The Math Isn’t Mathing
I recently stumbled upon a headline that made me do a double-take: a biotech company’s price target dropped from $35 to $6, yet it still had a Buy rating.
Wait… what?
Now, I’m no stock market guru (yet), but that math feels like it’s missing a few variables, or maybe they’re just buried under layers of biotech nuance. Either way, it got me thinking: what actually drives company valuation? Because, clearly, it’s not just cold, hard numbers.
In the world of biotech and pharma, valuations swing faster than [my] mood shifts on a Monday morning. Sure, clinical trial data, regulatory milestones, and funding announcements play their part. But I can’t help but speculate that there’s an often-overlooked factor quietly steering the ship: consistent marketing and strategic communication.
And yet, when times get tough and budgets tighten, marketing is often the first on the chopping block. It’s seen as a “nice to have” — an expendable function rather than a strategic necessity. But is that actually counterproductive? If valuation is, in part, about perception and confidence, then cutting marketing when clarity and trust are needed most might be one of the costliest mistakes a company can make.
It’s Not Just What You Do; It’s How You Talk About It
Let’s face it, biotech isn’t exactly a TED Talk. We’re talking about groundbreaking science, years-long R&D timelines, and data that require an advanced degree (or five) to decode. In this environment, could it be that the companies that thrive aren’t just the ones with the best science but also the ones that tell the best story about their science?
Take Moderna, for example. Before the pandemic, it was just one of many biotech firms plugging away at mRNA technology. But when COVID-19 hit, they had several strategic advantages that allowed them to move fast. Their deep expertise in mRNA technology enabled rapid vaccine design, and as a smaller, more agile company, they could pivot quickly without the bureaucratic hurdles larger organizations faced. Additionally, significant funding from Operation Warp Speed accelerated both clinical trials and manufacturing capabilities. Despite facing competition from industry giants like AstraZeneca and Johnson & Johnson, Moderna beat them to market; demonstrating that speed, expertise, and adaptability can outweigh sheer size and resources.
But it wasn’t just the science or the agility that set Moderna apart, it was how they communicated their progress. Their ability to deliver clear, consistent, and confident messaging around their vaccine development built public trust and investor confidence. That transparency didn’t just reassure a nervous world, it also helped send their market cap soaring from under $10 billion to over $100 billion at its peak.1
Moderna’s success was the result of a perfect storm: cutting-edge science, strategic positioning, and the ability to craft a compelling narrative around their work. In an industry as complex as biotech, having the right solution is only part of the equation; how effectively you communicate it can make all the difference.
The Cost of Getting It Wrong
Contrast this with a tale of another company that faced a crisis during COVID-19 vaccine manufacturing. In 2021, they were producing both Johnson & Johnson’s and AstraZeneca’s vaccines at the same facility. Due to poor manufacturing controls, cross-contamination led to millions of ruined vaccine doses, triggering regulatory scrutiny and public backlash. The FDA halted production, the U.S. government canceled their ~$628 million contract (ouch), and the company’s stock price plummeted by over 60% (still hasn't even remotely recovered) in just a few months.
The public relations (PR) response? A mix of transparency claims and defensive rebuttals that failed to fully control the narrative.
Had they been more proactive with crisis communication, owning the mistake, outlining corrective measures transparently, and reinforcing confidence in their quality control processes, they might have mitigated some of the valuation damage. Instead, by allowing speculation and uncertainty to dictate the story, they suffered deeper financial and reputational losses. Their case serves as a cautionary tale: marketing and PR aren’t just for the good times; they’re essential in protecting valuation during crises.
For those well-versed in commercial manufacturing, these were excruciating circumstances. Trust wasn’t just broken with the general public; it was fractured within the industry itself. While public perception matters, what really hurts is when confidence erodes among industry stakeholders, partners, and regulators. Regaining that trust isn’t just about fixing the problem; it requires an extra effort to communicate, educate, and reassure. Transparency isn’t just a nice-to-have in these situations; it’s the only way forward. Because when a crisis hits, the story you tell about it can be just as critical as the steps you take to fix it.
Yet, companies in damage control mode often make the same mistake: cutting marketing budgets when they should be doubling down on communication. If trust is currency, then silence, or worse, defensiveness; only devalues the brand further.
The Power of Narrative in Valuation
Valuation is fundamentally simple… until we overthink it. Aswath Damodaran, a leading expert on the subject, has emphasized that behind every valuation is a narrative, not just numbers. Numbers alone don’t tell the full story; the perception of potential is what drives real value.6
A friend of mine who works in finance put it like this: valuation ultimately comes down to cash flows, but there’s often a significant disconnect between market value and intrinsic value. The key factor? A catalyst: something that moves a company from what it’s trading at to what it should be worth. Without that catalyst, even a fundamentally strong company can remain undervalued.
This concept is particularly relevant in biotech. It’s not just about strong science or sound financials; investors, analysts, and the market at large need a reason to believe in the upside. Whether it’s an upcoming regulatory approval, a breakthrough clinical trial, or a well-timed PR campaign, the right catalyst is often the missing link between potential and realized value.
