Johnson & Johnson (JNJ) Earnings Call Transcript & Summary

Please note that today's presentation includes forward-looking statements. We encourage you to review the cautionary statement included in today's presentation, which identifies certain factors that may cause the company's actual results to differ materially from those projected. Our SEC filings, along with reconciliations of any non-GAAP financial measures utilized, to the most comparable GAAP measures are also available at investor.jnj.com.

Ladies and gentlemen, please welcome Executive Vice President, Worldwide Chairman, Medical Devices, Ashley McEvoy.

Hello, and welcome, everyone, to our Medical Device Update. It's great that we can be here together virtually. I hope you're all staying healthy and well. First, I'd like to ground us a bit in who we are. We are privileged to be in the business of health care. It's an industry with incredible purpose. And as the world continues to fight a global pandemic, what we do matters more today than ever before. J&J is the world's largest health care company, and we believe it's our responsibility and our opportunity to change the trajectory of health care. Our MedTech business was at the ground floor of our company over 130 years ago, and we're committed to strengthening our competitiveness and shaping the future of MedTech so we can meet the needs of patients and reach more of them, and we're making progress. We've driven a momentum shift in our business with year-over-year adjusted operational revenue growth accelerating from 1.5% in 2017 to 2.6% in 2018 and just shy of 4% at 3.9% in 2019. And we've done this by 4 key things: one, it's about executing with excellence; two, it's about shaping our portfolio; three, it's about innovating to disrupt; and four, it's all about our global J&J colleagues and cultivating a winning spirit. We know our progress won't always be linear. We've been talking about that. The entire MedTech industry is affected by this once in a generation disruption with COVID, including our own performance in 2020. However, we continue to believe in the strength of the MedTech market over the long-term and expect it to return to historical growth rates of about 5% once procedures return to more normalized levels. The strategic choices we've made to shore up our competitiveness has positioned us well to get through COVID, while also shaping the future of our business and the future of the MedTech industry. In fact, we expect to deliver robust double-digit operational sales growth in 2021. And beyond 2021, we believe we are well positioned to deliver consistent competitive sales growth. We're committed to emerging stronger from this pandemic, and let me tell you a little bit more about the why. I want to start by acknowledging the heroic efforts of health care workers around the world. Across J&J, our goal from Day 1 has been to support health care professionals in caring for our patients. Our MedTech employees in Wuhan continue to support doctors by providing clinical support during procedures throughout this dynamic situation. And around the world, we've been partnering with health care systems and governments to help facilitate their crises' response, from standing up overflow health care facilities in Europe, to supplying surgical devices for U.S. satellite facilities such as the USS (sic ) [ USNS ] Mercy Ship. Our colleagues at Janssen have been working tirelessly to develop a COVID vaccine, while our consumer team is making sure people have the products they need, even running our TYLENOL production facilities 24/7. These are just some of the ways our teams have pivoted quickly to help health care professionals and patients throughout this crisis. Within MedTech, COVID has accelerated several shifts in our industry, catalyzing creative solutions around digital patient engagement, telemedicine, virtual surgeon training and telementoring, remote case coverage, shifts in sites of care and continued evolution in our business models. For J&J's MedTech business, COVID has been a catalyst for change and evolution. While we've identified opportunities to responsibly manage expenses where possible, we are quite fortunate to have the financial strength and backing of Johnson & Johnson, allowing us the ability to invest for short and longer-term needs, even during the height of the pandemic. This includes supporting our field sales reps, offering temporary flexible contracting for customers, and identifying areas to drive future growth. We've developed new capabilities that have brought us closer to our customers and permanently changed the way we work. With the shift in sites of care, we are enhancing our presence in [ unitary ] surgery centers in the U.S. and expanding to more than 500 Tier 2 hospitals in China. Leaning into virtual training through our education collaboration with advances in surgery, reaching more than 1 million health care professionals in over 150 different countries, training on COVID-19 protocols as well as ways to safely resume medical procedures. We're maximizing our digital offerings such as care for today and Surgical Performance Institute and creating new capabilities such as telementoring and remote case management. And to help patients get the information they need to feel comfortable about going back into the health care system, we've launched an education campaign called My Health Can't Wait for patients and health care professionals. All of these exude the leadership of Team J&J, who is partnering relentlessly with our customers to find innovative ways to meet patient needs. While COVID has temporarily interrupted our markets, our recent results show that, in addition to the overall market recovery, our focus on customer and patient needs and the strategic choices we've made to strengthen our competitiveness are having an effect. In the third quarter, all of our business segments improved significantly versus the second quarter. Our largest market, the United States, returned to positive growth of 1%. And in our second largest market, China, where we command the #1 market position, we delivered positive 17% adjusted operational growth. Through 2019, Biosense Webster marked 11 consecutive years of double-digit growth in electrophysiology and gained 9 points of share over the last decade. In quarter 3, electrophysiology returned to double-digit growth and continued the share momentum. Biosurgery returned to mid single-digit growth in quarter 3 and has gained share throughout 2020 with the globalization and expansion of recently launched products. And in orthopedics, hip and trauma posted low single-digit growth globally and spine returned to growth in the United States. Now our contact lens business returned to growth in quarter 3, building on 4 straight years of at or above market performance. And while we still have work to do in our U.S. surgical vision business, our Auris growth has been strong. And we believe in the ability to strengthen our competitiveness in the U.S. with a series of new product launches rolling out in 2020 and into 2021. We continue to fine tune our business and operating models, build new capabilities and act with speed and agility every step of the way, which is what I'd like to talk to you about now. We are strengthening our execution and driving gross profit improvement to more competitive levels so that we can invest in commercial and innovation activities that drive value for our customers. Our focus on continuous improvement and supply reliability has played a critical role in strengthening customer confidence and gaining share. This, coupled with deep supplier partnerships and an end-to-end resilience, has allowed for sustained supply chain performance. We are pleased with our progress on innovation and strategic initiatives, which has set a new benchmark in collaboration across all of our platforms. With our customers, innovative commercial offerings have made it possible to partner with health systems with the goal of improving care for patients while reducing cost. We're also progressing customer-focused digital capabilities such as advanced case management for orthopedics, which leverages the latest in IT security standards and technology to standardize the workflow in the OR to drive efficiency and help reduce procedure time. For patients, we're advancing 3D printing designed for personalization and to improve outcomes, including first-in-the-world innovation with our 3D printed patient-specific bioabsorbable trumatch graft cage for large bones. We're adopting cutting-edge manufacturing technologies and are the first company to have 4 of our sites recognized as lighthouses, leading the way in the adoption of new technologies by the World Economic Forum. We're also using data science to further enhance quality, such as advanced camera technology and image recognition for contact lens manufacturing and to build real-time procedure-based forecasting models for more effective sales and operations planning. So turning to our portfolio and how we're shaping our portfolio to win. We've invested across our 4 franchises to drive growth, focused our portfolio by divesting noncore businesses and completed acquisitions to strengthen our position in high-growth areas such as digital surgery, which we'll talk about today. Since 2017, J&J MedTech has invested over $10 billion, executing around 150 acquisitions and partnerships to round out our portfolio and enhance our ability to meet customer needs. We've been busy on our investment strategy, which has helped to shape and advance our innovation agenda with recent additions like Auris, Surgical, Orthotaxy, JointPoint and C-SATs. And we'll continue to look actively at M&A opportunities to fill portfolio gaps, building new capabilities, accelerate innovation and expand our footprint in these high growth segments. I've shared where we've been and where we are today. Now I want to pivot to where we're going. We are advancing disruptive transformational innovation to address the most pressing needs of patients and surgeons and drive growth. That means we are continuously investing in our core, while advancing areas of strategic importance with higher growth potential. In fact, we're on track to double the value of our new product pipeline compared to 2018. In the exhibits, you heard a few examples of how we're delivering value to providers as well as patients. In electrophysiology, we received CE Mark approval for QDOT MICRO, the world's first high-power short duration ablation catheter, which reduces procedure time, improves efficiency without compromising safety. We also received FDA approval for our Thermocool SmartTouch Catheter to treat persistent atrial fibrillation. And in vision, we continue to enhance our industry-leading Tecnis family of intraocular lenses and are developing the first drug-eluting anti-allergy contact lens. Within our Orthopedics business, we've launched ATTUNE Cementless and Dual Mobility Hip, 2 high growth segments. And we're rolling out a revamp of our Ethicon Echelon platform, including buttresses, powered circular staplers and improved stapling mechanisms, all to reduce leaks. At Johnson & Johnson, we envision a future where medical interventions reduce variability in surgery and deliver improved outcomes for patients by being smarter, less invasive and more personalized. We are at the precipice of this amazing intersection of medical devices and MedTech, where rapidly accelerating technology is modernizing health care and making it possible to deliver care in new ways and even create entirely new categories of care. Today, you'll hear more about our digital surgery portfolio, one of the key areas where we intend to capitalize on these trends in technology to shape the future of our business and elevate the standard of care for patients. We've made significant progress in building leading edge capabilities in digital and robotics and expanding all of our digital surgery assets across our entire portfolio. While we were not first to market, we expect to deliver our differentiated value propositions for patients and providers in only a way J&J can. First, our innovation is being designed to be powered by a smart connected digital surgery ecosystem. We're bringing together the collective value of best-in-class robotics, advanced instrumentation, enhanced visualization, data analytics and powerful connectivity. Second, as J&J, we have an unparalleled global footprint with a diverse expertise in disease states and surgical specialties. And third, we have a multi-platform play of digital surgery offerings with multi specialty, end-to-end solutions across orthopedics, endoluminal, interventional and general surgery that we expect will set us up for a multi-decade of growth. To bring this all to life, we've convened a digital surgery dream team, and you'll hear from them today. Leading all of R&D is Dr. Peter Shen, who holds multiple advanced degrees in mechanical engineering and is an instrument guru architecting our digital surgery strategy. We're pleased to welcome Dr. Peter Schulam as our Chief Medical Officer for J&J MedTech. Dr. Schulam is an [ uberemics ] user and top surgeon who joined us from New Haven Hospital and Yale School of Medicine, where he was on faculty and chair of the urology department. In orthopedics, we have Dr. John Wright, a leading surgeon with over 30 years of experience who's now our Chief Medical Officer for orthopedics and is shaping our differentiated solution in orthopedics. We're fortunate to have the collective power of Dr. Bill Hait, a renowned oncologist and Dr. Avi Spira, a leading pulmonologist, who are shaping our cross-sector innovation through the J&J Lung Cancer Initiative. Advancing our digital surgery work is Larry Jones. He's dedicated his career to pushing the boundaries of tech innovation and is working at the [ cutting ] edge of tech and health care. And at the helm of our global digital surgery business is Celine Martin, who was at the ground floor of globalizing minimally invasive surgery at Ethicon and driving global penetration of cardiac ablation for Biosense Webster. And finally, we are fortunate to have the father of surgical robotics, Dr. Fred Moll, who is pioneering the development of our next-generation robotics for MedTech. And now I'll hand it over to Dr. Moll, who is the MC of our digital surgery story.

