Healthcare Sector Performance & Outlook - Healthcare sector experienced its worst three-year performance in over a decade, with a 25% increase compared to the S&P 500's 57% gain [1] - The healthcare sector's outlook hinges on clarity regarding drug pricing policies, particularly concerning the Most Favored Nation (MFN) [3][9] Drug Pricing & Policy Uncertainty - Uncertainty surrounding the scope of MFN drug pricing policy (Part B vs Part D, commercial spillover) is causing hesitation among generalist investors [2][5][6] - The industry anticipates MFN policy to be limited to Part B (injectable drugs) with potential for improved price points and US-only launches for new drugs, maintaining price integrity [5][8] Innovation & Investment - There is strong innovation within the biotech space, encouraging investment, with broad consensus supporting continued innovation [7] Company Earnings - Managed care companies like Sigma and Humana, along with large-cap pharma including Bristol Myers and Merck, are reporting earnings this week [1]

Financial Data and Key Metrics Changes - FFO per share diluted as adjusted was $2.33 for Q2 2025, up 1.3% compared to the prior quarter [34] - Occupancy at the end of the quarter was at 90.8%, down 90 basis points from the prior quarter [35] - Same property NOI was down 5.4% and up 2% on a cash basis for the quarter [36] Business Line Data and Key Metrics Changes - Approximately 770,000 square feet were leased in Q2 2025 with leasing spreads of 5.5% to 6.1% on a cash basis [25] - Tenant improvements and leasing commissions on renewals were down 40% compared to the previous two quarters [25] - The company leased 131,768 square feet during the quarter, including the first lease signed at 701 Dexter in Seattle [26] Market Data and Key Metrics Changes - Private biotechnology companies represented 30% of overall leasing for the quarter, with nearly $22 billion deployed in the first half of the year [14] - Publicly traded biotechnology companies represented just under one-fourth of leasing for the quarter, with over 95% consisting of new leases [15] - Large pharma represented 5% of leasing for the quarter, buffered from short-term volatility due to significant cash flows [18] Company Strategy and Development Direction - The company is focused on its mega campus platform, which is strategically important for capturing opportunities and supporting talent recruitment [22][24] - The company has a $3 billion investment in various future pipeline projects, with a focus on preconstruction activities [40] - The asset recycling program is expected to be heavily weighted towards the fourth quarter, with significant dispositions planned [30][31] Management's Comments on Operating Environment and Future Outlook - Management expects the Fed to lower interest rates, which is crucial for the capital markets in the industry [7] - There are reasons to be optimistic about the life science sector, with M&A activity and biopharma licensing deals providing positive dynamics [20] - Management noted that fears regarding spending cuts and changes at HHS may be overblown, and onshoring of R&D could provide a tailwind for the life science sector [13] Other Important Information - The company completed the largest lease in its history, a 466,000 square foot lease, demonstrating brand trust and product quality [6][24] - The company has identified 768,000 square feet of lease rolls with a weighted average expiration date of January 21, 2025, with 20% already leased [27] - The company reiterated its guidance for year-end 2025 occupancy at 90.9% to 92.5% [36] Q&A Session Summary Question: Trends or catalysts leading to the Campus Point lease - Management indicated that the lease was driven by a notable big pharma's effort to consolidate its R&D hub rather than onshoring issues [48] Question: Insights on free rent trends - Management noted that free rent did increase slightly this quarter, but it is hard to predict future trends [50] Question: Tenant perspective on build-to-suit versus vacant space - Management explained that large tenants prefer build-to-suit options for their specific needs and the quality of the location [54][56] Question: Occupancy expectations for the remaining portfolio - Management expects a pickup in occupancy as non-stabilized assets are sold and new leases are executed [64] Question: Impact of FDA leadership change on tenant decisions - Management stated that concerns vary by tenant type, with private biotech focused on cash conservation and public biotechs concerned about market health [74][76] Question: Potential for larger capital transactions - Management expressed a preference for owning more of their mega campus assets and is focused on strategic transactions to monetize non-core assets [84][86]

