Odd Lots - Lots More on What's Hot at JPM's Health Conference

Episode Date: January 12, 2024

For anyone interested in investing in the health-care space, JPMorgan's annual Health Care Conference has become one of the most important events of the year. We were not able to get to San Francisco this year, but one of our favorite Odd Lots guests, James van Geelen of CitriniResearch.com, was in attendance. He called into this week's episode of Lots More to tell us what the leading players in health care and medical technology are buzzing about right now — and he confirms that AI and GLP-1 weight loss drugs are at the top of everyone's mind."See omnystudio.com/listener for privacy information.

Thanks for listening to Odd Lots. Follow the show on Amazon Music for more future episodes or just ask, Alexa, play the Odd Lots podcast on Amazon Music. How's San Francisco? It's great. You know, like, I think that a lot of people told me it was going to be a dystopian hellscape. And it's not that bad. Wait, it's the first time you've actually gone, right, to the J.P. Morgan Healthcare Conference? To this one, yeah, this specific conference. And what's your first impression of it, I guess? or anything that surprised you?

I guess. What really surprised me was the security. Like I've been to conferences before where it's kind of like, you can't even go into the hotel without like your past and they're really strict about it. So I guess that was probably the most surprising thing. But other than that, it's, you know, the meetings are cool. The conference, it's still a conference, right? Like it's not, I'm not going to be like, oh, God, this is, you know, the coolest thing

I've ever seen in my life. Although that did kind of happen here with there was a company that was presenting that has, I guess, like you can call it like, drug GPT, right? It's like artificial intelligence, but used to like find new drugs. And that was really cool. I did a deadlift. One, two, three. Hedgemy. Okay, go. What two, Jimmy. Okay. Gany. Barges. This is an after-school special, except I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the U.S. Where's the best with impostin? These are the important questions. Is it robots taking over the world?

No, I think that, like, in a couple of years, the AI will do a really good job of making the Odd Lots podcast. And people will say, I don't really need to listen to Joe and Tracy anymore. We do have... Cha-ching? The perfect guest. You're listening to Lots More, where we catch up with friends about what's going on right now. Because even when the Odd Lots is over, there's always lots more. And we really do have The Perfect Guest.

We're talking to James Van Geelan of Citrini Research. com, also known as Satrini on Twitter. You might remember him. We had him on All Thoughts back in August to talk about weight loss drugs, including OZemphic and how they were going to change everything. That was kind of a prescient conversation, I think, because since then, we've seen even more excitement for a lot of these drugs, and the stocks have taken off even more. James, is that what everyone's talking about at that conference? I think it's split kind of 50-50 between the GLP1 drugs and then the ADC cancer stuff because of the cytokinetics acquisition that was announced. I don't like going to conferences typically.

You know, every once in a while, they're okay. But what is like, I know like the JP Morgan Healthcare Conference. I know it's a big deal. Why is it such a big deal? What is it exactly? And like why this one in particular, how did it become like such an important event for healthcare investors? I don't know the history of the conference. But when you look at the agenda of who's speaking here,

It's, you know, everyone that's a big deal, everyone that you would want to know what they're doing, they're kind of here. I think there's even more value in just sitting in some of the hotel bars. Like, oh, from hearing how people are talking, you know, like people seem pretty optimistic on like med tech in the funding environment. And that's almost more valuable to me than the conference itself. So by the way, we're recording this January 10th, Novo Nordisk hitting yet another all-time high right now. It's kind of crazy, Tracy, like for all of the hype about the GLP1 drugs, A, the stocks keep going higher. And B, I feel like every day there's some other article or a thing about here's another thing that they do well or another area that we're researching that shows promise

where it's not just about weight loss, you know, like compulsion or other things. Like, it's pretty wild how this is not slowing down. This is my opportunity to reject the idea of the odd lots curse. and that we top tick a lot of these things. We did not top tick Novo Nordisk stock, okay? There's a bunch that we haven't top ticked. Yeah. Actually, when I got the invite to come back,

I remember everyone that was like, if you go on a podcast and you talk about this trend, like that's it, it's over, you know? So when I got the invite to come back, I went and I looked at like Lily and Novo. So I think it's like 81% of the time they have been at all-time highs since. Since that, so I think we can put the oddlots curse rumor to...

