Johnson & Johnson Aktie

All right. We are just about time, so we can get started with our next session. My name is Asad Haider. I'm the Co-Head of the Healthcare business unit here at Goldman Sachs and the U.S. pharma analyst. I'm very excited to be joined by Tom Cavanaugh, Group Company Chairman of North American Innovative Medicine over at J&J. Tom, thank you for being with us.

Thank you. Thanks for having me again.

Say again. So just maybe just to kick off, very exciting times for J&J. You have multiple new products sprouting across the Innovative Medicines business. Joaquin made some comments last week saying again that The Street is continuing to underappreciate a number of these new products, both on the immunology side as well as in oncology.

So before we start to unpack some of the specific products on which I have a number of questions I'm going to hit you with, maybe just make some high-level comments on what you've been most excited about.

Absolutely. Look, first and foremost, as we said last year and over the last year, STELARA was a thing of the past. We're going to grow through the loss of exclusivity of STELARA, something that many companies have not been able to do, their biggest asset and really look at that 5% to 7% compound annual growth rate over the next 5 years.

And we're well on track to really go for that upper end of that, I would say. Just looking at our Q1 results, we delivered $15.4 billion. It's our fourth quarter in a row, delivering over $15 billion. We had 7% growth. In the U.S., we had roughly 10% growth, and exclude STELARA, 17% growth operationally and in the U.S., 22%.

So we're really excited about the momentum that we have coming into 2026. It was described as last year as a catapult year, but this year, we said '26 is going to be better than '25 and '27 is going to be better than '26. And we're well on the way to do just that. I think, first and foremost, we had 10 products over double-digit growth in Q1. And some exciting product launches, which I know we'll get into.

So I'll maybe leave it to you to ask some questions, and we can go from there.

Well, let's go right into some of the exciting product launches. Starting with TREMFYA, it grew 64% in Q1 with leadership in new patient starts in IBD. We look at weekly scripts, the momentum seems to be continuing. So just give us an update on what you're seeing broadly speaking in terms of overall market dynamics and really where the share gains are coming from.

Yes, yes. So first and foremost, with TREMFYA. It's the only dual-acting IL-23. So it hits CD64 and IL-23. CD64 is the source of inflammation. Why I say it's very important. We like to say tissue is the issue. If you can penetrate that tissue and hit at that target, you're going to see differentiated results, and we are seeing that.

But if we just take a step back and we just think about IBD, we're just in the early phases of that launch. In IBD, the IL-23 class is the fastest-growing class in IBD, both in UC and CD. And I would say barely penetrated. So it's about 20% to 25% penetration.

So significant opportunity ahead of us in IBD and in psoriatic diseases, whether it be psoriasis, psoriatic arthritis, a little bit more penetration, but still the fastest-growing class. In IBD, we're the fastest-growing product in IBD. We are now the -- what we call the induction share leader in IBD with TREMFYA.

And we're just about a year into launch, full launch with both CD and UC. And I can tell you the excitement is really profound, and the team is executing across all measures. But I would say we're seeing the differentiation from our customers and from the uptake. A lot of it that we talked about in the highlight, a little bit of the molecular structure showing that results. It's the only with subcutaneous induction, both in UC and CD.

Highest endoscopic remissions in UC. And then just recently coming out of DDW, we're really excited about this new data with the FUZION trial. It's basically perianal fistulizing Crohn's disease, represents around 25% of the population. And it's a population that really is not getting treated by IL-23.

It's typically being treated by REMICADE because REMICADE is the only product 20 years ago that was demonstrated success in this population. So this is the first time product TREMFYA has shown to differentiate in this population, similar to the way REMICADE did, which we're quite familiar with. So we're really excited about that opportunity.

It really can untap there. It also leads to the differentiation why we're so excited and feel confident we're going to be over $10 billion. And the last thing I would just say is, as we think about psoriatic diseases, we'll get to it, I'm sure, with ICOTYDE, but I said tides rise, and we're seeing significant growth also now in acceleration in psoriasis and psoriatic arthritis.

And a lot of it is off the APEX data showing that TREMFYA is the only IL-23 that shows inhibit structural damage that 30% of the population in psoriasis that have underlying joint disease.

Before we get into ICOTYDE because that is my next question, maybe just -- you talked about the subcu. AbbVie is going to be on the market at some point in the next several months with the subcu version. Just how do you think sort of from a competitive dynamic perspective, things could change there?

Yes. I think we need to understand both in UC and CD, if there's any differences there with dose and efficacy and, I would say, longer-term results. But look, they're a formidable competitor. We feel very confident. We have broad access. We have significant momentum. We have a molecular differentiated product, and we're here to compete to win for patients.

Fantastic. All right. Well, let's go right to the ICOTYDE launch. This is obviously something that's very much in focus. It's probably one of your most in focused new launches. And on the mid-April earnings call, you provided some really helpful early metrics on the launch.

I think you said 1,500 patients with prescriptions have been written, over 1,000 unique prescribers shortly after the approval. So I guess any updated thoughts on how the launch is tracking? It seems like IQVIA may not be capturing all the channels right now. So any new metrics to share in terms of how things are going would be helpful.

I would say some of the new metrics we're going to have to wait for the earnings call to release those. But I will share with you some qualitative and some early insights that we have in the launch. I think it's important because I do think we are, one, incredibly excited about the launch of ICOTYDE.

You heard from the earnings call, some of the early indicators. I can tell you we have roughly 4,500 prescribers now. And the data that you quoted is our hub services. So we have a fully dedicated hub services that we're able to get this information in. And quite honestly, if the patient has commercial insurance, some sort of commercial insurance is diagnosed with it and is of age, they can get the product in 24 hours.

So they can get it through our hub services and there's samples obviously available as well. I bring this up because ease of access is very important, and that's where they're getting the trial and able to understand is this product what's right for them. And it is really the sweet spot.

ICOTYDE, and we're hearing it from our customers. I've been able to engage with many of the providers at either AAD or a conference, CCD that was done in Florida just recently. And the insights, what we're hearing, intent to prescribe and awareness in just 2 months has jumped 20 points.

So you're seeing intent to prescribe and unaided awareness similar to what you see with current market products. We're fully focused from a commercial perspective, obviously, from a sales and marketing perspective. That's without even a DTC campaign. So there's still huge opportunities ahead of us once we engage the patient and create awareness there.

The provider base is typically, what we're seeing is some of those that are treating in the earlier diseases. First-line systemic is where it's beautifully positioned, but advanced practitioner providers, some primary care. And I would say, obviously, dermatologists. And a lot of that is because, one, there's the ease of access, complete skin clearance. Safety is fundamental when they're looking to switch from, say, a topical to a systemic treatment. Placebo-like AEs. And then last but not least, that became quite exciting for many of the providers, no mandatory TB testing.

When does the DTC campaign stop?

Soon.

Okay. And what can you tell us about the patient profile? I mean, treatment naive versus existing oral TYK2s? Is there any sort of impact on the current injectable biologics? Like where are the patients coming from?

Yes. I would say roughly, I would say, 60-40. 60%, predominantly what we call systemic naive and about 25% of that sourcing probably from -- 25% sourcing from the Orals.

And I guess how should we think about ICOTYDE's opportunity in IBD in the context of rapidly involving market combinations, emerging orals, Abivax, et cetera? Like how are you thinking about that?

Yes. So we're obviously aggressively looking to accrue the trials in both UC and Crohn's disease. Coming off of our Phase II data, we feel very confident about the target, the product as well as the dose that we're going to be delivering and see truly being a unique opportunity for us, the first really targeted oral therapy that has the trifecta efficacy, safety and convenience that I do believe is going to hit an untapped marketplace right now for those that are moderate to severe that may not be receiving treatment or subtherapeutic treatment, again, similar to psoriasis is an opportunity.

And in future, there's definitely combinations. I mean we are the first ones to look at combinations in IBD with 4804. I'm sure you probably have some questions around that. But I'd say that absolutely in select populations, the ultimate goal here is remission. And that is truly what we need to do in IBD is really get to the highest levels of remission.

And most of that will be in combinations in the future. ICOTYDE is a wonderful product to be able to combine with because of everything I just said.

And I guess when you make the statement and Joaquin made the statement that this could be one of your biggest drugs ever, any high-level quantitative framing on either the math on how to get there? Or is that purely based on PsO and PsA? Does it require additional indication expansion into the IBD indications?

Yes. I think our current development plan will get us there. And a lot of it is kind of I alluded to, if you think about a population, let's take psoriasis, you have roughly 3 million to 5 million patients suffering from moderate to severe psoriasis.

75% of them are cycling through therapies or not on advanced systemic treatment, 25% are. So if you just think about the total size of the marketplace, that 25% is the ones that we're competing in today with TREMFYA and the likes. This true untapped marketplace is that first-line systemic treatment. So that just opens up a large opportunity. And you take that same mentality or approach in IBD.

In IBD, they're a little bit more aggressive. They are really trying to treat and really hit that underlying disease. But I do think the systemic treatment of an IL-23 such as ICOTYDE truly will unlock that opportunity. So sky is the limit.

And when can we expect to see the data for ICOTYDE head-to-head versus STELARA.

It should be getting the data in this year and then reading out at an upcoming congress.

Okay. Let's move to 4804. You set me up for that. So you had the results of these recently presented DUET trials. I guess they fell short in the overall treatment population, but there was a pronounced effect in the subpopulation of highly refractory patients who cycled through treatment.

So how should we be thinking about this program and the size of the opportunity in the context of -- I think Joaquin framed this as a third blockbuster in your immunology stack on top of the dual powerhouse of TREMFYA and ICOTYDE. So maybe just with that framing, talk to us about this program.

Yes, absolutely. We're very excited about 4804, really co-antibody targeted both IL-23 and TNF. And you mentioned the data, like it's really important to do this trial so that we can understand the data in the population by which it is the most effective. And this is what we found. I think if you think about it, the population, let's call it refractory IBD -- this is a patient population that roughly at this time, there's roughly 20% of the patients have seen 2 lines of therapy already, if you just take the market today.

So right there, it's close to 1 million patients of an opportunity. If you think about a truly high unmet need where they really need to have high endoscopic remissions or high response rates, that's patient population, high unmet need and then the data supports really that market opportunity.

And that allows us also as we think about the marketplace. Typically, eventually, longer term, I do believe it's going to be like oncology, use the best first and get the highest remission. But in these chronic diseases, I do think you're going to start with a product, see if that product works, they're going to cycle through it.

And if they're not getting the treatment they want, they might move on to another one and then probably go more aggressive. And that's where a lot of the KOLs are doing it. Sometimes, I would say, off-label. They're looking at combination therapies already in the clinic. I think that's where 4804 is beautifully positioned, looking at as co-antibody therapy in that line 2 plus in a heavily refractory population. I do think that value recognition will be there globally as well.

So let's unpack that a little bit first, just in terms of just the long-term coexistence of this compound with TREMFYA and ICOTYDE, where does this live?

Yes. I think if you just think kind of how I describe like the patient journey, patients diagnosed with IBD, CD or UC, they're coming in, they're probably going to get depending on what -- when they get diagnosed, it could be ICOTYDE, it could be TREMFYA. If they're not getting the results they need, they might cycle to another alternative mechanism of action. And then maybe then -- or not maybe that is beautifully positioned than where 4804 will be.

Let's, Tom, talk about nipocalimab. That's another potential new product cycle that we certainly are very excited about. You've had the launch in gMG. You had a priority review in wAIHA. You recently presented very good data in lupus, numerous readouts in 2027.

So help us frame the opportunity for this compound unfolding and from which indications you see the largest contributions.

Yes. I think ICOTYDE, as we've highlighted before, we do believe it to be molecularly different. We do have the fastest and the deepest IgG, IgA reduction. And why I bring that up is that's why I do think it's translating into many of these other diseases that we're looking at, whether it be, as you just highlighted, warm hemolytic anemia, Sjogren's disease, Lupus, gMG, and then if you look at maternal fetal, highly differentiated -- especially from a safety perspective. So if you think about gMG, we're well on the way to launch. We just received full J-code at the beginning of the year.

