JPM: A sunny tone despite rain
Investors and executives alike are feeling more optimistic about the deal and financing environment at the 35th annual J.P. Morgan conference in San Francisco, despite the steady stream of bad weather that has plagued the city.
Although some executives speculate that the bad weather has limited the opportunity for chance meetings. "One of the advantages of J.P. Morgan is that in the after hours receptions you have all of these folks that you don't normally see, because at typical banking conferences you have a limited number of slots," said Curis CFO Jim Dentzer during a round table hosted by BioPharma Dive and Russo Partners. "But at the after hours thing you get to see lots of people."
"Serendipity," added SymicBio CEO Ken Horne, who said the conference is not the place companies come to get deals done, instead its where the seed is planted for future meetings and potential deals.
"Deals do get done," he admits, "but most of those have been in the works for months."
Biotech executives across the panel breathed a sigh of relief about the acquisition of Ariad Pharmaceuticals by Japan's Takeda that was announced at the start of the conference. While several smaller deals have been unveiled since, Takeda's $5.2 billion buyout is hands down the largest. The deal, arguably, set a positive tone for the meeting and potentially all of 2017.
"It's not 2016," Sutro Biopharma CEO Bill Newell said. "A year ago you would not hear as much enthusiasm from people doing a similar round table. We just had a bad initial week of the year [in 2016], from a biotech investment standpoint, and people were starting to wonder whether the run from 2014 and 2015 was about to peter out. There was a lot of concern about capital and where we were going to get it."
2016 was anything but a landmark year for deals in the biotech and pharma universe. According to a report released by Mergermarket on Jan. 10, the sector conducted 1,439 deals (including medical) during the year, but total deal values fell by 27.8% to $283.4 billion from 2015's record breaking level of $392.4 billion.
"I don't sense even a memory of what it was like last year at J.P. Morgan from the people I'm dealing with and talking to," admits Newell. "It's like night and day."
Panelists agreed that the uncertainty last year of going into an election year also dampened the mood for M&A in 2016. While that sentiment still lingers as questions abound about the direction the new administration is going to take, there is a sense that things are moving forward for the industry.
"J.P. Morgan sets the tone for deal making, always, for at least the next three to six months," added Dentzer. "It’s just more positive. Whether or not that is sustainable, we will have to wait and see."
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