JP Morgan Preview
Once again the healthcare world makes their annual pilgrimage to the San Francisco and the Westin St. Frances, for the JP Morgan Healthcare conference. While this venerable conference has undergone several name changes over the years, two things have remained consistent. The Westin St. Frances is not large enough to truly accommodate all the attendees and news is not just made in the many presentations and breakout sessions. Somehow this overcrowded event where attendees often feel like tuna stuffed into a tiny can has become an annual ritual and must attend event.
This year is no different as there are numerous questions Diabetic Investor has on our mind. Looking ahead to this year’s conference we can’t help but wonder how the Bydueron triangle of Alkermes (NASDSQ:ALKS), Amylin (NASDAQ:AMLN) and Lilly (NYSE:LLY) will hold up. While everyone is anxious for news on what the FDA has in store for the drug, there really will be little news that matters. The reality here is the FDA isn’t talking and the members of the triangle who will surely be peppered with questions on the subject won’t really have anything to say. Given the ultra-sensitive nature of the FDA the best move these days when asked about the agency is simply no comment.
Another interesting story could be what Abbott (NYSE:ABT) says about the future of their beleaguered diabetes care unit. Will this finally be the year the company realizes that the unit still has some value and better to capture that value before another product malfunction or test strip recall. Some may recall that it was during a previous JPM conference when word came that Abbott had acquired Therasense. Back then Diabetic Investor wondered how two completely opposite cultures would mesh and whether Therasense would prosper under Abbott’s conservative micromanagement. Needless to say this acquisition, like the Medisense acquisition years before, has not worked out giving Abbott the distinction of running two promising glucose monitoring companies into the ground.
Sticking with glucose monitoring we’re also anxious to see if Roche has actually found a strategy for their struggling diabetes unit or is management still wondering in the desert searching for that ever elusive mirage that will turn sand into gold. Like Abbott, Roche has been great at turning gold into sand, but just can’t seem to get out of their own way and see what’s happening in the real world. Few companies can go from number one in the US market to a distant number two, lose almost 20 share points and publicly state that everything is just fine. Diabetic Investor sees Roche as an addict who performs the exact same behavior but expects different results.
While Bayer will be presenting at the conference Diabetic Investor doesn’t expect much in the way of news here when it comes to their diabetes unit. The unit has undergone a massive reorganization, including major layoffs and no one, not even Bayer is quite sure what the next move will be. This once up and coming player in BGM has hit the wall and given the current market conditions may not be able to finish the race. Bayer’s biggest problem is they really can’t sell the unit the way it is currently structured and their management team is smart enough not to throw good money into a bad market.
One of the more interesting sessions should be when Al Mann steps to the podium and tells everyone that MannKind (NASDAQ:MNKD) isn’t worried about the latest FDA delay for their inhaled insulin Afrezza® and that they should have a partnership agreement any day now. Investor will buy into this horse manure as they have before falsely believing that when you spread a little fertilizer good things can grow and no one has spread more fertilizer than MannKind.
On the opposite end of the spectrum it will be interesting to see what Sanofi Aventis (NYSE:SNY) has to say this year. As everyone knows Lantus only has a few years of patent protection remaining and the product is already facing some serious competition from Victoza® and will soon face the ultimate insulin killer, Bydueron. It is also well known that the company is trying to reinvent themselves and become the dominate player in diabetes. Sanofi wants to move beyond selling drugs and devices that help better manage diabetes. Taking a longer life cycle view of the diabetes patient they see profits coming from disease management that ultimately produces better patient outcomes.
The issue with Sanofi isn’t resources but execution. In their quest to become the world’s premier diabetes company the company has pursed some top diabetes talent but with mixed results. Also given their ambitious effort they have gone outside the diabetes world seeking talent unencumbered by past mistakes in diabetes. The real question here is will the experienced diabetes talent be able to educate these newbies about the intricacies of the diabetes market. Or will Sanofi become another diabetes wannabe who gets lost in the wilderness forgetting that what really matters is building brand equity and ultimately selling more drugs and devices.
While Dexcom (NASDAQ:DXCM) and Medtronic (NYSE:MDT) will be presenting Diabetic Investor doesn’t expect much in the way of earth shattering news. Although Dexcom will face questions about its future the company is not yet ready to be sold. The question for Medtronic, the dominate player in the insulin pump market, should be how long they can remain the dominate player in the insulin pump market. The company still has not finished their much hyped and much delayed patch pump to compete with Insulet’s (NASDAQ:PODD) OmniPod system. Nor have they have completed the design for much talked about but not seen replacement for the Paradigm line of insulin pumps. Diabetic Investor really can’t blame the company for taking their time here as given current market conditions there’s really no rush.
While Diabetic Investor is not sure if Insulet will make the announcement that Charlie Liamos will soon be named the company’s Chief Operating Officer when they present on Wednesday afternoon, Diabetic Investor has confirmed the announcement is coming soon. There has been much speculation regarding Insulet and whether the board of directors was comfortable with the current management team. As we have noted on several occasions no one believed Insulet would still be an independent company ten years after getting started. It seems like Insulet is following a path similar to what Dexcom did when they brought in Terry Gregg. Like Mr. Gregg, Mr. Liamos will bring with him years of diabetes experience and a keen understanding of the diabetes marketplace. Diabetic Investor suspects this is just the first of many changes in store for Insulet.
Wednesday the 12th could also be labeled as Obesity day at JPM given that Vivus (NASDAQ:VVUS), Orexigen (NASDAQ:OREX) and Arena (NASDAQ:ARNA) will be presenting within hours of each other. This three headed beast isn’t dissimilar to the Bydueron triangle, in that, everyone wants to know what’s going to happen at the FDA, but none of the companies wants to say anything that might hurt their chances at the FDA. This unfortunately has become standard operating procedure in the drug development world as even if the FDA has told the company something one day, as we have seen in the past, the agency could do a complete about face and say something totally different the next day. Always a tricky business drug development has become even trickier given the wacky world of the FDA. Like the funhouse at the carnival you never know what’s coming as you make your way through the ride.
Perhaps the best part of JPM is the stories that just pop up, to Diabetic Investor that has always been the beauty of this unique event. JPM is actually much like the FDA only in a good way, at JPM you never quite what is going to happen or why, but things do happen. As always Diabetic Investor will be there to cover it all.