JPM 39th Annual Healthcare Conference: What We're Watching
7investing

JPM 39th Annual Healthcare Conference: What We’re Watching

January 7, 2021 – By Samantha Bailey

If you’ve signed up for email alerts from just about any healthcare or biotech company, then you probably know that next week is the JP Morgan 39th Annual Healthcare Conference. From January 11 through January 14, companies will take advantage of the spotlight from one of the largest conferences held each year — for any industry.

The conference, simply referred to as JPM, will of course be held virtually this year due to the coronavirus pandemic. The absence of in-person meetings might take a bite out of the usual wave of partnership and collaboration announcements, but don’t worry: investors will certainly have a difficult time keeping up with all of the announcements made next week.

Although it’s not a scientific meeting (most companies won’t report clinical data), private and public companies leverage JPM to announce new products, new partnerships, or drum-up interest from investors. For example, it was at JPM in 2014 that Illumina announced the $1,000 human genome.

That brings up another important point: investors must guard themselves and their portfolios against hype. After all, seven years later, the $1,000 human genome is still not a reality. How do investors find the signal in the noise for the JP Morgan 39th Annual Healthcare Conference? 7investing Lead Advisors Simon Erickson, Manisha Samy, and Maxx Chatsko discuss why JPM matters to investors and four areas they’re watching ahead of the event.

 

Topics discussed in this episode include how JPM will impact valuations in the current bull market, the possibility for a wave of new public listings through special purpose acquisition companies (SPACs) and initial public offerings (IPOs), next-generation diagnostics such as liquid biopsies, and the emergence of artificial intelligence as an important tool in the healthcare technology stack.

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Publicly-traded companies mentioned in this podcast include Amazon, Biogen, Eli Lilly, Exact Sciences, Google, Guardant Health, Illumina, Invitae, Microsoft, and Twist Bioscience. 

7investing’s advisors may have positions in the companies that are mentioned.

This interview was originally recorded on January 6th, 2020 and was first published on January 7th, 2020.

 

Interview Timestamps:

01:30 – What is the JP Morgan Healthcare Conference?

02:37 – Why Should Investors Care about the JPM?

06:14 – Valuations in Healthcare

19:01 – Next Generation Diagnostics and Proprietary IP

29:14 – AI in Healthcare

36:49 – What We Are Excited About in Healthcare in 2021

Transcript

Simon Erickson  0:19

Hello everyone and welcome to this episode of our 7investing podcast.  I’m 7investing founder and CEO Simon Erickson. We’ve gotten used to as investors following companies through their quarterly conference calls where companies are reporting important metrics like their revenue growth or their quarterly earnings per share. But things are a little bit different if you’re a development stage drug producer, where it’s actually much more interesting information is the progress of the clinical trials and the progress that you’re making with drug candidates that you want to bring to market. And so it’s very exciting that we have a big event coming up this next week, the JP Morgan annual healthcare conference, simply known often as JPM, is holding its 39th annual meeting. It’s an all virtual event this year due to the coronavirus pandemic, but it is also one of the biggest events for the industry throughout the entire year. And I’m so happy to welcome our 7investing lead advisors Maxx Chatsko, and Manisha Samy, to help us follow this event, talk about some of the things that they’re watching as they look at this space, and just the predictions of what we think that we’re gonna have happen after JP Morgan is here. So Maxx and Manisha, welcome to the podcast this evening.

Maxx Chatsko  1:22

Hey, Simon. Hey, Manisha, how are you guys doing?

Simon Erickson  1:26

Doing great, Maxx. Manisha, are you ready to get started?

Manisha Samy  1:28

Let’s roll!

Simon Erickson  1:30

Maxx, let’s start with the highest level question. What is JP Morgan? Why is this such a big deal?

Maxx Chatsko  1:36

Yeah, so JPM, let’s start off when it is. It’s next week. It’s from Monday to Thursday or through Thursday, I should say. So January 11. through January 14th. And, you know, it’s a meeting conference, when you know, a lot of companies get to come and pitch themselves to these major announcements that are coming up, or there’s new product or some new service, a lot of acquisitions, a lot of deal making, usually, probably not too much of that. You know, with it being a virtual event, right? There’s not so much shaking hands, kissing babies anymore. Okay, no kissing babies at past JPM’s. I made that up maybe. But, you know, as an example, like, 2014, for instance, Illumina announced the $1,000 genome at JPM. Right? So these are the types of announcements that everybody kind of is anticipating, right, of that magnitude. It’s really the biggest event of its kind for, you know, the healthcare industry.

