Key Takeaways from J.P. Morgan’s 41st Annual Healthcare Conference​

Last month, we attended the annual J.P. Morgan Healthcare Conference, the industry’s largest event, which draws more than 8,000 investors, industry professionals, senior government officials, and 550 global healthcare companies—from Fortune 100s to early-stage startups—to discuss market trends and medical innovations, share news and updates on breakthroughs, and spark new partnerships.

For those in healthcare, JPM provides the unofficial kickoff to every new year with a chance to recap the year before and inform our view on the year ahead.

We left JPM feeling optimistic about the direction of the industry at large and excited about the innovation happening today. These are our three key takeaways:

Biotech’s Rebound into 2024

After a few turbulent years, the outlook for biotech is sunnier. Companies today are focused on creating real value, and we are encouraged by the intelligence and innovation now directed at tackling some of the largest health issues we face. 

• The public biotech index $XBI had the best two-month stretch ever leading up to JPM, up 14% in November and 18% in December.
• Leading up to JPM, big pharma announced $25 billion worth of U.S.-listed biotech deals in December alone. On “Merger Monday,” during the first day of the conference, another $6.4 billion in healthcare deals were announced.
• Driving the need for deals is the loss of exclusivity for big pharma, which will be >2x higher in the next five years than the previous five.

AI Takes Center Stage

AI’s transformative power was a hot topic at the conference; Jensen Huang, the CEO of Nvidia, gave the keynote and later led a fireside chat with Chris Gibson, CEO of Recursion, a Menlo Ventures-backed biotech.

• Jensen discussed the bio revolution enabled by GenAI, saying, “It opened my mind that we could apply the same methodology that we use in computer-aided chip design to help the world of drug discovery go from computer-aided drug discovery to computer-aided drug design.” We believe this shift from discovery to design will allow portfolio companies such as Recursion, Genesis Therapeutics, and Vilya to develop their assets and de-risk their programs faster, with more throughput than previously possible.
• Isomorphic Labs, Google’s drug development arm, signed partnerships with Eli Lilly and Novartis worth almost $3 billion. President of biomedical research at Novartis, Fiona Marshall, said that AI technologies like AlphaFold “hold the potential to transform how we discover new drugs and accelerate our ability to deliver life-changing medicines for patients.”

Precision Medicines and Gene Editing Go Mainstream

Precision medicine and gene editing are rapidly becoming mainstream. Recent successes in clinical trials utilizing these groundbreaking technologies have shown promising results, and we expect to see improved patient outcomes. At Menlo, we are enthusiastic about the ongoing innovation in this sector,  having invested in pioneering companies like Encoded Therapeutics, Scribe Therapeutics, and Delfi. 

• In a historic milestone, the FDA approved the first gene editing medicine last December for sickle cell disease. The next generation of companies will focus on common indications and other rare diseases. 
• BeiGene, a biotechnology company specializing in drug development for cancer treatment, highlighted during their presentation the dramatic improvement in five-year survival rates for nearly all cancer types with continued help from both diagnostics and treatments.

We are encouraged to see strong tailwinds propelling the industry forward. Innovations at the intersection of advancements in technology and biology will vastly improve the quality of our health and drive down the cost of healthcare. At Menlo, we invest at that intersection—backing novel life sciences companies (therapeutic platforms and transformative technologies) and breakthrough digital health companies (vertical SaaS and digital care)—and are particularly focused on the transformative power of AI. JPM was a strong start for the year and we are excited to see how 2024 unfolds.