Q3 2023 Johnson & Johnson Earnings Call

October 17, 2023

Operator: Good morning, and welcome to Johnson & Johnson's third-quarter 2023 earnings conference call. All participants will be in a listen-only mode until the question and answer session of the conference.

This call is being recorded. If anyone has any objections, you may disconnect at this time. If you experience technical difficulties during the conference, please press star zero to reach the operator.

If you experience technical difficulties during the conference. Please press star zero to reach the operator.

I would now like to turn the call over to Johnson & Johnson. You may begin.

Jessica Moore: Good morning. This is Jessica Moore, Vice President of Investor Relations for Johnson & Johnson. Welcome to our company's review of the 2023 third-quarter business results and full-year financial outlook.

Good morning. This is Jeff Moore, Vice President of Investor Relations for Johnson <unk> Johnson welcome to our company's review of the 2023 third quarter business results and full year financial outlook.

A few logistics before we get into the details. As a reminder, you can find additional materials, including today's presentation and associated schedules on the Investor Relations section of the Johnson & Johnson website at investor.jnj.com.

Please note that this presentation contains forward-looking statements regarding, among other things, the company's future operating and financial performance, market position, and business strategy.

You are cautioned not to rely on these forward-looking statements, which are based on current expectations of future events using the information available as of the date of this recording and are subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected.

A description of these risks, uncertainties, and other factors can be found in our SEC filings, including our 2022 Form 10-K, which is available at investor.jnj.com and on the SEC's website.

Additionally, several of the products and compounds discussed today are being developed in collaboration with strategic partners or licensed from other companies. This slide acknowledges those relationships.

Moving to today's agenda, I will start by reviewing the third-quarter sales and P&L results for the corporation and highlights related to our two businesses. Joe Wolk, our CFO will then provide additional business and financial commentary before sharing an overview of our cash position, capital allocation priorities, and updated guidance for 2023. The remaining time will be available for your questions. Joaquin Duato, our Chairman and CEO, John Reid and Amit Tazel, our innovative medicine and med tech R&D leaders, as well as Erik Haas, our VP of Litigations will be joining us for Q&A.

Joe Wolk, our CFO will then provide additional business and financial commentary before sharing an overview of our cash position, capital allocation priorities, and updated guidance for 2023. The remaining time will be available for your questions. Joaquin Duato, our Chairman and CEO,

Joaquin Duato, our Chairman and CEO, John Reid and Ahmet Tezel, our Innovative Medicine and Med Tech R&D leaders, as well as Erik Haas, our VP of Litigations will be joining us for Q&A.

Joaquin Duato, our Chairman and CEO, John Reed,

John Reed and Amit [inaudible] our Innovative Medicine and Med Tech R&D leaders, as well as Erik Haas, our V.P of Litigation will be joining us for Q&A.

To ensure we provide enough time to address your questions, we anticipate the webcast will last approximately 60 minutes.

As a reminder, on August 23rd, 2023, Johnson & Johnson announced the final results of the exchange offer and completion of the separation of Ken View, Inc.

Unless otherwise stated, the financial results and guidance highlighted today reflect the continuing operations of Johnson & Johnson. We will report the consumer health financial results as discontinued operations.

Additionally, going forward, the pharmaceutical segment will be referred to as innovative medicine.

Starting with Q3 2023 sales results. Worldwide sales were $21.4 billion for the third quarter of 2023, an increase of 6.8% versus the third quarter of 2022.

Worldwide sales were $21 $4 billion for the third quarter of 2023, an increase of six 8% versus the third quarter of 2022.

Operational sales growth, which excludes the effect of translational currency increased 6.4% as currency had a positive impact of 0.4 points. In the US, sales increased 11.1%.

Operational sales growth, which excludes the effect of translational currency increased 6.4% as currency had a positive impact of 0.4 points.

In the US, sales increased 11.1%.

In regions outside the US, our reported growth was 1.6%. Operational sales growth outside the US was 0.7% with currency positively impacting a reported OUS results by 0.9 points. It is important to note that operational sales in Europe were negatively impacted by the COVID-19 vaccine and loss of exclusivity of ZYTIGA.

In regions outside the US, our reported growth was 1.6%. Operational sales growth outside the US was 0.7% with currency positively impacting a reported OUS results by 0.9 points.

Operational sales growth outside the U S was 0.7% with currency positively impacting our reported O U S results by 0.9 points. It is important to note that operational sales in Europe were negatively impacted by the COVID-19 vaccine and loss of exclusivity of Cheetah.

It is important to note that operational sales in Europe were negatively impacted by the COVID-19 vaccine and loss of exclusivity of ZYTIGA.

Excluding the net impact of acquisition and divestitures, adjusted operational sales growth was 4.9% worldwide, 8.9% in the US and 0.3% outside the US.

Turning now to earnings. For the quarter, net earnings were $4.3 billion and diluted earnings per share was $1.69 versus diluted earnings per share of $1.62 a year ago.

Excluding after tax intangible asset amortization expense and special items for both periods, adjusted net earnings for the quarter were $6.8 billion and adjusted diluted earnings per share was $2.66, representing increases of 14.1% and 19.3% respectively compared to the third quarter of 2022.

net earnings for the quarter were $6.8 billion and adjusted diluted earnings per share was $2.66, representing increases of 14.1% and 19.3% respectively compared to the third quarter of 2022.

On an operational basis, adjusted diluted earnings per share increased 13.9%.

I will now comment on business sales performance. Unless otherwise stated, percentages quoted represent the operational sales change in comparison to the third quarter of 2022, and therefore exclude the impact of currency translation.

Beginning with innovative medicine. Worldwide innovative medicine sales of $13.9 billion increased 5.1% with growth of 10.9% in the US and a decline of 2.3% outside of the US.

Worldwide innovative medicine sales of $13 $9 billion increased five 1% with growth of 10.9% in the U S and a decline of 2.3% outside of the U S.

Operational sales growth increased 4.3% as currency had a positive impact of 0.8 points. Excluding COVID-19 vaccine sales, worldwide operational sales growth was 8.2% with growth of 10.9% in the US and growth of 4.3% outside of the US.

Sales outside the US, excluding the COVID-19 vaccine, were negatively impacted by approximately 500 basis points due to the loss of exclusivity of ZYTIGA in Europe.

Sales outside the U S. Excluding the COVID-19 vaccine were negatively impacted by approximately 500 basis points due to the loss of exclusivity of <unk> in Europe.

Innovative medicine growth was driven by our key brands and continued uptake from our recently launched products with 11 assets delivering double-digit growth.

We continue to drive strong sales growth for both DARZALEX and ERLEADA with increases of 20.7% and 27% respectively due to continued share gains and market growth.

Within immunology, we saw growth in STELARA and TREMFYA with increases of 15.8% and 21.5% respectively. This growth was predominantly driven by favorable patient mix and market growth.

This growth was predominantly driven by favorable patient mix and market growth.

Turning to newly launched products. We continue to make progress on our launches of CARVYKTI and SPRAVATO.

We are also encouraged by the early success of our launches of TECHVAYLI and TALVEY, sales of which are driving the growth in other oncology. We expect to begin disclosing TECHVAYLI sales in Q1, 2024.

Total innovative medicines sales growth was partially offset by the loss of exclusivity of ZYTIGA and REMICADE along with a decrease in IMBRUVICA sales due to competitive pressures.

I'll now turn your attention to Med Tech. Worldwide Med Tech sales of $7.5 billion increased 10% with growth of 11.6% in the US and 8.3% outside of the US.

Worldwide Med Tech sales of $7.5 billion increased 10% with growth of 11.6% in the U S and eight 3% outside of the U S. A.

Operational sales growth increased 10.4% as currency had a negative impact of 0.4 points.

ABIOMED contributed 4.6% to operational growth. Excluding the impact of acquisition and divestitures, worldwide adjusted operational sales growth was 6%.

ABIOMED contributed 4.6% to operational growth.

Excluding the impact of acquisition and divestitures, worldwide adjusted operational sales growth was 6%.

On a pro forma basis, utilizing sales in the prior year from ABIOMED as a stand alone company, Med Tech's growth for the quarter would be 6.4%.

Med Tech was negatively impacted across all platforms by international sanctions in Russia worth approximately 60 basis points and volume-based procurement in China, primarily in five Med Tech platforms: science, trauma, endocutters, energy, and electrophysiology.

science, trauma, endo cutters, energy, and electrophysiology.

As communicated last quarter, we saw a return to more normalized seasonality with moderate deceleration in the third quarter.

The interventional solution franchise delivered operational growth of 48.1%, which includes $311 million related to ABIOMED. This reflects growth in ABIOMED patient procedures in the high teens and continued strong adoption of Impella 5.5 technology and surgery.

Electrophysiology is a major contributor to this growth with a double digit increase of 20.3%. This reflects strong growth in all regions, including Europe, driven by our global market leading portfolio, including the most recently launched Q.RF ablation and off trial mapping catheters.

This reflects strong growth in all regions, including Europe, driven by our global market leading portfolio, including the most recently launched Q.RF ablation and off trial mapping catheters.

Operational growth of 3.2% in surgery was driven primarily by procedure recovery and strength of our bio surgery and wound closure portfolios. Growth was partially offset by the impacts of volume-based procurement in China and supply challenges.

Global growth of 5.4% in vision was driven by price actions and contact lenses and other as well as strength of new products, including Accu View Oasis, one day family of products and contact lenses, and TECHNIS Eyhance, our mono focal interocular lens and surgical vision.

Growth of contact lenses was partially offset by strategic portfolio choices and supply challenges although these continue to improve.

Global vision growth was negatively impacted by 100 basis points due to the Blink divestiture.

Orthopedics operational growth of 2.6% reflects procedure growth, success of recently launched products such as the global expansion of our zealous digital solutions and expansion in the ambulatory surgical centers, partially offset by the impacts of volume-based procurement in China in spine and trauma.

spine and trauma.

Now turning to our consolidated statement of earnings for the third quarter of 2023, I'd like to highlight a few noteworthy items that have changed compared to the same quarter of last year.

Cost of products sold margin was flat due to favorable patient mix and lower COVID-19 vaccine supply network related exit costs in the innovative medicine business, partially offset by commodity inflation, unfavorable product mix, and restructuring related to excess inventory cost in the Med Tech business.

Selling, marketing, and administrative margins deleveraged 40 basis points, driven by increased expenses across the enterprise.

Selling marketing and administrative margins Deleveraged 40 basis points, driven by increased expenses across the enterprise.

We continue to invest strategically in research and development at competitive levels, investing $3.4 billion or 16.2% of sales this quarter. R&D was leveraged by 120 basis points, primarily driven by portfolio prioritization, partially offset by higher milestone payments in the innovative medicine business.

the innovative medicine business.

Additionally, IP R&D impairments were $206 million in the third quarter of 2023.

Interest income was $182 million in the third quarter of 2023 as compared to $99 million of income in the third quarter of 2022. The increase in income was driven by higher interest rates earned on cash balances, partially offset by higher interest rates on debt balances.

The other income and expense line was an expense of $499 million in the third quarter of 2023, compared to an expense of $226 million in the third quarter of 2022. This was primarily driven by higher unrealized mark to market losses on public securities, partially offset by the lower COVID-19 vaccine related exit costs and lower litigation expense.

The other income and expense line was an expense of $499 million in the third quarter of 2023 compared to an expense of $226 million in the third quarter of 2022. This was primarily driven by higher unrealized mark to market losses on public securities, partially offset by the lower COVID-19 vaccine related exit costs and lower litigation expense.

