Nordic Life Science 1
“The conclusion from this review is that possibly
Swedish companies are maybe not so “street smart” – they use Swedish advisers who primarily act in their own interest in a small Swedish biotech capital market.” line and patents etc. – and believe it will fly. Cultural issues like “do not glorify yourself” appear to be at work here. If companies do not dare to create credible dreams with investors, biotech investors will also be hesitant. Nowadays, every time a company makes a new rights issue, which is seldom a surprise, and is often a positive sign that there is belief in success, the value of the entire company often drops as a reflection of the proposal. Where this happens it often reflects a lack of enthusiastic (but still realistic) communication. In a recent review of a French biotech, very comparable to two listed Swedish biotechs combined, the French company 66 NORDICLIFESCIENCE.ORG is valued at five times higher value than the two Swedish companies together. The conclusion from this review is that possibly Swedish companies are maybe not so “street smart” – they use Swedish advisers who primarily act in their own interest in a small Swedish biotech capital market. Many companies themselves, and to some extent advisers too, seem not to think in terms of what the author calls “Anglo-Saxon thinking” where you prioritize vision-based communication, communicate value creation, emphasize looking bigger/better than you might be, seek international capital and board representation, leave room for some limited opportunism, plus emphasize that the CEO must promote the company AND the share price, and also own a relevant equity position, and that the owners should generally avoid appointing board members who only want to minimize risks. In general stock market terms maybe a CEO should be careful in having a view on the share price but in biotech this is the company’s most important currency for growth. The above shortcomings often lead to Swedish listed biotech companies having lower valuation than elsewhere, lower availability of financing and a lower share of international capital than could otherwise have been the case. It becomes a vicious circle that leads to lesser opportunities to develop platforms and pipelines. With weaker pipelines, companies become weaker, find it more difficult to find capital and become less attractive for high bio-dollar partnerships or M&A. Many Swedish biotechs do not have the financial strength to develop more than one product for one disease from their platform. This makes it difficult to get Big Pharma to see the underlying value, and the owners then rarely get paid for it (platform value) in business deals. Basically, we have a fantastic scientific position, but we are probably too complacent to realize that we need to cooperate more internationally and take on more international impressions to secure a supply of capital, especially to fund our smaller biotech companies. At perhaps the most important European partnering conference this spring, BIO-Europe Spring, around 15 out of 82 Swedish-listed biotechs participated. If you look at the agenda, there is not a single speaker from anywhere in Scandinavia during the four days. Lack of continental European network? These simple statistics are maybe telling us something? NLS