J.P. Morgan event in focus amid biotech M&A, obesity frenzy

The recent momentum in biotech deal-making, the rising interest in weight-loss drugs, and the popularity of artificial intelligence have all added significance to this year’s J.P. Morgan Healthcare Conference, set to kick off on Monday in San Francisco, CA.

The four-day event, one of the premier investment conferences on the healthcare calendar, is expected to attract more than 80,000 attendees, including representatives from leading drugmakers, emerging companies, and large financial firms.

“Things are looking up for the first time in a long time,” healthcare investor and CEO of Loncar Investments, Brad Loncar, told Bloomberg.

According to data from the London Stock Exchange Group, pharma and biotech deal-making bucked a decline in global M&A activity in 2023, rising 38% and 45% in value from the prior year, respectively, despite a slight drop in quantity.

“We’ve had an uptick of M&A recently, we’re seeing stocks rebound with the market recovery and interest rates lowering,” Mike Gaito, JPMorgan’s global head of healthcare investment banking, told Reuters. Gaito will interview JPMorgan CEO Jamie Dimon on the event’s opening day.

A new class of weight-loss drugs called GLP-1 receptor agonists, marketed by Novo Nordisk (NVO) and Eli Lilly (NYSE:LLY), has taken the pharmaceutical industry by storm, with major drugmakers joining the fray through in-house development and deal-making.

Smaller biotech companies such as Viking Therapeutics (VKTX) and Rhythm Pharmaceuticals (RYTM) with weight loss drugs in their pipeline sharply outperformed the broader market in 2023, while Eli Lilly (LLY) and Novo (OTCPK:NONOF) became the world’s most valuable drugmakers.

A new class of cancer therapeutics called antibody-drug conjugates (ADC) also made deal-making headlines recently.

In December, Pfizer (PFE) closed its $42B acquisition of ADC drugmaker Seagen (SGEN), and in October, Merck (NYSE:MRK) inked a $22B deal to obtain global rights for three ADCs from Japanese pharma Daiichi Sankyo (OTCPK:DSNKY) (OTCPK:DSKYF). AbbVie’s (NYSE:ABBV) ~$10B acquisition of ADC maker ImmunoGen (IMGN) is expected to close in mid-2024.

Commenting on healthcare technology and distribution, J.P. Morgan analysts led by Anne Samuel said AI will also be a key theme at this year’s event.

Even AI-driven biotechs, including Schrodinger (SDGR), Recursion Pharma (RXRX), and Absci (ABSI), have also made record gains in 2023 amid investments from the likes of Nvidia (NVDA).

According to Morgan Stanley, budgetary allocation to AI and machine learning is expected to hit ~11% in the healthcare sector this year, up from ~6% in 2022.

Major drugmakers scheduled for presentations at the JPM event include Amgen(AMGN), BioMarin Pharmaceutical (BMRN), Eli Lilly (LLY), Sarepta Therapeutics (SRPT), AbbVie (ABBV), Teva (TEVA), Bristol Myers (NYSE:BMY), Viatris (VTRS), Zoetis (ZTS), Organon (OGN), Moderna (MRNA), Elanco (ELAN), Vertex Pharma (VRTX), Regeneron (REGN), Baxter International (BAX) and Johnson & Johnson (JNJ)

Notable health equipment makers to present include Dexcom (DXCM), Zimmer Biomet (ZBH), GE HealthCare (GEHC) and Baxter International (BAX)

Other healthcare companies scheduled for presentations include Agilent (A), Thermo Fisher Scientific (TMO), Exelixis (EXEL), LabCorp (LH), Walgreens (WBA), Centene (CNC), CVS Health (CVS), Cigna (CI) and Molina (MOLN)