We're seeing definitely uptake, the fastest-growing biologic in gMG. So we're well on the way there. wAIHA is a unique opportunity. Nothing has been proven or approved in that population. It's roughly 7,000 patients in the U.S. It's a highly unique population, and we're quite excited about the priority review and the recognition from the agency on just the high unmet medical need also shows differentiation.

I do believe really some of these rheum diseases where it's going to really unlock the potential and why we do believe it's a $5 billion-plus asset. If you think about lupus, lupus, roughly 500,000 patients in the U.S., really nothing is available there. It could be the first FcRn antibody to show -- demonstrate an effect in lupus and the data

that you just saw at EULAR is pretty amazing. You take that as an opportunity. We have -- I believe we have Fast Track designation for lupus. We did look at Sjogren's disease as well, the most prevalent. And if you think about that, that's breakthrough therapy designation that we have already. So the excitement is there.

We do believe the data will play out, that just on tops a huge opportunity for us as we think about just in those diseases. Highly prevalent diseases of women of child. That's why I brought up the female or the, I would say, maternal fetal approaches that we have in HDFN and it just truly differentiates the product and the safety side of things as well as the efficacy across the other indications.

Okay. Terrific. Looking forward to seeing that program progress. I want to move to oncology. But before we do that, I just want to take a pause and see if there are any questions on the immunology side.

All right. Let's keep moving. So oncology. I guess, first, just starting with RYBREVANT, Joaquin called this out is one of the products that still remains underappreciated. You had some good data at ASCO recently. Consensus numbers still have this regimen, RYBREVANT and LAZCLUZE doing about $4.4 billion in 2030, peaking at about [$5 billion] and change. So where do you see the disconnect there?

Yes. I think a couple of things. I think, first, if we just think about lung cancer, we're still in the early phases of the launch. And in the U.S., I mean, we're literally -- we received approval for FASPRO, our subcutaneous formulation at the end of last year.

So we should receive permanent J-code July 1. So if you think through that from a reimbursement perspective, -- and as well as we've come to understand and have the data now to support and ASCO was part of that is really looking at the long-term survival that we see in Exon 20, really differentiating RYBREVANT in a population that's undertreated and really there's not much for those patients. And then in a common EGFR, we're looking at significant uptake in share growth that we're seeing already globally and then in the U.S. as well. 1 in 4 patients are seeing a RYBREVANT/LAZCLUZE in that setting.

So really now, we're anticipating the 5-year survival next year. That will be differentiated as well, we do believe to support where we're seeing it. But also the absolute necessity of using RYBREVANT. I think that is actually coming across with our provider base, especially, and I'll get to it some of these follow-on indications, really looking at changing the underlying biology of the disease.

And that is something that I think is differentiated. We can't just say use chemo or not. It's RYBREVANT should be essential for the treatment of EGFR non-small cell lung cancer. And it's in combination with LAZCLUZE in the frontline setting because you have to use your most effective and really look at change the course of the disease.

And that's when you can look at it as a RYBREVANT /LAZCLUZE combination in that frontline setting. Now I bring up just recently, we presented the data for head and neck and have submitted already and received priority review from the agency for L 2+ for head and neck cancer. I'll tell you the feedback that we have from the providers, especially, I mean, they have not seen anything like this as a single agent showing a 42% response rate, 1/3 of them being complete remission.

So I do believe -- and if you talk to some of them, they see the tumor essentially melts very quickly. So highly effective in head and neck as well as in colorectal cancer, 2 high unmet medical needs from an oncology perspective and cancer perspective. And then we have already started and are well underway to the frontline trials on both of those and are aggressively pursuing those and accruing to those. So I do believe the totality of all that combined, $5 billion plus easily.

Okay. Let's maybe talk about ERLEADA. That had another very promising plenary session at ASCO, the discussion call, the data practice changing. Congratulations on another successful trial there. So I guess what does this mean in terms of the revenue opportunity for ERLEADA? Like -- and how do you see the ramp from here? How can J&J make the most of the opportunity given the composition of [indiscernible] 2030?

Yes. So a couple of things. I think, first and foremost, we'll take the PROTEUS data that you're highlighting aside currently with ERLEADA, we're showing double-digit growth already. And some of it is based on most recent real-world data that we have, showing that ERLEADA, either combined to the other ARPI showing overall survival, irrespective of which ARPI that you're comparing to.

And I do think that is really resonating in the community and with the practitioners saying, all right, this is different, and I need to use ERLEADA. So we're seeing an uptake there in the current indications.

Then you now have PROTEUS, which was in high-risk localized disease, those are looking to intending to receive radical prostatectomy. So before and after surgery. And this is where it's shown. It was a plenary session highlighted at ASCO, the #1 abstract. And they do believe there will be practice changes. The first time in an earlier line setting, if you use ERLEADA 12 months before surgery and then 12 months after, you're showing a magnitude of effect of a 20% risk reduction, which has not been shown to date.

I do believe that will have a halo approach across the brand overall. But also really change practice, and that's what -- why we do these studies. And it was -- a lot of the feedback, it was a bell on the ball. It was great to see. It was a long time coming, and we're quite excited that we're able to demonstrate that. I don't allude to loss of exclusivity assumptions, but we do foresee there's still a lot of runway left with ERLEADA.

Okay. Let's move to INLEXZO. This is another product that is getting a lot of attention. It's a very in-focused product launch in oncology. It was highlighted on the sell-side call that was done last week. I'm not going to press you on quantitative metrics because I know the answer to that.

But qualitatively, give us some sense of how the trajectory is going on the back of the April 1 J-code. You provided some metrics on the first quarter call. But just high level, how are things progressing in terms of the overall launch and the feedback?

Yes, very nicely. Just to remind everybody, launched INLEXZO, it truly is transformative. 82% complete remission rates. Half of those patients still out after a year on therapy in a very high-risk population, fairly niche population, non-muscle -- high-risk non-muscle invasive bladder cancer with carcinoma in situ.

It's roughly 3,000 patients in the U.S. So if you just think about it, that smaller niche introducing to the marketplace and the receptivity has been pretty profound. The intent to prescribe, unaided awareness, highest ever in bladder cancer. The other thing I would say is there was -- I would say, especially with the urology provider base, they're waiting for the J-code, a lot of them were.

Post J-code, you saw a 50% increase in providers utilizing it. It's almost like a 90% increase in insertions. So there is a little bit of a wait for it. And there's -- it's still a smaller niche population. We just recently received NCCN guidelines, Category 2A for papillary disease.

Papillary disease, just to remind you, we have a robust program for INLEXZO, and we can get to Erda-iDRS, which is our Erdafitinib Intravesical drug release system. But with INLEXZO, you have SR-5, which is the papillary SunRISe-5 trial, which is the papillary, so BCG exposed, roughly 15,000 patients in that population, so much greater opportunity there.

That's that NCCN guideline. So that will be spontaneous until we get the approval for SunRISe-5 or the data readout. Then you have SunRISe-3, which is a much broader population. This is the first time anybody has ever gone head-to-head against BCG in bladder cancer. And this is a population around 40,000 to 50,000. So those are 2 step change.

I think there is a disconnect with The Street with regards to the greater opportunity for INLEXZO being $5 billion plus. And then you add in Erda-iDRS, which is Erdafitinib in this drug release system. And that is looking at it in non-muscle invasive bladder cancer for intermediate risk with the FGFR expression.

So roughly 70% of the population has FGFR. So targeted using FGFR. So I can say -- I can tell you there's significant opportunities ahead there and co-positioned quite nicely that the totality of that is going to be well above $5 billion plus.

So I guess it sounds like, Tom, as we think about how quickly this product can scale, these additional population expansions from the SunRISe trials that you mentioned, but also the MoonRISe trials, maybe give us a quick update on that.

Yes. So they're fully accrued, and we're just awaiting the results on 2 of them, I think. But I do believe that's the intermediate risk population, 2 of them, different types of intermediate risk and then one that goes a little bit over into the high-risk population, but targeted to FGFR alterations. So that's where you'll see the differentiation. So Erda-iDRS is also every 3 months. So it's 4 times a year. So a little less frequent insertions.

Okay. All right. Let's talk about TECVAYLI. You had some data at ASCO, just showing continued support to use as early second line. Maybe just zooming out from a big picture perspective, can you just frame how J&J is thinking about the broader treatment paradigm in multiple myeloma and specifically the coexistence of your BCMA targeting agents, CARVYKTI and TECVAYLI?

Yes. I think we remain committed to search for the cure. And our development program, our investment will always be put around that. And I do think the patients will ultimately win with regards to that. I think first and foremost is what you're seeing and even with the TECVAYLI data, DARZALEX is absolutely the foundational treatment and backbone therapy throughout the continuum from the very beginning all the way through the end.

It's one of the best combination immunotherapies on the marketplace in multiple myeloma. And what you saw in the combination with TECVAYLI, truly unprecedented results. I mean I've been in myeloma for quite some time. I've never seen anything with a hazard ratio of 0.17 and the flatlining of the Kaplan-Meier curve.

And that's what we're hearing back from the feedback from our providers. What I also said is that data is in earlier lines of BCMA absolutely need to bring BCMA earlier in the treatment, whether it be CARVYKTI or TECVAYLI. And that is the mindset. Right now, where the setting is Line 2 is available. So you do the quad in line 1, you might have transplant or non-transplant. And then if they're progressing, then either based on patient preference, site of care, availability, things like that, you either go to a CARVYKTI or TECVAYLI-dara.

And that sometimes becomes that, I would say, that shared decision-making with the patient and the provider. But right in and there, you have 2 incredible choices. And then post that, you'll see at EHA, we have the TALVEY data that will be presented at the plenary session at EHA.

So that's TALVEY in combination with Daratumumab, DARZALEX. So that allows us then you have that position to bring in BCMA upfront, hit the best immunotherapy. If once they progress or if they progress, then you can go on to additional therapies. And that's our whole commitment. In each line of therapy, we want to be along the step of the way.

What about your trispecific program? Maybe give us an update on how that's going and then also your involvement in in vivo CAR-T for the topic.

Yes, yes. So trispecific, Ramantamig, we're very excited about, different molecule, engineered by our scientists. I'll tell you, it's one of the benefits of being in myeloma so long with the team. We have the insights, we have the science, we have the expertise and the external engagement to help shape this.

We -- you guys have followed up us as well. You know all along, step-up dosing, which required for co-administration with either TECVAYLI or TALVEY needs some education and I would say, practice. What we understood also from a community to get expanded and really get the patient population, how do you make a community-friendly targeted treatment that can be administered in the community by the community with less AEs.

And that's what we did when we engineered, Ramantamig. And also, as we think about either antigen expression or release, the availability of having this trispecific targeting both GPRC5D and BCMA could prevent even further relapses and really looking at that curative intent. It's a different CD3 binder also so CRS is looking a little different as well as the GPRC toxicities. We're

being able to dial those down. So really taking it and saying, all right, we've built very incredible combinations, but how do we improve it even more so. And that's the ability that we're able to do with Ramantamig. So we're going to be looking aggressively in Line 2+ and Erdafitinib in the front line as well.

So obviously, in vivo CAR-Ts, were already have some programs in-house, and we have a partner products with [indiscernible] but we haven't disclosed any of the targets. So I'll just leave it at that. But we're quite excited about following that science as well. And we're looking across all modalities anywhere we can look for cure in cancer to become the #1 oncology company.

Okay. Looking forward to that. I'm going to take another pause there. Any questions on oncology before we pivot? Okay. Tom, let's pivot to Milvexian that's -- you've got this AF trial coming up from the LIBREXIA program at the end of the year. You guys are running that trial along with your partners, Bristol Myers.

