September 3, 2025

Should Biotechs Write Shareholder Letters?

Cutting to the chase, I’ll start by stating that shareholder letters are an archaic, unnecessary, and – perhaps most importantly – typically unread communication. When asked by clients (many of whom have public company experience dating back years, if not decades) if they should write one – or if it’s commonplace for biotechs to write them – I emphatically tell them, “No.”

Let’s start with what a shareholder letter is.

Shareholder letters are typically written once a year and are usually included at the front of a company’s annual report. They are generally written by the company’s President and CEO (usually one and the same person) and they usually look back on the company’s achievements in the past year, look ahead to the next year, and then thank every stakeholder imaginable for their respective contribution to both.

Let’s stop there. The paragraph above references an “annual report.” In a bygone era (before people realized that “saving trees” was a good idea, and that electronic communication was much cheaper), annual reports were glossy, magazine-like documents that were physically mailed to shareholders, informing them of their company’s financial and business performance in the prior financial year.

The average biotech does not and should not produce annual reports. Partly because its shareholder base typically lacks a large retail or individual investor component (instead consisting of concentrated holdings by numerous specialist healthcare funds) and partly it’s because biotechs say all they need to electronically, via their SEC filings, press releases, and webcasts.

Given that shareholder letters seldom contain any new information, they are a particularly poor communication – often regurgitating the same old news shareholders have heard before. This also makes them a waste of money – money that could otherwise have been spent developing a biotech’s pipeline.

These days, a 10-K in electronic form suffices for the old glossy annual reports, and such filings are already exhaustive enough without needing to be wrapped in a two page “letter from the CEO.”

More than once, a biotech client of mine – typically one with a low market cap that has perhaps previously disappointed the market and is struggling to regain the attention of the investment community – has suggested writing a shareholder letter as a way of amplifying the company’s story. Worse, a few have actually implied that writing one might be a catalyst for their stock.

Those clients were gravely mistaken.

These days I would argue that shareholder letters are, in fact, only issued by lower quality, unconventional biotechs.

Do not waste your time.