Okay, I think we're live. Thank you for joining us, and sorry for the few-minute delay. I'm Tim Anderson, the large cap U.S. Pharma Analyst and Biotech House, Bank of America. We're excited to have Johnson & Johnson with us today, specifically Dr. John Reed, currently Executive Vice President, Innovative Medicines R&D, joined the company in 2023. Prior to that, he was in various leadership positions at Sanofi, as well as Roche, served on their respective executive committees. He was in academia for a long period prior to that. John, thanks for joining us. I thought we'd start off with some high-level questions that are ones that a head of R&D can answer. I won't ask you about tariffs.
Please, let's stick with those.
Let's talk about FDA, HHS. There are changes going on there, turmoil, change in leadership. I think there is a sense that it could have an impact that is kind of incalculable, and it could manifest in various ways. Are you guys seeing anything at this point in terms of disruption to process?
Yeah, so far so good, knock on wood, despite the significant change there. I'm speaking of the FDA in particular. All of our adjuvant dates and other regulatory deadlines and interactions have occurred on schedule. Requests for meetings of various sorts have been honored. So far so good. Kudos to the professionals there for managing to keep the trains running. In terms of HHS, too early to, beyond FDA, too early, I think, to say. But at least with respect to adjudication of our various applications and whatnot with the FDA, so far so good.
I've been covering this space for 26 years. To me, this is absolutely, unquestionably, the biggest disruption we've seen, where different views are being espoused on what the drug development pathway should look like, what the regulatory bar to approval should be. Would you concur with that?
I would say that I haven't seen seismic shifts of this proportion at any other time in my career of being involved with this industry. Yeah. I still think there's so much we don't know in terms of where the dust will settle. I noticed, for example, the new commissioner had decided, last I heard, to keep the FDA structure largely intact rather than breaking it into these different divisions. Let's see where the dust settles as we get through the latter part of this year.
If you look at FDA, you have interacted with the agency for a very long time. Are there positives that could come out of this? I mean, I have frankly viewed FDA as being pretty objective, doing a pretty good job, and not really needing a lot of change. We tend to have pretty fast approvals relative to a lot of countries around the world. Launches often occur in the U.S. first. Are there some positives that could happen? Even a year ago, if I asked you, were there certain things FDA could do better? Anything rise to the surface, or would you agree that it is generally a pretty well-functioning agency?
I guess one thing that comes to mind for me, and again, I'm totally speculating, but this administration seems to be very enamored with AI and data at scale. There certainly are opportunities to have data sharing with the regulatory authorities occur in more robust ways where primary data could be uploaded directly, where analyses could be conducted in more automated ways or more consistent ways. I think there's some opportunities there, but to be determined. Tim, I was hoping we'd talk about the pipeline and not so much about these ecosystem changes, which, again, it's hard to speculate exactly where things will land.
Yeah, you'll be getting these questions from others, not just me, I'm sure, unfortunately. Okay, with that, yes, we'll shift to tariffs next. I'm joking. Let's shift to immunology. A newer product that's in the pipeline is ICOTRA/KINRA. This is an oral IL-23. Your partner is a biotech company, Protagonist. We've seen some phase III data. It looks quite compelling. It's complementary to some of the current products you have because you have an injectable IL-23 that does quite well. How do you think this kind of layers into your immunology portfolio? What about possible cannibalization of your injectable IL-23?
A couple of things. First, I just want to, for those who aren't that familiar with the story, this is an oral targeted peptide inhibitor of the IL-23 receptor, very potent, once-a-day dosing. I think it's an example of J&J at its best. We started with a collaboration with protagonist by making an equity investment in the company to help nurture along this peptide drug discovery platform they had. Licensed a lead candidate from them, but it quickly failed in the clinic. Our chemists went to work, synthesized more than 700 of these complex cyclic peptides, more than 20 crystal structures, got the optimized lead. The real work started because we had to find a way to manufacture this in a commercially viable way.
We went from a 20-plus synthesis solid state, very expensive, to a completely solution-phase conversion synthesis that we can make now at multi-kilogram scale. The cost of goods is more than 100-fold lower than what we started with. It is a great story. Now the data coming out have shown biologics-like efficacy with an IL-23-like, very pristine safety profile. Where it fits in is that if you look across autoimmune diseases and you look at the percentage of patients who are eligible for an advanced therapy biologic, no matter what disease you look at, it is only a minority of patients that have taken that plunge and have agreed to go on a biologic.
We see huge parts of these markets, whether it's psoriasis, psoriatic arthritis, IBD, where more than two-thirds of patients on average are not getting an advanced therapy even though they're eligible. This will have efficacy and safety that should make them comfortable. Once-a-day convenient dosing and really give patients that choice. I think one indicator of how much demand there is for this, on our psoriasis studies, for example, our phase III's, they enrolled at one-third the time that it normally takes us to do these studies. We had so much demand from patients and investigators. We're really excited about the potential of ICOTRA/KINRA.
