Reflections on the J.P. Morgan Healthcare Conference: Key Themes for 2024

The Fenwick life sciences team recently returned from the 2024 JP Morgan Healthcare conference. As we reflect back on the week, there were several key themes and trends that we expect will continue to resonate and evolve over the upcoming year.

1. Widespread but cautious optimism about industry prospects for 2024.

    While 2023 was a difficult year for the life science industry, the mood at the conference – reflected in conference presentations and discussions throughout the week – was cautiously optimistic. The life sciences financing environment over the past year has been generally slow, with venture capital financing activity down over 50% from the peak levels seen during 2021 and 2022, and IPOs nearly nonexistent. And as multiple observers have noted the venture financing activity that has occurred was skewed toward existing investors, with Series A round financings – a proxy for new company formation – approaching a five year low.

    However, looking behind the headline numbers, there are legitimate reasons to be optimistic about the future. For example, life sciences and healthcare venture capitalists have raised record-setting levels of funding in recent years, and that trend continued during 2023, suggesting that investors have substantial “dry powder” to deploy over the coming years.

    Furthermore, the fourth quarter of 2023 bought multiple positive signals, including:

    • A spate of year-end M&A deals such as the acquisitions of Karuna by Bristol Myers Squibb ($14 billion), ImmunoGen by AbbVie ($10 billion) and Axonics by Boston Scientific Corporation ($3.7 billion).  

      These positive developments have led to a more optimistic mood and hopes for a better 2024, especially for certain sectors seen as highly promising like ADCs, gene editing, metabolic disease and GLP-1 successors. Tempering this optimism are continued concerns based on historically high interest rates, regulatory challenges including the effects of Inflation Reduction Act on the pharmaceutical industry and the uncertainty that always comes with an election year. However, on balance, we share the cautious optimism of conference participants about the life science industry’s prospects for 2024.

      2. Obesity drugs and metabolic health are expected to transform the life sciences and healthcare landscape.

        The conference underscored the importance of obesity drugs, metabolic health and related treatments for the life sciences and healthcare industry. Current treatments based on GLP-1 have already transformed the landscape, propelling companies like Eli Lilly and Novo Nordisk to the forefront of the industry, and it appears we are only at the beginning of a wave of potential transformation.

        Originally developed to treat diabetes, GLP-1 agonists like Mounjaro (Eli Lilly) and Wegovy (Novo Nordisk) have shown significant weight loss effects and are now being used for obesity treatment as well. J.P. Morgan Research predicts that the GLP-1 market will grow exponentially and surpass $100 billion by 2030, with equal contributions from diabetes and obesity usage. In the United States, it is estimated that there will be around 30 million GLP-1 users by 2030, corresponding to approximately 9% of the U.S. population.

        The success of GLP-1s has spurred a massive influx of investment and a race to develop new and next generation drugs, with over 50 oral GLP-1s alone under development. Combination therapy is expected to become a dominant approach in the future, and companies are aggressively exploring the benefits of GLP-1s and related drugs beyond weight loss and diabetes, for example in indications such as in cardiovascular health, MASH (formerly known as NASH) and kidney disease, and even in early Alzheimer’s.

        Payment structure and reimbursement for obesity drugs is still uncertain, with pharma companies continue to explore direct-to-consumer and cash pay models, and the impact of obesity drugs on the health insurance market and health care decisions will continue to evolve over the coming years. However, it was clear before the conference, and is even clearer now, that these drugs will play a central role in the life sciences and healthcare industries in 2024 and well beyond.

        3. Artificial intelligence has tremendous potential to improve healthcare and drug development, but the true “killer applications” have yet to emerge.

          Over the past year, generative artificial intelligence (AI) has moved from a little-understood area of computer science research to a mainstream topic of discussion, and there is a growing consensus that AI is poised to transform industries across the spectrum, from manufacturing to technology to healthcare. So, it is perhaps unsurprising that AI was a major topic of discussion throughout the J.P. Morgan Healthcare conference and featured in seemingly every presentation.

          The use of AI enables the analysis of large amounts of datasets from multiple sources and offers the potential to accelerate the drug discovery process (e.g., by he the effectiveness or toxicity of drug candidates), improve the accuracy of medical devices (“Why Medtronic Is Bullish on the AI Opportunity in Medtech”), tailor treatments to the needs of individual patients, or more in general improve healthcare and its outcomes (“Google AI has better bedside manner than human doctors — and makes better diagnoses”, “Mayo Clinic engages Cerebras to deliver potent computing power, scale AI transformation”).

          As a result, there have been several announcements about high-profile AI-pharma collaborations , for example Nvidia's drug discovery collaboration with Amgen and Alphabet's AI arm Isomorphic's deals with Eli Lilly and Novartis.

          However, innovation in life sciences and healthcare is hard, and AI – as promising a technology as it may be – is no silver bullet, as the setbacks faced by first-generation AI drug development companies remind us. It will take time and persistence for entrepreneurs and innovators to find and unlock the applications of AI that will make a lasting difference in life sciences and healthcare. But conference participants seem to wholeheartedly agree that AI is here to stay and will be a major force in our industry during the coming years.

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