Congrats on beginning your quest towards the Holiest of Grails in our industry…capital.
Your Board has given you a “simple” mandate: Find an investor or a licensing partner for the lead asset.
They don’t care how you do it, so long as it gets done…or else.
OK…no problem…let’s look at the checklist:
- New suit and shoes
- New garment bag
- Plenty of business cards
- Creation of “hit list” from past contacts, LinkedIn, etc.
- Conference schedule and travel budget
- Presentation
Let’s stop and talk about this presentation of yours…
Should you prepare one uber-presentation, or two?
Most people will prepare one and use it for all meetings: the 15-minute conference speed dating meetings, the live presentations with investors, the video presentations…all of them.
There are many reasons why this is a bad approach, and we’ve developed an entire course on this topic.
But the fundamental question remains…what’s the difference between an out-licensing presentation and an investor presentation?
There are actually a number of differences, but we’ll focus on three of them.
Team Biographies
What follows is a true story.
We were scouting for approved hospital products for a certain European company.
Their mandate was fairly simple: find very late-stage or approved products from major markets which they can eventually commercialize in their particular countries.
Part of our scouting effort included meetings at a few conferences. At one particular meeting, the CEO of a company presented his company and his products.
The CEO had three slides, each with three biographical profiles of key members of the management team…and he went through all nine of them.
Needless to say, that left little time to talk about his company’s products.
So, how should we handle team biographies in our presentations?
Our general approach is to have team biographies in a fund raising presentation, but not an out-licensing presentation.
Why?
When fund raising, having a rock-solid team is critical, especially for those members of the team whose past experiences are critical for the next stage in the company’s evolution. So a Chief Scientific Officer or Chief Medical Officer may warrant a slide (total), but perhaps not the Chief Financial Officer.
When out-licensing, however, management biographies are secondary.
We generally recommend excluding them from presentations entirely, leaving this information for the company web site (or an Appendix).
When out-licensing, does it really matter that your CFO had an MBA from B.I.S. (Big Important School), or that your Chief Medical Officer graduated from Dravrah Medical?
Not really.
You can make an argument that credentials will give some comfort to a prospective licensee that the studies were done properly. But this should become obvious once prospective partners are in the data room examining the actual information.
Nobody is going to look at an Investigator Brochure and say, “Oh, this was written and signed by Charlie Smith. He went to Carolina. So I don’t have to read this. I’m sure it’s rock solid.”
So…
Fund Raising – Team is critical, and it should be included, but not over-emphasized at first.
Out-Licensing – Marginally relevant; can be moved to Appendix or referred to web site.
Cap Table
I suppose if you sit through enough presentations, you will see everything.
During one presentation at a partnering conference, I had a CEO show me the company’s cap table.
Now let’s set aside the fact that this is generally confidential information (or, at least information that is marginally relevant to any initial conversation).
Why on earth is a cap table in an out-licensing presentation in the first place?
Detailed company financials have no business being in an out-licensing presentation. End of story.
But what about a fund raising presentation?
Yes, of course.
Now there is a lot of room for interpretation here, i.e., past financials, product projections, source/use of funds, etc., etc. And all of these are ultimately necessary. It’s really a question of understanding what your audience will likely want to see, then tailoring the presentation accordingly…with sufficient supplementary information in the Appendix should questions arise.
So…
Fund Raising – Yes, you need financials when meeting with investors. What you include (and to what extent) will depend on your particular situation.
Out-Licensing – Yes, it’s appropriate to include some analysis on the candidate’s commercial opportunity. But company financials? No, unless you are seeking a co-development partner, and you intend to co-invest in the next phase of product development.
Key Message
What do you want to say?
Seems like a simple question, doesn’t it?
Yet most presentations (most bad presentations) do not answer this simple question.
In other words, there is often a lack of thought process which clearly states what the presentation author wants to say, and the slides which actually state what the author wants to say (reread this sentence).
When out-licensing, the general messages are centered on commercial opportunity and portfolio fit, with the latter being one which is widely under appreciated and under utilized.
For example, suppose you have a partnering meeting with Bayer to discuss your cardiovascular drug candidate.
It takes 5 seconds to find their “wish list.” It’s right here:
In Cardiology, we look for partnering options that can benefit patients in cardiovascular diseases from heart failure, hypertension, heart attack and stroke, atrial fibrillation, acute coronary syndrome (ACS), thrombosis, peripheral arterial occlusive disease, acute lung injury / adult respiratory distress syndrome, cardio-renal syndrome (CRS), pulmonary hypertension and inflammatory and fibrotic lung diseases, to chronic kidney diseases.
Our areas of interest, Bayer Pharmaceuticals
To address research in cardiovascular diseases, we focus on targets in the renin-angiotensin-aldosterone system (RAAS), the adenosine receptor system, on nitric oxide and soluble guanylate cyclase (sGC), the regulation of erythropoietin production by HIF-PH, and the blood coagulation cascade as a key point of control for many processes.
If you have something that fits exactly what they are looking for, then it is critical to make this fit a part of your message. Yes this will require a slight bit of customization; perhaps one Bayer-specific slide. But this is a message to Bayer which should not be ignored.
So what’s the out-licensing message?
Let’s be candid…investors want one thing and one thing only…they want sufficient return to impress their investors, enabling them to success in Fund n and raise Fund n + 1.
Having said this, we are not big fans of telling investors that their ROIC will be x or y%. But, the message that there will be a return, and how it will are realized, is critical.
For example, many companies who are fundraising say nothing about the possibility of out-licensing their drug candidate after the round of capital is spent. Suppose the round is being raised for a series of Phase II trials. Who will be interested in an asset in this specific therapeutic area with Phase IIa data, based on current information and industry trends? Specifically, who?
If a future license is unlikely, then what is the potential exit after this round? If the answer is “None, because we’ll need more capital for Phase III,” and if this reflects reality, then so be it.
It’s generally better off being brutally honest. There are too many smart, experienced people in our industry. Trying to fool them with a “We’ll raise Phase II capital and figure the rest out later” strategy is extremely difficult to pull off successfully.
So, what’s the difference?
Hopefully, this short post will convince you that out-licensing and fundraising presentations are different. Ultimately, you are communicating different messages to different audiences. This simple insight should help you improve your presentations, to the point where you feel comfortable moving away from the “one deck fits all” mindset.
The differences may seem subtle, but when you have a limited amount of time, hitting the right notes at the right times for the right people can make the difference between moving on into the data room and moving on to a new company.