Simon Erickson  2:37

Okay, so that sounds pretty good (at) the 10,000 foot level. There is some kissing of babies, there are some big announcements of stuff going out there. This is an investing show. Why should investors care about the JPM?

Manisha Samy  2:46

Sure. So basically, the JP Morgan healthcare conference – there’s a main conference, and there’s a number of other side conferences surrounding it, is everything healthcare. So anyone who’s even tangentially affiliated with healthcare, biotech, pharmaceuticals, med devices, they tune in. It is basically an annual thermometer for the health of the life sciences industry. It sets the tone for the rest of the year. It’s especially important for companies themselves. So companies, both in the public sector and the private sector, a lot of times the strike deals during this conference, because it’s very rare for companies to be face to face all in one place. There are a number of things that I look at here as an investor. One, what is the conference focused on? (That) usually gives you an indicator of what’s up and coming. What are people looking at? What are companies looking at? What are kind of new technologies that is in focus? What are people paying attention to? I personally like to look at the private side of things, comparing it to the public market. And are there private companies that are competitive to public companies that I own shares? For example, why should I be looking up or if they IPO?  What are companies that I want to have, you know, on the radar if it chooses to go public? So it’s a fun time there. It’s basically drinking from a firehose. And I think as an investor, there’s a lot of information that is disseminated, that, you know, people should definitely take note of, and it’s also just fun, you get a lot of science.

Maxx Chatsko  4:26

So, drinking from a firehose is a good way to put it. There’s like, way too much information. And I think a lot of people are gonna be overwhelmed. Especially with it being digital, right? It’s just everyone’s gonna have to rely on, you know, press releases and virtual presentations and things. So it might be more ramped up this year, I think.

Manisha Samy  4:45

So usually at the JP Morgan conference, there are five presentation tracks. Because it’s virtual this year, there’s nine. So there are nine different presentations going on at any given time.

Maxx Chatsko  4:56

So we just did like a podcast on ASH, which is a maybe like the second biggest event of the year. It’s only for hematology, of course. But is there much clinical data getting reported at JPM? It’s not a scientific meeting, right? But are there companies still reporting clinical data?

Manisha Samy  5:17

Yeah. Um, so, you know, there might be a few companies who decide to release clinical data. Usually, it’s business updates. So even if there are companies that talk, you know, just had their quarterly earnings, for example, they might add, you know, one or two things extra or announce a new product launch. So not necessarily scientific, but mostly just things that they’re working on. They might divulge an extra, you know, tidbit or two on kind of scientific things. But I think most of the companies, they’re just talking about their product pipeline programs, and just answering questions that other companies might have or other investors might have.

Simon Erickson  6:00

Well, we’re gonna take a look at a couple of things that are really interesting to you all that are coming up from this conference next week. And by the way, Maxx and Manisha will be providing coverage on our @7investing Twitter handle throughout the week. Stay tuned to see the updates that they give as they learn more about what’s taking place at this conference. But Maxx, let me start with you for the first topic that we like to talk about here today. Manisha said there’s a lot of activity with both private and public companies. Let’s focus on the public side of that, because the first thing that you actually want to talk about is valuations in healthcare right now. What’s on your on your radar for this topic?

Maxx Chatsko  6:34

Yeah, so going into JPM, as most investors know, we’re seeing some pretty healthy premiums, especially in biotech and drug development right. Now, JPM, the conference, usually, you know, we see these large increases, some volatility around this week’s conference. So I’m interested to see and watch what goes on this year, right? We already have this increased volatility in the markets just at like a baseline level. So what happens when there’s other announcements or partnerships or acquisitions? I mean, things could get pretty crazy this year, right? I mean, I don’t have any crazy predictions or anything like that. But I think, you know, investors might want to hold onto their hats. So I guess, you know, the takeaway here for me is how I’m approaching it. You know, even in a bull market, when there isn’t what’s going on now, we still always have to guard against hype to be able to, you know, tease out the signal from the noise. So every year, there’s always companies that, let’s say they abuse, the power of the press release, right? They announce things that maybe it’s more fluff and marketing, and it’s not really anything, and there’s their stock price moves, they’ll jump on it. This year, I think we might see investors attach healthy premiums to you know, legitimate news. And you have to be careful not to like overpay too much for something, even if it’s a good product or as a growth opportunity. You know, so just to be able to tease out what’s hype and what’s not, I guess, is my my takeaway there for investors who are trying to, you know, ride the volatility, I guess.

