IR Best Practices & Faux Pas

In this episode of TD Cowen’s Biotech Decoded Podcast Series, Anne Daub, Biotechnology Analyst at T. Rowe Price, and Isai Peimer, Biotech Analyst at Surveyor Capital (Citadel), join Cowen Biotechnology analyst Yaron Werber for a discussion about the dos & don’ts of investor relations.

Anne and Isai offer insights into how companies can communicate effectively with the buy side and  sell side, attract investor attention without overcrowding events/calls, and properly manage expectations. They also discuss how the ability to facilitate an insightful dialogue between investors and management can differentiate a good IR person from a great one.

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Transcript

Speaker 1:

Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Yaron Werber:

Thank you for joining us for another exciting episode in our biotech decoded podcast series. I’m Yaron Werber, biotech analyst at Cowen. It’s really a great pleasure today to be joined by Anne Daub and Isai Peimer in this episode called Investor Relations Best Practices and Faux Pas to discuss what to do and maybe more importantly, what not to do from an investor relations standpoint. Anne Daub joined T. Rowe Price Associates as a biotechnology analyst in 2018 and has more than a decade of experience investing in biotech stocks. She started her career in investment banking at JP Morgan in debt restructuring and healthcare investment banking.

Isai Peimer is a biotech analyst at Surveyor Capital Citadel where he focuses on public and private investing in biotech. From 2010 to 2016, Isai served as managing director at MedImmune Ventures, which as you know, is AstraZeneca’s Investment Fund. Isai was also an investment banker at JP Morgan and a specialty pharmaceuticals analyst at Alliance Bernstein. Prior to Wall Street, Isai was a management consultant in life sciences and began his career as a scientist at Merck. Anne and Isai, it’s so great to see you and thank you so much for joining us. I have to say that this podcast specifically, I’m very excited about. It’s not to say that I’m not excited about the other ones, but this is sort of a project of passion for me.

Having been like you on Wall Street for a long time, personally, I spent about three to four years in a company, so I’ve a little bit of a view of what happens inside a company and then obviously, Wall Street, this is investor relations is such an important topic and what to do and what not to do and you both have such really great backgrounds. Isai, you have a great background in VC and public and private investing. You have board experience, and if I remember correctly and correct me if I’m wrong, I think your fund was one of the biggest investor in private companies over the last two or three years.

Isai Peimer:

Yes, we started deploying capital to private companies at Citadel, perhaps four years ago or so and have been very active. It’s a way for us to build a real position given the size of our fund. So we kind of go upstream and looking forward to build a bigger position once these companies go public and try to be helpful to them along the way.

Yaron Werber:

Yeah, so you see what happens literally from series A, series B onwards to five years on the public market, and Anne, you have such a great knowledge base and industry experience that with such a great vantage point at T. Rowe and you’re both complimenting each other so well. So we all know the biotech markets have been under a lot of pressure. That’s an understatement. Companies are struggling to get noticed. You can argue that’s not new, but there’s over 600 companies now.

We estimate at Cowen that 35% of companies are going to need to raise capital in the next 18 months and that’s a tough hurdle to get through, and we’re getting questions on, I know you do from boards, CEOs, CFOs, IR companies, heads of IR about how companies should conduct and approach investor relations. How much should they do? How little should they do? What should they do? Maybe Anne, let’s start with you. What advice would you give someone in a company? What’s the best practices IR wise?

Anne Daub:

Thanks for having us, Yaron. So I mean, I would say that there’s a background level of communication that should be as efficient as possible. So quarterly calls for companies at a certain stage, certainly late clinical companies and absolutely commercial stage companies, and one thing that I find extremely efficient in terms of communication is participation in [inaudible 00:04:09] conference fireside chats as opposed to canned presentations because the canned presentations are on the website. The reason why I love the fireside chat format is because they’re very efficient because you get transcripts on Bloomberg and FactSet, the audience is broad and the questions are, they come from somebody who’s sophisticated and they’re very topical questions, the topics du jour.

