The Tools Are Finally Here

Notes From The JPMorgan Healthcare Conference

Inside today’s Daily Journal…

• Essay: The Tools Are Finally Here

• AI eats software stocks

• Flesh-eating worms eat Domino’s margins

• Hershey is back

• Chart Of The Day… Walmart joins the $1T Club

• Today’s Mailbag

Every January, the biotechnology world descends on San Francisco.

For one week, the hotel lobbies around Union Square and Nob Hill become the capital of global medicine. Leading scientists, founders, investors, Big Pharma executives, and biotech journalists gather – ideas filling their heads and conference badges dangling from their necks. Conversations spill out of ballrooms and into hallways, coffee shops, and bars.

This is the JPMorgan Healthcare Conference (“JPM”) – the biotech industry’s annual showcase event. JPM is not a place where breakthroughs are announced, nor where clinical data suddenly changes overnight. Instead, the conference is something subtler and more important: it’s a barometer.

It’s where capital takes the temperature of science, and vice versa. Where investors decide which narratives feel durable and which feel tired. Where you can sense – not always explicitly, but unmistakably – the emerging contours of biotech’s next decade.

I (Erez Kalir) attended the week-long gathering this year, and noted that the JPM conference was neither as frothy nor as loud as it’s been in the heyday of a biotech bull market. But below the serene surface, one could discern a genuine confidence in the ways biotechnology is poised, once again, to change the world.

Let me explain…

A Breakfast Conversation

On the first morning, I had breakfast with one of biotech’s most seasoned investors.

Over the past several decades, he has held senior, C-suite roles at some of the most successful biotech companies ever built. Today, he runs a biotech fund for one of the world’s largest asset managers. He’s seen multiple cycles – bubbles, winters, false dawns, and genuine revolutions.

Over eggs and coffee, he shared a story from his childhood.

His father was an engineer, the kind of man who could fix anything. Broken lawn mower? Fixed. Car not starting? Fixed. Kitchen appliance not doing its job? Fixed.

As a child, my breakfast companion would stand next to his father while he worked. His dad liked to lay his tools out neatly in front of him. When he needed a wrench, he’d call it out – and his son would hand it to him.

Years later, after earning a PhD in biology and entering the life sciences, my biotech friend lamented to his dad that biology didn’t work that way. In engineering, you could see the problem, diagnose it, then fix it. In biology, so much seemed probabilistic, indirect, frustratingly opaque.

His father listened, then replied: “Don’t worry, son. You’ll be able to fix things too. You just don’t have the right tools yet.” The sentence stuck with him over the course of decades.

And as we ate our breakfast at JPM this year, he smiled and remarked: “Well, I think we finally have the tools.”

Looking Back: What Biotech Has Already Done

It’s easy, in the midst of a bear market from which biotech has only begun to emerge, to forget what this industry has already accomplished. But one slide in a JPM keynote provides an arresting reminder. Over the past half-century, pharmaceutical and medical innovation has produced miraculous improvements in human health:

• Cardiovascular mortality has fallen roughly 75% since 1980, driven by statins, anti-hypertensives, stents, and thrombolytics

• Stroke-related deaths have dropped nearly 80% over the same period, driven by innovations such as beta blockers, ACE inhibitors, and calcium channel blockers

• HIV/AIDS, a near-certain death sentence as recently as 1997, has seen mortality fall by ~87% following the advent of combination antiviral therapies

• Chronic myeloid leukemia, which had an 18-month survival rate in 1997, now boasts ~94% three-year survival, thanks principally to kinase inhibitors

• Over the past 15 years alone, Cystic Fibrosis has seen its median age of death change from 28 years to 66 years – and 90% of cystic fibrosis patients can now be functionally cured

These aren’t incremental gains – they’re transformative changes to deadly disease categories, enabled by better tools. And as this year’s JPMorgan conference made clear, they’re also a harbinger of things to come.