Simon Erickson  8:07

Sure. Manisha I’ll hand this to you as well, because a topic we’ve talked about before is the inefficiency of this segment of the market, right? There’s data points, but it’s different than following the same store sales at Starbucks, and you’re looking at trying to clinical data and make sense of new technologies out there. I mean, do you have thoughts on private or public valuations of the companies in this space right now?

Manisha Samy  8:31

You know, traditionally, I feel like early stage companies, they’re riskier, but because of advances that we’ve seen in technology, and before I go on, early stage companies are always risky. Science is not – we haven’t validated everything. But I do think because of recent technological advances, we can say that the risk level is compressing a bit. And we as investors, and you know, people evaluating or valuing these companies, we haven’t necessarily stayed abreast of those technological changes in our personal analysis. So I think a lot of earlier stage pipeline programs are still under appreciated. Maybe not in 2020. It’s been very healthy for biotech. But even then, I think, you know, we focus so much on phase three trials, because it’s about to commercialize. There will be cash flow, or a commercial drug, so we actually have revenue. So these are revenue generating companies potentially. But if you look at preclinical stage companies and products that are in preclinical stages, or even phase one, phase two, I think a lot of these companies are still undervalued because we’re not buying their products properly, because we think the likelihood of failure is higher than potentially being approved. So generally speaking, I like looking at early stage companies and not only that, but smaller biotech companies. I feel like oftentimes these are founder led, the innovators of technologies are still part of the company or at some capacity – part of the Board of Directors. And especially now, I think, you know, in terms of technology and you know, you’re working with other technologies that are up and coming, they know how it integrates within their platform. So basically, I’m looking at it from a technology point of view, and understanding that so basically, I think, smaller biotech companies undervalued, if you look at the private sector, I used to believe that it was overvalued. But now I think that is changing a bit as we see more and more private companies emerge.

Maxx Chatsko  10:49

I would agree with that. You know, yeah, there’s some healthy premiums, obviously, and there is some wild speculation. But today, just today, I was reading about two different things. Like there’s something called bio molecular cognizance, which are coming out. There’s a lot of startups building pipelines around those. There’s Gamma delta T cells. There’s a bunch of different startups working on developing those. So there’s so much innovation, and there’s so much niche innovation, almost like people picking going real deep into specific topics, specific technical platforms. And it’s hard for the market to keep up. So I think that also drives some of the inefficient pricing we see with some of these early stage companies.

Simon Erickson  11:28

Yeah, and Maxx will definitely keep an eye out for that volatility. I think that you do a great job. And like, I think you were hinting out with you with the comments on this of separating the signal from the noise, what’s an interesting real development versus just what’s hype out there surrounding a big conference like this?

Maxx Chatsko  11:41

Yeah, actually, one example we just talked about, it was the $1,000 genome, right? So that was announced in 2014, at the JPM. And you know, that was really kind of technically still hype. Even today, we don’t have a $1,000 genome, I think the real cost you get are closer to maybe $4,000 per human genome for good coverage and everything like that. So we still don’t have it. So even that was hype, it’s, you know, seven years later.

Simon Erickson  12:09

Fair enough. Now, Manisha, let’s bring the second topic, because I think this is related too. We’re talking about valuations of public and private companies. We’ve seen a lot of IPO activity, and also M&A activity. What do you make of all this in the healthcare space right now?

Manisha Samy  12:25

I think we’re seeing a lot of technological change. And what Maxx was saying earlier, a lot of companies are merging on various kind of niche areas, diving deep in Gamma delta T cells. I think it’s because we’re able to accelerate the pace of research, that that’s why we have all these companies emerging. A lot of pharmaceutical companies, they’re reaching pen clips, so they’re looking out to acquire growth stories. So that means acquiring smaller biotech companies. In 2019, even before day one of the JPMorgan healthcare conference, Eli Lilly bought Laakso for $8 billion. And that basically indicated that they wanted to expand their cancer franchise, you know, it’s a huge market. And then we saw later on throughout the week, that there were more acquisitions based on broadening their cancer portfolio. So, you know, in terms of new IPOs, expected, or IPOs, or even mergers and acquisitions in 2021, I’m expecting a fair amount, maybe it’s not within that week of the JPMorgan healthcare conference. But you know, it might be a few weeks late. February, March, by Q1, I do expect there to be quite a few. And I believe there were 12 mergers and acquisition announcements and 2020. At the very least, I’m sure we’ll see an equal number in 2021. I’m really excited to see what happens during JPMorgan. Usually, that’s kind of the most exciting part of the conference.

