Initial Public Offering: A Fleeting Thought or a Fast-Moving Plan

Last year was a record year for biotech with the NASDAQ Biotechnology Index up 65.61% and the S&P Biotech Index up 48.4%.  Performance in the biotech sector beat out the S&P 500 which was up 29.6% and NASDAQ which was up 38.3%, both of which were at record highs.

This year got off to a hot start, too, with 29 life science companies going public in Q1.

Still, many companies thinking about it remain on the sidelines due to past volatility of the markets, demands of “living in a fish bowl,” and the costs associated with being public.

If you’re thinking about it, here are some things to think about:

ipo infographic

Preparation Phase. Choosing your partners can take a few months. Investment bankers will help determine fair value for your company and its brand, choose the ideal time to go public and conduct due diligence to verify the financial information, your market and technology/product story to determine how it will resonate with investors. Legal counsel leads SEC filings and responses, corporate governance issues and contracts. Corporate and public relations counsel will provide a roadmap for building value for your health science innovations such as how to craft messaging around corporate milestones and dissemination and coverage. This phase is about storytelling and connecting your brand to the right stakeholders that matter to you most.  The right investor audiences are important in this phase but so are the influencers with whom investors rely on for their information such as Key Opinion Leaders in the medical community.

Registration Phase. Considerations in choosing the right exchange for you should include stock liquidity, process and timeline of going public, valuation, regulatory environment and the listing standards and fees.  You will also want to come up with the company story for your roadshow.  You should be prepared to tell a compelling equity story with a clear message about how IPO proceeds will be used to fund growth and how your strong management and advisory teams are positioned to bring success in the future.  Is your message clear, consistent, sustainable and supportable?  Speaking of management, identify your company spokesperson and consider training that individual to improve on their verbal and nonverbal communication skills.

Marketing Phase. Bankers will be training their salesforce to sell your stock and you and your CFO will hit the road.  The roadshow, where the bankers will take your senior management team on a whirlwind tour, will begin, and the bankers will start to build the order book where they will compile a list of interested buyers.   At this point you will also want to get investor relations professional’s input on investor allocations.

Check out our next blog about developing your communications process post-IPO.