Johnson & Johnson ($JNJ)

[indiscernible] for the next company presentation at the BofA Annual Healthcare Conference. My name is Jason Gerberry. I cover pharma and biotech at BofA, and I'm pleased to be moderating our next fireside discussion with Johnson & Johnson, and John Reed, Executive Vice President, Pharma R&D. So John, thanks so much for joining us.

It's great to be here. Looking forward to the chat.

Well, look, you -- as a company, have had a lot of momentum, I think, in the R&D organization. So looking forward to just maybe at a high-level framing first. Where you're at in terms of the pipeline and BD consideration versus in-house developed -- you guys have shown a propensity obviously to have success on both fronts. And I imagine you're always opportunistically looking for best science, right? So we get that dynamic. But are the priority areas within the portfolio that from your seat, you're looking at and saying, "Hey, we maybe want to address and augment through external innovation." I know you probably don't want to tell your hand too much to the external community, but maybe if you could just frame that dynamic first because there's been so much activity with your pharma peers on the M&A front that it's topical.

Yes. No, we're -- first, I would say that we really have become a more focused company in the last few years. oncology, immunology and neuroscience are really the foundational elements. We do a little bit here and there in some other areas, but those are the key areas. And our strategy for some time has really been one of trying to roughly half of our product mix come from internal discovery and internal engine and half through BD M&A. And we tend to track pretty closely. I think right now, about 60% of the development stage portfolio actually happens to be internally derived but even many of those started with some collaboration or something. So it's a mixed picture like that. And we're both interested in products and sometimes platforms. And maybe a good example of a recent one that kind of checked both those boxes was towards the end of last year, we acquired a small company called [ Halda ] that had a lead candidate, an oral for prostate cancer, J&J is #1 in prostate cancer. So that's a good fit for us. That is based on a technology called [indiscernible] that use these cleverly designed [ bidentate ] oral small molecules that will grab on to a target of interest. In this case, it was the androgen receptor, and then also grab some essential protein and sequester is the cell can't have it. And without it, the cell dies. So it's a holding kill mechanism. We're able to bring in essentially a ready asset -- but on top of that, we got this nifty chemistry platform with several other projects in various stages of progression, that we're excited about taking across a number of areas in oncology, but also in some other therapeutic areas, too. So it's a nice example, I think.

Okay. So it wouldn't be -- I feel like every year at our conference, there's a little bit of drama with FDA, and there's been some recent headlines. I'm not sure the net outcome, what that's going to look like. But if you can maybe frame how productive the interactions have been with the agency with a lot of change and potentially more change coming.

Yes. I've had the opportunity to interact quite a bit with McGarry and his -- and the leadership there at the agency. They recognize that it's become progressively more difficult to do clinical development in this country compared to some other locations and that we need to speed some elements of that and rethink some elements of that and with a mindset to what would it take to make America a more attractive place to see studies conducted, so I certainly applaud the agency for many things they're trying to do to rethink the requirements for INDs, the pace with which INDs can be approved in this country and a number of other dimensions, too. I mean, you saw that they also now provided some fresh thinking about how many clinical trials do you actually need to get an approval and some other things, too. So I think there's a lot of good opportunity there and good intention. And the commissioner has invited members of the pharma company, company's community from time to time. to even submit white papers with our suggestions so that he's not trying to read our minds but trying to understand what are the things that might make it easier for us to do manufacturing in this country or do new studies in this country, et cetera. And then he and his team can take it under advisement. So I feel there's a bit a goodwill there to work collaboratively. Obviously, there were big impacts on the agency with the Dodge effort, et cetera, that has created, I think, some workload issues for the agency. I certainly -- the more I interact with the staff there, the more I appreciate just how hard working they are. They turn these applications around, and they've got a big full plate. So appreciative for their service.

Got it. Okay. Well, maybe we'll switch gears to some of the therapeutic areas and immunology is one of the core TAs for you guys as a company. And let's start with icatide, which the company, I would argue maybe a more bullish tone coming out of 1Q just on the revenue opportunity and we have validated set of indications where icatidend will have an opportunity in psoriasis is the near-term opportunity. But I guess I wonder, first, it's a drug with lower bioavailability. And so as we think about in UC, he's still approximating the efficacy of the biologics, right? And so there's perhaps some underpinnings there in terms of receptors in the gut that might make it feasible for you to achieve that level of efficacy. Is it realistic to think that you could push dose in psoriasis to narrow that efficacy gap that you see with IL-23 biologics, I guess that's one question. And then how confident are you in kind of your dosing strategy broadly in IBD?