What is too much or unnecessary, I mean, I’m all for investor days, but make sure they convey a very clear message and it’s not a data dump on topics, various levels of relevance to the stock. You don’t want a page with 30 programs on your screen or with acronyms like an alphabet soup. You basically, an investor day should answer three questions. What have you achieved, where are you, and where are you going to be in three to five years, and I think that a lot of times, that it’s kind of like we’re doing this and that, but you’re not telling me where you want to be and there are companies that do that very well. Alnylam is one of those where they tell you what they’ve done, where they are, and where they want to be in a few years.

Yaron Werber:

Great. So lots of advice there. Isai, what do you think?

Isai Peimer:

It’s really impressive to think about how many companies are, in the last five years, have gone public and are now publicly traded. There’s just so many companies. It’s really hard for companies to get noticed and added to that, just looked at the last couple of years, about 80% of the new IPOs have been preclinical companies or companies ahead of their clinical proof of concept. Nobody really needs to own these companies right now. So it’s tough going, especially because XBI is underperforming other indices and benchmarks. So I think the thing that I find works best is if the management team can really demonstrate their competency, become thought partners about the technology that they have or a particular indication. Those are the kinds of teams I want to interact with more frequently because it’s not just about their programs.

It’s also about their point of view on the competitive landscape and other advances in the field. So those teams who can demonstrate competency and become KOL/thought partners are the most valuable ones to track and build a relationship with them, and the companies really do need to build these relationships sometime before they need to raise capital and all of these companies, should they have success, they’ll need to raise even more capital, so it pays to take that approach, I think. I find the management team members at the scientific forums and medical conferences and I really enjoy catching up with them and not only about their programs, but also getting point of view from them about what’s going on in the space. That includes the supply chain, the FDA, and other things that are maybe less obvious.

Yaron Werber:

Okay, great. So a lot of insights there and one of the things that we see, I can imagine there’s a lot of pressure within the company to get attention. I remember being in a private to public company when the stock is under pressure, there’s a lot of pressure to reach out to Wall Street and a lot of times, we see companies are constantly trying to reach out to us. Anything happens, anything from their competitors happens, and a lot of these are fairly small pieces of information, but they want to do a conference call, they want to book an hour, they want to book 45 minutes with all their management, and I’m thinking to myself, honestly, look, we’re here for you and we have plenty of time to give you, but in reality, it’s not going to be a super productive call.

We honestly don’t need the time and your time is extremely valuable. Three or four people spending a half hour with us, it’s two hours and god knows how many calls they’re going to do like that. So to me, that’s not really super helpful. Just having a touchpoint for the sake of having a touchpoint is not productive just given how busy we all are. So Anne, to your point, you mentioned the companies that need to do conference calls are commercial companies and late stage companies. Does every commercial company need to do a conference call? Do they always need to do conference call and for earnings, I mean, and does every late stage company needs to do a conference call?

Anne Daub:

So I think that the bias in the public market, it’s broad strokes, but it’s long the stock into clinical regulatory events and then short the stock into the commercial launch except for rare exceptions, and so over-communicating on, especially in the context of a launch, always pays, but a lot of companies don’t do it well. So they’ll give you metrics such as number of doctor touchpoints, lives covered by managed care. I don’t care. What matters is formula replacement, net pricing, drug compliance, tiering, all these things, anything that helps us model things, and also these early calls are really important when it comes to making sure that expectations are carefully managed.

So there’s communications with the street, with buy side and then there’s also another form of communication which is communicate with your sell side, constantly revaluate consensus where numbers are and work on this because the work you invest upfront in making sure that numbers are achievable, beatable will pay off a lot, and especially in terms of your time management because if you have a launch that doesn’t go well and numbers get cut repeatedly, you are going to spend months of your life addressing this and you’ll end up looking defensive and incompetent. So I think these two channels of communications are really important.

Now with respect to late clinical, maybe not, but when you have a big set of data, even if it’s early data, put it in context because the other thing that is very troublesome is you see early data in cancer and it’s like five patients and you have three responses, they’ll be like, we have 60% response. No, the decision to put data out, so very important. We’re not going to calculate a resist response rate on six patients. We want a lot more patients and your first data is often your best data and then it falls off a cliff because of initial bias. So there’s something, they need to be very judicious about not only communication with the buy side and somebody with the sell side, but also when to give data, if that makes sense.

