J.P. Morgan Healthcare Conference 2022: Glass Half Full


David H. Crean summarizes the recent 40th annual J.P. Morgan Healthcare Conference 2022 that was held in a virtual format. Crean underlines the importance of the Conference for establishing the tone and tenor for the industry and highlights some of the biopharma topics to monitor.


39 years ago, JPM launched Wall Street’s premier investor conference focused exclusively on companies defining the healthcare industry. The conference provides a unique opportunity for investors to visit with many inter-related industry leaders and exciting high-growth companies in one setting. Despite best efforts, plans and hopes, and out of an abundance of caution given the rapid spread of the Omicron variant of COVID-19, the Conference was held in the same digital format similar to 2021. Everyone’s plans had pivoted to booting up computers and get meeting links ready rather than run rampantly through Union Square to meet face-to-face with business colleagues and prospects.

The tone and tenor coming out of this year’s conference can be characterized as optimistic despite no large newsworthy announcements

This year’s 40th Annual Conference welcomed more than 625 leading Healthcare companies from around the world ranging from emerging private and small-cap companies to Fortune 100 corporations along with more than 3,000 global investors. These numbers do not include the plethora of other ancillary meetings normally taking place adjacent to or surrounding Union Square including RESI and Biotech Showcase, to name a few, all of which were virtual as well.

While we all have marvelled at the unprecedented focus and speed our industry employed to address the pandemic, the tone and tenor coming out of this year’s conference can be characterized as optimistic despite no large newsworthy announcements. The mood is upbeat for 2022, considering available cash and advances in science. While COVID-19 shut down most of the world in 2020 and businesses have been disrupted or have had to pivot, the biopharma sector has seen some of its highest highs in 2021. Vaccine success has boosted public interest in drug development and pipeline successes have spurred investor interest in biotech. The fundamentals remain strong for biopharma and healthcare. There is a continuing demand for innovative new medicines and outstanding returns. In 2022, we have more reason to be thankful for and celebrate our global industry, prospects for growth, M&A, and partnerships, and to be hopeful for an in-person event in San Francisco for the 41st Annual J.P. Morgan Healthcare Conference in January 2023.


Glass Half Full

As the virus continues to evolve and the mutations from the Wuhan strain have now taken us more than halfway through the Greek alphabet with Omicron’s relentless wave of transmission delivering a powerful reminder of the need to improve detection, response, and variant-proof protection, we must stay focused on innovation, noted Flagship Pioneering Founder & CEO, Noubar Afeyan. At this year’s JPM22 conference, we heard much about SARS-CoV-2 and the involvement with the big players in the space. Vaccines were developed and deployed at record speeds and at-home COVID diagnostic tests became a staple in people’s lives. And while the world grappled with the disruption, the sector thrived and expectations for 2022 couldn’t be higher.

More deals and more financing opportunities are expected by the healthcare crowd, as investors compete for the best assets and companies in a cash-rich environment

Making predictions for the year ahead is always a challenge, even more so with the Omicron variant raising new challenges for suppressing the spread of coronavirus and revealing the knowledge gaps we still have when it comes to understanding SARS-CoV-2. But the overall impression from industry insiders is a guardedly optimistic one. More deals and more financing opportunities are expected by the healthcare crowd, as investors compete for the best assets and companies in a cash-rich environment.


Although there were no big deals announced on Monday, the first day of the conference, we know big biopharma is looking and hungry. We did not see big announcements such as Bristol Myers Squibb’s USD 74 billion Celgene deal, which dropped in the lead-up to the healthcare industry’s largest gathering in 2019. This year, many analysts expect a rebound for the life sciences capital markets paired with a year of M&A and partnering. There are many companies that have cash burning a hole in their pockets and with pipelines to fill. Analysts expect that M&A pistons in the engines are ready to start firing again. Some predict the number of deals in 2022 will be the same or larger than in 2021, while their overall value will be significantly higher.