We're not trying to time the market. We're not here to make recommendations, but we are just trying to establish that not every time we talk about a trend, it's at the top. And I'll just say the other one, we've done multiple episodes over the years, over the last year, relating to Nvidia and semiconductors and Tracy, Nvidia at another all-time high today. So we're just getting these on the record. We're just journalists who want to be time-lawed. We're just trying to want to be timely. Okay, so within the GLP1 world, what's hot?

What are people talking about? What's interesting within GLP ones? Well, there's two main things, right? You got the oral drugs and, like, Lily's CEO had a fireside chat type thing. And I have this big realization. I don't know if this was like common knowledge among people that are healthcare specialists, but I had a big realization that basically with these oral drugs, it's not so much about the fact that like patients don't want to use these auto injectors because as we've seen people are pretty much fine with the auto injectors. The thing is the auto injectors are super expensive and like very fine. So it's kind of like the oral drug, right? Like it's very easy to make a pill. And the eye chain is like not the same as the auto injector. So it turns out the way that he was speaking, it really gave me the idea that.

that like these oral drugs, right, like Lily has Orph and Novo has one, too that's in the, in the works. And they seem to be kind of like the rate limiter, right? He had something that he said about how he sees supply for these drugs being a constraint for, you know, the next 10 years. And then he said, that's not a bad thing, right? Because we have, you know, half of, we have, I don't know, 500,000 people in the U.S. that are on these drugs. and 110 million people that theoretically could or should take them. And that doesn't even count in Brazil or China or India, right? That's the main thing.

So one of the things that lives rent-free in my head ever since we first spoke to you was Titan stapler. Do you remember that? Like this company that makes Titan's stomach staplers. And I'm wondering, you know, obviously people are talking about the sort of positive impact. of weight loss drugs, GLP1 on their bottom lines. But is there anyone at the conference that you've heard or seen talking about negative impact? Honestly, I think that ever since right around the first time we spoke, there was a wave of some people that fell on the sword, so to speak, kind of like how Chegg did with artificial intelligence. I think that once they saw the stock

reactions, once you come out and you say, you know, GLP1 drugs are killing us. And then your thought goes down 10% a day. I think they're a little more careful about it now. They're not readily offering that information, but also at the same time, obviously I had a very, like, high conviction thesis on the idea that, you know, CPAP machines and the Titan stapler and all these things would be actively affected. But it got so priced in so quickly. And some of that was not GLP1 stuff, right? Some of that was basically just rates, like don't attribute to GLP ones, but you can attribute to interest rates, I guess. And so I think with MedTech where it is, it's kind of, even with the impact there, they can kind of say, okay, you know, but it's a little bit

better than you feared. ResMed, a big maker of CPAP machines. That's bounced a little bit over the last few months, though still down from where it was a year ago. You know, I was walking back to the office from lunch today, and I saw a sign for weight. watchers about like get on their glp one program so obviously they're trying to like pivot to being a glp one player show how they can fit in but uh that stock not doing so well it's uh down quite yeah it did a whole round trip went up like 150 percent then went all the way down and the thing if you're in the glp one space at all and eli lillies starts doing what you're doing it's not great it's see Tracy i feel like investors you know they love to get cute with things like

I miss the Eli Lilly trade. I'm going to buy this other company. And then you see like, you know, and V-Video's the winner, it's so far been the winner. Novo's the winner, Lily. And then all these other like secondary tertiary plays. It's like kind of dice here.

Yeah. James, you mentioned something else that I think is kind of like a big factor here, which is just interest rates and the move we've seen there. And you mentioned everyone being sort of enthusiastic about funding availability for pharma going into 2024. How much is some of this excitement just a pure, rates play on the cost of funding for, you know, these companies that spend a lot of money on research and development actually coming down? I think it's like a rate of change thing, right?