Yaron Werber:

Yeah, absolutely. And Isai, what do you think? Should companies do earnings calls and when should they do earnings calls?

Isai Peimer:

No, I think that companies should aspire to engage in high yield substantive interactions with investors, and so unless they have something that’s material and can be easily conveyed through a press release, they shouldn’t do a corporate events, I think. I think certainly, the revenue making companies, probably does make sense to engage in a dialogue in the form of a quarterly call, but it’s such a drain on management’s time, on sell side and buy side analyst time, and it creates conditions for perhaps heightened expectations.

And when those expectations are not met or exceeded, there could be a selloff. So this is why I think sometimes management teams are surprised to see after they put forth the effort to do an R&D day, suddenly their stock plummets. It’s because there’s a risk of expectations for what is going to be conveyed at that event gets away from them and they should control that much more. So I would say unless there is substantive information to convey that can’t be conveyed in the press release, they shouldn’t try to do that.

Yaron Werber:

Yeah. So I totally agree with you. I mean, an R&D day is an enormous amount of work and unless you have important data or an important strategic initiative or an important new direction, an important new technology to lay out, doing a four hour R&D day is not necessarily useful. By all means, don’t feel obligated to do them annually. It’s a huge drain on our time honestly, and if it’s not really productive, it will backfire at the end of the day, and also, R&D days don’t have to be four hours. You can also do a very productive two hour webinar in four half hour modules that’s going to be a lot more productive. Don’t necessarily need to fluff it out to make it lengthy to add substance, so to speak. We get a lot of companies are asking about conference calls for earnings and they feel that if you do it once, you have to do it all the time.

So I personally disagree. I do get it, that if you start doing them one quarter and then five quarters later and then seven quarters later, maybe it’s a little choppy. I also feel that if you’re in the very early stages of your commercial launch and you’re going to be putting out 2 million in sales, going to 4 million in sales while you’re waiting for formula replacement, I’m not sure personally to do a conference call is necessarily that value add while we all know we’re waiting for things to happen in the future. Sometimes putting out a press release and then calling the sell side, then scheduling 15 minute times within the buy side is a lot more productive than going through a long prescription remark. So Anne, you also mentioned Alnylam does a good job on earnings calls. What do they do that’s good as best practices?

Anne Daub:

So they do a good job on earnings costs because they have an A team and they spend time on, and they’re not the only ones, but it’s in big picture comments and then R&D commercial finance, but essentially, all the launch caps do this and usually, they have very good teams, but what I was pointing towards is the quality of their R&D days, which are not… I mean, by the way, they’re like five hour affairs, but they do follow that schema, if you will, of what have we achieved, what has been our hit rate, where are we and where are we going to be in a certain time horizon?

And what they did that was really impressive in my view, is they gave financial guidance, long term guidance, even though there was a lot of uncertainty around a crucial cardiac TTR trial, and they basically made a commitment like you can play with this scale. People will take a ruler and try to figure out when are they going to break even, but they said we commit to breaking even and being profitable as opposed to other companies I know that sell billions in revenues and have been around for 20 years and are still not profitable. So that message, especially track record of delivering on commitments from prior years gives you a lot of credibility.

Yaron Werber:

Another company to me really comes to mind is Amgen.

Anne Daub:

Yes, I agree.

Yaron Werber:

Right? They have a great deck. They need to get through 6 billion in revenues every quarter to explain to us in multiple product lines. They have a terrific slide deck. It’s very topical, it is easy to understand. It gives you an immediate view as to what volume, what the trends were for each product line. They assume that we have a great baseline knowledge so we don’t need to sit there for 40 minutes of prepared remarks rehashing what we know. It’s not a good use of time.