On the seller’s side of the equation, smaller emerging biotechs have had a relatively easy time raising money from venture capital investors as well as in public capital markets via IPO, thereby making deals with large biopharma companies less required for financing plans. Biotech stocks took a downward turn in the back end of last year. If public investor fears persist, and the market value for biotechs remains suppressed, it could result in more dealmaking. Continued challenges in the public markets could lead to a greater number of smaller companies being willing sellers in 2022.

Putting aside M&A, we did hear more about partnerships related to cool science at the conference this year. Strategic partnerships rather than M&A will be key for biopharma companies in 2022, finds a report from EY. There are a few key factors driving the focus on licensing and collaborations. Premiums on acquisitions have increased, thus limiting affordability; venture capital funding has skyrocketed three times in the past five years, reducing the need for biopharma’s capital investment; biotechs are going all the way to market on their own with tighter labels and more defined populations, shrinking the need for biopharma’s help in selling drugs; and the economic value of big biopharma buying a late-stage biotech has declined.


Several of these themes were reinforced at JPM22 webinars sponsored by Endpoints and others. Panelists spoke of their bullish view on continued partnering deal activities and that growth is on everyone’s agenda. Companies, especially the megacaps and large caps, need diversification in their pipelines and adjacencies. They have cash on their balance sheets and significant capacity to explore deals. Backloaded, billion-dollar biobucks deals are increasingly standard to mitigate biopharma risk.

The 2022 virtual conference started with multiple licensing and research deals revealed early in the conference. Bayer kicked off the week with a USD 1 billion biobucks bet on a gene therapy deal with Mammoth, using the CRISPR science. Pfizer, Bayer, Moderna, and BioNTech piled on with milestone-heavy research collaborations as well. Partnering plays a major role in developing innovative technologies. A good partnership, one that is well set up from the deal design perspective, is one that should increase the overall probability of success of the global pipeline for the industry.

There was also a much larger presence of digital health and health tech companies at this year’s conference. Among major pharmaceutical firms, the emerging trend in 2022 is placing bets that artificial intelligence, machine learning, and other technological buzzwords might one day live up to the hype when it comes to either identifying new drugs or dealing with patients remotely. Merck signed a deal with Absci, a company that uses AI to find drug targets, in which it will pay as much as USD 610 million to collaborate on as many as three potential therapies. Sanofi is also partnering with a company called Exscientia, also invested in AI for drug discovery, in a USD 100 million deal covering up to 15 potential treatments. The deals follow on the heels of news that Amgen is paying USD 50 million to do similar work with a machine learning startup called Generate Biomedicines. Biopharma’s increasing willingness to make bets on such technology suggests the drug industry is increasingly curious about what powerful computing can do for their drug research or improving patient access and engagement.

The emerging trend in 2022 is placing bets that artificial intelligence, machine learning, and other technological buzzwords might one day live up to the hype when it comes to either identifying new drugs or dealing with patients remotely

As we all know, the lifeblood of biotech is venture funding and capital. On the venture financing side, biopharma raised record sums of venture capital financing in 2021. For example, seed and series A rounds increased from USD 3.7B (2019) to USD 7.9B (2021). In 2022, many expect more exponential growth to occur. More capital is flowing into earlier stage companies. Of note, certain Tech funds are now coming into biotech.


Key Takeaways

A catalogue of noteworthy corporate updates were made throughout the week. A more comprehensive overview of the updates can be accessed through Informa’s Pharma Intelligence. Some of the illustrative updates included:


Johnson & Johnson (JNJ)

The Company presented their top three priorities in 2022 as it spins off its Consumer Products business and transitions to two separate companies. The CEO stressed J&J will continue to operate as a three-segment company until the transition is completed around the end of 2023. The first priority is the successful separation of the consumer segment as a stand-alone business, which J&J believes will be better positioned to unlock shareholder value and greater investor visibility as well as streamline innovation to accelerate strategies that drive growth. Another priority is growing its pharmaceutical business to USD 60 billion by 2025. J&J foresees 50 approvals or filings by 2025. The main driver (representing two-thirds to 80 percent) of the USD 60 billion is projected to come from its existing portfolio of 13 marketed products across six therapeutic areas. A third priority is making the medical device business a best-in-class performer. J&J’s strong financial position also gives it the flexibility to entertain larger deal opportunities to enter higher growth segments. Overall, across all three sectors, J&J believes the best way to maintain profitability and improve margins is through top-line growth reflected by its high levels of investment in R&D.


