JP Morgan | Take home messages

Key M&As set a positive tone for JPM 2019, as the sector shrugged off US stock market setbacks at the end of 2018. First out of the blocks were GSK taking Tesaro in a £3.8bn deal (announced before the conference) and since ringing in the new year we’ve seen Takeda complete their acquisition of Shire, Bristol-Myers Squibb acquire Celgene in a record breaking £70bn deal and Eli Lilly purchase Loxo Oncology for £6.24bn. These large pharma deals show desire for a strategic pipeline and prove the inherent value of biotech as a driver of innovation. More than half of new drugs registered in the coming years are expected to be made by small companies which large players may then look to add to their portfolio. The outlook for M&As looks strong and venture are keen to put money to work knowing there are valuable exits available.

The changing approach of two key UK companies is worthy of close attention. With the GSK consumer deal with Pfizer done at the end of last year, the new focus is on building the pharma business pipeline through 2019, with R+D chief Hal Baron and his team focused on innovation deals. Although not a big presence at JP Morgan, Astra Zeneca also announced changes to their corporate structure with a new oncology focus. At the same time Bahaja Jallal left Astra Zeneca to head up BIA member Immunocore, and Mark Mellon left to run Ironwood.

Cell and gene therapy, sometimes badged more broadly as regenerative medicine, remained a very hot topic. The UK’s having story of having built an ecosystem to industrialise the opportunity played well in San Francisco. With UK Unicorn’s like Orchard giving compelling presentations of the impact of gene therapy and the NHS Chairman Lord Prior able to explain how the NHS is training clinicians and reimbursing CAR-T therapies, the UK had a receptive audience from key US investors and companies looking to develop the latest therapies. It was interesting to see that ex-Juno executives have launched an $800 million start-up focused on the challenges of manufacturing cell therapies called Sana. This is a complex problem that UK companies like BIA member Oxford Biomedica have been working on with great success for years.

What struck me was how concerned the sector was by the US government shutdown. The most visible element of this was the no (physical) show at the conference by FDA Commissioner Scott Gotlieb. With the FDA unable to accept new submissions and a large percentage of its staff not getting paid, a prolonged shutdown will both slow and affect the timings of drug approvals. A similar problem emerges for companies wanting to IPO on US exchanges, where the shutdown of the Securities regulator is impacting roadshows and compliance issues.   

Chinese biotech was much in evidence at JPM and it was good to see many UK companies engaging with counterparts there. This is particularly important as funding European and UK companies from China is not affected by increased regulatory burdens that President Trump’s SFIUS plans have imposed on foreign investment in US biotech.