So just maybe give us your latest update and framing of your level of confidence on the success of that trial? And is it still expected at the end of the year, I believe.

It's an event-driven time, but we're anticipating around that time. It could be before or after, but it's on an event-driven time line. But I would tell you, we're very excited. And we do believe Milvexian will be another $5 billion-plus asset for us and working with our partner, BMS on this one.

I do believe there's a significant unmet need still and you think about claudication being not treated or undertreated. So I do believe AFib, obviously, a significant opportunity ahead of us. We do believe the molecule and the dose we got right. We had modeled it appropriately. We've taken the data from the Phase II and really helped us inform on Phase III is where we feel confident.

Really looking at similar efficacy to, say, an Eliquis or Apixaban, but superior safety profile. And if you can reduce the risk of bleeding, we do believe that's going to untap a significant opportunity, both in AFib and obviously secondary stroke, which actually from a proof of concept have already been established.

What -- on the bleeding side, what's the expected magnitude of bleeding superiority that you think would be needed to drive a meaningful displacement of Eliquis?

I think from the research that we have from our providers, 30% to 40% risk reduction is absolutely significant.

And how should we think about addressable sub-populations, elderly, renal, et cetera?

Yes. I think because -- when we get the data, we're going to need to identify that and see if there's enrichment strategies or subpopulations that might benefit versus others.

Okay. And then maybe just on launch and access and pricing, anything you can share in terms of just color on how you're thinking about those metrics, the commercial opportunity really in the world of generic Apixaban?

Yes. So I'd say, obviously, we're going to be working in close partnership with BMS. We won't disclose our strategies. But I would tell you, if you think about both ourselves, Xarelto as well as our partner, Eliquis, when those products came into the marketplace, you were dealing with generic warfarin. And we found a significant unmet need, and we're able to identify the value and ensure access and success.

Okay. Terrific. Let's move to neuroscience. This is an area that Joaquin has talked about an ambition to be #1 in that segment. Do you feel that J&J is positioned to achieve that with the current portfolio?

Absolutely. I think what helped us reinforce that was the acquisition for CAPLYTA, intracellular. And I do think it's not only for CAPLYTA, actually intracellular in totality. I think CAPLYTA, obviously, we're well underway of the biggest indication for adjunctive major depressive disorder.

We're seeing significant uptake already. New-to-brand shares surpassed REXULTI. We're well on the way to look to become the #1 typical antipsychotic for branded. We just recently have data 2 studies, network meta-analysis that shows CAPLYTA is the most effective treatment across all branded atypical antipsychotics. So you have CAPLYTA, the momentum that we have there. We also got 1284 through the acquisition, we're looking at general anxiety disorder as well as agitation with dementia.

1284.

It's another compound. It's a deuterated CAPLYTA essentially. It's unique. And then coming back to our current portfolio, SPRAVATO, we're seeing significant growth, over 45% growth, still very little penetration in treatment-resistant depression, significant unmet need, open up treatment centers and having utilization productivity in treatment centers.

So we still see significant runway with SPRAVATO, our INVEGA baseline business as well as what I would say Seltorexant that we are looking to have readout this year, looking at major depressive disorder with those with underlying insomnia. So I think in totality of that, we are and will be the #1 neuropsychiatry company. And then we're going to continue to look as we think about neurodegeneration. Obviously, we have [indiscernible] but we'll continue to look there in other spaces.

On the Exon 2 agonist that you mentioned, that you said it's going to have Phase III data later this year, I believe. What level set us on what we should be looking for there?

Positive trial.

Any -- what would define the positive?

Significant improvement in MADRS, of course. And then some of the endpoints that we're looking at with regards to insomnia.

Questions? Maybe just in the last couple of minutes, Tom, we've covered a lot across the enterprise, across your portfolio. Like what haven't we talked about? Anything else you want us to be double-clicking on?

Yes. I think a couple I would say, you touched on ERLEADA, but I would say our prostate cancer pipeline, we just recently did the acquisition of Halda at the end of last year with RIPTAC. We have a portfolio of products. I'd like to compare it now to our myeloma portfolio and how we're looking at myeloma.

I think we have the ability with the science and the expertise. We have the only KLK CD3 redirector targeting KLK. We have the ADC KLK. We have costim. So there will be data that's going to be presented at ESMO that's looking at our KLK-CD3 plus costim in prostate cancer. So we have the ability to really target prostate cancer across all lines of therapy in different modalities, really looking at curative intent. And I do believe what you're hearing like the KLK2 data is pretty remarkable.

I mean, think about it, it fits right nicely with the urology practice, oncology practice. You don't necessarily have the step-up dosing and things that you have from bispecifics. -- that if you can bring costim into there and really showing even greater efficacy.

And forget about it when you bring in RIPTAC, we do believe that's really going to transform the treatment of prostate cancer. So I do believe as we think about our prostate cancer portfolio, we have significant opportunities to really help the curative intent there. And then that RIPTAC technology is not just prostate cancer, it's a platform that we can look across all other tumor types as well.

And at the end of this year, you guys are going to be hosting an Enterprise Business Review Day after a few years. Maybe in the last 30 seconds, give us a little bit of a preview on what we should be looking for from your enterprise.

Significant growth.

Okay. Well, I think that's a great place to leave it. Thank you very much. We covered a lot. Appreciate it.

All right. Thanks, everyone. I'm Lee Hambright, U.S. MedTech analyst at Bernstein. Thanks, everyone, for being here. We are delighted to host Johnson & Johnson, Chairman and CEO, Joaquin Duato. Thank you so much for being here.

Thank you, Lee.

We are scheduled for a 50-minute fireside chat here. Just a reminder that investors in the room can submit questions at any time through Pigeonhole and we'll try to work in as many as we can here.

Joaquin, you've described 2025 as a catapult year, and J&J is now entering what you call a powerful new era of growth. Maybe you could kick us off with some opening remarks on the state of the business, particularly as you look toward crossing the $100 billion revenue milestone this year.

Thank you, and glad to be here with you. Why was 2025 important? Because that was the year in which we were getting the biosimilars of STELARA into the U.S. market. So all investors were thinking, is John & Johnson going to be able to grow through the STELARA biosimilars, and we did. We grew mid-single digit. We exceeded expectations. And I believe we are the only company ever that has been able to grow the year in which the biosimilars to our largest products came. So why were we able to do that?

We were able to do that because we have a strong portfolio of existing products that we can discuss both in MedTech and Innovative Medicine and because we have a very strong pipeline, too. So that's the reason behind. And in 2025, we said we are going to be able to grow faster in 2026 than in 2025, in 2027 than in 2026, and we have line of sight to double-digit growth by the end of the decade. So from the point of view of today into the second quarter of 2026, I can tell you that, that's still the position we are in.

Coming from the first quarter, we upped our guidance, both in top and bottom line. And our guidance for total year 2026 is 6.1% adjusted operational growth, and we are going to surpass $100 billion as a company. So why -- what are the drivers of those growth? On the Innovative Medicine side, our strong portfolio of 60 medicines with DARZALEX, ERLEADA, CARVYKTI, SPRAVATO and the new product launches that we are now in the middle of like CAPLYTA, ICOTYDE, INLEXZO and RYBREVANT, all of these having a significant impact this decade.

In MedTech, the drivers are the growth in our cardiovascular franchise, which is one of the largest in the industry in three of the fastest growing markets like electrophysiology, calcified arterial disease or heart failure and the upcoming launch of our OTTAVA robotical surgical system that we hope to have an approval by the end of this year, beginning of next year that will drive growth in our surgical franchise. So when I look at our position today, we have a strong portfolio. We have a strong pipeline. All of this underpinned by strong cash generation and a strong balance sheet. We are still a AAA-rated company and that gives me confidence of our performance in the second half of the decade.

Excellent. Excellent. Thank you for that. Okay. Let's talk a little bit about the macro environment. Lots of moving pieces over the past 18 months, including shifting trade policies, geopolitical tensions, regulatory changes. Can you put all of that into perspective for us in terms of key risks for J&J?

Yes. So our size and scope makes us very well equipped to navigate all type of scenarios. I would say that Johnson & Johnson is built for times like this. So in these situations is when we thrive and hence, my confidence on the second half of the decade. We have multiple options. We have a strong track record of being able to navigate multiple geopolitical situations. And while -- I mean there's always puts and takes that we have to navigate but I'm still very confident that we're going to be able to deliver in our growth objectives.

When I look into the elements that are out there for an innovation-based company like Johnson & Johnson, which is what we are, we have tried to focus our portfolio in areas of unmet medical need where there's breakthrough innovations such as oncology, immunology and neuroscience, in Innovative Medicine and cardiovascular, vision and surgery. In MedTech, for us, there's always going to be some tension between breakthrough innovation and issues of pricing, access and affordability. And that's always a constant. That's not going to change.

So at the end of the day, the companies that are going to make the difference are going to be the ones that are able to bring breakthrough innovation. If you are able to bring breakthrough innovation, then everything will come together, and you will be able to have a good business. Now we also have another advantage is that we have more options than other companies. So we have a number of platforms that helps us navigate all the different scenarios. And it's good for us not to have impending big loss of exclusivity in front of us. we are not dependent of a single platform neither.

So that gives us much more flexibility to navigate multiple scenarios. And while we'll have to work through that, I'm very confident that this is the space where Johnson & Johnson thrives.

Great. Okay. You talked about that tension between breakthrough innovation and price. You've had a productive dialogue with the U.S. administration, including recent agreement to improve access to medicines. How did Trump RX and new price parity models impact your long-term pricing strategy and thoughts about R&D return on investment?

Yes, overall, we have said before that while we think it's important to be able to improve access for patients in the U.S. and make it easier for patients to get the therapy they need based on medical decisions. We don't think that the way of achieving that is importing foreign price controls through the so-called MFN. So on one hand, we think it's good to be able to make it, so that all patients in this country are able to access the best therapies, and that's something that is not only something that we can achieve alone. We have to work with insurance companies, with the hospital industry in order to be able to achieve that.

But I don't think the way to do that is to hamper investment in innovation by importing foreign price controls. So what type of things can we do in order to be able to maintain an environment where innovation can thrive in this country, which I think it's important in multiple fronts, and I'm sure we can discuss before. I think there are things that we can do in order to improve affordability. I mean two ones that are -- the ones that are top of mind are one is work on the middle man side, on the intermediaries that, as you know, capture more than 50% of the value and also try to maintain the 340B hospital pricing system for its original intent without the excesses that are today.

So I think that by working on the middle man and by working also on the 340B pricing system, we can create savings that can be then plowed into the patient to improve affordability and to diminish their out-of-pocket expense. That's the way for us to go, and that will continue to enable us to invest in innovation, especially at a moment in which we have two factors converging. One is more opportunities than ever to be able to address difficult complex diseases as we are seeing in cancer, for example, and then on the other hand, more competition by other countries that are trying to take or participate in the leadership position that the U.S. has.

So I don't think this is the moment for us to shortcut in innovation, is to double down on that because we have this opportunity to bring more breakthroughs and at the same time, we're having competition that is challenging our status.

Great. Okay. FDA is part of the equation here. We've seen significant changes and leadership turnover at FDA. You're obviously engaged very closely with the agency. What are you seeing on the front lines? Any changes or risks to approval timelines?

Having a strong regulatory agency is a key component of the innovation ecosystem. I mean you need to have the basic research, you need the capital, you need the companies like us, but a central piece of that is have a strong regulatory agency because the regulatory agency is a needed linchpin of being able to develop medical technologies and medicines in a safe and effective way. And innovation in regulatory processes also drives medical innovation. So the FDA has and it still is the best regulatory agency in the world.

If I leave aside the turnover in leadership and in personnel, our relationship with the industry during this period has been functional. So I cannot really point to any area in which we have had a delay or a situation in which the professionals of the FDA have not acted according to the standards that we were used to. So our working relationship with the agency, it's been positive, and it's to the credit of the people working at the FDA that have maintained a high standard of performance.

