Johnson & Johnson

Good morning and welcome to Johnson & Johnson's second 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 will now turn the conference call over to Johnson & Johnson. You may begin.

Hello, everyone. This is Darren Snellgrove, Vice President of Investor Relations for Johnson & Johnson. I am excited to be here today and to lead the investor relations team moving forward. Welcome to our 2025 second quarter review of business results and updated financial outlook. First, a few logistics. As a reminder, today's presentation and associated schedules are available 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 Duato, our Chairman and CEO, will discuss our business performance and key catalysts. I will then review the second quarter's sales and P&L results. Joe Wolk, our CFO, will then close by sharing an overview of our cash position and guidance update for 2025. Jennifer Talbot, Executive Vice President, Worldwide Chairman, Innovative Medicine, John Reed, Executive Vice President, Innovative Medicine Research and Development, and Tim Schmidt, 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 approximately 60 minutes. With that, I will now turn the call over to Joaquin.

Thank you, Darren, and hello, everyone. I'm excited to talk about our very strong second quarter. Today's results showcase the strength of our uniquely diversified business as the only major healthcare company operating in both the medtech and innovative medicine sectors. In the second quarter, we delivered operational sales growth of 4.6% across our business. In innovative medicine, we reported 3.8% operational sales growth delivering more than $15 billion in quarterly sales for the first time. No other healthcare company has grown through the loss of exclusivity of a multi-billion dollar product in the first year. In our case, Stellara. And yet, that is exactly what we are doing, and for the second quarter in a row. Our performance was driven by double-digit growth across 13 brands, including Darsalex, Carvicti, Tecvali, and Talve, as well as Ribraman plus Lasclus, Trenfaya, Caplita, and Spravato. And in MedTech, we delivered 6.1% operational sales growth with particularly strong momentum in cardiovascular surgery and vision. Based in our strong performance in the quarter, we are pleased to raise our full-year sales guidance by $2 billion and EPS guidance by 25 cents from $10.60 to $10.85. Results like these are a direct result of our deep and resilient portfolio. It's what makes Johnson & Johnson unique. Today, we'll focus on the remarkable ways we are driving innovation and creating value for patients and shareholders. We'll highlight the depth of our portfolio and pipeline, focusing on six areas of unmet need and where we are delivering significant growth. Oncology, immunology, neuroscience, cardiovascular, surgery, and vision. These are spaces where we are moving the conversation from treatment to cure and where we are extending and improving lives in meaningful ways. Let's start with innovative medicine and oncology where we have a bold vision to eliminate cancer. Our leading products for the treatment of blood cancers and solid tumors are built from on cutting-edge scientific platforms that are transforming outcomes for patients. With more than 10 products in market across 26 approved indications and over 25 treatments in late-stage development, we expect to become the number one oncology company by 2030 with sales of more than $50 billion. And when you look at our quarterly results in oncology, with operational sales growth of 22.3%, you can see that we are well on our way to achieving that. I'll draw your attention to three key areas of Q2 progress. First is multiple myeloma, where we have treatments in every line of therapy. Approximately 80% of myeloma patients today receive a Johnson & Johnson medicine at some point in their treatment journey. And in Q2, we presented several important sets of data. They include new five-year data showing a single treatment of our CAR-T therapy, CARVIC-T, has the potential to deliver long-term remission. We also presented the first data from our investigational tri-specific antibody, which showed an unprecedented 100% overall response rate in heavily pretreated patients. With results like this, we are closer than ever to our ambition of curing multiple myeloma. Second is lung cancer, where our chemotherapy-free combination of Ribraman plus Lasclus has a projected overall survival of at least a year over the current standard of care in frontline non-small cell lung cancer with EGFR gene mutations. Intent to prescribe continues to grow among healthcare professionals, which you can see in our strong quarterly sales. This is a life-changing advancement for patients, and one we are building on with a pipeline of novel therapies. And third is bladder cancer, where we are excited to share that we have received FDA priority review for TAR200, a first-of-its-kind drug-releasing system. We anticipate launching TAR200 for high-risk, non-muscle invasive bladder cancer later this year, a transformational product that harnesses our unique expertise in both innovative medicine and medtech. We expect TAR200 to generate at least $5 billion in annual peak year sales. In immunology, We have a 25-year legacy of redefining the standard of care and we are just getting started. With six products in market across 14 approved indications and many treatments in late stage development, we are expanding treatment options for patients and restoring health for millions of people around the world. From Remicade and Sympony to Stellar and Trenfaya, and now exploring targeted oral peptides and future combinations, the growth potential of our immunology portfolio and pipeline continues to be significant. For immunology, I will draw your attention to two key areas of Q2 