Thanks, Ashley. Hello, everyone. We're excited to discuss the future of surgery and our approach to bring innovation and transformative change to medical intervention. When I entered surgical training in the early 1980s, minimally invasive technique was really more of a concept than a practice. A very nascent and controversial technique at that time, but one that I was convinced could make an enormously positive impact in patient care. I got so excited about the future of minimally invasive surgery, that I took a break from my surgical training to start a company to develop instrumentation in manual MIS technique. And that pathway led me to found Intuitive Surgical in 1995. My objective in starting Intuitive was simply to resolve some of the drawbacks associated with manual MIS technique. And I've been both humbled and gratified to experience the widespread adoption of robotics and its impact on patient care. But as an industry, we are just at the beginning of this journey. The latest advancements in technology, from smart sensors and implants to microinstrumentation, are helping us reimagine how care is delivered. As you will hear today, we at J&J are working at the intersection of health care and emerging technologies to bring a new generation of robotics and MIS technique to a wide variety of surgical specialties and medical intervention. When I joined Johnson & Johnson, I hoped that together, we could build a partnership where robotic innovation could capture the imagination of a new generation of MIS surgeons. As our robotic platform prepares to enter clinical testing, I can see that even my lofty goals underestimated what we could accomplish together. First, I want to tell you about our collective vision. We are in the early days of a rapidly accelerating innovation cycle in digital surgery. And we want to shape the future where medical intervention is smarter, less invasive and more personalized. It's a bold ambition, for the innovation we bring cannot be incremental but must be fundamental. We are approaching our strategy in 3 important ways: first, we are developing an end-to-end digital ecosystem that will connect our entire portfolio across the continuum of patient care. In doing this, we are taking a holistic approach by using a collective value of our world-class instrumentation implants and next-generation robotics. Second, we are leveraging the size and scale of J&J. Unlike standalone medtech companies, J&J is able to bring cross sector clinical knowledge and a robust understanding of diseases in our pharmaceutical pipeline, to fully consider diverse therapeutic solutions. In addition, J&J's vast innovation network and our trusted relationships with health care professionals creates unlimited partnership opportunities across the globe. And third, we are fortunate to have the internal talent, technologies and resources to execute on our collective vision. Today you'll hear more about the progress in developing a robust innovation pipeline. And on that note, I'll now hand it off to Celine Martin, who leads our robotics and digital solutions business at Ethicon, to discuss some of the characteristics of this expanding and dynamic market opportunity.

Thank you, Dr. Moll. I'm excited to talk to you today about the growing and underpenetrated robotics market and our innovation strategy to capitalize on the future of robotic surgery. I started my career at Ethicon when we were accelerating the adoption of minimally invasive surgery. And it's a real privilege to be back here to lead the team in bringing our robotics and digital solutions to market in order to make a meaningful difference for patients. The robotics market today is still significantly underpenetrated, representing 2% of procedures globally with approximately 10% in the U.S. and less than 1% outside of the U.S. in general surgery. We see a tremendous opportunity to grow the market together with our peers to expand innovation across robotics, imaging and instruments in service of more patients around the world. In general surgery, we have a long-standing position as a trusted provider of best-in-class instrumentation. And with our acquisition of Auris in 2019, we are in robotics today with Monarch, and we've been able to earn a leadership position by being first to market in robotic-assisted bronchoscopy. And we're going to continue to learn from the pioneers in the robotics space to help shape the next frontier of robotic surgery. And the market today is largely a U.S. play. What makes me excited is how we're going to use the global scale and footprint of J&J to help expand the robotics market both inside and outside of the U.S. And it's important to remember that this is just the beginning and the opportunity for expansion and penetration is nearly limitless. When we think about our journey in the robotics market, we're looking at the next 5, 10 and even 20 years, and how we can continue to drive innovation that will make a clinical difference. And we're going to do this by taking advantage of the rapid progress in technology that is accelerating innovation and making it possible to bring robotics to a broader range of procedures from simple to complex and even new procedures. Advancements in machine learning and artificial intelligence are also enabling the creation of digital solutions on and off robot that connect the patient journey before, during and after a procedure. And we all know the market is demanding greater value from health care, and we have our eye on lowering the overall cost of care by connecting robotics and digital solutions to enhance clinical outcomes. And to describe our approach, our Chief Information Officer for medical devices, Larry Jones, will talk a bit more about our digital surgery ecosystem.