Merck (MRK)

The CEO commended a “new” Merck after a strong year of achievements across key strategic priorities in 2021. A strong financial performance was visible throughout oncology, vaccines, hospital, and animal health with a revenue growth of 13 percent and 18 percent in non-GAAP EPS in Q3 2021. Merck remains very positive for long term growth throughout 2022 holding pride in its internal pipeline and external science development throughout various therapeutic areas in early and late-stage studies as well.

As of the conference, Merck boasts a strong portfolio with over 120 programs in discovery and early development, most notably a 34 percent in ID / vaccines, 24 percent in neurology and 23 percent oncology. All in all, Merck does not plan to stray away from oncology but instead to further build upon its leadership position around Keytruda thus far and to advance its various programs and modalities throughout the decade with internal and external business developments.


Novartis AG (NVS)

The Company has strong positions in five therapeutic areas and new technology platforms, with diversified geographic presence. The focused medicines company continues to concentrate on strengthening its core areas, advancing its leading technology platforms, accelerating its four priority geographies, and transforming Sandoz, its generics division. Innovative medicines have generated a 7 percent CAGR increase in sales from 2018 to 2021 (25.9 billion to 31.3 billion). Additionally, the company sold its stake in Roche for USD 21 billion in a single bilateral transaction. Novartis has an attractive growth profile and is confident in a 4 percent+ sales CAGR increase through 2020 to 2026, which it plans to achieve by focusing resources on key growth brands and launches, and upscaling next generation engagement models.


Pfizer (PFE)

The Chairman and CEO began this year’s JPM discussion by addressing the current COVID-19 landscape, noting that globally, we are in a much stronger position than we were this time last year in the fight against the virus. Vaccines are working, manufacturing capacity is continually increasing, and there are now treatments available. Switching to business development, the Company discussed the acquisition of Arena Pharmaceuticals, and the mRNA landscape. As the technology becomes more popular, Pfizer wants to stay in the forefront. Development continues on mRNA vaccines for infectious diseases (COVID, influenza, shingles), cancer, and rare genetic diseases. Key recent deals were touched on, including the USD 1.6 billion partnership signed the day of the presentation with Beam Therapeutics focused on in vivo base editing technologies (using mRNA) and lipid nanoparticles (LNP) to deliver base editors to target organs), and a deal with Acuitas through which Pfizer gained an option to non-exclusively license Acuitas’ LNP technology for up to 10 targets for vaccine or therapeutic development.


Biogen (BIIB)

The CEO provided an update on the company’s decelerating base business including MS, SMA, and biosimilars while emphasizing potential for the controversial Alzheimer’s treatment and Phase III zuranolone, which has had postponed filing after a history of mixed results. Acknowledging that the Aduhelm launch in Alzheimer’s disease was slower than expected, the Company announced the lackluster market penetration prompted the company to slash the drug’s contentious price tag by almost half, to USD 28,200 per year.

During the same week of the conference, CMS proposed a restrictive coverage decision to AD patients (80 percent of patients with AD are covered by Medicare); Medicare will only pay for medicine who are enrolled in a randomized, controlled clinical trial. This is essentially close to a nightmare scenario for USD BIIB. Medicare put their foot down (perhaps unlike the FDA in many people’s minds) and the implications are vast, potentially across the industry.

When asked about whether the company would consider other strategic options, the CEO said the management team is “engaging very closely with our board on tactical short-term measures but also strategic options.” There are reports that Biogen has tapped Goldman Sachs to compile a list of potential acquisition targets.