This was primarily driven by higher unrealized mark to market losses on public securities, partially offset by the lower COVID-19 vaccine related exit costs and lower litigation expense.

Restructuring in the third quarter was $158 million, primarily related to the Innovative Medicine Restructuring Program announced in the first quarter.

Regarding taxes in the quarter, our effective tax rate was 17.4% versus 16.7% in the same period last year. This increase was primarily driven by a non-deductible, non-recurring pretax charge that occurred in the current quarter.

Excluding special items, the effective tax rate was 15.6% versus 15.9% in the same period last year.

As a result of the completion of the exchange offer, Johnson & Johnson is presenting the consumer health business financial results as discontinuing operations, including a gain of approximately $21 billion.

I encourage you to review our upcoming third quarter 10-Q filing for additional details on specific tax and separation related matters.

Lastly, I'll direct your attention to the box section of the slide where we have also provided our income before tax, net earnings, and earnings per share adjusted to exclude the impact of intangible amortization expense and special items.

Now, let's look at adjusted income before tax by segment.

In the third quarter of 2023, our adjusted income before tax for the enterprise as a percentage of sales increased from 35.3% to 37.6%, primarily driven by favorable patient mix and innovative medicine, partially offset by unfavorable product mix and commodity inflation in Med Tech.

Inflation in Med Tech.

Innovative medicine margins improved from 41.4% to 45.4%, primarily driven by favorable patient mix and R&D portfolio prioritization.

Med Tech margins declined from 25% to 24.7%, primarily driven by commodity inflation and unfavorable product mix, partially offset by a divestiture gain.

This concludes the sales and earnings portion of the Johnson & Johnson third quarter results. I'm now pleased to turn the call over to Joe Wolk. Joe? Thank you Jessica and thanks, everyone for joining us today.

This concludes the sales and earnings portion of the Johnson & Johnson third quarter results. I'm now pleased to turn the call over to Joe Wolk. Joe?

Joseph J. Wolk: Thank you Jessica and thanks, everyone for joining us today.

This quarter's call marks a new era for Johnson & Johnson with a sharpened focus on innovative medicine and Med Tech.

What has remained consistent is our credo and our commitment to patients. We are privileged to build upon our 137 year legacy of tackling the world's most complex health care challenges and helping patients with serious unmet health needs around the world.

As we look forward, we are well positioned to grow our business and innovate across the spectrum of health care. We are excited about what's ahead and what we can achieve in the future.

We are excited about what's ahead and what we can achieve in the future.

Before we dive into our performance, I want to briefly touch upon other items important to our business.

The first is a brief recap of the Kenvue separation, which was formally completed during the quarter. The transaction was executed within our targeted time frame and under budget, while generating significant cash and value for our shareholders.

Through the separation, we raised $13.2 billion in cash proceeds through the Kenvue debt offering and IPO. We reduced Johnson & Johnson's outstanding share count by 191 million shares or approximately 7% without the use of cash and in a tax free manner.

We maintained our current quarterly dividend per share and we retained approximately 180 million shares of Kenvue stock that provides cash proceeds for future flexibility.

We will see the full impact to EPS of the share reduction in 2024.

Another item warranting comment is the Inflation Reduction Act. We continue to believe the IRAs price setting provisions are damaging to innovation and will prevent the delivery of transformative therapies and cures to patients.

As we await adjudication of legal proceedings initiated by us and others, we did submit all requested information in compliance with CMS's drug price setting scheme to continue supporting patient access to our medicines that help them stay healthy and live longer.

Moving to segment highlights in the quarter, as Jessica previously shared, our teams delivered strong results in the third quarter, while continuing to advance our pipeline to enhance future growth.

Within the innovative medicine business, two important regulatory milestones were announced during the quarter. Specifically, we received European Commission approval for a reduced biweekly dosing frequency for TECHVAYLI for eligible patients with relapsed and refractory multiple myeloma and US FDA and European Commission approval of TALVEY, a first-in-class by specific therapy for the treatment of patients with heavily pre-treated multiple myeloma.

US FDA and European Commission approval of TALVEY, a first-in-class by specific therapy for the treatment of patients with heavily pre-treated multiple myeloma.

Regarding clinical data, we are excited to have an unprecedented seven late breaking abstracts, including three featured in the presidential symposium being presented at the European Society of Medical Oncology meeting this weekend. Highlights will include the results from all three phase III studies of RYBREVANT in lung cancer, including Mariposa, Mariposa II, and Patheon.

Highlights will include the results from all three phase III studies of RYBREVANT in lung cancer, including Mariposa, Mariposa II, and Patheon.

Additionally, updated data from the SunRISe-1 study of TAR-200 in non-muscle invasive bladder cancer will be shared as well as the first-ever data of TAR-210 in patients with FGF FR mutations.

We also look forward to presenting phase two data for Nipocalimab in rheumatoid arthritis at the American College of Rheumatology annual meeting in November and have already launched a phase II combination study in [inaudible].

Lastly, we plan to initiate multiple clinical development programs for a targeted oral peptide J&J 2113. This includes the initiation of the anthem phase II B study in ulcerative colitis, which will begin this month and the phase III clinical program titled the iconic for adults with moderate to severe plaque psoriasis expected to begin in November .

This includes the initiation of the anthem phase II B study in ulcerative colitis, which will begin this month and the phase III clinical program titled the iconic for adults with moderate to severe plaque psoriasis expected to begin in November .

Moving to Med Tech, notable highlights in the quarter include significant advancements in electrophysiology across our cardiac ablation platform.

We received FDA clearance for multiple atrial fibrillation ablation products in our portfolio to be used in a workflow without fluoroscopy. This FDA indication is unique to Johnson & Johnson and is a significant advancement where caregivers and patients are not exposed to harmful fluoroscopy related radiation during their cardiac ablation procedures. It also allows for the removal of heavy lead protective equipment that may lead to orthopedic complications for care teams.

during their cardiac ablation procedures.

It also allows for the removal of heavy lead protective equipment that may lead to orthopedic complications for care teams.

In pulse field ablation, we have completed our clinical trial in Europe and submitted for CE Mark for our Vera pulse catheter. We expect the completion for our US Vera pulse study to occur in the fourth quarter.

We expect the completion for our US Vera pulse study to occur in the fourth quarter.

We are also simultaneously advancing clinical studies for two additional pulse field ablation catheters, the STFS dual energy catheter, capable of delivering both PF and RF energy through the same device and Omni pulse, a large tip focal catheter.

Beyond electrophysiology, we have completed enrollment in the ABIOMED Impella ECP Clinical study, a landmark pivotal trial designed to demonstrate the safety and efficacy of the Impella ECP during high risk PCI procedures. Impella ECP is the world's smallest heart pump and the only heart pump compatible with small bore access and closure techniques.

Impella ECP is the world's smallest heart pump and the only heart pump compatible with small bore access and closure techniques.

While not a clinical advancement, we have also taken steps in the quarter to improve Med Tech's future margin profile implementing a restructuring program designed to simplify and focus the operations of our orthopedic business. As part of this two-year program, we expect to exit certain markets and product lines across that business.

As part of this two-year program, we expect to exit certain markets and product lines across that business.

We anticipate some short term modest revenue disruption in orthopedics of approximately $250 million in total over the next two years, given the market and product line exits, but believe these actions will improve our ability to meet demand, resulting in accelerated growth and enhanced profitability.

The program is expected to be completed by the end of 2025, with total program costs estimated to be between $700 million and $800 million.

Let's now turn to cash and capital allocation. We ended the third quarter was approximately $24 billion of cash and marketable securities and approximately $30 billion of debt for a net debt position of $6 billion.

Free cash flow year-to-date through the third quarter was approximately $12 billion, up from the 5 billion we reported year-to-date in the second quarter of 2023.

Our capital allocation priorities remain unchanged. We will continue to execute our strategic and disciplined approach utilizing our strong credit profile and robust free cash flow generation to prioritize continued investment in our business, increasing dividends on an annual basis, executing strategic business development initiatives for inorganic growth and executing share repurchases when appropriate.

inorganic growth and executing share repurchases when appropriate.

Moving on to our 2023 guidance update. Based on the strong results delivered in the quarter and the first nine months of this year, balanced with planned investments in the fourth quarter, we are raising the ranges for full year sales and EPS guidance.

With planned investments in the fourth quarter, we are raising the ranges for full year sales and EPS guidance.

We now expect operational sales growth for the full year of 2023 to be in the range of 8.5% to 9.0% or up $600 million at the midpoint in the range of $84.4 billion to $84.8 billion on a constant currency basis, and adjusted operational sales growth in the range of 7.2% to 7.7%.

up $600 million at the midpoint in the range of $84.4 billion to $84.8 billion on a constant currency basis, and adjusted operational sales growth in the range of 7.2% to 7.7%.

Just a reminder, our sales guidance continues to exclude any COVID-19 vaccine revenue.

While we do not speculate on future currency movements, utilizing the Euro spot rate as of last week at 1.06, we now anticipate an incremental negative currency impact of $400 million, resulting in a full-year impact of negative 1% or $800 million.

Looking across the P&L, adjusted pre-tax operating margin is still expected to improve by approximately 50 basis points versus prior year, driven by stronger margin profile and business mix. Net other income is also being maintained ranging from $1.7 billion to $1.9 billion.

Due to higher interest rates earned on our cash, we now expect net interest income in the range of $300 million to $400 million.

And finally, based on current tax law, our estimate for the effective tax rate for 2023 will be between 15.0% and 15.5%. These revised estimates translate to an increase in our adjusted operational earnings per share guidance by 10 cents at the midpoint. Our new range is $10.02 to $10.08 or 12.5% growth at the midpoint and adjusted reported earnings per share in the range of $10.07 to $10.13 or 13% growth at the midpoint.

These revised estimates translate to an increase in our adjusted operational earnings per share guidance

by 10 cents at the midpoint. Our new range is $10.02 to $10.08 or 12.5% growth at the midpoint and adjusted reported earnings per share in the range of $10.07 to $10.13 or 13% growth at the midpoint.

$10.13 or 13% growth at the midpoint.

Since January, we've been able to increase our guidance throughout the year for a cumulative impact of $3 billion on operational sales and 25 cents on adjusted operational earnings per share, which includes absorbing 10 cents for our licensing deal with Cellular Biomedicine Group announced in the second quarter of 2023.

Now I appreciate that many of you are turning your attention to 2024 and our teams are actively finalizing our plans for next year. With that context, allow me to provide some preliminary perspectives for you to consider.

For innovative medicine, we remain confident in our ability to deliver growth from key brands and anticipate continued progress from our newly launched products, all advancing our robust pipeline with many exciting data readouts, filings, and approvals ahead of us.

This includes data presentations and regulatory submissions for TREMFYA in IBD, presenting data from our phase III study of Nipocalimab in myasthenia gravis and readouts from two phase III or leader trials in early stage prostate cancer.

We do not expect the entry of STELARA Biosimilars in the United States during 2024. However, as a reminder, STELARA does have a composition of matter patent expiry in mid 2024 in Europe.

For Med Tech, we expect our commercial capabilities and continued adoption of recently launched products across all Med Tech businesses will continue to drive our growth and improve competitiveness, while continuing to advance our pipeline programs, including innovation in pulse field ablation, ABIOMED, and surgical robotics. We expect procedures in 2024 to remain consistent with elevated 2023 levels.

in 2024 to remain consistent with elevated 2023 levels.