Thanks, Celine. As Dr. Moll described, achieving our vision is going to take an integrated holistic approach. Our digital surgery ecosystem joins the forces of next-generation robotics, best-in-class instrumentation, advanced imaging and visualization, data analytics, artificial intelligence, machine learning and digital solutions. And to really mobilize the potential of these assets, we are establishing robust connectivity with and between all elements of the ecosystem using the latest and best technology. Through this seamless interconnected network, we will be able to meet our surgeons where they are in their workflow and our patients where they are in their health care journey. This is an audacious goal. And to achieve it, we're partnering with hospitals, health systems and leading technology companies to understand and enhance the total experience at every corner. With partners such as Verily and through our acquisition of Verb Surgical, we are leveraging deep insights from experts in the digital space as well as bringing in critical capabilities and talent into J&J. And of course, the components of our platform are created the same way we would develop any other medicine or device, in a secure compliant way that our doctors and patients can trust. The COVID-19 pandemic has accelerated the uptake of technology across health care, and we have digital solutions in the market today that are actively delivering on our promise. For example, with C-SATS, we can connect any OR to the cloud to collect and analyze surgical video for surgeon learning. With Visible Patient, we aim to provide a patient-specific 3D anatomical reconstruction to help surgeons navigate procedures just by using that patient's CT or MRI scan. These technologies are available today across a wide variety of procedures and approaches. And I am excited for you to see the full capability of our ecosystem in action when you hear more about VELYS digital surgery and our digital offerings that continually learn, to inform future procedures and reduce complexity. Through this portfolio of connected technologies, we will deliver transformative capabilities and improved outcomes across all interventions, and for everyone across the continuum of care. With that, I'll turn it over to Dr. Moll to expand further on our innovation strategy.

Thank you, Larry. As both Celine and Larry mentioned, we are taking an integrated, holistic approach to digital surgery. A key component of this plan is innovation. Over the past 18 months, we've made significant progress in building our digital surgery ecosystem. Today, we will describe 3 differentiated robotics programs we are working on simultaneously. First, in general surgery, we are building a flexible platform that will allow for procedural expansion and multi-decade growth. This platform has the potential to revolutionize surgery by combining multi-specialty surgical techniques with interventional methods to allow for optimal surgical outcomes. Second, in orthopedics, we are creating an evolving platform of connected technologies, including a next-generation robotic solution to address future market needs. And third, we continue to develop new capabilities of the Monarch endoscopy platform, which I'd like to share more about now. As Celine mentioned, we've entered the robotics market with Monarch to provide novel methods for minimally invasive lung biopsies, and we have an exciting pipeline of procedural innovation with Monarch. As you've heard recently, we received breakthrough designation with the FDA for development of a potential lung treatment via ablation and oncolytic viruses. And we're not stopping there as we push forward to enable future applications in urology and gastroenterology. As one example of the potential of the Monarch platform, it's rewarding for me to see the innovative cross sector work with the Johnson & Johnson Lung Cancer Initiative. To build on that, I'd like to introduce my colleague, Dr. Bill Hait, who will discuss the opportunity to transform and improve a lung cancer patient's treatment pathway using the Monarch platform.

Thank you, Dr. Moll. I've devoted almost 30 years to caring for cancer patients, leading major academic programs, and then joined Johnson & Johnson to build the Janssen Oncology therapeutic area. Today I serve as the Global head of Johnson & Johnson Innovation, a group working to source transformational science and technologies wherever they exist, and link these to our internal capabilities in areas of strategic focus. We execute this external innovation strategy through our global innovation centers located in the world's leading hubs for life science innovation, our 13 J-labs incubators and invest through JJDC, our corporate venture group. As a R&D leader of Janssen 2020, our strategy that delivered breakthrough medicines for patients around the world, I became convinced that only a company as broadly based in health care as J&J, one that possesses a deep understanding of disease and one that's strongly connected to the external life science ecosystem could successfully unite expertise in medicine, surgery and consumer health to solve the greatest unmet patient and consumer needs and change the trajectory of human health. And few if any companies have taken the bold step of creating a world without disease accelerator, where the focus extends to prevention, disease interception, early detection, in curing major diseases like lung cancer. Having embarked on this cross-sector lung cancer journey, we imagine the medical device that could explore some of the most difficult regions of the lung and detect early signs of lung cancer just as the colonoscope does for the early detection of colorectal cancer. What we imagined was a pulmonoscope, a digital robotic instrument that could reach and biopsy the most peripheral pulmonary nodules detected by low-dose CT screening, or treat lung cancer at its earliest most curable stage, detected through finding circulating tumor DNA in the blood, an instrument through which an Ethicon energy device could remove a premalignant lesion or deliver a Janssen oncolytic virus to create a vaccinated person, eliminating microscopic deposits of cancer everywhere in the body. Today, we are pursuing all these possibilities with our Monarch system, which is currently indicated for bronchoscopic visualization of and access to patient airways for diagnostic and therapeutic procedures. I'm now pleased to hand over to Dr. Avi Spira, who leads J&J's Lung Cancer Initiative to give you more details on how we are working to transform lung cancer detection and treatment.