progress. First is Trenfaya, which has recently expanded into inflammatory bowel disease. Trenfaya grew 30% in the quarter. With strong uptake in Crohn's disease and ulcerative colitis, we expected to generate at least $10 billion annually in peak year sales. We also made important progress in our pipeline in Q2 and expect to file icotroquinra with the FDA in the third quarter as the first targeted oral peptide to selectively block the IL-23 receptor with similar efficacy to a biologic. As a once-a-day pill, this molecule has the potential to set a new standard in the treatment of plaque psoriasis and we look forward to sharing more in the coming months. In neuroscience, we are building on a 70-year legacy and expect to be the number one company by the end of the decade. We are pushing boundaries in diseases like schizophrenia, depression, and Alzheimer's, which together affect one in eight people worldwide. In Q2, Spravato grew 53%, delivering sustained double-leaded growth and demonstrating the power of this medicine for patients living with difficult-to-treat depression. We also completed the acquisition of intracellular therapies this quarter. Intracellular Scapulita is approved to treat adults with schizophrenia and bipolar depression, and we are excited about the anticipated major depressive disorder approval later this year. With the addition of Caplita, we now have five neuroscience products in market across six approved indications and eight treatments in late stage development. Caplita adds to Johnson & Johnson's robust lineup of therapies with $5 billion plus potential in peak year sales, and further solidifies sales growth above analyst expectations through the rest of the decade. Turning to MedTech and in cardiovascular specifically, we are leaders in heart recovery, circulatory restoration, and electrophysiology. Cardiovascular has some of the largest unmet needs in healthcare and is one of the fastest growing spaces in MedTech. In Q2, we delivered over 22% operational sales growth over the quarter, driven by new product performance in a biomed, shockwave, and strength in mapping in electrophysiology. Today, we're a leader in four of the largest and highest growth medtech segments within cardiovascular intervention, impacting more than 1 million patients each year. Now, let me highlight three areas of important progress from Q2. First is electrophysiology, which delivered close to 10% operational sales growth over the quarter, driven by new product performance and strength in mapping. We have now completed more than 10,000 body pulse cases globally, with a reported neurovascular event rate of less than 0.5%. consistent with published rates across other PFA platforms. Second, we continue to advance a suite of cardiovascular solutions to expand our market leadership, including our dual-energy ThermoCool SmartTouch SF catheter, where we performed our first cases in Europe this quarter. It also includes Omnipulse, where we presented strong early data that will expand our portfolio of tools for safe and streamlined ablation procedures. Third is ShowWave's unique intravascular lithothripsy technology, or IDL. which has transformed the treatment of atherosclerotic cardiovascular disease and is driving significant growth. ShowWave is expected to be our 13th billion dollar medtech platform by the end of the year, a position that is further strengthened by a compelling body of evidence on the benefits of this technology. This includes data showing an IVL-first approach can achieve excellent outcomes in female patients with complex calcified coronary artery disease. In surgery, we have spent 140 years advancing the standard of care, and today our surgical technologies are used in most operating rooms around the world. Q2 highlights include the introduction of the Ethicon 4000 surgical stapler, the newest advancement in our surgical portfolio. Featuring advanced stapling technology and reloads, the Ethicon 4000 minimizes surgical leaks and bleeding, which are common and costly surgical complications for patients and hospitals. This advanced stapling technology will be harnessed for future use exclusively on the Otava robotic surgery system. And as mentioned on a warning call in April, Otava completed its first clinical cases, gastric bypass surgeries performed in Houston. In our conversations with surgeons who have spent time on Otava, they tell us that they are eager for the system's sophisticated architecture, design features like twin motion, the surgeon-entrusted Ethicon advanced instrumentation only available in Otava, and the future connection to our open digital ecosystem, Polyphonic. We plan to submit for an FDA de novo approval next year. And finally, vision, where we have a deep legacy in developing transformational innovation. With quarterly growth of 4.6% across the business and 8.9% in surgical vision, the portfolio has a robust growth trajectory driven by our Acuvue Oasis Max one-day family of contact lenses and our Technis Odyssey and Technis Pure-C intraocular lenses. and with the Q2 release of the first disposable multifocal lenses for people with astigmatism, we have high expectations. You know, few other healthcare companies can talk about their impact across as many high-growth areas as Johnson & Johnson, and none spanning both innovative medicine and medtech. These six examples are only a cross-section of our cutting-edge portfolio. This depth and breadth is who we are at Johnson & Johnson. It's how we grow through a major loss of exclusivity, how we have reinvented ourselves time and time again, and how we will deliver strong financial performance through the end of the decade and beyond. The bottom line is this. Johnson & Johnson's relentless focus on innovation yields results. Quarter after quarter, year after year. I will now turn the call back over to Dare.