With respect to tax, as you may be aware, the European Union member states are in the process of enacting the EU's pillar two directive, which generally provides for a 15% minimum tax rate as established by the OECD pillar two framework. The first EU effective date for certain aspects of the law is January 1st, 2024. As a result, we currently estimate it up to a 1% tax rate increase in 2024.

as you may be aware, the European Union member states are in the process of enacting the EUs pillar two directive, which generally provides for a 15% minimum tax rate as established by the OECD pillar two framework. The first EU effective date for certain aspects of the law is January 1st, 2024.

As a result, we currently estimate it up to a 1% tax rate increase in 2024.

In addition, the US Treasury's current perspective on pillar two will be harmful as it relates to the treatment of US incentives for innovation and will result in US based multinational companies paying more tax revenue to foreign governments.

Regarding share count given the Kenvue separation, the full benefit of the approximately 191 million net share reduction in Johnson & Johnson shares outstanding from the exchange offer will be reflected in our 2024 financials.

And finally, while we don't speculate on future currency impact, utilizing the current euro spot rate would yield an approximate 15 cent negative currency impact on 2024 full-year adjusted earnings per share.

We are pleased with our strong performance during the first nine months of this year and have positive momentum as we move into 2024. We look forward to sharing more about the strength of our business, promise of our innovative medicine and Med Tech pipelines and the long term strategy of Johnson & Johnson at our upcoming enterprise business review on December 5th at the New York Stock Exchange. More information, including an overview of the day's schedule will be shared shortly. We hope you will be able to join us either in person or on the available webcast.

at the New York Stock Exchange.

More information, including an overview of the day's schedule will be shared shortly. We hope you will be able to join us either in person or on the available webcast.

I want to conclude my remarks by thanking our teams around the world for their continued hard work and unwavering commitment to excellence on behalf of our patients. We are confident that our strategy will position us to deliver long term growth and create significant value for our shareholders. With that, it's my pleasure to turn to Kevin and begin the Q&A portion of the call.

We are confident that our strategy will position us to deliver long term growth and create significant value for our shareholders. With that, it's my pleasure to turn to Kevin and begin the Q&A portion of the call.

Operator: Thank you. Ladies and gentlemen, if you'd like to ask a question at this time, please press star then one on your telephone keypad. If you'd like to withdraw your question, please press star then two. Please limit your questions to one question only. Our first question is coming from David Risinger from Leerink Partners. Your line is now live.

David Reed Risinger: Thanks very much for taking my question and congrats on the strong financial performance. So my question is on benchmarking Mariposa results please. Could you share your thoughts on key considerations, including Astra Zeneca's recent flora two results, which included a nine month PFS benefit? Thanks very much.

So my. It is on a benchmark in Mariposa results. Please could you share your thoughts on considerations, including Astrazeneca as recent flora to results, which included a nine month PFS benefit. Thanks very much.

It is on a benchmark in Mariposa results. Please could you share your thoughts on considerations, including Astrazeneca as recent flora to results, which included a nine month PFS benefit. Thanks very much.

Thanks very much.

John C. Reed: Hi, John Reed here. It's great to join the call. This is my first time as a newcomer to J&J and before I answer your question David, I would just like to say I have to tell you I'm really enjoying being a new member of the J&J team. I've really been impressed with the culture, inspired by our credo, with the caliber of talent, our people here at J&J and with a really strong performance of the pipeline.

Yeah.

Hi, John Reid here, it's great to join the call. This is my first time as a newcomer to J&J and before I answer your question, David I would just like to say I have to tell you I'm really enjoying the being a new member of the J&J team I've really been impressed with the.

Culture inspired by our credo with the caliber of talent there are people here at J&J and with a really strong performance of the pipeline.

We've already launched two enemies this year, [inaudible] for prostate cancer in TALVEY for myeloma, continuing our tradition of bringing new therapies and those agents. We're positioned to deliver an average of more than two enemies per year between now and the close of the decade 2030. So the pipeline is very robust. It is exciting to be here and to be a part of it.

An average of more than two enemies per year between now and the close of the decade 2030. So the pipeline is very robust. It is exciting to be here and to be a part of it.

It is exciting to be here and to be a part of it.

So on to your question, the data will be presented at ESMO in a presidential session so we're embargoed. Until then, abstracts will be available on Wednesday. I can tell you that the RYBREVANT-LAZERTINIB combo did perform well, had to [inaudible. Our regimen is a chemo free option for patients which we think is important and we'll present those data at ESMO.

So we are embargoed until then abstracts will be available on Wednesday, I can only say that the rubber band. Certainly. <unk> did perform well head to head against those of Merck Nib. Our regimen is a chemo free option for patients, which we think is important. We'll present those data at ESMO.

Certainly. <unk> did perform well head to head against those of Merck Nib. Our regimen is a chemo free option for patients, which we think is important. We'll present those data at ESMO.

<unk> did perform well head to head against those of Merck Nib. Our regimen is a chemo free option for patients, which we think is important. We'll present those data at ESMO.

Our regimen is a chemo free option for patients, which we think is important. We'll present those data at ESMO.

We'll present those data at ESMO.

Operator: Thank you. Next question today from Matt mixing from Barclays. Your line is now live.

Matt Miksic: Hi, thanks so much for taking the questions. So I think most folks they may look at the orthopedic results in medical devices maybe being a little bit softer than expected. It's not everything by a long shot for J&J, but given the expectations were for kind of continued strength heading into Q3, if you could talk maybe a little bit about your comment on more traditional seasonality and thoughts on the sustainability of that strength as well as the sort of divestiture and sort of realignment plan that you described. Thanks.

I think most folks they may look at the orthopedic results. In medical devices, and maybe being a little bit a little bit softer than expected. It's not everything by a long shot or J&J, but given. Given the expectations were for kind of continued strength heading into Q3. If you could talk maybe a little bit about you know your comment on more traditional seasonality and thoughts on the. Staying ability of that strength as well as the sort. So divestiture in sort of a realignment plan. Describe thanks.

In medical devices, and maybe being a little bit a little bit softer than expected. It's not everything by a long shot or J&J, but given. Given the expectations were for kind of continued strength heading into Q3. If you could talk maybe a little bit about you know your comment on more traditional seasonality and thoughts on the. Staying ability of that strength as well as the sort. So divestiture in sort of a realignment plan. Describe thanks.

It's not everything by a long shot or J&J, but given. Given the expectations were for kind of continued strength heading into Q3. If you could talk maybe a little bit about you know your comment on more traditional seasonality and thoughts on the. Staying ability of that strength as well as the sort. So divestiture in sort of a realignment plan. Describe thanks.

Given the expectations were for kind of continued strength heading into Q3. If you could talk maybe a little bit about you know your comment on more traditional seasonality and thoughts on the. Staying ability of that strength as well as the sort. So divestiture in sort of a realignment plan. Describe thanks.

If you could talk maybe a little bit about you know your comment on more traditional seasonality and thoughts on the. Staying ability of that strength as well as the sort. So divestiture in sort of a realignment plan. Describe thanks.

Staying ability of that strength as well as the sort. So divestiture in sort of a realignment plan. Describe thanks.

So divestiture in sort of a realignment plan. Describe thanks.

Describe thanks.

Joaquin Duato: So thank you for the question. And yeah, I mean, our result in orthopedics was a 2.6% growth overall. And part of it as you mentioned was driven by seasonality. As we have commented, we are on a journey of improvement in orthopedics. We want to be number one and number two in every segment we compete and that is a place where we are not at yet, but we are very confident that we are going to continue to make improvements by investing and by growing in the highest growth segments. We have made improvements in our portfolio, for example, on the [inaudible] side we have a more complete portfolio now on the revision side. On the [inaudible] side we are launching now our VELYS orthopedics total knee surgery replacement in Europe and we already have about 30,000 procedures that have been performed with our VELYS robotic system.

On part of it as you mentioned is driven by seasonality as we have commented we are in a journey of improvement in orthopedics.

We want to be number one and number two in every segment we compete on a dot Aesop plays where we had no bad debt.

But we are very confident that we are going to continue to make improvements by investing them by growing in the highest growth segments. We have made improvements in our portfolio. For example on the knee side, we have a more complete portfolio now on the <unk> side on this same endless.

we are launching now our VELYS orthopedics total knee surgery replacement in Europe and we already have about 30,000 procedures that have been performed with our VELYS robotic system. Overall, we are increasing our penetration also in the ASCs which is a fast growing segment and we see our performance continue to improve in the US and globally. In this particular quarter, we also had some impact due to the impact of value-based procurement in China and

we are launching now our VELYS orthopedics total knee surgery replacement in Europe and we already have about 30,000 procedures that have been performed with our VELYS robotic system.

Launching now a water bally's orthopaedics. Total total knee surgery, a replacement in Europe on a we already have about 50000 procedures that have been. Form with our Belize Cobaltic system overall, we are increasing our penetration also. In the Asia CS would use a hypothesis growing segment and we see our performance continued to improve I E. The U S and globally in this particular quarter. We also had some impact due to the impact of a value based procurement in China on <unk>.

Total total knee surgery, a replacement in Europe on a we already have about 50000 procedures that have been. Form with our Belize Cobaltic system overall, we are increasing our penetration also. In the Asia CS would use a hypothesis growing segment and we see our performance continued to improve I E. The U S and globally in this particular quarter. We also had some impact due to the impact of a value based procurement in China on <unk>.

Overall, we are increasing our penetration also in the ASCs which is a fast growing segment and we see our performance continue to improve in the US and globally. In this particular quarter, we also had some impact due to the impact of value-based procurement in China and also because of the impact of the Russia sanctions that was mentioned already in the prepared remarks. So overall, in orthopedics, we are determined to continue our journey of improvement. We are focusing on having the right portfolio. We have a very strong team in the field. And as Joe has announced and Joe commented that we have a plan to be able to continue to improve our margins in orthopedics.

Form with our Belize Cobaltic system overall, we are increasing our penetration also. In the Asia CS would use a hypothesis growing segment and we see our performance continued to improve I E. The U S and globally in this particular quarter. We also had some impact due to the impact of a value based procurement in China on <unk>.

In the Asia CS would use a hypothesis growing segment and we see our performance continued to improve I E. The U S and globally in this particular quarter. We also had some impact due to the impact of a value based procurement in China on <unk>.

also because of the impact of the Russia sanctions that was mentioned already in the prepared remarks. So overall, in orthopedics, we are determined to continue our journey of improvement. We are focusing on having the right portfolio. We have a very strong team in the field. And as Joe has announced and Joe commented that we have a plan to be able to continue to improve our margins in orthopedics.

We had a we had foreseen in having the right portfolio, we have a very strong team in the field and as Joe has that mounts on Duke and commented that we have a plan to be able to continue to improve our margin you can see in orthopedics.

Joseph J. Wolk: Yeah, just very quickly Matt, thanks for the question. With respect to the restructuring program that we announced specifically in orthopedics, we're looking to exit those less profitable markets and product lines, so we'll have some clearly inventory write downs as a result of that. Over the next two years, there will be some modest revenue disruption, but we actually do think these actions, not only accelerate growth going forward, but will improve profitability.

Our restructuring program that we announced specifically in orthopedics, we're looking to exit those less profitable markets and product lines and so we'll have some clearly inventory write downs as a result of that over the next two years, there will be some modest revenue disruption, but we actually do think these actions not only accelerate growth going forward, but. Will improve profitability.

Will improve profitability.