Like Anne mentioned, when you read the transcript, you don’t really read 20 pages of prepared remarks. You want to go to the Q&A quickly. They’re brief and to the point and they leave a lot of time for Q&A, which is frankly what we all want. I know companies sometimes feel like an earnings call is the only time the investor base is going to listen to them, but that’s not what really happens in my view. What do you think, Isai? How do you get to know a company?

Isai Peimer:

My favorite way of getting to know management teams is at the medical conferences and scientific forums, talking about the space generally. That’s my favorite way to do it. I certainly expect to interact in person with management teams at least several times a year. It doesn’t have to be once a month or every quarter, but for me, it’s a personal preference. I also like some management teams, once they have a press release out or a call is finished, they can follow up with an email that contextualizes things a little bit, offers up an opportunity to connect with them. I’ve seen various practices. I really appreciate the opportunity to interact like that.

Yaron Werber:

Those emails, that’s a great point. Those emails are unbelievably useful. Hey, FYI, bam, bam, bam, bam, bam. When you don’t abuse it, it’s extremely, extremely useful and companies don’t. One of the things that when we were on the other side and interacting with a lot of IR companies, and it’s something that we all know also from this side, there’s a lot of at times, a view within companies that their stock is weak because “Wall Street’s not getting it,” and then they spend a lot of time and a lot of IR resources with their external IR firms trying to figure out how do we get Wall Street to get it. So let me ask you, you’re seeing a company, their stock has been under pressure for a long time. They feel like Wall Street’s not getting it. How often is Wall Street “not getting it” in your view, or is there another reason why the stock is usually down?

Anne Daub:

Here’s the issue. There are so many publicly traded companies in this space that it is true. We have a process and we try to skim through stuff and try to see what is worth doing an additional layer of work. So it is true that some things can fall under the [inaudible 00:19:02]. However, companies should not assume that Wall Street is missing their story as the default explanation, and the reason why I’m saying that is because their audience is an army, literally a huge army of highly sophisticated, hungry people looking for the next Pharmacyclics, Regeneron, or Alexion, and so a hidden gem will ultimately be discovered. So I think that this assumption that Wall Street is missing something after many years in the market is probably misguided.

I mean, if a company keeps being “missed,” I would have encouraged these companies to ask themselves, is there something with respect to execution and communication, and maybe these companies, they should WeChat every time they do a meeting with a buy side or a sell side, ask at the end of the meeting for candid feedback. Do you like the end market? Do you think there’s enough data that public investors will include finance people like me or science people like Isai will understand the story or not, or is there an issue with execution or just the stage we’re at, but I think if companies spend years saying that Wal Street is missing them, I think my guess is that in most of the cases, it’s an issue of communication/execution.

Isai Peimer:

It’s a familiar theme, I think particularly for early stage development stage companies. Many of them have gone public so early, years away from any clinical data, maybe years away from the clinic, and they are so troubled by the fact that they’re being ignored and they’re being ignored because, and there’s lots of opportunities to invest in many different things and we have to prioritize why do we need to own it right now? That’s a question I think they need to think about, and yes, capital markets have been extraordinarily permissive, I would say, in the last few years, but that environment has changed.

So I think it shouldn’t be a surprise that people are focused on catalyst, on the right value inflection and starting a clinical trial is not it. Clinical data is it. So I think it also pays to cultivate the investor base that’s right for the company and it’s an incredibly difficult thing to get right. Many people try and there’s all sorts of bad assumptions that they make about long only funds versus hedge funds and everything in between, but I do think being thoughtful about your investor base makes sense and there are lots of venture funds who raise capital to do public investing. They have very long term horizons. They can get into stories that are dislocated without any near term or even medium term news flow.

Anne Daub:

Actually, one thing I’ll pick up on that you just said, and I think it’s absolutely valid, Isai, and a big factor is that I mean, the market’s been so treacherous, you need to manage your books very tightly, especially on the long short side, and so I agree. I remember back when I was at Visum, we were happy to sit something for two years before clinical readout. Now books have to be managed so tightly. It’s like, I’m not going to sit on dead money for a couple of years, even if I like the idea, even if I like the management. I need to get paid now, and so I think it’s making it much, much harder for these companies to get attention. That was a great point you raised.