Simon Erickson  14:11

Tell me a little bit about SPACs. You have some statistics here that there’s been quite a few healthcare related SPACs this past year.

Manisha Samy  14:17

Yes. So in 2020, there were 33 SPACs. Or healthcare focused SPACs that were announced. So of those 33, five of them found their significant other. So they’re private companies that they’re merged with. So they’re and correct me if I’m wrong, I think you know, a bit more about SPACs than I do here, Simon, but I think they have two and a half years or so to find a potential target to merge with. So I think in 2021, the focus will be on the private sector, the SPACs that have not found a private company to merge with, they will be kind of sifting through and listening to pitches of private companies. Finding targets that they can merge with. So I think, you know, for the for I think most of JPMorgan will be focused on the private side, finding new technologies, new up and coming, you know, whether it’s on the, you know, cancer side, whether it’s on the diagnostic side, or whether it’s focusing on autoimmune diseases, or rare diseases. So that’s gonna be really interesting. In I believe, so yes, that’s, yeah, 2020 SPACs, raised $6.3 billion. So that’s, you know, a fair amount. I expect, I’d hope that, you know, we’ll see a few SPAC based announcement during JPMorgan with maybe, you know, a handful, but this is definitely the time to be betting private companies.

Simon Erickson  15:49

Yeah, for anyone who’s listening to this podcast, or wondering what the heck we’re talking about a SPAC is a special purpose acquisition company, where funds can be raised upfront, and then that company, which is a financial shell company, can merge with an existing operating private company to bring both of them public. And at the same time, it’s much more efficient than the traditional Initial Public Offering, IPO, as we’ve gotten used to, and so many, if I hear you correctly, you’re saying it’s gonna be really interesting to see which of those private companies with some real innovative science are actually on display, because there might be a new way that they can start raising money these days.

Manisha Samy  16:24

Right. And also, one of the things I was thinking about is, you know, we have SPAC So for these private companies, they have a ton of options now. Do they want to be acquired by a company? Do they want to IPO or do they want to be a target for SPAC? So I think they have pricing power. So whichever methodology gives them, you know, the best cash value I think the cards are in their hands. So I think private companies are the winners right now for all intents and purposes. And I mean, I’m keeping my eye out in terms of you know, which private companies that I see are interesting and may have leverage, you know, whether it’s an IPO or they are part of a SPAC deal.

Simon Erickson  17:12

It will certainly be interesting to watch, especially if we get some of these large dealmakers, we’ve seen Chamath Palihapitiya doing some frontier technology stuff that he’s raising a lot of money through his SPACs. It’ll be interesting to see if we see some of the personalities like that in the healthcare side of things as well. Maxx, any thoughts before we move on on IPOs? Or SPACs?

Maxx Chatsko  17:31

Yeah, the way to maybe think about it is, you know, when a company does a typical IPO, they do a roadshow, they go and drill up interest and try to get it make it easier for those investment bankers to sell the blocks are shares you’re buying at the IPO? So JPM or these big conferences are kind of like a free roadshow, right? If you go and you get good publicity, it’s amplified across media because there’s a lot of coverage of this event. So it’s a good way for private companies, even some that might be in stealth mode, in kind of emerge and come out and, you know, showcase what their technology platform is, what their pipeline might be. And as Manisha said, you know, whether that’s an acquisition, there’s a lot of larger companies that are starving for assets or need to acquire growth, maybe their early stage pipelines aren’t that impressive, or they’re kind of pigeon holed in some of these. You know, I don’t want older, maybe focus areas, I don’t want to say that. But, you know, we saw like Eli Lilly trying to get into a lot more gene therapy, you know, by are still investing heavily in cell therapies. Right now. We just saw Biogen a good deal for building out an ophthalmology pipeline. So like these types of things, I mean, there’s there’s going to be a lot of activity, a lot of interesting things coming out

Simon Erickson  18:46

It will be interesting to see how a more efficient way of fundraising for those trials could put public companies much more on display. Maxx, the next topic you want to talk about was actually next generation diagnostics. What is on your radar with this topic?

