The Smart Profits Report: Issue #487
Friday, January 11, 2008 The JP Morgan Healthcare Conference Hosts Healthcare Heavyweights
By Marc Lichtenfeld,
Senior Analyst, Smart Profits Report
As I write, I’m 30,000 feet in the air above the JP Morgan Healthcare Conference, 30 minutes into a red-eye flight back home to Florida, and worn out from an exhausting three days in San Francisco. I wish you could have seen the controlled chaos. Hardly surprising when you’ve got 300 companies and 6,000 of the world’s best investors descending on the Westin St. Francis hotel to listen to presentations and grill company executives in an attempt to find the next great healthcare investment. And those numbers don’t even include the myriad of companies and investors who weren’t invited to the conference, but have taken over suites at hotels like The Hilton in order to meet conference attendees and others who couldn’t get in. I was one of the privileged folks who did receive an invitation – and as I promised you last week, here’s my report… The JP Morgan Healthcare Conference Bigwig Blitz Monday, January 7 – Morning: Having flown out on Sunday afternoon, it was an early start on Monday morning. The crowds weren’t too bad as we munched on fruit and croissants, while listening to opening remarks by JPMorgan CEO Jamie Dimon. He reminded the audience to stay well capitalized in order to take advantage of any weakness in the economy. After his talk, the crowds appeared and swarmed the hallways outside the conference rooms. The place was so packed, I’m sure the fire marshal would have said something about it, if he could have gotten in. It’s in those hallways that you meet the kind of people you expect. Fund managers named Kip and Boyd, with Greenwich, CT addresses, check stock prices on their PDAs, while talking to colleagues. Then it was onto the presentations. The first one I attended was by a company in late-stage clinical trials for sleep disorders and schizophrenia. I wasn’t familiar with the company, but the executives put on a solid presentation. Having said that, though, the presentations are all pretty much the same. Companies put together impressive Powerpoints that highlight successes and ignore the disappointments. No new news is revealed unless a press release is issued first. For example, Biogen Idec (Nasdaq: BIIB) issued 2008 guidance in a press release time-stamped at 8:45 AM. By the time the firm spoke to investors in the Grand Ballroom at 4:00 PM, the market had fully digested the news. After that, I shot over to the Hilton for what was my most valuable conversation of the trip. I met with the CEO of a company with a phase III drug for a common form of cancer that is currently untreatable. It’s possible that this company will have the market to itself – and the best part is that through some shrewd deal-making, a large pharmaceutical company is paying for the development of the drug. I can’t wait to get back home and dive into some further research. Monday, January 7 – Afternoon: I returned to the Westin in time for lunch, where keynote speaker Bob Woodward gave an amusing talk about Washington politics. He took shots at both parties and was as relentless on some of the members of the audience as he was on President Bush. Now, if you’ll excuse my bluntness… one of the things you have to get used to at this conference is that there’s a lot of crap in the marketplace. There are many companies that shouldn’t be publicly traded at this point. The problem is that it’s not always immediately apparent. So you spend a lot of time listening to pitches and reading material that ends up in the junk pile. My next meeting was with one such company. It has one drug on the market that is facing stiff competition and has a technology platform that I’m not convinced can be commercialized. It didn’t take long to decide that we’ll take a pass on this one. Later in the day, I attended the Biogen meeting, where CEO James Mullen attempted some careful spin control. The presentation was the usual routine, but in the breakout session he addressed the failure to sell the company. However, before anyone could ask a question, he performed a 15-minute monologue on the subject, framing the situation as he would like investors to believe it. But once he’d finished and the floor opened up to questions, investors hammered him. I came away from the meeting with the distinct feeling that Biogen has little interest from a buyer. Tuesday, January 8 – Morning: Day 2 was busier than Day 1. I kicked it off by listening to another presentation by a sleep disorder company, then filled the rest of the day with back-to-back meetings. Again, some of them were with companies I wouldn’t touch, but I am interested in digging a little deeper into a tiny company with a drug for liver cancer. The good news is it won’t have to compete with Onyx Pharmaceuticals’ (Nasdaq: ONXX) Nexavar. Tuesday, January 8 – Evening: After having dinner with a trader, we hit the industry parties. The highlight was a Scotch-tasting, where we sampled various single malts that included a $300 a bottle Lagavulin 21-year. I have simpler tastes. My favorite was Oban 14 year – a mere $65 per bottle. Wednesday, January 9 – Morning: After the revelry of the night before, I slept in, waking up at 6:00 AM (I was up at 5:00 AM the other days). Morning highlights included a meeting with a very cheap company that has a potential blockbuster drug in early stage development and another meeting with a bioterrorism firm. As I was leaving a presentation by Viropharma (Nasdaq: VPHM), I ran into Jean-Jacque Bienaime, CEO of BioMarin (Nasdaq: BMRN). Although I didn’t expect to see him, as BioMarin wasn’t presenting, I was pleased to chat for a little while. BioMarin is a company I’m very familiar with, having made it my first recommendation in the Xcelerated Profits Report. On December 14, as the company’s Kuvan drug received full FDA approval, readers grabbed a 99% profit on the first half of the position. Today, it’s trading even higher. Jean-Jacque and I chatted about BioMarin’s recent success and general healthcare industry topics. Incidentally, I like Viropharma, too, but the company needs to clear up the generic competition issue before I touch the stock. Wednesday, January 9 – Afternoon: Grabbed a burger with the CEO of company involved in treatment for renal disease. It just so happens that he was one of the founders of the sleep disorder company whose presentation I attended on Tuesday. But he’s not impressed with his former company. Furthermore, the CEO of the bioterrorism company I’d met with earlier in the day sits on this guy’s board. It’s a small world. After saying goodbye, I collected my luggage and went to the trendy Hotel Vitale for my last meeting of the week. I’m glad to say it wasn’t even with a biotech person. Instead, I had drinks with one of the most well-known technical analysts on the street. It was nice to talk stock charts rather than kinase inhibitors for a change. Surprisingly, the analyst was bullish on the market, due to strong money flows. So, that’s it from the JP Morgan Healthcare Conference. I’ve got a lot of research to do and I’ll have some more specifics once I get through it. For now, though, it’s time to try and catch a few winks… if only the guy next to me would stop talking. Best regards, Marc Lichtenfeld Today's Smart Profits Action Center: - Sluggish growth… downside risks… but no recession. That was the verdict from Federal Reserve Chairman Ben Bernanke this afternoon – news that sent stocks into the red after a promising day. But it didn’t take long for the market to vault back into positive territory, with the news that Bank of America (NYSE: BAC) is in “advanced talks” to buy battered mortgage lender Countrywide (NYSE: CFC) – one of the companies hardest hit by the subprime crisis. As we reported here on Tuesday, Countrywide endured an awful fourth quarter, where losses piled up to a massive $772.7 million. Countrywide shares rocketed up to an intraday high of $8.91 on the news today.
- While a possible Bank of America-Countrywide deal stole the bulk of the headlines, it’s not the only major merger deal in the works. The Delta Air Lines (NYSE: DAL) board are expected to be asked that CEO Richard Anderson is allowed to open formal talks with both United Airlines and Northwest Airlines (NYSE: NWA) on Friday in hopes that a merger deal can be struck with one of the company’s rivals. In response, Delta shares shot up around 24%.
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