JPM at 10

January 6, 2017

By 1991 the biotechnology industry, as measured by our annual January gatherings in San Francisco, had just hit 10. In just over a decade, a new industry built on the ability to “cut and paste DNA” had erased the need to await the Mendelian generational clock to rewrite the blueprints of life. In just a short 10 years, remarkable investments, talents and ambitions had been mobilized and new medical and agricultural advances were emerging.

JPM at the beginning

JPM at 5

But as history never ceases to teach, neither we as individuals nor any industry can escape the turbulence of the world around us. Just months before JP Morgan’s 10th Healthcare Conference gathering, Saddam Hussein announced his intent to annex Kuwait then proceeded to invade his neighbor in August of 1990. By January at the JP Morgan conference, the hallway chatter was filled with not “if” but “when” the world would strike back. We would not have to wait long. Just hours after the January U.N. deadline, a coalition of 34 nations led by the USA, began Operation Desert Storm with massive air and missile attacks on targets in Iraq and in Kuwait. As the attacks began, the world gathered together to watch a televised announcement by President Bush who proclaimed, “as a coalition of peace loving nations, we will not fail.” After seemingly endless televised news coverage, on Day 39 the ground assault begins and then on February 28th, just five days later, Kuwaiti troops raise the Emirate’s flag above Kuwait City. More chapters on Iraq were yet to be written but by February of 1991, Kuwait would be returned to its people. Technology and the will of a unified world had rejected a rogue leader – good (and technology prowess), it seemed, had prevailed.

In 1990 the internet was born via Tim Berners-Lee’s first Internet “browser” and, by 1991, this new software application hit its one millionth download with vigorous discussion of the Persian Gulf war dominating the newly-formed chat groups and “online” newsfeeds.

Biotechnology’s first decade had made some history itself. Since Genentech’s historic offering in 1980, 89 new biotechnology companies had captured the attention of investors and gone public in markets that were buoyed less by revenue-generating biotech products than by prices paid by would-be acquirers. 1991 was to be a record-breaking year with 33 young companies completing IPOs, eclipsing the previous record of 25 in 1986.

But building these new businesses and making biotech-based products was proving to be extremely difficult, expensive and slow. Running these businesses solely off of persnickety equity-based financings was difficult. Partnerships with profitable and well- capitalized pharmaceutical companies were proving to be critical. Even Genentech, the company that had laid the groundwork for the biotech industry and had already used its head-start with recombinant DNA technologies to generate a basket of new products was struggling to fund operations. In 1990 the company’s management team sold a 60 percent stake and an option-to-fully acquire the rest to Roche for $2.1B. The Genentech 1990 transaction was the first of what proved to be many similar types of transactions between leading biotechs and the established pharmaceutical companies of the day. Immunex, Genetics Institute, Systemix, Chiron among many others were integrated into larger organizations during the next few years. And each would illustrate to investors that the large, well-established players in the healthcare industry could provide access to robust profit-built balance sheets and pathways to earlier investor liquidity.

1991, a full 10 years after the discovery of the AIDS virus, the growing epidemic continued as a relentless reminder that all of us are vulnerable. It was in 1991, after a 13-season NBA career with the L.A. Lakers, that included five championships, that Magic Johnson after testing positive for HIV, announced his retirement. Johnson was one of the first sports stars to go public about his HIV-positive status. Since HIV’s discovery and as a result of the advances purely made possible by biotechnology, Magic and others around the world with access to treatment are living longer lives.


Following the 1986 space shuttle Challenger disaster and after nearly three years of mission hiatus, investigation, accusation and engineering review, it was resilience and determination that had prevailed. In 1990, one of the five remaining space shuttles, in this case the Space Shuttle Discovery, roared back into space with the Hubble telescope in its cargo bay to deploy. By 1991, streams of images were opening a new window through which we could peer more deeply into the cosmos than ever before.

While back on earth a new biological “moonshot” was just getting underway as Congress seeded funding to both the NIH and the DOE to begin a 15-year research effort called the “Human Genome Project.” The project would develop technology for analyzing DNA; map and sequence human and other genomes; and study related ethical, legal, and social issues. It was a program thought to exceed the technical complexity of anything ever conceived but one that finished ahead of schedule at a fraction of the anticipated cost. When reflected on today, it is hard to fathom the progress in sequencing and now gene editing that has been made since 1991 and even harder to fathom where both will be in just 10 short years from now.

As we head into the 35th annual JPM Healthcare Conference, perhaps it is also good to reflect on the year we’ve just completed. Biotech stocks finished a tough year with the BioCentury 100 losing 1,474.40 (23%) to 4,834.54 at year-end and far underperforming the broader markets. The NASDAQ Biotechnology Index and the iShares NASDAQ Biotechnology ETF each slipped 22% on the year, while the NYSE Arca Biotechnology Index shed 19%. By comparison, the Dow Jones Industrial Average was up 13% in 2016, and the NASDAQ Composite rose 8%.

2016 saw only 22 medicines approved by the FDA, which was down dramatically from 45 and 41 in 2015 and 2014, respectively. That said, many of these 2016 approvals do address key areas of unmet medical need including new treatments for advanced ovarian cancer, bladder cancer and spinal muscular atrophy. Nearly half of these advanced quickly as a result of FDA sponsored innovation pathways and many have accompanying diagnostics to enable targeted treatment approaches. In 2017, 115 applications for approval have been accepted for review by the FDA, loading the calendar for an exciting new stream of patient-directed solutions in the year ahead.

When JPM began in 1982, it was an assembly of biotech pioneers determined to do and see more and was metaphorically reflected in the audacity of Lawnchair Larry’s fateful balloon powered flight “to rise above it all” and try new approaches. By 1991, just 10 years later, it reflected a global and powerful industry that reconvened again at the St. Francis. An industry whose products and talents could truly save lives and even help feed the masses. And an industry whose successes had provided the catalyst to sequence not just the blueprints of “who we are” but all life that surrounds us. Yet it was also a time that provided a sharp contrast of what is scientifically possible with the humbling tribal histories from which we have all come and the fragility on which civil society (and technology) rests.

May 2017 seek to couple peace with our progress.