May 21, 2025

How Should Biotechs Communicate Their IPO to Employees (and What Are the Major Landmarks of Going Public)?

Communicating the details of a biotech’s prospective IPO to employees is all about walking a fine line. On the one hand, it’s one of the most exciting milestones your company will go through, and it should rightly be shared far and wide within any high-skilled, inclusive start-up.

On the other hand, a successful IPO is subject to numerous factors outside management’s control and can never be guaranteed, so management needs to tread carefully to avoid the appearance of failing.  

Here are some guidelines on how to best communicate your IPO to employees that let them in on the excitement but minimize your downside in the event that you don’t make it to the finish line. These are broken down into the five key landmarks associated with going public.

1. Organizational Meeting – All-Hands Meeting / Town Hall

An organizational (org) meeting is the official kick-off of any IPO process. Yes, a biotech will have been courting bankers, analysts and others leading up to that point (as well as engaging in a whole host of other preparation), but an org meeting marks the firing of the starting pistol as far as the SEC is concerned.

After an org meeting has taken place, every company undertaking (be it the issuing of a press release, or taking part in investor meetings, etc.) is viewed by the SEC as potentially being promotional with regard to its IPO, which is not allowed. Thus, every relevant company action has to conform to strict rules (e.g. every investor meeting must be in the presence of a banker, and every press release that’s issued must be in the normal course of business).

Having sat in on a number of org meetings, I can tell you that they are all unique. Typically they are run by the IPO’s lead manager/bookrunner with other participants including the company’s management, the auditors, company counsel, underwriter’s counsel, as well as bankers from all the other banks in the IPO syndicate.

As the name suggests, an org meeting discusses how the IPO will be organized. A big part of the 30-120 minute meeting (yes, I’ve witnessed org meetings at both extremes of this range) will be taken up with going through a calendar of future events, including but not limited to S-1 drafting, responding to SEC comments, a public flip, any healthcare investor conference attendance, test the waters meetings (TTWs), an analyst teach-in, an IPO roadshow, and the launch and pricing of the transaction.

In addition, the prospective public company usually gives a version of its corporate presentation – with Q&A – which counts towards due diligence efforts on the part of its bankers. All parties are introduced to one another, contact information is swapped and from there the process unfolds.

Most biotechs choose to hold an all-hands / town hall internal meeting the same day, since the enhanced scrutiny the company is then under necessitates it.

Content for this town hall meeting typically includes:

• Why the company has chosen to go public (timing, funding), how it fits into the company’s story arc, and how excited management is at the prospect of being publicly listed.  
• What it means to be a public company (to have shares traded on a stock exchange, and the opportunities this provides).
• A statement of (potentially new) company policy strictly limiting the discussion of workflows, company decisions and communications with outside parties, and a point of contact within the company to whom outside inquiries (e.g. media) should be forwarded to. 
• Advanced notice of potential future communications and the provision of training from Human Resources (HR).

What an all-hands meeting should not include is:

• The proposed timing of any IPO, since this may slip marginally, substantially or be cancelled altogether.
• Anything in writing that could be forwarded to outside parties, since everything material to a biotech’s IPO will be covered more formally later in the process.

The golden rule here is: a biotech should at all costs avoid being seen to have unsuccessfully pursued an IPO. Being labeled such jeopardizes a company’s future fundraising, and will fuel rumors of management incompetence, issues with clinical development, lack of market interest, etc. This is why a town hall meeting (as opposed to email communication) is most appropriate for the first employee IPO communication.

2. Education on Insider Trading – Group or One-on-One Training

Well in advance of being a public company – but after a communication has been sent to employees regarding the company’s intent to go public – a biotech should provide either group or one-on-one training to employees regarding their prospective public company stock trading policy. Human resources should make this a requirement for every employee, with participation recorded, and training often provided by a third-party consultant (IR partner, or law firm).

The reason for having a stock trading policy and for providing training is simple – biotechs are typically small organizations and an accusation of, or prosecution for, insider trading is extremely damaging, and potentially fatal.

Employees need to be taught (or reminded if they have worked in a public company setting before):

• What insider trading is and what constitutes material non-public information (MNPI).
• Why insider trading is illegal, who it hurts, the penalties it incurs (fines and prison time), and the additional damage it can cause to individuals’ careers and the company they used to work for.
• How to report suspicious activity (either via HR, a chain-of-command, or via a whistleblower hotline).
• How to legally buy and sell company stock (including education on trading windows, blackout periods etc.,).
• How to properly handle requests for company information from third parties, including understanding who is permitted to talk to the media and/or investors.
• A reminder of company policy about posting work-related content on social media or discussing it with third parties outside of work.

3. Public S-1 Flip – Email to All Employees

The public flip of a company’s S-1 filing is the first sign to the outside world that a biotech is planning to IPO, and as an SEC filing it is visible to anyone who may care to look – including employees.

At this time, it is appropriate to communicate the milestone to all employees. Email can be used for this purpose, and an all-employee email should cover:

• Management’s excitement at having publicly filed the company’s S-1 registration statement with the SEC – a critical step towards the company’s anticipated initial public offering (requiring a ton of work).
• Gratitude for the dedication, innovation, and hard work that employees have contributed to bring the company to this point.
• An emphasis once again on confidentiality and compliance:
  • Directions not to share or comment on the company’s S-1 filing or any company-specific information on personal social media or in public forums.
  • Instructions to refer to a chosen individual (usually the CFO or General Counsel) any and all outside inquiries individuals may receive regarding the IPO.

Companies may subsequently provide employees with a “frequently asked questions” document explaining what the IPO means in more detail, especially to equity holders.

4. First Day of Trading – Email and NASDAQ/NYSE Bellringing Viewing Parties

The first day of trading in a newly public biotech’s stock is truly special. It’s so important that many  companies arrange to ring the opening or closing NASDAQ/NYSE bell shortly thereafter (typically either the same day or the day after).

Since almost all biotech IPOs are on NASDAQ, let me talk a little about how the experience unfolds there.

• Bellringings are typically 15-minute events, with a preamble/introductory speech from a NASDAQ representative, a 3-minute speech given by a company representative (usually the CEO), followed by the actual opening/closing bell and lots of clapping – which is typically picked up by the likes of Bloomberg TV, Fox News, and CNBC.
• Moreover, the whole event is webcast from beginning to end, which means employees can watch the event online on their computers – or with others in conference rooms on TV screens – which is typically great for morale (but requires organizing).   
• Additionally, there is usually an opportunity to have your company logo and/or employee headshots shown on the NASDAQ electronic billboard in Times Square. These digital assets need to be collected in advance by HR/IR but really help to involve the wider company in an event that is otherwise only attended in person by a biotech’s C-suite, and occasionally some of the company’s directors.

5. First Public Quarterly Financial Results – Email to All Employees

Once you’re a public company, it goes without saying that your employees will have access to the same filings, press releases and webcasts that third parties will. As such, it’s good practice to treat them as informed parties.

While near-commercial stage or commercial stage biotechs might host quarterly earnings calls – passive participation in which companies might promote internally – the average non-revenue generating biotech will not. As such, a typical biotech’s first quarterly results post IPO will likely not involve a conference call/webcast but will instead consist simply of a press release.

It’s good practice for a biotech CEO to send an email to employees after every financial results press release has been issued, mirroring the content of the public communication. This personalized approach builds employee goodwill and fosters openness and loyalty.

Note that such emails can always (accidentally or otherwise) find their way to rival companies, regulators or the press, so the content of these “emails from the CEO” should never contain commercially sensitive information or any material non-public information.