Johnson & Johnson (JNJ) Earnings Call Transcript & Summary

Hello, everybody. Thank you for rejoining us. I'm thrilled today that we have moved on to talk about Johnson & Johnson. And we have Jennifer Taubert with us, EVP, Worldwide Chairman of Pharmaceuticals. Jennifer, welcome.

Thank you so much, Joanne. I'm really happy to be here with you today, and hello, everybody. First of all, on behalf of J&J, I hope that you and your families are remaining safe and healthy. I'm really proud to have a chance to chat with you today around -- about our Pharmaceutical business, which delivered really robust, very, very strong growth throughout 2020, exceeding the market growth rates for our ninth consecutive year. A couple -- few things I'd like to run through with you here today. First, our broadly based growth was across regions, it was across therapeutic areas, and it was across our key brands. And we think that, that's a key indication of the increasing number of patients that we're reaching with our innovative medicines. Of note, our oncology, immunology and pulmonary hypertension portfolios were particular outperformers last year. Our success in 2020, really during the pandemic required agility, resilience and most of all, a keen focus on patients and on our customers. And so from the outset of the pandemic, our team used virtual tools to help patients start and stay on their medicines. We leveraged technologies to help keep our clinical trials on track and developed omnichannel solutions to really help meet customer needs. We kept our innovation engine going strong, and we did that -- and by doing so, advanced our marketed portfolio. We received approvals for 30 new indications. We also achieved 21 regulatory submissions for additional uses of our medicines. These were not only done on time, but in some cases, actually happened ahead of schedule, enabling us to reach even more patients with our medical innovations. In addition, and really importantly, we submitted regulatory filings for 3 new molecular entities, including Ponesimod for multiple sclerosis; our BCMA CAR-T for multiple myeloma; and amivantamab for non-small cell lung cancer. Additionally, we really advanced our portfolio through strategic M&A, and one notable example of this was our acquisition of Momenta. This complements our proven expertise in immune-mediated diseases and also enables us to advance our leadership position, in this case, in autoantibody-driven diseases. And I know that you all know, Johnson is also playing a really key role in developing and advancing an investigational COVID-19 vaccine. So based on our strong performance in 2020, I feel really good about the momentum with which we're entering 2021. So in 2021, we're going to continue to maximize the value of our marketed medicines to deliver highly robust growth really across regions. We're going to continue to advance our pipeline of innovative assets, and we're going to build on the capabilities and new operating models that we've been putting into practice over the course of the past year and ways of staying really well connected with customers and with patients. This also includes leveraging our data science capabilities across our business, enhancing digital engagements with patients and customers and also through medical education -- virtual medical education. And finally, if we receive our Emergency Use Authorization for our COVID-19 vaccine candidate, we're successfully going to deliver that vaccine to people throughout the world to do our part to help bring an end to this global health crisis. So look forward to a successful year in 2021, and also to having -- to answer some questions today.

There's so much to go from there. So thank you so much for that. I recognize that you're probably limited on what you can say regarding the vaccine, but we're -- it's sort of the elephant in the room, and I have to ask the question. There's a panel tomorrow, and there are some meetings happening over the weekend. And there are things coming across my news feed that speculates when J&J may or may not get approval. What is that you can tell us about the steps? And just certainly, what can you tell us?

Yes. Sure. So thank you for the question on the COVID vaccine, and really, before I talk about the VRBPAC meeting, which is scheduled tomorrow, I'd like to start and really recognize the extraordinary effort the entire industry has done over the course of the last year. To be at the point where we're talking about the third advisory committee meeting for a vaccine only 1 year in, where we've got 2 approved vaccines now and hopefully a third that will receive Emergency Use Authorization shortly, coupled with the fact of multiple therapeutics that can be used in patients with COVID as well, it really is an extraordinary position to be in, and I really -- I'm so proud to be a member of the entire pharmaceutical industry to be at this point really at this time. So yes, you're correct. The VRBPAC meeting is scheduled for tomorrow, and we're really looking forward to having a really good opportunity to share our data and to answer and address questions by the advisers and also the FDA. We announced the data -- the interim data from our Phase III trial back at the end of January, and we've shortly thereafter filed for Emergency Use Authorization with the U.S. FDA, also for conditional marketing authorization in Europe and have also filed with a number of other regulators around the world. And so yes, so tomorrow, we're going to have the VRBPAC meeting. And assuming that everything goes well, hopefully, we will have an Emergency Use Authorization in the very near future after that.

