THE BIOTECH BUZZ: Can the next big thing become the big thing? - PRfirms must think of biotech as a long-term investment with risksattached, says Julia Hood

5 Understand the immutable relationship between discovery research and the need for cash. Simply put, money fuels the biotech industry. However, you also have to understand that short-term "PR hits

5 Understand the immutable relationship between discovery research and the need for cash. Simply put, money fuels the biotech industry. However, you also have to understand that short-term "PR hits

are not going to create long-term corporate value; only great science can do that.

6 Timing is everything. Though there is a role for traditional PR activities such as alliance building, early-stage companies might not need them.

You and the client should carefully map out when each activity is most appropriate, based on the company's product-development schedule.

7 You may be a teacher. Most biotech companies do not have seasoned PR professionals, and often management does not fully understand the power of communications. Part of your job is to help nurture internal staff and help management understand what PR can and cannot do.

8 Appreciate the power of "No.

It's not easy telling a client's VP of corporate development that you should not issue a press release or pitch media for an early-stage trial. Good PR is convincing him or her that it is better to keep quiet when you don't have a real story.

9 The power of "No,

part two: Some biotech companies are not right for your agency. No matter how much money they have, they'd make lousy clients.

It is perfectly fine to decline business if you get a bad feeling about the management, their business plan, or their goals.

10 As with any client relationship, it's hard work to make it work right.

There should be frequent meetings between senior client management and agency management. Neither side should be afraid to pick up the phone and let the other know what it's thinking.

A recent article in The Wall Street Journal outlined the risks attached to investing in the biotechnology sector. "A flurry of merger-and-acquisition deals among biotech companies helped boost the returns of biotech funds well past that of the average stock mutual fund in the final quarter of last year,

the report reads.

But wait: "That doesn't mean biotech was a bright spot in 2001's generally gloomy investment landscape - far from it."

The article could almost be a primer for PR agencies keen to get into the biotech business; though there's no doubt the industry holds great promise for investors (not to mention patients), it also holds great risk.

PR firms thinking about entering the market must consider it an investment with risks attached, not simply a potential revenue source.

A growing sector

Though there is no hard data to prove exactly how many firms have added biotech practices in the past six months, it is clearly a sector gaining momentum. Barbara Lindheim, VP of strategic communications with Orchid Biosciences, says PR firms offering their services call her regularly.

"There has been a noticeable increase since September."

Orchid's agency of record is Noonan Russo Communications, at which Lindheim used to be an SVP. "I cast a jaundiced eye over (other) firms," she says, but she believes that her agency understands the mindset of working with young companies.

Biotech clients like Orchid have more agencies to choose from than ever.

Firms like Waggener Edstrom and MS&L have either added new biotech practices or formalized their offerings. And smaller agencies have either launched dedicated firms or added on the biotech capability, such as Giles Communications, Morrissey & Company, and Merritt Group.

The industry is still full of potential pitfalls for the uninitiated, however. Mounting a serious entry into biotech requires investing time and resources.

Enthusiasm has waxed and waned for years. "Biotech has historically been a very speculative proposition,

explains David Catlett partner/director of Ketchum's global healthcare practice. The agency has been working with biotech clients for almost 10 years, beginning with Genentech. "There have been so many false starts with biotech over the years,

he says.

But Catlett and others say the industry is showing real signs of maturing; the large, established companies like Genentech and Amgen more closely resemble fully integrated healthcare companies. But many others are small and battling for funding, with products years away from the marketplace.

"You've got a small company, often staffed with scientists not necessarily familiar with SEC regulations,

explains Sophia Twaddell, global cochair of Fleishman-Hillard's biotech practice. "The key thing is for us to understand what it is to be a private company looking for funding - and a newly public company with new responsibility to shareholders - and struggling to finish clinical trials."

Some technology firms have stayed out of biotech. "If the recession should have taught people in hi-tech one thing, it's get big, get niche, or get out,

says Chris Lewis, CEO of Lewis PR. "Don't try to be all things to all people at once. It's one of those perennial red herrings that hi-tech people think they can pull off."

Agencies that have serviced biotech clients for years can be the most critical of new entrants to the PR market, if only because the experienced practitioners know how tough it can be to ramp up a thriving practice.

"They are seeing it as one of the growth areas,

says Susan Noonan, president and COO of Noonan Russo. "But you really need to understand these companies, their cultures, their needs, and their audiences - not to mention the sensitivities of the regulatory environment."

