Afterwork: Seen & Heard, Last Week, at JP Morgan’s Annual Healthcare Conference 2023

Rising interest rates have triggered a fall in market valuation, and an indirect brutal loss in appetite from VC and traditional life science investors. Many Healthtechs, both public and private, are currently struggling to raise funds. The JP Morgan Health Care conference held on the week of the 9th of January, and numerous other meetings that took place around it, offered invaluable moments to take the pulse of the sector.

Here are a few questions we asked our speakers, who were back from San Francisco :

• How do financial investors evaluate the current situation : cycle-management or bubble burst ?
• How are big pharma sailing this troubles waters : conservative or opportunist ?
• I/O, gene & cell therapies… are there new keywords and new players in the game ?
• Give me one (or many) reasons to be (very) optimistic for the future ?

For those who missed this in-person event, we have highlighted here some invaluable quotes from our speakers.

“In the current conjuncture, funds are cautious : they don’t want to pay too much when valuations are falling and they have to keep reserves to support the companies of their portfolio. Meanwhile, they have a lot money sleeping and they can’t wait too long before they deploy it, because they need to show their LP’s that investments are being made, and prepare for the next rounds.”

“The Inflation Reduction Act (IRA) is of great concern to many investors. Some think, this reform could jeopardize the wide-spread strategy of first developing a new drug in a rare disease and then extending its potential to broader indications. Combined with the patent cliff, IRA could discourage big pharma from doing many early-stage deals.”

 — Emmanuelle Déponge, L’allianSe

“Pharmaceutical companies will lose approximately $180 billion of revenues from sales of therapeutic drugs in the next five years due to the patent expiration of these drugs. Due to this impending patent cliff, big pharma, who ended 2022 with as much as $500 billion in cash, have little choice but to replenish their pipelines and to acquire new drugs through in-licensing or M&A deals. 

Today, investors are cautious and less active because of the economic uncertainty. But as the economic growth rebound – expected by Q1 2024 from majority of economists – investors are preparing to return to the market in the second half of 2023. On the deal front, while competition between pharmaceutical companies are increasing, creative deal structures like CVRs (Contingent Value Rights) are often used for deals with public biotechs when valuations are far apart between the buyers and sellers.”

— Pierre Courteille, Abivax

“Very attractive during the covid period, the life sciences sector has been losing financing support for several months. Many generalist investors are withdrawing from listed companies; there are fewer American in European private equity rounds. In both public and private spaces, Chinese investors are missing… and there are no Indian investors yet to replace them. Theoretically, we can hope for a rebound this year, especially as the valuations of many healthtech companies are becoming attractive. But there is still a lot of uncertainty and a trend towards de-globalization, the full consequences of which are still difficult to gauge.”

— Samuel Levy, Lauxera Partners

“Despite a cautious economic climate, there was a feeling of optimism and satisfaction because people were finally getting together after two years of travel restriction. In our therapeutic area, metabolism, the strong and fast success of anti-obesity drugs is game-changing. Their commercial potential is huge and the safety profile of those products (GLP-1 agonist) is known since they have already been prescribed for more than ten years for diabetes. These successes demonstrate that there is a life outside oncology. It could end in overturning hierarchies in the pharmaceutical industry.”

Lilly and Novo are already ranked 2nd and 3rd most valuable Pharma companies with market cap above $300B, J&J the 1st likely for its success against COVID. The obesity market is a blue ocean for maybe a decade as cardiometabolic field begins to attract big names like Amgen, BI, AZ… and a new cohort of innovative biotech companies.”

— Olivier Soula, Adocia

“Our business – at the crossroads of digital, artificial intelligence and medicine – carries lots of promises. A couple of emblematic start-up have paved the way, such as Owkin, which have raised a lot of money and signed some very nice deals with big pharma. Today, we are of great interest to investment funds and industrialists alike. This has not prevented us though from feeling downward pressure on valuations in recent months, in our negotiations with investors.”

— Yann Gaston-Mathé, Iktos