And what was it about the data that surprised you to most? And what was it that you're like, yes, we got that?

On behalf of our scientists in J&J, we were really pleased with the results. We had a very big study. It was 44,000 patients. And if you think about it, back when we were planning this trial back in the August, September time frame, our folks had to not only take a look at where the virus had been or where it was then, but really predict where it was going to be. And a credit to our data scientists because they really nailed it. And so we planned our study, the 44,000 patient study, to actually be done where we thought there was going to be hotspots, and so throughout the United States, throughout Latin America, particularly in Brazil, and also in South Africa. And so when we got our interim results, what was really great was that we had a robust test and we -- the vaccine candidate in patients that today with the disease now, and also across regions, where the disease is a little bit different and where there's been different viral mutations as well. So we were really pleased with the results overall, but also to see the results coming out of Brazil, where we know that there are certain mutations and also out of South Africa. So we're really looking forward to having the totality of the data discussed at VRBPAC tomorrow.

And so as you think about this getting EUA approval or just regulatory approval around the world, how does J&J start to prepare? And how have you been preparing for it?

Yes. So back on -- at the beginning, we made a really bold commitment. We said we are going to do our darndest to develop a COVID vaccine that's going to be effective and that can be a solution for the world. And we're going to do so and in 2021, be able to deliver a vaccine with 1 billion doses worldwide and also do it at a not-for-profit price. And so we made this commitment back a year ago when it was still -- we were still in the very early stages. And I'm so pleased to be at the point now where we've got a vaccine that we believe we've got strong data. We have been able and we have been working diligently throughout the world to be able to scale our manufacturing and supply chains to be able to achieve that billion-dose commitment. And we're absolutely right on track as well with our not-for-profit commitment to the world, too. So earlier this week -- because I know this is a question on a lot of people's minds, we actually, at a recent hearing, also communicated that upon EUA approval, should we receive it, we are ready to start shipping immediately. And that we would do that with the doses that we have. In the month of March, we would be able to ship more than 20 million doses in the United States. And the beauty with our shot being a single dose is that when we say we're shipping 20 million doses -- more than 20 million, that equals 20 million people. And so that can have a significant impact. And we're also on track with the commitment that we've noted to deliver over 100 -- or deliver 100 million vaccines to the U.S. government through the first half of this year. So we're going to -- our supply chain guys have been very, very busy working throughout the world to set up the supply chain to enable us to be able to do that.

So as we think about sort of next iterations or next moves, we've talked about a pediatric application. We've talked about possibly a second dose or a booster dose. Can you sort of reflect on that a bit?

Yes. Sorry, just need to do this here. We're going to really -- we're going to -- first of all, we're going to follow the science on this. As it pertains to additional populations with the current vaccine, we're in discussions with the regulators right now in terms of what they'd like for us to be able to show to extend any Emergency Use Authorization that we receive down into pediatric populations. And so we're working with them right now to finalize those requirements and then to be able to move forward quickly. So those plans are underway. And then as it relates to whether there would be, at some point in time, booster shots or somehow due to mutations and changes that could come, if additional shots will be needed, that's one where we're really going to follow the science. The beauty of our vaccine platform is that should that come to bear and be the right thing to do, we're able to pivot very quickly to be able to design that new vaccine and to be able to get it through the right levels of testing to prove the safety and efficacy. And then because of the scale of the manufacturing and supply chain that we built up, we've got the ability to be able to provide it really at scale and large doses pretty quick where possible.

There are some people, investors, or just my sister, friends, who saw the headline data and went, oh, that doesn't look quite right. Why is that the wrong way to look at it?

I would like to let all of this play out tomorrow at VRBPAC, so -- if you don't mind, where they'll have a really good, robust discussion on the data every which way. So if you don't mind, I suggest folks, if you've got the opportunity, to tune into that for a little bit and to see our folks present the data and to see what will obviously be a very robust and good discussion on it.

Excellent. Thank you for answering the questions that you did. I want to spend a little bit of time about talking holistically about the pharma franchise. And how do you think about -- I use the phrase feeding it. But what I'm really saying is investing and acquiring and just thinking about move it forward so that you can continue to say we're growing faster than our pharmaceutical peers.

