Advisory intelligence: Nasdaq Advisory Services provides ‘eyes and ears’ for unpredictable times
Healthcare has been dominating headlines this year. Fr om healthcare reform, new leadership at the US Food and Drug Administration (FDA), Congressional scrutiny into drug pricing, to new IPO listings and ongoing potential for M&A activity, each new headline gives IROs in the biotech sector new market noise to wade through and interpret.
Joshua Kolins, who oversees Nasdaq Advisory Services’ healthcare and biotech practice, describes his team as the ‘eyes and ears’ of issuers in the financial markets, helping companies understand the ebb and flow of market moves in real time.
Kolins takes both a big picture and a company-specific approach to the task. He views it as ‘extremely beneficial’ to identify the drivers of capital flows that are impacting stocks aside fr om just fr om company-specific news. This helps IROs to see the whole trading picture when talking with investors, updating senior management and understanding their shareholder base.
For example, as investors had piled into tech names earlier this year, Kolins had seen a rotation of capital out of other sectors including healthcare. In addition, specific factors have accentuated the recent volatility in the healthcare industry. Recent scrutiny of drug pricing sent pharma and biotech stocks down, as healthcare investors swapped into medical technology stocks, viewed as safer bets. As the headlines receded, investors came back into pharma and biotech names, which are outperforming the benchmark S&P 500 year-to-date.
Biotech companies also require a different approach when it comes to targeting potential investors. While traditional targeting relies on company fundamentals as a starting point, ‘fundamentals don’t exist’ for many biotech companies that often lack significant revenue, Kolins points out.
The more relevant markers for biotech investors are whether a company is in phase one, two or three of its clinical trials or under FDA review – each situation comes with a different risk profile. Recognizing this, the Nasdaq Advisory Services team identifies investment managers’ appetite for companies based on wh ere they lie on that spectrum. This level of actionable intelligence not only arms IROs with insight when speaking with current investors, but also helps them identify new targets in anticipation of wh ere the company will be as it progresses through its pipeline towards commercialization
In addition, the high level of IPO activity in the biotech sector in recent years calls for a proactive approach wh ere the Nasdaq Advisory Services team looks at the IPO allocation list so the company has an understanding of its shareholders ‘out of the gate’. The team also plays a crucial role in helping newly public companies understand their shareholder activity following the lock-up expiration period.
Kolins’ analysts arm clients with the information necessary to execute an offensive IR strategy while also taking a defensive posture to uncover potential problems such as activist accumulations, before that information becomes public. ‘The core of what we do is getting behind the real-time buying and selling and to understand the why behind investor movements,’ he concludes. ‘We excel in understanding institutional activity, sector knowledge and market intelligence, so IROs can focus on their program.’