JPM25: Deals, Summit’s bravado and gene therapy headwinds

Every January, the Westin St. Francis in San Francisco is, for a few days, the center of the universe for the healthcare industry. It’s the site of the J.P. Morgan Healthcare Conference, where hundreds of companies pitch investors, negotiate deals and plan for the year ahead.

The convergence of thousands of executives in one location makes the meeting a good barometer for the industry’s mood. But in the wake of the recent killing of United Healthcare CEO Brian Thompson, this year’s conference began with a dose of tension — and extra security.

While J.P. Morgan declined to comment, a person familiar with the situation confirmed an increased presence of both J.P. Morgan and Westin St. Francis security personnel, as well as dedicated San Francisco Police Department officers in nearby areas. Bicycle barricades were set up on Geary and Powell Streets to control entry and exit.

The added security was visible beginning Sunday. SFPD officers manned the entrances and patrolled the hotel halls. Another group in blue-and-black jackets emblazoned with the words “safety team” lapped the block around the Westin.

There were other signs of caution, too. The final conference agenda doesn’t include presentations from some of the country’s top healthcare companies, such as Cigna and CVS, that have been previously appeared at the JPM meeting in past years.

M&A hopes

Dealmaking drives investment in biotechnology, and that’s one reason why the industry has recently been in a slump. The number of big-ticket acquisitions of public biotechs dropped off last year, dragging down stock prices and frustrating shareholders to the point that, just a few days ago, analyst Paul Matteis of the investment bank Stifel wrote, “expectations for meaningful M&A are about as low as we can remember.”

While the meeting is seen as a dealmaking forum, it hasn’t delivered many M&A fireworks in the past few years beyond a handful of bolt-on transactions.

Yet there was excitement Monday. Johnson & Johnson announced the largest public biotech buyout in over a year, agreeing to buy schizophrenia drug developer Intra-Cellular Therapies for nearly $15 billion. The deal is even more notable after there were no biotech deals worth more than $5 billion in 2024 — the first time that’s occurred in at least six years.

Two deals involving privately held companies were revealed as well, continuing a trend of pharma companies looking further afield for bargains.

Such smaller deals may continue to be the order of the day. “Intra-Cellular has been an important demonstration of what we do,” J&J CEO Joaquin Duato told investors at a presentation Monday. “But I also have to explain to everybody that these deals don’t happen every day and, as a matter of fact, larger deals are more outliers.”

A major biotech stock index ticked down Monday, suggesting it will take more M&A to encourage investors.

Nonetheless, Wall Street analysts are already expecting a rally. The J&J deal should “catalyz[e] more interest in the broader sector,” wrote RBC Capital Markets analyst Brian Abrahams. — Ben Fidler

Summit’s ‘black swan’ event

A few years ago Summit Therapeutics scoured the globe for a cornerstone asset. Executives examined some 140 medicines before zeroing in on a cancer therapy discovered by Akeso, a China-based drug developer.

The resulting deal in December 2022 was met with little fanfare and even criticized by investors at the time. “This is boring,” Dave Gancarz, Summit’s chief business and strategy officer, remembers being told. The drug, ivonescimab, was aimed at a “boring set of targets” — PD-1 and VEGF — that existing medicines already addressed, he recalled hearing.

Summit was convinced ivonescimab had more to offer. Its belief was validated last year, when the drug outperformed Merck & Co.’s Keytruda, the industry’s dominant cancer immunotherapy, in a clinical trial.

Practically overnight, Summit’s results made drugs like ivonescimab the next big thing in oncology. Summit is now the leader in a fast-moving race that already involves several competitors — among them Merck, formerly a critic of the approach.

“This really was a ‘black swan’ event,” said Summit Chief Medical Officer Allan Yang. “It’s clearly what everyone’s been looking for.”