How does the world’s most social Biotech investor use social media?

“Anyone with a 1 to 2 percent information edge can significantly increase their profits,” Mark Schoenebaum explained to me, “but social media still has a lot more noise than valuable signal.”

Schoenebaum is a Senior Managing Director and Head of Evercore ISI Health Care Research Team and has been widely recognized in the industry as of the best Biotech analysts – and now he’s captured the social title as well.

Despite my affection for earned titles, I do not think that such recognition can only be bestowed “by the faceless elite.” Schoenebaum’s accomplishments must be viewed as those without such powers view him, as a collection of experiences that shape their opinion of him. In other words, if Schoenebaum were a stock, where would he be trading?

According to Crimson Hexagon’s analysis, Schoenebaum has 63% positive approval rate amongst the people following him. While not entirely scientific, the data does seem to support Schoenebaum as a respected source of Biotech information in the industry (and probably a ‘buy’ according to sentiment data).

But despite Schoenebaum’s use of social media, he still trails far behind his elite social counterparts in other industries. That’s because, according to him, there are so many compliance restrictions that it’s difficult to engage in a real conversation.

He also told me that there are not enough physicians, professors and other Biotech experts that are engaging on public social networks – which means most of the conversations on social are being conducted by people that don’t understand the science well enough. It’s a lot like hosting a scientific event without any scientists.

Yet Schoenebaum still finds value in social media, and outlined today’s benefits and tomorrow’s possibilities of using it to create a valuable information edge. Here’s what he said:

Use social media to listen for signals about new drugs

In social media, Schoenebaum finds it difficult to separate the signal from the noise, but when he can manage to do it, the information derived between physicians and patients about a new drug is invaluable. For example, if Biogen is in a phase 1 or 2 trial with patients, patients may tweet about their experience with the drug. Obviously that information can be valuable to an investor .

There’s a huge untapped market in big data and biotech

Schoenebaum believes that the information edge will move to 5% in the future. “As more and more physicians and patients jump on social media, the information will become more valuable,” he told me, “but the signal to noise problem will need to be solved.”

And whomever solves it will be paid a tremendous amount of money, according to Schoenebaum. It’s a big opportunity.

There’s a closed social media system being used by analysts and investors

Apparently, investors and analysts are using social media, just not in public. It’s a closed system where institutional investors are starting to mimic social media in private. Instant messenger is popular and there are new technology systems being deployed that are more social in nature.

“Before someone would put out a 25 page research report – now they just send out short notes and reactions – but email is still most common,” Schoenebaum told me. Schoenebaum himself uses a closed, members only YouTube channel to disseminate his recommendations.

In an October 2013, Institutional Investor video interview, Schoenebaum said it was nearly impossible to predict whether a drug will get approved and that he spends a lot of time trying to predict whether it will or not. I can’t help but believe Schoenebaum has gained an edge by listening in on those social conversations taking place about those new drugs. The question is, why hasn’t the rest of the industry?

Companies like Fidelity are not actively using Twitter, they may be listening but they are not participating,” Schoenebaum said. Let us all agree that more not less transparency about the Biotech industry is valuable to everyone involved – especially the patients. The question is, how do we get more participation from analysts, investors, physicians and patients?

Social media did not win its place in the world because it “imitates life” or stands as a system for larger truths and trends of human existence. Rather, social media became popular for a far more ordinary and concrete reason of providing a platform for all participants to communicate without barriers. Yet In biotech today, there are many regulatory and cultural barriers that are hindering progress.  And until these are broken down and replaced with less restrictions, we won’t have an optimal system for anyone involved.