AstraZeneca: Keeping IR in good health

At a glance

Runner-up
Ranking at number two in this year’s IR Magazine Euro Top 100, the Anglo-Swedish AstraZeneca has ostensibly reaped the benefits of its IR efforts, which included a full team overhaul, newly improved IR literature and an emphasis on sell-side relationships.

Block building
Building the IR ‘house’, head of IR Thomas Kudsk Larsen has focused his outreach on US institutions, marketing the equity story of ‘a traditional growing company, but still with a very attractive pipeline’. Next on the priority list are UK and Swedish individual investors.

Living organism
Larsen has developed an approach for his team to tackle the flow of science- intensive information, leveraging IT tools but also boosting team morale. Some fun time spent in and outside work has helped improve teamwork, interactions – and overall efficiency.

At the recent IR Magazine Awards – Europe in London, AstraZeneca impressively walked away with three awards: the big-hitting best IR in the UK & Ireland, best IR in the healthcare sector and best investor event. ‘And making it into second place for the best IRO (large cap) award was a brilliant bonus,’ says a pleased Thomas Kudsk Larsen, head of IR at AstraZeneca. 

Thinking about the story behind this success, Larsen says a number of factors came together to make it happen. ‘First, we have fundamentally upgraded the IR effort at AstraZeneca: a new IR team, improved key IR documents such as result announcements, presentations and the [improved] website,’ he details. ‘We try to think what the market needs and then deliver it, including being more proactive than ever.’ 

In addition, last year AstraZeneca started spending more time with its sell-side analysts on top of the time spent with the buy side. An accommodating management culture has also helped. 

‘We have a relatively free hand from our management to do the job,’ Larsen explains. ‘We have good colleagues in the corporate secretary and external communications teams. We have a limited budget, but we get mileage out of it.’ 

Building the foundations 

This development very much started at the end of 2014 when the company began renewing its IR efforts. That came after AstraZeneca received an unsolicited takeover bid from Pfizer earlier in the year; the bid was ultimately unsuccessful, but proved a catalyst for the AstraZeneca IR team to ask itself how it could help the company improve its communications with the financial markets. 

Larsen subsequently joined the firm in October 2014, and last year AstraZeneca relocated its £330 mn ($427 mn) Cheshire research and development facilities and global London headquarters to Cambridge, to strengthen its relationship with research, academic and healthcare organizations based in the city. 

‘Only one colleague decided to move with the company to Cambridge, so we started getting new people on board – external as well as internal – and with different competencies: one colleague with UK investor relations experience, one with strong presentation and IT skills, one with a good network in a US biotech organization, one with oncology finance experience and one with oncology marketing experience,’ Larsen says. ‘We also promoted a temporary admin colleague to a permanent job. This constitutes our current investor relations team.’ 

The challenge now is to maintain the momentum. ‘This year is a crucial time for AstraZeneca’s return to growth,’ admits Larsen. ‘The company has become smaller over past years due to the loss of patent protection on three large medicines. We have rebuilt our pipeline of new medicines and delivered lots of positive results from the testing of new medicines, and this year will show whether we can get the results right and return to sales and profit growth. The IR team needs to adjust to this transition from a ‘pipeline story’ to an equity story – more like a traditional growing company, but still with a very attractive pipeline.’ 

Backing up this story is a deeper layer. ‘The overall philosophy is one of under-promise and over-deliver,’ says Larsen. ‘This impacts everything we do. We think of investor relations as like building a house: you start with the ground floor, then add more floors above. The ground floor is about solid disclosure processes, a good investor-relationship system to keep track of shareholders, prospective investors and activities, well-written press releases and quarterly results announcements and presentations – all what people would call the basic stuff. 

‘On top of that ground floor we then start the outreach to the sell-side analysts and the buy-side investors. Then we add outreach to CFA societies in the US and we are now looking at how we can improve the servicing of smaller investors in our two home countries of Sweden and the UK.’ 

For all the success and evident progress, Larsen observes that the company remains in a state of evolution. ‘AstraZeneca is still a company in transition undergoing lots of change,’ he says. ‘We have many busy and long days, which is a challenge for the IR team. But we remain focused on working smarter and more efficiently, for instance through the better use of IT and other productivity tools.’ 

Given all that, keeping the IR team going while having fun has also been a key, but practical focus, says Larsen: ‘We try to spend time together, sometimes also outside of work.’ There further exists an open dialogue in the IR team with strong support for each other. ‘If one team member is busy, another can step in,’ Larsen adds. ‘We are still improving interactions within the team, but we have come a long way since 2014. The teamwork is the base of it all.’ 

Keeping up with the news 

Does Larsen feel there are unique and specific challenges – from an IR perspective – at a pharmaceutical company? ‘Biopharmaceutical companies are complex organizations with lots of science and news flow,’ he points out. ‘It is a constant challenge keeping up to date with all developments, in particular when things have moved as fast as they have at AstraZeneca. 

