Success Story - Biology PhD to Wall Street Biotech Equity Research

[Katherine Lee]

Sorry for the delay! I thought this post was sort of drifting into history. A moderator pinged me today - and I'm happy to come back and answer questions.

1. Was your PhD advisor supportive of your career goals?

No. I was brought up the topic about alternative careers during my weekly 1-on-1 meetings with my advisor at least five times over the final 2 years prior to my graduation, and it was always a one person conversation. He did not want to talk about it. To him a post-doc was the only option. Even as my graduation date was set and I told him about my plans to rush to New York City to interview for equity research positions, he still stated I should do a post-doc first. I still very much respect my PhD mentor, but honestly he is not knowledgeable about alternative careers. He also probably felt sort of a betrayal that I was whistling a new tune than my "I'm going to be a PROFESSOR!" message I had when I was a fresh graduate student. But at the end of the day--- It's YOUR decision. Just realize you may need to bear the journey alone.


2. Did you advisor know about your bank internship and time studying for the financial exam?

Nope. Most of the 10 other people in my lab knew because I was very open about my career interests, but my PhD mentor did not know. He only found out in the last 3-4 months before my defense date when I reiterated my alternative career plans, and that was only because he pushed me into a corner to defend that it was possible for me to do it. I actually was never planning telling him because I did it during my own time (6:00am alone in the library, and 5-7 hour study marathons both Saturday and Sundays at a coffee shop) - it did not affect my PhD studies. I thought he didn't need to know about it.

3. I'm assuming you live in or near NYC for all this to happen. How did you support yourself post-PhD until you landed your job?

Nope. I lived in the Midwest. Although from experience, NYC banks will not take you seriously as an applicant unless you live in NYC. I had one bank considering me before my graduation because I paid for a small vacation out there to "introduce myself" before my graduation (it was not a formal interview). After I graduated, half a week later I "moved to NYC" (read as: horribly bad, but cheap Brooklyn AirBnB) and I was given a job offer I ultimately declined.

However, to your "support" question. Even on my 26k/year stipend I still managed to save for "transitional expenses" and paid down over $15,000 in undergrad student loan debt over my almost 6 years as a PhD student. Unless you live in Boston, NY, or San Francisco, I don't think "transitional expenses" should be a problem. If you want it enough, and you plan for it, you can make it work. Maybe it's time you move into a cheaper apartment to prepare?

4. Could you describe your job a little more. Do you visit or talk to Biotech companies as part of your research?

If you think this is a career path you want to pursue, we should probably take this conversation offline, because there's so much to say here. And although I will try to be brief, I just cannot do this justice.
My title is Biotech Equity Research Associate - and I work more-or-less as an assistant to a Senior Analyst. As a team we currently cover 19 different biotechnology companies (market capitalizations between 100 million and 6 billion, so small-mid cap biotech).

We know these companies forwards and backwards - and are on first name basis with executive teams at these 19 companies. We write research "notes" providing updates about the company and more importantly the value of the company stock. We make financial models in Excel to forecast the revenues of the company which are used to support our overall "Buy", "Hold", or "Sell" ratings on stocks.

In my particular "coverage universe" of 19 companies, only about 3 of these companies are actually "cash flow positive" - meaning making more money quarter-to-quarter than they spend; this varies based on the size of the companies an analyst covers. This means I do a lot of research into how large a market could be, how much market share or penetration into a market a particular new drug might make, etc. We use this research to support our financial model and ultimately our stock rating. My job is just lots and lots of a reading and writing - and more importantly - ANALYSIS. If you hate writing, or if you hate having to write VERY QUICKLY - don't do this job.

Typical day: I go into work a little before 7:00am to prepare in case a company issues a press release. If one comes out, I'm instantly typing up a note and putting my opinion or analysis into it. I shoot it off to my analyst who reviews, edits, puts a stamp of approval on it and we submit to publish. A published note gets disseminated to our clients, who *hopefully* decide to act on it by calling up our sales/trading floor specialist to buy or sell stock. That's one way equity research drives revenues to banks. Timing is important in this job because news gets old fast and if you cannot provide your clients with quick news, analysis, and recommended action - they won't do trading business with you. Oh, and you also need to be right the majority of the time (luckily not ALL the time - of course we try our best)!