Noonan's specialty is IR work with biotech clients, a crucial offering for companies that often move from pre- to post-IPO without the benefit of full-service PR and IR teams in-house. Typically, a biotech will go through four funding rounds before it goes public. "The brass ring for these companies is the IPO, or a merger,

Noonan says. Having products in later stages of clinical trials and forming partnerships with big biotech companies or pharmaceuticals are among the most important ways a company validates itself in the eyes of investors.

Following an IPO, a biotech will have to oblige both the SEC and the FDA - in other words, satisfy investors over its viability, without promoting products that have yet to be approved. "If you give a biotech company naive advice, it can be exceptionally costly to the company," Noonan says.

One need look no further than the controversy created over ImClone's promotion of Erbitux - following phase-II clinical trial results - to see that companies risk a lot when balancing investor and FDA needs.

Clients and agencies must take into account the short and long views of a company's prospects, in context with the science. While many of the PR firms adding on biotech practices have a tech focus, they quickly discover a whole new learning curve. Even in the more tech-related area of bioinformatics, which big companies like Oracle are chasing, science and the FDA are king.

Agencies should not underestimate the challenges of working in such a heavily regulated industry, compared to the virtual Wild West of technology.

Dealing with the FDA

Loomis Group has been doing biotech for about five years, and SVP Tanya Rodante came from a tech background. She found navigating the FDA to be the toughest challenge at first. "It sort of handcuffs you,

she says.

"And you never know when anything will be approved, let alone launched." The rate of failure is incredibly high.

"The cost of drug discovery is huge,

says Martha Bernard Welsh, EVP at Brodeur. "The counter-pressure is that the FDA can be conservative.

It's difficult for a company to predict when its drugs will get approval.

They may get signals of intent to approve, and yet the FDA overturns its own advisory board recommendations."

And unlike technology, it's not just about building a better desktop, but the welfare of human beings. That human element puts biotech, like other health sciences, under the media microscope. "If you look at the last few months, there have been a number of high-profile disasters in late-stage development,

says Katherine Metcalf, EVP and MD of Cohn & Wolfe's healthcare practice, citing the death of a patient during a clinical trial, as well as the failures of drugs to win approval.

The good news is that many agencies setting up biotech practices for the first time are responding to the demands of the sector, and methodically investigating the industry before leaping into it. Metzger Associates has not yet been retained by a biotech company, but president and COO James Clarke has carved out a large chunk of time getting up to speed on the industry, and particularly its viability as an industry in Colorado.

"We created a relationship with the Colorado biotechnology association," he explains. "If we're going to go in and start a new practice, we have to bring in people with a high level of experience. We also need to support biotech in our own backyard."

Waggener Edstrom Bioscience's, December launch was preceded by the setting up of an advisory board comprised of a practicing physician, two journalists, and an investment expert. "I need to know how my client's science works,

says Jenny Moede, VP and head of the practice.

Others are formalizing practices, or, through acquisitions, increasing their offerings. With its recent acquisition of FitzGerald Communications, Brodeur is set on bringing its combined technology and healthcare strengths to a new level. And MS&L, which has been handling biotech clients for 10 years, recently formalized its practice under the moniker BioIT, drawing on the life-sciences and technology work it had long undertaken with IBM.

Giles Communications is a new boutique shop, and TechMarcom added its biotech offerings only weeks ago. Then there's Rowland Communications, which had its practice, called Science First, on hiatus when the sector went through a rough patch. Things are looking up, and the practice is being ramped up again.

The exciting thing about biotech, according to David Sassoon, Rowland SVP and practice leader, is witnessing a company's progress. "There's a point at which it undergoes a profound transformation,

he says, "from being a company that is developing something, to actually having something that is approved to sell."


By Michael Durand, global healthcare practice director at Porter Novelli, who has worked with biotech clients for 20 years

1 If a PR agency is going to form a credible biotech practice, it must make a long-term commitment. This may contradict agencies' need for immediate billings and healthy margins, but you can't simply stick your toe in the water and expect results. It may take several years.

2 The world is flat. Biotech accounts do not need large, multilayered account teams. Rather, they need two or three practitioners who understand their business, can give great advice, and know what the news media wants.

3 You can never stop learning. Attend investor seminars and subscribe to industry publications such as BioCentury. There are lots of great books, including Cynthia Robbin Roth's From Alchemy to IPO, The Billion Dollar Molecule by Barry Werth, and Genome by Mike Waldholz and Jerry Bishop.

4 You can't fake it. You cannot bluff your way through biotech any more than you can wing your way through surgery. If you don't understand the science or the regulatory environment, turn to people who do. Fast.

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