Thank you, Dr. Hait. Good afternoon. My name is Avi Spira. As a pulmonary and critical care physician and serial entrepreneur, I joined Johnson & Johnson 2 years ago to lead a dedicated group, bringing together the expertise of all our sectors to focus on the prevention, interception and cure of lung cancer. I've [ seen ] years of my career on the clinical front line battling lung cancer, an incredibly humbling experience. Lung cancer is the #1 cause of cancer death in the world, killing more people every year than the next 3 cancers combined. A major reason for this is that lung cancer is usually diagnosed at a late stage. About 60% of patients diagnosed with lung cancer today have metastatic disease. I joined Johnson & Johnson because I believe that it is uniquely positioned to change the trajectory of this devastating disease by bringing together the robotic Monarch platform with Ethicon Surgical capabilities and Janssen's deep oncology expertise. Now let me take you through the details of how we will transform the patient journey in lung cancer. As we just discussed, today, most patients present with late-stage disease, on the far right of the patient journey depicted at the top of this slide, where survival is very poor. Our goal at Johnson & Johnson is to move that patient journey from right to left. To do that, we have to overcome 2 critical unmet needs: first, it is very hard to diagnose lung cancer at the earliest possible stage. Because lung cancer often arises deep within the lung tissue, where it is difficult to access, making diagnosis of early stage disease both risky and inefficient. Our best opportunity for detecting lung cancer early is finding a lung nodule on CT scan of the chest. The majority of the 1.5 million lung nodules found every year in this country are benign, but a subset represent early stage lung cancer and it's very hard to tell the difference between a benign lesion and a cancer on the CT scan. Therefore, a lung biopsy is often required. However, 60% of these nodules are peripherally located deep within the lung, making biopsy very challenging. There is a second unmet need. Among the subset of patients that are diagnosed with early-stage lung cancer, the gold standard treatment is surgical resection, an important procedure in which J&J's Ethicon surgical devices play a key role. However, the procedure has significant risk for complications, with an approximate 1% 30-day mortality rate. As a result, 20% of patients are medically ineligible for surgery. Additionally, surgery is not always curative. About 1 in 3 patients have a recurrence of their cancer within 3 years of surgery. And as we push further left on the patient journey at the top of this slide, before the establishment of cancer to the pre-cancer state, there are simply no effective treatments today for pre cancer. At J&J, we see 2 opportunities to address these unmet needs. The first in market today is the Monarch platform, which allows bronchoscopic visualization of and access to patient airways, providing an opportunity for early lung cancer detection. The second, which we are preparing to test in the clinic, involves treating early stage lung cancer in a less invasive and more effective way using the Monarch endoluminal platform to deliver energy and drugs locally, directly into the cancerous and precancerous lung lesions. Now let's take a closer look at each of these innovations, starting with early diagnosis. As I mentioned a moment ago, there are about 1.5 million lung nodules found every year in this country and most of them are like this one, deep in the periphery of the lung. There are only 2 ways to biopsy it. You can go outside in or inside out. Outside in involves putting a needle or surgical incision through the chest wall to access the nodule and biopsy it. This carries risks for significant complications, including a greater than 20% chance of lung collapse. Inside out involves endoscopically going through the mouth or nose and into the airway to sample the lesion. This is the least invasive approach. But unfortunately, it's very difficult for today's manual bronchoscope to go all the way out and reach the nodule. There are 3 critical limitations to biopsying lung nodules with the conventional bronchoscope shown on the screen. First is the reach. As you can see, the scope flexes in only a single plane. So this bronchoscope can only go out to maybe the fifth or sixth generation of the airway. Most lung nodules arise much more deeply in the lung, well beyond the 12th generation of the airway. Second, during bronchoscopy, vision becomes challenging due to respiratory motion and pulmonary secretions. Last and maybe most importantly is control. Even if this scope could reach the nodule, when we insert a needle through the working channel of the scope to do the biopsy, it [ frequently ] results in the scope moving a little bit so that the biopsy needle misses the nodule. We are incredibly excited about the Monarch endoscopic robot under development, the Pulmonoscope that Dr. Hait referred to, which is designed to overcome all 3 of these critical limitations. Let me now show you a video, which will tell you more about this innovative platform. [Presentation]

I want to now show you 1 of those 4,000 procedures, to highlight the real impact Monarch is already having in the clinic today. This is a case from Northwestern Medical Center in March of this year. Given that she was considered to be at low-risk for lung cancer as a never smoker, the standard of care previously, for this case, would be to watch and wait. The physician at [ Northwestern ], however, had access to the Monarch platform and was able to perform the endoscopic procedure. This short video clip from that procedure shows you how the Monarch platform navigates the tricky path towards that peripheral nodule and how the stability and precision of the platform allows the needle to be placed directly into the lesion for biopsy. The biopsy in this case yielded a diagnosis of Stage 1 lung adenocarcinoma, the earliest endmost stage of disease. The patient then underwent a successful right upper lobe resection to remove the cancer. This case illustrates the power of the Monarch platform to detect lung cancer at an earlier stage than is possible with conventional bronchoscopy. While we are very excited about Monarch impacting early detection of lung cancer today, we're even more excited about the potential to directly impact treatment for lung cancer tomorrow. The Monarch platform, combined with the medical device and pharmaceutical expertise of J&J, creates the potential to endoluminally deliver drug and energy treatment less invasively and more precisely into early and precancerous lung lesions. Let me start with local energy delivery, which has the potential to treat early stage lung cancer that's medically inoperable, representing about 20% of today's early stage cases as well as pre cancerous lung lesions. Today, interventional radiologists are using Ethicon's NeuWave Microwave Ablation System for minimally invasive soft tissue ablation in multiple organs. The NeuWave probe shown on this slide is the only microwave probe offering distal energy control for precise ablation that helps protect non-targeted tissue. While today's percutaneous ablations can be effective, going through the chest wall carries risks of complications described earlier. Therefore, we are working with the new aim to develop a procedure leveraging their flexible microwave ablation catheter designed to deliver ablation endoluminally via Monarch. In recognition of the transformative potential of this approach, the FDA recently granted us breakthrough device designation for use in early and precancerous lung lesions. In addition to delivering energy with Monarch, we are studying the local delivery of drugs, leveraging the deep scientific knowledge and innovation of the Janssen team. There are 3 potential advantages for locally delivering a drug via Monarch. First, as we all know, immunotherapy is radically changing treatment of late-stage lung cancer. But when we try and move those drugs into earlier stages of disease, we're challenged with systemic toxicity. So locally delivering drugs directly into a lung cancer lesion has the potential to lower the risk of systemic complications. Second, the local delivery of these drugs could increase their concentration within the tumor, resulting in improved immune priming. Activating the immune system may not only kill the injected tumor but potentially eliminate metastases elsewhere in the lung as well as in other organs. Finally, we are developing the next generation of immunotherapy agents, like the oncolytic virus platform that only have the potential to work injected directly into a tumor. The reach, vision and control of the Monarch platform could play a critical role in unlocking the value of these new treatments. Importantly, we are working quickly to bring local treatment to market. We are planning for the first in-human trials with Monarch endoluminally delivering both drug and energy in 2021. To conclude, we are bringing together the full potential of Johnson & Johnson to intercept lung cancer using the Monarch platform in combination [ with the ] breadth and depth of the expertise and assets across our J&J business segments. We believe our unified unique approach will ultimately extend beyond lung cancer to other organs that Monarch can endoluminally access, including both the genitourinary and gastrointestinal tracts, where additional diseases like kidney and other cancers have similar challenges of early detection and treatment, and therefore present an opportunity for J&J to further transform the trajectory of human health. And now I'm pleased to turn it over to Dr. Peter Schulam to speak with you about the next generation of general surgery.

