Four core principles for biotech board meetings
By Adam Koppel
Adam Koppel, MD, PhD is Managing Director at Bain Capital Life Sciences.
June 30, 2021
I recently lent my experience to RA Capital’s new resource for biotech boards, SABER (“Strategic Alignment: Board and Executive Resource”). And it gave me a chance to reflect on how to run productive biotech board meetings.
For me, the highlight of most board meetings is the opportunity to engage with other board members and senior management in a collaborative way that can help move a company’s business objectives forward. While it’s helpful for boards to be updated on housekeeping and operational items in a quarterly fashion, most routine updates can be covered in advance. What I most look forward to is the opportunity to have productive, robust discussions with company leaders about how to problem-solve and identify growth opportunities. It’s a setting for engaging and working with management to look into a company’s future.
If I have a pet peeve, it can be frustrating when important questions come up and they are immediately pushed off to be solved “at the next meeting.” If what’s been brought up is important, I think that it should either be addressed immediately, or that we should use board meeting time to plan specific work that can be done to answer the question before the next board meeting. Pushing a key decision off doesn’t solve the problem (and often draws it out).
There are many ways to conduct an efficient board meeting, and every management team and board member has different preferences. But here are four key principles I believe will improve everyone’s experience.
When it comes to slides, more isn’t always better.
Though I understand a management team’s desire to highlight everything positive that’s been accomplished over the past quarter, distilling a board deck into as few slides as are necessary to convey key strategic points is usually most effective. If a team has more than a tight set of 20-30 slides, there is a sense of obligation to walk through each page, which can be counterproductive. On each slide, there should be a clear take-home message. As a management team, always ask yourself “Why is this slide in the deck? Why should the board care?” Certainly, there may be critical updates that management feels compelled to communicate to the board in person in addition to what’s been covered in a pre-read. But the meeting itself should be about discussion, debate, and overcoming obstacles for the company. Always aim to spend more time in discussion than in presentation!
Focus your board meeting on strategic discussions instead of on reviewing updates.
This reveals a classic tension between a management team and a board when determining the most ideal way to allocate time in a meeting. These are the areas I believe are most critical: focusing on capital formation, capital allocation, key strategic decisions, major business development activity, and any issues that come up in the process of operating the company where board-level discussion, advice, and/or governance is needed.
The job of the management team is to operate, manage, and run the company. So while the team should update the board on these activities, significant time doesn’t need to be spent on operations unless there’s a critical development (positive or negative) that the board should be consulted on from a governance perspective. The vast majority of meeting time can be spent determining how the company should approach raising capital (form, timing, structure, and valuation); identifying the highest-priority needs for allocation of that capital once the balance sheet is built (spending, timing, priorities); and projecting what the company should be thinking about regarding longer-term strategy (next 2-4 years).
Make, track, and report progress toward transparent annual and multi-year goals.
For a company to run efficiently and effectively, it first needs to outline a set of goals. Management can align employees around annual goals focused on a central vision, mission, and set of priorities. (Making the organization’s goals explicit also makes it easier for the compensation committee to allocate bonuses at the end of the year.) These goals should be built together with the board and assessed on an ongoing basis. They should also be transparently communicated throughout the organization so everyone can track their progress. I also believe that each company should maintain a multi-year set of goals - strategic goals - centered around how the company is aiming to create long-term value. Those goals, though they may be loftier, should be similarly transparent.
Use a tool like the Elephant Slide at the beginning of every board deck to visualize a company’s core narrative, cash runway, financing plan, and milestones together in one place.
At Bain Capital, we call this the “Mountain Slide”; SABER calls it the “Elephant Slide.” And it’s among the most important slides to include in any deck for both management and the board to understand. We create this slide before making any investment to fully understand what the balance sheet will look like before a raise; what this capital will enable management to do; and what value-creating or potentially harmful events are on the immediate horizon. It’s vital to know when a company plans to raise capital, how they’ll raise, and at what approximate valuation, so the board gets a good sense of what the mountains and valleys on this slide will look like over time. Financial plans are then juxtaposed with the critical events the company needs to display to prove to the markets that you are reducing the cost of capital, the risk associated with your enterprise, and increasing value.
The biggest mistake a company can make is to not raise enough capital and not have the runway needed to get through the next value-creating event. The Elephant Slide enables transparency around this question and sets the stage for thoughtful debate and discussion on capital formation and allocation.
Our industry is brimming with brilliant folks who want to run board meetings as effectively as possible. It’s productive for all of us to periodically reflect on what makes a biotech board meeting great - and to communicate with our colleagues, peers, and management teams on what changes we can make to get there.
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RA Capital’s SABER (“Strategic Alignment: Board and Executive Resource”) is a detailed compendium of best practices drawn from the experiences of seasoned board members. Want to hear Adam and other board members discuss their experiences on camera? Check out SABER’s video series.