Operator: Thank you. Next question is coming from Christian Shibutani from Goldman Sachs. Your line is now live.

Chris Shibutani: Alright. Thank you very much. Can you provide us with some insight into updates on the Talc litigation process? And then secondly, if you could just comment, Joe, you used the word for voracious last time with your appetite for business development opportunities. How does that word stand still in terms of your appetite on the board? Thank you.

development opportunities, how does that word stand still in terms of your appetite on the board? Thank you.

Joseph J. Wolk: Yeah, So Eric why don't I turn it over to you to discuss the talc litigation matter and then I'll come back and answer Chris's second question.

Erik Haas: Great. Thanks, Joe. The short answer is that we continue to pursue the four pronged strategy that we communicated back in July. So let me quickly summarize those four prongs and highlight this early in development and perhaps anticipate some follow up questions about Talc. So the first prong, we are pursuing the appeal to the Supreme Court in the United States in the July ruling by the New Jersey Bankruptcy Court that dismissed LTL's bankruptcy case. Notably, our appeal recently was joined by counsel representing the vast majority of the Talc claimants. Also thereafter, the bankruptcy court certified the case for a direct appeal to the third circuit bypassing the district court because the bankruptcy court found that the appeal raises matters of significant public interest, the resolution of which would materially advance the progress of the case and we fully agree with that assessment.

The short answer is that we continue to pursue the four pronged strategy that we communicated back in July . So let me quickly summarize those four prongs in highlight this early in development and perhaps anticipate some follow up questions about <unk>.

So the first prong, we are pursuing the appeal to the Supreme Court in the United States and the July ruling by the New Jersey bankruptcy Court dismissed L. T O bankruptcy case, notably, notably our appeal recently was joined by counsel, representing the vast majority of the child.

Claimants. Also thereafter, the bankruptcy court certified the case for a direct appeal to the third circuit bypassing the district court.

Also thereafter, the bankruptcy court certified the case for a direct appeal to the third circuit bypassing the district court.

the bankruptcy court found that the appeal raises matters of significant public interest, the resolution of which would materially advance the progress of the case and we fully agree with that assessment. On the merits of the appeal challenges, both validity as well as the application of

On the merits the appeal challenges both validity as well as the application of the novel standards that was imposed by the third circuit that requires a showing of quote, immediate financial distress to proceed with the bankruptcy case. That immediate financial distress requirement, which the third circuit did not specifically define is nowhere in the bankruptcy code and is contrary to the standards that are deployed by other circuits. Moreover, under any reasonable interpretation of that standard, we believe the record has fully established that LTL faced immediate financial distress due to the large volume of Talc claims that were asserted against it.

the novel standards that was imposed by the third circuit that requires a showing of quote, immediate financial distress to proceed with the bankruptcy case. That immediate financial distress requirement, which the third circuit did not specifically define is nowhere in the bankruptcy code and is contrary to the standards that are deployed by other circuits. Moreover, under any reasonable interpretation of that standard, we believe the record has fully established that LTL faced immediate financial distress due to the large volume of Talc claims that were asserted against it.

Which the third circuit did not specifically defined is nowhere in the bankruptcy code and is contrary to the standards that are implied deployed by other circuits. Moreover, under any reasonable interpretation of that standard we believe the record had fully established that <unk> faced immediate financial distress due to the large volume of child claims. That were asserted against it.

Moreover, under any reasonable interpretation of that standard we believe the record had fully established that <unk> faced immediate financial distress due to the large volume of child claims.

That were asserted against it.

In terms of timing, the third circuit could rule at any moment, whether it will take the direct to appeal or not. If it does, we expect briefing to take place over the next couple of months with a decision in the early 2024 timeframe. And because we do anticipate the third circuit, both summarily affirm the application of its standards, we will immediately thereafter request the Supreme Court to resolve the circuit split it and decide if the third circuit's novel approach is an appropriate standard for deciding a motion to dismiss. We do not think it is. We hope to squeeze the certification to the Supreme Court in to the first term in 2024, but if not, we will raise it in the second term.

And because we do anticipate the third circuit, both summarily affirm the application of its standards, we will immediately thereafter request the Supreme Court to resolve the circuit split it and decide if the third circuit's novel approach is an appropriate standard for deciding a motion to dismiss. We do not think it is.

think it is.

We hope to squeeze the certification to the Supreme Court in to the first term in 2024, but if not, we will raise it in the second term.

The second prong of our strategy involves working with the council, representing the vast majority of the talc claimants more than we had previously that were along with us along with and in addition to the future claims representatives and together with the council and the future claims representatives we're pursuing a consensual resolution of the talc claims through another bankruptcy. And that is exactly what the New Jersey Bankruptcy Court urged and strongly recommended that we do in its decision that actually dismissed the case. And the New Jersey Court made those recommendations having found that LTL had made remarkable progress towards an equitable and efficient resolution to date. So we are continuing on in that process. In terms of timing on the second prong, the consensual resolution is on the same trajectory as the initial bankruptcy plan with a vote expected in the next six months to determine whether the requisite supermajority of claimants support the plan.

that were along with us along with and in addition to the future claims representatives and together with the council and the future claims representatives we're pursuing a consensual resolution of the child claims through another bankruptcy. And that is exactly what the New Jersey Bankruptcy Court urged and strongly recommended that we do in its decision that actually dismissed the case. And the New Jersey Court made those recommendations having found that LTL had made remarkable progress towards an equitable and efficient resolution to date. So we are continuing on in that process. In terms of timing on the second prong, the consensual resolution is on the same trajectory as the initial bankruptcy plan with a vote expected in the next six months to determine whether the requisite supermajority of claimants support the plan.

Z bankruptcy, Florida urged and strongly recommended that we do and its decision that actually dismissed the case. And the New Jersey cord made those recommendation, having found that L. T. L had made remarkable progress towards an equitable and efficient resolution to date. So we are continuing on in that process in terms of timing on the second prong. The consensual resolution is on the same trajectory as the initial bankruptcy plan with a vote expected in the next six months to determine whether the requisite supermajority of claim and support the plan.

And the New Jersey cord made those recommendation, having found that L. T. L had made remarkable progress towards an equitable and efficient resolution to date. So we are continuing on in that process in terms of timing on the second prong.

The consensual resolution is on the same trajectory as the initial bankruptcy plan with a vote expected in the next six months to determine whether the requisite supermajority of claim and support the plan.

Third, while those negotiations are proceeding we will continue to vigorously defend the merit list talc claims in the tort system. As you may have seen just this last week, we had a significant favorable ruling in that regard with the New Jersey's appellate court in the Barton case, reversing a $223 million verdict against the company. The appellate court reversed because it determined the opinions of the leading plaintiff's expert were unsound, were unscientific, and were unsubstantiated and it is that baseless nature of those expert opinions why we have prevailed in the vast majority of the cases that have been tried to date.

With the new Jersey's appellate court in the Barton case, reversing a $223 million verdict against the company the appellate court reversed because it determined the opinions of the leading plaintiff's expert.

Unsound, where unscientific unsubstantiated and it is that baseless nature of those expert opinions why we have prevailed in the vast majority of the cases that have been tried to date in.

In terms of timing of the litigation, there are two additional mesothelioma cases that we expect will be tried this year with more to come in 2024. As with the BARDA case, it's important to keep in mind that the ultimate resolution of those matters often is determined at the appellate level, not at the trial level, which is the place in which occurs in the forms that the plaintiff lawyers choose.

at the appellate level, not at the trial level, which is the place in which occurs in the forms that the plaintiff lawyers choose. Finally, we will aggressively challenge the abuses of the judicial system by the mass toward plaintiffs bar and its experts with our own affirmative litigation.

at the appellate level, not at the trial level, which is the place in which occurs in the forms that the plaintiff lawyers choose.

Finally, we will aggressively challenge the abuses of the judicial system by the mass toward plaintiffs bar and its expertise with our own affirmative litigation.

Finally, we will aggressively challenge the abuses of the judicial system by the mass toward plaintiffs bar and its experts with our own affirmative litigation. We mentioned last time that we brought two actions against the plaintiffs lead experts for determining our talc products with publications premise, unknowingly false propositions, and those are moving forward. They've been fully briefed with respect to the initial case motions and in terms of timing, we expect a ruling shortly from the Federal District Court in New Jersey, whether those matters may proceed to the discovery phase.

We mentioned last time that we brought two actions against the plaintiffs lead experts for determining our talc products with publications premise, unknowingly false propositions, and those are moving forward. They've been fully briefed with respect to the initial case motions and in terms of timing, we expect a ruling shortly from the Federal District Court in New Jersey, whether those matters may proceed to the discovery phase.

<unk> false propositions. And those are moving forward they've been fully briefed with respect to the initial case motions and in terms of timing, we expect a ruling shortly from the Federal District Court in New Jersey, whether those matters May proceed to the discovery phase.

And those are moving forward they've been fully briefed with respect to the initial case motions and in terms of timing, we expect a ruling shortly from the Federal District Court in New Jersey, whether those matters May proceed to the discovery phase.

So that's a quick summary, I'd be happy to answer any follow up questions you may have regarding the strategy. Great. Thank you Eric. Chris, regarding your second question, if

So that's a quick summary, I'd be happy to answer any follow up questions you may have regarding the strategy.

Joseph J. Wolk: Great. Thank you Eric. Chris, regarding your second question, if J&J had a nickel for every time voracious was quoted back to me since the second quarter earnings, we probably could have taken up guidance even a little bit more. And while that's often associated with wanting or devouring great quantities, I think it's really the second definition of Webster's where having a very eager approach toward activity is the construct in which I meant that term in the second quarter. So I could've said that five years ago, 10 years ago, my predecessors could've said that. We routinely, almost weekly meet on new opportunities that may complement our existing portfolio or our future pipeline in both Med Tech and innovative medicines and the current moment is no different. In fact, we're in a very good position given the low levels of net debt, the cash we were able to raise to fulfill one of our capital allocation priorities, which you're probably very, very familiar with at this point in time, but we're not going to compromise our principles in making sure that it's a strategic fit, so it fits into the scientific expertise, the commercial capabilities or the global reach that will add value to that asset in our hands versus someone else and we're going to make sure that we're disciplined

J&J had a nickel for every time voracious was quoted back to me since the second quarter earnings, we probably could have taken up guidance even a little bit more. And while that's often associated with wanting or devouring great quantities, I think it's really the second definition of Webster's where having a very eager approach toward activity is the construct in which I meant that term in the second quarter. So I could've said that five years ago, 10 years ago, my predecessors could've said that. We routinely, almost weekly meet

And while that's often associated with wanting or devouring great quantities, I think it's really the second definition of Webster's where having a very eager approach toward activity is the construct in which I meant that term in the second quarter. So I could've said that five years ago, 10 years ago, my predecessors could've said that. We routinely, almost weekly meet

on new opportunities that may complement our existing portfolio or our future pipeline in both Med Tech and innovative medicines and the current moment is no different. In fact, we're in a very good position given the low levels of net debt, the cash we were able to raise to fulfill one of our capital allocation priorities,

Joseph J. Wolk: In fact, we're in a very good position given the low levels of net debt, the cash we were able to raise to fulfill one of our capital allocation priorities, which you're probably very, very familiar with at this point in time, but we're not going to compromise our principles in making sure that it's a strategic fit, so it fits into the scientific expertise, the commercial capabilities or the global reach that will add value to that asset in our hands versus someone else and we're going to make sure that we're disciplined in that approach financially by ensuring that we have a return that's commensurate with the risk that we're bearing on behalf of shareholders. So we'd much rather have an okay deal pass us by than make a bad deal and that's kind of the principles that we'll live into. There's no deal that's too big give it our credit rating as well as our financial strength and our annual cash flow generation. But as you know, we've had great success doing smaller earlier stage deals as well. We're agnostic with respect to whether it be the next one being Med Tech or innovative medicines. We are simply looking for the best qualified deal that meets both strategic and financial parameters. So hopefully that answers your question.

which you're probably very, very familiar with at this point in time, but we're not going to compromise our principles in making sure that it's a strategic fit, so it fits into the scientific expertise, the commercial capabilities or the global reach that will add value to that asset in our hands versus someone else and we're going to make sure that we're disciplined

in that approach financially by ensuring that we

have a return that's commensurate with the risk that we're bearing on behalf of shareholders. So we'd much rather have an okay deal pass us by than make a bad deal and that's kind of the principles that we'll live into. There's no deal that's too big give it our credit rating as well as our financial strength and our annual cash flow generation.