Thank you, Dr. Spira. The work that you and your team are doing with Monarch is truly revolutionary. As Dr. Spira mentioned, I'm here to talk about the next generation of general surgery. Before I start, I'd like to tell you a bit about myself. I recently joined Johnson & Johnson. By way of background, I'm a Former Professor of Urology and Surgery and was Chair of the Department of Urology at the Yale School of Medicine. Over the course of my academic career, my focus has been on medical technology innovation and entrepreneurship, so at the nexus of everything we are talking about today. I joined J&J because I believe we have an incredible opportunity to deliver innovative solutions to address unmet clinical needs. In general surgery, we are taking a holistic approach to create a multi-specialty platform that will make medical intervention smarter, less invasive and more personalized and deliver multi-decade growth. We know this requires software and hardware working together, and I would like to walk you through how we are doing this with digital solutions. While the COVID-19 pandemic has affected the lives of everyone around the globe, it has further brought to light the power of digital solutions in health care. Over the past 8 months, we have seen the accelerated adoption of technology across the entire health care sector, as novel digital technologies and applications have been utilized to treat patients. As we look ahead, we are well positioned to capitalize on this momentum to drive our digital solutions. Despite decades of meaningful advancements in surgery, variability in surgical outcomes still exists. In one study, low-skilled surgeons produced 3x the complication rates and 5x the mortality rates compared to high-skilled surgeons. These rates are unacceptably high. We believe we can do better for our patients. We have spoken with more than 3,000 doctors and nurses and more than 1,500 economic stakeholders across the globe. And through those conversations, several key unmet needs rose to the top. Number one, the need to shorten the learning curve for surgeons throughout their careers. Number two, to better understand the patient's anatomy, both preoperatively and intraoperatively. And number three, decision support to prevent injury to critical structures during surgery. For me, as a surgeon, achieving excellent patient outcomes is a function of both a surgeon's skill and his or her judgment. As part of our digital surgery portfolio, we are developing solutions that leverage leading-edge technologies in order to address these unmet needs along 3 horizons. The first is to accelerate the learning curve. The second is to augment surgeon knowledge. And finally, the third is to enhance intraoperative judgment. First, I'm going to speak with you about how we're helping to accelerate the learning curve with a solution already in the market today. Advances in data analytics and machine learning are enabling us to facilitate the transfer of surgical knowledge from experts to less experienced surgeons. Through C-SATS, we have convened a network of more than 300 of the world's leading surgeons who have provided reviews and feedback on more than 13,000 validated case videos. We are well on our way to creating a robust global community for surgeon information sharing and learning. The C-SATS platform is impacting surgical education by providing surgeons with convenient access to their information, allowing them to seamlessly capture and access their surgical videos when and where they want; offering personalized learning and mentoring, allowing them to [ receive ] feedback on skills and technique from an expert surgeon within their specialty; and connecting them with a community of peers virtually. [Presentation]

C-SATS is available today for surgeons across multiple specialties, and we are also in the process of building machine learning algorithms that will be deployed intraoperatively and [ deploy ] real-time intelligence on things such as workflow and decision-making to truly make surgery smarter and more standardized. A saying among surgeons is that you see what you look for and you look for what you know. Our second horizon is focused on augmenting the surgeon's knowledge of their patient's unique anatomy. In order to accomplish this goal, we have signed an agreement with Visible Patient to be their exclusive global commercial partner. This video illustrates the power of this preoperative experience. [Presentation]

By bringing this innovative solution to more surgeons, we believe we can arm them with the most detailed anatomical information of their patients so they can best anticipate intraoperative findings. Lastly, the third horizon addresses intraoperative judgment. Despite the best point in time imaging and 3D models, identification of critical structures during surgery is challenging. This is exemplified by the fact that ureteral injury, the most common complication of pelvic surgery, is experienced in up to 18% of hysterectomies and up to 8% of colorectal surgeries. Unfortunately, 62% of those injuries are not recognized until after the surgery has been completed. This delay in diagnosis can lead to further complications, need for additional procedures and an extended hospitalization. The execution of a surgical plan is dependent upon characteristics unique to each patient. These characteristics can be influenced by obesity, inflammation and prior surgery and can lead to difficult surgical dissection or difficulty in the identification or misidentification of critical structures. To address these issues, we are in the process of creating a platform based upon interoperative imaging and intelligent instrumentation that will provide real-time surgical navigation of critical structures. For example, during pelvic surgery, our technology would inform the surgeon of the location and proximity of the ureter relative to her surgical instruments, thereby decreasing the risk of ureteral injury. At Johnson & Johnson, we have a clear sense of the problems facing surgeons every day. The technologies we've just discussed for accelerating learning, augmenting knowledge and enhancing judgment are applicable across open and minimally invasive surgery, including robotic laparoscopy. We are ready to bring these digital solutions to more surgeons in order to enhance skill and augment judgment to improve patient outcomes. With that, let me turn it back over to Dr. Fred Moll to talk more about the role of robotics in these efforts.

Thanks, Dr. Schulam. When we think about the continued evolution of robotics, we are, in many ways, going back to basics in order to enable the best surgical technique. Historically, the open surgical approach allowed for optimal surgical technique. This is because there were 2 surgeons doing 2 very important jobs, one surgeon to do the dissecting, cutting, sewing and resecting and the assisting surgeon was charged with creating the exposure to tissue by generating traction and countertraction and presenting the proper tissue planes for resection. The surgical assistant allowed the primary surgeon to do the best and safest job possible. As a surgeon in training, one hears over and over again that tissue exposure and displaying tissue planes by creating tissue traction and countertraction are the keys to good surgery. And to do this properly, it takes more than 2 hands. In conventional laparoscopy and robotics, surgeons have 2 primary instruments with the addition of an endoscope for visualization. This means that 3 hands are required even in the simplest of procedures. In the early days of robotics, we introduced 3 arms and had a certain degree of success, but we knew that having 4 arms was going to dramatically increase the attractiveness of robotics by giving surgeons better assistance with the fourth arm, and thereby allowing them to do a broader set of procedures. Again, it goes back to basics. If you really want to display tissue planes for optimal exposure, you need traction and countertraction. To do that, using robotics in a minimally invasive approach, you need a minimum of 5 hands. This idea of allowing surgeons to perform the best traditional surgical technique in a minimally invasive approach was one of the main driving forces behind our surgical platform currently in development. It's a real need in minimally invasive surgery and robotics and a frustration that surgeons work around on a daily basis. We've designed the architecture for our platform with 3 key differentiators. First, we're providing surgeons with 6 arms; second, the robotic arms will be integrated into the operating table; and third, our platform has a 0 footprint design. On the first point, we're getting surgeons more robotic arms for more control in surgery and the flexibility to choose 3, 4 or now 5 arms based upon the procedure and their clinical judgment. They can now use any combination of up to 6 arms across a variety of surgical specialties and a full range of procedures from the most routine to the most complex. This gives a single surgeon the freedom to provide their own 2-handed exposure and still have 2 hands to perform the primary surgical tasks. This is not possible today. Second, we have directly integrated the robotic arms into the operating table. Why did we do this? In the early days of robotics, we understood that the integration of robotic arms with the surgical table would be a significant advantage but frankly, it was too technically challenging at the time. What's powerful about this step in integration is the potential for enabling more robotic intelligence, full integration with the table allows arms to move together with more coordination to do better surgery. And third, our 0 footprint design enables patient access and increases space in the operating room together with improving overall workflow. Currently, there is no robotic system that provides surgeons robotic control and coordination across a full breadth of procedures, from surgery to endoscopy, to catheter intervention and orthopedics. It is my team's ambition to enable our robotic platform to enhance intervention in all medical specialties and to improve outcomes across a broad range of disease states. We are at the exciting stage of development where this platform is coming to life and are well on our way to starting system verification and validation in 2021 and enrolling patients in clinical trials in 2022. And now I'm pleased to share the name of our platform for the first time: OTTAVA. OTTAVA, in Italian, means to play music an octave higher, and that's exactly what we aim to enable in medical intervention. We see the surgeon as the conductor of the OR team in service of the patients, and we view OTTAVA as the surgeon's instrument for orchestrating a new level and elevating the surgical experience. This video will provide you with a closer look at OTTAVA's key features as well as impressions from surgeons who have used the system. [Presentation]

In summary, OTTAVA will have 6 arms integrated into the operating table with a 0 footprint design, all powered by our digital ecosystem. OTABA's architecture makes it possible to provide surgeons with enormous flexibility, giving them the ability to determine the best approach to treat their patients. When I get an OTTAVA, together with Monarch, I envisioned the enablement of new possibilities to access and treat very challenging anatomy and to do it in the most minimally invasive way. I imagine a future where, in one example, clinicians could biopsy and diagnose cancerous lung tumors and in the same-day perform a procedure that utilizes energy-based ablation or localized drug delivery therapies. It is innovation like this that can truly elevate patient care. As our technology advances, I can imagine entirely new procedures and new approaches to treating disease. As another example, early stage colon cancer can be treated with a robotic hybrid approach, navel endoluminal tumor resection with a common assistance of laparoscopy. Although robotic surgery has been here for 2 decades, we are just at the beginning of a journey with the advancement of robotic and digital technologies, and we are well positioned to capitalize on emergings in robotics and digital solutions. I look forward to sharing more on our progress soon. Here to tell you more about the exciting innovation in orthopedics is Aldo Denti.

