Guidance changes, management access and teamwork: Inside IR at Biocartis
They say IR truly shows its worth in challenging conditions – and that’s precisely what Biocartis faced in September when the molecular diagnostics company announced its half-year results. A slowdown in growth in the US market meant Biocartis needed to revise down its annual guidance, leading to a share price fall of a third in just one day.
While little could be done about the initial share price fall, Biocartis worked hard to reassure investors that lessons were being learned. The firm, which currently offers tests for melanoma, colorectal and lung cancer, met with more than 45 people over two days to explain the situation and how it was responding.
It helped that the company had already developed strong links between the senior management team and the investment community: earlier this year, Biocartis came fourth for best IR by senior management at the IR Magazine Awards – Europe 2019, which is voted for by investors and analysts.
Here, IR Magazine speaks with Renate Degrave, head of corporate communications and IR at Biocartis, about her day-to-day job, managing negative news and the importance of teamwork.
Can you tell us a bit about yourself? What’s your background and how did you get into the IR industry?
I started off my career in the consulting domain. I worked for EY for several years in strategic business-model consulting, with a focus on sustainable business. My work varied from providing advice to construction companies that wanted to launch roof materials with built-in solar panels, to retail companies that wanted to make their supply chains more sustainable.
I ended up, in the last years of my consulting, giving advice to companies in the healthcare and financial sectors. Both areas grabbed my interest.
Then I found the job at Biocartis. The switch to investor relations was a move toward the financial community, but at the same time I would still be active in an industry that is very relevant for society: building diagnostic solutions that can really make a difference for cancer patients.
What does your typical day look like?
I think every day is a little bit different – that’s the interesting thing here. I think for every IRO who works in biotech, or medtech, we work in an industry that changes very rapidly.
In general, I start my day checking the analyst news. There’s a lot of news from the financial analyst community that covers biotech, pharmaceutical and medtech companies. I tend to focus on what peers are doing, what is happening in the oncology treatment landscape and what is happening in the molecular diagnostics landscape (with a focus on oncology). Aside from that, I follow up on some macroeconomic trends because these impact the valuation of your company.
On a daily basis, I am also in contact with investors, both institutional and retail. Some investors are just starting to look at our company and want to have the first introductory meeting, or want to schedule a site visit during one of their upcoming trips to Belgium. Other investors might have been following us and give us a call to get some more context on a press release we issued. After full-year and half-year results announcements are the busiest times; then we go on roadshows in Europe and the US to meet with investors to give them a full update.
Finally, a third big part of the day is, of course, communications. That can vary from IR website updates, press release drafting or management of the press release review processes, speaking to media or preparing internal communications.
What has been the biggest challenge you faced over the last 12 months?
I think it is something that happened very recently. On September 5, we announced our half-year results, after which we had a drop in our share of about 40 percent. For the first time, we brought some more negative news to the market, about a slowdown in our growth of commercial cartridge volume. Our value is in the recurring sales of our molecular diagnostic tests: the Idylla cartridges. So just like the cups in an espresso business model, these cartridges are our recurring revenues.
We entered the US market – the biggest molecular diagnostics market – about two years ago. Coming to that market is quite challenging. We are working toward US Food and Drug Administration-approved tests, but this is a long process for every player in this industry.
In the US, we had a delay in the commercial pick-up of our cartridge volume related to the fact that our Tier 1 clients in the US – very large labs – had to adopt several procedures before they could run Idylla tests. As a result, we had to adapt our guidance and targets for the year, which gave us a considerable downward pressure on our share.
Rightfully, a lot of investors just had questions. We had prepared an intense roadshow after our H1 announcement to go and see as many investors as possible. At one conference in Paris, we spoke to more than 45 investors spread over two days. We invested a lot of time in speaking and explaining to our investor community, because it’s an important moment where you really need to manage your messaging in a transparent way.
The share price impact doesn’t show in just one day: it often continues for weeks afterwards, and this is what happened here. So we were being very flexible every day, answering investor questions that had come in with calls and meetings, and then anticipating the questions that might come later. We worked very closely with the senior management team on how to approach that, making sure that, for example, the CEO’s and CFO’s agenda was flexible enough to allow them to speak with investors.
When there is a big sell-off of shares, there are also questions from your analysts, the press and internally. For example, we had to stay in contact with our US teams to make sure they didn’t feel overwhelmed by the wave of negative messaging about their region.
What IR lessons have you taken from the experience?
I think the biggest lesson in being transparent is that you need to explain in the clearest way possible. This implies adapting your message to the person or group you’re addressing. Some of our investors have a lot of scientific knowledge or invest in other oncology companies, but some don’t. Depending on who you speak to, therefore, you need to give more or less explanation about certain aspects.
Moreover, as a listed medtech company developing clinical products for patients, we need to take into account the heavy product and financial regulations. This can be extra-challenging at times.
And what has been the biggest highlight?
For me, the biggest highlight in challenging times is the teamwork. Being able to count on each other is so important. If I have a large fund on the phone that wants to speak to our CEO, I really want to have a direct line to his assistant or, if she’s not available, to the CEO himself. I think the biggest highlight for me was seeing that the team really works: we all pitch in when the moment comes.
In terms of biggest business highlights, we can be pretty proud that today we have, despite all the events, a very solid cash position because we managed to do an equity raise in January of €55.5 mn ($61 mn), followed by a convertible bond issuance of €150 mn in May. Together they provided us with what we call a record financial position that can take us forward a few years.
What are some of the top issues investors and analysts are asking at the moment?
They revolve around the short term: how are we going to fix the situation in the US? Then we also have long-term questions: how will we keep our leader position and how will we face future competition in our area? Within oncology and diagnostics, there are more and more technologies entering the market: how will we keep our position there? Developing a continuously growing menu of tests – together with partners – is key.
At the IR Magazine Awards – Europe this year, Biocartis came fourth for best IR by senior management among small and mid-caps. What involvement does the senior management team have in the IR program?
It is continuously involved. In the year to date, our senior management has participated in more than 15 investor events and spoken to more than 300 investors. There is great commitment and flexibility from senior management to be in continuous dialogue with (potential) investors, just as there is continual involvement toward our commercial target groups: clients, prospects, customers, and so on.
Why do you think investors and analysts voted for the Biocartis senior management team as a good example of IR?
I think the fact that they have access to senior management in a rapid and efficient way is very important. We don’t wait two weeks to send an answer if there’s a request.
If resources were no object, what would you like to do more of?
For me, the answer is extremely clear: education. I would invest more time in reading and sharing insights and research around oncology, molecular diagnostics, trends and what peers or other organizations do that impacts our business. I would feed that to audiences inside and outside our company, including analysts, investors, employees and the media.
Although our product makes oncology diagnostics very simple, Biocartis is a very complex business. We develop liquid biopsy-based tests to monitor the therapy efficiency, we are developing tests for immuno-oncology treatments. ‘Cancer’ is a simple word but within the cancer domain, there are many complex niches. So if I could invest more time or resources, education around cancer diagnostics would without a doubt be my first choice!