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Red (and Green) Flags To Look for With Biotech’s Buyside Investors

Opinion

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marked it up with questions and comments, has read background papers, has probably talked to some experts, has thought about it, and is ready to make the most of your time and theirs. To share an experience of a colleague: “We met with most of the eventual IPO buyers several times. That said, one of our best experiences was with an investor that we met for the first time on the IPO roadshow. They had read our S-1 and our key papers, which we highlight for easy access on our website. This investor asked about five truly salient questions from a science-meets-business point of view. The meeting was relatively short, maybe 30 minutes. What’s the lesson? Good investors invest the time and effort to THINK about the company and the investment.  It leads to a much better roadshow interaction and more importantly to an effective long-term relationship.”

2) Positive comments from fellow CEOs & CFOs.  You know we talk to each other, right?

3) Constructive Feedback.  As a small private company matures and raises capital from new kinds of investors, there’s a learning curve.  Private companies approaching public investors need to understand how different kinds of investors think, and direct, critical feedback from them is invaluable. It’s a green flag when an investor tells you their concerns as well as how the investor views the competitive landscape for products and for investments.  It gives the company a better opportunity to try to address those concerns.

4) The LaGuardia meeting. The poster session meeting. You run into an investor at the airport, your flights are delayed, and you end up poring over data together. You run into an investor at a competitor’s poster presentation at a scientific conference like the American Society of Hematology and the three of you talk about the science and what it means. These kind of investors really want to understand their investments.

5) Focus on relationship-building. Biotech will inevitably have ups and downs, and an investor isn’t in the midst of the decision-making about how to handle those events. The management team is. It’s a sign that an investor has a long-term view when they are interested in understanding who’s running the companies they invest in and having an effective relationship with those people. This does take time, but investors thinking about long-term value get that.

6) Track record.  Perhaps as with anything in life, past behavior says a lot. Those investors with a track record of success investing in companies that are similar to mine in both challenges and opportunities are more likely to be a good match for my company.

7) Excited about the mission.  An investor’s job is to earn a return on the capital they invest, but there are infinite ways to do that. An investor who also recognizes and cares about the consequences of investment decisions in biotech— the potential to help patients—definitely gets a green flag.

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5 responses to “Red (and Green) Flags To Look for With Biotech’s Buyside Investors”

  1. Stumps_Mcgee says:

    Wow, thank you Katrine. Great insight from someone who is actually on the frontline. It’s rare to see a perspective from the inside looking out.

    (Just an FYI…the link to David Sable’s article is broken.)

    • Katrine BosleyKatrine Bosley says:

      thanks for the heads up re: link. will see if we can get it fixed. in the meantime, try these:
      David’s “red flags” bit.ly/1iinfeV
      David’s “green flags” bit.ly/1eJ3VaZ

  2. Guest says:

    Yo Katherine, your lucky to be one of the few companies who made it. Most of you biotech CEO’s are lying scoundrels that hide the data, mislead investors, present only the positive case and worst of all lie through your teeth like the scum you are…You comment on investors reading old research and using it against you, perhaps that is because the biggest scam you scoundrels pull is taking an old drug, renaming or applying some type of vector to claim it works. Everyone knows you guys are up to no good….. so just stop it with your BS.

    You live on a another planet. Most investors think that a biotech CEO is about as honorable as a pile of poop laying in the petting zoo at the fair…

    Lets look at the list of recent IPOs–CCXI, TZYM, RNA, ZIOP….these are great investments,…as you postulate everyone should have blindly just invested in this crapola… WRONG 3 of those companies were using old technology from the 70s you buffoon.

    I know you don’t have time for this, you probably have a secondary offering to go do so you can rip off more unsuspecting mom and pop retail investors.

    get lost with your altruistic talk, your a biotech ceo, your lips are moving so 85-90% is lies… go back to ripping off retail investors, not posting misleading articles about biotech on xconomy

  3. David Miller says:

    I have to smile at the 15-year-old-paper comment. Such papers have kept me out of more bad investments than I can count. This usually works one of two ways:

    (1) The paper provides clues as to why similar approaches didn’t work. Or it describes some obscure complicating factor to a chosen population. Older papers, especially those with heavy citations, also tend to be the ones that generate the best questions for management.

    (2) A management team telling me to ignore the 15-year-old paper simply because it’s old — and then not being able to provide a good reason why I should ignore it or updated research that contradicts it. This teaches me management likes to ignore inconvenient facts, which is always useful information for potential investors.

    David

  4. Andrew G says:

    Thanks for adding your unique perspective on this important topic – I will update my “biotech red flag” compilation accordingly!