JP Morgan Wrap-up

The 28th annual JP Morgan Healthcare Conference wrapped up yesterday.  This conference represents the bellwether meeting of the year for the biotech industry and is used to gauge sentiment for the new year.

Here were my observations for the week.

Cautious optimism was the prevaling outlook, in part, because 2009 was so tough for the industry.  This time last year everyone was reeling.

The focus for venture capital firms funding new companies is Phase 2 and beyond.  The reason is that for venture funds who have been successful raising money the investment needed to provide a meaningful return to the new fund is substantial, typically $20-$50 million.  That leaves many early start-ups out of the picture.  In fact, for one prominent industry CEO I talked to his single biggest concern for the industry was lack of capital for the early stage companies.

The three life science managing partners of national search firms I spoke to all commented that the bottom fell out of executive search during the second half of 2009.   They are starting to see signs of improvement entering 2010, but the level of demand is difficult to gauge.  Clients are being extremely specific in their specifications and and won’t settle for anything less despite efforts to the contrary.

Investor relations firms seemed to be very busy in 2009 as companies tried new approaches to explain depressed stock prices to investors.  For the President of one boutique IR firm 2009 represented “the year of the haircut” with several clients wanting more for less.

Corporate development continues to be very competitive as smaller companies compete for the attention of larger companies in an effort to raise capital for continued development.  For consultants in the space it is tough going.  One successful internationally based deal maker told me he had not completed one transaction in 2009.  In fact, nobody I talked to had closed more than one transaction.  Big pharma and big biotech have more than enough opportunities to sift through and timelines have grown longer.

Finally, the entertainment budgets of those firms throwing parties around the conference don’t seem to have been impacted.  There was more than enough champagne and exquisite seafood for all.

Here’s a toast for a better 2010!

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About Mike

Mike has been an executive in the biotechnology industry for the past 20 years. Mike is a graduate of University of California, Santa Barbara, earning Bachelors degrees in Business Economics and Geography. Mike also earned his MBA in Finance from California State University, Fresno. Mike is married to the mother of his 3 children and currently lives outside of Boulder, CO. In his spare time Mike enjoys hiking, fishing, skiing, reading and coaching basketball.
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