Okay, let me ask you a commercial question. Just like you liked it when I asked you policy questions, I'm sure you'll like me asking a commercial question. We have had another oral out there in the last few years from Bristol, Sotyktu. It really struggled to gain traction, frankly. Different class of drugs. Your data, I think, indisputably is better. You do, though, have one structural impediment. It's a peptide, an oral peptide. You do have to not eat, I think, for 30 minutes before you take the pill. That's a little bit cumbersome. Why would your product at psoriasis do better than Bristol's? As much as the commercial team and you talked about this.
Principally because the efficacy is so much better. We have not yet disclosed the difference between the TYK2 inhibitor and our molecule; that will be presented at a future medical meeting. Just to give you a preview, think Eagles versus Chiefs in the last Super Bowl. It is not a trivial difference. It is really head and shoulders efficacy on par with biologics. We are really excited that ICO can become a go-to therapy. In terms of the food effect you mentioned, indeed, one takes it for half an hour before eating. We are doing studies just to verify that you can take black coffee, black tea, and just so you can go ahead and enjoy your morning coffee or tea before you have your breakfast. That is probably the only thing that is sort of a convenience factor with this. Again, once-a-day oral dosing, otherwise.
Early data, or not early, but phase II data in ulcerative colitis looked quite good. Very different setting of inflammatory bowel disease. Is that likely to be the bigger opportunity for this product where there is more of an established paradigm, I think, with oral therapies?
If you just look at our biologics like Stelara, it very well could be about 70% of Stelara sales. That's a non-selective IL-23 inhibitor biologic, for those who don't know. Although it's approved for psoriasis, psoriatic arthritis, and Crohn's and colitis, about 70% of the sales are coming from IBD. It very well could be that in this IL-23 class, that is going to be the biggest of the opportunities.
Last question on IBD for this product. Competitive space, not a regulatory requirement, but effectively, do you need to run a head-to-head trial in phase III against an active drug to really kind of find a home for this product?
We intend to do that. We did that with Tremfya, where we went head-to-head against our Stelara in a rigorous double-blind controlled study unlike the way some others have done head-to-heads. We will do the same with this molecule. That is important outside the U.S. in particular for sometimes for reimbursement, particularly now that Stelara has gone biosimilar. We will need to have some data of that sort for the payer conversations, especially overseas.
Okay, I want to pivot to neuroscience.
Sure.
The company recently paid about $15 billion to acquire a company, Intra-Cellular Therapies. And really, the cornerstone product there is Caplyta, which is for schizophrenia and other indications. There's a follow-on molecule, and it really hasn't gotten much attention. You guys didn't really highlight it at the time you did the transaction. It's called ITI-1284. And it's a deuterated formulation, so a slight tweak to the chemical structure. What excites me about this is that when I look at the development program, you're running quite a few number of phase II trials in Alzheimer's psychosis and Alzheimer's agitation. You're also running trials in generalized anxiety. You think phase II, okay, long pathway to approval. When I look at these phase II's, they're randomized trials. They're large, large enough. They're run in duplicate. To me, it feels like it's registrational.
Is this a phase II product that's actually a phase III product that could get to the market a lot quicker than folks are thinking?
Yeah, to be very astute. First, let me just back up a little bit. We're super excited to have brought the Intra-Cellular colleagues and their pipeline and products into J&J. J&J is number one in psychiatry. And so the marketed product Caplyta is a great fit for our portfolio. Approved for schizophrenia, approved for depression in the context of bipolar I and II. It's the only drug approved in both I and II. The thing that sort of tipped us over the edge to take the plunge was their phase III data in adjunctive treatment of major depressive disorder. That's sort of your more garden-variety depression. There are more than a quarter billion people around the world struggling with depression today. That's been submitted to PDUFA dates later this year, but those data are just outstanding. We see broad utility.
1284, as you said, is sort of son of Caplyta. It's a slightly chemically modified. Those studies that you mentioned are indeed of a size that normally could constitute grounds for the equivalent of a phase III for the regulators that want to see two independent well-controlled studies. Let's see what the data look like. They are technically exploratory. Sometimes one is adjusting what your final endpoints will be and other patient eligibility requirements based on the data. We'll see what we learn from it. If the data sets are rock solid and the FDAs and other health authorities agree, yes, this can count as one of the two required studies, then we'll be one step further to approval.
That would take the product into areas potentially that Caplyta is not in, things like Alzheimer's psychosis. That is relevant to products like Bristol's Cabenfy, which is trying to get there as well. Okay, timing of news flow for these data sets. It is not 2025. It looks like it is maybe 2026 or even 2027.