But as you know, we've had great success doing smaller earlier stage deals as well. We're agnostic with respect to whether it be the next one being Med Tech or innovative medicines. We are simply looking for the best qualified deal that meets both strategic and financial parameters. So hopefully that answers your question.

Next question Kevin.

Operator: Our next question is coming from Geoff Meacham from Bank of America. Your line is now live.

Geoff Meacham: Hey, guys, good morning. Thanks so much for the question. I'll stick with one. So on CARVYKTI, can you talk about the commercial backdrop just with respect to new centers or prescribers and related on manufacturing you guys have any update on the vector constraints and even when that could be relieved? Thank you so much.

Joaquin Duato: Thank you Geoff. As you have seen in the progression quarter over quarter of CARVYKTI we continue to have on one hand strong demand on the other hand progressing our manufacturing. We're also very encouraged by the data that came out with [inaudible] four but eventually we make CARVYKTI a medicine in early signs of therapy. So when it comes to our manufacturing progress, I'm going to let John explain what we are doing in order to be able to supply the strong demand that we have seen in CARVYKTI to date. Overall, what you can expect Geoff is that we will continue to see quarter over quarter improvement in 2023 into also 2024.

That eventually we make a big deal so maybe seen in early signs of pickup so when it comes to our module factory in progression I'm going to let John explain.

what we are doing in order to be able to supply the strong demand that we have seen in CARVYKTI to date. Overall, what you can expect Geoff is that we will continue to see quarter over quarter improvement in 2023 into also 2024.

To follow up on Joaquin's comments, we've been progressively adding more and more capacity that's included at our original launch site in New Jersey, but we're close to having an additional manufacturing site up enrolling in Europe, in Belgium. And also have recently increased our capacity by using some excess capacity that Novartis had to further bolster the number of slots that we can accommodate. One of the traditionally rate limiting components of the therapy has been the lengthy virus component and there we've made really outstanding progress in house, mastering that technology, increasing our scale at our factory in Switzerland, and we're in the process, we're building, I think it'll be available next year,

That's included at our original launch site in New Jersey.

We're close to having an additional manufacturing site up enrolling in Europe in Belgium.

And also have recently.

Increase our capacity by using some excess capacity that novartis had to further bolster the number of slots that we can accommodate.

One of the traditionally rate limiting components of the therapy has been the lengthy virus component and there we've made really outstanding progress in house, mastering that technology, increasing our scale at our factory in Switzerland, and we're in the process, we're building, I think it'll be available next year, another factory in the Netherlands to support the lengthy virus component which has sometimes been one of the rate limiting aspects. So altogether the capacity continues to ramp up and we continue to perfect the technology I would say. Same thing with the number of centers that are qualified to administer the therapy and we're also making progress on the number of countries where CARVYKTI will be available.

One of the traditionally rate limiting components of the therapy has been the lengthy virus component and there we've made really outstanding progress in house.

Man stream that technology, increasing our scale at our factory in Switzerland, and we're in the process, we're building and I think it'll be available next year.

another factory in the Netherlands to support the lengthy virus component which has sometimes been one of the rate limiting aspects. So altogether the capacity continues to ramp up and we continue to perfect the technology I would say. Same thing with the number of centers that are qualified to administer the therapy and we're also making progress on the number of countries where CARVYKTI will be available. So very excited obviously about the momentum with that, really best-in-class CAR therapy. The CAR-4 data as you know, showed unprecedented free survival benefit hazard ratio of 2.6, overall response rate of 99%, 86% complete response, very durable, a one and done therapy that was well tolerated. The grade III or above cytokine release syndrome was only 1.1% so this is really I think now emerging as the preferred second line therapy and we'll be able to more such as bring in the frontline alternative stem cell transplant.

Sometimes being one of the rate limiting aspects.

So altogether the capacity continues to ramp up and we continue to. To perfect the technology I would say.

To perfect the technology I would say.

Same thing with the number of centers that are qualified to administer the therapy and we're also making progress on the number of countries, where garbage people will be available. So.

Very excited obviously about the.

So very excited obviously about the momentum with that, really best-in-class CAR therapy. The CAR-4 data as you know, showed unprecedented free survival benefit hazard ratio of 2.6, overall response rate of 99%, 86% complete response, very durable, a one and done therapy that was well tolerated. The grade III or above cytokine release syndrome was only 1.1% so this is really I think now emerging as the preferred second line therapy and we'll be able to more such as bring in the frontline alternative stem cell transplant.

About the momentum with that. Really a best in class best in class <unk> therapy. The card of two four data as you know.

Really a best in class best in class <unk> therapy. The card of two four data as you know.

Showed unprecedented. Progression free survival benefit a hazard ratio of <unk> to six overall response rate of 99%, 86% complete responds very durable for a one and done therapy was well tolerated. The grade three or above cytokine release syndrome was only one 1%. So this is really I think now emerging as the preferred second line therapy, and we hope to do more so I keep bringing in the frontline as a possible alternative to stem cell transplant.

Progression free survival benefit a hazard ratio of <unk> to six overall response rate of 99%, 86% complete responds very durable for a one and done therapy was well tolerated.

The grade three or above cytokine release syndrome was only one 1%. So this is really I think now emerging as the preferred second line therapy, and we hope to do more so I keep bringing in the frontline as a possible alternative to stem cell transplant.

Joaquin Duato: You know Geoff to your point, [inaudible] myeloma and new product launches, we are also very encouraged by the launch of TECHVAYLI and also the [inaudible] the progression of this medicine is exceeding our internal expectations and we already have about 2000 health care professionals in the US that are REM certified to be able to administer TECHVAYLI and TALVEY so very encouraging progress in these two medicines in multiple myeloma, and we expect to be able to break out TECHVAYLI sales beginning in 2024.

To your point, they moved into myeloma and new product launches. We are also very encouraged by the launch of take lightly and also there'll be sent up no debate. The progression of these maybe seems is exceeding our internal expectations and we already have about 2000 health care professionals in the U S.

That rems certified to be able to administer take value until they saw very encouraging progress.

These two made these things in multiple myeloma.

We expect to be able to breakout take viably sales beginning in 2024.

Operator: Thank you. Next question is coming from Josh Jennings from TD Cowen. Your line is now live.

Josh Jennings: Hi, good morning. Thanks for taking the questions. I was hoping to ask on STELARA and the biosimilar competition in the US now expected in 2025, that's not new news, but wanted to check in on how beneficial is the extra year for the innovative medicines business' defense strategy, I guess focusing on not just the potential for TREMFYA to take share from STELARA in psoriasis and psoriatic arthritis and inflammatory bowel disease indications. And this timing should provide more confidence in the potential because of country revenue target set for 2025 for the former unit. Thanks.

TREMFYA to take share from

STELARA in psoriasis and psoriatic arthritis and inflammatory bowel disease indications. And this timing should provide more confidence in the potential because of country revenue target set for 2025 for the former unit. Thanks.

Joaquin Duato: Thank you for the question. Certainly we have always been very confident in being able to hit $57 billion target in 2025 for pharma. As I have explained before there are number of factors there. The first one and most important is the growth that we're having in our key assets: TREMFYA, ERLEADA, [inaudible], our long acting injectibles and especially [inaudible]. We continues to have a tremendous trajectory gaining share in first line. We are encouraged as I just commented by the launches of CARVYKTI, the progression of SPRAVATO and also the recent launches also in multiple myeloma of TECHVAYLI and TALVEY. Looking into 2024, the remainder of the year, and also into 2025, we have some very exciting news in our pipeline. Some of them have been already commented, for example, the first chemo free regimen as first line Egfr mutated non-small lung cancer. We will be presenting the data of MARIPOSA in asthma that potentially will be a filing and an approval in 2025. This would be a new standard of therapy in this line of therapy in this very important need for patients. We also continue to be encouraged by the progress in our [inaudible] delivery platform.

<unk> $57 billion target being 20 to 25 for pharma. As I have explained before there are number of factors there. The first one and most important is they could OS that we're having in our key assets.

As I have explained before there are number of factors there. The first one and most important is they could OS that we're having in our key assets.

Yeah, It would be the with Robbie our long acting injectables on especially data lakes. We continues to have a tremendous trajectory gaining share in first line. We are encouraged as I just commented by the launches of <unk> D. The progression of the subprime auto and also the recent launch of <unk> two.

also in multiple myeloma of TECHVAYLI and TALVEY. Looking into 2024, the remainder of the year, and also into 2025, we have some very exciting news in our pipeline. Some of them have been already commented, for example, the first chemo free regimen as first line Egfr mutated non-small lung cancer. We will be presenting the data of MARIPOSA in asthma that potentially will be a filing and an approval in 2025. This would be a new standard of therapy in this line of therapy in this very important need for patients. We also continue to be encouraged by the progress in our [inaudible] delivery platform. You are also going to see data being presented at ESMO,

As first line Egfr mutated non small lung cancer will be presented the data of <unk> in asthma that potentially would be filing an approval in 2025. This would be a new stand that will fit up be in this line of therapy. In these very important on a need for patients. We also continue to be encouraged by the progress in our parties that are delivering platform. You are also going to see data being presented at ESMO.

This would be a new stand that will fit up be in this line of therapy. In these very important on a need for patients. We also continue to be encouraged by the progress in our parties that are delivering platform. You are also going to see data being presented at ESMO.

You are also going to see data being presented at ESMO, very important for us in two existing products. We will be presenting data on TREMFYA in IBD, both in Crohn's and ulcerative colitis for a potential approval later in 2024. That's going to be a very significant growth driver for TREMFYA, take into consideration that in the STELARA case IBD represents 75% of the sales. So we still have a lot of growth in front of us with TREMFYA as we do also in ERLEADA which we will present data in localized high risk prostate cancer. We're also going to be able to present some data of Nipocalimab for myasthenia gravis end of this year. So all in all, very good news for our pipeline in 2024 and 2025. Certainly, the entrance of the biosimilars in 2025 in the US is another factor that builds our confidence that we are going to be able to meet the $57 billion.

very important for us in two existing products. We will be presenting data on TREMFYA in IBD, both in Crohn's and ulcerative colitis for a potential approval later in 2024. That's going to be a very significant growth driver for TREMFYA, take into consideration that in the STELARA case IBD represents 75% of the sales. So we still have a lot of growth in front of us with TREMFYA as we do also in ERLEADA which we will present data in localized high risk prostate cancer. We're also going to be able to present some data of Nipocalimab for myasthenia gravis end of this year. So all in all, very good news for our pipeline in 2024 and 2025. Certainly, the entrance of the biosimilars in 2025 in the US is another factor that builds our confidence that we are going to be able to meet the $57 billion.

