David Crean summarises the mood at the recent J.P. Morgan Healthcare Conference 2020 in San Francisco, noting a more subdued atmosphere than previous years, with reduced attendances and no big M&A announcements. Crean does, however, underline the importance of the Conference for industry networking and highlights some of the biopharma trends to watch in the US election year of 2020.
Compared to JPM healthcare conferences of recent past, the start of the new year and decade in and around Union Square was more measured and intentional. Companies were present at JPM Week to discuss the execution of their plans and talk more about their pipelines and R&D. There was the absence of big M&A announcements prior to and during conference albeit many important partnerships were announced. No “Merger Monday” occurred like one year ago when BMS and Celgene announced their USD 74 billion merge. It was more like “Mundane Monday”. Attendance was noticeably down by my estimate. Meeting rooms and daily networking receptions weren’t shoulder-to-shoulder as was the case in the past few years. Ubers and Lyfts were easy to hail and coffee shops were busy but it was not impossible to find a place to sit.
The annual J.P. Morgan Healthcare Conference began in 1983 and was hosted initially by Hambrecht & Quist (H&Q). It has been and continues to be the marque meeting in the sector. Back in 1983, it featured just 20 companies, had about 200 attendees and focused on the biotech industry. The life science ecosystem for this event has matured over the years since the H&Q days and is now much more than a few multinational pharma companies presenting within the Westin St Francis. In my opinion, JPM Healthcare Week has taken on a broader view beyond Jamie Dimon’s healthcare bankers and now entails multiple different conferences (RESI, Biotech Showcase, China / Cross Border Partnering to name a few) in adjacent locations that attracts early and mid-stage companies from the US and internationally looking to identify capital or for partnership deals. These adjacent events have popped up through JPM Week to capitalize on the high density of biotech brainpower visiting the city. There are literally two dozen different events to possibly consider attending during the week, independent of the plethora of after-hours networking affairs sponsored by legal and financial advisors.
I’ve been coming to Union Square for more than two decades to meet with clients, strategic companies, referral partners and investors. The meetings and events around town during the week are a myriad and diverse array of networking receptions to exhaust you. High energy is a prerequisite, and business card supplies dwindle quickly. I admittedly dialed back my reception activity this year and focused only on high quality events and referral partners to maximize productivity. Overall, this was a really pleasant week in San Francisco with intermittent periods of sun.
A key theme of JPM Week this year was what the biopharmaceutical industry can look forward to in a US presidential election year. Drug pricing is expected be a hot topic throughout the year, as will US efforts to allow consumers to acquire drugs from Canada, as well as efforts that have been made for the FDA to allow certain imports of drugs approved outside the US but not by the FDA. Some other notable themes and activities during JPM Week included the potential for the newest most expensive drug in the world, as BioMarin anticipates pricing its gene therapy for the blood disorder hemophilia between USD 2 million and USD 3 million, per the Wall Street Journal. Right now, the most expensive drug in the world carries a price tag of USD 2.1 million. There was also news of a partnership between digital health company Livongo and Dexcom. One of the biggest things to happen at the conference was the announcement of that EQRx, an Alexis Borisy biotech, will create “equally good or better drugs” than those available today and sell them for cheaper. EQRx raised USD 200 million to get started. Making products better and cheaper is what businesses outside of life sciences would do.
From an M&A perspective, there was discussion during JPM Week of when we will see the deals return. A new report from EY suggests the wait won’t be long. The life sciences industry set an all-time record for M&A in 2019, which anticipates 2020 being another busy year of dealmaking, but unlikely to surpass 2019 levels. EY tallied USD 357 billion in 2019 deals among life sciences companies, which encompasses pharma, biotech and medtech — an “all-time record” that surpassed a previous high set in 2014. Going into 2020, dealmaking should still be strong, with the life sciences industry holding about USD 1.4 trillion in financial capacity to pursue acquisitions. EY anticipates big biotechs and medtech companies that largely remained quiet in 2019 will drive more activity in 2020.
Finally, a common question I often heard during JPM Week was “is it worth attending JPM Week, especially given the surge pricing in hotel accommodations and ride share services along with table rentals in random locations going for USD 100-150 per hour”? By the way, three of my favorite pricing stories include the following scenarios. Can you imagine paying USD 100 just to talk business in a hotel lobby on the couch? How about being charged USD 30-50 extra for a lunch meeting going beyond 90 minutes? Moreover, I was blown away by learning about the price of a hostel going for nearly the same as a nice hotel with a shared bathroom for 10 rooms. Perhaps the hyperinflated pricing or the city’s well documented social problems are what drove reduced attendance but the fear of missing out still lingers. FOMO is alive and well and drives behaviors. That said, one needs to question capital efficiency and the use of precious cash, especially for start-up companies, to attend JPM Week. Nonetheless, in this writer’s mind, it is worth the effort of making the trip, navigating the crowds and painstakingly trying to connect with the folks that matter. Deals happen serendipitously and new business connections occur in the coffee shops, bars, diners and networking events of San Francisco. The conference may be a madhouse, but can be a productive madhouse. One needs to properly prepare well in advance to use the capital efficiently. See you at #JPM2021.
David H. Crean, Ph.D., is a Managing Director for Objective Capital Partners, a leading investment banking advisory firm whose Principals have collectively engaged in more than 500 successful transactions serving the transaction needs of growth stage and mid-size companies. Services include M&A sale transactions, partnering/ licensing, equity and debt capital raises, valuation and comprehensive advisory services. Additional information on Objective Capital Partners is available at www.objectivecp.com.
This article is provided for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. Securities and investment banking services are offered through BA Securities, LLC Member FINRA, SIPC. David H. Crean is a Registered Representative for BA Securities. Objective Capital Partners and BA Securities are separate and unaffiliated entities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC makes no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person.