Great. As you mentioned, you now see a path to double-digit growth by the end of the decade, which is striking for a company of J&J's scale. You continue to grow through STELARA LOE. As you look toward 2030, what are the key levers required to bridge from your current 5% to 7% CAGR target to that double-digit profile?

Yes. Great question. So the ambition of being able to grow double-digit growth by the end of the decade is based on the portfolio and pipeline, late-stage pipeline that we have today. So just to be clear, this is not an ambition based on predicated on anything else, not on M&A. It is based on our existing portfolio and our late-stage pipeline. So our existing portfolio and our late-stage pipeline are largely derisked. So just to put that aside.

So what are the areas in which we believe there's still a disconnect between our own internal expectations and the Street expectations? That would be the -- to focus your question. So there's three products in our Innovative Medicine side where the expectations of the Street are still lower than our own internal expectations, and I will go into them in a second. And then in the medical technology side, our expectation in our cardiology group is higher than the Street. And I still think that the Street is not taking enough consideration to our launch in robotic surgery, which is going to accelerate our surgical franchise growth.

So let me go one by one and we can dig later more into everyone. The three products that are still underestimated by the Street in the Innovative Medicine side are RYBREVANT, which is our EGFR/c-MET bispecific, which is now approved for lung cancer. We have breakthrough designation in head and neck, and we are going to be presenting data at this ASCO, which is this weekend. And also, we are developing it in colorectal cancer where EGFR and c-MET are important oncogenic drivers. So that one is underestimated.

The second one is INLEXZO, which is our intravesical drug releasing system for non-muscle invasive bladder cancer. Non-muscle invasive bladder cancer is a highly prevalent condition, more than a million patients, 600 patients diagnosed every year, 400,000 patients relapse. So it's a large patient population, and we have shown durable and sustained results superior to any other therapy that I have seen. And we are in the middle of the launch of INLEXZO. The initial indication was in patients that do not -- that have failed BCG. We are working now in two other indications, BCG exposed and BCG naive, and that's going to expand the patient population.

And then the third product there is ICOTYDE, which is our oral peptide blocking IL-23. That is the first oral medication, once a day, 1 pill that has similar efficacy and safety to a biologic. And that's going to change the market because the arrival of an oral therapy that is comparable to an injectable biologic is going to change the market. It's going to expand the market, and it's going to actually compete with the injectable biologics, as some patients may prefer an oral therapy to an injectable one. So ICOTYDE is the other one that we believe is underestimated.

On the MedTech side, we are in three very fast-growing markets. Electrophysiology is a fast-growing market with the advent of PFA, and we can discuss that later. Calcified arterial disease with our acquisition of Shockwave, we're in the middle of the launch of a new catheter, C2 AERO for coronary calcified arterial disease, which is doing really well. And then heart failure with Abiomed, both in high-risk PCI, in cardiogenic shock, we are seeing significant improvements there too.

So that is still underestimated versus -- what the Street has underestimated versus our own projections. And then finally, I think that nobody is really factoring in a serious way our efforts in robotic surgery with the upcoming launch of OTTAVA, and that would be another element that would help us fortify this double-digit growth in MedTech and in total Johnson & Johnson.

Excellent. Okay. You've given us a meaty agenda there of things to dig into. Excellent. So let's start with oncology. You've set a goal to be the #1 oncology company by 2030 with over $50 billion in sales. As you mentioned, consensus is still a couple of billion short of that $50 billion target. You talked about RYBREVANT, and INLEXZO. Maybe can you just talk a little bit more about maybe those two and particularly what to look out for on those two, particularly maybe the data at ASCO on RYBREVANT? And then just what are the key drivers more broadly that gets you to that oncology objective?

So oncology includes oncology and hematology, it's all together, right? We've said that we plan to be the #1 oncology company by 2030, and we have even put a number out there of $50 billion by 2030. So let me break it down. An important part of that is our hematology franchise, in particular, our multiple myeloma franchise. We aim to have a therapy for every line of therapy for every patient. We have the backbone therapy, which is DARZALEX, which is growing double digit today. It is our largest product and is the backbone of therapy in any multiple myeloma therapy.

And today, in most of the clinical trials in multiple myeloma, they are using DARZALEX as part of the standard of care. So that's a backbone of the standard of care that is going to remain and we see that in a continual growth. Together with DARZALEX, we have two biospecifics, one targeting BCMA, another one, GPRC5D. We have already presented data with our BCMA bispecific in second line in combination with DARZALEX that received an unsolicited commissioner national priority review voucher, it is already approved that in patients in second line, we have external responses like they have never been seen.

So I am assuming that you are going to see an uptake of biospecifics, TECVAYLI, our BCMA bispecific and down the road, TALVEY, our talquetamab, our GPRC5D bispecific in second line. Today, only 5% of the patients in second line are using a biospecific. And then we have CARVYKTI, our cell therapy, in which we have had external results in later lines and in second line, and we are developing in first line that has about 10,000 patients already treated, that continues to gain adoption. We're seeing very strong growth on CARVYKTI and at this point, we don't have any constraints from a manufacturing perspective.

So the combination of our cell therapy, DARZALEX and our bispecific portfolio makes it a very strong multiple myeloma franchise, which is going to be a very important part of our growth moving forward. We are also into later stage development of trispecific, which would combine in a single drug, both GPRC5D and also BCMA, and you are going to see data really soon about our trispecific. It will most likely launch in this decade and will be another contributor to our multiple myeloma franchise.

Bispecifics on cell therapy could -- can coexist together. It depends on the site of care, and it depends also on patient preference. It depends also on what therapies that patient has received before. But clearly, bispecific and cell therapy can coexist and are coexisting as we speak now. That's in the hematology side.

On the solid tumor side, the first one is RYBREVANT. I discussed that before. Today, with RYBREVANT in combination with LAZCLUZE in EGFR-mutated non-small cell lung cancer in all lines of therapy already, 1 out of 4 patients is treated with RYBREVANT. We see a continuous expansion of RYBREVANT in non-small cell lung cancer because it's the only regimen that has demonstrated overall survival with a chemo-free regimen in first line, the only one. We think it addresses the mechanism of resistance of the tumor and that going slow to go fast, you're going to see a constant progression of RYBREVANT, and we see every quarter of RYBREVANT plus LAZCLUZE in non-small cell lung cancer.

We'll add to that our head and neck indication, the data that you're going to see at ASCO. It is going to be in second line, but we plan to go into Phase III in first line, and that would create another leg of growth for RYBREVANT and then later, but also in this decade, we'll continue our development in colorectal cancer, in which EGFR and c-MET are also oncogenic drivers, and that's going to create a larger product for RYBREVANT, which I think it's still underestimated.

Of note, in January this year, we had the approval of RYBREVANT FASPRO, which gives a subcu formulation of RYBREVANT, which makes administration easier and also an approval for a once-a-month dosing regimen, which makes it more consistent with what the oncologists are expecting. So the combination of the additional indications, the subcu formulation, the once-a-month regimen is going to create continual growth of RYBREVANT.

INLEXZO, now at this point, we have the indication only in patients that have failed, not responded to BCG and that have carcinoma in situ. We just got the J Code for INLEXZO in April which is going to open the path for less complex reimbursement. And we have seen a very significant uptick of INLEXZO since April in getting the J Code. And in the period of '26-'27, you are going to see data of two additional studies of INLEXZO, SunRISe-3 and SunRISe-5. SunRISe-5 is in patients that have been exposed to BCG and SunRISe-3 in patients that are BCG-naive.

So the combination of these three indications plus the J Code, it's going to make INLEXZO a standard of care in the treatment of non-muscle invasive bladder cancer. It is a therapy, which combines a device and a drug, it's perfectly fit in the urologist's practice. It's an easy implantation and we see that being a platform that is going to expand beyond INLEXZO. We have already presented data of a next-generation platform, which we call TAR-210 that has erdafitinib, an FGFR inhibitor in the platform, and that has shown very significant response rates with less frequent dosing schedule. So for us, this platform of intravesical drug release system, it's going to have multiple iterations that are going to drive growth particularly in this area.

And then finally, ICOTYDE. It's an area we know really well. We are leaders in immunology and we are developing ICOTYDE not only in psoriasis, which is the first launch, but also in psoriatic arthritis, and you're going to see Phase III data this year. And in IBD, both in Crohn's and in ulcerative colitis. So the combination of that and the fact that physicians now are going to have an oral once-a-day pill with efficacy, which is comparable to an injectable biologic and safety comparable than the biologic is going to expand the market in a significant way. And there is patients that may prefer to have an oral product than an injectable.

So that's going to be, and I have said that, and it's been many times quoted, one of our biggest products ever and is still being estimated by the Street. I have to tell you that we have bookings. We have people that have gone really, really very far and people that are very, very, very much on the low end, right? So truth may be in the middle, but it's going to be a very large product there.

On our cardiovascular franchise, on EP, we are the leaders in electrophysiology today. We are not the leaders in PFA but we are the leaders overall because electrophysiology is not only about the therapeutic catheter, it's about an entire ecosystem of mapping, diagnosing, having the best clinical mapper as a service for the electrophysiologist and then therapeutic catheters too. So we have the best combination and ecosystem, and we can discuss that later. We plan to continually launch new therapeutic catheters every year to make fix simple for the electrophysiologist and safer.

Calcified arterial disease still is a market that has potential for continual penetration as it is high risk PCI and cardiogenic shock, and we see more opportunities there to continually penetrate. And I think we have an opinion which is higher than what the Street has as far as the potential of our cardiovascular franchise.

And finally, again, robotics that I'm sure we can discuss later. For us, everything in robotic is additive to what we have. It's additive to what we have because we are not there and it's not a space where we are new. We have been in surgery, in these operating rooms for decades and the same people that are using the robots right now are using our sutures, are using our hemostats and oftentimes are using our staplers too, are using our instruments overall. So for us, surgical robotics is our territory. It is a place where we have all the right to become a leading company, and we plan to be a leading company.

Excellent. Excellent. Okay. Before we get into some of those MedTech platforms, just a question from the audience on AI in research. Can you give us some examples of how you're thinking about using AI in research for the Innovative Medicines business and will that be material to the [indiscernible]?

So I mean the -- every company including us is using AI in two areas, one in molecular design and discovery, another one in optimizing clinical operations. So in molecular design and discovery, it's shortening the time from hit to lead. So we can do things faster. And at the same time, if you have the right models, you can better predict some of the preclinical aspects in toxicology and efficacy that would be predictors of success once it goes to humans. So we have a number of examples of oral medicines that we are getting into humans much faster than we were able to do pre utilizing AI.

So I think it's safe to say that the use of AI, it's going to enable us to get things from hit to lead to humans faster than before and the probability of success once it goes to humans is going to increase. Look, we have a number of examples. I mean I don't want to disclose which ones because some of these targets are confidential, but we are clearly using it, and it's already ongoing. The other area in which companies, including us, are using AI and we were using that even before generative AI, it's in the area of clinical operations. Why?

In protocol design, patient selection and also in selecting the centers that are more likely to recruit and to have quality in the way they conduct the clinical trials. So those are two areas in which you are going to see AI having a positive impact in drug development. And I think that for companies like us, AI is a force for good because it's going to help us being able to develop medicines which are better and get faster to patients and it's going to help medical devices being smarter and improve the outcomes of surgery and any procedure.

So when I think about AI, when it comes to the health care industry to Johnson & Johnson and to other companies, I see that as a force for good and as a positive thing. I don't see that as with fear. I think it's something the companies like us need to fully embrace because it's going to make us better in doing what we do best, which is bringing medicines and medical technologies to patients.

