August 1, 2009 (Vol. 29, No. 14)
Down Markets Often Provide Promising Opportunities for Visibility via PR and IR
Over my 25 years in public and investor relations, I have seen many bull and bear markets. I witnessed the great bull leading up to the crash of ’87, the recovery of ’88, the exceptionally strong biotech markets beginning in ’95, and the extreme bull market of ’99, followed by the lackluster years of the current decade.
Through the good times as well as the bad, there has always been one dictum among companies in the biotech sector: spend money on public and investor relations when times are good and conserve cash when the times are hard.
This strategy makes sense on a basic level. Cash-strapped biotech companies need to watch their money, and PR and IR are seen as nonessential. But what can be more fundamental to raising money than maintaining a strong profile and leadership image in a given sector?
As the Bill Gates quote goes, “If I had one dollar left, I’d spend it on PR.”
The history of biotech financing has taught us that one never knows how or when there might be an opportunity to raise additional funding. Raising money whenever possible is always a wise move, even if the opportunity looks expensive at the time.
Look at the second quarter of 2009. Who would have thought in January that the companies with a market cap below $200 million would be the strongest performing group in biotech. Visibility is one factor that impacts a company’s ability to raise capital.
Based on our two decades of experience, we can say that it’s not a smart move to conserve resources in the one area that can maximize a company’s value and help raise money through challenging times. Rather, setting aside resources that can be directed at greater visibility and turning up the volume for important clinical and development milestones is usually a wise move and one that can pay handsome returns.
Two things tend to happen in challenging financial markets: companies conserve resources and the competitive landscape fades. In this environment, the news that is released receives greater attention. In bull markets, this trend is reversed.
Tony Russo, Ph.D.
Creating Buzz
Earlier this year, after the financial disasters of the fourth quarter, biotech companies started en masse to slash their communications budgets. In early January, one of our clients decided to take the opposite tactic and engage us to issue a news release about a Phase I study—a task that might seem marginal, but bears strong potential to improve a company’s image if executed properly. We spent considerable time strategizing and executing a program.
As a result of the buzz we generated, the company’s share price increased by more than 200% overnight and maintained its new value throughout the first quarter. This story supports a trend we have seen again and again over our years of experience: if one goes against the grain of conventional wisdom, the risk can result in healthy returns.
This pattern can play itself out in every aspect of public relations. Take the issuance of press releases. The vox populi of PR says to never release on Friday. But why not? This strategy is left over from the days when news was only printed in a daily newspaper. Today, that old wisdom is outdated. In the wake of the Web revolution, news is instantaneous and its impact immediate.
In this new era of constant electronic communication, we need to think of news in terms of bite-size pieces of information, key words, and audience segmentation, coupled with the careful consideration of timing, distribution channels, and relationship building with key media outlets. A well-planned PR campaign should consider and incorporate immediate news—the 140-character tweets, the spot news that drives many blogs, and the longer investigative analysis and feature pieces that are seen in the daily newspapers and weekly publications.
Because biotech news seldom makes the bar of the daily newspaper—and if it does, the coverage tends to be analytical rather than a retelling of the news—healthcare PR counselors need to build campaigns for their clients that go beyond the old methods that once worked with print media.
The traditional strategy of simply writing and issuing a press release is seldom successful with companies that may have less material news. Cultivating positive media coverage for a client depends not only on the writing and construction of the release but on its mechanics as well.
In healthcare PR, getting these details right depends on having people who understand the science involved in the construction and execution of your campaigns. In addition to having the relationships with the media outlets and reporters, PR counselors need to know who gets what information, when, and in what form. It is a much more viral approach than has been in the past.
The success of a campaign depends on careful planning that takes into account a client’s specific situation as well as the strengths and pitfalls of new media. With each announcement, one needs to orchestrate a series of events that takes into account the many audiences that one wants to reach. The build must be immediate, structured, and include a myriad of possible players. For public and private companies, this following includes one’s stakeholders, possible analysts, key opinion leaders, and patients, among other groups, and their conduit, the media.
Firms need to construct a following beyond their core so they can take advantage of opportunities that may prove to be beneficial to their long-term health. It is shortsighted to refrain from communicating with Wall Street because one believes that there is no window for financings.
A company needs to constantly be in front of those audiences that are its lifeline for success—followers that include business development audiences, financial audiences and, if the company is close to developing a product, doctors and patients.
If you believe the biotech market will be healthier in the fourth quarter and want to build a communications campaign for that healthier market, you cannot begin that program in the fourth quarter. The work needs to begin at least one or two quarters before.
It takes time to gain traction as a company and sporadic communications that begin and end with a news release in a highly competitive climate—that are not built in the context of a strategic programmatic communications program—seldom lead to success.
Tony Russo, Ph.D. ([email protected]), is chairman and CEO
of Russo Partners. Web: www.russopartnersllc.com.