Hello, everyone. I'm Aldo Denti, DePuy Synthes Company Group Chair. For the last 25 years, I've been a part of the medical device industry with the bulk of those years in orthopedics. I've worked across all aspects of this business and within most of our orthopedic platforms, from sales and marketing to roles across the globe. In my current role, I've had the honor of helping DePuy Synthes further evolve, working to challenge industry norms and living into our 125-year legacy of innovation. At DePuy Synthes, our vision is to keep people moving. We live by these words every day and stand proudly with the more than 5 million patients we serve each year. Our mission includes our commitment to care that is personalized and connected, shaping the future by leveraging technology to address the unmet needs of our customers and our patients. Digital surgery and data give us the opportunity to realize our vision of being the most personalized and connected orthopedics company with a goal to drive sustainable industry change. This commitment fuels our drive to shape the future of orthopedic surgery. Technology is driving exponential change. As one of the world's largest and most comprehensive orthopedic companies, we tapped into our deep customer relationships and our global market insights to recognize the MedTech market opportunity now and for the future across all our platforms. And this is what we learned. Globally, first-generation robotics have only penetrated key orthopedic segments between 5% and 10% of the market, a significant opportunity for robotic and digital surgery technology remains. We believe DePuy Synthes is uniquely positioned to innovate and capitalize on this opportunity. Today's opportunity goes beyond robotics, extending beyond the operating room. Today's opportunity includes developing a next-generation robot plus clinically proven implants plus enabling technologies to come together to positively impact the patient and the surgeon. This includes aiming to reduce the time it takes to perform surgery. It also includes the potential to gather data insights to help surgeons and their care teams continuously learn and improve clinical outcomes and patient satisfaction. Today's opportunity is about solving health care needs the moment a patient decides to visit a surgeon. It's about creating an experience supported by advanced technologies that may reduce uncertainty in a patient's care journey. We are taking bold steps to address these unmet needs and bring disruptive innovations into our business through a connected and personalized digital platform. Let me introduce you to DePuy Synthes' digital surgery platform for orthopedics, VELYS Digital Surgery. With VELYS Digital Surgery, we are building a platform of connected technologies, powered by data insights and designed to elevate the orthopedic experience for patients, surgeons and their teams across the entire continuum of care, from preoperative to postoperative. It is a system that [ gets ] smarter learning as it captures real-time data generating actionable insights and informing each step of the surgical approach to optimize outcomes. The name VELYS is derived from the word velocity. This represents the speed, efficiency and intention with which our digital surgery platform will aim to improve surgery and patient care. Although a robotic-assisted solution is an offering within VELYS Digital surgery, our platform is being developed to go beyond robotics and is powered by a comprehensive set of technology solutions with clinically differentiated implants. Let us show you how. Allow me to introduce Dr. John Wright, our Chief Medical Officer. Dr. Wright has played an instrumental role in providing us with the lens of an orthopedic surgeon to help deliver a better and differentiated experience for surgeons and patients.

Thanks, Aldo. Hello, I'm Dr. John Wright. As an orthopedic surgeon for more than 30 years, I've witnessed firsthand the need for technology to help evolve our industry beyond the operating room. When I was practicing, everything in my operating room was tightly choreographed. I had worked through all the mechanics over the years and at a certain point, my operating room would run like a precision machine with the sole purpose of putting 100% of my focus on my patient's need. As Aldo said, robotics has only 5% to 10% market penetration in worldwide orthopedics. There's an opportunity today for deeper penetration, but also for the development of differentiated technology to offer surgeons that allows them to get back to focusing on the patient along every step of their care journey. We call that VELYS. VELYS Digital Surgery will serve the orthopedic community through tools and technologies designed to enable a more personalized patient care experience, greater insights for real-time decision-making and greater precision and consistency during surgery in a connected operating room environment. The platform starts at preoperative, where we aim to meaningfully communicate with and prepare patients before and after surgery through our VELYS patient path mobile app. We will also strive to use data and predictive analytics to identify patient-specific risk along with care navigation solutions to provide patient readiness for surgery and optimal recovery after surgery. For surgical plan and through partnerships with innovative digital companies, we are developing cost-effective imaging technologies designed to convert X-rays to 3D models, avoiding radiation exposure and the expense of CT scans. Intraoperatively, we envisage a connected operating room that will include not only robotics, but also solutions that focus on digitized and synchronized workflows, targeting increased reproducibility, consistency and efficiencies. And postoperatively, we are working on integrating solutions such as sensors to postoperative patient monitoring and rehabilitation. Along each step of this journey, we are taking advantage of the Johnson & Johnson infrastructure of robust and secure connectivity between our products, the hospitals and the cloud. We will work to develop, aggregate and analyze, helping each system learn, predict and inform clinical actions aiming to reduce variability. This data will power insight-driven decision-making and optimize the technology, making it simple and reducing the burden of complexity. Our vision is end-to-end going beyond implants and beyond robotics. We believe VELYS Digital Surgery is a catalyst for moving DePuy Synthes from a medical device company to a MedTech company. We have a proud 125-year heritage at DePuy Synthes, and VELYS is a key accelerator as we begin our next 125 years. Now that you know more about our VELYS Digital Surgery platform, let's dig into the central point of our offering, our VELYS robotic-assisted solution. Allow me to introduce Addie Harris, R&D leader of our orthopaedic robotics team. Addie has played a critical role in the development of our VELYS robotic-assisted solution.

Thank you, Dr. Wright. As we build our VELYS Digital Surgery platform, our initial focus has been in joint reconstruction with recent additions to our portfolio like the concise surgical automated system and VELYS hip navigation. We've also added VELYS insight portal for health care professionals and the VELYS Patient Path companion mobile app for digital care navigation. And we will add new solutions like the VELYS Robotic-Assisted Solution, which you'll learn much more about today. We expect a robotic-assisted solution to be part of the next-generation of new and disruptive technology. We have already seen a significant number of our loyal ATTUNE customers unwilling to compromise on the level of implant just to adopt a first-generation robot. Our patients and customers are looking to adopt robotic technology that is designed to deliver better clinical outcomes and improved patient care. Going forward, you will hear more about our VELYS Digital Surgery solutions across our DePuy Synthes platforms, including shoulders, trauma, cranial maxillofacial, spine, sports and power tools. And we're proud to say, to date, we have a steady stream of successes related to our VELYS Digital Surgery platform. Despite unprecedented challenges related to COVID-19, we have accomplished our goal of a second-half 2020 U.S. regulatory submission for clearance of our orthopedic robotic solution with a full launch targeted in 2021. While our regulatory submission is in review at the FDA, in anticipation of strong demand, we are building our commercial and supply chain infrastructure to seamlessly support the VELYS robotic solution pending clearance. In addition, we are planning first-in-human cases later this month in New Zealand. Complementing the orthopedic robotic solution, we also have a range of exciting innovation in our core implants portfolio, including the addition of the ATTUNE [ Afixium ] Cementless, fix bearing tibial base plate and patella to our clinically proven ATTUNE portfolio. Let's turn it back to Dr. Wright to dig into the variables and advancements we're making related to joint replacement surgery.