India still a lot of case IBD represents 75% of the sales. So we still have a lot of a lot of growth in front of us with that imply yet as we do also in Italy that in which we will present data in localized high risk prostate cancer. We also. We're also going to be able to present, some data of nipple tally might be myasthenia gravis end of this year. So all in all very good news for our pipeline in 'twenty 'twenty, four and 'twenty 25, certainly. The incidence of the Biosimilars in 2025 in the U S is another factor that built our confidence.

We're also going to be able to present, some data of nipple tally might be myasthenia gravis end of this year. So all in all very good news for our pipeline in 'twenty 'twenty, four and 'twenty 25, certainly. The incidence of the Biosimilars in 2025 in the U S is another factor that built our confidence.

The incidence of the Biosimilars in 2025 in the U S is another factor that built our confidence.

For me, the most important thing now is to look forward and to think about the growth profile of our innovative medicine group into the second half of the decade. We have a number of growth drivers that are already there that I described but also the strength of our pipeline both in immunology, in oncology, and in our science profiles as a strong company, as a strong growth profile into the second half of the decade, and that's part of what we will be looking forward to discussing with you in our upcoming enterprise revenue, focusing on what is going to be the growth profile in the second half of the decade.

And to think about the growth profile of our innovative medicine group into the second half of the decade, a we have a number of growth drivers that are already there that I described but also the strength of our pipeline both in immunology and oncology and neuroscience profiles as a strong co. He has had a strong growth profile into the second half of the decade, and that's part of what we wouldn't be looking forward to discussing with you in our upcoming. Enterprise services revenue focusing on what is going to be the growth profile in the second half of the decade.

He has had a strong growth profile into the second half of the decade, and that's part of what we wouldn't be looking forward to discussing with you in our upcoming. Enterprise services revenue focusing on what is going to be the growth profile in the second half of the decade.

Enterprise services revenue focusing on what is going to be the growth profile in the second half of the decade.

Operator: Thank you. Next question is coming from Chris Schott from JP Morgan. Your line is now live.

Chris Schott: Great. Thanks so much for the question. Maybe Joe just a little bit more color on 2024, I appreciate the details you provided. It seems like another year of healthy topline growth, but can you just give us some directional color on margins next year? I know there were some dis synergies with Kenvue this year and I was trying to get a sense of how you think about margin progression here as you kind of balanced some of these new kinds of pipeline opportunities in some of these topline growth initiatives versus kind of dropping that to the bottom line. So just any directional color would be appreciated. Thanks.

balanced some of these new kinds of pipeline opportunities in some of these topline growth initiatives versus kind of dropping that to the bottom line. So just any directional color would be appreciated. Thanks. Yeah, sure, Chris. Thanks for the question. So first off, we're very pleased with the margin

Joseph J. Wolk: Yeah, sure, Chris. Thanks for the question. So first off, we're very pleased with the margin progress that we've been able to make in 2023. I think we started the year roughly flat to now improving by 50 basis points. A lot of that has is directly attributable to the efforts of many people in the organization who really took the opportunity to look at our infrastructure as a two segment company versus a three segment company. So the disynergies that we warned about and talked about early on in the Kenvue separation process, really hasn't come to manifest. In fact, as we look out to 2024, we see minimal to almost no impact from disynergies from the separation.

progress that we've been able to make in 2023. I think we started the year roughly flat to now improving by 50 basis points. A lot of that has is directly attributable to the efforts of many people in the organization who really took the opportunity to look at our infrastructure as a two segment company versus a three segment company. So the disynergies that we warned about and talked about early on in the Kenvue separation process, really hasn't come to manifest. In fact, as we look out to 2024, we see minimal to almost no impact from disynergies from the separation.

So the synergies that we warned about and talked about early on in the can do separation process really havent come to manifest and in fact, as we look out to 'twenty 'twenty four we see minimal to almost no impact from dis synergies from the separation we are in the process of finalizing our bid.

We are in the process of finalizing our plans for 2024. I'd like to get a little bit better assessment of how the clinical development pipeline is shaping up, what the investments are required there, but we're a larger company, we take the opportunity to look each and every year at efficiencies, so we're not in a position to give you margin guidance right now, but I would expect that something similar to where we started this year would not be a bad starting point for next year. Again, it's going to depend on the investments that the R&D teams from both Med Tech and innovative medicines can bring forth and we'll obviously look to accelerate bringing some of these great products to patients sooner if we have that opportunity.

Your margin guidance right now, but I would expect that something similar to you know where we started this year would not be a bad starting point for next year again, it's going to depend on the investments that the R&D teams from both med Tech and innovative medicines can bring forth and we'll obviously look to. To accelerate bringing some of these great products to patients sooner, if we have that opportunity.

To accelerate bringing some of these great products to patients sooner, if we have that opportunity.

Operator: Thank you. Your next question is coming from [inaudible] from Wells Fargo. Your line is now live.

Unknown: Good morning, Thanks for taking the question. Joe, could you just clarify what you meant by a flat procedures in '24 for Med Tech? Does that mean flat in Med Tech growth? And just for my question, can you talk about what you're seeing with bariatrics for GLP1 this is and how you're thinking about the potential impact of GLP1 to [inaudible] device business long term especially in cardio and ortho? Thank you.

device business long term especially in cardio and ortho? Thank you.

Joseph J. Wolk: So I'll give the second half of that question to Joaquin, but thanks for the clarifying question with respect to market growth. We are not suggesting flat market or a flat market in Med Tech next year. What we do is we are foreseeing right now based on what we know today is the elevated levels, the market overall being 5% to 7% versus what traditionally has been maybe 4% to 6%, we see that same 5% to 7% next year. Joaquin?

maybe 4% to 6%, we see that same 5% to 7% next year. Joaquin? Thank you and thank you Larry. Taking a step back, we see the evolution of our Med Tech business in a very positive way. One of our key goals for us is to be a top tier grower in Med Tech. When I look at the results of Med Tech this year, we are delivering on that. Our growth in the quarter pro forma was 6.4% when you compare with ABIOMED as a standalone company and when you look at our pro forma growth year to date in Med Tech it's 7.9%. So very pleased with the performance of our Med Tech business and we have expectations to continue our progression into 2024 in part fueled by the procedural growth that we see and also by our continued improvement in our execution and the launch of new products. Some of them we can discuss later. For example, we will be launching our first PSA catheter in Europe into 2024. When it comes to GLP-1, it's good for patients to have new options for treatment, especially in obesity, which overtime has been a stigmatized disease in which patients were not looking for treatment due to the stigmatization of that. Certainly, as you commented, we are seeing some impact in our bariatric business in the short term. Some patients are reconsidering surgery

maybe 4% to 6%, we see that same 5% to 7% next year. Joaquin?

Joaquin Duato: Thank you and thank you Larry. Taking a step back, we see the evolution of our Med Tech business in a very positive way. One of our key goals for us is to be a top tier grower in Med Tech. When I look at the results of Med Tech this year, we are delivering on that. Our growth in the quarter pro forma was 6.4% when you compare with ABIOMED as a standalone company and when you look at our pro forma growth year to date in Med Tech it's 7.9%. So very pleased with the performance of our Med Tech business and we have expectations to continue our progression into 2024 in part fueled by the procedural growth that we see and also by our continued improvement in our execution and the launch of new products. Some of them we can discuss later. For example, we will be launching our first PSA catheter in Europe into 2024.

I look at the results of metric this year, we are delivering on that our.

Growth in the quarter pro forma or six 4% when you compare with a b humid a standalone company and when you look at our pro forma growth year to date. The mythic is seven 9%. So very pleased with the performance of our med Tech business and we have expectations.

To continue our progression into 2024 in part fueled by the procedural growth that we see and also by our continued improvement in our execution on the launch of new products. Some of them. We can discuss later for example. We will be launching our first <unk> got a third in Europe into 2024. When it comes to DLP once it's good for patients to have a meal options for treatment, especially in obesity, which. <unk> has been a stigma disease in which patients were not looking for treatment due to the stigma appreciation of that certainly as you commented we are seeing some impact in our body at the business in the short term some patients are reconsidering, if they consider into surgery.

We will be launching our first <unk> got a third in Europe into 2024. When it comes to DLP once it's good for patients to have a meal options for treatment, especially in obesity, which. <unk> has been a stigma disease in which patients were not looking for treatment due to the stigma appreciation of that certainly as you commented we are seeing some impact in our body at the business in the short term some patients are reconsidering, if they consider into surgery.

When it comes to DLP once it's good for patients to have a meal options for treatment, especially in obesity, which. <unk> has been a stigma disease in which patients were not looking for treatment due to the stigma appreciation of that certainly as you commented we are seeing some impact in our body at the business in the short term some patients are reconsidering, if they consider into surgery.

When it comes to GLP-1, it's good for patients to have new options for treatment, especially in obesity, which overtime has been a stigmatized disease in which patients were not looking for treatment due to the stigmatization of that. Certainly, as you commented, we are seeing some impact in our bariatric business in the short term. Some patients are reconsidering surgery expecting to get treatment, but overall, when we talk to bariatric surgeons, what they see is a complimentary role of surgery on GLP-1 and many of them comment on the fact that they could see a tailwind for bariatric surgery down the road given this complimentary nature, the increased awareness about obesity, more patients seeking treatment. And many of the patients, about 30% of them are not going to be tolerating these medications so they would be another funnel for our bariatric business. In the rest of our Med Tech business, at this point, we continue to see robust procure increase and we don't anticipate that changing in the foreseeable future.

<unk> has been a stigma disease in which patients were not looking for treatment due to the stigma appreciation of that certainly as you commented we are seeing some impact in our body at the business in the short term some patients are reconsidering, if they consider into surgery.

expecting to get treatment, but overall, when we talk to bariatric surgeons, what they see is a complimentary role of surgery on GLP-1 and many of them comment on the fact that they could see a tailwind for bariatric surgery down the road given this complimentary nature, the increased awareness about obesity, more patients seeking treatment. And many of the patients, about 30% of them are not going to be tolerating these medications so they would be another funnel for our bariatric business. In the rest of our Med Tech business, at this point, we continue to see robust procure increase and we don't anticipate that changing in the foreseeable future.

Implemented in nature. <unk> increased our warning about obesity more patients seeking treatment on many of the patients about 30% of them are not going to be tolerating. These medications. So they would be another now that our funnel for our body I think business in the rest of our <unk> business at this point we. <unk> continued to see robust proceeded increase and we don't anticipate that change that think that they are changing in the foreseeable future.

<unk> increased our warning about obesity more patients seeking treatment on many of the patients about 30% of them are not going to be tolerating. These medications. So they would be another now that our funnel for our body I think business in the rest of our <unk> business at this point we. <unk> continued to see robust proceeded increase and we don't anticipate that change that think that they are changing in the foreseeable future.

<unk> continued to see robust proceeded increase and we don't anticipate that change that think that they are changing in the foreseeable future.

Operator: Thank you. Your next question is coming from Terence Flynn from Morgan Stanley . Your line is now live.

Terence C. Flynn: Great. Thanks so much for taking the question. I was just wondering if you could elaborate a little bit more John on Nipocalimab and RA. We're going to see the full data at ACR, but is this a drug that you see potentially working in a broad population or is there a biomarker subset group that's more likely to respond? And then how are you thinking about phase III plans here in this indication? Thank you.

how are you thinking about phase III plans here in this indication? Thank you.

