‘We really need to refresh our corporate deck’ – a common refrain from our biotech clients seeking to strengthen their investor relations engagement efforts.
A strong corporate slide deck is an essential tool to communicate any biotech’s story. However, we strongly believe there is an essential exercise that should be undertaken prior to developing or revising the deck. This is the creation of a strategic document we term the corporate ‘Investment Thesis’.
The Investment Thesis is a brief synopsis of the company that should articulate, in a crisp and compelling manner, the company’s focus, path to value creation, and why investors need to pay attention now. The purpose of this document is to serve as a guide for all key corporate messaging including the corporate deck, website, press releases, SEC disclosures, and Q&A. While the Investment Thesis will not directly be used externally, this critical document will be the foundation for all investor focused communications.
The Investment Thesis should be a short document, typically less than a half page or about 5 bullet points. These should summarize the company, its plan to create value and anticipated milestones. An essential element is to ensure that the narrative is concise and only includes the most important components of the company’s value creation story. It shouldn’t include secondary proof points or programs and opportunities of lesser importance.
Is it Really Necessary?
In our experience, company leaders often believe that their management team is already aligned on the strategy, such that the exercise of creating an Investment Thesis isn’t necessary. Interestingly, we have found that, almost universally, development of the narrative prompts meaningful discussions regarding corporate priorities and strategy. Productive discussions occur across the management team where constructive debate spurs alignment on the corporate vision, priorities and pending milestones. Often, the process of developing this document yields important benefits, and ultimately creates a useful tool that will guide future communications.
Components of the Investment Thesis
As with all communications, it is essential to consider your specific audience. Broadly, the primary audience is current and prospective investors. However, it is helpful to consider the specific audience, and their context, more narrowly. A biotech with a highly technical platform aiming to close a Series B should target a different investor group than a more mature, publicly-traded clinical-stage company.
The components of the Investment Thesis should be specific to your company. Typically, these should include brief descriptions for key assets and the ‘reason to believe’. This should not be a detailed description of all scientific and clinical supportive evidence but rather focus on the most critical points. However, of course additional detail can and should be included in derivative documents (e.g., corporate deck).
There is often a push from certain team members to include secondary, earlier stage assets in the Investment Thesis. Our recommendation is that less is more here. It is best to keep this document truly strategic and focused on what is most important to the company’s value creation efforts. Consider the document a 30 – 60 second elevator pitch articulating the key points that investors should remember.
Beyond the core programs, it may also be helpful to include additional elements of the company that may drive investors’ interest or provide validation. This could include mention of the company’s intellectual property, prior investor base, cash position, and existing collaborations. Some companies may also want to highlight the strength of the management team, and this may be warranted if the team is especially well known in the industry.
The Investment Thesis should also capture why an investor should pay attention now. Highlighting near-term milestones and anticipated value drivers will motivate prospective investors to consider taking a position in the near-term.
Using the Investment Thesis
The development of the Investment Thesis is an iterative process, typically with several rounds of management discussion. Debates regarding program prioritization, corporate strategy and pending milestones are typical. Once complete, all corporate communication materials should be reviewed to ensure these are reflective of the priorities and messaging emphasized in the Investment Thesis. In many cases, companies will note that the messaging contained within current communication materials is not aligned, which may prompt a refresh of the corporate slide deck and other materials (e.g., website). The Investment Thesis messaging should also inform future press releases other corporate disclosures, as well as how management handles investor Q&A.
The company’s Investment Thesis, as a strategic document, should remain relevant for a reasonable period of time. However, it is prudent to revisit the narrative periodically and especially after key corporate events.
Kendall Investor Relations, LLC has extensive experience successfully helping public and private biotechs optimally position their technology and effectively reach high-quality investors. Our perspective is informed by substantial industry and capital markets leadership experience that includes roles in research, corporate development, commercial operations, finance, and investor relations.