We’re kicking off a year that’s predicted to be a big one for biotech IPOs. And based on the resurgence of IPO filings by life science companies at the tail end of 2017, those predictions look like they’re already translating into reality.
If investor appetite continues, we expect more and more emerging biotech and pharma companies to be looking to the public markets to fund the development of their pipeline.
Yet, for even the most seasoned executive teams, the path leading to an IPO can be filled with stresses and surprises — so it’s beneficial to be surrounded by a professional team that you know and trust, said Jason Spark, managing director of Canale Communications and a moderator at the Marsh IPO Bootcamp, held at JLABS in San Diego.
Here are some more tokens of advice from the recent IPO Bootcamp, sponsored by Marsh & McLennan Agency.
1. Confidential S-1 filings won’t be stealth forever.
Any company planning to go public must first submit a Form S-1 with the U.S. Securities and Exchange Commission. The S-1 is a content-rich document in which the company describes its business model, technology, competition, planned use of proceeds, reasoning behind the proposed stock offering price and other details.
As of July 2017, the SEC began to allow all companies to confidentially submit registration documents, offering privacy for companies who are still testing the waters. Smaller, emerging growth companies have benefited from confidential filing under the JOBS Act since 2012.
When putting together the S-1, remember that the confidential filing will eventually become public — including any changes made to the S-1, such as changes requested by the SEC — if the company chooses to proceed with an IPO. A confidential S-1 must be flipped public 15 days before the road show can begin. Thus, use caution in the “confidential” S-1 when discussing development timelines and other company details that may fluctuate before the IPO. You don’t want investors find surprises or perceived squishiness in strategy that will cost you their confidence.
2. Establish your company story and set milestones as soon as possible — then, stick with it.
A clear, crisp story goes a long way in generating investor support. Most emerging biotech companies don’t have a revenue story to lean on, at least in the beginning. Companies instead rely heavily on sharing how they’re solving a big problem, the validation behind their product or technology, and the credibility of their management team to deliver on a plan.
This is one reason that most new client relationships at Canale Communications start with a positioning workshop — a practice that’s useful for all companies, but particularly for a pre-IPO biotechs establishing their corporate story and preparing to draft their S-1. In these interactive sessions, the executive team and all major stakeholders meet for an in-depth, all-inclusive exercise that hones in on the company’s strengths, weaknesses, differentiators, competitive landscape and value drivers. The result is company messaging that will be compelling and memorable.
Along with this, media training and speaker training are both extremely helpful. The CEO and executive team must be prepared for prime time, as they will become the face of the company in the months leading up to the IPO and in the years afterward.
IPO hopefuls also should identify and communicate milestones they plan to hit in coming months and years. When will clinical trials enroll? When do you expect data readouts? Give yourself wiggle room when determining dates; missing a deadline will not reflect well on you, while meeting them will show investors you’ve been following a pattern of hitting goals as planned.
3. Start acting like a public company now.
You can never control when the market will be favorable for an IPO. But can control whether you’re prepared to launch when the time is right. If an IPO is a possibility in the future, start acting like a public company as soon as possible.
This is important because once you officially begin the IPO process, you will be subject to a designated quiet period during which the SEC requires that you maintain your “normal” business practices. So begin to “normalize” practices such as issuing press releases, announcing publications, and publicizing or participating in conference presentations.
Getting to an IPO may be one of the most grueling journeys for a biotech executive, but it can also be one of the most rewarding. For more tips on pre-IPO communications and strategy, stay tuned to the CanaleComm blog or contact us to talk.
This article includes select insights from the panel “IPO Pre-Game: Getting Ready for IPO,” which kicked off the Marsh IPO Bootcamp, hosted by Marsh & McLennan Agency. The panel featured Sean Clayton, Cooley LLP; Bruce Rucks, Deloitte; Mark Doscher, Marsh & McLennan Agency, and was moderated by Jason Spark, Canale Communications.