Core Viewpoint - Johnson & Johnson is actively engaging with the administration regarding drug pricing and healthcare costs, emphasizing a collaborative approach to reduce costs for patients in America [4][5]. Group 1: Company Insights - Tom Cavanaugh, Company Group Chairman for North America Innovative Medicines, represents Johnson & Johnson at the Goldman Sachs 46th Annual Global Healthcare Conference [1][2]. - The company is focused on understanding the external environment and the implications of ongoing discussions in Washington, D.C. regarding drug pricing [4][5]. Group 2: Industry Context - There is a shared goal among industry peers and the administration to reduce healthcare costs, indicating a potential for substantial impact through collaboration [5]. - The administration's recognition of certain areas for improvement is seen as encouraging by the company [5].

Core Insights - Bristol-Myers Squibb Company participated in the Goldman Sachs 46th Annual Global Healthcare Conference, highlighting its engagement with the pharmaceutical sector and the current operating environment [1][4]. Group 1: Company Overview - Christopher S. Boerner serves as the CEO and Chairman of Bristol-Myers Squibb, while Adam Lenkowsky is the Chief Commercialization Officer [1][2][3]. - The company is actively engaging with the U.S. administration regarding policy-related uncertainties affecting the pharmaceutical industry [4][5]. Group 2: Industry Context - The pharmaceutical sector is currently facing external operating environment challenges, including policy-related uncertainties that have been a topic of discussion among various companies at the conference [4]. - Conversations with the administration are reportedly moving in a positive direction, although the outcomes remain uncertain [4].

Company Overview - Merck & Co., Inc. is represented by key executives including Jannie Oosthuizen, President of U.S. Human Health, who has been in this role since 2022 and has a background in global marketing for oncology [2] - Doctor Marjorie Green serves as Senior Vice President and Head of Oncology Clinical Development, having joined Merck in 2023 from Cision [3] - Peter Dannenbaum is the Senior Vice President of Investor Relations, with the company since 2017 [3] Conference Insights - The conference included discussions on various policy questions, particularly focusing on the Most Favored Nation (MFN) policy, which is currently a significant topic of concern for the company [4] - The company is dedicating considerable internal resources to understand the implications of current policies and potential changes in the healthcare landscape [4]

Company Overview - AbbVie has a strong leadership team with key executives including Jeff Stewart (EVP and Chief Commercialization Officer), Roopal Thakkar (EVP and R&D, Chief Scientific Officer), and Scott Reents (EVP and CFO) [1][2] Current Challenges - The company is experiencing some disruption due to external factors such as MFN (Most Favored Nation) policies and tariffs, which are impacting operational timelines [3][4] - There is an ongoing discussion about the level of disruption and the time it is taking to adapt to these changes, indicating that the company is actively involved in contingency planning [3][4]

Core Insights - Gilead Sciences is focused on executing its strategy to drive top-line growth while maintaining operational discipline and advancing its pipeline [2] Group 1: Company Operations - Gilead is managing its operations amidst changing macroeconomic conditions, including potential impacts from MFN, tariffs, and IRA [2] - The company has a small team dedicated to scenario planning to navigate the fluid market environment [2]

Group 1 - McKesson Corporation participated in the BofA Securities 2025 Healthcare Conference, with CFO Britt Vitalone discussing the company's fiscal year performance and future guidance [1][2] - The conference provided an opportunity for McKesson to reflect on the past fiscal year and outline expectations for the upcoming year [2] - A significant topic of discussion was the MFN (Most Favored Nation) executive order, which has implications for pricing strategies and business operations [3][4] Group 2 - The CFO highlighted the evolution of McKesson's business model over the past decade, transitioning from fee-for-service to fixed fee-for-service in the brand business [4] - The company has also expanded its focus on USO (United States Oncology) and oncology-related services, which are sensitive to ASP (Average Selling Price) pricing changes [4][5] - The discussion emphasized the potential impact of changes in list prices and ASP-based pricing on McKesson's business operations [4]