Right, right. Yes. So several dimensions to the question. But First, just to remind the audience, if you don't were now that icotide was just approved this year for psoriasis. It's an oral therapy that targets the IL-23 receptor targeted oral peptide, and what we've been seeing is biologics like efficacy, combined with a very pristine safety profile in the convenience of a once a day. The reason that we're excited about it is because if you look at the patient populations in this country and elsewhere that are -- have an autoimmune disease, they're eligible for biologic only 20% to 30% of them are actually taking one. Many people just do not want to commit to a lifelong of injections with a biologic. So this offers an oral option with efficacy on par with biologics. And in psoriasis, for example, if you look at the data that we generated, we have 5 out of 5 positive Phase III studies published in the New England Journal Publishing Lancet head-to-head against the leading TK2 inhibitor. But is [indiscernible] 1 out of every 2 patients had completely clear skin. That's the IgA 0. That's right on par with the best biologics. So we were able to get that done with a 200-milligram dose. As you know, the health authorities make us do dose ranging because they want us to use the minimally effective dose. They don't want us to push doses anymore than we have to, in order to reduce risks of some safety event. And so we do dose ranging in all our indications. We'll see where we land in the end with the inflammatory bowel disease, as you said, because it's orally absorbed maybe you'll get higher local concentrations in the gut, but we'll do the studies and we'll land on whatever the minimally effective dose is. for those indications. I feel quite confident because the IL-23 class is validated there. So -- but we'll just -- we'll have to see if we get that kind of on par with biologics type of type of efficacy. I'd say one other thing, too, that we're really happy since you mentioned the FDA is with the adjudication of the label with them. we were able to get a very clean label. So there's no laboratory monitoring required. There's not a requirement to do TB testing upfront, unlike many other biologics. So it's really easy for the dermatologist to write the script and feel confident around the safety of [indiscernible].

How quickly do you think old ways change, right? These doctors are almost preconditioned to look for these things, right? And so what some doctors have said to us is, well, maybe there's a psychological predisposition to doing these things still, right? Is that at all a factor when you guys think about how these dynamics change with Otezla, right, which was the last successful oral therapy in psoriasis, commercially speaking, it was kind of an easy right, right, for community dermatologists. And it seems like at least in psoriasis, right, the idea is to kind of expand the category.

Yes. I think the clean label really helps in that regard so that you don't have to do a bunch of laboratory testing or wait for a TB test to come back or things like that. As we know, in medical practice in the community, it does take some time for patient education, et cetera. But the interactions we've had, and that's with the KOLs, which maybe are not always representative of our your average dermatologists, but they're really excited because what they talk about is they have patients with psoriasis, they're trying to manage it with topicals, but it's a systemic disease really. So at some point, they realize this is just not cutting it. And then historically, the dermatologists would say, okay, I think it's time for you to go on an injectable. And what they would describe to us as the patients would go -- let me think about that. I'll get back to you and then they don't come back. So with this way, you write a script, they start taking a pill once a day. It's just an easy transition from the patient to get from trying to manage their disease with topicals to now on a systemic therapy. So we're we're excited. We think it's going to be a real market expander.

Yes. Okay. Now with IBD, this is a big component, I think, of the peak sales outlook for icotide. So I guess what I wonder is -- we haven't seen a really great commercially successful oral outside of maybe mesalamine, right, which had a lot of volume utilization. If you listen to how AbbVie frames it and they're looking at INI combinations, you had the recent DUET data. You want to go with your biggest gun early, avoid things like fistulas later downstream in the patient. So I guess I wonder where iscotide fits in all that, right, where you and competitors are looking at these combination products. You've got biologics that work really well there. So how do you think about the oral opportunity in IBD?

Yes. I think, again, there are a lot of -- a large percentage of patients that are eligible for a biologic but not taking one in IBD as well. So I think there must be a -- there's clearly a large patient population there that would like an alternative. The -- I think the key for us will be the efficacy data that we deliver in the studies. Is it right there on par with the biologics and then that gives patients and health care providers another option to consider. You mentioned DUET. For those who don't know, that's some studies we did with patients who are on the more severe refractory end of the scale where a monotherapy is not getting the job done for them. So they're -- we've created a co-formulation of our TNF inhibitor and our IL-23 inhibitor, 2 antibodies co-formulated at the right doses so that a single injection, the patient gets both of those and had seen that in patients who have failed or more prior lines that this really then started to get into a range of efficacy is essentially double what you saw with the monotherapies in that patient population where monotherapy is just not getting the job done for them. So it won't be a one size fits all, I think, with these patients, some will gravitate to an oral, others injectables. Some may need more than one drug depending on their disease. Unfortunately, with IBD, as you know, fewer than half of patients achieve and sustain a complete remission. So it is one of those diseases despite even our best medicines. -- there's room for improvement, and we're going to keep pushing at it.

