It used to be that healthcare companies released news at the J.P. Morgan Healthcare Conference. In the last few years, the Friday before the conference became a news dump.
Now, the whole week before the conference has become a news extravaganza. The conference is starting later in January than it usually does, which has probably also added to the spreading of the pre-JMP news cycle.
Here are the stories healthcare investors should know as the conference kicks off on Monday.
Preliminary fourth-quarter revenue
Celgene’s bean counters were famous for burning the midnight oil in early January to release preliminary fourth-quarter earnings so management could talk about the results at JPM. More and more companies have followed the big biotech’s lead — even if Celgene is no longer with us and its acquirer, Bristol-Myers Squibb, didn’t carry on the tradition. (The big pharma has more moving parts than Celgene, so we’ll give its accounting department a pass.)
Here’s a sprinkling of the companies that released preliminary results this week:
- Amarin (NASDAQ:AMRN) reported 2019 Vascepa sales of $410 million to $425 million, up about 85% year over year. The biotech is guiding for sales in the $650 million to $700 million range this year, thanks to an expanded approval to treat patients with moderately high triglyceride levels.
- Clovis Oncology (NASDAQ:CLVS) reported slowing growth in sales of its cancer drug Rubraca, but there’s potential for sales to reaccelerate with launches in Europe and a likely approval in prostate cancer later this year.
- Intuitive Surgical (NASDAQ:ISRG) saw sales jump 22% year over year in the fourth quarter as the robotic-surgery company increased sales of instruments and accessories used on its da Vinci Surgical Systems by 24%.
Image source: Getty Images.
Buyouts
While we didn’t have any news as big as last-year’s Celgene buyout, there were a few smaller acquisitions this year that should keep investors hopeful that their favorite company could be next.
- The good news: Eli Lilly (NYSE:LLY) announced plans on Friday to acquire dermatology expert Dermira (NASDAQ:DERM) for $1.1 billion. The bad news: Dermia was already up 21% this year after more than doubling in 2019, so the premium was only 2.2% higher than Thursday’s closing price. Investors seem to think Dermia can do better: Shares of the company closed at $19.16 on Friday, higher than the $18.75 per share Eli Lilly agreed to pay.
- Sorrento Therapeutics (NASDAQ:SRNE) didn’t need big pharma to step in — and it got a bigger premium — as the company received an unsolicited, non-binding buyout offer from an undisclosed private equity firm for $7 per share, more than double the previous closing price. Investors weren’t quite sure what to make of the offer, and Sorrento closed Friday at $4.76, well short of the full potential offer price.
- In the too-small-to-be-material category, Medtronic (NYSE:MDT) announced the acquisition of privately held Stimgenics, which is focused on spinal cord stimulation to alleviate pain, for an undisclosed sum.
Deals
While buyouts can offer a quick payout for investors, deals with larger companies can help them get to the next inflection point while remaining (mostly) independent. Quite a few duos announced pre-JPM deals:
- Kaleido Biosciences (NASDAQ:KLDO) hooked up with Johnson & Johnson (NYSE:JNJ) to use Kaleido’s microbiome screening platform to discover treatments for childhood allergies and other related diseases.
- Sanofi (NASDAQ:SNY) entered into a research collaboration with privately held Nurix Therapeutics to use Nurix’s DNA-encoded libraries and portfolio of E3 ligases to develop drugs against five undisclosed targets. Sanofi is paying $55 million upfront and is on the hook for $2.5 billion in potential payments based on the successful completion of certain research, preclinical, clinical, regulatory, and sales milestones.
- In another discovery deal, Roche Holdings (OTC:RHHBY) elicited the help of privately held Amunix Pharmaceuticals to discover and develop non-oncology therapeutics against certain undisclosed targets. Roche will pay $40 million upfront, and Amunix is eligible for $1.5 billion in developmental and sales milestones, plus royalties on sales of commercialized products.
More to come
While more and more companies are releasing news ahead of JPM, investors should expect a smattering of news items at the conference in the week to come. And of course, JPM will also serve as a meeting place for companies to initiate deals that will occur later this year.
Blackstone Group (NYSE:BX) will likely be interested in talking to companies looking for buyouts. The private equity company has raised $3.4 billion of its $4.6 billion goal for a fund dedicated to investments in the life sciences sector.
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