My Report Card for JP Morgan Healthcare Conference Picks

Xconomy National — 

Forecasting trends in an industry that you cover every day, if you take time to think about it, is not that hard. Checking back a year later to see how right you were? That can be a little uncomfortable.

Rather than add to the pile of predictions people have already made about biotech in 2013, and will continue to make this week at the JP Morgan Healthcare Conference, I looked back instead at the five predictions I put down here 12 months ago. The exercise, I figured, ought to provide some humility for the year ahead, which is never a bad thing.

So here are last year’s predictions, and a quick summary of what actually happened in 2012. I’ve given myself a letter grade on whether the prediction was right, half-right, or wrong.

—“The biotech IPO market won’t pick up.” Prediction grade: B-. This prediction was a little more than half-right. The biotech IPO market has been so anemic for so long, it’s hard to remember when public investors were excited about new companies at all. There was so little enthusiasm in 2011 for biotech IPOs that Groupon (NASDAQ: GRPN)—remember Groupon?—raised more money in its IPO that year than the previous 10 biotech companies combined. In 2012, there were 12 biotech/biomedical companies that went public by my count. That’s roughly on par with the tepid performance of past years. None captured the public imagination, or even made mainstream business news headlines.

The surprise is in what happened next. Biotech’s IPO class of 2012 performed extremely well, compared to the debacles everyone saw with tech glamour boys like Facebook (NASDAQ: FB) and Zynga (NASDAQ: ZNGA). Nine of the 12 newly minted public biotech companies are worth more today than they were on IPO debut day, and the three decliners are only down modestly. Two members of the 2012 biotech IPO class—Kythera Biopharmaceuticals (NASDAQ: KYTH) and Intercept Pharmaceuticals (NASDAQ: ICPT)—saw their valuations roughly double in the just a couple of months. That just might encourage a few more companies to take the IPO leap in 2013, and provide a lifeline to a few VC firms in need.

—“Amgen will not make a mondo acquisition.” Prediction Grade: A. Here’s what I said last year as rumors were circulating about Amgen prepping for a monster deal. At the time, the company had named a new CEO, had more than $17 billion of cash in the bank to play with, and a need to fill up its pipeline.

“It may sound logical, but this all feels like wishful thinking to me on the part of bankers with vested interests. Amgen will think long and hard before it attempts to do any monster acquisition, especially after seeing the organizational indigestion mega-mergers have caused in Big Pharmaland (see Pfizer/Wyeth, Merck/Schering-Plough, and Roche/Genentech). My hunch is that Amgen may buy a company in the $1 billion ballpark, but it will not pull the trigger on a really audacious mega-merger in 2012.”

I got this one right. Just a couple weeks after last year’s JP Morgan conference, Amgen shelled out $1.2 billion to acquire Rockville, MD-based Micromet. In April, it acquired South San Francisco-based KAI Pharmaceuticals for $315 million, and got ahold of Turkey-based Mustafa Nevzat Pharmaceuticals for $700 million. The biotech giant (NASDAQ: AMGN) ended the year by swallowing up Iceland-based deCode Genetics for $415 million. The pattern here is clear. No mega-mergers, just small tuck-in acquisitions that bring either technological or geographic diversity to the world’s biggest biotech company. I’d expect more of the same in the year ahead.

—“FDA won’t be more supportive of innovation.” Prediction Grade: F. This is the stinker in the bunch. At this time last year, I had reported on the FDA’s new initiative to encourage innovation, but took a skeptical position, predicting that the number of new FDA drug approvals would drop in 2012. Wrong, wrong, wrong. The agency approved 39 new drugs in the past year, the highest number in 15 years. Everyday interactions between companies and the FDA appeared to improve in the past year. There was a 17 percent decline in projects being delayed by regulatory requests last year, according to one survey of 157 biotech CEOs in California conducted by BayBio, the California Healthcare Institute, and PwC.

Margaret Hamburg, FDA commissioner

To be fair, I did write a column in September which tallied up the year’s activity and concluded the FDA turned “friendly toward pharma” in 2012. While it’s possible this past year could be a fluke, I doubt it. FDA commissioner Margaret Hamburg is the longest-tenured boss in more than 15 years at this agency at this agency that so many people love to hate. She showed backbone and scientific integrity when she stood up to her boss, Health and Human Services Secretary Kathleen Sebelius, in a political decision about the availability of Plan B emergency contraceptives. Hamburg was a central player in the extension of the Prescription Drug User Fee Act that became law last fall. She deserves credit for a job well done, and with President Obama’s re-election, there’s no reason … Next Page »

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