JPM 2014: Opening Remarks – Doug Braunstein, Vice Chairman

There was a general atmosphere of cautious optimism at 32^nd Annual J.P. Morgan Healthcare Conference, in San Francisco, this year.  In his opening remarks, Doug Braunstein, Vice Chairman of JP Morgan Chase & Co., welcomed 432 companies presenting at the conference plus over 9,200 attendees.  This year, the presenting companies included 100 not for profit companies and 38 companies from emerging markets.  Braunstein remarked that while life expectancy in the US has not improved significantly, US spends considerably more on healthcare than majority of the other nations.  Increasing pressure to contain costs in healthcare represents both a major challenge for healthcare professionals, as well as a big opportunity, said Braunstein.  He also remarked that healthcare industry is returning to pre-recession levels.  There were 46 IPOs and over $10 million dollars were raised by life science companies, in 2013.  This past year has also been a robust year in debt markets, said Braunstein.  By all indications, 2014 will continue to be a robust year, and acquirers will be rewarded, in the stock market, observed Braunstein.  Acquisition of Life Technologies by Thermo Fisher Scientific for $13.6 Billion was the largest acquisition deal in 2013 and is poised to give Thermo Fisher a leading position in the genetic sequencing market.

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JP Morgan Healthcare Conference 2014 – Environment of Optimism

For the healthcare sector, JPM conference is the largest and most important event of the year.  Technology innovators and life science professionals come together with the business analysts and investors and significantly more transpires outside the halls of the Westin hotel and presentations rooms, then what goes on inside.  Inside, the companies begin their short presentations with disclaimers that their presentations will include forward looking statements and reality can be different.  The companies give a quick overview of how they met the goals, objectives, and milestones they had envisioned or how and why they failed to meet them.  The companies go on to succinctly talk about their goals, objectives and milestones for the year ahead.  They share about new technologies, products, or drugs in the pipeline, the kind of return shareholders can expect, and make a case for why they present a great investment opportunity.

Outside the conference halls, market opportunities are discussed, new product or technologies are pitched, licensing contracts are signed, and deals are done as suited professionals fill up SF hotel lobbies, coffee houses, and diners.  The networking does not stop in the evenings.  Instead, it picks up.  Various receptions hosted by law houses, life science companies, and investment firms at hotel penthouses and art galleries, offer opportunities to mingle and get to know people, in a less formal and more personal way.  As alcohol freely flows and finger food and attractive dessert choices loosen everyone, professionals find more ways to make deals.  In my next few reports, I will share more details from JPM conference and One Med Forum events.  But overall mood this year was positive and companies had less to apologize for.  Large pharma companies and smaller biotech and device companies are mostly done dealing with most dire recession challenges that hit the life science industry most deeply; nearly dried out funding sources, stagnated hiring, patent cliffs and lackluster period of growth that significantly lowered earnings.

Biopharma sector has enjoyed an incredibly good year, with 76.25% increase in value for the year, according to Bio World Blue Chip Index.  Funding has also begun to flow.  According to Bioworld Snapshots, the amount of capital raised by global private biotech companies was $4 B in 2013, up 4% on the total raised in 2012.  Almost $1.5 B was raised in 4^th quarter of 2013, a huge 55% more than $975 million raised in the third quarter of 2013.  Biotechs also closed many venture rounds in Q4, 2013.  And there was a flurry of activity in the IPO market, with a number of IPOs with 2X the offering price.  So the good news is not just the number of IPOs, but their price, which has gone up 119% and their market cap which is up 236%.

But it will take a while for money to trickle down and spread more widely.  And many other challenges remain.  For instance, at 45 percent of the global R&D spend, although US still tops investment in life sciences, the amount has dropped 51% since 2007.  Meanwhile the cost of developing drugs continues to rise.  As one of the most scientifically and technologically advanced industries, life science sector still faces major challenges including stringent and constantly changing regulatory standards, rising R&D costs, and shorter market cycles.  Additionally, there are increasing cost pressures, a need to streamline business operations, and increasingly higher expectations from patients, doctors, payers and so on.  The environment at JPM was one of optimism, even exuberance, but it was also mingled with caution.  In my following posts, I will include highlights from various keynotes and some company presentations.