Yaron Werber:

Yeah. And I got to tell you, so there’s two points that really resonate with me that you just mentioned, and when I was in a company, one of the constant sayings that I would tell people is we don’t get rewarded for going to work. We get rewarded for delivering results. That’s a very, very big difference in the way Wall Street looks at the world and looks at progress versus what companies are doing because to them, it’s, look, we filed the IND or we started our phase two study. We’re expecting you to do that. We gave you capital with the understanding that you can do that. It’s a question, can you deliver positive phase two data that’s really the difference.

One of the things, you were both talking about how it is hard for companies to get attention and companies, to a certain degree, a lot of times when they struggle, they want to do more. They call for advice and they have people call for advice, how can they do more, and I don’t know that doing more is the right answer. I would say absolutely do more in delivering value. In creating a medicine, delivering positive results, but spending more time with Wall Street when there’s big gaps in your data set or you’re too early and you’re in limbo is not necessarily going to help your stock and it’s probably going to distract you a little bit from doing your job within the company.

They’re also really trying to, I would say overcrowd prime time. So a lot of times, we have during a big competing conference at the primetime slot, 8:00 AM on Tuesday, a small 180 million market cap, 320, want to do an analyst event right on top of what Amgen is releasing their phase three, God knows what data. It’s not a good use of time and when there’s too many events going on, to your point, it thins all of Wall Street. So when a company actually does have anything to say, no one’s there to listen because they’re too distracted looking at a hundred press releases. So one of the questions that I have to you is what’s the best way to get your attention and when? Maybe Isai, let’s start with you on that one.

Isai Peimer:

Well, I mean, at these broker conferences, it’s a perfect time to get attention. There are lots of opportunities to schedule times on the non-deal road show and speak with us. It’s a delight to meet companies, as I’ve said, at different medical and scientific forums because we do attend most of them, so that’s always a good idea. If they have connections to me through their board members or management team members, those are also easy to react to, but there are so many companies and there’s so few of us and it’s really tough to fill out your schedule with companies that don’t have anything near term that you absolutely have to react to.

Anne Daub:

Yeah, I mean, I think this concept of talking to investors around medical meetings and data presentation is, I think it works really well because everybody’s in the same place, covering the same topic. I think it works really well.

Yaron Werber:

Okay, terrific. The one other element that I wanted to throw out, and you probably will know what I’m talking about, as we all know, companies need to close the quarter 45 days after the quarter ends, and I remember being a CFO. The finance team wants to release the queue on that Thursday, the last Thursday. Well, if you notice, I think I counted recently, there were 35 earnings at Cowen on our biotech team that Thursday and I think it was, there must have been 10 conference calls after the close.

You can imagine the ability for anybody to pay attention is nonexistent at that point. So as you think about setting up your landscape, zoom out a little bit and think about what else is going on in the industry because each company is a part of a broader ecosystem and then try to plan, to your point, when people have time, and in other words, don’t release the phase two data in the middle of the late breakers at ASCO, as an example, if you’re not a late breaker company at ASCO.

Isai Peimer:

If I could add to this, I’ve seen some really innovative ways of releasing data that I personally appreciate, especially when I’m a shareholder. I’ve seen companies embargo sell side analysts and actually take them through the data so they’re prepared for when they actually release it, and sell side analysts could be a company’s best friend in terms of promulgating the message, clarifying whatever is opaque, things like that. So I’ve seen some companies do that. I don’t think it’s a standard thing, but you only get one chance to present the data and contextualize it appropriately. So I think it pays to be prepared and make the most of it.

Yaron Werber:

Yeah, absolutely. So I’ve definitely seen an uptick in that, Isai. I agree with you. The first time it happened, it was a little jarring. I was like, “Oh boy, here we go.” It was my top pick. They’re bringing me over the wall 20 hours ahead of time. This is going to be a slow train wreck. It was actually a pleasant surprise. It was actually positive. So it really works and it lets you prep. A lot of times, I’m sure you’re in meetings and the meeting goes extremely well for whatever reason. Some meetings are, don’t go very well.

