Friday, January 14, 2011

The JPMorgan Healthcare Conference: Where Optimism Is Its Own Catalyst

The annual January health care confab in San Francisco is ostensibly run by JPMorgan but long ago took on a life of its own and spread well beyond the hallways of the Westin St. Francis. (Yes, they are crowded; we think we can all get over it.) One tweeter dubbed it "spring break for old white dudes in suits" but (thankfully) we think it has moved beyond that in so many ways too.

However, what the broader JPMorgan conference ecosystem can't escape is the sureness with which it knows its importance. It's not necessarily unearned or mistaken, this sense of self-worth. As a barometer for sentiment in the health care world, and biopharma in particular, the meeting and its attendant parties, satellite conferences, and offsite deal-building are impossible to beat. It doesn't really matter whether that's by design or by accident of geography and calendar.

Every year at JPMorgan, the mood's the thing. And this year, the mood was unmistakably optimistic. Perhaps the best part of that mood, that vibe, that intuition, is that nobody we talked to could really put their finger on Why. There were no concrete reasons offered for the buoyancy carrying people from meeting to meeting and from reception to reception. It just was.

And so, this was the year biotech CEOs talked with straight faces about their potential 2011 IPOs. This was the year a tiny biotech boasted about its technology from the sides of Powell-Mason cable cars (yes, Adimab bought every available ad for the week). This was the year one of the industry's oldest precommercial biotechs talked about launching not one but two drugs in the next 12 months (Vertex's straws did the trick). And this was the year that Big Pharma shifted from talking about dealing with patent expiries to talking about bulging pipelines (and of course returning cash to shareholders).

Like last year's meeting (also tinged, if not quite as much, with a sense of optimism) there is of course a reality that doesn't quite live up to the good mood. In 2010 fewer biotechs received Series A cash than in any recent year, and the average haul in those rounds was also lower than any year in recent memory, as we'll report in the next issue of START-UP. Hours after talking about its industry leading pipeline, Merck got a $7 billion wake-up call, losing that much market cap in response to some fuzzy bad news coming out of its voraxapar Phase III program. Industry's experiments with R&D models have yet to prove themselves -- or excite investors -- and it will be a long time before the results of that restructuring can demonstrate any success. Regulators remain safety-focused, payers remain in the drivers' seat.

We left San Francisco with the sense there are of a lot of deals in the industry pipeline. Hey, even those crazy kids Sanofi-Aventis and Genzyme may make a go of it (you might have heard about that one). Pharma is still in its first steps of a long march toward externalization of R&D, so we don't doubt the deals will come.

But unlike the majority of those future deals, we suspect 2011's optimism is front-end loaded. A mood is just a mood, after all.

No comments: