ICR Consilium Conscience
JP Morgan outlook for 2024: sunshine reflects cautious optimism for healthier markets
BY TRACY CHEUNG, PARTNER AT ICR CONSILIUM
Are clear blue skies over San Francisco – infamous for its fog – a good or a bad omen?
Meteorological speculation at the JP Morgan Healthcare Conference is almost as popular a pastime as industry gossip. Sunshine on the first day set the tone this year, however, and even the arrival of rain later in the week did nothing to squelch the mood of cautious optimism.
JP Morgan is always seen as a curtain-raiser for the performance of the healthcare sector for the coming year. After a relentlessly tough 2023, with financing difficult and some companies sadly closing their doors, attendees were keenly reading the runes. And it turns out that there may be something more to this than pure superstition according to data from TD Cowen, which has found evidence that positivity at JP Morgan bodes well for the year to come.
Analysts at TD Cowen looked at JPM trading data since 2000 and found that in 14 out of the 18 years in which biotech traded up during the conference, the sector had a positive full-year return. So a good JPM has led to a good year 78% of the time. At the other end, in the six years biotech traded down during JPM, it finished the year in the red four times.
The conference is usually notable for big ticket M&A, with Big Pharma sending out signals about the therapeutic themes for the year. This year’s announced deals weren’t as eye-catching in financial terms as at previous conferences. But they were interesting because of what they told us about what’s got decision makers fired up.
Take Novartis: the Swiss pharma giant was involved in a flurry of dealmaking during JP Morgan week, all focused on smaller-sized but interesting transactions. These included acquisition of Calypso Biotech, a Netherlands-based antibody company, and R&D agreements with Shanghai-based biotech Argo. This followed the acquisition of SanReno Therapeutics, a kidney disease developer, earlier in the month. Novartis also signed a billion dollar-plus collaboration agreement with Isomorphic Labs, an Alphabet-owned AI company specialising in protein-folding, the largest and most visible example of an AI/discovery collaboration to date.
AI and its impact on drug discovery and development was a huge topic of discussion, something demonstrated by the wall-to-wall attendance at a talk on AI given by the NVIDIA CEO, Jensen Huang, at the San Francisco Mint. Meanwhile the Antibody-Drug-Conjugate (ADC) space continues on its hot streak, with no immediate sign of letting up.
Advanced therapies made some extraordinary breakthroughs in 2023 including approval of the world’s first gene edited therapy, but the sector has had funding challenges. Peter Marks, Director of Center of Biologics evaluation and research at the Food and Drug Administration, gave a speech to the Alliance for Regenerative Medicine’s state of the industry event, emphasising the FDA’s support for cell and gene therapies, especially in rare diseases. He also tamped down anxiety around T-cell therapy, following recent safety concerns around CAR-T, which had rattled some nerves in the community.
Delegates observed that private companies seeking finance are asking for larger numbers than in recent years, with many companies seeking $100m plus from financing rounds – it is unclear whether this is due to the rising cost of drug development or the ambitions of companies increasing significantly, but in a tight funding market, the confidence was striking – and in line with the generally optimistic mood.
Perhaps the most obvious bellwether of activity is positive: there are seven or eight US IPOs waiting to launch – some of which have already broken cover in the days post JP Morgan. CG Oncology last week raised $380 million in its debut on Nasdaq, while ArriVent Biopharma, raised $175 million, both companies significantly exceeding expectations. Other hotly anticipated launches include preclinical gene-editing company Metagenomi, obesity gene therapy maker Fractyl Health and mid-stage autoimmune CAR-T maker Kyverna Therapeutics.
The performance of these companies post launch will be the real litmus test, and we await this with excitement. For now, however, the vital signs are good and healthcare is taking some Californian sunshine with it.