‘From time to time, team members are challenged by the amount of information they need to digest and process. During my three investor relations jobs – biotechnology company Novozymes, pharmaceutical company Roche and now AstraZeneca – I have developed an approach for how to deal with this massive flow of information. This is key to dealing with the challenges of a complex business, science-intensive pipeline and lots of news flow, from within the firm and from the industry.’ 

AstraZeneca does targeting with Nasdaq, with further help provided by Morgan Stanley and Goldman Sachs. The corporate broking is historic in the UK. ‘We also get some help from our ADR depository bank Citi,’ Larsen adds. There is a lot of common sense [in our team] and over the past couple of years we did a lot more work in the US as we felt US investors more specifically appreciated our equity story of a pipeline-driven transformation.’ The US now constitutes AstraZeneca’s largest country of holding. 

‘As we look ahead, we want to do more for high-net- worth individuals in the US through our US ADR listing as well as develop an approach to non-institutional investors in Sweden and the UK,’ Larsen continues. ‘Until now, we did not have time to do much here.’ 

IR as a role, he says, is certainly a ‘relationship’ business. ‘It is important to remember when doing targeting that you may disqualify one investor, but the person there may move on and become important at another company,’ he explains. ‘As such, meeting as many people as possible is important. 

‘Also, it is about never giving up. Circumstances can change quite rapidly. Your company may be out of favor, but it could easily become a hot commodity if things change within or outside of the company. For instance, a setback suffered by a peer company can make your company look good.’ 

Trials and tribulations 

As part of pushing the boundaries of medical research, the company has also been involved in the MYSTIC trial, one of several AstraZeneca trials in lung cancer treatment. The company has a strong historical connection with lung cancer and the aim is to increase that presence. ‘We have three unique medicines, one of which is already approved and benefiting patients,’ says Larsen. ‘MYSTIC is testing the other two. If the MYSTIC trial is successful, it would be a great opportunity for the company to help even more patients and, of course, to sell more medicine for lung cancer. 

‘But while there are many potential outcomes from the MYSTIC trial and though we are likely to get results over the 2017-2018 timeframe, some analysts and investors see the MYSTIC trial as a very binary event for the company, resulting in volatility for our share price.’ 

How will he and his team overcome these challenges? ‘Through our standard approach of being as open and forthcoming as possible,’ Larsen says. ‘When we made refinements to the MYSTIC trial, for example, we issued a proactive stock exchange announcement in January 2017 and spent the whole day on the phone explaining what we were doing and why. 

‘We have also been very consistent in our messaging about the MYSTIC trial in order to avoid rumors and reverse broking in the market. Finally, we were thrilled to have another positive result in an earlier lung cancer drugs trial in May 2017, the PACIFIC trial. This has helped balance the importance of the MYSTIC trial to benefit shareholders that invested in the pipeline- driven transformation.’ 

Staying healthy 

Looking ahead, what does Larsen perceive to be the biggest challenge he and the organization face over the next 12 months? ‘Many people talk about Mifid II and the potential changes it may entail,’ he says. ‘We need to wait to see how it plays out. I think the equity research aspect is more ‘sticky’ than some people think. 

‘For AstraZeneca, our focus will be on the IR team and further improving how we work and how we work with each other. An IR team is a living organism that needs care to thrive. We will also further refine and adjust our equity story and performance over the coming quarters and year. We are still a company in transition so adjusting to change is key to success.’ 

Will Brexit impact his IR role? ‘It may,’ Larsen concedes. ‘There is no doubt that EU citizens in the UK will think twice before moving in if they are offered a job. My family and I are Danish, and Denmark remains a solid member of the EU. When Brexit happens, all EU citizens in the UK will need to assess whether they are OK staying here with whatever terms are eventually agreed or whether they would prefer to find another job in the EU or elsewhere.’ 

Larsen lists two people who have been pivotal to his professional development: ‘My first boss and mentor in investor relations was Michael Steen-Knudsen, who took Novozymes public in November 2000 and hired me as IR manager in June 2001. I have learned tremendously from him. The second is Karl Mahler, head of IR at Roche, with whom I worked from 2005 to 2014. At Roche, I was head of IR in North America, which was a great opportunity and experience. 

‘This is my third job in IR since 2001. There is something truly special about investor relations: I like to educate investors and analysts about the company and our business and pipeline. I like that no two days are the same. Yes, it is busy, but it is also a very rewarding job with lots of opportunity to learn, both personally and professionally.’
 

Praise for AstraZeneca

AstraZeneca came second in the IR Magazine Euro Top 100, a ranking of companies based on an annual survey of investors and analysts. Below are some of the comments from survey respondents who voted for the pharmaceutical firm: 

‘There has been a marked improvement over the past couple of years from AstraZeneca and its contact with investors. It is now more proactive at arranging meetings with the team and senior management, and these tend to be informal and chatty, creating a more open environment’ – UK, sell side 

‘AstraZeneca’s approach to IR is changing and improving’ – Sweden, sell side 

‘Thomas Kudsk Larsen, head of IR at AstraZeneca, is so knowledgeable and extremely helpful. He understands what drives my decision-making and is capable of looking at the company with an investor’s eyes’ – Netherlands, buy side

 

This article appeared in the fall 2017 issue of IR Magazine

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