January 18, 2023
Key Takeaways and Insights from the 41st Annual JP Morgan Healthcare Conference
Recession fears loom, yet the need for strategic development planning and speed to market for life-saving treatments continues. What was the general view of this issue at the conference? How are companies future-proofing?
Tom: We are at an inflection point in the development of treatments for serious diseases. That’s evidenced in new drug approvals for neurodegenerative diseases and an ever-expanding list of targeted therapies for oncology. New technologies in early detection, targeted therapies, and advanced therapeutic modalities are making a difference. A recent report detailed a 33% decrease in death rates from cancer since 1991. Some of that decrease is due to lifestyle changes, but the overall decrease is largely due to advances in the healthcare industry.
There was tremendous optimism on display at the JP Morgan Conference as drug development companies are tackling some really difficult problems. Given the financing challenges, however, companies have found the need to focus only on their lead asset, make difficult decisions about how to advance key programs, and make sure the data they obtain is meaningful to both investors and regulatory agencies. There are opportunities to move programs through development quicker than ever, but that requires careful planning and close contact with regulators. Future-proofing for biotechs and biopharmaceutical service companies means the ability to be flexible, carefully consider CapEx in the face of technology advancements, and be more open to outsourcing and partnerships that can bring both resources and expertise.
Abe: The general view was that, although there is a chance of a macroeconomic recession in 2023, there is still an urgent need for curative cell and gene therapies. Companies are “pulling every lever” to ensure that they are well positioned to hit their next inflection point, whether that is clinical read-out or approval of their product.
Acquiring funding was a challenge for many companies in 2022. Were there any discussions or solutions to help navigate this tough financial market?
Tom: Downturns in the biotech capital market are nothing new, but that doesn’t make the situation any easier. Investors are focused on providing their existing portfolio with needed capital and largely are not making new investments. Follow-on financings from new investors are particularly difficult as valuations in both the public and private markets have taken such a hit. Further, given the lack of IPOs in 2022, there weren’t the liquidity events we’ve experienced in prior years and capital just isn’t there to reinvest in the industry.
There are alternate methods of financing- which include non-dilutive government funding or grants, partnerships, funding from strategies, or selling off of non-core assets. There is an expectation that Pharma companies, which are sitting on a large amount of cash and many facing patent cliffs, will increase their partnering efforts dramatically in 2023.
Abe: While external markets remain challenging, there is optimism that they will improve in 2023. Navigating this market comes down to two things: having a truly differentiated technology and an ability to execute at a high level
Were there any advances in technology that were particularly interesting?
Tom: JPM is a meeting that focuses on investment and partnering, and much less on announcements around novel technologies. We started the week with news of a few large company acquisitions and the structure of those acquisitions – and that focus continued through the conference. 2023 is clearly starting off as a buyer’s market and a large part of the value to sellers was in contingent value rights or earn-outs.
I spent the week in one-on-one meetings, talking with individual companies about their strategic needs and priorities for 2023. Companies that will be successful in the next year will be those with novel technologies that make a truly meaningful difference in patients’ lives and/or can bring their products to market sooner.
Abe: mRNA continues to generate headlines. BioNTech made an interesting acquisition, CureVac reported positive data on a combo COVID-19 and flu vaccine, and Moderna indicated they plan to substantially increase their R&D budget in 2023.
What activity was there around cell and gene therapy?
Tom: There is no question that cell and gene therapy (CGT) took center stage – both in terms of excitement around company presentations and discussions around growth in the CGT biopharmaceutical service industry. I talked with numerous service providers that are developing technologies and capacity so that they can partner with innovator companies and solve the complex challenges around the manufacturing of cell and gene therapeutics. And it’s important to emphasize that they want to partner – both innovator companies and CDMOs have developed incredible technologies to advance their programs, but it will take cooperation and collaboration to bring products to market. It’s impossible for any one company to possess all the talent, resources, and expertise necessary and we honestly don’t need to replicate it in each of the 100s of CGT companies that exist.
Abe: There was substantial activity within cell and gene therapy. In particular, one partnership that I thought was interesting was 3T Biosciences’ with Boehringer Ingelheim.
What advice might you offer to those interested in attending next year’s conference for the first time? How can attendees get the most out of their experience?
Tom: Prepare early. There are opportunities to meet with more companies than you will have time for. Everyone’s schedules fill up quickly so reach out to the most important companies/ investors/ clients early and then fill in with other meetings after you ensure that your priority meetings are set. Also, travel and hotels are limited so book early – things get very, very expensive if you wait too long to plan, and it can be difficult to find a convenient hotel. JP Morgan is unlike any other conference and your meetings are likely to be spread around at various hotels within walking distance of Union Square. The weather that we had in San Francisco this year, made things particularly challenging. While an added expense, consider using meeting resources like those available for the Biotech Showcase and/or BioPartnering to make scheduling easier.
Abe: One tactical suggestion: I would suggest building in enough travel time in between meetings that are occurring in different locations. I had several meetings start late or have to end early due to travel to and from a different location.
What was your biggest takeaway or lesson learned from this year’s conference?
Tom: Be resilient, and remain optimistic. There have been tremendous advancements in the biopharmaceutical industry in the past few years. We will navigate around issues like the cost of certain therapies, the impact of impending government pricing controls (e.g. the Inflation Reduction Act, 2022), manufacturing and scalability of novel therapeutic modalities, and the availability of capital.
Our industry holds the promise of improved health and the eventual reduction of the overall costs associated with healthcare. Health Economic and Outcome Research (HEOR) will take on further importance moving forward. Financing cycles occur regularly and the companies that will survive and thrive are those that have truly novel technology, focus on meaningful advancement of their core programs, and are open to partnering for needed resources and expertise.
Abe: Since Inceptor Bio was founded in August 2020, this was the first year we attended the conference in person. It was a tremendous experience to meet investors and partners face-to-face for the very first time. The importance of face-to-face interaction is hard to understate!