JP Morgan Healthcare Conference – The #JPM12 Edition

Lacerta Bio has returned to cold, windy New York following a solid week in sunny, warm San Francisco. We blogged about last year’s JP Morgan Healthcare conference here . For commentary on what happened inside the Westin, check out posts by Adam Feuerstein , Bruce Booth , and others .

Our top highlights were as follows:

Badges? What Badges? – Many of us were surprised on Monday morning when hotel security did not allowing the un-badged to enter the Westin. This took many of us by surprise, as the traditional “Under the Clock” meetings now had to be quickly rescheduled or moved to other locations. Fortunately, everyone we encountered was very understanding and willing to meet at the Drake, the Hilton, and even Union Park.

In hindsight, the policy makes some sense. Limiting entry into the hotel means more room for guests and attendees, and minimizes the chance of protestors getting camera time. But did JPM12 lose some its value, given this policy? We don’t think so, but only because the weather was so cooperative. Had the weather been poor, we think many folks would not have ventured outside as often, thereby limiting these impromptu meetings. Our badgelessness forced us to conduct our meetings in various locations, from the Mark Hopkins on Nob Hill, down to the Four Seasons on Market. All this travel helped us bump into old friends and colleagues, which was great. It will be interesting to see if JPM13 has this same policy as JPM12.

Other Conferences – There were two other biotech conferences taking place simultaneously, and are described here and here . Our impression was that these were also well-attended, judging by the foot traffic at the Wyndham and the Drake.

Mood – As we have discussed before , the JP Morgan healthcare conference in January is a positive, optimistic time. This year was no different in that economists are projecting the US economy to grow 2.5% in 2012 . However, our discussions with executives from smaller biotech and pharmaceutical companies suggested that 2012 won’t be that different than 2011. Cash will remain tight except for the truly innovative companies (preferably those with Phase II data). Unemployment and underemployment means fewer patients are insured, thereby driving more generic use. The situation in Europe is also a concern, as some companies with European operations are struggling to make sense of the situation and adjust accordingly. Also, with this being an election year, healthcare reform (or the lack thereof) provided an additional source of uncertainty. So there are many factors that are driving this overall uncertainty. As one CEO put it to us, “We don’t know what will happen this year. So we’re going to do our best to hold on and hope things get better in ’13.”

Opportunities – At the JP Morgan Healthcare conference in 2011, we ran across a few individuals, new companies, and VC/PE groups who were searching for on-market products to in-license or acquire. This year, the number of companies and individuals looking for these types of products seemed to increase substantially over last year. We have no statistical proof of this; it is simply our impression. However, companies with on-market products generating $25 million or less will find a market of interested parties willing to acquire or license these assets, especially if they are in niche therapeutic areas. Lacerta Bio is actively involved in a few of these opportunities, and 2012 may provide even more of these for smart companies looking to pick up solid revenue-generating, under-the-radar assets.

505(b)(2) Market – Reformulations of old drugs are frequently derided as not being terribly innovative. We think this is partially true. However, there are a number of very successful products that are based on old drugs being delivered in novel ways. Interestingly, we met with CEOs from small European companies who were actively looking for US partners for their products because there is a semblance of a market here in the US. There is no question that reimbursement will be a challenge for some of these products. However, for the right product in the right niche. a small company can do very well with 505(b)(2) opportunities in the US, especially in areas such as Pain Management, Pediatric Compliance, and alternatives to parenteral delivery.

Little Guys – If you read the press surrounding the JP Morgan healthcare conference, it will be dominated by the multinational biotech and pharmaceutical companies, and for good reason. After all, JP Morgan Healthcare is first and foremost an investor conference. However, there are a number of small biotech and pharmaceutical companies who are never discussed in the media, who are not risk-takers in the NCE discovery & development sense, yet are profitable year over year. Some of these companies are very focused on a particular therapeutic area (i.e., pediatrics, Women’s Health), in a particular region of the US, or some combination of both. We never read about them, since they are not listed on any stock exchange. Yet they provide valuable products to their patients, they provide employment to their parts of the country, and they have the capital to execute small transactions (like those suggested earlier). We met a few executives from these types of companies (usually with major big pharma experience). We’re big fans of these types of companies, and we hope more of them are formed.

Summary – What will 2012 mean for biotech and pharmaceutical companies? We can’t say. With all the uncertainties surrounding Europe, healthcare reform, etc., companies will likely continue their conservative, cautious approach carried onward fro 2011. There will be some failures, perhaps some spectacularly ones. We think many of the successes in 2012 will come from some of these small, profitable pharmaceutical companies we mentioned earlier. They won’t be discussed in the media, not even on Twitter. However, their lack of noise will not detract from their ability to profitably help physicians help their patients.

Ultimately, isn’t that what we’re all supposed to be doing?