Thanks, Addie. At DePuy Synthes, we have a tremendous opportunity to help change the entire orthopedics landscape through a digital surgery offering that spans the entire care continuum. Through connected data, we will learn, improve precision and consistency and build a better personalized experience for our surgeons and patients in the future. Across the industry, data shows up to 20% of knee replacement patients aren't satisfied with the outcome of their surgery. The patient selection process is very subjective. Personalization in surgical planning or postoperative rehab is limited, and data collection is not connected across the entire journey. We want to take you through the advancements DePuy Synthes is making to address today's unmet needs, specifically in joint replacement.

The joint replacement robotic category is expected to grow significantly. In fact, most estimates suggest up to nearly 30% of all joint replacements will be robotic within the next 10 years. Today's robots are complex. They could add overtime, reduce efficiencies, are large, cumbersome and may add cost to serve for the hospital. We are moving to the next-generation of robotic solutions in orthopedics that are being developed to address future market needs, including reduced complexity, reduced operating room time, rapid operating room turnover, an efficient learning curve and all with a footprint to serve both the outpatient and specialty hospital setting. We took a thoughtful approach in the design of our robotic-assisted solution. Our VELYS robotic-assisted solution has a sleek and compact footprint. It attaches directly to the bed rail, allowing more room for the surgical staff bedside to the patient. It is designed to eliminate the radiation, time and expense of a CT scan and is perfectly suited for a high efficiency outpatient environment, which is especially useful now that the movement of outpatient procedures has been accelerated by COVID-19. The VELYS robotic-assisted solution becomes an extension of the surgeon with a vision to reduce procedure times, provide a simplified user experience and reduce costs for health care systems compared to competitive offerings. Let's show you exactly how it works. [Presentation]

As you can see, we have focused on the most important needs of our customers through efficiency and speed and worked to address the 20% of patients who are dissatisfied with their surgical outcomes through clinical accuracy positioning. In fact, preliminary evidence from a recent cadaveric accuracy study showed the VELYS robotic-assisted knee demonstrated superiority to manual total [ neothroplasty ].

And this is just one piece of a broader VELYS digital surgery offering, spanning the continuum of care and connected data to continue to learn, reduce variation and become more personalized. Let's go back to Aldo.

Thank you, Addie and Dr. Wright. I want to leave you with a few final points. VELYS Digital Surgery platform is specifically designed to offer a digital platform for the entire patient journey with robotics at the center differentiated from today's existing offerings. And importantly, it is founded in deep insights. Although what you saw today was focused on joint reconstruction, our vision expands beyond joints and goes across the entire orthopedics portfolio. Our vision includes designing and developing offerings to provide enhanced accuracy, consistency and efficiency, but also sensors and advanced computing for better predictability. It includes partnerships in spine and trauma for robotic arms to help improve outcomes in complex procedures. It includes sensors and trauma to monitor how patients heal from the comfort of their home using advanced technologies to wirelessly share data with their health care professionals. And it includes ongoing data collection across our platforms to drive stronger insights, help improve outcomes, optimize inventory and support evidence generation. We are committed to evolving the orthopedics industry. And over the last 2 years, we have continued to build our enabling technology and digital surgery capabilities by leveraging more than 10 partnerships and acquisitions. The real magic comes when we connect each individual solution into an overall platform, something no one offers today. Let me end as I started, with a reminder of our commitment to care that is personalized and connected. We are making that a reality, as you can see from our customers, who are already living into the vision of VELYS. We are working with our customers to usher in a new era in orthopedics, one that goes beyond an intraoperative robot and gives our customers and their patients the ability to change their approach, reduce steps, improve outcomes and increase patient satisfaction. This is industry innovation that matters and innovation only Johnson & Johnson can deliver. And now I'll hand it back over to Dr. Moll to share closing remarks.

Thank you, Aldo, and a big thanks to our very talented team. As you've seen today, there's a lot we are excited about. We are making big bets to impact the treatment of diseases such as lung cancer, while also addressing unmet needs in the areas including urology, gastroenterology and orthopedics. I believe we can make procedures more predictable and enable new clinical frontiers by offering surgeons' novel capabilities and insights that will provide demonstrable patient benefits. We are creating a differentiated digital surgery portfolio in a way that only J&J can. I will leave you with 3 points. First, our innovation is powered by a smart connected digital ecosystem. We are capitalizing on emerging technology across best-in-class robotics, advanced instrumentation, enhanced visualization, data analytics and powerful connectivity. Second, as J&J, we have a global infrastructure and footprint that uniquely positions us to be the leader in a majority of surgical specialties and medical intervention. No other company can work at this type of scale to impact patients. And finally, we are delivering multi-specialty end-to-end solutions across orthopedics endoluminal intervention and general surgery to improve the standards of patient care. Today, we are in the market with the Monarch platform, C-STATS (sic) [ C-SATS ] and Visible Patient. In addition, we have a pipeline of new indications with Monarch in emerging innovation with VELYS and our rapidly advancing development program with OTTAVA. It is my personal ambition to always find better ways of improving technique that benefits patient care. This is just the beginning of a new era of treatment options driven by technology, and we are well positioned to transform the future of health care for generations to come. Thank you.

Good morning, everyone. This is Chris DelOrefice, Vice President of Investor Relations for Johnson & Johnson. We hope you enjoyed the exhibit materials we share along with today's presentations and have a good appreciation for how we are well positioned to consistently deliver competitive growth while also building leading edge capabilities in digital surgery, enabling long-term success. We are now going to take a 3-minute break to allow us to transition to the question-and-answer part of the event. Before we break, just a quick reminder about the Q&A process. I'll be leading 2 separate sessions with panelists tailored to address your questions on both our differentiated, multi-specialty digital solutions as well as our broader medical devices business. Questions for either panel can be submitted using the Q&A section on your screen. Please limit yourself to one question per submission and ensure it is written as clearly as possible so it is conveyed as intended. Similar to our earnings calls, we will be focused on questions from our covering sell-side analysts. We will address as many questions as possible during this session. But if we don't cover your questions today, please reach out to our Investor Relations team after the event, and we will respond. Thank you, in advance, and we will resume in 3 minutes. [Break]

Welcome back, everyone. The first panel will focus on our differentiated multi-specialty digital solutions that include many of the physicians who we just heard share our digital surgery programs across orthopedics, endoluminal and general surgery. I'd like to reintroduce our Johnson & Johnson physician experts: Dr. Fred Moll; Dr. Avi Spira; Dr. Peter Schulman (sic) [ Schulam ]; and Dr. John Wright; and Dr. Erik Wilson, the Medical Director of Bariatric Surgery at Memorial Hermann Texas Medical Center, who's been working with our teams to shape our general surgery program. Biographies for each of these panelists can be downloaded from the Resources section of the event site.

