Big deals, data kick off JPMorgan health conference

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The JPMorgan health care conference hadn't even officially begun when the first big piece of news of the week hit: Irish drugmaker Shire said Sunday morning it's purchasing orphan-drug company NPS Pharmaceuticals for $5.2 billion.

Hours later, data from Alnylam Pharmaceuticals in hemophilia: in a very small, early-stage study, the drugmaker showed that its experimental therapy helped improve blood clotting, preventing the bleeding that characterizes the disease. Bristol-Myers announced a late-stage trial of its drug Opdivo was stopped early because it met the study goal: showing it helped lung cancer patients live longer than the comparator drug, the chemotherapy docetaxel.

Then, in the wee hours of Monday, another deal: Swiss drug giant Roche said it is buying a majority stake in diagnostics company Foundation Medicine, paying more than twice Foundation's stock price per share.

Just your typical kickoff to the year's biggest health-care investing event.

More than 400 companies will present this week to about 9,000 attendees at the JPMorgan conference. And after the tear biotech, in particular, has had—outperforming the Standard & Poor's 500 Index for five years straight—it's a key week for gauging sentiment about the sector for the rest of 2015.

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The early pieces of news fall in step with the themes that drove biotech valuations last year: mergers and acquisitions, and excitement over medical advances (not to mention strong sales of marketed products, which we're likely to hear more about as companies make their presentations this week).

Let's start with Foundation Medicine: Roche is paying $50 a share to acquire 15.6 million shares of Foundation, for a total of about $780 million. Foundation's stock closed at $23.93 Friday. Roche also said it would invest an additional $250 million in Foundation by buying 5 million newly issued shares, also at $50 apiece. The deal gives Roche ownership of up to 56.3 percent in the diagnostics company.

JPM's health care summit preview
JPM's health care summit preview   

Foundation makes genomic tests for cancer, aiming to help doctors determine what's driving a patient's disease and find the right drug to treat it. Roche will also invest $150 million in research and development funding for Foundation over five years, and sell Foundation's products outside the U.S., the companies said.

In other deal news, Shire said it will pay $46 a share for NPS, ending a month-long period of deal speculation. Shire said the price is a 51 percent premium to NPS's share price before the speculation began in December. It's Shire's first big move since its deal to sell itself to AbbVie for $54 billion in a tax-inversion plan was unwound.

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On the data front, Alnylam reported initial results from a study of its experimental compound ALN-AT3 in hemophilia; the data were in just three patients, but showed the drug helped the most advanced patient remain bleed-free for 47 days. The company said the therapy has the potential to offer a once-monthly treatment option to patients with hemophilia, who now often must take medicines every few days. Alnylam said it plans to start the next phase of trials later this year.

Bristol-Myers Squibb said its Opdivo trial was the first to show a survival advantage for that class of drugs, known as anti-PD1 immune checkpoint inhibitors, in lung cancer. Mark Schoenebaum, an analyst with Evercore ISI, said most investors had expected it to work, and that the data could have implications for Merck's competing drug, Keytruda. Both medicines were approved by the Food and Drug Administration last year.

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The news didn't stop there; Vertex said it will start late-stage studies of its combination therapy in a large population of cystic fibrosis patients much earlier than investors expected, according to Schoenebaum. Keryx announced its CEO will be replaced by its chief operating officer. And Biogen Idec said it will buy U.K.-based Convergence Pharmaceuticals for $200 million upfront, plus up to $475 million in potential future payments, gaining a slate of experimental drugs for pain.

The news will only continue to flow; the JPMorgan conference runs through Thursday.