Analyst Interactions with Biotechs

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This past Tuesday, May 2nd, Gilmartin Group hosted a webinar with TD Cowen’s Joseph Thome, PhD (Managing Director) and Tyler Van Buren (Managing Director), moderated by Gilmartin Managing Directors, Laurence Watts and Stephen Jasper to discuss analyst interactions with biotechs. Below are the key takeaways from the dialogue.


  • Laurence Watts, Managing Director, Gilmartin Group
  • Stephen Jasper, Managing Director, Gilmartin Group

Guest Speakers:

  • Joseph Thome, Managing Director, Cowen
  • Tyler Van Buren, Managing Director, Cowen

Key Takeaways:

Standing Out to Analysts & Making Yourself Known
When establishing your company name and story, it’s important to have a strong management team with a record of credibility to “stand out” to analysts. It’s advised to be supportive of your story and company vision, but to be careful to not exaggerate or mislead the analysts. In addition, having novel, differentiated science relative to competitors, such that you’re either the sole player in the space or standing among a few other competitors is valuable. It’s preferable to be going after a large market—Cowen’s Managing Directors noted that what we’ve learned from early targeted oncology or orphan launches is that you’ll only get so much credit for going about small markets, especially in tough environments.

Determining Coverage
When determining what companies to cover, analysts look at a number of factors, but in the ideal scenario, the company would align with the analyst’s interests and scientific training. Scientific rigor is important, but there are common threads when analyzing companies no matter what the indication is and despite background, analysts can be put in front of any company and be able to provide value. In addressing the question of whether an analyst would cover a company whose deal the bank wasn’t involved in, Van Buren and Thome noted, from an institutional perspective, the company would have to be $1B or above in market cap, as analysts need to have enough flow and interest from investors to make it worthwhile in covering. If the companies aren’t coming from the banking or institutional side, it’s a hard pitch for the company to have an analyst potentially take up a coverage spot when they have a finite capacity.

Fostering Analyst Relationship with Companies Through the Lifespan of Coverage
The who/what/when/why of analyst coverage is dependent upon a number of factors, but timing, relevance and investor interest play a significant role. When engaging with private companies ahead of an IPO, most biotech analysts wait for the vetting to come through from the bankers. That being said, if analysts are trying to build a relationship with a company for the long-term, engagement should start well before the bankers reach out, with post-B round being ideal timing for beginning the relationship prior to syndicate decisions.

In fostering a strong relationship with your covering analyst, an open and honest line of communication is key. When confronted with an error on an analyst report or a disagreement on analyst conclusions, it’s best to communicate quickly and clearly to remedy any discrepancies and clear up any confusion.

Analysts cease coverage of a company if they are no longer relevant, if there’s a lack of interest on the investor side or if companies violate trust or have been misleading to analysts and investors. Every biotech company experiences a low, often during the execution period, where stock prices go down, but this is just a function of time. Unfortunately, investors’ time horizons are short, but analysts don’t necessarily drop coverage during that period. That being said, analysts are likely to drop coverage if there’s a lack of interest and some component of the story is broken from a credibility standpoint or from the fundamentals of the asset.

Biotech Earnings & Analyst Communications
While cadence and frequency of analyst communication depends on the news flow of each individual company, communication should be largely milestone-driven. Frequent calls and conversations are never frowned upon if the company management team has something new and meaningful to discuss. If your company story is changing frequently or if investors are asking differentiated questions, it’s recommended to touch base once a quarter to ensure the analyst is level set. In quieter periods where companies have 3-6 months without news flow or milestones, less frequent communications are advised to help companies and analysts to make the most of their time.

With regard to biotech earnings, companies shouldn’t feel obligated to host earnings calls every quarter. Earnings calls should be held if the company has a revenue-generating drug or if there’s a data readout that coincides with the quarter in question. From an investor standpoint, it’s much more preferable to host earnings calls only when there is something new or noteworthy to discuss. In short, don’t hold an earnings call solely because you did so last quarter.

Analysts & Embargo
When determining whether to bring an analyst under embargo, companies should focus on setting good expectation instead of jumping into the embargo process. Analysts prefer for companies to use embargos limitedly—with analysts engaging with investors 7 days a week, there’s never a fully convenient time to put an analyst under embargo. In these cases, analysts note that it’s almost less helpful to do so, as they already have established conclusions around what the data should look like and what the investors want the data to look like. Instead, it’s advised that companies set up time with the analysts to mention that they’ll be going into a blackout period ahead of the data and set expectations of what they’re looking at for the data set. This method helps companies behind the scenes as they prepare for what they’re going to show and what they’re going to emphasize. It’s important to note that analysts can digest information quickly, especially when they know the company story well and expectations are set thoughtfully.

TD Cowen Recent Acquisition:

TD, the second largest bank in Canada, closed the acquisition with Cowen at the beginning of March. TD Cowen is now the 6th largest bank in North America. In addition to the $1.4 trillion safe balance sheet, TD Cowen is rated the number one safest bank, a particularly important factor in this environment. From the biotech research perspective, the Cowen heritage and culture that has been developed over decades will remain the same and it was a big part of the negotiations with management at TD and Cowen. TD Cowen has 7 senior biotech analysts and 10 total biotech covering analysts.

In conclusion, relationships with analysts should be governed by open and honest communication with strong expectations setting and thoughtful approaches to relationship fostering. Gilmartin Group has deep experience working with both private and public companies across Biotech and the larger healthcare space. For more information about how we strategically partner with our clients, please contact our team today.

Authored by: Rachna Udasi, Analyst, Gilmartin Group

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