Setbacks, including the disappointing Aduhelm launch along with erosion of Tecfidera, have prompted Biogen to announce cost reduction measures in 2022 that the CEO noted would yield about half a billion in annualized savings. With a commitment to persistent investment in the business, the company expects to focus capital allocation on continued BD and returning capital to shareholders.


Bristol Myers Squibb (BMY)

The CEO kicked-off his presentation by highlighting the four key drivers that will position the company for sustained growth and will help offset the loss of exclusivities expected in the near future (i.e., Revlimid, Abraxane, Sprycel and Pomalyst which altogether are expected to have a USD 12-14B negative impact between 2020-2025). The focus of the company is on renewing its portfolio, and the four drivers/pillars are represented by growth of new products, the launch of a robust mid- to late-stage pipeline, advancement of an early-stage pipeline, and the leverage of financial strength.

To support its growth, BMS also plans to focus on disease areas with large commercial potential, such as cardiovascular, hematology, immunology, and solid tumor oncology, and has over 50 early-stage assets in development across these therapy areas, as well as 7 mid to late-stage pipeline assets. The CEO summarized that BMS has cash flows of USD 45-50 billion estimated in 2022- 2024, is expected to deliver low to mid-single digit revenue CAGR from 2020 to 2025, and is well positioned for the second half of the decade, with plans to maintain a strong balance sheet, which will allow it to prioritize business development and return cash to its shareholders through the company dividend and share repurchase program.


Dexcom (DXCM)

The Company, a leader in continuous glucose monitoring (CGM), had a strong year, with expected 2021 revenues to be USD 2.45 billion, or 27 percent growth. The Company did advance various initiatives over the past year, including launching of Dexcom ONE, which is a lower cost, simpler CGM device to help them compete internationally, where they lag competitors. They also expanded access internationally. In the US, they doubled their US sales force, where the Company acknowledged they did not have the depth or breadth of competitor Abbott. For 2022, they are expecting ~15-20 percent growth, to USD 2.82-2.94 billion.


Moderna (MRNA)

Investors were watching eagerly to find out which direction the CEO planned to steer the company as the pandemic crisis abates. The resounding message was that Moderna would stick to its roots in mRNA technology and intends to delve deeper into mRNA technology, with organic growth planned by leveraging mRNA technology to develop mRNA encoded disease-specific proteins and pioneering a next-generation of mRNA encoded gene-editing technology. Moderna announced total sales of a staggering USD 17.5 billion in 2021 for Spikevax, with the company boasting a further USD 18.5 billion of advanced purchase agreements (APA) secured for 2022.

Moderna is looking to re-invest its newfound wealth into its own pipeline for organic growth and subsequently, the company has increased R&D spending exponentially from USD 0.5 billion in 2019 to USD 2 billion in 2021 and expects to increase spending further to USD 2.5-3 billion through 2022. Additionally, the company noted that its early-stage pipeline had expanded to 14 pipeline assets across four modalities – immune-oncology, rare, cardiovascular and autoimmune diseases. Moderna is hoping to maintain its distinguished reputation as a leader in mRNA technology.


Takeda (TAK)

The CEO outlined the company’s growth strategy for the next 5 years. There are 14 global brands that are accelerating mid-term growth expectations including Takhzyro, for which the company anticipates an approval in the next few months. Takeda plans to continue to seek partnerships with other companies in the industry to bring new therapeutics to market as well as grow. It was also announced at the conference that Takeda plans to acquire Adaptate Biotherapeutics, in addition to the previously announced acquisition of GammaDelta. These acquisitions are expected to be finalized in the first quarter of Takeda’s fiscal year 2022.

In addition to highlighting company milestones and planned growth and R&D strategy, the company also outlined their pipeline consisting of approximately 40 clinical-stage assets as well as some anticipated milestones. The company remains focused on accelerating their pipeline, as well as enriching their pipeline through partnerships and targeted, strategic bolt-on acquisitions.