Okay. Well, maybe that's a segue for DUET, which was recent data that you presented and AbbVie a week or 2 earlier had interim data for its IL-23 integrin. And so I'm just curious the strategy and why prioritization of, say, TNF versus, say, other combination partners that you could have paired with your IL-23.

Right. Well, to some extent, it was logical for us at J&J because we had -- we brought the first TNF inhibitor to market with REMICADE and golimumab, which is the product of Symphony was in our portfolio and then guselkumab, TreEmbYa. And so it made sense for us to do exploratory work with those combos. And -- what we did first, though, was pilot studies where they were biomarker-driven, where we put patients on one or both and then take biopsies from the intestine and do deep molecular profiling, single-cell transcriptomics. And that taught us that the 2 together really had a synergistic suppression of inflammatory pathways. So we thought, okay, this could really make sense. And then as we got in the clinic, we were, of course, watching safety because when you start taking out a couple of these cytokines, what's going to happen to safety. But there, we found that the safety was consistent with each of the underlying components. We did not see incremental adverse events. So we were good on those. And then when we did the studies, we started to see these really promising data. So that's how we started in this journey. It's not to say that other combos wouldn't be logical to also give a try. And we'll probably do some of that ourselves down the road, but this was a good entry point for us to bring together 2 mechanisms. And we're poised to be the company that delivers the first of a dual mechanism with these co-antibody therapeutic. So we're trailblazing with this and really excited to be able to offer more hope to these patients who are really tough to treat.

So your just general thoughts on having TNF-based combinations and potential with the black box warning. -- others in this space would say, hey, we want to like combine 2 really safe MOAs orthogonal that lack the black box warning. Maybe the counterargument to that is when you start to deal with settings like IBD or RA, you need big guns and that risk-benefit-wise, a black box warning in the grand scheme may be an acceptable trade-off.

Yes. I mean the black box in this case goes with the TNF class. And because that class has been around so long, we find patients are very comfortable managing those risk profiles. So it's something that they're very familiar with. IL-23 doesn't really have the black box issues. So that pair -- but I mean, if you compare it, some patients who end up on a JAK inhibitor, right? Talk about your black box warning. They have the infection risk warning, they have the cancer risk warning, they have cardiovascular event warnings, they have thrombosis warnings. So I think when patients are desperate enough and physicians are desperate enough, sometimes they'll even put up with that. But compared to a JAK inhibitor, this is far more benign. And yet we see people reaching for JAK inhibitors with some of these refractory patient populations. So I think the risk benefit it's very attractive, I think, for many physicians and patients.

Okay. And so with -- following the DUET data, what are next steps with that? I -- would the plan be to go directly to Phase III? Are you happy with what you saw? If you can kind of outline that?

Yes, we're going straight to Phase III in ulcerative colitis because we already did a dose-ranging Phase II. We have defined what the dose will be. In Crohn's, we're doing a seamless Phase IIb Phase III. So we'll do some dose ranging and then start the Phase III component. I don't think we've revealed all the details of that, but that's the plan there. We're also going to do a study in psoriatic arthritis, which is another one of the autoimmune diseases where there are a significant percentage of patients where monotherapy is just not enough. So we're going to study there as well. And we'll go head-to-head against -- in the case of the inflammatory bowel disease, we're going head-to-head against guselkumab, Trempaya. The regulators agreed that we did not need to do also the TNF single therapy. So it's just -- it's basically guselkumab versus the co-antibody therapeutic, those 2 arms basically.

Okay. And then any efforts, it sounds like to interrogate different orthogonal mechanistic combinations either with a coformulation or bispecifics. Is that something that J&J can do internally, does it need to go out externally to find assets that can facilitate that strategy?

I think it's some of both. So in some cases, we certainly, from a technology standpoint, we have a very robust bispecific platform. We have the ability to do the co-antibody therapeutics. And as we bring more and more orals, there could be oral combinations and sometimes those could be co-formulated a fixed-dose combo. But because there are different targets that you might want to pair in different ways. In some cases, we might have both targets in hands. In other cases, we might want to go externally and grab one from another partner. So it will be some of each, I think, as we get into this sort of commentatorial aspect of on immune diseases.

