Johnson & Johnson

JNJ reported Q1 2024 revenue of $21.4 billion, up 2.3% operationally, with the Innovative Medicine segment growing about 8% driven by Darzalex for multiple myeloma and Erleada for prostate cancer. They raised full-year guidance slightly but the MedTech segment came in softer than expected due to macro pressure in China.

Nipocalimab, the FcRn antibody they got through the Momenta acquisition, could be a sleeper hit across multiple autoimmune indications including hemolytic disease of the fetus and myasthenia gravis. The autoimmune pipeline beyond the obvious Tremfya and Stelara replacement candidates is deeper than most analysts model.

The FDA accepted JNJ's supplemental BLA for Rybrevant plus Lazclubenib combination therapy in EGFR-mutated non-small cell lung cancer with a PDUFA date set for later this year. This combo targets a patient population that progresses on osimertinib and represents a significant unmet need in thoracic oncology.

Carvykti CAR-T therapy for multiple myeloma just got an earlier line label expansion and the manufacturing capacity constraints are finally easing up through the Legend Biotech partnership. This is a potential multi-billion dollar franchise and it's barely in the revenue run rate right now.

The MedTech segment is quietly becoming a monster — Abiomed heart pumps, Shockwave Medical intravascular lithotripsy, and the Ottava robotic surgery system coming to market are all high-margin, high-moat plays. Wall Street still prices this like a sleepy pharma holdco but the surgical robotics race is heating up and JNJ is better positioned than most give credit for.

The talc litigation overhang is NOT resolved. The third attempt at a Texas two-step bankruptcy for the LTL Management subsidiary was rejected again and JNJ is back in regular tort court facing tens of thousands of claimants. Legal liability estimates keep creeping higher and nobody really knows the ceiling.

How does JNJ's MedTech compete against Medtronic and Stryker in the orthopedics space long term? I know they have DePuy Synthes for hips and knees but Stryker's Mako robotic platform seems to be winning hospital contracts at a faster pace.

It's interesting to watch JNJ navigate the transition from its historical triple-segment identity to a focused pharmaceutical and medical device company. The question is whether institutional investors who held it for the defensive consumer health exposure will rotate out now that Kenvue is a separate entity.

Post-Kenvue spinoff JNJ is essentially a pure pharma and MedTech company now, which sounds cleaner but it also means there's no more consumer health segment acting as a ballast during pharma downturns. The diversification story that justified a premium multiple for decades is gone.

Does anyone have a view on how the Inflation Reduction Act Medicare drug price negotiation affects JNJ specifically? Stelara is one of the ten drugs selected for the first round of negotiations and it's still doing like $2.5B a quarter — that's a real revenue cliff to manage.