Yes. And we've made that commitment at our last pharmaceutical business day back -- about 1.5 years ago or so. Our CFO made the commitment, we're going to continue to grow above the market and have success out through the foreseeable future. I think we do a few things a little bit different than others, and maybe I can spend a minute and talk a little bit about our strategy there and what differentiates us from the competition. So first and foremost, we're a transformational medical innovator. And so we set the bar very high on innovation and truly are going after innovation that addresses unmet need. Next part of our strategy, we make a conscious choice to disproportionately invest in R&D. As an example of that, in 2019, we invested nearly $9 billion in R&D globally. This makes us one of the top investors in R&D out of any industry throughout the world. So we really put significant resources there. And just by a point of comparison, this is 91% more than what we spend on sales and marketing. So we say we are going to go after the best science, we are going to fully develop it and do the best job that we can for patients there. So we disproportionately invest in R&D. Really, the next element of the strategy is that we're truly agnostic to the source of innovation. So if it comes from inside our labs, great. If we find something on the outside that can get us to market faster or is going to be better differentiated and do something better for patients, great. We're going to go after it and try to bring it in. For our teams, the win is being able to have a transformational medicine that we can get to patients. Doesn't matter where it originated. And I think that's a fundamental difference, and really, that belief set, that does differentiate us from a number of the competitors. I think one of the other key things is, when we go in on an asset, we really work to develop it to win. So we build it out to clearly win. We take a look at what are all of the populations that we can go into where we can truly make a difference. We look at all the lines of therapy where we can show that we're effective. We look at the various combinations, particularly in the case of oncology, where so much is based on combination regimens. We look at new formulations that can be more patient-friendly. And we look to do this -- and because of our size and scale, we can do this. We can make the big investments and build it and do it out quickly. So it isn't something that gets slowly metered out over time. We try to enter and really enter with a big punch as quickly as possible. I'm sure at some point, we'll talk about DARZALEX. I think DARZALEX is a great example of this, but so is IMBRUVICA, and so is STELARA, and so is TREMFYA, and so is ERLEADA, and so on and so forth throughout our portfolio. So I think we've really demonstrated we go in, we really go big. We take a look at how can we win and make sure that we've got those data sets that are going to enable us to do so. Not only just to get regulatory approval, but also to make sure that we can get payer access for patients there, and then also make sure that we've got the competitive data to win and to show why that we're besting the standards of care. And...

So if you can -- oh, sorry. Go ahead.

No, go ahead. That's fine.

I was going to say, if you take that framework and you overlay it on the Momenta acquisition, what made that the right acquisition at this time?

Oh, fabulous, great question on that. And Momenta is a perfect example of how this works. So with Momenta, Momenta is going to give us a shot at really being a leader in autoantibody-driven diseases. And with Momenta, and particularly the lead asset, nipocalimab, what we see is an opportunity to really build that asset out to go into at least 10 different diseases, many of which there's no currently good therapies for. And where we believe that we can go in and, in many cases, be first-in-class and truly be a best-in-class competitor. And when you take a look, there are opportunities in immunology, there's opportunities in oncology, there's opportunities in neuroscience, which are existing therapeutic areas and strongholds for us where this can nicely plug into existing infrastructure. And then there's other areas which are new and compelling, such as maternal-fetal, and where there's been really robust data on, so far, more than just proof-of-concept with live births in the material-fetal indication. So when we took a look at Momenta and particularly that lead asset, we really saw an opportunity to bring something in and to put the Janssen machinery behind it to fully build out and maximize it on the R&D front and then to put all of our commercial expertise behind it as well to help get the payer access and really make this available to patients around the world.

So let's do spend some time on DARZALEX because that's been a real win in oncology.

Yes.

Can you talk about how you thought about bringing that to market, new formulations, subcutaneous formulations and sort of next.

Yes. So DARZALEX is one of our key products. It's becoming one of our largest products and one of our fastest growing. And we're so excited for what this has been able to do for patients with multiple myeloma. And so when we brought DARZALEX in, and we've got a terrific partnership with Genmab on it, what our team was able to do was really take a look at -- we know multiple myeloma with our prior efforts and partnerships in this area. So really take a look at what do patients with multiple myeloma need and really work to develop it, starting, first and foremost in the later lines of therapy, but then moving it sooner and sooner to the earlier lines of therapy. Also taking a look and studying it in combination with the other regimens and continually besting the standard of care. Taking a look at it in transplant-eligible as well as transplant-ineligible patients. And then taking a look at how can we continue to make this even easier for patients and also the health care system. And so DARZALEX FASPRO, which we got approval for and launched last year, which is really proving success in the marketplace, enabled the -- what had been a 4- to 6-hour infusion, to go down to a 3- to 5-minute injection. So you can imagine how that's going to enable us to further penetrate the first-line settings and truly become standard of care in multiple myeloma with the FASPRO application. Additionally, we're taking a look at additional opportunities. So we studied and, in fact, just got approval for use in AL amyloidosis, and we're also looking at smoldering myeloma. And so it's a great example of another case, like what I highlighted with Momenta, where we're really taking a look at the asset, how can we build it out to truly be all that it can be for patients. And if we do so and do so successfully, that works out really well for J&J and for investors as well.

