Communicating clinical data represents important inflection points for development-stage companies, often defining their business strategy and financial trajectories for years to come. Unlike more established or mature peers, development stage companies stake their entire valuation on their lead clinical program, and the program’s make-or-break data readout. There’s temptation to capture market attention around these data readouts, but it is important to be balanced, both in the communications and strategy for doing so.
Best Practices in Communicating Clinical Data
The Importance of Scenario Planning:
In the months leading into a clinical readout, it’s important to formulate a strategic communication plan for the range of outcomes. The planning must consider the regulatory strategy, competitive positioning, and financing or capital allocation decisions that will need to be made based on different data outcomes. Companies that communicate these scenarios effectively help investors understand not just what success looks like, but how the management team will create value even from results that don’t meet initial expectations.
Set Clear and Reasonable Expectations:
The market is not a fan of surprises (both the timing of data and the outcome), making it ever more important to clearly articulate expectations to the Street. Accurate communication of timelines is crucial, particularly for your investors who allocate their portfolio around these timelines. If timing slips, it’s important to be transparent for why the delay occurred, and why a study will meet its new timelines.
The concept of the “whisper number” among institutional investors creates an additional layer of complexity in managing expectations around high-profile data readouts. Even when management sets conservative expectations, investors will develop their own expectations for what will quantify a readout’s “win” based on their conversations with KOLs, your covering analysts and their investing peers. The added debate and visibility can be useful for companies but can also work against a company when the clinical results fall short of the Street’s expectations.
Ultimately, companies must ground their expectations in realistic assessments of what their clinical data packages need to show to be commercially meaningful, rather than celebrating activity that may not translate into patient benefit or market penetration.
Own Your Narrative:
While sometimes it is unavoidable that the market defines your data readout, most companies that maintain investor confidence frame their clinical updates within a compelling, over-arching narrative of the treatment landscape and why their approach offers advantages over existing alternatives. Even when the data is positive, it is ideal to stay grounded as overly promotional communications of clinical data can often come across the wrong way and has the potential to erode a management team’s hard-earned credibility. Ultimately, building durable value on the back of important clinical updates is about controlling the conversation that happens after the data drops.
True ownership of your clinical data also means evaluating if there is a meaningful opportunity to move an asset forward. Transparency becomes critical when dealing with disappointing data, as attempts to spin or minimize unfavorable results invariably backfire with sophisticated investors who can see through selective subgroup analyses. While these subgroup analyses often inform an asset’s future following a stumble, management teams need to be laser focused on communicating the new market opportunity, and why the Street should still follow or finance the asset’s development.
It is imperative to convey and own your data as transparently as possible, including considering the concerns of stakeholders viewing the data. Do not shy away from including data tables that make interpretation of the data easier (particularly when multiple dose levels are being presented and there’s a clear dose-effect).
In short, keep the data digestible and in context, even in the face of setbacks.
Building Trust Through Results
Transparent communication is crucial to building and sustaining credibility in the management team and development program. Furthermore, there are plenty of investors and members of the sell-side who are looking for genuine thought partners. The management teams that keep their clinical messaging updates tight and clear, as well as benchmarked to their asset’s competitive landscape, will drive long-term trust with the investment community.
For more insights on how Gilmartin partners with healthcare companies, please visit our resources section or reach out to our team to discuss how we can help optimize your investor communications strategy.
Authored by: Nick Colangelo, Principal, Gilmartin Group