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Jan 15, 2009

The Big Idea for 2009 as Discussed at J.P. Morgan

  • As the conference winds down, the buzz has remained positive despite being buffeted this week by a nasty stock market, negative economic indicators, and the ongoing dreary credit meltdown. Biotech has seen tough times before, but the life science market is now more resilient, buffered by many strong companies, breakthrough technologies, and an M&A theme.

    And according to experts at the keynote luncheons there is a planetary alignment for healthcare reform. The logic may be a little bizarre, but voters are ready because they see $350 billion going into the black holes of AIG and their ilk so at least they get something more tangible from a national healthcare plan.

    The serious cash crunch has created the need for small-cap companies to look for synergies through a partner or merger. IPO activity is unlikely till the Q4, and early-stage venture capital is nonexistent except for angel networks. It will be interesting to see VC funding data from Q4 2008 and Q1 2009, which will show the impact of the credit crisis and losses among endowments and pension plans.

    Many conference rooms were filled beyond capacity, and many companies with new products and deals saw their stocks soar. Here is a short list of interesting companies and their focus:

    Abiomed(ABMD)—Unique blood pump products (e.g., Impella 2.5 device) for failing hearts that are cost effective, reimburseable, and replacement $1 billion market to IABD(intra aortic balloon pump). Revenues are approaching $100 million level with75% penetration to top 50 cardiac hospitals.

    Biogen-Idec(BIIB)—This is a top-tier biotech with revenues in the $4 billion range with treatments for MS (Tysabri and Avonex) and B-cell cancers (Rituxan). It is also a $1 billion R&D budget with extensive product pipeline for oncology, neurology, immunology, and cardiopulmonary.

    Cephalon(CEPH)—This is an emerging top-tier biotech with $2 billion in revenue, which was built largely through licensing and acquisition. Products for CNS include Provagil for wakefulness, Gabitril for seizures; in Cancer Treanda for CLL and NHL as well as Actiq for pain in opiate–tolerant cancer patients. CEPH acquired Ception this month, which has mAb product for treatment of pediatric eosinophilic esophagitis. 30% of Cephalon sales are new products.

    Elan(ELN)—The $1 billion Irish drugmaker put itself up for sale because of cash needs to fund its extensive pipeline and products in Alzheimer disease (AD) and MS. Most of its sales are from Tysabri, partnered with Biogen Idec. The Company has one of the largest clinical development programs for AD therapy.

    Genomic Health (GHDX)—This isan emerging-growth company with revenues exceeding $100 million focused in personalized medicine and genomic-based clinical tests for cancer. The Oncotype DX test is used in early-stage breast cancer to predict likelihood of cancer recurrence and chemotherapy benefit.

    Infinity (INFI)- It is a drug discovery and development company focused in solid tumor cancers utilizing exclusive IP for heat shock protein Hsp90 and the Hedgehog pathway. An impressive four-year plan was presented with financing in place through equity and its largest partner, Purdue.

    Inverness (IMA)—IMA is an emerging-growth $1.5 billion diagnostic company with products for women’s health, infectious disease, cardiology, and oncology. Recent acquisitions have positioned the company in disease management, “engaging the patient” by connecting the physician and tests to the patient. New biomarkers and point-of-care testing platforms are under development. Heavy debt for acquisitions has caused losses but the CEO is forecasting profitability in 2009.

    Volcano (VOLC)—This is an emerging-growth $165 million device company focused in treatment of vascular and structural heart disease through ultrasound (IVUS) and functional measurement (FM). Recently Axsun was acquired for $17 million and has components for optical and laser devices for industrial applications. The IVUS technology has an opportunity in the $2 billion image-guided stent and balloon market.


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