And similarly, IMBRUVICA, you've also -- it's like the tree. You start off with the base and then the branches just keep on going out.

It's a very similar story. And there, our scientists found what looked like truly a tremendous opportunity. That was with Pharmacyclics at the time, now part of AbbVie. And we got in very early and worked with them. They had a terrific asset, and we were able to bring both our R&D and commercial expertise to the table to deliver a great win for patients and also a great win for both companies. So there, we've developed it throughout CLL, we've developed it in MCL, in Waldenström’s, and are really continuing to build out and penetrate the market. We've studied in combinations, and this continues to be a big asset for us. It's a similar story to DARZALEX and what I mentioned with Momenta. So hopefully, you're seeing a recurring theme here. And so we feel very positive about our strong partnership with AbbVie on it and what we're able to do for patients there, and a lot of additional growth potential.

Excellent. I'm just going to just knock out some of your high-profile products here. Stop me in any direction or move me in a different way. So I want to spend a little bit of time on ERLEADA. Some data recently came out at the American Society of Clinical Oncology Genitourinary Cancers Symposium, quite the mouthful there. And I'm curious if you can sort of tell how this data might pivot the company in a little bit of a different direction. Or what was really noteworthy about it?

So ERLEADA is obviously for prostate cancer, and we think it's one of our really important growth drivers going forward. And so what we like and what we've been doing, if you take a look at the data, we've been really working to build it out as a standard of care in both the metastatic and non-metastatic settings. So proving that in patients with mets, it can be a go-to choice. Also working in pre-metastatic as well, and going earlier and earlier in the course of disease to help prevent a patient from ever getting to metastasis in the first place. So we're really working to advance the asset across the spectrum of care to really be a backbone of therapy for patients unfortunate with prostate cancer. And so that one has been a tremendous growth driver for us as of late, particularly with the addition into the metastatic setting.

Okay. And then STELARA and TREMFYA, you have sort of a 1-2 punch there going on in immunology. Walk me through label expansions and how you think about other line expansions.

Yes. So STELARA is currently our largest asset and has been really delivering tremendous growth. And right now, that's really been driven -- or most recently, that's been driven by our indications in Crohn's disease and in ulcerative colitis. So areas that are very underpenetrated in terms of biologics and also where there's still a remarkable amount of really unmet patient need. And so we've seen tremendous growth in both Crohn's and ulcerative colitis. That really is where we're going with STELARA right now, where we believe that we've got tremendous data and are building it out. Now based on our history in immunology and the science there and what we've since learned is we believe that the IL-23 pathway really offers a lot of opportunities for more existing areas such as psoriasis, psoriatic arthritis, and then Crohn's disease and ulcerative colitis, but also additional areas as well. And so our scientists worked then to develop TREMFYA, which we've launched recently, launching it first in psoriasis, where we really were able to prove clinically and really best the other standards of care, or what had been, with superiority data versus Humira, superiority data in patients in STELARA failures and then also data versus the IL-17s. And so we believe that we've got a really great asset with TREMFYA in psoriasis and a really robust data set. And then most recently, we've completed the studies, filed for, gained approval and launched in psoriatic arthritis, which ends up being a very nice catalyst, not only for patients with psoriatic arthritis, but also in psoriasis. So our focus in psoriasis and psoriatic arthritis is really on TREMFYA in the IL-23 pathway, where we think that, that's better and where we've proven success where STELARA has failed. And meanwhile, right now, while we've got great data in Crohn's and ulcerative colitis for STELARA, we're continuing to drive that. So they're driving down different pathways. We've got studies underway for TREMFYA in Crohn's disease and ulcerative colitis, where we've got reason to believe that it's going to prove very, very successful there as well based on our insights in the IL-23 pathway, and we're going to continue to build out that asset over time. So that's how we're seeing it right now. STELARA, growth in the GI and IBD area; and for TREMFYA right now, near term, psoriasis and psoriatic arthritis, but later term, hopefully, the GI and others.

Excellent. If I was going to ask you to highlight another 1 or 2 of your favorite products, it's a little bit like choosing your favorite child I think amongst the group. What would you mention...