September 24, 2025

What Guidance Should Public Biotechs Provide to “The Street”? (And When Should They Provide It?)

Why do biotechs provide guidance?

If equity analysts are all so enlightened (hint: not all of them are), and if stock valuation and forecasting are such informed sciences (hint: they are not), then why do companies even need to provide guidance?

Well, guidance is necessary to herd analyst price targets (and sales forecasts, among other metrics) away from what could otherwise be a highly disparate range. Of course, analysts’ price targets still exhibit a range even in the presence of a biotech’s guidance, but arguably they (should) form a narrower band than they otherwise would.

Why is that important? Well, it doesn’t serve the (hint: effort-adverse) capital markets when extremely diverse opinions about a biotech’s prospects exist. It doesn’t inspire investor confidence when, according to one analyst you massively beat expectations (and your stock is a Buy recommendation with 40% upside), while another analyst says you came in materially below expectations (and your stock is a Sell).

Partly for this reason, investors and analysts look to “consensus” – an average of your covering analysts’ forecasts – when measuring your company’s success. But a “consensus” is more credible if it averages a range of like numbers and views.

Even so, guidance is more than that.

Company guidance is especially useful because you are the expert on your company. You are the one closest to your company’s day-to-day operations. You are typically on the cutting edge of technology, and the rest of us are really just trying to get a grasp of what you’re doing. Guidance therefore is intrinsically linked to educating the market on the value you’re creating, and it comes from the most potentially credible source there is.

What constitutes guidance?

Guidance is a forward-looking statement in which the issuer outlines its expected future performance.

For biotechs, examples of financial guidance metrics (that should be provided in a range, rather than a specific number) might include:

• Cash runway / expected cash at period-end.
• Sales guidance (be it monthly, quarterly or annual).
• Peak sales of a drug in development.
• The cost of a clinical trial.
• Operating cost guidance.
• Expected profit margins on drugs in development, and more.

Since most biotechs are pre-commercial, the degree of financial guidance they collectively provide is minimal (certainly compared to other healthcare verticals or even other sectors) and largely immaterial – because all biotech investors really care about is whether your drug will work and if there is enough cash runway to find out.

As a result, examples of guidance on expected future performance might include:

• The timing for when certain preclinical or clinical results might be announced.
• The timing of first patient-dosed and/or last patient-dosed in a clinical trial.
• Expectations for safety and efficacy metrics in a preclinical or clinical trial. 
• The planned timing of any interaction with or feedback from the FDA.
• The timing of key hires, the signing of commercial partnerships, or vendor agreements. 
• Expectations for a competitive drug product profile for a drug in development.
• The likely size of a future salesforce for a commercial rollout, and more.

Note that company guidance is material information and as such can only be disclosed in accordance with Regulation FD (meaning that the information must be made publicly available to all investors at the same time). For this reason, guidance is most commonly delivered and/or updated in a biotech’s investor presentation, quarterly financial press releases, preclinical or clinical results press releases, as well as in its associated 8K, 10-Q and 10-K filings.

Note also that there is no such thing as “unofficial guidance,” only selective disclosure (which is illegal).

Three Golden Rules for biotechs when providing guidance:

1. Do not provide more guidance than you need to. Unless you have a crystal ball, guidance is more or less a “best guess” regarding the timing or outcome of a future event or metric. There are countless things outside of your control (as well as many within your control) that can affect your company’s operations. Consequently, guidance has the very real possibility of being – when looking backwards from the future – “wrong.” Since management’s credibility hinges on being “right,” a biotech is best served by limiting guidance to what it can most accurately predict, and by not giving more guidance than the market expects, nor more than is given by your peers.
2. Under promise and over deliver. While guidance has to be plausible (i.e. don’t guide to your trial taking twice as long as your peer’s equivalent took to enroll, simply so you can say you exceeded your own expectations), management would be negligent in not factoring in some cushion or buffer to the estimated timing of future events. This is not cheating or misleading, this is planning for the unforeseen. Then, in the event that everything does go according to plan (or better), you have the opportunity to positively surprise the market.
3. Do not change guidance unless you are certain you can no longer meet it. Remember, you are the experts. You are best positioned to know what’s going on at your company. Providing and meeting (or exceeding) guidance is the surest sign to the outside world that you know what you’re doing. Missing guidance, or continually changing guidance, gives the impression that you are stumbling in the dark. As such, once guidance is issued, you shouldn’t think about changing it until you are certain that you cannot meet it. In that eventuality, you will need cast-iron reasons for why you couldn’t hit your previously stated guidance, and just as importantly why the market can believe the replacement guidance you put out. Retracting (or pulling) guidance without issuing new guidance is doubly bad: it’s bad enough that you missed guidance, but it’s worse that you still don’t know what’s likely to happen (unless there are substantially new circumstances – e.g., a material acquisition, merger, divestiture or pivot in the business model).

