) announcement is the IPO roadshow. This is where a company’s leaders undertake a whirlwind tour of meetings with individual and institutional investors, underwriting sales forces, members of the media and others.
A roadshow can cover such topics as the shares being offered, why the company is going public, and how it is approaching the marketplace. Company leaders are essentially auditing for investor confidence.
A successful road show can be the rocket fuel that propels the company into the stratosphere. A poor one; well, you get the idea. Let’s examine a few elements favoring the former.
1. It isn’t called a roadSHOW for nothing
You need to carefully craft the story. It should be one that informs, engages and, yes, entertains. And you have to tell the story in a way that shares your enthusiasm with potential investors. What does the audience want to know? Be prepared to cover things like technology, cash flow, management team, growth projections, and risk management strategy. All this should lead up to the reason why they should invest in your company and not someone else’s.
2. Be a good guest
Value peoples’ time. Don’t be late or miss appointments. If you can’t make a meeting, how will you successfully invest someone’s money and run a company? Be pleasant, positive and receptive—vocally and through body language. Avoid being pushy or over eager. Study roadshows done by competitors or similar companies.
3. Don’t take the audience into a vortex
Time is money. Cover what you need to cover, be factually accurate and keep it concise. They don’t need your life story. Part of this includes researching and knowing your audience and what may be important to them. Ideally, have three key things you’d like your audience to remember. Use images or infographics wherever possible.
4. Rehearse! Rehearse! Rehearse!
Robin Williams was a master at ad libbing. You’re not Robin Williams. While you can’t account for every situation or question, rehearsals are crucial. Work with a professional, if necessary. Tape your rehearsals and fine tune your performance. (Have legal counsel review the presentation.) While no two meetings are the same, be consistent in your message.
5. Follow the money
Because time is limited, you want to plan a tour that includes locations with the highest chance for success and the largest potential investment. Work with the investment bankers and IR firm to carefully select the audience of the road show.
6. Handle the Q&A
This is often a make-or-break step, and it can be brutal. The key here is to be prepared and be a good listener. Don’t just reiterate your three talking points. If you don’t know the answer, say so and that you’ll find out. Before the presentation begins, do a walk through with the tech person on the computer, microphones, etc. Also, be conscious if media are in attendance. Remember, there’s no “off the record.”
7. Take care of yourself
The schedule can be grueling. You’ll be in a different city each day with several meetings and conference calls per day, each lasting up to 60 minutes. Get plenty of rest; eat well; exercise; and stay hydrated.
8. Be a team player
The buck stops with the owner or CEO. He/she should be front and center of the presentation (since the early planning stages of the roadshow). However, introducing key staff (including chief scientist or researcher) and mentioning external support such as bankers, underwriters and attorneys lets investors know you’re assembling a worthy team.
9. Go with the flow
You certainly want to prepare and rehearse. But things don’t always go according to plan. Flights get canceled; microphones break; and phone service gets disrupted. Stay calm and try and have a plan B where possible.
10. Don’t forget home base
Keep the team at HQ informed. Also, stay on top of key areas that could impact the IPO, such as product trials, regulatory approvals, or distribution agreements.
11. Have a call to action
Of the sales that don’t happen, most are because the salesperson fails to ask for the sale. Follow-up with attendees. Have some sort of call to action: contact me to discuss the particulars, visit our website to see our prospectus, etc. Bring the process to a conclusion.
U.S. Biotech IPOs
Source: Renaissance Capital
Tom McDonald, Managing Director at Westwicke Partners, a health care-focused capital markets and investor relations advisory firm, gave us some of his thoughts on today’s life sciences IPO roadshow:
John: How is a life sciences IPO roadshow different than other industries?
Tom: It’s a much more targeted audience. They’re extremely knowledgeable about the science, business models, competitive landscape, and so on. Also, management’s track record is extremely important. Biotech investors have long memories.
John: How have the roadshows changed over the past 10 years?
Tom: The JOBS Act had a dramatic impact. Companies can now file confidentially and spend more time with test-the-water meetings, and smart leaders can build meaningful relationships with key investors long before the IPO roadshow begins. This priming has somewhat reduced the length of the typical roadshow.
John: Give us one key piece of advice?
Tom: Start preparing for your IPO sooner rather than later — at least 12-18 months out. Craft your message, get to know investors, and put systems into place that will allow you to be confident about the demands of successfully managing the roadshow.
You’ve probably heard, “You only get one chance to make a first impression.” The IPO roadshow is no exception. Thankfully, the company’s CEO controls many of the variables. Combine that with some preparation and he/she can get investors to take notice.