El Niño At The JP Morgan Conference: Optimism After A Stormy Week For The Biotech Markets

Posted January 15th, 2016 by Michael Gladstone, in Biotech financing, From The Trenches, Pharma industry

This blog was written by Michael Gladstone, Principal at Atlas Venture, as part of the “From the Trenches” feature of LifeSciVC.

The wifi is predictably not working on my flight back from the JP Morgan Healthcare Conference (#JPM16), allowing me the time to reflect on four dense days of biotech.

A casual observer of the public biotech indices might conclude that this year’s meeting was a total bummer, and that the only good news was that it didn’t rain that much and that Joe Biden has finally decided to cure cancer. Indeed, much of the media coverage depicts a very different mood than the “everything is awesome” theme of the last few JPM conferences.

So let me provide a slightly more optimistic perspective. First, some context for my observations:

I work for Atlas Venture, an early-stage biotech firm that builds new therapeutics companies. Most of my meetings this week were related to two nascent companies I’m immersed in launching. Both companies are developing platforms with curative potential in lethal diseases, and we intend for both of them to grow and transform healthcare over the course of the next decade (albeit with benefits hopefully emerging far sooner than that).

So while I suppose I’d rather the NBI not shed 10% this week, I’m not losing any sleep over the January 2016 biotech volatility. We’re in this for the long haul, and the market gyrations of one week, one month, or even one year have no impact on what we need to do to make these companies successful.

So here’s why I actually took away a somewhat sunnier view of things this week.

Great companies are developing great medicines. In 2016, Moderna is initiating clinical trials for six new products with an exciting new modality. Kite Pharma presented breathtaking data in aggressive lymphomas with their lead CAR-T program, and they are marching toward approval with a game-changing therapy that sounded like science fiction just a few years ago. In the Atlas portfolio, Miragen is starting first-in-man trials with two novel microRNA-modulating therapeutics to treat fibrotic disease and cancer. In 2016, Nimbus Therapeutics will initiate a proof-of-concept trial in NASH with their ACC inhibitor. Unum will initiate a new trial with their unique ACTR T cell therapy platform. These are just several examples of biotechs generating compelling new medicines, which (you’ll remember) is the whole point of what we’re all trying to do here.

The investor and Pharma ecosystems are supporting these companies. Many great companies have strong balance sheets, as they’ve capitalized on their promise and the robust market of the past few years. This gives them the cash to advance their products and fret less about their ticker’s day-to-day fluctuations. And the big biopharma companies continue to enthusiastically partner with smaller biotechs, providing a crucial additional capital source for these companies. In just the last 9 days, multiple companies that Atlas co-founded – including Quartet Medicine, Rodin Therapeutics, Surface Oncology, and F-star – have announced transformative partnerships with Merck, Biogen, Novartis, and AbbVie, respectively. Pharma will absolutely remain a partner and financier of biotech companies, providing an important buffer against uncertain public markets.

Capital is being recycled, and the long-term company creators and investors are not going to stop. Illumina and ARCH announced the launch of Grail with $100M in backing, creating an ambitious new diagnostics company intent on revolutionizing the early detection of cancer. NextCure raised $67M to capitalize on continuing breakthroughs in the immuno-oncology field. Over the course of 2016, Atlas will likely launch 5 or more new companies, and of course our early-stage biotech VC peers at other firms will continue to churn out great companies as well. In 2015, numerous VCs (including Atlas, Flagship, Frazier, MPM, NEA, Orbimed, and Sofinnova Partners, among others) restocked their coffers with fresh biotech funds to support new companies for the next decade.

With all of that being said, things obviously aren’t perfect. It turns out that discovering and developing new and better medicines for serious diseases is still challenging, expensive, and a long-term endeavor requiring patience, persistence, and great people. We still have a long way to go to establish a sustainable approach to drug pricing, and industry leaders admittedly haven’t yet done a very good job of communicating a strategy for this. Clearly many in the industry are still hoping that issue blows over or can at least be kicked down the road. On a different front, biotech’s gender imbalance was painfully clear in the JPM conference microcosm, and it remains appalling and disappointing. While there’s been some progress on this front, it’s obviously coming far too slowly. So yes – we absolutely have a lot of room to improve.

Having said that, the discussions I had in San Francisco this week provided a great reminder that there are great people in this industry who are brilliant, passionate, and incredibly dedicated to making new medicines. It is truly energizing to spend time with folks like that, and it keeps me very optimistic about the long-term prospects for our industry.

Michael Gladstone

Principal at Atlas
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