The 2019 J.P. Morgan Healthcare Conference kicks off on Monday, but as companies have been apt to do, there was plenty of news released the week ahead of the event. Here's a look at the most important healthcare stories as we head into the biggest conference of the year, and how these developments could affect your portfolio.
Without a doubt, the biggest pre-JPM announcement came from Bristol-Myers Squibb (NYSE:BMY), which is buying Celgene (NASDAQ:CELG) The deal is worth upwards of $74 billion in a cash-plus-stock deal that includes a contingent value right (CVR) as a kicker. For each share, Celgene's investors will get $50 in cash, one share of Bristol-Myers Squibb, and a CVR worth $9 a share if Celgene's ozanimod, liso-cel, and bb2121 are approved by the Food and Drug Administration (FDA) by certain dates.
Bristol-Myers Squibb's investors weren't thrilled about the deal, sending shares down 13% on Thursday, although they recovered almost 4% on Friday. The deal came with a 54% premium, but investors should consider that Celgene had been knocked down substantially over the last year and a half, making the acquisition price -- based on Wednesday's closing price for Bristol -- still substantially below Celgene's all-time high.
A little help from a friend
A few companies announced licensing deals that they can tout at their J.P. Morgan presentations.
Esperion Therapeutics (NASDAQ:ESPR) licensed rights to its cholesterol-lowering drug, bempedoic acid, as well as its bempedoic acid/ezetimibe combination pill, in the European Economic Area and Switzerland to Daiichi Sankyo Europe. Esperion gets $150 million up front in the deal and another $150 million upon first commercial sales in the territory. The deal also calls for up to $900 million in total milestones including sales-based milestones and a milestone payment for EU approval of the drug for cardiovascular risk reduction, and Esperion will receive tiered royalties on net sales in the territories by Daiichi Sankyo.
Given the large market, a partner in Europe makes a lot more sense than Esperion setting up its own large sales force across the pond. Shares of Esperion were up on Friday, but ended down 6%, which may have been the typical sell-the-news decline or may have come from some investors who were hoping Esperion would get acquired, which appears less likely now that it has a European partner.
On Thursday, Agenus (NASDAQ:AGEN) got a grant from the Bill & Melinda Gates Foundation to the tune of $1 million to support the development of an expanded manufacturing process for its QS-21 Stimulon adjuvant, which is used in vaccines to make them more efficient. GlaxoSmithKline uses QS-21 Stimulon adjuvant in a couple of its vaccines and the adjuvant is also being tested in other vaccines in the clinic, including ones being developed by Agenus.
QS-21 Stimulon adjuvant is currently manufactured from Chilean soap bark trees, which, as the name implies, come from Chile. Through a deal with Phyton Biotech, Agenus is looking to manufacture the adjuvant in plant cells grown in incubators, which would be substantially more scalable.
In a pair of deals, Biogen (NASDAQ:BIIB) is hooking up with a couple of privately held companies in discovery deals. Neither deal -- nor them combined for that matter -- is going to move the revenue needle in the near term, but they show the big biotech is continuing to add more compounds for diseases it's already tackling.
Biogen's deal with Skyhawk Therapeutics will explore using small molecules to treat spinal muscular atrophy, a disease that its antisense drug, Spinraza, already tackles. And a deal with C4 Therapeutics will use C4's targeted protein degradation technology to develop drugs for neurology indications, such as Alzheimer's and Parkinson's diseases, both of which Biogen has clinical-stage drugs in development for.
More to come
While it's become popular to release deal news in the week before the J.P. Morgan conference, investors should expect plenty of additional news, including more deals, 2019 guidance from some commercial-stage companies, and perhaps even a few clinical trial data announcements in the days ahead. Be sure to check back here at The Motley Fool's 2019 JPM Healthcare Roundup for all of them and what, if any, ramifications they might have on your portfolio.