And so I wanted to ask each one of you, what resonates with you when you’re in a meeting with a management team and what really doesn’t work for you, and maybe to, I can tell you the first thing I look for when meeting with a company now, increasingly in the same room is when the CEO brings the team and lets them talk and it’s not a one person, man or woman CEO running the show, answering all questions because I want to see whether they’re comfortable with them, how capable they are, and I want to read the room too when they answer questions. What works for you? What do you want to see in meetings? Anne, maybe let’s start with you.

Anne Daub:

I mean, what I want to see, again, it’s this notion of commitment and delivering on what you’ve promised, and if something goes wrong, I want to see a plan B being articulated right away because I think a lot of companies don’t have a plan B. A lot of companies have so much, and it’s good, they have so much faith in what they’re doing that they don’t have a plan B and then something blows up the next day, they’re in your office and it hasn’t been thought through. So I always encourage companies to think about that. I mean, the other thing is I love… The best companies, and it’s more consistent in launch cap land than in small cap land, is where you have an A team across the board. The head of R&D is amazing, the CFO is amazing, the CEO is good, and it’s harder to see… I mean, I’m sorry, it’s less consistent in smaller caps.

And what I appreciate also is companies that ask for feedback at the end of a meeting or after the meeting. You know who’s really good at this, is Amgen, by the way. They ask for feedback constantly and I think it’s very good practices. So they will ask for feedback and we’ll give them candid feedback, and sometimes you actually can do that in the meeting and then you need to have follow-up conversations when you think that something could have been improved because otherwise, the meeting would’ve been adversarial, but again, consistency of management and being prepared as we are as investors because we look at alternative scenarios, we put properties on them. When something goes wrong, showing that you had a plan B is really important in terms of your credibility.

Yaron Werber:

Yeah, absolutely. Isai, what about you?

Isai Peimer:

Well, it’s a little annoying when you’re meeting with a company that is going through clinical development and the only person you get is the CFO who is not able to answer questions. I would say don’t conduct those kind of meetings. Don’t schedule those kind of meetings when you know investors are going to be focused on the particulars of the trial, they’re going to want to understand how do you stratify it, how you powered the trial. You want to go through all these questions.

And when it’s a complete waste of your time and you’re getting nothing in return, that’s annoying and that’s happened several times to me. I would also say when companies do a press release and they said we’ve conducted a clinical trial and there was a success, and when they don’t provide the details, that’s also very annoying, I think especially if you’re a shareholder and there may not even be anything wrong with it, but the fact that they overlooked to provide the transparency that’s needed and folks are shorting the stock, as a shareholder, it doesn’t feel good.

Yaron Werber:

So I completely agree with you, Isai. I mean, if even the CEO in our view needs to be aware in detail about whether it’s a technology company, what’s the strength and weaknesses and the competitive landscape. If it’s a clinical company, the ins and outs of the clinical study and competition, that’s critical because a lot of times, we want to understand that they have a real pulse on not just how good their data is, but what’s going on broadly, that they’re not going to be supplanted quickly, and secondly, just the one thing I highly recommend companies not to do.

And we get that there’s a lot of noise and from all in the outside world, stick to your data when you talk about it. Have a good sense and you can talk about the competition, but there’s no need to put the competition down. If you have great data, just show us your great data, answer questions about what the competition’s doing. You don’t need to knock them down. That’s usually a red flag when we start seeing badmouthing the competition, I want to talk about what’s the difference between a good IR person and a great IR person, and when do you decide that, yep, you want to call and speak to the IR person as opposed to calling the IR person so you can get a meeting with the CEO or CMO, et cetera.

Isai Peimer:

Yeah. When they can facilitate your learning after, it’s very helpful. I think a lot of larger cap companies are quite good. They have larger teams that are able to do it. With small cap companies, I actually want to hear from the CEO. I don’t feel comfortable meeting with an IR person of a development stage company. The CEO should be there, and I think many, many investors feel that way.

Yaron Werber:

Anne, what about you?