So, who controls that narrative? More often than not, it’s marketing and PR teams who shape how data are perceived, which in turn influences investor sentiment. The story you tell matters just as much as the milestones you reach.
How Marketing Shapes Valuation: Public vs. Private Stakes
This brings up an important question: does the impact of marketing and communication on valuation apply to both publicly traded and privately held companies? Public companies face the constant scrutiny of shareholders, analysts, and the media. Every earnings call, press release, or even a single tweet can send stock prices swinging. But for private companies, especially those backed by investment firms, the pressure is just as intense — if not more so. Budget constraints often dictate strategic decisions, particularly when positioning for acquisition or sale to a larger, often publicly traded, organization. In these cases, marketing and communication aren’t just about brand awareness; they’re strategic tools for shaping valuation in the eyes of potential buyers.
Which leads me to yet another question: Does marketing or PR carry more weight in influencing valuation?
PR vs. Marketing: The Valuation Tug-of-War
The distinction between PR and marketing can be blurry, and definitions often vary. For the sake of this discussion, I define PR as media relations, earned coverage, and reputation management, particularly in shaping public and investor perception. Marketing, on the other hand, encompasses a broader strategy that includes brand positioning, stakeholder education, and targeted outreach to drive awareness and engagement.
Rather than one being more important than the other, it’s the dynamic interplay between the two that makes an impact. PR builds trust, credibility, and thought leadership, ensuring that key messages resonate with external audiences. Marketing amplifies those messages, strategically positioning the company in a competitive landscape and ensuring they reach the right stakeholders at the right time.
During a crisis, PR plays a critical role in managing reputation, while marketing ensures that the company’s broader positioning remains strong. Together, they form a powerful duo, one that not only influences perception but can also have a tangible effect on how a company is valued.
The Danger of Going Radio Silent
Silence can be costly. Very well-established companies, no matter how solid their science, can still fall into the trap of under-communicating, leaving room for speculation. If you’re not actively managing your narrative, others will do it for you. Investors, media outlets, competitors, everyone loves to fill in the blanks. And let’s be honest, they’re not always kind.
This risk exists whether you’re reporting to Wall Street or to a boardroom full of private equity partners. In both cases, the absence of a clear, consistent narrative invites uncertainty, and in the world of valuations, uncertainty is rarely rewarded.
Ironically, the same companies that cut marketing budgets during downturns are often the ones that later struggle with investor confidence. They assume cost-cutting will protect them, when, in reality, failing to maintain visibility in the market only reinforces uncertainty.
So, How Do You Mitigate the Risks?
While there’s no one-size-fits-all solution, here are a few strategies that could make a meaningful difference:
Consistency over crisis control: Regular updates on scientific progress, leadership insights, and strategic goals build a foundation of trust long before any crisis hits.
Transparency is your superpower: Investors expect setbacks. What erodes trust is being blindsided. Own it, explain it, and outline next steps.
Make it relatable: Investors aren’t just asking, What is this? They’re asking, Why does this matter?
Engage, don’t broadcast: Thought leadership, investor calls, and industry events foster stronger, more resilient relationships.
The Bottom Line (Pun Intended)
Valuation isn’t just an outcome of financial models, it’s also a reflection of perception, confidence, and narrative control. In biotech, where the future is often speculative, could the story you tell be just as impactful as the data you publish?
So, the next time you see a price target swing from $35 to $6 (with a Buy rating, no less), consider this: numbers matter, but the story behind them? That might be where the real value lives.
References
1. "Analysts Tell Moderna Investors to Hold After 2024's Steep Drop." BioSpace. 17 Dec. 2024.
2. Building a Biotech Valuation: Key Considerations for Investors and Companies. Deloitte. 6 Mar. 2023.
3. "8 Critical Success Factors for Biotech Deals." PwC. 10 Oct. 2022.
4. "5 Key Strategies to Boost the Commercial Value of Your Biotech Innovation." RTI Health Solutions. 26 Sep. 2024.
5. Damodaran, Aswath. Narrative and Numbers: The Value of Stories in Business. Columbia University Press. 2017.
6. Damodaran, Aswath. “Introduction to Valuation.” YouTube. 2021.
7. "Moderna Inc. (MRNA) Historical Stock Prices & Data." MarketWatch, Dow Jones & Company. Accessed 13 Feb. 2024.
8. Investigation of COVID-19 Vaccine Manufacturing Failures. U.S. House of Representatives Committee on Oversight and Reform. 4 Dec. 2024.
9. Observations from Baltimore Bayview Facility. U.S. Food and Drug Administration. 2021.
10. "Emergent’s COVID-19 Vaccine Production Contract with U.S. Canceled." Fierce Pharma. 5 Nov. 2021. Questex LLC.
11. "COVID-19 Vaccine Doses Ruined: Internal Reports Reveal Manufacturing Failures." The Washington Post. 2021.
12. "Crisis Communications Do’s and Don’ts." Harvard Business Review. Harvard Business Publishing. Accessed 13 Feb. 2024.
13. "How Companies Can Rebuild Trust After a Crisis." PRWeek. Haymarket Media Group.