Very good. Excellent. So let's touch on drug device synergies. INLEXZO, as you mentioned, is off to a great start, projected to reach $5 billion in peak sales. Are you looking to apply that kind of targeted release platform to other therapeutic areas?

Yes. I mean, I already commented that we are already using the concept for another drug device combination, which incorporates erdafitinib on it, and we are thinking about all the areas of the kidney, in the upper kidney, in cancer that we can use that drug device combination. So we see multiple opportunities of utilizing the technology behind INLEXZO in different instances in contained spaces like the kidney or the bladder. So you will see more of that, and that's an area that we are investing and we plan to expand.

Another exciting area for us in which we are using our drug device expertise is a relatively unknown one, which is our radio enhancer. So we are already in Phase III and in Phase II with a radio enhancer is an element that, let's say, amplifies the effects of radiotherapy. We have already presented some data in this recent ESTRO that occurred recently and the community in radiology, in radiotherapy is very excited about having the opportunity to have an inert substance that is going to amplify the effects of radiotherapy.

In this case, in order to do the procedure, you need the support of our medical device clinical specialists because this is injected directly into the tumor, and you need to have the right way of injecting and delivering the drug and delivering the right amount. So that's another area given that radiotherapy is the most frequent treatment modality in cancer that if we are able to find a radio enhancer that could amplify the effects of radiotherapy or help using less radiotherapy to optimize the effect of radiotherapy and minimize the side effects could be quite transformational.

Yes, nanobiotics.

And our Nanobiotics collaboration.

Yes. Excellent. Okay. Let's talk about MedTech. Valuations for MedTech have been slashed by 40% over the past 6 months. Have you seen any material changes in the underlying fundamental outlook for MedTech markets?

I think you have to separate valuations from underlying trends. So I don't see other than healthy trends when it comes to demand for medical devices because the number of procedures expanding, the capacity of the hospitals is expanding, and the quality of those procedures is improving, too. So the underlying trends that I see in the areas that we participate that is very broad, orthopedics, cardiovascular, vision, surgery.

I don't see anything but continuous progressive growth there, I think, which is helped by the normal aging of the population and the fact that the procedures get better, get faster and you have better outcomes and results out of this. Now the valuation is a different story. And look, I think there's, I would call it, a recalibration, let's say, rather than a reset. I think that there's a recalibration and as you know, you've been here for a long time, that is a normal ebb and flow that, of course, with the valuations. There's always recalibrations. But clearly, the underlying fundamentals of the MedTech business, I see them as healthy as ever.

Great. Okay. Let's talk about surgery. You mentioned OTTAVA a couple of times, of course, you submitted to the FDA earlier this year. What unmet need will OTTAVA address? And how are you measuring success in the surgery business over the next couple years?

I mean, first of all, as I said before, we have been in surgery for a long time. So we are not entering a new space. The same customers that are customers of the robotic systems now are customers that are using our sutures, our hemostats and oftentimes even our own instruments. We are leaders in open laparoscopic surgery. So it's a space that we know globally. And as a consequence, I think we have all the right to be an important player in robotic surgery, which is where surgery is going, right? So there's no question about that. And it's still largely a space which is underpenetrated.

Most of the procedures are still open laparoscopic, I still see that down the road, every procedure will incorporate some robotic component. So we are in the first inning, in the first cycle of robotic penetration, and that's going to continue to grow. So why do we think that our system could carve out a space? A number of things. First, we have what we believe is a differentiated system. The architecture is different. It does fit in standard operating rooms. The arms are tucked below the bed and the bed is like a normal hospital bed. So that makes it more efficient to be able to be used in normal standard operating rooms.

As an anecdote, I was talking to a surgeon, and he was telling me one of our nurses came into the operating room and the nurse asked him where is the robot because she was not seeing the robot because the arms are tucked below, and it's just a normal operating room. So you can do open surgery or laparoscopic surgery in that bed. So that makes it more efficient and makes the hospital being able to utilize the space and turn around the operating room faster.

The other element that I have heard from surgeons that they really appreciate is what we call twin motion because of the arms being attached to the bed, when you move at the same time, the bed and the arms. So that avoids that you have to constantly reposition the patient. And depending on the BMI of the patient, that could be a difficult task. So they like this feature that we call twin motion in which the arms and the beds are moving at the same time.

The third element is that it's going to mount our instruments. It's going to mount our staplers. It's going to mount our energy devices, and they like our instruments. You can ask now which ones do you like the most. In some countries, they even stop the robot and they use our instrument for certain tasks. So they are going to have the superior Johnson & Johnson instruments mounted in the robot, and that's going to be ultimately making a big difference because ultimately, those instruments as the ones touching the patients.

And then finally, look, I mean, surgeons, series of hospitals, they want to have more options, and we are going to be there to provide those options. So I think that's why we are going to have a space in the robotic surgery space. And we are a company that has the muscle and the resilience in order to be able to take the time to build a leadership position there.

Amazing. Great. Just a question from the crowd about just how much of your double-digit growth by the end of the decade expectation is predicated on OTTAVA successor? Is there any kind of metrics you can give us related to that?

Yes. I mean, I appreciate the question. What I can tell you is that the double-digit growth is the totality. I gave you I think, 7 different elements why I think we are underestimated. I talk about RYBREVANT, INLEXZO, ICOTYDE, electrophysiology, calcified arterial disease, heart failure, OTTAVA is one of the elements there. I mean the good thing about Johnson & Johnson is that we don't depend on one element. We are not a one-trip pony company.

Yes.

I know investors sometimes like one-trip pony companies because they are easy to understand, but they have an expiration date, right? So I mean, it's good to have the number of options that we have. And in every single area that we are in, we are #1 in most of them or #2, with the ambition to become #1. So it's not -- we are deep in every single area. We're deep in oncology. We're deep in immunology, we're deep in surgery. We are deep in cardiovascular, deep in neuroscience so that gives us the opportunity and the optionality to be able to be a company that will be more than $100 billion and still is telling you credibly that we have line of sight to double-digit growth. I cannot think about any other company of our size that can talk about that.

Incredible. Good. Okay. In Electrophysiology, you've lost share, of course, as the market has shifted rapidly to PFA. Is it realistic to think that you can catch up with surging PFA competitors and hold on to that #1 position in the EP market?

We are #1 today, as I said before, electrophysiology is not about the therapeutic catheter only. It's about the entire ecosystem, even in the value of the procedure, it's not about the therapeutic catheter only. It's about being able to have a system like CARTO to map, it's about to have the diagnostic catheters, it is about to have the service level that our unmatched clinical mapper network provides. It's about having Ultrasound too, which improves the quality of the procedure and enables you to do it without fluoroscopy. So it's about an entire ecosystem.

And that's what we are providing today to the electrophysiologist is because, as you know, oftentimes when they are using competitive therapeutic PFA catheters, they're still using our mapping system. So why we believe we are going to remain leaders and gain back a position of leadership in PFA? A, because we are going to continue to upgrade constantly our mapping system, which is foundational for us. B, because we plan to constantly improve our therapeutic catheter portfolio.

Now we are launching in Europe VARIPULSE Pro. VARIPULSE Pro has a shorter sequence than VARIPULSE, and VARIPULSE Pro is 5x shorter than VARIPULSE. We plan to have VARIPULSE Pro also in the U.S. that's going to make the procedure shorter and easier for the electrophysiologists. And we have already presented significant data in HRS with rates of stroke that are 0.2%, the lowest in the category. So clearly, VARIPULSE is a safe catheter as compared to the competitive catheters.

So from there on, we are going to be launching a dual energy catheter that would be the STSF catheter that will combine electrophysiology and PFA. We are working on a large deep focal catheter and we'll continue to innovate our therapeutic catheters in order to remain leaders in total electrophysiology and also in PFA. So our aspiration is to get back to be leaders in PFA. It may take us some time, but we're going to continue to invest to be there.

Great. Okay. You mentioned the other two big assets in cardiovascular, Abiomed and Shockwave. Business is performing well ahead of deal models, but competition is coming in both markets. How do you plan to maintain your lead in both of those places?

Two avenues. One is continue to improve our catheters when it comes to Shockwave and we are launching a catheter every year. Last year, we launched Javelin for difficult to cross classified lesions. And this year, we're launching C2 AERO which improves the leverability and maneuverability of the catheter in coronary, which is the largest market. And we continue to innovate in our pump. I mean, part of the growth in Abiomed is the 5.5 pump, which is implanted through the axillary by the surgeons. So we are always a step ahead of the competition, and we will be in having new catheters or improvement in the existing pump. So that's one avenue.

We plan always to be a step ahead of the competition. And on the other hand, we plan to continue to generate data to substantiate why the use of our catheters or pumps is beneficial for the patients. So both in the new product side and in the data generation, we will push forward to be always a step ahead of the competition.

Great. Volume-based procurement in China continues to be a headwind. It's a headwind in surgery, likely is going to hit EP in the second half of this year. When do you expect China to return to becoming kind of a more meaningful growth driver for MedTech?

Yes. Volume procurement is a pricing mechanism. And I was referring before to this tension between innovation and affordability that goes always through cycles. I think we are now in the cycle of constrained prices in China, but the market will continue to come back. And what matters is that the underlying demand in China is significant, and it's an important driver of growth longer term for us. So I'm optimistic about the China market. While we will have to navigate the short-term pricing pressures, the underlying demand for our medical devices and medicines is still strong, and it's an area where Johnson & Johnson will continue to be.

Great. I hate to ask a question from the audience on talc, just a quick update on how to think about where we are on that one.

On talc?

On talc.

Yes. So look, I mean, we are working now through the Daubert proceedings. And we are focused on litigating every single case. We have a strong track record of litigating every single case. Of 17 cases that have been gone into appeal, we have won 16, so we plan to continue to fight every single case because the evidence and the regulatory agencies are on our side. So we plan to continue to fight for what we think is fair. And our approach is we're going to litigate every single one.

Yes. Great. Okay. All right. Maybe zooming out to talk about portfolio. From the start of your tenure, you've talked about getting more acquisitive, particularly in MedTech. With the ortho separation in process and valuation is looking pretty attractive across the health care space, how do you think about opportunities to continue to reshape J&J's portfolio?

So from -- I mean, I think we have gone through a significant reshaping of our portfolio. I mean, on one hand, we separated our consumer business, and now we are separating our orthopedics business. So we are clearly focused, as we say, in three areas in Innovative Medicine and in three areas in MedTech. And all the six areas are areas where we have a strong position and depth and there's medical need and also science is advancing to bring medical innovation. I think from that perspective, we are what I would call using pharmacological terms at a steady state.

Look, as far as M&A has to be clear, when I'm talking about double-digit growth, it's not because of M&A. It's based on the existing largely derisked portfolio and pipeline that we have today that I have just described. When I think about M&A, look, we have the cash generation, we have the balance sheet to be able to have optionality in M&A. If there are opportunities that fit our areas of expertise, that do have a significant improved membership in standard of care and that are financially attractive, we'll think about it.

Our sweet spot, however, is earlier stage acquisitions in which we can use the scale of Johnson & Johnson in order to expand their clinical development under commercialization. One good example of that is the acquisition of Halda Therapeutics that we did at the beginning of the year. It's a new platform called RIPTAC. They have an asset in Phase II in prostate cancer. We can use the RIPTAC platform in other solid tumors. And our goal is to expand it into multiple areas and to create significant value there.

The Halda Therapeutics acquisition doesn't make the headlines because it's a relatively small one, but we have demonstrated over and over again that we have a good ability to identify small acquisitions that become big products. ICOTYDE is one and INLEXZO is another one. So Halda, our prediction is that it's going to become a big platform for us. So M&A, it's an important component of our overall portfolio growth but our bias is clearly for earlier stage acquisitions.

Got it. Great. I think of your 6 big focus areas, maybe the ones we didn't touch on as much were neuroscience in the Innovative Medicine business and then Vision in the MedTech business. Maybe just 30 seconds on what's interesting in those two?