Maxx Chatsko  19:01

This has been a really hot space in recent years. You know, when it started off, I don’t know decade ago, whatever. I always thought this was kind of like, right, like, oh, we’re never gonna be able to find signals with biomarkers and detect cancer early. That’s ridiculous. But yeah, we actually can’t obviously, right, we have these big companies Guardant Health now, EXACT sciences – Illumina is trying to acquire Braille – did that close? Do you guys know? Well, EXACT sciences just closed its acquisition of Thrive  just this week. So there’s so much activity here, so much money to be made. Obviously, these are brand new markets. There’s, you know, multi billion dollar markets. It’s just wide open for opportunity and capturing big market share. So we were talking about this internally. I mean, we stumbled across a new liquid biopsy platform or company like every month it seems. Have you ever heard this? Know what what’s going on?  I’m interested to see how you know what’s going on with JPM, what presentations they make any announcements you’re talking about, again, there’s so many companies, eventually there’s going to be consolidation. You know, Guardent Health ended September with over $1 billion in cash. EXACT sciences just made a big acquisition, but also in September with 1.3 billion in cash. So there’s a lot of smaller companies to to be gobbled up. I think we’ve kind of seen that already in in, you know, genetic testing, right. There’s like a couple companies are merging is like the big companies. They’re consolidating the field or buying up these tiny, little companies to add to their technology stacks. So I wouldn’t be surprised if we see that in liquid biopsies, or, you know, I would include other next generation diagnostics that, in that not just looking for cancer, but early detection of various other diseases.

Simon Erickson  21:01

Sure, and Maxx getting to the science of this and Manisha, I’d love to hear your thoughts on this as well. But kind of the fundamental sciences, we’re trying to detect things earlier in earlier stage, right? You mentioned Grail, you mentioned Guardant health, I mean, the ultimate goal of diagnostics is to be the least invasive as possible. So you have good patient outcomes, you’d have to pull out the scalpel, if you can use a blood test or something like that, but also to detect and characterize correctly, cancerous tumors through the bloodstream or through other ways. I mean, is this, or is it a lot of proprietary IP that goes into each one of these diagnostics? And do you think that’s what makes this area ripe for consolidation?

Maxx Chatsko  21:41

Yeah, so I guess there’s two ways to look at it. First, there’s a lot of context and nuance that goes into each product approval or liquid biopsy. So you know, there might be whatever, half a dozen products that are targeting, you know, non small cell lung cancer, we have to dig a little bit beyond that, right. It’s not just about the indication, these products may be approved for specific mutations and specific genes that might be for only patients that are eligible for certain treatments, you know, might be only using next generation sequencing, which I think everybody does now anyway. So it’s not just looking at what cancer are they looking for. It’s also all these other conditions that get slapped on the approval and the specifics of each approval. So that’s the first thing, it’s not as proud as it looks, there’s a lot of different ways to slice it up. Second, is, you know, the longer the holy grail is like, how early can we detect cancer, right? Right now we’re detecting you know, more advanced cancers, which is still very valuable. And using it for detecting recurrence, people have had remission, so that’s very valuable as well. But the early we needed to detect cancer, the easier it is to treat, the better the prognosis for the patient. But that’s also a much harder data problem, right? So I found this little example here. So most of these platforms, look for something called cell free DNA, also called circulating tumor DNA. So it’s abbreviated with cfdna, or CT DNA, I’ve seen both means the same thing, I think. So for you know, we have prenatal diagnostics, right. And the cell free DNA of you know, the baby in the mother’s blood is about 10%. That’s a very high percentage. And that’s why you see these products, you know, they’ve been around for 10 years, remember that company saquinavir, a while ago, that’s when I started investing when I was a baby, right? So 10% of the composition of maternal blood, that’s pretty high percentage. For advanced cancers, though, that cell free DNA composition drops all the way to point four 6% of what’s found in the blood. So there’s a lot more noise to use that analogy, again, very small signal of what you’re actually trying to find. So you need very good detection tools, and you need very good computational power to be able to detect that signal. But then when you get the early cancers, the cell free DNA composition, the blood drops, all the way to point Oh, 1%. So it’s incredibly difficult data problems, all you need a lot of data, you need a lot of computational power, we probably need better reagents and acids and proteins and enzymes that we don’t even have yet. So all these companies are, you know, trying to race ahead and get there and who can have the first one or who can have the best atom, you know, so we see garden health has its own proprietary company, platform, rather, for early detection of cancers. You know, Grail obviously, that’s what the whole platform is built around as far as I know, exact sciences. That’s why it acquired thrive, thrive has, in my opinion, what might be one of the best so far, platforms for early detection, you know, liquid biopsies. But the caveat, of course, is most of these are in studies that won’t be releasing data until you know, the second half of this decade or, you know, the end of this decade. So it’s going to be a while before that You know, these products emerged, but, you know, man, what it means for healthcare in the prognosis of cancers? I mean, it’s how you put a value on that right? Right now it’s kind of hard to see, but it was gonna come down to the data, who can detect it at one stage? What percentage specificity and selectivity do you have? So, you know, that’s how this competitive landscape is gonna kind of get sorted.