John C. Reed: Yeah, thanks for the question and we look forward to sharing those data at ACR in November in San Diego. We're looking at Nipo as either a monotherapy combined with a precision medicine strategy or as a combination for a broad population where we aim to combine with the anti-TNF agent and we see those two mechanisms as being very complementary reducing the levels of auto antibodies with Nipo and then inhibiting inflammatory mechanisms with the TNF. The so called Daisy study, the phase two is under way now and we will test that combination. So that in general has been the way we're looking at RA not only for Nipo but for other agents in our pipeline where we see the future being monotherapies that are targeted in a modern precision medicine way or broad therapies that are combos that can bring together synergistic mechanisms in a safe way. We're excited to be launching the Daisy program to look at that combo and we're hoping that that'll being deeper, more durable remissions for patients as we bring those new mechanisms together.

We're looking at nipple.

Either a monotherapy.

Combined with a precision medicine strategy or is a combination for a broad here broad population.

Where we aim to combine with the anti TNF agent and we see those two mechanisms as being very complementary reducing the levels of auto antibodies.

With their boat and then inhibiting inflammatory. Mechanisms with a TNF the. So called Daisy study the phase two is. Your way now we will test that combination.

Mechanisms with a TNF the. So called Daisy study the phase two is. Your way now we will test that combination.

So called Daisy study the phase two is. Your way now we will test that combination.

Your way now we will test that combination.

In general has been the way we're looking at already not only for example, what other.

Agents in our pipeline, where we see the.

future being mono therapies that are targeted in a precision medicine way or broad therapies with greater combos that can bring together synergistic mechanisms in a safe way. We're excited to be launching the Daisy program to look at that combo, and we're hoping that will bring deeper, more durable remissions for patients as we bring those new mechanisms together.

We're excited to be. Launching a program to look at that combo. And. We're hoping that that will bring deeper more durable remissions for patients. As we bring those new mechanisms together.

Launching a program to look at that combo. And. We're hoping that that will bring deeper more durable remissions for patients. As we bring those new mechanisms together.

And. We're hoping that that will bring deeper more durable remissions for patients. As we bring those new mechanisms together.

We're hoping that that will bring deeper more durable remissions for patients. As we bring those new mechanisms together.

As we bring those new mechanisms together.

Operator: Thank you next question is coming from Joanne Wuensch from Citibank. Your line is now live.

Joanne K. Wuensch: Good morning and thank you for taking the questions. Is it possible to give us a little bit more detail on a couple of things? You mentioned headwinds from BVP and I'm just curious if there's A, a way to quantify it and, B, a way to say if it's at least better or worse or the same as it has been the last couple of quarters? And then similarly, in other aspects of China, we've been hearing a lot about anti corruption policies etcetera, if you could comment on that, that'd be great. Thank you.

Is it possible to do.

Give us a little bit more detail on a couple of things.

And headwinds from our V P and I'm just curious if there's a way to quantify it and be a way to say, if it's at least better or worse or the same as it has been the last couple of quarters and then similarly in other aspects of China. We've been hearing a lot about anti corruption policies etcetera. If you could comment on that that'd be great. Thank you.

Joaquin Duato: Thank you Joanne. First, let me say that China for us is a key market and a market in which we are delivering growth now and we are going to continue to deliver strong growth into 2024. So it is a key growth driver for us. So on one hand, certainly BVP represents a headwind in price and on the other hand, it also represents an opportunity as you can expand quality products, medical technologies into more patients. So there are a number of Med Tech platforms now currently undergoing BVP headwinds: electrophysiology, spine, trauma, endocutters of energy on these effects will last during 2023 and part of 2024. We have already anniversaried our large [inaudible] BVP. So at this point, we have about 80% of our platforms that have been already affected by BVP. Again, as we look into 2024, we expect to continue to deliver strong growth in China, and China remaining a key part of our growth.

Delivering our growth now and we are we are going to continue to deliver strong growth into 2024. So it is a key growth driver for us. So on one hand, certainly pvp represent a headwind.

In price on on the other hand. It also represents an opportunity as you can expand widely T. <unk> medical technologies into into more patients. So they got out of a number of med Tech platforms. Now currently undergoing V. P headwinds electrophysiology spine trauma and cut those type of energy on these effects are we. Lost during 2023 and part of 'twenty 'twenty four we have already Anniversaried now what large joins Pvp. So at this point, we have about 80% of our platforms that have been already affected might be BP.

<unk> medical technologies into into more patients. So they got out of a number of med Tech platforms. Now currently undergoing V. P headwinds electrophysiology spine trauma and cut those type of energy on these effects are we. Lost during 2023 and part of 'twenty 'twenty four we have already Anniversaried now what large joins Pvp. So at this point, we have about 80% of our platforms that have been already affected might be BP.

Lost during 2023 and part of 'twenty 'twenty four we have already Anniversaried now what large joins Pvp. So at this point, we have about 80% of our platforms that have been already affected might be BP.

Again, as we look into 2024, we expect to continue to deliver strong growth in China, and China remaining a key part of our growth. When it comes to the question that you were asking in anti corruption side, we have a strong culture of compliance in our business. At this point, we may see some limitations related to physician and surgeon access but we have not seen any material impact in any part of our business due to that and we'll continue to monitor the situation. All in all, as I said, we continue to see China as a key driver of our growth and also as a key source of innovation moving into the future.

Again, as we look into 2024, we expect to continue to deliver strong growth in China, and China remaining a key part of our growth.

When it comes to the question that you were asking in anti corruption side, we have a strong culture of compliance in our business. At this point, we may see some limitations related to physician and surgeon access but we have not seen any material impact in any part of our business due to that and we'll continue to monitor the situation.

At this point, we may see some limitations related to physician on surgeon access like we have not seen any material impact in any part of our business due to that and we'll continue to monitor the situation all of it all. I said, we continue to see China as a key driver of our growth and also as a key source of innovation moving into the future.

All in all, as I said, we continue to see China as a key driver of our growth and also as a key source of innovation moving into the future.

I said, we continue to see China as a key driver of our growth and also as a key source of innovation moving into the future.

Operator: Thank you. Your next question is coming from [inaudible] from Guggenheim Securities. Your line is now live.

Unknown: Great. Thanks for taking my questions. I just wanted to maybe dive a little deeper into the immunology side. I appreciate the comments you made there already but for the quarter the performance was very strong for several of your products there, so I'm just curious if there are any sort of onetime items there that we should be aware of? It sounded like there's a lot of patient mix and market growth users commenting on that. I'm curious if you can just highlight [inaudible] or if there's one time pricing adjustment that we should take into account as we look at future quarters. Thank you.

I appreciate the comments you made there already but the for the quarter. The performance was very strong for several of your products. There. So I'm just curious if there are any sort of onetime items. There that we should be aware of it sounded like there's a lot of. Ah patient mix and market growth figures are commenting on that I'm curious if you can just highlight again English for stocking or sort of one time pricing adjustment that we should take into account as we look at future quarters. Thank you.

Ah patient mix and market growth figures are commenting on that I'm curious if you can just highlight again English for stocking or sort of one time pricing adjustment that we should take into account as we look at future quarters. Thank you.

Joaquin Duato: Thank you. We are very pleased with the performance of our immunology business, especially we're pleased with the performance of TREMFYA with a 25.1% growth in the quarter, which shows our ability to drive growth there. As I said before, TREMFYA currently is now indicating psoriatic arthritis and psoriasis as an analog in the case of Este Lauder that represents about 25% of the sales, so with the upcoming

Fire with a 25, 1% growth in the quarter. Which so we saw what are our ability to drive growth there as I said before that and fight yet currently used now indicated in Psoriatic arthritis, and psoriasis are assigned analog in the case of Este Lauder that represents about 25% of the sales so with the upcoming.

Which so we saw what are our ability to drive growth there as I said before that and fight yet currently used now indicated in Psoriatic arthritis, and psoriasis are assigned analog in the case of Este Lauder that represents about 25% of the sales so with the upcoming.

read out, filing, and potential approvals of [inaudible] colitis and Crohn's disease, we expect to have significant growth even in TREMFYA. We talked about the TREMFYA as a $5 billion product earlier in our Analyst Day in 2021, now you can see clearly that we are going not only to meet that but clearly exceed that benchmark for TREMFYA. So when it comes towards the latter, we had also a very robust growth of close to 16%. In that case, there is a prior period adjustment in the quarter a year ago that represents about 600 basis points. So you should take that into consideration when you think about the Este Lauder growth. We are very pleased overall as I said with our immunology portfolio. Overall, our portfolio in the quarter grew to 12.4%, which is pretty strong considering that we also have the headwinds there of REMICADE biosimilars. We remain very excited about the immunology portfolio as a key driver for J&J.

read out, filing, and potential approvals of [inaudible] colitis and Crohn's disease, we expect to have significant growth even in TREMFYA.

We talked about the TREMFYA as a $5 billion product earlier in our Analyst Day in 2021, now you can see clearly that we are going not only to meet that but clearly exceed that benchmark for TREMFYA. So when it comes towards the latter, we had also a very robust growth of close to 16%. In that case, there is a prior period adjustment in the quarter a year ago that represents about 600 basis points. So you should take that into consideration when you think about the Este Lauder growth. We are very pleased overall as I said with our immunology portfolio. Overall, our portfolio in the quarter grew to 12.4%, which is pretty strong considering that we also have the headwinds there of REMICADE biosimilars. We remain very excited about the immunology portfolio as a key driver for J&J.

Seed that benchmark Portland fire. So when it comes towards the latter we had also a very robust growth of close to 16% in that case. There is a prior period adjustment in that in the quarter a year ago that represents about 600 basis points. So you should take that into. Consideration when you think about the Este Lauder growth. We are very pleased overall as I said with our immunology portfolio overall, what anymore. All your portfolio in the quarter grew to 44%, which is pretty strong considering that we also have the headwinds that are well thought out Amy gate Biosimilars are we. We remain very excited about the MRO you portfolios I keep it I bet for J&J.

Consideration when you think about the Este Lauder growth. We are very pleased overall as I said with our immunology portfolio overall, what anymore. All your portfolio in the quarter grew to 44%, which is pretty strong considering that we also have the headwinds that are well thought out Amy gate Biosimilars are we. We remain very excited about the MRO you portfolios I keep it I bet for J&J.

We remain very excited about the immunology portfolio as a key driver for J&J. our innovative medicines are going to be bringing significant improvements there in IBD with TREMFYA [inaudible] but also staying there we have our targeted oral peptide, which is going to be presenting some data soon that we already presented that data in psoriasis. And also we have the combination of [inaudible] in IBD which has presented also groundbreaking results, so very encouraged about our immunology portfolio and the ability to drive growth in the second half of the decade more to be seen in our EBR later in the year.

We remain very excited about the MRO you portfolios I keep it I bet for J&J.

our innovative medicines are going to be bringing significant improvements there in IBD with TREMFYA [inaudible] but also staying there we have our targeted oral peptide, which is going to be presenting some data soon that we already presented that data in psoriasis. And also we have the combination of [inaudible] in IBD which has presented also groundbreaking results, so very encouraged about our immunology portfolio and the ability to drive growth in the second half of the decade more to be seen in our EBR later in the year.