30 seconds, Vision. Look, this is a good market for us. Overall market in Vision grows 4% to 6%, but we have a very strong position in contact lenses, where we are the market leader, and we continue to innovate there with multiple generations of contact lenses. We are in the middle of launching next-generation intraocular lenses, and we are gaining share overall in intraocular lenses, which are our two areas of focus. We see Vision as a good space for Johnson & Johnson and one in which you are seeing improvements both in medical devices and in therapeutics. So it's a good space for Johnson & Johnson.

Then when it comes to neuroscience, it's an area that we have clearly signaled as a priority where we have a strong track record there. Our two growing assets are SPRAVATO in treatment-resistant depression, which is growing very healthily, close to 50%. It's a multibillion-dollar product, and we are now in the middle of the launch of adjunctive treatment of major depressive disorder for CAPLYTA, which is doing really well. And we are seeing a very significant increase in the prescriptions for CAPLYTA since we have the major depressive disorder indication.

Plus we continue to grow in the other two indications of CAPLYTA, which are schizophrenia and bipolar. So we think that CAPLYTA is going to be a leading antipsychotic in these three areas, and we feel very confident that as we communicated when we acquired Intra-Cellular, this is going to be another $5 billion asset. We are continuing our investments in our pipeline in depression, and we have an orexin-2 antagonist, seltorexant, which it's going to have a read in Phase III pretty soon that we are developing also in depressive disorder with a prevalence of insomnia and that could be another addition to our depression portfolio.

So we feel confident in the continual growth of our Neuroscience franchise. And we keep on trying in the area of neurodegeneration, which is a bet for the next decade, but we think that a company like Johnson & Johnson has to be in these major decisions like neurogeneration, that, in my view, is the next frontier for Innovative Medicine companies in order to be able to conquer. There is still a lot of room for improvement in neurodegeneration and it's an area where as population ages will become more and more prevalent, it will become more of a social problem overall.

Amazing. All right. We covered a lot of territory there in 50 minutes. Thank you so much for being here.

Thank you. Thank you very much.

Thanks, everybody.

To have here Michael Bodner, Company Group Chair, EP and Neurovascular from J&J MedTech as well as Ryan and Lauren from Investor Relations. So thank you so much for being here. Just a quick background. Michael has been with J&J for almost 10 years, previously served as Worldwide President of Biosense Webster. He also led the integrations of Abiomed and Shockwave, and he now oversees 2 high-growth, high-innovation franchises within J&J's cardiovascular portfolio. So Michael, thank you so much for being here today.

Thank you for inviting me.

Okay. Great. So maybe we'll dive into the EP market because that's definitely the hot topic here. I think you've described the global market as a $16 billion opportunity, growing about 12%, 13%, and it is still highly underpenetrated. Maybe you can talk to us about where you see the opportunity for growth? Is it geographic expansion, procedure expansion beyond AFib or a function of improvement in diagnosis that's going to drive growth here?

So as you were doing the intro, I was reflecting on my time at Biosense back in 2022. And back then, it was an $8 billion market. So 4 years later, it's doubled. It's now $16 billion. And as you stated, it's growing 12% to 13% procedurally. The biggest segment of that growth is AFib. AFib is at least 60% of the mix. And that AFib market is most likely growing north of 15%. The driver of that is all of us. 1 in 4 people over the age of 40 will develop atrial fibrillation. And it's still significantly underdiagnosed, it's undertreated.

We estimate that of the patients that could benefit from a catheter ablation, it's still in the single digits that are getting access to care. So still extremely underpenetrated. Growth in this segment will continue to be driven by 2 major factors: market development, and I'll get into that detail, as well as innovation. From a market development perspective, that's patient awareness. 10 years ago, nobody knew what AFib was. Now that's more of a household name. So truly understanding whether a patient has AFib or not is becoming easier to understand, particularly with smart watches and everybody measuring everything they possibly can.

That is also spreading globally outside the United States into Europe and in Asia. But there are more to arrhythmias beyond AFib. That's just one of them, right? There's SVTs, there's flutters, there's VTs. And those are also significantly underpenetrated. So the opportunity for growth is on geographic expansion in Europe and in Asia, patient awareness, but also the referring physicians truly understanding that there are treatment options beyond a pill in the pocket and that those treatment options are getting better and better and those outcomes are improving.

We also have opportunities to introduce innovation to these physicians and to do clinical evidence generation that proves out the safety and efficacy of these new modalities. But the innovation curve right now is steep. There is extremely -- there's an extreme acceleration of innovation and helping guide physicians on what to use when, to best serve patient outcomes. So AFib is the driver, innovation that brings technologies that help physicians to know where to ablate and how to do that in a safer and more effective way will continue with driving that growth.

Got it. Just as a follow-up there, you were talking about the growth rates. So 12% to 13% is global, and you said it's a procedure number. And then AFib is north of 15%. Is that a procedure number as well?

Correct.

Okay. Got it. And then I believe about 75% plus of the U.S. market has already converted to AFib. So I guess...

PFA.

Sorry, to PFA. And so in terms of the pricing premium going forward, adding to that revenue growth is going to be a smaller percentage. So how -- can you parse out the wide U.S. growth?

That's why I quote procedural versus revenue growth because the revenue growth is harder to size because, yes, there is price premium of the conversion from RF to PF. Some of that's going to be unpredictable. As you stated in the U.S., PFA penetration is probably north of 75%, lower in Europe, and just starting in Asia. So there is going to be a price premium that will be layered on top beyond the 12% to 13%.

Okay. That's really helpful. The market has definitely gotten very competitive. And I think recently noted for the U.S. trends that you are gaining some unit market leadership in the U.S. Can you maybe elaborate on that? What is driving it and how sustainable that is?

Yes. So when we talk about therapeutic unit leadership, that is across all arrhythmia types, all ablation types. So that's RF and PF. So we're the clear leader in electrophysiology, and we're the leader in mapping and diagnostic and imaging and RF catheters, and we are now building momentum with PFA. So when we look at total unit leadership, we are now there, and that happened late last year in the United States. And then week over week over week, we're seeing significant momentum building, particularly with our VARIPULSE Plus platform in the United States. So that's where we've had catheter enhancements to VARIPULSE, where we have automated the irrigation rate. Physician feedback has been very positive and the momentum is significantly building. And that anchors to our full ecosystem of CARTO, where everything is fully integrated.

Can you maybe elaborate on that just as a follow-up. So you have indicated that you would be launching a new catheter every year through 2030 and at least 2 CARTO updates each year. Where is J&J driving the differentiation given that it's so competitive? And you mentioned that the innovation curve is pretty steep right now. And what gives you the confidence that you can execute on that pipeline?

We expect to have the most comprehensive and complete PFA portfolio in the market. And that portfolio will be multimodal. And what I mean by that is there will be a small focal, a large focal, there will be a catheter for regional ablation and for single shot. So when we think about the workflow of the EP community, it really depends on physician preference, but also where that patient is in disease progression and the continuum of care. Is this their first procedure or have they had multiple procedures. And so when we look at the strength that we have with, again, the full ecosystem, given that our catheters are integrated into CARTO, we're able to provide physicians with real-time procedural feedback.

Are they touching tissue? Have they provided the right amount of dosing to the vein, to the posterior wall? And do they have contact and how many grams of contact and then the dosing again with a PF index, we used to have an RF index, but now we have a PF index that guides them to how much pulse field they've actually delivered into that tissue itself. And that will drive outcomes. So when I look at the cadence of innovation that we're bringing and I look at the depth of our team globally, we actually have a surge of innovation coming, and we're accelerating. We're not slowing down. We're actually speeding up. And when we look at how we've structured our organization with R&D, advanced R&D, our incubator group and how everything work seamlessly with CARTO, we're well positioned to continue this momentum.

That's really helpful. Maybe we can talk a little bit more about CARTO. So I think you have indicated some of the differences there with tissue proximity indicators, contact force management that you just mentioned, ablation indexes, is there anything else we are missing? Or what feedback you're getting from physicians, which they really appreciate? Because as we know, the market is getting competitive. Abbott has their own mapping system. Boston and Medtronic are launching theirs as well. So where do you think that differentiation lies?

So those intraprocedural cues really make a difference in patient outcomes. Earlier this year, we had a data readout that showed that CARTO, particularly because of the TPI, the tissue proximity indicators, which tells the physician that they're truly delivering the energy into the tissue, not into the blood, showed a 61% reduction in rehospitalization rates at 30 days, 61% reduction. Said differently, patients that were treated with CARTO were 2.5x less likely to go back to the hospital within 30 days because of an arrhythmia-driven rehospitalization. So it matters. And with the introduction of PFA, the traditional cues that they used to see with RF are now missing.

With RF, they would see signal attenuation in real time. They would see the amplitude of that signal getting smaller and smaller until it disappeared. They would be able to see changes to the tissue itself with impedance drops. With PFA, they don't have that. And so giving them those intraprocedural cues that help guide them on therapy delivery significantly improves outcomes. And we're starting to see that in our real-world evidence with our VARIPULSE data in Europe and in the United States. And pleasingly, that data is matching.

That's really helpful. And my guess is that you are in the field with that data showing to physicians.

Yes.

Okay. Perfect. I guess on CARTO Edge, how would you differentiate that versus CARTO 3? And then also at HRS, you launched the CARTOSOUND, the SONATA Module. And so can you walk us through those modalities? What's different here?

So I'll take SONATA first because it's what we're launching now. SONATA is our next-gen imaging modality. It is AI-enabled, and it can take ultrasound images from our ICE catheter. So ICE is intracardiac echo and automatically build high-quality, accurate maps of the heart. Now it used to be that we could do this with the left atrium only. We can now do this also with the left ventricle, which is important for VT, ventricular tachycardias, but we can build an even more detailed map of the left atrium with the new SONATA Module that is CT-like. And as a result, we don't need to use fluoroscopy. We have a 0 fluoro indication. And physicians like the speed, the accuracy and they rely on that and enables them to see things they couldn't see before.

It also auto labels different structures. It tells them what they're looking at on the image, but it also tells them tissue thickness. So by knowing the thickness of the tissue, they can tailor their ablation strategy to those patients. Some areas that are thin may not need as many ablations, whereas others that are thick may need more, and they want to ensure that they're creating effective lesion sets so those patients don't have recurrences.

Got it. That's helpful.

You want to know about CARTO Edge, though. So on CARTO Edge, CARTO is now best-in-class in terms of mapping and the total tech stack is leading edge. but we don't want to rest on our laurels. We want to take it to the next level. In order to do so, we want to bring in more artificial intelligence and machine learning into our software modules. And we have a cadence of about 2 major mapping releases per year, but we're getting to the limits of what we can do with our current platform. And so CARTO Edge is a play on the word edge, meaning it's cutting edge, but it's also bringing in edge computing. And by bringing in edge computing, we bring in much more powerful computing power so that we can have better insights. And so what it will be enabling is tissue characterization.

We're able to understand the underlying tissue. Is it calcified? Is it scarred? Is there fat? And based on that, how would you address your ablation strategy. We're also able to see deeper into the tissue. And sometimes the arrhythmia is not on the surface. It can dive deep into the tissue. And knowing that helps physicians with their guidance in more complex patient sets. And then with CARTO Edge and the tech stack that we've got coming, we're also able to have insights into the quality of the lesions. With PFA, there is this period of time where it can be reversible or irreversible, and we're able to implement multi-frequency impedance mapping where we can guide the physician, is that lesion actually effective or not? And is there more ablation to do.

Got it. Just moving to -- actually, what about the timing on CARTO?

On CARTO Edge, we haven't guided to that timing yet, but more to come.

Okay. Understood. Just shifting gears to VARIPULSE Pro that you launched in Europe in March of this year. I think you've indicated that it delivers 5x faster ablation times. Can you maybe elaborate on that product? When do we see it come to the U.S.? And then you're also doing a head-to-head study with Farawave on persistent AFib. Maybe you can talk about that study.

