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Biopharma’s Burning Man

Masters of the sprawling biopharma universe are gathering in San Francisco today for the start of J.P. Morgan’s 35th annual healthcare confab, a four-day crush of presentations, panels, and meet-and-greets that will test the endurance of an army of press-release writers. (So far, judging by my inbox, they seem to be holding strong.) The conference has gotten so freakishly enormous over the years—from this morning through Thursday, speakers from over 450 healthcare companies and nonprofits will take the stage in back-to-back sessions that begin at 7:30 a.m.—that is has even spawned a conference within the conference: the StartUp Health Festival (which also opens today).

That said, this year’s meeting(s) come(s) at a tough time for the biotech industry as a whole, as STAT’s Damian Garde explains this morning in a lovely scene-setter. Biotech stock prices and new public offerings are both down sharply from 2015’s bloated levels. (For some helpful perspective, BioWorld’s Peter Winter has numbers on biotech financing over the past decade.) Drug and device makers—rightly—worry that the rubber band will snap back on pricing; investors are at least starting to take a gimlet eye to valuations, particularly in the wake of cost pressures and sliding FDA approvals and as Sy reports, there are some ugly patent battles on the horizon to whip up the dust even more.

All have added up to what analysts (meaninglessly) call “uncertainty.”

As if anything in the world were otherwise.

Here’s Sy with the day’s news.

Clifton Leaf
@CliftonLeaf
clifton.leaf@fortune.com

DIGITAL HEALTH

IBM Watson strikes a major partnership with Illumina. Tech giant IBM on Monday announced a big new partnership with genomics firm Illumina that could significantly expedite the tumor genetic analysis process. Illumina offers a range of DNA sequencing services, including the TruSight Tumor 170 profiling panel for sniffing out gene variants in solid tumors. Watson for Genomics will harness its super computing powers to read the genetic alteration data produced by TruSight and spit out a customized report incorporating the latest clinical trial data and medical literature. That’s the type of project that could take a human as long as a week to complete; IBM says Watson will be able to do it in minutes. “This partnership lays the groundwork for more systematic study of the impact of genomics in oncology,” said Deborah DiSanzo, general manager of IBM Watson Health, in a statement. “Together we are poised to help researchers realize the potential of precision oncology by expanding access to valuable genome sequencing from Illumina and reliable, standardized genomic interpretation from Watson.”

The massive Anthem data breach was reportedly ordered by a foreign government. It looks like elections aren’t the only things that foreign governments are trying to disrupt with cyber warfare. Investigators from the California Department of Insurance say that 2015’s massive attack on insurance giant Anthem, which exposed a staggering 78 million health records, was conducted by a hacker working on behalf of an (unnamed) foreign government. And only the federal government can help ensure that such international attacks don’t become a regular occurrence. “Insurers and regulators alone cannot stop foreign government assisted cyber attacks,” said California Insurance Commissioner Dave Jones in a statement announcing the findings. “The United States government needs to take steps to prevent and hold foreign governments and other foreign actors accountable for cyber attacks on insurers, much as the President did in response to Russian government sponsored cyber hacking in our recent presidential election.” (Healthcare IT News)

INDICATIONS

Japan’s biggest pharma snaps up cancer drug maker Ariad. The J.P. Morgan Healthcare conference deal spree has begun. Takeda Pharmaceuticals, Japan’s largest drug maker, buying cancer specialist Ariad Pharma in a deal valued up to $5.2 billion. The buyout will give Takeda access to an oncology portfolio that includes the leukemia med Iclusig and a pipeline that contains the potential lung cancer blockbuster brigatinib. For its part, Takeda has been on a mission to restructure and expand its global presence, including through a series of acquisitions, and the Ariad deal will shore up its existing oncology franchise. (Fortune)

The three big patent spats that could rock biopharma’s 2017. The biopharma world was taken by storm last week when a judge ordered Sanofi and Regeneron to halt sales of their next-gen cholesterol-busting medication Praluent for infringing on Amgen’s patents on a similar therapy. But that’s not the only major patent case to keep an eye on in 2017. I explore two of the other major IP spats that have billions of dollars at stake: Merck’s stunning royalty victory over Gilead on the blockbuster medications Sovaldi and Harvoni, and the academic world/biopharma compendium battle over the rights to the revolutionary CRISPR gene-editing platform. (Fortune)

EpiPen sales could be headed for a big decline. Bernstein analyst Ronny Gal has a pretty bearish outlook on Mylan’s EpiPen, the life-saving epinephrine device whose staggering price hikes landed Mylan in some serious hot water with the public and lawmakers last year. Gal thinks that competition from generic competitors like Kaleo’s Auvi-Q, which is making a return to the U.S. market within the next six months, will eat away at EpiPen’s sales (especially when coupled with the bad rap that Mylan’s been getting). Just how substantial of an effect could these competitors have? Gal writes that sales could dip all the way down to $300 million in 2018, compared with estimated sales of $1.1 billion in 2016. (FiercePharma)

THE BIG PICTURE

Senate majority leader says first Obamacare repeal step will take place this week. Senate Majority Leader Mitch McConnell said that the first major step towards repealing Obamacare will come this week during an appearance on CBS’ Face the Nation on Sunday, adding that “there ought not to be a great gap” between the health law’s repeal and passing a replacement plan for those who would lose coverage. The Senate has been debating a budget resolution that would shift the Obamacare dismantling process into high gear since last week and is expected to give it final passage in the coming days. Still, McConnell remained unclear on just how long of a transition period there will be between the health law’s repeal and its eventual replacement. Some senior GOP officials have noted that it could take between two and three years to transition into a new program. (Fortune)

REQUIRED READING

Theranos Says It Will Fire About 41% Of Its Remaining Staffby Katie Reilly

These 7 Tech Companies Are Recruiting Moms Who Left the Workplaceby Claire Zillman

IMAX CEO Talks Virtual Reality and His Plans for High-Tech Arcadesby Jonathan Vanian

How Box Office No. 1 ‘Hidden Figures’ Is Inspiring Black Girls to Codeby Kristen Bellstrom

Produced by Sy Mukherjee
@the_sy_guy
sayak.mukherjee@fortune.com

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