That's correct. I think we're next year on the 1284 readouts that you mentioned.
Okay. I had asked you this. We did one of our pipelines on plug call with you a while back, where we covered lots of things. I had asked at the time, $15 billion purchase price, how much was ascribed to this product? Could not answer at the time. Deal had not closed. Do you have an answer now?
No. No. I mean, most of the value obviously was the marketed product, although we do see a lot of potential for 1284. I would say, though, although yes, that was a big acquisition, and J&J has the largest balance sheet in the industry, so we can certainly do those. It is pretty atypical for us that we do big acquisitions. We tend to go in much earlier, do small bolt-ons. From that, we tend to really—that is really where a lot of the value in our pipeline comes from. You can see that in recent examples like the Momenta acquisition, where Nipocalimab just got approved, our FcRn inhibitor for a broad diversity of autoantibody-driven diseases, or the TARS platform for bladder cancer that is gaining a lot of interest. These are just a few examples.
We tend to do a lot of these little bolt-ons rather than the big product-based companies like Intra-Cellular.
Okay, let's move to oncology and hematology. In multiple myeloma, you guys have really charted the course more than any other company in really making a meaningful difference to this disease over the years with a host of products. Newer ones include cell therapies like Crevisti, and then bispecifics like Tecvayli and Talvey. I wanted to kind of talk about those last two products. Bispecifics versus CAR-T. CAR-T gets kind of held back in terms of usage because of certain toxicities like cytokine release syndrome. The bispecific T-cell engagers also share some of these toxicities. The feedback that we sometimes get is that community hematologists are reluctant to engage with those products because of that safety profile. CAR-T gives you great efficacy. These other products like Tecvayli give you good efficacy. They are off the shelf. They're easier to use.
What is J&J doing to kind of massage those concerns and better define the safety profile such that there's a better commercial future for those products?
Yeah. Now, with any of these new therapies and the regimens in which they're included, there's always a journey in really devising the most convenient and best tolerated ways to get there. I mean, this is not unlike the journey we went through with good old Darzalex, where in the beginning, it was pretty much limited to the academic community. Over time, we figured out how to manage things like infusion reactions and other issues, and it became more and more integrated into community practice. We're going through that same journey right now. We're doing a lot with community oncology groups. We just got to ameliorate the cytokine release syndrome. As you know, many times one uses an IL-6 receptor inhibitor, namely TOSI. We recently have that now in the NCCN guidelines to be used together with the bispecific so that it ameliorates the cytokine release syndrome.
We're now working with community practices to make that part of the routine that the TOSI is reimbursed as well in this country. We are certainly getting there. I think what's more exciting is that, of course, we start, as always, in late line. Our overall response rates were groundbreaking. These are first-in-class bispecifics. The launches have been the most successful of any bispecifics in the industry. Take that into account as well. Now we're moving into frontline and earlier lines of treatment in combination. At the last hematology meetings of American Society of Hematology, we showed, for example, if you take our Darzalex and pair it with either Tecvayli or Talvey in patients with just one to three prior lines of therapy, we were getting 100% minimal residual disease negativity in these studies.
MRD is now recognized by the FDA as a bona fide surrogate for disease-free survival based on pronouncements they had last year. I mean, we're seeing this now. The ability to take combinations of molecules from our portfolio and bring them to the early line is literally going to define the next regimens of the future. We'll work with community practices to teach them how to use them and make them well-tolerated.
Let's move to Rybrevant, which is a newer product for you. This is your EGFR CMET bispecific used partly in conjunction with a small molecule EGFR in frontline lung. It's notable because J&J has high views. You guys have given peak sales that are at least $5 billion, and the street is a fraction of that. There is a discrepancy in how the street views it. One of the reasons is the safety of that regimen going up against the current gold standard, which is AstraZeneca's Tagrisso, which is only just a single pill. It's quite easy to use. How is this being used in frontline now? It's more of a commercial question, but what are you seeing as the uptake in the frontline setting versus the second line setting?
Yep. Now, ever since we shared our overall survival data in the frontline setting, we're seeing the uptake really increasing exponentially. Just a few months ago at the European lung cancer meetings, we showed that going head-to-head against the standard of care, that we were delivering this combined drug regimen of Rybrevant plus Lazertinib, a chemo-free regimen, is able to extend survival by more than a year. The other thing that is really insightful is that if you look at the Kaplan-Meier curves, as time goes on, the curves between standard of care and Rybrevant and Lazertinib are actually diverging even more.
