Johnson & Johnson

Good morning and welcome to Johnson & Johnson's first quarter 2025 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 would 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 first quarter of 2025 and our updated 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 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 2024 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. John Reed, our Executive Vice President, Innovative Medicine R&D, will highlight recent data from select assets. I will then review the first quarter sales and P&L results. Joe Walk, our CFO, will then close by sharing an overview of our cash position, capital allocation priorities, and guidance for 2025. Jennifer Taubert, Executive Vice President, Worldwide Chairman, Innovative Medicine, And Tim Schmid, Executive Vice President, Worldwide Chairman, MedTech, will be joining us for Q&A. To ensure we provide enough time to address your questions, we anticipate the webcast will last slightly over 60 minutes. With that, I will now turn the call over to Joaquin.

Thank you, Jess, and hello, everyone. In the first quarter, we delivered strong operational sales growth of 4.2% across our business. Our Q1 performance reinforces my confidence in our 2025 guidance and reflects the strength of Johnson & Johnson's uniquely diversified business, with year-over-year sales increases in both our innovative medicine and medtech sectors. No other healthcare company has delivered growth through the first year of losing exclusivity for a multi-billion dollar product. In our case, Stellara. And yet, that is exactly what we are doing. Our resiliency is a testament to what makes us unique. We are not just a pharmaceutical company or a medtech company. We are a healthcare company, innovating across the full spectrum of disease. Our consistent, strong performance is a testament to our capabilities across commercial, R&D and supply chain. It is also a reflection of our strength in execution, which you can see in our quarterly results. We have described 2025 as a catalyst year. It is a year that will set us up for accelerated growth through the second half of the decade and beyond. In Q1, the power of our portfolio and pipeline was on full display. In innovative medicine, we delivered 4.2% operational sales growth despite an approximate 810 basis points headwind from Stellara, with 11 key brands growing double digits. With our third consecutive quarter of sales above $3 billion, Darzalex continues to set the standard in multiple myeloma with another quarter of over 20% growth. In fact, just last week, we expanded our Darzalex indication in Europe with the approval of a Darzalex-based quadruplet regimen for patients with newly diagnosed multi-myeloma regardless of transplant eligibility. It is further proof of the impact of this medicine, which together with Carvicti, Talve and Tecvali, is changing the conversation from treating to progression to treating to cure. Other significant oncology portfolio advancements in Q1 included Phase III data presented at ELCC last month showing ribobin plus lasclus extended overall survival by more than one year versus the current standard of care in first-line EGFR-mutated lung cancer. And last week, the European Commission approved subcutaneous ribramant in combination with Las Cruz for the treatment of EGFR-mutated non-small cell lung cancer. This was an important milestone for patients as subcutaneous ribramant reduces administration time from hours to minutes. Our aspiration is for RibraBand plus Lasclus to become the new standard of care for these patients, and you can see our progress in Q1. In immunology, we're seeing the impact of Trenfaya's entry into inflammatory bowel disease, with our launch in ulcerative colitis helping accelerate operational sales growth to 20%. And with our recent FDA approval in Crohn's disease, I'm more confident than ever that this blockbuster drug will become the gold standard for IBD patients and a $10 billion plus product. Turning to Medtech, in Q1, we delivered 4.1% operational sales growth with strong performance in our recently acquired cardiovascular businesses, AvioMed and Shockwave, as well as in surgical vision and wound closure. In addition to their contribution to Medtech growth, AvioMed and Shockwave continued to meet deal model expectations and both announced important portfolio milestones this quarter. These included updates to the American College of Cardiology and American Heart Association guidelines for our Impella heart pump, which based on evidence from the Danger Shock Trial was upgraded from Class 2B to Class 2A. And in Shockwave, the team launched the first of its kind Javelin Peripheral IVL catheter for the treatment of difficult-to-cross lesions in peripheral artery disease. In electrophysiology, we resumed U.S. body pulse cases, and to date, we have completed more than 5,500 cases globally. Turning to surgery, we recently announced we have started OTAVA clinical trials with a procedure that supports submission for U.S. FDA de novo in general surgery with an indication for multiple upper abdomen procedures. This is an important milestone as we continue to strengthen our presence in robotic surgery. Beyond our existing portfolio and pipeline, we also fortified our leadership as an innovation powerhouse with two major announcements. In March, we announced our commitment to invest more than $55 billion in the U.S. over the next four years in manufacturing, R&D, and technology. This represents a 25% increase in investment compared to the previous four years. It builds upon the company's already elevated commitment to the U.S. economy while expanding our capacity to manufacture next-generation medicine and devices for patients in America and around the world. The investment includes four planned new manufacturing facilities, the first of which broke ground last month in North Carolina. And at the beginning of April, we announced the completion of our acquisition of intracellular therapies, which extends Johnson & Johnson's industry-leading portfolio in central nervous system disorders. With the addition of Cablita, we have expanded our lineup of therapies with at least $5 billion plus potential in peak year sales, further solidifying sales growth above analyst expectations now through the rest of the decade. Turning to the Talc bankruptcy ruling. As we shared a few weeks ago, we will return to the tort system where we expect continual success in litigating these meritless claims. In terms of next steps, we will immediately pursue our motions pending in the multi-district litigation to exclude plaintiff's experts known as the Daubert Challenge. And finally, as announced this morning, we increased our dividend for the 63rd consecutive year, which we know is important to our shareholders. We have a strong start to 2025, and I'm looking forward to sharing many more successes throughout the year. Recognizing that there have been many important milestones and data readouts in the quarter, I will now pass the call to John Reed for an innovative medicine R&D update.