JPMorgan Healthcare Conference-2010 Day One-Monday January 11

Over 5000 people piled into the Westin St. Francis Hotel in San Francisco for the 28th Annual Conference. Investors, Company presenters and entrepreneurs
were emboldened by good biotech sector returns in 2009 of 18-28% with many stocks reaching new highs. Seasonality has been a factor
with the so-called “January effect” where small cap stocks tend to spike up due to a number of factors but this Conference is paramount. For example the IBB ETF is up about 6% from November levels
Although financing opportunities are still limited due to a closed IPO window there is renewed optimism due to explosive scientific developments in molecular biology
immunology and genomics and how this will result in more targeted drugs and diagnostics.

Among the big movers Monday were :
AMAG up 7.9%, Array(ARRY) up 8.5%,Biocryst( BCRX )up 4%, Helicos (HLCS) up 4.6%,Ideninx(IDIX) up 9.2%,Quidel(QDEL) up 4.5%,MITI up 11%,
NovaVax(NVAX) up 14% and Seracare (SRLS) up 6.7%

At the Luncheon and Keynote Chairman and CEO Jamie Dimon of JPMorgan(JPM) gave an excellent synopsis of the current economic environment,
while detailing some of the causes of the financial meltdown . Dimon said ,”there is plenty of blame to go around and the risk management rules were not followed”.
Aggressive mortgages,securitization, derivatives and bad housing policy are among the culprits.
While the bailout of big banks is still a big issue (See Jan. 12 WSJ headlines) with the public Dimon felt that Secretary Hank Paulson did the right thing with little time to explore options and
averted a more disastrous scenario. He also has praise for Bernanke and Geithner. Dimon supports stronger consumer protection but doesn’t favor creation of a new Federal agency. The Feds could not avert the failure
of Lehman because it was an investment bank and the public outrage would have been considerable. However with more time, Lehman which had $20B in assets and $120B in debt
could have been saved from bankruptcy by restructuring debt with help from other private players. Dimon favors healthcare reform due to the number of uninsured and the stress on infrastructure such as emergency rooms but believes people need to take more responsibility for their health to combat smoking, obesity and management of Type 2 diabetes. The biggest issue in healthcare reform is how to reduce cost.

Also in response to Q and A Dimon made a number of key points:

-We need better enforcement of existing rules and laws but no doubt a major overhaul of the financial regulatory system may be needed.

-We do not need to re-instate Glass Steagall Act because that would not have prevented the meltdown of AIG and Lehman.

-There is $3.5T of commercial real estate debt outstanding of which 40% is held by banks. As equity is wiped out, debt should reach a stable level and new investors are coming in.

Rod Raynovich

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