It's what we call kind of a fishtail type of shape, as opposed to what you might see with the standard of care protein tyrosine kinase inhibitor, OZ, together with chemo, where the curves initially diverge, but then they converge, and you get more of this banana shape type of thing. We really like what we're seeing in the data. On top of that, mind you that those data were not an optimized regimen. That was our first shot. Now we have a subQ rather than an IV, which looks to be not only more convenient, but also safer in terms of injection site reactions, also more efficacious. We also have learned a lot about how to ameliorate the side effects related to skin, thrombosis, etc.
We now have an optimized protocol that we're testing in community oncology centers, particularly in this country, to gather more data. We feel that we're really on the right trajectory with this and that that's why we have high hopes for the molecule in both first and second line lung. Beyond that, Tim, we're now in phase III in colorectal cancer, two different phase III there in first and second line, as well as we've achieved POC, are moving into phase III with head and neck squamous cell carcinoma. There's more to the Rybrevant story than lung cancer.
Early stage lung, my guess is the subQ formulation, better tolerability, probably allows you to go into early stage like Astra did with Tagrisso?
Yeah, that's certainly on the list of things to explore is getting even into adjuvant, etc.
Just admittedly, we used to be pretty skeptical of that program, but that survival data does actually look quite compelling. Do you have any idea? Is that actually preventing the emergence of MET formation and MET resistance? Is that why the shape of the curve looks like that?
We do know that. We actually did that analysis. And for those who aren't following this, so Rybrevant is the world's first bispecific antibody ever approved for a solid tumor indication. One arm neutralizes the EGFR, which is commonly mutated in lung cancers. And the other c-MET, which is another growth factor receptor, often called HGF receptor, that becomes overexpressed as a resistance mechanism when you block the EGFR. We did do analysis in the MARIPOSA study and looked at how often did c-MET overexpression occur in the Rybrevant-Lazertinib arm compared to the OS. We significantly suppressed the emergence of c-MET overexpression. We also suppressed the emergence of additional mutations in the EGFR as well.
Okay. Let's finish up in the cardiovascular space with Movexion. This is your partnered product, oral Factor XI, in three different indications in phase III, the biggest of which is atrial fibrillation. It has been a class kind of marked by some setbacks here and there. Some companies have dropped out. Others are pushing ahead. Just your updated level of confidence, some totality of all the industry data and where things are today, would you describe this as a low-risk, medium-risk, or high-risk program?
I won't do it pronounced, but maybe just say, look, we're very dedicated to the program. We've already completely enrolled the AF, the atrial fibrillation study, more than 20,000 patients. We think we got the pharmacology right in collaboration with BMS in that the molecule has been really well-behaved. It was well-tested in phase II studies using total knee replacement as a sort of playground in which you can adjust and define doses that have historically translated to the AF situation. In fact, all oral anticoagulants that are approved for AF went through that phase II testing. We're actually the only Factor XI that has done that at this point that's still in the hunt for AF. We think we got the dose right. As my mentors always told me, dose matters. That is where we've put a lot of emphasis on that.
Some companies, not as much. We feel that we've got a molecule where for the AF indication, which is more like a venous stasis type of situation for coagulation rather than an arterial side, where we know from our experience with Xarelto, the Factor Xa inhibitor, we know you have to push the dose. What we've got with Movexion is a molecule that is safe enough that we can push the dose and get it to the right level for that AF indication. We are very bullish on the study. It addresses a huge unmet need, particularly as our populations become more aged. While I'm at it, maybe I'll put in a plug for the med tech colleagues who do a lot with ablations in AF for those patients who prefer not to stay on the medicine forever. They can have the option of trying an ablation.
Okay. Last question on this and of the session here. Would you say that secondary stroke, which is one of your trials, is riskier than atrial fibrillation? It's a relevant question, in my opinion, because we've got the Bayer stroke data coming up at the end of the year. Naturally, people are going to look at that as a read across to the mechanism, whatever the indication.
Yeah. I think just by the nature of the more heterogeneous kinds of mechanisms that can lead to stroke, you'd probably say it is higher risk than the AFib. Again, there we feel confident that we've got a great mechanism in Factor XI. For those who haven't followed it, there's great genetics where people are sometimes born without Factor XI. They have a decreased risk of thrombosis, but they don't have major bleeding problems. We feel like we've got that shot at both efficacy and safety. When it comes to a disease like stroke, so many patients are not on therapy because of the risk of bleeding in the brain.
This will be able to address an unmet need due to the safety of Factor XI inhibition, which is believed to block the formation of pathologic clots that might plug a vessel, but still allow the homeostatic clotting mechanisms that prevent bleeding. We are excited about the stroke prevention as well. This new mechanism, we think, fits right there where the current anticoagulants are thought to be not safe or enough for that kind of an indication in many cases.
Great. Okay. We're going to call it there. Thanks so much, John, for joining us today and for participating in our conference this year.
Hey, Tim. Thank you.