As head of business development for Westwicke Partners, I always look forward to a jam-packed, action-filled week of conversations. This year did not disappoint.
With almost 50 meetings scheduled, I had the pleasure of meeting with many compelling private and public healthcare companies. And there was no shortage of innovation, grit, and creativity this year. I found many management teams determined to advance their science, technology, and businesses in 2018.
The capital markets mindset and backdrop was a big component to many, if not all, of my conversations. In addition, most healthcare companies, private and public, were constantly thinking about their next financing.
Coming out of the J.P. Morgan conference, I am extremely optimistic that companies with defensive business models, interesting technology, and reasonable valuation expectations will have success attracting both private and public capital. After spending seven years in this role, I am very upbeat that 2018 will be a great year to attract capital to help fund creative healthcare companies to help them grow and deliver on their business plans.
I asked my team to offer their insight on what stuck with them most, and whether they had guidance for companies attending future conferences. Here’s what they had to say.
AI and Tax Reform Controlled the Conversation
Artificial intelligence is taking over the world, or at least healthcare. All the cool, hip companies highlighted at least one aspect of their business driven by AI. However, investors are skeptical. They believe it’s great in theory but wonder whether AI will accelerate growth or how companies anticipate monetizing it.
Another big question was what companies are going to do with all of their tax reform money. With the recently signed tax reform bill lowering corporate tax rates, investors wanted to gauge the benefit and sought to learn what companies think their corporate tax rate will be in 2018, how much money they can repatriate, and how they intend to spend the extra cash.
— Asher Dewhurst, Principal
Key Performance Indicators Are Aligning
Overall, there was a positive sense from companies and investors that 2018 is shaping up to be a good year for healthcare. There are a number of key factors lining up that are necessary to drive healthcare market performance. First up are the amazing innovations being made in biotechnology ranging from new targeted mechanisms to the advancement of gene-therapies and editing technologies that could transform the treatment of disease. Second, the FDA is remaining accommodative. Specifically, 46 novel drugs were approved in 2017 versus just 22 in 2016. This is the highest approval number of the last 10 years. Third, the repatriation of cash and the already cash-rich large-cap companies should begin to get more active on the M&A front. Already, we are seeing this with the recently announced $9 billion deal for Juno Therapeutics and the $1 billion deal for Impact Biomedicines both being acquired by Celgene as they look to rebuild its pipeline. The last factor is the re-emergence of interest in biotech and healthcare by the generalist investors, which means money flow into healthcare companies should remain strong. With all these factors aligning, we have confidence that the first part of 2018 should bode well for investors.
— Chris Brinzey, Managing Director
IPO Outlooks Are Improving
In the world of medical technology, IPO optimism is aplenty coming after a rather dismal 2017 IPO market. Valuations of public med tech companies are strong, but companies with good revenue profiles and a clear path to profitability are being lined up for the public markets. Westwicke thinks that device companies should have a run rate of $40+M in revenues in order to expect success going the IPO route.
— Caroline Corner, Managing Director
Optimism Reigns in Biotech
Despite a bit of intermittent light rain, it did not dampen the mood at the J.P. Morgan conference, which remained buoyant and optimistic for 2018. Tax reform and its potential to drive M&A, an accommodative regulatory outlook, and the apparent willingness of investors to line up and commit funds to companies with the strongest development pipelines and product value to offer patients with unmet medical needs are some of the pillars that support an optimistic viewpoint. Issuers share that optimism as evidenced by a long queue of biotechs prepping to close out crossover rounds, flip their S-1 public, embark on the IPO track, or raise capital through follow on rounds. The absence of notable negative pre-announcements in the sector also helped the mood. If 2018 turns out to be only half as good as the early optimism indicates, it will be a solid performance.
— Robert Uhl, Managing Director
Biotech M&A on the Horizon
There are high expectations for biotech M&A. We heard from bankers, analysts, and companies that the current environment — including recent changes in tax code — has created expectations for significant M&A in the biotech/pharma space. There was also disappointment that there weren’t more announcements in this regard prior to J.P. Morgan. Subsequently, we have seen an uptick that possibly confirms this outlook.
— John Woolford, Managing Director
Guidance for Companies Attending Future Conferences
It goes without saying that your prep for J.P. Morgan should include developing summary messaging on your company’s performance during the fourth quarter. But management teams would also benefit from knowing how competitors performed as well. You may be asked about their preliminary results as well as what may have impacted their businesses and your business differently.
— Mike Piccinino, Managing Director
If you are a presenting company, work with the conference coordinators to make appropriate modifications to your schedule to make it as efficient and impactful as possible. While this may be harder to do for the J.P. Morgan conference given the sheer size, it will likely be well worth the effort. In addition, make sure that the investors paired together for group meetings have a similar knowledge base about the company, and try to schedule your more important or potential shareholders for valuable one-on-one meeting slots. If a buy-side account cancels, ask why. If it’s due to a scheduling conflict, and not because they don’t want to meet with you, you may want to follow-up after the conference. Lastly, make time to meet with companies that are geographically harder to see or ones you typically don’t get much face time with.
— Patti Bank, Managing Director
Here are a few practical tips you won’t see on a J.P. Morgan conference prep checklist:
- Always take an umbrella with you. It’s January and in San Francisco.
- Always wear comfortable shoes – you’re going to be doing a LOT of walking from meeting to meeting.
- Get your flu shot at least a month before. It’s flu season, there are a lot of people, and the last thing you want is to get sick.
- Try and plan something fun each day. It could be a movie or coffee or lunch with a friend, but have something non-work related to look forward to each day.
- If you’re going to give out copies of your pitch/presentation, do so electronically or in a miniature version. No one wants to carry a ton of paper around with them.
- FOLLOW UP. There is no point to attending the J.P. Morgan conference if you don’t follow up with people afterwards.
— Laurence Watts, Principal
I hope you found these insights helpful. If you’re next step is to take your company public, take a look at our insider’s guide. Thinking about your next event? Get in touch if you’d like to talk about how to make the most of your time.