With that, our first question is for Dr. Wilson. It comes from Larry Biegelsen from Wells Fargo. Can you provide us with the differentiation versus Da Vinci and HUGO with respect to data capabilities, intelligent surgery, console, arms, cart, instrumentation, and/or cost per procedure.

Thanks, Chris. That's a pretty detailed question. I'll try to hit some of the key points of it. As it relates to HUGO. And, as we know, HUGO is not yet on the market as well, but I have quite a bit of experience with the Da Vinci platform over many, many years. The platforms have different footprints. Obviously, the Da Vinci platform is a boom-mounted system. The HUGO platform is individual modules, and this platform OTTAVA is table-based. The consoles, as it relates to the surgeons, are very similar, I think, in many respects. When you look at OTTAVA and Da Vinci as far as being immersive and you sit in a goggle-based system, it is more of an open platform, I think, with the HUGO-based system based upon what I've been -- have seen in the past. So the surgeon console feels very immersive and I think, translates well from -- if you do a lot of Da Vinci surgery, I think the OTTAVA platform feels very, very similar when you're sitting in the console as a surgeon. I think the instrumentation is going to be quite good. Obviously, Ethicon and J&J have a long history of advanced instrumentation as it relates to laparoscopy and those instruments will be well adapted and adopted into the robotic platform. And over time, we'll include every type of advanced instrument you would expect around advanced energy in stapling. So the differentiators -- I think Fred hit on that very well during the presentation -- are the extra arms, the more freedom of movement within the abdomen and potential future offerings around further integration across differing platforms.

Terrific. Dr. Moll, maybe for you, similar question. Anything that you would like to add or amplify?

I would just amplify the points that have been made. The key, I think, to the OTTAVA platform is really offering greater flexibility and versatility with regard to what procedures can be done, what procedures can be done easily. And as procedures -- as you look at the more complex procedures, I believe we are solving problems in the -- in those procedures that are going to make a difference in ease of use and outcome. I also think that the architecture, the integration of the arms into the bed, that architecture has a lot of advantages with regard to ease of use and also flexibility when considering the use of not only conventional surgical technique, but surgical technique, potentially in combination with endoluminal methods. So I'll turn it back over to you, Chris.

Thank you, Dr. Moll. Appreciate that. So actually, let's stay with you for this next question. It comes from Bob Hopkins from Bank of America. So the question is, in July, you said your goal is to initiate first-in-human studies with your soft tissue robotic solution in the second half of 2022. Today, you referenced robotic platforms about to enter clinical testing. Can you just clarify when you plan on starting, first-in-human testing for burb? And then related to this, we are getting a number of questions asking just to clarify the regulatory pathway. So if you could respond to both of those, that would be great.

Sure. And Bob, thanks for the question. So look, we're in a pathway that is referred to as a de novo pathway and feel very good about the conversations and the ongoing dialogue with the FDA. We think we're in very good shape. We understand the pathway. We understand what's important and the methods by which we demonstrate safety and efficacy of the platform. So consistent with what I've said, we are starting first-in-human studies in the second half of 2022. And we will advance the platform to clearance, both in the U.S. and outside the U.S. subsequent to those clinical trials. That's the guidance I can give you. I do feel we are on track and, again, understand very clearly the pathway to clearance and have had ongoing dialogue with the FDA that continues to advance our -- and solidify our plans for those dates. Again, I'll pass it back to you, Chris.

Great. Thanks, Dr. Moll. Appreciate that. Okay. Our next question is for Dr. Schulam. So this comes from Louise Chen, Cantor Fitzgerald. Do you think robotic procedures will become the standard of care and why or why not? How important is it for teaching hospitals to have robotics as part of their programs?

Chris, thank you. Louise, thank you for the question. I'd like to begin by just telling you a little bit about myself. I recently joined J&J just this past summer after spending 30 years in academia as a urologic surgeon. And my passion over my career has been in medical technology innovation at the intersections of industry, engineering and surgery. I've spent time at Johns Hopkins, UCLA and most recently at Yale, where I was a professor and chair. I'm extremely excited to be at J&J because I feel as though we're uniquely positioned to really transform the future of surgery. We can do this by leveraging our core competencies in the area of pharma, medical device and consumer products. Regarding your question, after having spent 8 years at Yale as the Chair of the Department of Urology and prior to that, I was the Vice Chair at UCLA from 2000 to 2012, and I feel as I have a good line of sight as to what physicians, surgeons, trainees and patients are looking for. And I feel as though we're well on our way. I don't think this -- we're going to back up at all. If you recall, back in early 2000s when the robotic device was released, there was very little adoption in urology. If you look now, I believe, in the United States, over 90% of prostatectomies are performed robotically. This is just going to increase as well. The indications for urologic surgery robotically have expanded. We're seeing use in colorectal surgery, bariatric surgery, hernia surgery, transplantation and thoracic. I think we're at the point now that we have a generation of surgeons that are expecting this technology. And I believe that this will become a standard over the years to come. Chris, thank you.

Great. Thank you. Appreciate that. So our next question is for Dr. Spira, comes from Rick Wise from Stifel. So Monarch technology today clearly very exciting and compelling technology. Can you discuss early physician interest and concerns about the technology, time to learn as an example?

Yes. Thank you, Rick, for the question, and good morning, everyone. So I'm a pulmonary and critical care physician, and I joined Johnson & Johnson 2 years ago to lead the cross sector R&D team. And within 2 weeks of joining J&J, I had the good fortune of being able to go out to Auris Health and drive the Monarch scope for the first time. And that was my a-ha moment, when I realized it was the most transformative advance in the field of bronchoscopy that I had seen in my 20 years of clinical practice. So the technological advantages of the platform that I mentioned in my talk, the reach, vision, control, allow this platform to address a major unmet clinical need today with lung cancer, one that I've been battling with my entire career: early lung cancer detection. I can't tell you how many times I had to go into a patient's room and give them and their family the heartbreaking news that I was diagnosing them with late-stage lung cancer. So early detection is near and dear to me. But my even bigger a-ha moment came when we realized that we could combine the Monarch platform with other assets at Johnson & Johnson, specifically NeuWave's microwave ablation catheter and Janssen's deep pharmaceutical pipeline. We could not only transform early detection of lung cancer, but shift the paradigm in the treatment of early-stage lung cancer, more precise, less invasive treatment for lung cancer at its earliest and most curable stage. So specifically, we are seeing a very exciting adoption of the technology today. More than 4,000 bronchoscopies have been performed in the United States with the Monarch platform. The feedback we're getting is very, very encouraging. We are seeing a very high rate of localizing the lesion with the Monarch scope. In fact, in our first study published 3 months ago, there was a 96% success rate in the bronchoscopist being able to get out adjacent to the lesion with the scope and a very small complication rate. Less than 4% rate of lung collapse or pneumothorax. That's consistent with other forms of bronchoscopy. We are now looking to generate additional clinical evidence around safety and efficacy of this platform in multiple other indications. But as I said, we're very encouraged with the data that's been generated to date. I would say lastly that this convergent approach of bringing the breadth and depth of J&J's expertise is really going to transform -- position us to transform the trajectory of this disease. So again, thank you for the question.