Three Things to Pay Attention to at the 2020 J.P. Morgan Health-Care Conference

Presenters at the main show include Bristol-Myers Squibb (ticker: BMY), Gilead Sciences (GILD), Johnson & Johnson (JNJ), and Regeneron Pharmaceuticals (REGN). The gathering comes as the health-care sector has surged over the past three months, with the S&P 500 Health Care sector up 16.1% and the iShares Nasdaq Biotechnology ETF (IBB) up 23%. The broader S&P 500 is up 11.4% over the same period.

Yet significant worries remain. At the start of an election year, drug pricing remains a key issue in the political debate. While it has receded in recent months as foreign crises have heated up, it could easily return to the headlines. So could calls for Medicare for All, which shook the sector early last year.

M&A

Biotech companies often save their merger-and-acquisition announcements for the conference. As Evercore ISI analyst Josh Schimmer wrote in a note out Wednesday, January is a particularly busy month for biotech M&A. In 2017, Schimmer wrote, nearly half of the value of the year’s biotech deals was spent in January. One exception to the trend? January of 2016, the last presidential election year. “Entering 2020, will companies look to keep their heads down with modest guidance?” Schimmer wrote. “If so, we might see another choppy month, although the macro setup is quite different this time around with expectations around conservative price hikes already in sentiment.”

Biogen

Also likely to be heavily attended will be Biogen’s (BIIB) presentation at 3:30 p.m. Pacific time Monday. The company, which announced a new $5 billion stock buyback in December, was the biotech story of the year in 2019, when its experimental Alzheimer’s drug failed in clinical trials, and yet the company said it still planned to submit it for regulatory approval. Investors will be listening for any news on the drug’s future, including clues on plans for when the company will submit it to the Food and Drug Administration.

The election

Executives will likely be fielding questions about how they are thinking about the coming presidential race. “The line we expect to hear most, is that managing through various political climates is a constant exercise/challenge and management teams are dealing with 2020 no differently,” Holz wrote. Drug pricing, health insurance proposals, and other issues will dominate the discussions, though the implications of the election will of course go far beyond those points. Watch for how executives discuss these issues, and how much they are worrying investors.

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