It got so bad that even a incremental improvement is going to be met with overwhelming kind of enthusiasm, enthusiasm, because the regional bank stuff, you know, Silicon Valley Bank collapsing hurt the biopharm and biotech industry significantly. And I think that it's kind of been so long where rates were just going up and everything's going to stay higher for longer. And now, you know, there's a glimmer of hope on the horizon. And it's very easy if you're in this industry and you've just been hearing no for the past, you know, year and a half to say, oh, finally. I'm June Grasso, inviting you to join me for the Bloomberg Law podcast.

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Apple, Spotify, or anywhere else you listen. On the East Coast, listen as you start your day. And on the West Coast, catch up in the evening. That's the Bloomberg Law Podcast with me, June Grosso. Subscribe today wherever you get your podcast. Wait, can we go back? I think you said there were like two things in the GLP1 space. You mentioned auto injectors.

And so I was curious what the other one was. The other thing is that we're kind of finding out, or I guess we already knew, But the thing with the GLP1 drugs is that they will make you lose weight, right? And if you are morbidly obese, that's great. Now, the problem is you are going to lose some muscle, too, right? When you say you lose weight, it's not necessarily that all that weight is fat. And that can be a problem just because kind of common sense, right? It's better to have muscle mass.

Muscle mass is great, especially if you're diabetic and also from like a cosmetic aesthetics perspective. So now, kind of the thing that everyone is focusing on is finding a combination drug to be used alongside these GLP ones that makes it so that you either do not lose muscle when you are losing fat or that you actually gain muscle. So there was some data from regeneron that was, in my opinion, just like everything else that happens, very bullish for Lily. They had a acquisition. They bought Versanus for $4 billion. And Versanis has a drug called the migramath. And when you combine the migramath with, you know, semi-glutide or another GLP-1 drug, the phase one trial was showing that you will lose 12% of your body weight,

but you will also increase your lean muscle mass by 6%, which is a cheat code, right? Like there is nobody who doesn't want to lose 10% of their body weight and then also gain lean muscle mass. But it's also very important with like the elderly population. because if they get weaker than they're more at risk for falls or injuries and, you know, making sure that like bone mineral density stays high. So, you know, but at the same time, it's also, if you make this drug, that seems like a money printer to me. Well, also, I think muscle building drugs already exist in the form of anabolic steroids,

although I doubt anyone's recommending that you go on an Zemphic and then take steroids as well. But James, you mentioned at the very beginning of this conversation that you saw something cool And you sent me a little video of this. And when you sent me the video, I had a sort of realization that we are truly in the future in some respects. Because you sent me a video of a presentation of basically like an AI for drug development. So drug GPT. And you recorded the video using your meta sunglasses. I am speaking to you guys right now on them.

It was definitely future coded for sure. I mean, the thing was this was recursion pharmaceutical. presentation and theirs was at you know 715 in the morning so it wasn't very crowded and then invidia presented later but recursion was the one that had the demo they did it right in front of you it's like if you loaded up chat gpte and started asking a questions but they were they look it's called low i call it drug gpt just because it's funny but they opened up this program and then started they said you know give us a list of molecules that are going to target raf one or and and it just gave them 50 new drugs and then they can refine it down based on how likely it is

to have this side effect or that side effect or what the structure activity relationship is or you know the dose response curve just based on you know this predictive AI and how do we know well I mean how do we know that the program well yeah I mean like so like they like they give you some molecules and stuff but like how does anyone know that ultimately this is where does it go from there. What's the evidence that this is, you know, produces drugs or finds new combinations of molecules faster than traditional routes? Well, when he was doing it, you kind of in the audience, you have to assume that there are some people that know biochemistry pretty well. They got into some stuff that, you know, I couldn't really follow, but he was talking about how, oh, you know,

if there are any chemists in the audience, you'll recognize this drug looks a lot like this drug. And basically they went through the whole, I mean, the thing is, I dropped out of med school, right? So, like, I could follow for a very limited amount of time. But I think the main point that they were getting across was that in biotech and biofarmat, they spend so much time and money on things that might just not work. And if you have a program that can basically make you faster to fail, right, where you're kind of figuring out what's going to be a waste of time and what might not be more effectively, that that's huge, right? Maybe it's not that this is going to find the cure for cancer,

but the company that, you know, eventually does find the cure for cancer, they're going to be a lot more efficient with it because they're not going to be wasting their time on stuff that, you know, maybe this program can tell them obviously going to work. How often are people mentioning AI in general at that conference? I'm curious if it's sort of like infiltrating to the degree that it seems to be. be in financials conferences, for instance. Oh, yeah, it was a ton. I mean, you know, Lily didn't mention AI.