Manisha Samy  25:23

Yeah, I predict the not the winner, because I think there, there’s definitely enough room for multiple companies to or liquid biopsy companies to have, you know, great technology. But the tricky part would be timing, when to get the actual liquid biopsy. DNA is basically, these are fragments of nucleic acids after a cell undergoes a pop ptosis or necrosis. So it’s only in the bloodstream for a certain period of time. And for specific types of cancers, the duration of how long is in the bloodstream is different. So if you wait too long, so say, you know, maybe you waited too, you know, two days too long, before you got your liquid biopsy, it won’t show it, it won’t show up as positive or even if you are positive. So you have to time it right. So I think computation is going to be extremely important. Understanding the disease, and it’s going to be very different for which type of tumor as well, which Maxx is saying, so it’s gonna be very specific to that. So I think a platform that is modular and scalable for multiple types, or that basically can predict based on the type of tumor and the kinetics of that tumor will be helpful. And then recurrent monitoring is also going to be huge market, a lot of these companies will be able to positively or negatively confirm the presence of a tumor, but then can they adequately do recurrence monitoring for these cancers? I think that’s going to be an important part as well. So I think plenty of room for winners, and then you can tell that this is a huge market Invitae had acquired Archer diagnostics for $1.4 billion. And just shortly after, that’s when Illumina decided to rail Grail back in into and acquired them at a premium for that matter. So a huge area, you know, they’re in terms of therapeutics, no, definitely huge market, but are detecting early stage cancer. That’s the holy grail that we’re trying to achieve here.

Maxx Chatsko  27:37

And that’s a good point from Manisha about, you know, the timing of when, you know, perform a liquid biopsy. So a lot of these companies are building technologies. So, you know, cell free DNA is kind of what they’re focused on. But then there’s all these exhilarating things around it that they’re trying to find as well. So companies are building technology around additional biomarkers, because you might need to look for specific proteins, or, you know, other types of DNA, or not just that you can detect the cell free DNA, but also, you know, how is it methylated? You want to look at the epigenetics of it. So there’s all these other really super nerdy things Manisha and I could talk about forever. Maybe we should probably talk about that when we get some the article system up on our website, but I’ll go into the nuance and context of it. But there’s all these other areas. And so it’s, it gets very complex very quickly. And I think that’s where, you know, these tech platforms will be differentiated, as well as Manisha said, a modular scalable one as well.

Simon Erickson  28:37

Yeah, I agree. And just to pitch in with my two cents to it, it’s really encouraging to see a lot of the payers getting on board with this, you starting to see some local coverage determinations for Medicare, there’s codes now you can actually get a liquid biopsy reimbursed. It’s not just out of pocket for patients, for the doctors, there’s things like that. A lot of that overhead, you know, just kind of stuff like that, that we take for granted. When you’re really technical company, you don’t want to have to deal with a lot of that stuff like dealing with the payers and Medicare and stuff like that. So I think it makes the case also for consolidation in the space as well. Manisha, let’s change. Let’s change topics a little bit. Let’s talk about AI and healthcare. Something else you wanted to talk about that you’re watching for JPMorgan?

