Event: From Bench to Broker: Equity Research in the Life Sciences

From Bench to Broker: Equity Research in the Life Sciences

Summary

Panelists:

Ellen Horste - Equity Research Associate at Cowen Inc.
Eva Fortea-Verdejo - Vice President of Biotechnology at Wells Fargo

Questions and answers:

1. Tell us about your background and how you got interested in equity research.

Ellen: She heard about venture capital initially and did not think about equity research much. She joined a biotech company and then when that shut down she went back to thinking about equity research. Ellen found a way in to equity research by getting involved in the community.

Eva: Landed job in 2021 at Wells Fargo after not knowing about things until the last year of the PhD.

2. Can you please describe what you do during a typical day on the job?

Ellen: Supports analysts mostly in oncology and IAI. Job is to help investors figure out if it is a good time to buy a company. Job is to do your best to help your clients understand the market. The days can be very different. They are doing a lot of different activities at the moment. Learning about the competitors of the company. In busy season writing about your companies’ earnings. Lots of writings and calls with companies discussing data and other aspects of the company.

Eva: Walking fine line about talking about stock and being on company good side. Now cover her own companies. Write notes a lot. When you get news later in the day at like 4 pm then you have to be there and write about it. You have to be there. You talk a lot with clients and you have to play the political game within your job to keep moving forward.

3. Differences in banks (seeing as they all work at different ones, with some having working at multiple at this point)

a. Team structure

Eva: Few teams per project. Each team has a senior analyst, VPs, and associates. Within the small team, there is structure. VPs are expected to be able to do the work faster than analysts. Some VPs try to oversee all the work and others distribute the work better.

b. Work-life balance

Ellen: Saw highest and lowest work load of the season already. Some late nights and early mornings and weekend work when it is in busy season. There are differences between firms such as 2 day vs 5 day in person work days. You will not have a work life balance in busy times.

Eva: Biggest challenge is not work load. It is that you cannot predict when PR sends out anything. When something big comes out you are not going to sleep until late. If you can work at home it is way easier. When at work in person late you feel more stressed than at home. FDA may approve a drug on Saturday morning and then you have to deal with it. Now supporting analysts and launching own stocks and have to work on this on your own time. Within 12-18 months you either become your own person or you do not. It depends a lot on which team you work in also. The last two weeks of August there are no clients and the week between Christmas and New Years so there is not a lot of work to do. We travel a bit and they count as in office days. There are some teams at Wells that management makes everyone be in person.

4. For Ellen: After completing your PhD, and before joining Cowen Inc., you worked for a year and a half at Apertura Gene Therapy first as a scientist and then as a consultant. Did your experience in industry help you get hired at Cowen Inc. and if so in what ways? If not, what did you do to develop the skills necessary to secure a role in equity research?

The PhD helped. It is good to get outside of academia and do work in industry to get experience. This helps as a stepping stone to get to a finance role as well. You need to be able to talk to CROs and clients and you do not get that experience too much in academia. Also you are a bit more exposed to biotech in general. Equity researchers always want you to pitch a stock and be able to explain the company well and know the science and defend why someone should want to buy the stock. At gene therapy company Ellen had to learn a lot about competitors. It helps in an interview setting to be able to speak intelligently about companies. Also you get paid a little bit more because you have industry experience now.

5. For Eva: You started at Wells Fargo over 3 years ago, first as an associate and now as Vice President of Biotechnology. Can you please describe the different stages of the equity research position you have experienced during your time at Wells Fargo and specifically what responsibilities you have at your current position as Vice President that are different from earlier in your career?

Stayed at Wells for so long because was attached to the job due to needing a visa. Did not want to make noise. A lot of people leave after a year to find better pay and this actually sets them back. The first year and a half at Wells Eva was asked about a promotion since she was hitting the requirements and it worked out. Started covering a few stocks and did it faster than the other people and then was asked to cover 5 stocks. All natural conversation and did the best she could and stayed out of trouble and it worked out well. Sometimes if you become a VP you are in a weird role that does not get much coverage and this does not last long. All the small jumps that you take within a year may be used against you because it makes you look a bit volatile.

6. Transitioning out of an academic environment into a financially driven role, especially at such a large institution like Bloomberg, can be very intimidating. What has your experience been with this transition, how is the culture within your team different from your experience in the lab, and how do you find that mentorship differs outside of academia?

Ellen: Nice transition since went to biotech first. Biotechs are not as different as equity research is to academia. Big proponent of joining biotech first. Since laid off from job, had time to prep for the job. Need to take and pass an exam called the SA which gives you a good foundation for how equity research works. Taking this before an interview shows interest and looks good. SA is like 80 dollars.

Eva: Bit rougher transition. Started the day after defense at Wells. Your PhD advisor can’t fire you but this is very different because in a job you are competing with your teammates for who gets the best opportunities and at the same time you need them because if they do not do their work then you have to do it. So you need to compete more on the job. You do projects that are a few days or a month long, and when those finish you move on to the next thing. Some projects are more science heavy and they are more fun. Sometimes you do bad on a project but it ends quickly and then you move on. You do not dwell on things like you do in academia. If you do well in the beginning and then do bad, your management will not remember the good. They will only think about the most recent things you have done. You have to have good communication with your bosses so they know who you are and want to promote you. You have to learn to be nice and make requests that are nice. There are exams that if you do not pass you are fired. You will be overwhelmed in the beginning of the job because it is completely new and then you have to study a lot for the exams you need to pass early on.

7. What growth or exit opportunities do you see for yourself as your career progresses?

Ellen: Going into pharma or biotech strategy. Going to the buy side is super common. Or going to a private fund. Our VPs do not have coverage and they left to go to a buy side fund in which you are working for a portfolio manager for a fund. You make more money and have a better lifestyle. You do not have to leave the sell side analyst either.

Eva: Get experience on the sales side and then you will want to move to the hedge fund side. People who have gone to get a banking job exist. Can go to consulting which is sometimes thought of as a step down by some people. You can build up your investors through medical communications. Hedge funds are stressful like equity research on steroids. They also have to travel a lot.

8. What trends are you most excited for in the biotech market?

Ellen: The field of Immuno oncology. The first therapies had some that worked well but had strong safety signals and toxicity. Now we are at a point where we are fine tuning the therapies and it may be possible to move those drugs that work well in different indications. A lot of companies doing that.

Eva: Not a lot of good trends to be excited about now. The lifecycle of biotech is going on. In the recent past there has been great data and you write a report on the good research but the stock still goes down.