Okay. Maybe we'll shift to neuroscience, an area that you guys have been acquisitive in. But my question was around SPRAVATO just given the surprising commercial success that you guys have had. I think it speaks to just the unmet need in MDD. I feel like every time there's a new category, it's not zero-sum game, it's expanding the market. And so when we talk to physicians who treat patients either with like ketamine clinics or with SPRAVATO. It seems like it's a very unique segment of the market relative to typical SSRIs or even atypical antipsychotics. So there's some changing going on in the landscape to around psychodelic therapies, that there could be potentially, at least if you listen to how some of them portray their therapies as more of a durable benefit. You don't need to have as many follow-up treatments as SPRAVATO, which can be time-consuming. So as you look at like what's going on in psychedelic therapy pipeline competitively? Is that a risk to SPRAVATO? Or is that something that's like an opportunity for you to augment Privado in the portfolio down the line potentially.

I think we're waiting for data to come in on this psychodelics to really understand it all. But just to back up a little bit on SPRAVATO. So it's a particular [indiscernible] of ketamine that's formulated for delivery to the intranasal route with a device. So it's another good collaboration between med tech and pharma at J&J. And it was the first example of an antidepressant that had rapid actions. So in other words, within minutes to hours, patients could see their depression symptoms relieved was approved for treatment-resistant depression, which is patients who failed to prior antidepressants at least as well as for the really urgent situation of depression with suicidal ideation. Altogether, we've taken it through 36 clinical trials, a 1/4 of 1 billion people have been treated with SPRAVATO it is approved in multiple countries. And it really added a new weapon to the battle against chronic depression, which affects 1/4 of 1 billion people around the world and it's a heterogeneous disease, right? It's not a 1 size fits all. So we need different mechanisms. And this provide was the only depressant ever awarded breakthrough designation by the FDA. Twice, we got priority review too. So it's really a new step forward. Now, how does it work? It's thought to work by affecting neuroplasticity, which is what the psychodetics are thought to do, right? Different mechanisms, SPRAVATO works through a thing called NMDA receptors. The psychodetic is not entirely clear, but there's theories that it might be a certain type of seratonin receptor. But the idea is you're affecting this phenomenon called neuroplasticity, and that's where this may be then giving this real breakthrough in terms of getting at that really treatment-resistant depression as well as maybe the more durability because you're actually changing the connections of the neurons. In the case of SPRAVATO, we have data showing that 50% of patients stay at remission for 5 years on SPRAVATO, they need to take it a different schedules. Some are once a week, some are twice a week, different schedules for different people, but great durability for an antiopressent if you think about it. So real breakthrough. I decided to have that in our armamentarium with other mechanisms now to try to help patients battling with depression.

This just occurred to me, but is there the possibility that over time, as the drug gets better characterized to lessen the need to do the inhalation -- the nose inhalation at home potentially for patients.

Yes. I think see it moving that way. The issue was that sometimes when patients initially takes for vial, they have these dissociative out-of-body like sensations. They typically last only minutes -- and some patients don't even get them at all or they only get them on the first few doses. So I think it's something that we will be continuing to have conversations with the regulatory authorities around is there opportunity to start bringing this more into the home as opposed to having to go to the clinic and sit in a quiet room while you wait for 2 hours for your post years SPRAVATO [indiscernible] so to speak to see how you're faring.

Okay. Maybe we'll pivot to multiple myeloma. You've got arguably an embarrassment of riches with assets here, right? I guess the one thing that I really struggle with -- on the one hand, BCMA-directed therapies, the book says, go with the CAR T first because you'll have lessened efficacy if you use a BCMA-directed bispecific in advance of that, right? But you have data now for both modalities that look pretty competitive, right? And I think you guys have said we're just going to get patients choices and providers choices, right? If you want a one and done, we've got the option for you. And if you want as a community oncologist, not that this is what you all per se, but like community-coogists don't want to give up their patient, right? That's just a practical reality of that, right? So how do you see this playing out?