And also we have the combination of which they'll come up. I'm, calling them up in IBD and witchcraft presented also groundbreaking to be felt so very encouraged about our hemophilia portfolio and the ability to drive growth in the second half of the decade more to be seen in our E. B later in the year.

I'm, calling them up in IBD and witchcraft presented also groundbreaking to be felt so very encouraged about our hemophilia portfolio and the ability to drive growth in the second half of the decade more to be seen in our E. B later in the year.

Operator: Thank you. Our next question is coming from Daniel Antalffy from UBS. Your line is now live.

Danielle J. Antalffy: Hey, good morning everyone. Thanks so much for taking the question. Ahmet, I wanted to actually bring you into the conversation here and ask about some of the innovation in Med Tech. And specifically you guys have Ottava day coming up and just curious what you can say about A, what we can expect to see, obviously appreciating you are not going to totally open the kimono and front run the day, but B, and probably most importantly, sort of where you see Ottava ultimately fitting into the robotics landscape and helping contribute to a continued move them higher on robotics penetration? Thanks so much.

expect to see, obviously appreciating you are not going to totally open the kimono and front run the day, but B, and probably most importantly, sort of where you see Ottava ultimately fitting into the robotics landscape and helping contribute to a continued move them higher on robotics penetration? Thanks so much.

On the day, but he and probably most importantly sort of where you see ottava ultimately fitting into the robotics. Escape and helping contribute to our continued move them higher. Higher on robotics penetration based on that.

Escape and helping contribute to our continued move them higher. Higher on robotics penetration based on that.

Higher on robotics penetration based on that.

Ahmet Tezel: First of all, thank you for the question. Similar to John, this is my first call as well, so really excited to be here, equally excited to be leading a team of talented scientists, engineers, and physicians as we draw smarter, less invasive, and more personalized solutions for our patients. So with respect to Ottava, we have made great progress on the platform. The team is really focused on combining a really differentiated architecture based on its software and hardware together with our best-in-class instruments. And we believe that combination of a differentiated architecture with instruments is going to enable us to have high value from day one. Now we will more updates on Ottava next month, as you mentioned. And at that time we will provide a lot more detail. But the one point I'll make is that even today, robotic assistant surgery penetration is in single digits so there's still a lot of growth left in that segment and we're really excited because Ottava brings a differentiation so we are excited that we can make it big, we can open our path and grow in that segment as well.

More personalized solutions for our patients so with respect to ottava, we have made great progress on the platform. The team is really focused on combining it really differentiated architecture based on its software and hardware together with our best in class instruments, and we believe that combination. If a differentiated architecture with instruments is going to enable us to have high value from day, one and now we will have more updates on top of next month as you mentioned and at that time, we will provide a lot more detail, but the one point I'll make is that even today robotic oh. The surgery penetration is in single digits. So there's still a lot of growth left in that segment and we're really excited because we'll talk about brings a lot of differentiation. So we are very excited about we can make a big kind of path. We can open our path and growth there in that segment as well.

If a differentiated architecture with instruments is going to enable us to have high value from day, one and now we will have more updates on top of next month as you mentioned and at that time, we will provide a lot more detail, but the one point I'll make is that even today robotic oh. The surgery penetration is in single digits. So there's still a lot of growth left in that segment and we're really excited because we'll talk about brings a lot of differentiation. So we are very excited about we can make a big kind of path. We can open our path and growth there in that segment as well.

The surgery penetration is in single digits. So there's still a lot of growth left in that segment and we're really excited because we'll talk about brings a lot of differentiation. So we are very excited about we can make a big kind of path. We can open our path and growth there in that segment as well.

Joaquin Duato: Danielle, if I may interject here on Ottava, I've been in touch with multiple surgeons around the world and one common comment that I find is that they all want, they are all rooting for Johnson & Johnson to come into the robotic surgical space. They want to have the service and the support that they have been accustomed doing decades with our ethicon business and they also want to be able to utilize the advanced instruments with whom they have grown. So what I see in the surgical space is that the surgeons want to have alternatives and they are all looking forward to having Johnson & Johnson play an important role in robotic surgery.

Service and the support that they have been accustomed doing decades, with our ethicon business and they also want to be able to utilize that months instruments with whom they have grown so what I see in the surgical space is that the surgeons want to have alternatives and they are all looking forward to having Johnson and Johnson. Play an important role in robotic surgery.

Play an important role in robotic surgery.

Jessica Moore: Thank you, Danielle. We have time for one last question.

Operator: Thank you. Our final question today is coming from Louise Chen from Cantor Fitzgerald. Your line is now live.

Louise Alesandra Chen: Hi, thanks for taking my question. I wanted to ask you on the Floris 2 results, if they impacted at all your thinking on your market opportunity for MARIPOSA and why or why not? Thank you.

John C. Reed: I don't think it influences because it's really important to pay attention, not only to progression free survival, but also overall survival as well as the PFS2, the survival in the second line of therapy. Unfortunately, with today's therapies, almost all lung cancer patients will eventually relapse, they will need a second line therapy, and we think chemo is best reserved for that circumstance where the patient now has failed the frontline targeted therapies. So I would really say pay attention to overall survival, pay attention to that progression pre-survival two endpoint because these are going to be I think really things that matter in terms of what the long term outcome is for patients with EGF receptor mutant lung cancer. We believe based on the data we'll present in the presidential session at ESMO that the combination of RYBREVANT, our biospecific antibody, first biospecific ever approved for a solid tumor indication incidentally, fully human, as well as the third generation small molecule oral EGF receptor LAZERTINIB, which is brain penetrant I remind, we believe that that will become the new frontline standard of care for EGF receptor mutant lung cancer and offer patients durable remissions that are achieved in a chemo free regimen.

As well as the PFS to the survival in the second line of therapy. Unfortunately, with today's therapy use almost all of lung cancer patients will eventually relapse. They will need a second line therapy, and we think chemo is best reserved for that circumstance, where the patient now has failed the frontline targeted therapies. So I would really say pay attention to overall survival pay attention to that progression pre U. Survival too.

Unfortunately, with today's therapy use almost all of lung cancer patients will eventually relapse. They will need a second line therapy, and we think chemo is best reserved for that circumstance, where the patient now has failed the frontline targeted therapies. So I would really say pay attention to overall survival pay attention to that progression pre U. Survival too.

Survival too.

Because you know these are going to be I think really things that matter in terms of what the long term outcome is for patients with EGF. <unk> mutant lung cancer. We we used it we believe based on the data will present in the presidential session at ESMO that. The combination of rubber band or Bispecific antibody, but first bispecific ever approved for a solid tumor indication incidentally fully human. As well as the third generation small molecule oral EGF receptor losers. Which is brain penetrant I remind we believe that that will. Become the new frontline standard of care for EGF receptor mutant lung cancer. And offer patients. Durable remissions, but are achieved in a chemo free regimen.

<unk> mutant lung cancer. We we used it we believe based on the data will present in the presidential session at ESMO that. The combination of rubber band or Bispecific antibody, but first bispecific ever approved for a solid tumor indication incidentally fully human. As well as the third generation small molecule oral EGF receptor losers. Which is brain penetrant I remind we believe that that will. Become the new frontline standard of care for EGF receptor mutant lung cancer. And offer patients. Durable remissions, but are achieved in a chemo free regimen.

We we used it we believe based on the data will present in the presidential session at ESMO that. The combination of rubber band or Bispecific antibody, but first bispecific ever approved for a solid tumor indication incidentally fully human. As well as the third generation small molecule oral EGF receptor losers. Which is brain penetrant I remind we believe that that will. Become the new frontline standard of care for EGF receptor mutant lung cancer. And offer patients. Durable remissions, but are achieved in a chemo free regimen.

The combination of rubber band or Bispecific antibody, but first bispecific ever approved for a solid tumor indication incidentally fully human. As well as the third generation small molecule oral EGF receptor losers. Which is brain penetrant I remind we believe that that will. Become the new frontline standard of care for EGF receptor mutant lung cancer. And offer patients. Durable remissions, but are achieved in a chemo free regimen.

As well as the third generation small molecule oral EGF receptor losers. Which is brain penetrant I remind we believe that that will. Become the new frontline standard of care for EGF receptor mutant lung cancer. And offer patients. Durable remissions, but are achieved in a chemo free regimen.

Which is brain penetrant I remind we believe that that will. Become the new frontline standard of care for EGF receptor mutant lung cancer. And offer patients. Durable remissions, but are achieved in a chemo free regimen.

Become the new frontline standard of care for EGF receptor mutant lung cancer. And offer patients. Durable remissions, but are achieved in a chemo free regimen.

And offer patients. Durable remissions, but are achieved in a chemo free regimen.

Durable remissions, but are achieved in a chemo free regimen.

Jessica Moore: Thank you and thanks to everyone for your questions and your continued interest in our company. We apologize to those that we couldn't get to because of time, but don't hesitate to reach out to the investor relations team with any remaining questions you may have. I will now turn the call back to Joaquin for some brief closing remarks.

Joaquin Duato: Thank you Jess and thank you to all of you for joining us today. I'm proud to present today the company's performance. This is the first quarter that we reported our new J&J focus in healthcare innovation, in Med Tech and in pharmaceuticals and I believe this new J&J has a better foundation to continue to drive growth for the next decades. We are achieving strong results in 2023 with our 7.5% adjusted operational growth in the quarter. It's the second quarter in a row that we have a beat and raise of our guidance and we continue to believe that we're going to have a very strong finish into 2023 and that treats well for a strong 2024 too.

Neogen J full course in getting novation emit tick on even pharmaceuticals and I believe these these new Indy has a better foundation to continue to drive growth. For the next decades. We are achieving strong results in 'twenty to 'twenty, three with our seven 5%. Adjusted operational growth in the quarter is the second quarter. The net ROE that we have about a beat and raise of our guidance and we continue to believe that we're going to have a very strong finish into 'twenty. Two 'twenty three on that that treats well for a strong 2024 to <unk>.

For the next decades. We are achieving strong results in 'twenty to 'twenty, three with our seven 5%. Adjusted operational growth in the quarter is the second quarter. The net ROE that we have about a beat and raise of our guidance and we continue to believe that we're going to have a very strong finish into 'twenty. Two 'twenty three on that that treats well for a strong 2024 to <unk>.

We are achieving strong results in 'twenty to 'twenty, three with our seven 5%. Adjusted operational growth in the quarter is the second quarter. The net ROE that we have about a beat and raise of our guidance and we continue to believe that we're going to have a very strong finish into 'twenty. Two 'twenty three on that that treats well for a strong 2024 to <unk>.

Adjusted operational growth in the quarter is the second quarter. The net ROE that we have about a beat and raise of our guidance and we continue to believe that we're going to have a very strong finish into 'twenty. Two 'twenty three on that that treats well for a strong 2024 to <unk>.

We have a dedicated team, both in innovative medicines and in Med Tech and we think we are very well positioned as I said to carry the momentum that you're seeing in 2023 into 2024. Finally, we are looking forward to engaging all of you at our enterprise business review on December 5th. Thank you very much and enjoy the rest of your day.

We have a dedicated team, both in innovative medicines and in Med Tech and we think we are very well positioned as I said to carry the momentum that you're seeing in 2023 into 2024.

Finally, we are looking forward to engaging all of you at our enterprise business review on December 5th. Thank you very much and enjoy the rest of your day.

This business review on December the fifth thank you very much and enjoy the rest of your day.

Operator: Thank you. This concludes today's Johnson & Johnson's third quarter 2023 earnings conference call. You may now disconnect.

Yeah.

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