AbbVie (ABBV)

The Company positioned itself as a diversified company with strengths in immunology (Rinvoq, Skyrizi and Humira), hematologic oncology (Imbruvica and Venclexta), neuroscience (Vraylar, Botox, Qulipta, Ubrelvy and Duodopa), aesthetics (Allergan Aesthetics, Botox Cosmetic and Juvederm) and eye care (Restasis, Lumigan, Alphagan, Combigan and Vuity). Blockbuster Humira is set to lose exclusivity in 2023 in the US and based on the experience with EU biosimilars, Abbvie expects a 45 percent erosion of US Humira sales in 2023. AbbVie expects a return to modest top-line sales growth in 2024 and a return to strong top-line growth in 2025. For 2025, Abbvie is guiding for >USD 15 billion in sales with strong uptake of Skyrizi in psoriasis and inflammatory bowel disease (IBD) and with sales for Rinvoq driven by uptake in RA as well as contributions from atopic dermatitis, SpA and IBD.


Eli Lilly (LLY)

The CEO highlighted a few 2021 events, including important readouts for drugs in diabetes, anti-amyloid antibody donanemab in Alzheimer’s disease, as well as new indications for Verzenio in high-risk breast cancer and for Jardiance in a whole suite of heart failure. Capital allocation in R&D is expected to grow as Eli Lilly maintains focus on their core therapeutic areas, including neuroscience, oncology, immunology and diabetes and obesity.


Roche (RHHBY)

The CEO summarized the companies’ recent success in COVID-19 solutions and went on to present a high-level picture of Roche’s innovation strategy and growth opportunities expected in the coming years. Throughout 2021, many new diagnostic and pharmaceutical developments emerged in the fight against COVID-19, and through multiple PCR, antibody, and drug developments, Roche demonstrated its broad capabilities through its success in battling the pandemic. The Company stated alongside a strong routine of COVID-19 testing expected to continue, Roche has built a strong underlying pipeline that will carry it through the anticipated decrease in COVID-19 pharma sales.

The CEO showcased Roche’s Pharma Vision 2030, including the doubling of medical advances at a lower cost to society and plans for transformation through a decentralized execution across the entire Pharma organization. Roche plans to reallocate resources to increase investment in research and development to further develop their neuroscience and oncology pipelines. A key focus of the Pharma Vision 2030 is driving a digital transformation throughout the pharma and diagnostics value chains, bringing more effective, faster clinical trials and individualized treatments.


BioNTech (BNTX)

The Company’s opening remarks centered on celebrating the success of a record-breaking year for the company, in which its COVID-19 mRNA vaccine achieved the prestigious status of being the first mRNA vaccine to reach the market. Unsurprisingly, much of the discussion centered around the company’s plans for its mRNA vaccine in 2022 and how it would invest the startling wealth of USD 17 billion it had accumulated in 2021. In terms of the COVID-19 market, 2022 is expected to be another phenomenal year for the company, with advanced purchase agreements already secured for USD 13-15 billion worth of doses. Like others, BioNTech predicts that COVID-19 will mature into an endemic market, with seasonal booster vaccination becoming common practice by the end of 2022. Importantly, the company has combined computational modeling of the SARS-COV-2 spike protein with artificial intelligence to develop an early warning system for the prediction of SARS-CoV-2 variants. Through these approaches BioNTech expects to remain a leader in the COVID-19 space as it shifts into an endemic market. By ramping up R & D investment, accelerating late-stage oncology programs, and the acquisition of synergistic technologies and product candidates, BioNTech hopes to correctly invest the huge revenues generated over the pandemic period.


Final Thoughts

As an investor, I am confident that 2022 will be a healthy year for this industry where we will see and finance cutting-edge science and enabling technologies towards products and the market. I expect that we will witness many significant partnerships, collaborations and acquisitions advancing innovative technologies and companies to benefit patients, first and foremost, and their respective shareholders. See you in 2023.



David H. Crean, Ph.D., is a Managing General Partner for Coast Bioventures LLC, a life sciences focused investment fund, and for Cardiff Advisory LLC, an investment banking M&A advisory firm executing transactions in the healthcare and life sciences sectors. 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. Cardiff Advisory and BA Securities are separate and unaffiliated entities.

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