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2013 J.P.Morgan Healthcare Conference, San Francisco, CA – Overview

2013 J. P. Morgan Healthcare Conference Overview– San Francisco, CA

(more details to be shared in next posts)

Whew!! The J. P. Morgan conference and all other related events are finally over. This conference is the largest and most important event of the year, for the health care sector. It brings together global industry leaders, investors, business analysts, emerging fast-growth companies, technology innovators, and other professionals in the industry. Despite 2012 year ending on a rather dismal note, improvement in the economic indicators point to a greater stability and the optimism at the conference was palpable. 2012 was a challenging year with weak domestic economy, ongoing financial challenges in Europe, contentious uncertainty of the long looming “fiscal cliff”, the big pharma dealing with patent expirations, and greater uncertainty in FDA regulations. Fundraising in 2012 lagged behind the pace in 2011. According to Bioworld Insight analysis, in 2012, approximately $14.3 billion was raised by biopharmaceutical public companies, compared with $18.9 billion, in the previous year. Public offerings accounted for $8.5 billion of this total figure, down from $10.2 billion in 2011. However, things seem to have greatly stabilized on many levels, towards the end of 2012. Market is showing signs of steady job growth, there is increasing stability in the financial markets, the fiscal cliff appears to be inching closer to complete resolution, and the big pharma has gone through restructuring and cost reduction to deal with the patent expirations and have promising pipelines that portend a sound and steady growth. In the next post, I will summarize some specific highlights from public and private company presentations.

In his opening remarks, Doug Braunstein, Chief Financial Officer for the firm, looked back at the first conference. Back in 1983, it featured 21 presenting companies, when US spent about $350 billion on healthcare. At the 2013 conference, a record 397 public and private companies presented and was attended by over 8,600 registered attendees that included over 4,000 investors. Braunstein observed that the U.S. expenditures in healthcare have increased “eight fold” to more than $2.8 trillion, which is also a driver for biotech companies to come up with technologies that are value differentiating.

For a dedicated democrat like me, politically speaking, JPM keynote presentations can be lonely affairs. But aside from the politics, the lunch time keynote presentations were made by influential figures and they did not disappoint. They included, Mr. Bob Woodward, Legendary Pulitzer Prize-Winning Journalist/Author and Associate Editor of The Washington Post, and Dr. William Frist, Surgeon and former U.S. Senate Leader, during the first two consecutive days. Quoting Sir William Osler, Frist observed, “variability is the law of life”, and emphasized the need for personalized medicine to help improve efficiency and lower healthcare costs. Frist demonstrated how the convergence of new technology with personalized medicine can help achieve dramatic results. While genome sequencing was very slow and expensive, now the cost is low enough, for it to be in common person’s reach and the process is much speedier. Big data however is a significant barrier, since we don’t yet know how to put the data to good use. Frist also wowed the audience with a dramatic demonstration of getting an instantaneous ECG recording of himself with Alive Cor iPhone app.

The palpable optimism and activity at J.P. Morgan Healthcare Conference, at the Westin, in San Francisco, resonated outward to dozens of other hotels, restaurants, bars and outdoor venues where meetings, lunches, and evening receptions, further facilitated deals between analysts, executives and other professionals. Concurrently occurring, the Biotech Showcase, an investor and partnering conference, devoted to providing private and small- and mid-cap biotechnology companies an opportunity to present to and meet with investors and biopharmaceutical executives, had attracted investors and biopharmaceutical executives from around the world. Also, simultaneously occurring OneMedForum, at Sir Francis Drake Hotel, attracted leading investors and management of some of the most promising emerging life science companies, with a slightly greater focus on medical devices. In one of the next few posts, I will discuss OneMedForum event, in greater detail.

Dedicated, passionate professionals in the healthcare sector know that for good health, playing is as important as working. The evening cocktail receptions sponsored by various law firms, banks, and other public and private companies, provided a much-needed respite from the breakneck pace of the J.P. Morgan Healthcare Conference and other events. There were anywhere between 50 and 60 evening receptions during the 3 days, taking place in various hotel penthouses and lobbies, art galleries, and stores like Saks Fifth Avenue. The receptions featured gifts, delicious finger foods served by waiters and waitresses, rare wine and expensive scotch at some events, and of course ongoing opportunity for deal making, well past into the mid-night.

In the next few posts, I will write about highlights from specific company presentations and also highlights from OneMedForum conference.

EPPIC 2013 Annual Life Science Conference Highlights

EPPIC 2013 Annual Life Science Conference Highlights

The annual EPPIC Life Science Conference (www.eppicglobal.org) takes place on the day before the start of the J. P. Morgan Healthcare Conference, each year, and offers a forum for information, networking, and mentoring. This year, the conference took place at the Westin SF Airport Hotel on January 6, 2013 and was jointly chaired by Ramani Aiyer, EPPIC President & Principal at Shasta Bio Ventures and Geetha Rao, CEO of Springborne Life Sciences and VP of Corporate Development at Triple Ring Technologies. The Gold sponsors of the event were Global Industry Analysts http://www.strategyr.com, Camargo http://www.camargoblog.com, Merchant & Gould http://www.merchantgould.com, Morrison Foerster http://www.mofo.com, Vivo http://www.vivoventures.com, and WSGR http://www.wsgr.com. Below are the highlights from the conference.

Plenary Talk – Carlos Olguin

The conference opened with plenary remarks by Carlos Olguin, Head of Bio/Nanotechnology/Programmable Matter Group at Autodesk and was moderated by John Cumbers, Head of Synthetic Biology & Resource Utilization in Space at NASA Ames. If you are wondering what has Autodesk to do with life sciences, the talk was an eye opener about interesting things happening on the boundary between bio-nano technology with 3D visualization, simulation, and design. Autodesk professionals bring design and engineering knowledge and look at ways to program matter, through scan, modify, and print pattern, said Olguin. Scan in the case of molecular biology is akin to sequencing DNA, modify refers to modeling, simulation, and optimization and print alludes to synthesizing the DNA. Looking beyond molecular biology, design and engineering in manufacturing as a whole may shift from being top down to self assembled, from being inert to being alive, from being generic to personalized, and from being product oriented to being service oriented, said Olguin. The talk was a clear indication that interesting, cutting edge stuff is happening on the boundaries between disciplines and that is where we will see some breakthrough advances take place in the years to come.

Personalized Medicine Panel

Personalized Medicine Panel was moderated by Sara Kenkare-Mitra, SVP of Development Sciences at Genentech. Brian Naughton, Founding Scientist, 23 and Me, Eric Sasso, VP of Medical and Scientific Affairs at Crescendo Bioscience, and Deborah Kilpatrick, Chief Commercial Officer at CardioDx discussed the implications of efforts in personalized medicine for chronic diseases.

Crescendo Bioscience is a molecular diagnostics laboratory focused on rheumatology. Currently,  assessment of rheumatoid arthritis disease activity depends on subjective clinical indicators and is a time consuming process. Crescendo is developing quantitative, objective, biology-based tests intended to provide rheumatologists with deeper clinical insights, said Naughton. The blood test, commercially available since  2010, integrates the concentrations of 12 serum proteins associated with rheumatoid arthritis disease activity into a single objective score to help physicians make more informed treatment decisions.

CardioDx offers Corus CAD blood test that can quickly and safely identify symptomatic patients unlikely to have obstructive coronary artery disease (CAD). However, getting physicians to think differently about using these tests versus imaging based tools, is a challenge, and “we are asking them to trust biology and not just an image”, said Kilpatrick. Currently, 75% of its commercial use is by primary care physicians and about 25% by cardiologists. Cardio Dx works the referral channel from an advocacy standpoint. An additional benefit observed by CardioDx is that after the test, the compliance to statins among patients is dramatically improved. Thus the test leads to a behavior change that would not otherwise occur.

23 and Me has an exciting story and it will again be covered in greater detail in my JPM post. The exciting development is in dramatic reduction of cost. Naughton shared that now it is within the reach of everyone and for $99, any consumer can get all sorts of information about their genetics, including increased risks for diseases like AMD, Alzheimer’s and others The panelists discussed their strategies for broadening the use of their tests with partnership opportunities and for other indications. Hearing about advances in personalized medicine, beyond oncology, was exciting.

Panel on Repurposing of Drugs

Mahendra Shah, partner with Vivo Ventures, moderated the panel that focused on repurposing of drugs. While new drugs cost upwards of $1.1B to develop and bring to market, and take over 10 years, once approved, there is no guarantee that they would be commercially successful, said Shah. The knowledge accumulated, can be analyzed to see the effectiveness of old drug for new usage. NIH is also planning to make an extensive database of old drugs available, to enable scientists to look for new indications.

Ken Phelps, CEO of Camargo Pharmaceutical Services, talked about the regulatory pathway in repurposing of drugs. Camargo specializes in FDA’s 505(b)(2) drug approval process. In 2011, more 505(b)(2) NDAs were approved than 505(b)(1) compounds, said Phelps. Sharing the history of 505(b)(2), Phelps emphasized that currently over 3000 drugs are still on the market that were introduced prior to 1962, when they were not required to be shown to be efficacious, and they are for taking. There are also compounds with new chemical entities and new indications that are available. He observed that it is important to identify compelling commercial differentiation and then take the knowledge available in the public domain, think outside the box, and use it effectively.

Warren Cooper, President at Coalescence was CEO of Prism Pharmaceuticals, a venture backed company that he led from inception to sale of the company to Baxter in 2011. According to Cooper, in repurposing a drug, same criteria should be used as NCE; identification of well defined clinical need, market value, and willingness to adopt and obtain reimbursement, technical feasibility, ability to protect from generics for meaningful period of time, and positive financial justification. What is different from NCE is that compound has a history and sometimes that is helpful and sometimes a hindrance. The deeper the history, the higher the challenge it may cause in the regulatory pathway of repurposing. Cooper discussed the example of injectable amiodarone that was originally developed for use in cardiac arrhythmias and was transferred at Prism Phrama, into NEXTERONE, from IV to ready to use pre-mixed product. The regulatory challenges required rewriting of the label and negotiations with FDA on labeling.