Another venue equity research drives value to a bank is through supporting investment banking business such as mergers/acquisitions, or more typically (in the realm of Biotech) through helping underwrite (issue) new equity shares (stock) for a company to raise more money. Initial public offerings (IPOs) are the best example of this, but a lot of smaller biotech companies need to raise money multiple times in the equity markets (read as issue additional shares to the stock market). When banks participate in stock underwriting they are taking on a financial liability - the bank is on the hook to buy the shares and if they cannot find someone to sell them, too - the bank OWNS those shares and loses reputation credits for being incapable of selling the shares. Equity research supports the banks here by helping in the analysis of if the bank should be involved in the stock underwriting.


From day one on the job I was already in small meetings with companies (Imagine: the analyst, me, and 2-3 members of the company - usually CEO, CFO, and an investors relations individual). In the 3 months I have been on the job I have probably had meetings with at least 15 companies. Next week I'll be meeting with 33 companies in a 3 day time span at the craziness that is the J.P. Morgan Healthcare Conference (disclaimer: this meeting is attended by thousands of biotech companies, investors, banks, etc - so I am not stating I have any affiliation with JP Morgan). It's going to be a marathon and I'm very excited to meet all these different companies and hear their company's story.

Hopefully that provided a little more color to any curious readers about what an equity research associate does. There's much more to say and I'll try to check back in case there's some follow-on questions.

[Katherine Lee]

ER is a field that interests me however one that I am not entirely sure and thus, something I am not entirely sure I want. Regardless, I am a BS level associate and thus feel I am under qualified in competing with those that have experience in the field or those that don't but have Phds. Even if I were to go to a similar route as you to get first level of CFA, wouldn't a firm choose a PhD vs a BS given the choice?

I will just state some facts and observations, and it's up to you to decide if ER is an area you want to pursue.

Biotech ER is the easiest field for a PhD or MD to get into because it is very technical and requires a lot of deep literature research and analysis. Banks feel that PhDs have demonstrated they can do this. Banks like MDs because they understand the clinical side of drug development (which makes it very easy for him/her to understand how severe a drugs adverse events actually are).

BS level may find it easier to go into Specialty Pharma, Medical devices, or medical services equity research positions because they're less "technical" in nature - HOWEVER - these positions typically require better financial analysis knowledge since these companies are typically "cash flow positive" and have more complicated financial statements due to being more mature, developed companies (compared to biotech).

I think most biotech equity research associates have a PhD or MD. But NOT ALL DO. But they may compensate for this with stronger financial backgrounds (financial B.S. background, CFA, or MBA -- or other job on "the street" before becoming an associate).

Do I know any Science B.S. level associates in health care equity research who entered "the street" straight from undergrad? No. But I have only been on the street for 3 months - I obviously don't know everyone.

Some of the PhDs and MDs I have encountered on the street had passed all three CFA exams before they applied for jobs (you cannot officially apply for the CFA title until all three exams are done AND you have four years of work experience - so these people only could claim the CFA exams were passsed)!!! CRAZINESS! I passed CFA level one, and feel it was critical for me to get job interviews. I guess what I'm saying is I think CFA level I was necessary for me to get interviews, but there were people competing with me for jobs that had an advanced degree AND more CFA levels completed - in these cases the interview is critical.

This is a VERY competitive job field. And it is very hit-or-miss on the number of job postings at any given time. Some that are open are not even posted and that's where networking is important.

Banks sometimes hire recruiters to scout for people, so make sure that your Linkedin profile is carefully crafted and clear about your intentions. However, you also need to get connected to people in that realm for them to find you.

[Dave Jensen]

Thanks for coming back and filling in some of the blanks, Katherine. We very much appreciate it,

Dave Jensen
Founder and Moderator, ScienceCareers Discussion Forum