Well, as you said, we have a lot of tools to work with 5 approved therapies, more in the pipeline. And it is becoming a very dynamic space in terms of how the therapies can come together. That's what we've been doing now is to bring them together in combinations in different lines of therapy. We started the journey with VELCADE, the world's first proteasome inhibitor. And then behind that, [indiscernible], Darzalex, the first biologic for myeloma, the CD38. And even with those 2 combined with other medicines, when we started this journey at J&J, the average life expectancy of a myeloma patient was 2 years. Now with DARZALEX, [indiscernible] plus other meds the life expectancy for the transplant eligible is almost 2 decades. And for the transplant ineligible almost a decade, so even there, we have achieved enormous benefits for patients. But we're not stopping there, bringing now the T cell engagers Tech Bailey, our first-in-class BCMA. TAVI, our first-in-class GPRC5D. These, together with DARZALEX in earlier lines or giving miraculous data, the most recent approval was for TecBaily, where in second line, the data were so impressive that the FDA called us and said, "May we offer you a commissioners priority review voucher because we'd like to get this to the American people as fast as possible." 55 days from submission to approval and just unprecedented progression for an overall survival data is seen, now we want to move into frontline, where we've been doing pilot studies and seeing that if we can combine a T cell engager, which could be tech tile or now we have a trispecific romantimig that does both tech and Tal in a single molecule with Dara we can get 100% MRD negativity. So minimal residual disease negativity, which that was recognized as a valid surrogate endpoint by the FDA last year. for progression-free survival. So really excited about involving these paradigms, T cell engagers, Dara in the frontline, CarViCTI, CAR T cells probably for second line, but even there, who knows one of our investigators at [ Dana Farber ] took patients with smoldering myeloma, gave them CARVICTY, 20 out of 20 have minimal residual disease negativity, no evidence of disease, a one-and-done treatment, Nipigant in the bud. So there's so many opportunities now to offer patients different ways to try to tackle these.

So as you say, you're testing a lot of permutations in frontline. And if we think about the frontline strategy, do you think MRD would be enough to both enable accelerated approval, but ultimately, be practice changing for physicians to want to adopt. There are certain settings, right, of oncology, right, where you could get by on PFS, but if you don't have a WES data, you're not getting used or you're not getting used at a high rate. So when you think about the maybe the commercial bar, right, for frontline, is MRD enough?

We would always do PFS and OS as well, although it would be nice if the FDA would allow us to have an accelerated approval based on MRD, but we would continue to follow patients. The rest of the world hasn't adopted that standard of MRD might be sufficient. So since we try to bring our patients -- we try to bring our product globally to the patients around the world. we know that we're going to be held to more of the traditional endpoints, but it is exciting to think that, particularly in front line where the current standard care is so good that you would have to wait a long time to find out. It is exciting to think that perhaps FDA would allow us to have an accelerated approval so we can bring these innovations to patients faster because we really say we are in the cusp of curing myeloma. And so that would be so exciting if we could use that as a way to just get these new combinations to the patients even faster.

Yes. Well, we've got less than 2 minutes here. So maybe ahead of ASCO [indiscernible] you've got some data in head and neck -- what is the ORIGAMI 4 trial Cohort 1, right? That's described in the title is pivotal data. So maybe if you can just set the table because as we think about sort of the opportunities beyond lung cancer, head and neck and CRC have been flagged as big opportunities. And just trying to think through your second-line monotherapy strategy and if these data are filable?

Yes. No, we think they could be [indiscernible] just contextualized as a bispecific antibody that neutralizes the 2 growth factor receptors approved in lung cancer for EGF receptor mutant. It was the first bispecific ever approved for a solid tumor indication incidentally. In head and neck, which is the eighth most common cancer, we saw really promising data. KOLs tell us they've never seen a more active agent in head and neck. So the first entry is in patients who failed frontline so that they're in second line. The bar gets where going, typically, those patients have been treated with either cetuximab or taxanes and overall response rates 10% to 20% on a good day. So that's the bar. And that's why I think the FDA is open even a single mono study, which is where we have breakthrough designation. So at ASCO, you'll be able to see what kind of responses and durability of responses we're able to bring there. We also, I think, are going to show some of our pilot data in frontline where we're doing combo pembro and Oxyplatin in frontline and then going against the standard of care regimen, the chemo immunotherapeutic standard of care there, too. That regimen only has overall response rates of about 30 to 35 and the durability of less than 7 months. So we'll see what [indiscernible]. You'll get a little into the data, but super excited about [indiscernible] possibility to really create the next standard of care in head and neck. And then we're also pursuing in colorectal. We've got 2 big Phase III studies going there, one in frontline, one in second line. So [indiscernible] just getting started,

Awesome. Well, thank you so much. We're out of time, but I appreciate the conversation.

Right, Jason. Thank you.