December 23, 2024

What’s The Difference Between Investor Relations and Public Relations for Biotechs?

A lot of first-time biotech CEOs and CFOs confuse and conflate investor relations with public relations. So, I thought it would be good to address the issue, and then talk a little about why such confusion exists.

Put simply, the difference between investor relations and public relations is their target audience and the relationships their professionals maintain.

Investor Relations (IR) is focused on communicating with your existing institutional and retail investors, prospective institutional and retail investors, equity analysts and bankers (what I have many times collectively called a biotech’s financial ecosystem).

Investor relations practitioners maintain relationships with venture capitalists, institutional public investors, equity analysts, bankers, lawyers, and officials at NASDAQ and the NSYE, to name but a few. They utilize these relationships to get you investor meetings, form IPO/financing syndicates, obtain healthcare investor conference invitations – all with the aim of helping you achieve a correct valuation for your company and maintaining your ongoing access to capital.

Public Relations (PR) is focused on communicating with the general public, potential employees, potential clinical trial participants, advocacy groups (and could indirectly also include retail and institutional investors if they happen to be consumers of the media coverage being generated).

Public relations practitioners maintain relationships with journalists to whom they pitch articles about their clients, with the aim of increasing awareness of your company and/or your drug for various reasons that could include attracting talent, increasing trial enrollment, selling more of your drug, or raising your profile within the financial community.

So, why are the two professions sometimes confused?

Principally, I believe it is because of an overlap in the services each offers, which especially for an early private biotech or a public microcap, can look and feel similar.

Let me give you four examples of similar services that both types of agencies offer and how I believe they actually differ.

News Release/Press Release Writing and Distribution:

Both IR and PR agencies will offer to write releases for you. IR consultants tend to call them “news releases” because they believe they should be conveying news to your investors, potential investors, bankers and covering analysts. PR professionals tend to call them “press releases” since they see the primary audience for your announcement as being The Press.

If you are an early private biotech, you are likely to be at an early stage of clinical development, and therefore not of much interest to journalists (who tend to get interested in post-safety data, when biotechs have human proof-of-concept (Phase 2 data)). As such, there is likely to be little of a PR angle here, but a PR agency might still offer to write your releases for you.

An IR agency working with the same early private biotech would write the news releases with the idea of appealing to the investors who might participate in your next round of financing.

Corporate Presentation Creation:

Both IR and PR agencies offer corporate deck creation and refreshes – sometimes using their inhouse capabilities and sometimes managing a third-party contractor.

Each will be focused on crafting your message, with IR firms more focused on investors and business development as the principal audiences, with PR agencies perhaps seeing a wider use for the deck as an educational, corporate or media tool.

Website Construction and Updating:

Again, both IR and PR firms will offer this service to you. PR firms tend to aim this offering more at private bitoechs – since this doesn’t involve the complexity of services providers such as Notified- or Q4-run integrated investor relations portion of your website.

Investor relations firms are firmly focused on making your website the first port of call for any new investor or analyst investigating your company or stock as a potential investment.

Regulatory requirements are much stricter when you are public, and I would argue that IR firms are more attuned in navigating these for you (especially S1 compliance or other potential regulatory red flags).

Media Training / Q&A Training:

Both agencies offer what looks like a similar product – PR companies call it media training and typically charge for it as a project fee; IR agencies really just call it Q&A practice and will offer it as part of their service around any important announcement (or even just for an inexperienced or oversharing CMO).

The premise for both types of training is similar: to train management to stick to their key points, not disclose anything that hasn’t already been disclosed, and not to damage the company by inadvertently going off script.

PR agencies are worried about you doing this in front of journalists and the repercussions that may occur in print.

IR agencies are worried about you doing this in front of investors or analysts, as well as the repercussions it may have in analysts’ published notes, or in court should you create liability for the company in front of an investor or investor group.

Summary

In summary then, I hope you can see that IR and PR are two very different crafts. In addition, they are both not cheap, so be sure you have need for each of them and give each respective agency a clear remit of what you are trying to achieve.

For some early stage private biotechs, and for some microcap public biotechs who have lost their analyst and/or institutional investor following, they can overlap substantially. In each scenario, it’s probably worth saving your money and just engaging one or the other.