What kind of guidance do biotechs typically provide and when?

Granularity:

In my experience, some good rules of thumb are as follows:

• For milestones expected to take place in the next six months, give guidance in the form of an expected quarter (e.g. 1Q’XX. 2Q’XX, 3Q’XX, 4Q’XX).
• For milestones expected in the next six to twelve months, give guidance in the form of half years (e.g. 1H’XX, 2H’XX). 
• For milestones that are expected to occur more than twelve months away, give guidance in the form of years (e.g. 20XX).

Update or tighten your guidance as you progress through the year. For example, prior guidance that said topline results were due in 2H should be tightened to either 3Q or 4Q once you get past June 30.

Cash runway:

• This can be provided once a biotech exits its 25-day post IPO quiet period. It could be included in a “normal course of business” press release (quarterly results or otherwise), or it may be on a slide in your investor presentation (which at that point is allowed to be posted on your IR website.) 
• Most biotechs give guidance in the form of, “management believes it has sufficient cash resources to fund planned operations into BLANK.” Where BLANK could be a year, a half-year, or even a quarter. 
• This type of guidance suffices for biotech investors because:
  1. they know you’re not funded through to breakeven;
  2. they understand you will likely have to raise money multiple times in the future; and
  3. what they are most interested in is what milestones (such as clinical trial results) you are funded through, because they know this derisks your story, creates value, and acts as a catalyst upon which you can raise more money.
• Note: a biotech should never give guidance (or comment on the likelihood of) potential capital raises, since such commentary is highly prejudicial to your prospects.
• Once a biotech is revenue-generating, it becomes common to provide guidance for expected year-end cash (or even expected free cash flow).

Milestone timing:

• Clinical trials: Reputable biotechs will generally provide guidance for trial initiation (usually, first-patient-dosed) and the announcement of topline data. Less reputable (or early stage biotechs) will provide guidance for IND filing and acceptance. Guidance is typically given for the current trial in a drug’s development and seldom extends to the timing for subsequent trials, NDA or BLA submissions, approvals or launches. As a drug progresses through each stage of its clinical development, a biotech typically provides new guidance pertaining to its next stage.

Guidance on what would constitute success for a clinical trial:

• For placebo-controlled studies, the primary and secondary (or exploratory) endpoints determine whether or not the trial was a success. Endpoints are either met with statistical significance, or they are not. There is no reason to provide additional guidance, unless the potential product profile of your drug demands it.
• For non-placebo-controlled trials, it’s often a good idea to provide a floor below which a drug’s potential product profile simply isn’t feasible. In the absence of this guidance, analysts and investors will look to the safety and efficacy of already approved drugs, as a way to judge your success.

Sales guidance:

• Fun fact: most drugs in recent history underperformed their developer’s/the market’s sales expectations for the first year of launch. This is the reality that underpins the infamous “go long the approval, go short the launch” trade. 
• Consequently, thoughtful biotechs often refrain from providing first year sales guidance, typically citing the need to see four quarters of launch before issuing such guidance.
• Note: when you finally do provide sales guidance, you have an option of providing an expected dollar range, growth rate range, an expected dollar floor, etc.

Guidance on FDA interactions:

• Expectations for the timing of key FDA interactions (end of Phase 2 meetings, for example) generally follow the same rules as when giving any other kind of guidance. 
• That being said, more run-of-the-mill FDA interactions are seldom telegraphed or the subject of guidance, with history showing that second-guessing or pre-empting FDA meetings, decisions or guidance can be highly detrimental to the eventual outcome.
• Guidance and commentary on FDA interactions should be dictated by reality – which is to say you should only talk about interactions after they have occurred and when you are in receipt of official meeting minutes. 

Commercial plans:

• Up until a biotech has submitted its New Drug Application (NDA) or Biologics License Application (BLA), most companies can suffice with providing minimal commercial guidance. 
• The important thing is to have a credible alternative to being bought by Big Pharma, but before your NDA or BLA filing this usually only consists of an estimated U.S. salesforce size.
• Once your NDA or BLA has been submitted, however, you will be pressed for more granularity. Not least because by this time you’re likely hosting quarterly earnings calls, and you now have a news void to fill while the FDA decides whether to approve your therapy. Again, thoughtful biotechs will refrain from providing short term market penetration stats or sale numbers, and instead talk descriptively of adoption strategies, market rollouts, sales initiatives… with some mention of longer-term goals that provide for short-term flexibility.