LaVoieHealthScience Blog

Managing Turbulent Times and the Integrated Communication Model

An Interview with Gemma Bakx, head of Investor Relations and ESG at LaVoieHealthScience

by Paul Sagan, VP, Investor Relations and Corporate Communications


PS: What led to your investor relations role at LHS?

GB: Donna Lavoie founded her integrated communications agency almost 22 years ago in the firm conviction that biotech and health sciences companies are best served having their public, media, and investor relations all under one roof, from seed-stage to corporate adulthood. Donna had a clear vision that has fundamentally not changed over time. By creating a new senior investor relations role, Donna reiterated her commitment to this vision.

PS: How would you describe the market conditions you have encountered since you joined LHS?

GB: It has been a mixed picture. On the one hand, many companies in the space are going through unprecedented and existentially challenging times. Quite a few trade below net cash, and some are under pressure to return capital to shareholders. The NASDAQ Biotech Index has been cut almost in half this year. Clearly, the market is going through a major correction. 

This afternoon’s news confirms we are now officially in a bear market, with NASDAQ down 30% this year. The market is fearful, largely driven by inflation concerns. Business leaders are increasingly pessimistic about the economic outlook as central banks have aggressive plans to raise interest rates to quell current highs in inflation.

On the other hand, we have clients who have been weathering the storm quite well. They are seeing upgrades in analyst ratings, their stock price is holding up and investors continue to express an interest in meeting with them. Their data are good, their milestones are being reached and I am convinced these companies will continue to do well, despite the turbulent market.

As their integrated comms advisor, it is important we are very alert to the greatly varying circumstances our clients find themselves in. What makes great sense for one company to do, may not for another. One thing we are hearing a lot recently is that the current challenging market conditions create an increasing impetus for having your media relations and investor relations coordinated at one address. Of course that has always made great sense to us, not only from the perspective of alignment of company story and investment thesis, but also from the perspectives of synergies. This is clearly resonating.

PS: Do you have any advice for companies, or their Boards, who are facing market conditions that are the most challenging perhaps in a decade?

GB: I can certainly understand the anxiety, but if there is anything that we’ve learned through the firm’s 20+ years, it’s that you must continue to work on getting your company story and aligned investment thesis out to the market, making sure it is well understood and visible. While tempting for cost-cutting reasons alone, this is the worst time to retreat from your stakeholders. And, happily, in this turbulent time, we are seeing encouraging signs from Boards, who having been through market ups and downs, are exerting a calming effect on their executive management teams, helping to prevent knee-jerk reactions, and remaining rational about staying lean while keeping a sharp eye on what is essential spend.

PS: What are you hearing about the mood swings that the Street is in?

GB: We have been picking up opinions from investors, during client investor meetings and at recent conferences like Jefferies, that validate our own observations: While the market for our space is clearly turbulent, there is a lot of capital around and investors are looking for the true gems. Yes, the sector may need to restructure due to earlier exuberances, and we are clearly going through a major correction. Valuations were too high and this excess went on for too long. It is now working its way out. But in this bear market, current stock prices create buyers. It is important to not lose sight of that.

PS: What will it take to turn the tide?

GB: Investors will re-engage when companies produce medical breakthroughs and therapies that can change treatment paradigms. Expectations for the sector have become irrationally low right now, but just a few dramatic catalysts could quickly change that. And with what we know that is in the clinical trial pipeline, 2022 may be the year of these dramatic catalysts. Sooner or later a new blockbuster will come along. It’s important to remember, that this sector – perhaps more than any other – is central to our well being.

PS: What do you make of the market’s anxiety around redemptions?

GB: I have been hearing this week that this concern is irrational. Apart from the occasional one, funds are not expected to disappear. Clearly, some funds are facing some level of redemptions right now, and the challenge is to bring generalist investors and portfolio managers back to the table. There is money on the sidelines. But the message remains that companies with strong Phase 2 or 3 assets have enduring investment value, many investors are sticking to their process and keeping that process consistent.

PS: Finally, what is the role of ESG in all this?

GB: The role of ESG has helped for sure, as it has brought a pool of new money with a new orientation into the market. A new generation of investors clearly have an appetite for companies that have good ESG scores and can demonstrate that sustainable values are well aligned with their purpose, well integrated in their strategy. ESG disclosure obligations and scores have become an integral part of our clients’ existence.

Want to discuss your investor relations strategy with our expert team? Connect with Gemma Bakx to get started today at gbakx@lavoiehealthscience.com.


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