May the candle burn forever: Polite reminders about the JPMorgan confab
Editor’s Note: Biotech Voices is a contributed column from select Endpoints News readers. Below is an anonymous commentary from a public biotech CEO who was inspired to write a defense of JPMorgan following a litany of complaints.
Every year we start the biotech calendar with a busy January pilgrimage where JPMorgan hosts a widely attended get together that attracts big and small to the San Francisco Union Square neighborhood. Despite the perennial success of this event, it is interesting to hear recent complaints from multiple voices, suggesting diminishing returns and waning enthusiasm for future participation. While all of these complaints may be valid, let’s not go overboard and forget why this event is a key landmark.
On behalf of the many beneficiaries of the JPMorgan confab, I would like to provide respectful and polite reminders regarding the unparalleled value of this meeting. I have been coming to JPMorgan for approximately 20 years, no specific financial connection with JPMorgan itself, but I like many others hope and pray that our industry’s candle burns brightly, and that the January momentum created by JPMorgan’s confab is perennial.
Reminder #1: The core purpose is public biopharma company guidance. The heart of this event, located on the mezzanine floor of the Westin St. Francis, is the need for each public company to establish guidance for what they seek to achieve during the calendar year. An astonishingly high number of well-qualified public market investors come to presentations, have 1-on-1 scheduled meetings with companies and exchange ideas inside the hallways of the Westin throughout the week. The quality and quantity of influential investors at JPMorgan allows large pharma, and fledgling public biotechs, to reach a wide audience in person on a single trip. This is why the event exists and is highly respected.
Reminder #2: Gets the buzz going. An enormous, perhaps unrealized, benefit of JPMorgan is how it tends to ignite industry momentum each year. We should all remember that we are in a highly risky business with more frequent failures than successes, and it would be easy for us to become dour on the challenges of drug development. The intentional hold-back of good news by many companies until JPMorgan creates a spring-load effect that likely drives investment and risk capital cycles through the rest of the year. The event materializes themes regarding how pharma is likely to behave, how the markets are likely to play and what technology waves are going to be anticipated for the rest of the year. Without this, we would likely grapple for positive news, or even direction, for months in the new year.
Reminder #3: The bystander effect. Many, many biotech companies have been launched, financed, bought and partnered during this week without holding an actual invite to JPMorgan itself. A bystander effect is created because every major pharma hosts meetings outside of the core meeting, providing a target rich environment for emerging companies to sell their wares. Even if these meetings are short, and merely introductory in nature, they provide an avenue for pharma money to meet biotech assets. Allows pharma to triage who they want to license or buy for their strategic therapeutic area needs during the coming year. This is worth gold for every emerging biotech company that wants to contemplate a partnership to further their business. While perhaps not as large as some other partnering-only focused events, the bystander effect of JPMorgan is a life-line for key parts of the industry.
Reminder #4: The demand-and-supply pendulum. The cost of attending JPMorgan, or being a bystander, has increased remarkably over the years. The industry is gathering momentum, hiring more people, deploying more capital and therefore it is no surprise that people are willing to spend more to attend the biopharma superbowl. We are at a tipping point where people are disgusted, but this will not lead to a dramatic pull back but more of a gradual recalibration. Depending on business models, some companies appropriately will not find the cost to be worthwhile and will hence make decisions accordingly next year, which will bring the pendulum back to a point where San Francisco hotels and restaurants will adjust prices closer to normal levels. For most of us, the cost is definitely worthwhile.
Reminder #5: Thank you JPMorgan analysts. If anyone has the right to complain, it’s the JPMorgan analyst team that is responsible for covering >200 presenting companies at this conference. It is their work that attracts public companies and investors to attend. I cannot imagine the hours they (Chris, Cory, Anupam, Jessica, Eric and others) must put in to prepare for company guidance and then write reports on each company post-presentation. Every public company CEO appreciates your effort.
I wrote this anonymously in order to avoid distraction from my official company narrative, but I represent a contingent of biopharma CEOs that are thankful for what our industry has become and the role that the JPMorgan conference has played over the years. May the candle burn forever.
Image: Westin St. Francis hotel SHEHLA SHAKOOR for ENDPOINTS NEWS