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TheStreet Open House

Biotech 2013 Kickoff Party: J.P. Morgan Investor Confab

Stock quotes in this article: CELG, AMRN, ZIOP, ONXX, GILD, BIIB, AMGN, ARIA, VRTX, ARNA, KERX, DNDN, VVUS, SRPT, AVEO, AEGR, NKTR, NPSP, FOLD, IDIX, MNKD

SAN FRANCISCO ( TheStreet) -- I used to call the J.P. Morgan Healthcare Conference the "Super Bowl of biotech investing confabs." This year, I'm retiring that moniker for "Life Sciences Lollapalooza."

On the main stage, of course, will be the few hundred biotech, drug and healthcare companies presenting their 2013 stories to thousands of institutional investors, all running around like rats in the maze-like hallways of the Westin St. Francis Hotel.

Outside the J.P. Morgan hotel, on satellite stages scattered across downtown San Francisco, scores of hangers-on biotech conferences and meetings will be taking place. It's quite the scene.

Next week's J.P. Morgan conference will be my thirteenth. As always, I'll be on site to cover and analyze all the breaking news, rumors and goings-on inside and outside the Westin St. Francis. The fun starts Monday.

This year, my plan is to rely heavily on Twitter and live blogs to cover the conference in real time. When I hear something juicy from a biotech executive or investor, you'll read it too. My daily live blogs, which you'll find easily on TheStreet's home page, will capture all my tweets, just in case you're one of those people not hip to Twitter quite yet.

To help prep for next week, I've prepared capsule summaries of some (but not all) of the major story lines and questions for biotech and drug companies presenting at the conference.

Monday, Jan. 7

Celgene (CELG): If tradition hold, Celgene will pre-announce fourth-quarter earnings and offer 2013 financial guidance. Right now, 2013 consensus stands at $5.54 per share in earnings on total revenue of $6 billion. I don't have consensus pegged for 2013 Revlimid sales but J.P. Morgan analyst Geoff Meacham is at $4.31 billion (15% year-over-year growth), which he says is "marginally below consensus." Remember, Celgene typically goes conservative with early guidance so it can "beat and raise" later in the year.

Celgene always garners a lot of attention at the conference but perhaps more so this year because of three very near-term catalysts: 1) Presentation of data from the Abraxane phase III study in pancreatic cancer at a cancer research meeting Jan. 24-26; 2) the FDA approval decision for pomalidomide in relapsed/refractory multiple myeloma on or before Feb. 10; and 3) top-line results from the "MM-020" study of Revlimid in front-line multiple myeloma (transplant ineligible patients) expected in the first quarter.

Onyx Pharmaceuticals (ONXX): The good: Sales of Onyx's multiple myeloma drug Kyprolis came out of the gate smoking hot. The not-so-bad: Investors now expect the strong launch to continue. There are definitely worse problems for a biotech company to have going into 2013, but Onyx does need to be mindful that investor expectations are growing (even if sell-side models may still be lagging.) Speaking of, the current sell-side 2013 sales consensus for Kyprolis is approximately $200 million.

Outside of Kyprolis, don't forget Onyx receives a 20% royalty on sales of the newly approved colon cancer drug Stivarga, marketed by Bayer. The company could also report data from a phase III study of Nexavar in breast cancer. A similar study in thyroid cancer met its primary endpoint successfully on Thursday.

Vertex Pharmaceuticals (VRTX): How much lingering hostility against (and mistrust of) Vertex management do investors carry into 2013 following the amateurish cystic fibrosis data debacle of last summer? Let's not also forget the "good news in the morning, bad news in the afternoon" investor-relations brain fart of Nov. 1.

Vertex will do well at J.P. Morgan if it can begin to repair a strained relationship with institutional investors following a rocky 2012. Sales of the hepatitis C drug Incivek are falling (consensus calls for an approximate 35% drop in year-over-year U.S. sales) but that's baked into the stock already.

What Vertex needs is for investors to buy into its long-term plan for the cystic fibrosis drug franchise. Kalydeco was the most important drug approved in 2012 but Vertex's valuation will grow only if the combination of Kalydeco and follow-on drugs can demonstrate benefit for a larger swath of cystic fibrosis patients. Vertex CEO Jeff Leiden lays out an ambitious and exciting long-term plan that could have Vertex dominating cystic fibrosis the way Gilead Sciences dominates HIV. In 2013, Vertex needs to execute on Leiden's vision -- and avoid the screw-ups that had investors cursing the company's name in 2012.

Biomarin Pharmaceuticals (BMRN): Investors are in love with orphan drugs. BioMarin has lots of 'em. Two to watch: GALNS for Marquio syndrome (FDA approval filing expected in the first quarter with potential approval in the fourth quarter) and PEG-PAL for PKU entering phase III this year. GALNS is particularly important because once approved, the drug has the potential to double Biomarin's revenue.

Amarin (AMRN): 2012 ended brilliantly and profitably for Amarin... bears. The stock lost 50% of its value, plunging from $15 in July following FDA approval of Vascepa (and insiders dumping tons of stock) to $7 at the end of December due to the "Three Nos" -- No NCE status, No Vascepa launch partner, no takeout.

As we enter 2013, the Amarin bear story is, admittedly, less compelling. There's probably another $2 or so in downside from here if the Vascepa launch is delayed (my prediction) or otherwise fails to meet expectations. If Amarin manages not to screw up the Vascepa launch, the stock could find firmer footing at its current valuation. Harder to envision is a scenario under which Amarin shares claw back to $15 or higher any time soon -- not until the company can prove to skeptical investors that Vascepa is a blockbuster drug.

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