Okay. So VARIPULSE is our commitment to delivering not just multiple form factors, but multigenerational catheters with pulse sequence innovation. So we're on Plus in the United States, which is the bump in the irrigation rate at 30 mL. And then Pro is a further build with second-generation pulse sequence. That second-generation pulse sequence is 3.8 seconds versus 21 seconds, and we only do 4 per vein. So it's an extremely fast, efficient and easy workflow. The physician feedback has been extremely positive. It's a workflow they already know, but it just works better and it's smoother.

The data that's building is significant. So we have data sets in the real world from VARIPURE and from REAL AF that is showing extremely safe profiles with very good efficacy. So we're seeing acute performance, acute success, and we're seeing greater than 90% freedom from AFib at 1 year. And our event rates are extremely low. So with PFA, we can see hemolysis, ours is extremely low. We can see with other modalities, coronary spasm. We haven't seen that with this platform in over 70,000 cases. And there are other adverse events like groin complications and others. Now given our experience base with VARIPULSE, we have confidence to do a head-to-head. Now PERSIGMA is an indication expansion study for persistent indication in the United States. We could have made this a single-arm study just for indication expansion. But given the confidence that we have in this platform, the data that we're seeing from a safety and efficacy perspective gave us confidence to go head-to-head to guide physicians on platform choice to enable them to have better treatment options as they look through the data.

That's great. When can we expect Pro in the U.S.?

We are actively working with the FDA on that as we speak. But PERSIGMA is not linked to Pro coming to the U.S.

Okay. Got it. That's helpful. I wanted to touch on dual-energy catheters. I think what we've heard from our checks is that it's used in about 20%, 30% of the cases. I think you've indicated in 20%, 30% of simple cases and slightly higher in the more complex cases. And our KOL checks were indicating that it could help you regain more share in the complicated end of the procedure spectrum. So can you just maybe talk about the opportunity with the dual-energy catheter?

So dual-energy STSF is our small focal ablation catheter. It's based on the STSF platform, which is the most widely used RF catheter globally. It's what physicians train on. It's what they're most used to. So it has like muscle memory for them, and there's a lot of comfort to that catheter for them. And now it has dual energy. So we can seamlessly toggle between RF and PF. It has contact force. It has a PF index. So it is a workflow that they're most comfortable with. And the ability to toggle gives them a lot of versatility, depending on the complexity of the patient. There are clinical situations where RF may be more suitable than PF. For instance, if there's an ablation needed near the conduction zone like the AV node, PF may not be suitable or if there's an ablation near the coronary arteries where coronary spasm may be something to be avoided, an RF approach may be more suitable.

Understood. With respect to OMNYPULSE, I think you've indicated that it could potentially redefine PFA. What did you mean?

So with OMNYPULSE, it is a map and ablate catheter with contact force and a PF index. So the contact force tells them how much they're touching tissue and how many grams of force that they're pushing. The PF index indicates have they delivered the therapeutic dosing or not. This is novel to us. And the fact that it's a 12-millimeter basket creates a lot of efficiency. So with STSF, this is a 3.5-millimeter tip, to upgrade that to 12 millimeters enables the physician to have a very efficient workflow. If it is a patient that's having an index procedure, but they're complex, the physician can rapidly map with a high-density mapper, they can quickly isolate the veins. And then based on what's happening in the substrate because it's a single catheter, they're then able to decide where else to ablate with that catheter. So it creates a significant efficiency in that more complex patient population.

Actually, just a follow-up to what you said earlier. I think there are different form factors. You've talked about VARIPULSE, small focal, large focal, single shot. How do you think the market is going to be split between those modalities?

It's going to be reliant on 2 things: physician preference, just what they like to use as well as where the patient is in their continuum of disease progression and the continuum of care. So if the patient is a young patient, and this is their first procedure and all that's needed is to isolate the veins, our large basket, which is referred to as ISOPULSE. Actually, I think we've just named it today for you. ISOPULSE. We didn't disclose it before. ISOPULSE would be a great option. ISOPULSE can map and ablate. It could very safely and effectively take out the veins. If the patient needs beyond the veins, then it would be VARIPULSE Pro where we can segmentally isolate the veins with 4 ablations and then potentially go beyond the veins to the posterior wall. If that patient is even more complex and work needs to be done ablations beyond the posterior wall, then an OMNYPULSE could be suitable. And then finally, if the patient is extremely complex and you need the ability to toggle between RF and PF and you need that smaller tip to get into hard-to-reach areas of the atrium, then dual-energy STSF might be most suitable.

That's really helpful. So J&J really will have the entire toolkit with refreshed...

Not just the toolkit. We will have the most comprehensive therapeutic and mapping tech stack in the market.

That's really helpful. I wanted to touch on the neurovascular franchise. Maybe can you talk to us about the strategic importance of this franchise? And what are the greatest growth opportunities here?

Well, this is a high-impact area, particularly stroke. And you've heard the saying time is brain. So the devices and how they perform really matters. How can we can get that patient to the right interventions quickly, but then how do we get deeper into the brain to remove that clot safely and effectively. So the performance of those devices matter, how they track, how they aspirate and that they're predictable and reliable. So our focus is on ischemic stroke with aspiration and aspiration catheters, but also going after new use cases for our TRUFILL Liquid Embolic for chronic subdermal hematoma.

And so those are patients that are elderly, that can slip and bump and have a bleed. Those bleeds can be difficult to resolve and they're hard to dry out. The traditional approach is surgical. So you can imagine a patient that's over 80, having a surgical approach to help deal with the hematoma doesn't have a great recovery and the recurrence rates can be quite high. By taking a percutaneous approach with TRUFILL, we can improve the patient experience and the physician experience by embolizing the middle meningeal artery to help dry out that chronic subdermal hematoma and reduce the recurrence rate.

Got it. I guess as we think about this franchise, where do you see portfolio gaps? Is it even on the peripheral side? And I don't know any thoughts on the Boston Penumbra acquisition?

I won't comment on competitive activity, but we do have a lot of interest in continuing to expand into high-growth, high-unmet need areas like we've done previously with our acquisitions in the past with Shockwave and Abiomed into heart failure, into complex PCI.

Got it. That's helpful. I guess just -- there's a big focus on innovation on the EP side. It sounds like you'll continue to be looking at -- you'll be looking at expansion opportunities on the neurovascular or vascular side. Where else should investors be focused? What is underappreciated about the 2 franchises that you're running right now?

Yes. So on the EP side, I think what's underappreciated, this isn't about a single catheter. It's about a full ecosystem from imaging to mapping to diagnostic to therapeutic and how it all works together in the ecosystem with the clinical mappers, the R&D strength, the know-how and that commitment to an accelerated launch of innovation, multigenerational catheters, pulse sequence innovation, and it is an exciting time in EP. On the neurovascular front, this is about having consistent performance of our products that enable the interventionalists to quickly and effectively get to the clot and remove it in a predictable way that is -- that tracks well.

These are little small catheters and how they push along that wire and then as they connect it to an aspiration system that the columnar strength stays there, that it doesn't collapse and that they're truly able to remove that clot safely and effectively, and it doesn't break off and go distally. And so having technology that is safe and effective, but also predictable in their hands and gets them to that clot quickly because, again, time is brain, and we want to remove those clots as quickly as we can.

Got it. I know we're out of time. Just one last question, maybe rapid fire here. Just any impact on the macro front? Anything you're worried about?

In terms of EP, the market situation is very favorable. lots of unmet need, very underpenetrated. Innovation is coming rapidly and there's economic value because the innovation that's coming is driving safety, it's driving efficacy and it's driving efficiency.

Okay. Very helpful. Thank you very much. Thanks for being here.

Thank you.

[Audio Gap] to the next company presentation at the BofA Annual Healthcare Conference. My name is Jason Gerberry. I cover pharma and biotech at BofA, and I'm pleased to be moderating our next fireside discussion with Johnson & Johnson, and John Reed, Executive Vice President, Pharma R&D. So John, thanks so much for joining us.

It's great to be here. Looking forward to the chat.

Well, look, you -- as a company, have had a lot of momentum, I think, in the R&D organization. So looking forward to just maybe at a high-level framing first. Where you're at in terms of the pipeline and BD consideration versus in-house developed. You guys have shown a propensity obviously to have success on both fronts. And I imagine you're always opportunistically looking for best science, right? So we get that dynamic. But are the priority areas within the portfolio that from your seat, you're looking at and saying, hey, we maybe want to address and augment through external innovation. I know you probably don't want to tell your hand too much to the external community, but maybe if you could just frame that dynamic first because there's been so much activity with your pharma peers on the M&A front that it's topical.

Yes. No, we're -- first, I would say that we really have become a more focused company in the last few years. Oncology, immunology and neuroscience are really the foundational elements. We do a little bit here and there in some other areas, but those are the key areas. And our strategy for some time has really been one of trying to roughly half of our product mix come from internal discovery and internal invention and half through BD M&A. And we tend to track pretty closely. I think right now, about 60% of the development stage portfolio actually happens to be internally derived, but even many of those started with some collaboration or something.

So it's a mixed picture like that. And we're both interested in products and sometimes platforms. And maybe a good example of a recent one that kind of checked both those boxes was towards the end of last year, we acquired a small company called Halda that had a lead candidate, an oral for prostate cancer. J&J is #1 in prostate cancer. So that's a good fit for us. That is based on a technology called RIPTAC that use these cleverly designed bidentate oral small molecules that will grab on to a target of interest. In this case, it was the androgen receptor, and then also grab some essential protein and sequester it so the cell can't have it. And without it, the cell dies. So it's a holding kill mechanism.

So we're able to bring in essentially a Phase III ready asset. But on top of that, we got this Nifty chemistry platform with several other projects in various stages of progression, that we're excited about taking across a number of areas in oncology, but also in some other therapeutic areas, too. So it's a nice example, I think.

Okay. So it wouldn't be -- I feel like every year at our conference, there's a little bit of drama with FDA, and there's been some recent headlines. I'm not sure the net outcome, what that's going to look like. But if you can maybe frame how productive the interactions have been with the agency with a lot of change and potentially more change coming.

Yes. I've had the opportunity to interact quite a bit with McGarry and his -- and the leadership there at the agency. They recognize that it's become progressively more difficult to do clinical development in this country compared to some other locations and that we need to speed some elements of that and rethink some elements of that and with a mindset to what would it take to make America a more attractive place to see studies conducted. So I certainly applaud the agency for many things they're trying to do to rethink the requirements for INDs, the pace with which INDs can be approved in this country and a number of other dimensions, too.

I mean, you saw that they also now provided some fresh thinking about how many clinical trials do you actually need to get an approval and some other things, too. So I think there's a lot of good opportunity there and good intention. And the commissioner has invited members of the pharma company, company's community from time to time to even submit white papers with our suggestions so that he's not trying to read our minds but trying to understand what are the things that might make it easier for us to do manufacturing in this country or do new studies in this country, et cetera. And then he and his team can take it under advisement.

So I feel there's a bit a good will there to work collaboratively. Obviously, there were big impacts on the agency with the Dodge effort, et cetera, that has created, I think, some workload issues for the agency. I certainly -- the more I interact with the staff there, the more I appreciate just how hard working they are. They turn these applications around, and they've got a big full plate. So appreciative for their service.

Got it. Okay. Well, maybe we'll switch gears to some of the therapeutic areas and immunology is one of the core TAs for you guys as a company. And let's start with ICOTYDE, which the company, I would argue maybe a more bullish tone coming out of 1Q just on the revenue opportunity and we have validated set of indications where ICOTYDE will have an opportunity in psoriasis is the near-term opportunity. But I guess I wonder, first, it's a drug with lower bioavailability. And so as we think about in UC, it is still approximating the efficacy of the biologics, right? And so there's perhaps some underpinnings there in terms of receptors in the gut that might make it feasible for you to achieve that level of efficacy.

