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  • Jonathan Poyer

JPM Healthcare Conference and Hopes of a Biotech Resurgence

The S&P select biotech index enters 2023 following its two worst years on record and remains more than 50% off highs set in early 2021.

Specialists see upside potential into January's annual JP Morgan Healthcare Conference as companies often announce positive developments. Specifically, expectations are rising for strong earnings and guidance pre-announcements as the therapeutics business model continues to perform independent of broader economic headwinds.

Likewise, reset valuations, cash flush pharma balance sheets and the strategic imperative for growth heighten expectations for M&A. Creative destruction will continue to cull the herd of aspiring development stage SMID innovators, but the resulting group continues to offer an improving risk / reward profile.

Aurinia Pharmaceuticals (AUPH) reminded investors alpha is often found at the intersection of oversold conditions and good news. Shares rallied nearly 40% on news they entered into a settlement agreement with a patent challenger. AUPH stock was punished in 2022, falling >80% to near cash value as the patent overhang shook out weak hands and emboldened shorts.

Vera Therapeutics (VERA) went the other way, falling >60% post-market as their experimental therapy for a renal indication fell short of wall street expectations.

The first day of trading in 2023 seemingly dispels any misconception about the critical role stock picking will likely play to drive performance this year. Nearly every major wall street strategist is now predicting the S&P 500 will retest or make a lower low sometime in 2023 as the economy enters a likely recession making the relative setup for a fundamental, thesis-driven life sciences portfolio as attractive as ever.

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