Let’s face it: companies do not aspire to be micro-cap companies. It’s a crowded arena chock full of thousands of companies, each fighting to gain the attention of investors and raise capital. For a select few, being a micro-cap company is temporary, but for most of these companies, the micro-cap space is their forever home.
While we can all agree that life as a micro-cap company is not easy, I contend that life as a clinical-stage micro-cap pharma company is the most difficult of all.
Beyond the challenges posed by unproven science and the fickle nature of the US Food and Drug Administration, the greatest challenge to micro-cap pharma companies is what I refer to as the news flow conundrum. In total, a typical clinical-stage pharma company has only a handful of opportunities each year to provide meaningful updates to investors:
- Earnings – four times per year. This is often more of an operational update, as all these companies do is burn cash!
- Wall Street-sponsored and industry conferences – four or five times per year. But nobody gets excited about these events unless significant news is announced
- Clinical milestone updates – a handful, if you’re lucky. And they better be positive.
Simply put, the lack of organic news flow coming out of these companies results in a perfect storm nightmare:
Lack of organic news flow = reduced trading volume + lower stock price = higher cost of capital
For any micro-cap company, but especially true for clinical-stage pharma companies, the inability to access the capital markets under reasonable terms often results in a limited, painful existence.
While many companies believe the solution is to throw additional money and resources at investor relations – attend more conferences, conduct more roadshows – firms would also benefit from directing some of their budget into public relations efforts.
IR and PR integrate really well: PR placements can and should be flowed through IR channels to make sure that the investment community sees everything. Once posted, these placements can be housed in a media section on the corporate and IR websites, can be sent to investors via email and should be amplified via social media channels.
There is no better way for a clinical-stage pharma company to overcome the dearth of organic news flow than by becoming part of a larger discussion. Management teams need to take their ‘heads out of the clinic’ and think more broadly – all in an effort to position themselves as experts in general science and specific disease categories.
For example, there is no shortage of stories being written every day in both science and mainstream media about gene editing. While a specific company may be working on utilizing gene editing to address a specific disease, the overall story about gene editing is much broader – ethics, approaches, overall cost of healthcare, current treatments, patient stories and the like. Through public relations, there are countless opportunities to be inserted into larger discussions like these, to provide expert insight and perspective and ultimately raise the profile of a company.
Additionally, for those clinical-stage micro-cap pharma company executives who enjoy putting pen to paper, there are plenty of opportunities to establish themselves as expert thought leaders in their respective fields through writing compelling op-eds or bylined articles. Everyone has opinions or reactions to what’s going on in the news, and op-eds can be a powerful way to get management insights in front of a larger audience, and control company messaging at the same time. Furthermore, these op-eds can be repurposed through posting on social media and company websites, or sharing directly with investors and strategic partners.
Simply put, it’s the gift that keeps on giving.
The bottom line is this: Expert public relations support provides a much-needed lifeline to clinical-stage microcap companies, helping to keep them top of mind, overcoming the lumpiness of organic news flow and eliminating the news flow conundrum. When you combine the above tactics, the result is often a reporter knocking at your door looking for that big company feature story everyone has been waiting for. Suddenly, both reporters and investors know more about your story – who you are and where you are going.
It takes time for micro-cap companies to take off from ‘phase I’ PR, but if you’re willing to put in the work and effort, there’s no reason you can’t soar through phases II and III, all the way to the finish line.
You’ll be pleasantly surprised at how approachable and amenable the media is to gaining access to expert opinions outside of Big Pharma. I would go as far as to claim that the media has an insatiable appetite for smart, timely and – when possible – contrarian (even controversial) opinions from ‘small’ pharma, the underdog. After all, micro-cap companies fight tooth-and-nail for attention and capital every day – there’s no reason not to tip the scale in your favor.
Jeffrey Goldberger is managing partner at KCSA Strategic Communications