2 things biotech investors need to know today

Meet Jackie Grant, Principal at Abingworth, a life science VC firm. She’s “one of the few, if only, female racial minorities in biotech VC, with few being groomed in the pipeline…and even fewer ahead in senior positions,” she writes in Nature Biotech.

By the numbers: “[L]ess than 1% of the nearly 200 senior-level positions on investment teams (managing partner, partner level) are filled by under-represented racial minorities (Black, Latinx, Native American, Alaskan Native, Native Hawaiian and Pacific Islander). At the junior level (principal, associate) it is hardly better (also <1%),” she says. “Black founders receive just 1% of VC dollars. Worse still, Black female founders receive just 0.2% of all funding.” 

But #BlackLivesMatter is not enough. “Firms cannot proclaim their commitments to racial diversity when the composition of their investment teams and portfolio companies tells a different story,” she says. 

She lists five things companies can do right now to address this disparity:

1. Hire under-represented racial minorities.
2. Build a pipeline of under-represented racial minorities early.
3. Expand networks.
4. Engage in mentorship and sponsorship.
5. Address education and culture. 

Why it matters: “Although venture capitalists comprise a small segment of the life science industry by numbers, they hold outsized influence and power over the sector: the power to invest millions of dollars into innovation and to incubate new companies; the power to offer senior positions in startups and to shape companies through board positions; the power to create wealth,” she explains.

Watch her talk about this issue. 

Dr. Ted Love, president & CEO of Global Blood Therapeutics (BIO member), responds.

More reading:

• The San Diego Union-Tribune: Black people still few and far between in San Diego’s biotech industry
• BIO's Report on Measuring Diversity in the Biotech Industry: Building an Inclusive Workforce

As we mentioned last week, the Securities and Exchange Commission (SEC) voted to regulate proxy advisers more closely—changes for which BIO has been advocating for years. These changes will help ensure investors have more complete information ahead of a shareholder vote, instead of just the information provided by proxy firms—and ensure everyone is aware of a proxy firm’s conflicts of interest, which have long been withheld from their clients and the public.

First, what’s a proxy advisory firm? They advise institutional investors on how to vote at shareholder meetings—and they have a lot of influence over how shareholders vote, despite having little to no direct stake in the company, as The Wall Street Journal explains.

Now, proxy firms will be regulated more closely. The SEC finalized rules requiring proxy firms to disclose any and all material conflicts of interest, methodologies, and resources, among other provisions. 

And failure to disclose—and that includes omitting pertinent information or including misleading information—may constitute violations of anti-fraud provisions governing solicitations. 

Regarding reporting, proxy firms have to make reports available to registrants before or at the same time they’re available to investors, and ensure investors have the ability to see company feedback, corrections, or dissentions with sufficient time before votes are cast at shareholder meetings. 

So, companies have the chance to disseminate information, addendums, and responses ahead of the shareholder vote.

The SEC also issued guidance to proxy clients—basically saying that investor advisers must disclose to their clients under what circumstances and the extent to which they will use automated voting services, among other disclosures needed to ensure that clients can provide informed consent for the use of automated voting. 

These rules will ultimately curb the power of proxy firms—and allow BIO members to counter proxy advisers’ undue influence and end the lack of oversight that has allowed proxy firms to go unchecked for decades. 

What’s next: The rules go into effect in 60 days, but proxy advisers have until December 1, 2021, to comply.

More Health Care News:

AP: U.S. agency vows steps to address COVID-19 inequalities
“[F]ederal public health officials have released a new strategy that vows to improve data collection and take steps to address stark inequalities in how the disease is affecting Americans.” 

The Wall Street Journal (Opinion): Trump's drug price panic
His drug price controls "would harm U.S. innovation," says the WSJ Editorial Board.