Jaisim Shah, Board Director at Igdrasol, discussed the key drivers for drug repurposing that include, reduction in cycle time, lower cost, better success rate, and quicker ROI for investors. Drug repurposing sales are up, to $20 B this year, said Shah. In 2012, as Chief Business Officer of Elevation Pharma, Shah led the sale of the company to Sunovian for upto $430 million, contingency based deal. The company took glycoyrrolate, a generic drug, approved decades ago by the FDA, and reformulated the compound for use with a nebulizer for chronic obstructive pulmonary disease (COPD), which includes emphysema and chronic bronchitis. It is found to be a well tolerated, tasteless, and stable formulation.

Panel on Technology Innovations that Shorten Therapeutic Product Development Life-Cycles

Moderated by Mohan Srinivasan, Director at Bristol-Myers Squibb, the panel discussed diverse and new technology adaptations aimed at compressing lifecycle and boosting success rates for drug development. Currently, for each new therapeutic, the product life-cycle ranges between 9 to 15 years and costs over a billion dollars. Can this be significantly shortened by adapting technology advancements in other sectors?

Chunlin Wang is Senior Scientist & Director of Informatics at Stanford Genome Technology Center. In last several years, Wang has been analyzing sequencing data generated by 454 FLX, I1-lumina GAIIx, HiSeq, MiSq, Ion Torrent and Pacific Bioscience platforms for various projects including drug-resistant mutation detection, whole genome sequencing, immune repertoire sequencing, high resolution high-throughput HLA genotyping and new virus discoveries. Using novel sequencing approaches to speed up drug development is one of the best ways to reduce costs, said Wang.

Scott Turner is EVP of R&D at Kinemed Inc. focused on the field of stable isotope research. Turner is leading the research into novel in vivo applications of stable isotopes in diseases. With its patented isotopic tracer technology, Kinemed enables its clients to track key chemical pathways within living systems and look at bio-chemical processes that are targets of drugs. Focusing on study in intact organism provides integrated systems biology information underlying the root causes of disease, said Turner.

Nikesh Kotecha is CEO of Cytobank Inc., a company focused on providing scientific, informatics and software solutions for cytometry. Cytobank focuses on analyzing single cell technologies and has created Cytobank, a cloud-computing platform for flow cytometry data. The Cytobank project grew out of Kotecha’s focus in Dr. Garry Nolan’s lab at Stanford University in developing a diagnostic for juvenile myelomonocytic leukemia and on analysis methods for single cell assays. Thus they take an interdisciplinary approach to address biological and clinical problems to help companies bring together their laboratory bench work and informatics needs. Cytobank is taking this beyond flow cytometry to mass cytometry, for identifying biomarkers, useful in personalized medicine, said Kotecha.

Pradeep Fernandes, co-founder and President of Cellworks Group, was most recently VP and GM of Synthesis Solutions at Cadence Design Systems, following its very successful $120M acquisition of Get2Chip in 2003.  Currently, a great deal of data is being generated.  Software is a tool that can be leveraged to manage and visualize large data, extract trends, generate insightful data and eventually predict information from large data sets, said Fernandes.  CellWorks takes in vivo and in vitro data and clinical trends and tries to build dynamic models that simulate disease phenotypes in computers and can be used to perform mechanistic studies.  This information is used to predict effects of new therapy and gain new biological insights regarding toxicity and biological efficacy of drugs.  CellWorks has an internal pipeline of therapies and is in collaboration with Astra Zeneca, Genentech and other companies interested in driving selection of therapies.

Speed Pitch, Accent on Youth, Speed Networking

In Speed Pitch, early stage life sciences companies were given the stage for a quick 5-minute pitch about their idea, technology, or company. The companies presented to the entire audience and obtained quick feedback from the distinguished VC panel and gained exposure to showcase to various potential collaborators, partners, and investors. Selected presentations are highlighted on the EPPIC website and other promotional material.

The Youth Panel was An Eppic Annual Conference First. This panel gave an opportunity to budding high school and college age scientists to showcase their outstanding research and later ask questions of each other’s research and future goals etc. The purpose of this panel was to inspire excellence among young people but these exceptionally bright, charming youngsters inspired the audience and left everyone spell bound.

Finally the Speed Networking event gave an opportunity to meet conference attendees in quick three-minute introduction and card exchange rounds.

This was a great conference that provided wonderful networking opportunity and was followed by more relaxed networking and wine reception.