Manisha Samy  29:14

Yeah, so I was looking through JP are just different panels. They had an AI and then also the side conferences. There’s a huge focus on AI and healthcare. So I’m excited to see what advancements we made. You know, Maxx was the first to note this, when AlphaGo or for deep minds AlphaGo. You know, for protein folding your that was a huge feat for biotech and healthcare, seeing what else is up and coming. So there’s AWS and Illumina. There’s a conference or not a conference, a panel just on that. Seeing how a cloud services and how, I guess AI there, there’s a different panel or I guess event called 40 meets AI. So they’re talking about advancing drugs, devices diagnostics and digital health using AI. I think we will be seeing more and more tech companies collaborating with biopharmaceutical companies I’d like to see which biotech and biopharmaceutical companies are looking at are looking towards collaborating with traditional technology companies. You know, in 2020, we saw that trace bio sciences, for example, I decided to collaborate with not only just Illumina, which is a device or tools and diagnostics company, but Microsoft. So we have Microsoft, Apple, Amazon, Google, they’re all entering into the health arena. I think it will be interesting to see which biotech companies decide to go, I guess, the tech route, and I think AI is going to become a very important pillar in accelerating advancing biotech innovation. So that’s part of the reason I will be paying attention to that I think those that choose to go out, go go towards the AI route, will be long term winners, especially in as we’re, for example, when we were talking about liquid biopsies, you need that computational rigor, these technology companies have that capability. So it’s not just biotech, we can’t just have traditional biologists, but we need we need engineers, computer scientists, to create these algorithms predict certain candidates. We want to increase productivity in R&D. So I think come those biotech companies that are talking about AI, and collaborating with technology companies, therefore looking and I think, as an investor, that’s an important metric for me to look at. Because I think those would be the long term winners. So not, you know, companies that are just still working on or looking towards, you know, I will be using a pipette. And doing everything kind of the biological route, I think there’s a convergence that’s happening. And that’s where innovation is.

Simon Erickson  32:12

Let’s follow up on that one more step. Maybe you should, because we saw IBM Watson try to get into AI into healthcare a couple of years ago, didn’t work. pushback from doctors, or at least a lot of doctors weren’t very happy with the solution that it was coming up with. But now you see platforms like Google trying to get a lot of clinical data from hospitals from Essential health in the midwest (of the) United States. I mean, do you think it’s the right time for AI and healthcare right now, this has traditionally been a pretty slow moving industry that’s kind of shied away from tech companies creeping into their turf, but are things a little different. Now we’re gonna start seeing a lot more announcements.

Manisha Samy  32:45

I like to think so I, so I so I have worked with IBM Watson AI in terms of doing so this is at Memorial Sloan Kettering Cancer Center. And in differential diagnosis, yeah, there are a few times where IBM Watson, they completely predicted, you know, giving the wrong treatment, and the patient probably would have died if they listened to IBM Watson. But AI, the improvements, we’re seeing an AI, it’s exponential. So I think we are kind of at the prime point where we can actually trust AI. So if you look at CRISPR, for example. So using CRISPR genome editing. So AWS actually has a free tool for researchers that they can use to basically predict, okay, here are guide sequences that you can use that will make sure that you don’t have off target genome editing. And that’s helping researchers expedite their research process. So if you’re looking at Google or any of these other tech companies, I think right now is the time because we’re seeing more accuracy. I don’t remember the statistic maybe Max, you remember, but what was the accuracy rate for AlphaGo? in predicting alpha or predicting protein structure? It was something

Maxx Chatsko  34:02

I remember, it just blew away all the other teams that were there, and it wasn’t even close. But, yeah, so I mean, I would agree, but I would say maybe I’d be a little more careful still, with AI in bio. So the thing to remember is, you know, it’s not just about having data, it’s about having annotated data. And biology is very complex, we still don’t have a great handle on it. We still have a lot that we haven’t standardized. So I think like you said, using AI can go off the rails pretty quickly if we get to, you know, to ball of ourselves with Oh, yeah, the computer will figure it out. It’ll give us the answer. Like, you know, it doesn’t always work out like that right now. So there’s specific areas where I think it makes a lot of sense. You know, we can speed it a lot of like, pictures of suspicious looking moles and where they actually melanoma or not, and we can train a computer to do that better than a dermatologist and saves everybody time and money. So that makes sense. You know, it took deep mind years, and a lot of data and iterations to be able to, you know, get the results that did last year, you know, at that conference for protein folding, so but when to start off, it wasn’t necessarily that good. So it takes time to build out these data sets and tweak these things. Still an amazing advancement. But, you know, there’s other areas where maybe it doesn’t make sense right now, or maybe won’t ever make sense. I don’t know. But yeah, like in drug discovery, right? We would need a lot more data early on. So But yeah, I didn’t know there was a TPM. I didn’t look at the side conferences going on.