Novo didn't mention AI because they have their own thing. But then, you know, you had Sanofi, Amgen, both talking about their new AI platforms. And Invidia was here, right? The Nvidia presented here and had a whole thing about their predictive analytics platform and Ionimo. And it was, I mean, you guys should have seen when the presenter from Nvidia concluded her speech. it was like night of the walking dead literally the entire audience just like shambling up like just trying to get a little bit of the invidia magic on speak and oh that's always the most awkward moment at conferences when the speakers get off stage and everyone kind of like awkwardly stands around waiting for their chance to introduce themselves and network hand them a card tell them about their company yes totally yeah i was worried it was going to get violent you know and like the other thing the ratios at these

conferences, like finance conferences, not great. And like, this is like a woman with 90 men and two women just standing out. It was like not the, the coolest scene. By the way, Tracy, you know what stock is at basically the same level it was 10 years ago? I have no idea. Pfizer. That's one company that my understanding is is not in the game at all on GLP1s. Of course, it went nuts in 2021. Yeah. The hot thing was COVID injections. But obviously, I think, Many fewer people these days are getting boosters than people may have expected two years ago. And that stock is literally where it was. No, maybe it's paid dividend and stuff since then.

That's not like it's literally where it was in 2014. So don't miss the GLP 1. Pfizer had an oral gLP1 and, you know, ditched it. The side effects were just too bad. And that's going to be like a serious risk to look out for, right? Because, you know, with the oral preparations of these like peptides or like any really like endocrine drug, there's always, it seems at least, you know, I don't have science to back this up, but it seems like when you have an endocrine drug and you're trying to turn it into an oral

instead of, you know, an injectable, the side effects get really crazy. And that's definitely, I think the biggest risk to like Lily Novo would be one of them gets the oral and the other one has side effects that are way too bad, right? Because like I said in the beginning, right, but the oral drug will make it so that they can take advantage of this huge demand. They're constrained by supply. But the supply of the oral drug would, you know, kind of alleviate that. And if one of them has it and the other one doesn't, that could really change the landscape.

So, James, in addition to bringing us dispatches from the JPM Healthcare Conference and being our sort of eyes on the ground, our sunglasses on the ground maybe, what else are you going to do in San Francisco? Like, who are you talking to while you're there? Oh, you know, I message all the people that I know that have a kind of venture capital health care vibe. And I'm not really super involved. Like I just like trade and, you know, I'm in my own office and trading and I'm not super linked up with all the finance people. So I didn't get invited to any of the like events or anything. But, you know, I can still have a good time in San Francisco myself. James, I think that's it. Oh, yeah. Go ahead. I just want to say, Joe. Oh, wow, you are a real musician. Finally, finally a little respecter on here. No, I appreciate that. I met James in person at our concert in December.

Very kind of you to say on here. Thank you so much. I was surprised. I kind of expected it was a joke, but you are a musician. Very nice of you to say, great. Let's leave it here. This is a great place to end it on this note. Let's leave it here.

That's a great place to end. He kind of broke up there at the end. I don't know if we got that on audio. I think we did. I heard it. I heard it. I heard it. I heard it. Lots more is produced by Carmen Rodriguez and Dashel Bennett with help from Moses

Ondom and Kail Brooks. Our sound engineer is Blake Maples. Sage Baumann is the head of Bloomberg Podcasts. Please rate, review, and subscribe to Odd Lots and Lots More on your favorite podcast platforms. And remember that Bloomberg subscribers can listen to all our podcasts add free by connecting through Apple Podcasts. Thanks for listening. It's Drug GPT, Joe.

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