Anne Daub:

For me, the greatest IR professionals are those who deeply understand the company from a valuation standpoint. So Justin Holko at Regeneron did an amazing job, essentially telling the story because the story was very highly eccentric and there were new things emerging and the COVID story, and later on, oncology, and I think he knew it exceptionally well, had a story. So there are a few people like that in IR positions. Lavina Talukdar at Moderna knows the story inside and out. I mean, to me, she’s like C suite level, no question whatsoever. She’s of the highest caliber. Otherwise, good IR should be a conduit, a two-way conduit between investors and management. Relay feedback from investors to management.

And so they need to have these good relationships so that there’s actually a dialogue as opposed to spitting back what has been said in the press release and work closely with management so they can really understand the company at the deepest strategy and financial level and convey the story rather than rehash pieces from press releases, and good IR people will also say, nudge people and say, “Hey, maybe you should take a look at this program because we think it could be important,” and again, Justin could do that, Lavina can do that, a few people can do that. Amgen is very good at this. They have an amazing IR team, but the worst where IR is not useful to me is when the only thing I get from them is what we have said is, and then they read to you the quote from a transcript that I’ve evidently read.

Yaron Werber:

Yeah, I agree with you, and a good IR person has resources at their fingertips to point you to. They understand the program, they understand the gap, they understand the areas that are going to make or break the program, and they have data. They can send you references, they can help you advance your knowledge base and they can help fill the gaps for you, which is extremely useful. They really help expand the message as opposed to contain the message to your point, Anne, right?

Anne Daub:

Yes, absolutely.

Yaron Werber:

Can we talk about setting expectations? It’s really an art and not a science, and it really requires a certain level of commitment, intuitiveness, patience, dedication to stick to an end, a long-term vision that some CEOs really have and some CEOs don’t, and it’s really entwined in personality and skillset. Everybody’s made up of certain strengths and certain areas that are just a little harder, and there’s a lot of amazing CEOs who just get overly excited. They don’t stick to the script, but I think they’re not necessarily realizing how when you talk, what people hear and how that change then shifts in terms of building expectations over time, and when you do that too early, how they can amplify into the data and they’re not willing to be patient and hold the horses back from the race. They want to sprint the whole time. Can you talk about what does that mean for Wall Street? Maybe give some advice. Isai, let’s start with you.

Isai Peimer:

I think particularly for newly public companies, they are so naive to that being a core skill, setting expectations, and they’re so motivated to be liked, to say the right thing to investors. You really do have to step back and be more of an adult about it and refrain from this gratification of high-fiving with investors and whatever because it will hurt the company. I think in markets like this, you get rewarded for exceeding expectations, not meeting expectations. So I think it’s important to set the context in a way that you can exceed expectations in a realistic way, and certainly inappropriate to put out expectations that you can’t meet.

So it’s a tough one because many of these public company CEOs are public company CEOs for the first time, and it’s a different world in the private world and with venture investors who are… It’s just a skill that they have to develop. I’ve seen some companies do tremendously well with expectations managers. I recall Endocyte, Mike Sherman. Years ago, I was a top shareholder and even I was surprised about the FDA feedback. I was certainly surprised about the Novartis acquisition. They’ve been at it a long time with strategic discussions, but my point is that’s an example of a team that knew how to handle expectations and never got ahead of themselves and that’s a very important, it’s half the battle is exceeding expectations that you set.

Yaron Werber:

Anne, what are your thoughts on this?

Anne Daub:

Yeah, no, I agree. I mean, I see repeatedly R&D days that the stock does well into the R&D day and then it collapses because people somehow are expecting a big reveal, and so it’s IR’s job to manage expectations realistically around what’s going to be presented or going into a medical meeting, we’re going to get our first data of this dose escalation trial in cancer, and it turns out that the therapeutic dose was only the last three patients and there are two responses out of three and they say where it’s a 67% response rate and then boom, your stock craters, especially because, I mean, the trading dynamics are also difficult in this market in that people go long into the “catalyst” and then they exit, and so you want to smooth your stock as much as possible.