Simon Erickson  35:45

Yeah, definitely sounds like AI is going to be a tool that seems like it’s really innovative right now. But I wouldn’t be surprised if we see so many companies just kind of all across the board using that within just a couple of years here. And so to close this out, you know, I’m gonna go I’m gonna put both Manisha and Maxx on the spot. But I’ll give them a little bit of time to think about this. And I’ll answer it first to ask what is one thing in healthcare that you personally are really excited about in 2021. And I might go first, just by saying that I think that something I’m pretty excited about is seeing the shift from just the clinic and just the hospitals to kind of consumers getting more options to being more involved with their own health. We’ve seen companies like good RX going public, which allows people to choose from pharmacies more efficiently, we’ve seen telemedicine and tele doc kind of bringing people to computer screens to more regularly be checking in now with their acquisition of livongo actually getting data that empowers them to kind of be a little bit more involved. I like this push to consumer facing healthcare, that a lot of companies are tend to be pursuing Maxx, I’m going to go to you first, what’s something you’ve really excited about in healthcare in 2021.

Maxx Chatsko  36:49

I’m going to stick with what I said earlier. I mean, I was just reading all day about this. So it’s on my mind, but just how, how many startups are out there and they’re going, they’re picking specific, you know, niche areas. It’s not just, you know, maybe five years ago, a company would have said, oh, we’re a gene therapy company. Well, now there’s, you know, you’re not just the gene therapy company, you might be well, we’re a gene therapy company. But we’ve engineered this new vector that can hold more DNA. So we can actually, you know, insert larger trans genes, you know, where we can target different tissues other than the liver, or muscle, so it’s, there’s like very specific pipeline and technology platforms that are getting built out. Or again, I was reading about biomolecular promises. I don’t even know what those were until today. So, and there’s a whole gang of startups, investing in that and a bunch of big money from Big Pharma, or larger pharmaceutical company, I should say, you know, investing in those and helping them with their, you know, series A and B rounds. So just the emergence of all these areas, it’s exciting. And to use the quote from Aneesh, it’s like drinking from a firehose, there’s so much to keep up with, but I’m looking forward to it.

Simon Erickson  37:58

Manisha what’s something you’re really excited about 2021 in health care?

Manisha Samy  38:01

There’s so much I’m excited about. First of all, I am so excited to get more human data for CRISPR based clinical trials. I mean, I’m not saying you know, these are one time cures, but the fact that they’re one time treatment paradigms, I would love to see it work, or, you know, maybe it won’t work, but I’m excited to see the data. I have high hopes for them. So I definitely am excited about that. I’m also excited about DNA based storage improvements in throughout 2021. Seeing what happens there. And I’m also excited about advancing microbiome based therapeutics. I at one point, people talked about it quite a bit. It kind of fell off the radar. So I hope that 2021 we engages that field a bit more. So by microbiome based research, basically, were more bacteria than human. So how these bacterial cells that are in us how that affects our health, and using kind of our gut microbiome to change our kind of health status. So I think that’s a very interesting concept. So I want to see that field advanced a bit and I’m excited, because I think there will be seeing more clinical trial data there and more companies emerging in that field.

Simon Erickson  39:24

Well, no, no shortage of exciting things going on in healthcare. Right now. Our team is ready to drink from the fire hose and see what happens at JP Morgan healthcare conference next year. Follow our coverage of the event. We’re @7investing on Twitter, Manisha Samy’s twitter is at Msamy_ 7 that’s M S A M Y underscore 7, and Maxx is @7MaxxChatsko. That’s at the number 7 M A X X C H A T S K O. We are really excited about all the things going on and we can’t wait to give some more updates on what happens at the conference next week. Maxx and Manisha, thanks very much for being on this episode of our 7investing podcast. Thank you everyone for tuning in. We are here to empower you to invest in your future. We are 7investing.

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