Johnson & Johnson

Good morning and welcome to Johnson & Johnson's fourth quarter 2024 earnings conference call. All participants will be in 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, you may press star zero to reach the operator. I'd now like to turn the conference call over to Johnson & Johnson. You may begin.

Hello, everyone. This is Jessica Moore, Vice President of Investor Relations for Johnson & Johnson. Welcome to our company's review of business results for the fourth quarter and full year 2024 and our financial outlook for 2025. 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 the 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 2023 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, Joaquin DeWato, our chairman and CEO, will open with a few comments on our performance and key catalysts for the company. I will then review the fourth quarter sales and P&L results as well as full year 2024 results for the enterprise. Joe Walk, our CFO, will then close by sharing an overview of our cash position, capital allocation priorities, and guidance for 2025. Jennifer Taubert, John Reed, and Tim Schmid, our innovative medicine and medtech leaders, will be joining us for Q&A. To ensure we provide enough time to address your questions, we anticipate the webcast will last a little over 60 minutes. With that, I will now turn the call over to Joaquin.

Thank you, Jess, and good morning, everyone. 2024 was a year of progress and transformation for Johnson & Johnson. Today, we operate in a broad set of high unmet need, high growth, and high innovation segments, including oncology, immunology, and neuroscience in innovative medicine, and cardiovascular, vision, and robotics in medtech. In 2024, we continue to make disciplined decisions to exit lower-priority businesses while investing industry-leading amounts in our pipeline, approximately $50 billion in R&D and M&A in the last year, inclusive of the recently announced acquisition agreement with intracellular therapies, which I will speak about shortly. And while we have been through a period of transformation, the fundamentals of our company remain the same. Indeed, our enduring success is rooted in two things. First, we are a purpose-driven company guided by our credo. And second, we are broadly diversified, meaning that we can truly lead where medicine is going. No other company. has the span of expertise and capabilities that Johnson & Johnson has. No other company can impact the entire patient journey as we do. We are not just a pharma company or a medtech company. We are a healthcare company. And our strategies are disease-centric, focused on end-to-end solutions. Just think about multiple myeloma and the impact of Darzalex, Carvicti, Tecvali, and Talve. Think about heart recovery and the impact of a biomed's impeller heart pumps and the promise of V-Wave's minimally invasive interatrial shunt. Think about mental health and the impact of our Invega portfolio, Spravato, and the potential of the intracellular therapies acquisition we announced last week. And think about inflammatory bowel disease and the impact of Stellara and Trenfaya and the potential of our targeted oral peptide that blocks IL-23, Icotroquimra, and JNJ-4804, our co-antibody therapeutic targeting IL-23 and TNF. As the only major healthcare company focused both on pharmaceuticals and medical technology, we are unique in the industry with the financial muscle, global reach, and disease expertise to deliver the sustained high pace of growth and innovation that is the hallmark of Johnson & Johnson. The strategic decisions we made in 2024 position Johnson & Johnson for sustained growth through the second half of the decade and beyond and strengthen our confidence in our 2025 guidance. Now to the numbers for 2024. Over the full year, we delivered robust operational sales growth of 7%, excluding the COVID-19 vaccine. With Spravato surpassing $1 billion in annual sales, we now have 26 platforms that generate at least $1 billion in annual revenue. In innovative medicine, we reported a third consecutive quarter of sales exceeding $14 billion, with 10 key brands growing double-digit. Across the full year, we achieved strong growth in oncology, neuroscience, and pulmonary hypertension, with immunology performing well despite the entry of biosimilars for Stelara in the EU. Equally impressive is our pace of innovation, which in 2024 resulted in 27 approvals in major markets, including FDA approvals of TREMFAYA for the treatment of ulcerative colitis and RIBREVENT and LASCLUS for first-line treatment for patients with EGFR-mutated advanced non-small cell lung cancer. In 2024, we reported 18 positive readouts for registration studies, initiated 16 phase 3 studies, and submitted 49 filings across major markets. And as you have seen over the last three weeks, we are off to a fast start in 2025. Ribervan and Lasklus showed significant improvement in oral survival in first-line treatment of advanced or metastatic non-small cell lung cancer. We received FDA approval of Spravato as the first and only monotherapy for adults with treatment-resistant depression. We received priority review for nipocalima for the treatment of generalized myasthenia gravis in addition to the FDA breakthrough therapy and fast-track designations for other indications received last year. And last week, we announced a new drug application with the FDA for TAR200, our intravesical drug-releasing system for the treatment of non-muscle invasive bladder cancer, an area of significant unmet need impacting as many as 1 million patients per year. Turning to MedTech, and for the full year, we reported a second year of over $30 billion in sales, with growth across most parts of the business, including particularly strong momentum in cardiovascular and vision. Our pace of MedTech innovation also continues to accelerate, with 15 major products launched in 2024. Major highlights of the year include the approval of our BodyPulse pulse field ablation platform in several major markets and FDA clearance of our VELIS robotic-assisted solution for the use in unicompartmental knee arthroplasty procedures. as well as an expanded FDA indication for Impella Heart Pants to treat pediatric patients, and FDA clearance of Shockwave's Javelin peripheral IVL catheter for the treatment of tight, difficult-to-cross peripheral lesions. We also achieved the full market release of 10 major products, including the Shockwave E8 peripheral IVL catheter in the U.S., version 8 of the CARTO3 electro-anatomical mapping system, and our Technis Odyssey intraocular lens. And we progressed 18 clinical trial programs, including the IDE approval of our Octava robotic surgical system, which allows clinical trials to begin at US sites. And last year, we fortified our future by making significant value-creating investments in M&A, These investments enable us to further shift our portfolio to address unmet needs in high-growth and high-innovation markets. This included the acquisitions of Shockwave and B-Wave in Medtech and Ambrix Proteologics and the NM26 biospecific antibody in Innovative Medicine. And building on our nearly 70-year legacy in neuroscience, we announced last week plans to acquire Intracellular Therapies, a biopharmaceutical company focused on the development and commercialization of therapeutics for central nervous system disorders. This unique opportunity to add intracellular therapies reflects our commitment to transforming care and advancing research in mental health. It also further solidifies sales growth above analyst expectations now and through the remainder of the decade. Together, these transactions represent industry-leading levels of investment for the company, providing strategic, near, and long-term growth catalysts for Johnson & Johnson. Turning to 2025, and as previously guided back at the end of 2023, we expect to deliver operational sales growth of 3%, overcoming headwinds associated with U.S. biosimilar entries for Stellara and the impact of the Pardee redesign and continued macroeconomic pressures in China. Perhaps even more impressive, we are planning for adjusted operational earnings per share growth of nearly 9%. I cannot think of any other company that would be able to deliver growth through the first year of losing exclusivity of a multi-billion dollar product. We are able to achieve these results because of the diversification of our business. strength of our commercial assets, as well as the breadth of our pipeline with additional launches in 2025, including Trenfaya and IBD, Ribravan and Lasklus in lung cancer and body pulse, and the dual-energy ThermoCool SmartTouch SF catheter in electrophysiology. In closing, I want to thank everyone at Johnson & Johnson for all that they do to help patients. We are starting the year from a position of strength, and we have confidence in our sales growth and EPS guidance for 2025. And with that, I'll turn the call over to Jess.