You don’t want to let expectations build into marginal data sets, into R&D days unless you are really confident that it’s going to be game changing. So that’s expectations management. So I think the expectations management side of IR job, IR as a position is crucially important, crucially important, and it also goes to their communication with the sell side where they should… The best way to communicate with Wall Street is to call up your analysts at Cowen, Goldman Sachs, and JP Morgan because the message will be disseminated, and again, you have to be careful with messaging, with SEC rules, but there are, as you said, it’s an art more than a science, but I mean, companies would save themselves so much anxiety and hours of post blowup meetings if this expectations management work were done upstream.

Yaron Werber:

Well, let’s get to my favorite part of each podcast where we ask you a little personal touch and humor about what makes you who you are and usually things that most people who probably know you professionally might not know about you. So maybe Anne, let’s start with you. What was your first job ever, and I’m not talking about first job after college or after MBA school. What was your first job? What did you like about it and what did you hate about it?

Anne Daub:

Sorry. My first job in my first internship, or my first full-time job?

Yaron Werber:

Yeah, first full time job. It might be-

Anne Daub:

Oh God.

Yaron Werber:

[inaudible 00:41:36].

Anne Daub:

Yes. My first job was at JP Morgan as an analyst in the analyst training program, and I was based in London and I really took the path of most resistance because I remember we had to fill time sheets and there were a number of weeks where, and it was never below 100 hours, but sometimes it’s 120 and I have no idea how I made it through it, but somehow, I did. I think it was a great job because it’s very intensive, rigorous training, but you need to… So you learn a lot. Your salary on an hourly basis is terrible, but you really learn a lot. It really rounds you up and it makes you tough. I did it for far too long is what I will say. One or two years would’ve been enough.

Yaron Werber:

Isai, what about you?

Isai Peimer:

Well, my first job was when I was 12. We left Russia, Soviet Russia as refugees and we were in Italy for almost a year before we came to the US. So my first job was as a squeegee kid, window washer. I would stand on the corner and basically wash the windows even though some of the drivers wanted it and some did not. It was a bit humiliating, but I had to do what I needed to do and just learn to keep going. The other thing I did was fixing up bikes and selling them to other Russian immigrants who were in the same kind of situation.

Yaron Werber:

It’s like buying and sell, buying stocks. You’re just fixing bikes and selling them.

Isai Peimer:

That’s right. I had to hustle so some things don’t change.

Anne Daub:

Isai, you came a long way, but I have to say, I have a lot of respect for what you just said. That’s like, wow. That’s amazing.

Yaron Werber:

It’s amazing. Yeah. My first job in high school when I was 14, 15 years old was fixing pool cleaners called Aquabot. Those Aquabot that you put in the pool, those electric pool cleaners. I would do that in the summers before and that’s how I would make pocket money, and then my second job was at Joe’s Pizza and that’s how I bought my first stereo. I was, I think 16 and I still call my wife all the time and say Joe’s Pizza. It’s a running joke. Would you ever skydive or have you ever skydived, Isai?

Isai Peimer:

I haven’t. No way. I’m a private investor, not that much of a thrill seeker. I have two kids. I don’t even fly prop planes, so it’s a no for me.

Yaron Werber:

Yeah. Anne, what about you?

Anne Daub:

Yeah, I mean, I thought the question was basically an invitation, say, yeah, absolutely. No, I have no desire for a near death experience. My life is stressful as it is staring at my screen, and I do have two kids and parents and my husband. So no, I have no desire for either near death experience or in fact, a premature end to my life.

Yaron Werber:

Yeah, same with me. Are you kidding me? If I paid to get on the plane, presumably that fare included landing. Then other people jump and I’m going to drink all the Diet Cokes there are left behind. Yeah, I’m not jumping off a plane. It’s not going to happen. Well, great, Isai and Anne. So great to see you as always. Thank you so much. This was really great. I think it’s going to help a lot of people, hopefully.

Isai Peimer:

Pleasure. Thank you.

Anne Daub:

Thank you for having us.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of Cowen Insights.

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