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Expert Financial Analysis and Reporting

If You’re Going to San Francisco

This has always been one of my favorite songs and I love the lyrics.

If you're going to San Francisco
Be sure to wear some flowers in your hair
If you're going to San Francisco
You're gonna meet some gentle people there

For those who come to San Francisco
Summertime will be a love-in there
In the streets of San Francisco
Gentle people with flowers in their hair

So what does this song have to do with biotechnology? Well, every January there is a biotechnology love-in in San Francisco that centers around the JP Morgan conference on health care. This conference began in the 1980s and has grown beyond all expectations of the people who started the conference. There are now two other conferences held at the same time; One Med Forum and Biotech Showcase focus on very small biotechnology companies. Perhaps more importantly, a huge number of biotechnology companies take advantage of the confluence of biotechnology investors and analysts to hold one on one meetings.

San Francisco and the January Biotechnology love in bring back a lot of memories for me. In the late 1980s, I was recruited by Hambrecht & Quist to head their health care research and to help with the then budding H&Q conference. I was primarily recruited by David MacCallum. He and I had both been pharmaceutical analysts who were beginning to expand into the newly emerging field of biotechnology. David had decided to move on into investment banking and I was hired as his successor as an analyst to also run health care research for H&Q.

Because of the brilliant leadership of Bill Hambrecht, H&Q’s founder, H&Q was the leader in financing biotechnology companies. At the time, none of the major brokerage firms took biotechnology seriously and financing and research coverage was left to the small, entrepreneurial firms like H&Q, Robertson Coleman, Montgomery and Alex Brown. These were the “four horsemen” who laid the foundation for the biotechnology industry. But, I digress.

Bill Hambrecht is one of the most brilliant men I have met on Wall Street and David MacCallum is not far behind. They came up with the idea of holding the H&Q health care conference in January in San Francisco. David provided the energy to get the conference off the ground. I remember that most brokerage firms scoffed at the idea of holding a conference. They felt that it could not possibly lead to any profits. With perfect hindsight, we can see that the H&Q conference has exploded into an annual cultural event of enormous magnitude.

I give Bill and David 99% of the credit for starting this January, San Francisco biotechnology love in, but I would like to claim some credit for a part of the other 1%. I ran the conference from 1990 to 1995. This was a period in which the conference continued to gain momentum. I got to know some of the people who pioneered biotechnology-George Rathman, the founder of Amgen (AMGN) and Bob Swanson, the founder of Genentech- and of course, this led me into a 25 year plus involvement with the analysis of biotechnology companies.

This little bit of nostalgia brings me back to the point of this note. I am going to San Francisco next week and I have scheduled one on one meetings with the following list of companies. I will also likely meet with additional companies on an ad hoc basis.

Northwest Biotherapeutics (NWBO)
Cytokinetics (CYTK)
Corcept (CORT)
Repligen (RGEN)
Inovio (INO)
NovaBay (NBY)
Rigel (RIGL)
Cadence (CADX)
Chimerix (CMRX)
Derma Sciences (DSCI)
Geron (GERN)
Alexza (ALXA)
Titan (TTNP)
Discovery Laboratories

I would like to think that one of the things that distinguish SmithOnStocks from most biotechnology blogs is that I have strong relationships with managements. While one cannot accept everything that managements say as gospel, I think it is critical to get to know them and understand their strategies, strengths and weaknesses. Investors can’t just depend on press releases to try to understand these companies.

Anyway, next week promises to be a busy week. I start with a cocktail party at 8 PM on Sunday followed by a dinner. Then on Monday, Tuesday and Wednesday I start with breakfasts at 7:00AM or 8:00 AM and each night I have a dinner with a company. You may not hear from me next week on my blog, but this will jump start the analysis of my research works in 2014.

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