Is it realistic to think that you could push dose in psoriasis to narrow that efficacy gap that you see with IL-23 biologics, I guess that's one question. And then how confident are you in kind of your dosing strategy broadly in IBD?

Right, right. Yes. So several dimensions to the question. But First, just to remind the audience, if you don't know that ICOTYDE was just approved this year for psoriasis. It's an oral therapy that targets the IL-23 receptor, a targeted oral peptide. And what we've been seeing is biologics like efficacy, combined with a very pristine safety profile in the convenience of a once a day. The reason that we're excited about it is because if you look at the patient populations in this country and elsewhere that are -- have an autoimmune disease, they're eligible for biologic only 20% to 30% of them are actually taking one.

Many people just do not want to commit to a lifelong of injections with a biologic. So this offers an oral option with efficacy on par with biologics. And in psoriasis, for example, if you look at the data that we generated, we have 5 out of 5 positive Phase III studies published in the New England Journal Publishing Lancet head-to-head against the leading TYK2 inhibitor. But is psoriasis 1 out of every 2 patients had completely clear skin. That's the IgA 0. That's right on par with the best biologics.

So we were able to get that done with a 200-milligram dose. As you know, the health authorities make us do dose ranging because they want us to use the minimally effective dose. They don't want us to push doses anymore than we have to, in order to reduce risks of some safety event. And so we do dose ranging in all our indications. We'll see where we land in the end with the inflammatory bowel disease, as you said, because it's orally absorbed maybe you'll get higher local concentrations in the gut, but we'll do the studies and we'll land on whatever the minimally effective dose is for those indications.

I feel quite confident because the IL-23 class is validated there. So -- but we'll just -- we'll have to see if we get that kind of on par with biologics type of efficacy. I'd say one other thing, too, that we're really happy since you mentioned the FDA is with the adjudication of the label with them, we were able to get a very clean label. So there's no laboratory monitoring required. There's not a requirement to do TB testing upfront, unlike many other biologics. So it's really easy for the dermatologist to write the script and feel confident around the safety of ICOTYDE.

How quickly do you think old ways change, right? These doctors are almost preconditioned to look for these things, right? And so what some doctors have said to us is, well, maybe there's a psychological predisposition to doing these things still, right? Is that at all a factor when you guys think about how these dynamics change with Otezla, right, which was the last successful oral therapy in psoriasis, commercially speaking, it was kind of an easy right, right, for community dermatologists. And it seems like at least in psoriasis, right, the idea is to kind of expand the category.

Yes. I think the clean label really helps in that regard so that you don't have to do a bunch of laboratory testing or wait for a TB test to come back or things like that. As we know, in medical practice in the community, it does take some time for patient education, et cetera. But the interactions we've had, and that's with the KOLs, which maybe are not always representative of our your average dermatologists, but they're really excited because what they talk about is they have patients with psoriasis, they're trying to manage it with topicals, but it's a systemic disease really.

So at some point, they realize this is just not cutting it. And then historically, the dermatologists would say, okay, I think it's time for you to go on an injectable. And what they would describe to us as the patients would go, let me think about that. I'll get back to you and then they don't come back. So with this way, you write a script, they start taking a pill once a day. It's just an easy transition from the patient to get from trying to manage their disease with topicals to now on a systemic therapy. So we're excited. We think it's going to be a real market expander.

Yes. Okay. Now with IBD, this is a big component, I think, of the peak sales outlook for ICOTYDE. So I guess what I wonder is, we haven't seen a really great commercially successful oral outside of maybe mesalamine, which had a lot of volume utilization. If you listen to how AbbVie frames it and they're looking at I&I combinations, you had the recent DUET data. You want to go with your biggest gun early, avoid things like fistulas later downstream in the patient. So I guess I wonder where ICOTYDE fits in all that, right, where you and competitors are looking at these combination products. You've got biologics that work really well there. So how do you think about the oral opportunity in IBD?

Yes. I think, again, there are a lot of -- a large percentage of patients that are eligible for a biologic but not taking one in IBD as well. So I think there must be a -- there's clearly a large patient population there that would like an alternative. The -- I think the key for us will be the efficacy data that we deliver in the studies. Is it right there on par with the biologics and then that gives patients and health care providers another option to consider.

You mentioned DUET. For those who don't know, that's some studies we did with patients who are on the more severe refractory end of the scale where a monotherapy is not getting the job done for them. So they're -- we've created a co-formulation of our TNF inhibitor and our IL-23 inhibitor, 2 antibodies co-formulated at the right doses so that a single injection, the patient gets both of those and had seen that in patients who have failed or more prior lines that this really then started to get into a range of efficacy is essentially double what you saw with the monotherapies in that patient population where monotherapy is just not getting the job done for them.

So it won't be a one size fits all, I think, with these patients, some will gravitate to an oral, others injectables. Some may need more than one drug depending on their disease. Unfortunately, with IBD, as you know, fewer than half of patients achieve and sustain a complete remission. So it is one of those diseases despite even our best medicines. There's room for improvement, and we're going to keep pushing at it.

Okay. Well, maybe that's a segue for DUET, which was recent data that you presented and AbbVie a week or 2 earlier had interim data for its IL-23 integrin. And so I'm just curious the strategy and why prioritization of, say, TNF versus, say, other combination partners that you could have paired with your IL-23?

Right. Well, to some extent, it was logical for us at J&J because we had -- we brought the first TNF inhibitor to market with REMICADE and golimumab, which is the product of Symphony was in our portfolio and then guselkumab, TREMFYA. And so it made sense for us to do exploratory work with those combos. And -- what we did first, though, was pilot studies where they were biomarker-driven, where we put patients on one or both and then take biopsies from the intestine and do deep molecular profiling, single-cell transcriptomics. And that taught us that the 2 together really had a synergistic suppression of inflammatory pathways. So we thought, okay, this could really make sense.

And then as we got in the clinic, we were, of course, watching safety because when you start taking out a couple of these cytokines, what's going to happen to safety. But there, we found that the safety was consistent with each of the underlying components. We did not see incremental adverse events. So we were good on those. And then when we did the studies, we started to see these really promising data. So that's how we started in this journey. It's not to say that other combos wouldn't be logical to also give a try.

And we'll probably do some of that ourselves down the road, but this was a good entry point for us to bring together 2 mechanisms. And we're poised to be the company that delivers the first of a dual mechanism with these co-antibody therapeutic. So we're trailblazing with this and really excited to be able to offer more hope to these patients who are really tough to treat.

So your just general thoughts on having TNF-based combinations and potential with the black box warning, others in this space would say, hey, we want to like combine 2 really safe MOAs orthogonal that lack the black box warning. Maybe the counterargument to that is when you start to deal with settings like IBD or RA, you need big guns and that risk-benefit-wise, a black box warning in the grand scheme may be an acceptable trade-off.

Yes. I mean the black box in this case goes with the TNF class. And because that class has been around so long, we find patients are very comfortable managing those risk profiles. So it's something that they're very familiar with. IL-23 doesn't really have the black box issues. So that pair -- but I mean, if you compare it, some patients who end up on a JAK inhibitor, right? Talk about your black box warning. They have the infection risk warning, they have the cancer risk warning, they have cardiovascular event warnings, they have thrombosis warnings.

So I think when patients are desperate enough and physicians are desperate enough, sometimes they'll even put up with that. But compared to a JAK inhibitor, this is far more benign. And yet we see people reaching for JAK inhibitors with some of these refractory patient populations. So I think the risk benefit it's very attractive, I think, for many physicians and patients.

Okay. And so with -- following the DUET data, what are next steps with that? I -- would the plan be to go directly to Phase III? Are you happy with what you saw? If you can kind of outline that?

Yes, we're going straight to Phase III in ulcerative colitis because we already did a dose-ranging Phase II. We have defined what the dose will be. In Crohn's, we're doing a seamless Phase IIb Phase III. So we'll do some dose ranging and then start the Phase III component. I don't think we've revealed all the details of that, but that's the plan there. We're also going to do a study in psoriatic arthritis, which is another one of the autoimmune diseases where there are a significant percentage of patients where monotherapy is just not enough. So we're going to study there as well.

And we'll go head-to-head against -- in the case of the inflammatory bowel disease, we're going head-to-head against guselkumab, TREMFYA. The regulators agreed that we did not need to do also the TNF single therapy. So it's just -- it's basically guselkumab versus the co-antibody therapeutic, those 2 arms basically.

Okay. And then any efforts, it sounds like to interrogate different orthogonal mechanistic combinations either with a coformulation or bispecifics. Is that something that J&J can do internally, does it need to go out externally to find assets that can facilitate that strategy?

I think it's some of both. So in some cases, we certainly, from a technology standpoint, we have a very robust bispecific platform. We have the ability to do the co-antibody therapeutics. And as we bring more and more orals, there could be oral combinations and sometimes those could be co-formulated a fixed-dose combo. But because there are different targets that you might want to pair in different ways. In some cases, we might have both targets in hands. In other cases, we might want to go externally and grab one from another partner. So it will be some of each, I think, as we get into this sort of commentatorial aspect of on immune diseases.

Okay. Maybe we'll shift to neuroscience, an area that you guys have been acquisitive in. But my question was around SPRAVATO just given the surprising commercial success that you guys have had. I think it speaks to just the unmet need in MDD. I feel like every time there's a new category, it's not zero-sum game, it's expanding the market. And so when we talk to physicians who treat patients either with like [indiscernible] or with SPRAVATO. It seems like it's a very unique segment of the market relative to typical SSRIs or even atypical antipsychotics.

So there's some changing going on in the landscape to around psychodelic therapies, that there could be potentially, at least if you listen to how some of them portray their therapies as more of a durable benefit. You don't need to have as many follow-up treatments as SPRAVATO, which can be time-consuming. So as you look at like what's going on in psychedelic therapy pipeline competitively? Is that a risk to SPRAVATO? Or is that something that's like an opportunity for you to augment SPRAVATO in the portfolio down the line potentially.

I think we're waiting for data to come in on this psychedelics to really understand it all. But just to back up a little bit on SPRAVATO. So it's a particular [indiscernible] esketamine that's formulated for delivery to the intranasal route with a device. So it's another good collaboration between med tech and pharma at J&J. And it was the first example of an antidepressant that had rapid actions. So in other words, within minutes to hours, patients could see their depression symptoms relieved was approved for treatment-resistant depression, which is patients who failed to prior antidepressants at least as well as for really urgent situation of depression with suicidal ideation.

Altogether, we've taken it through 36 clinical trials, a 1/4 of 1 billion people have been treated with SPRAVATO, it is approved in multiple countries. And it really added a new weapon to the battle against chronic depression, which affects 1/4 of 1 billion people around the world and it's a heterogeneous disease, right? It's not a one size fits all. So we need different mechanisms. And SPRAVATO was the only depressant ever awarded breakthrough designation by the FDA. Twice, we got priority review too. So it's really a new step forward.

Now, how does it work? It's thought to work by affecting neuroplasticity, which is what the psychedelics are thought to do, right? Different mechanisms, SPRAVATO works through a thing called NMDA receptors. The psychedelics is not entirely clear, but there's theories that it might be a certain type of serotonin receptor. But the idea is you're affecting this phenomenon called neuroplasticity, and that's where this may be then giving this real breakthrough in terms of getting at that really treatment-resistant depression as well as maybe the more durability because you're actually changing the connections of the neurons.

In the case of SPRAVATO, we have data showing that 50% of patients stay at remission for 5 years on SPRAVATO. They need to take it a different schedules, some are once a week, some are twice a week, different schedules for different people, but great durability for an antidepressant, if you think about it. So real breakthrough. I decided to have that in our armamentarium with other mechanisms now to try to help patients battling with depression.

This just occurred to me, but is there the possibility that over time, as the drug gets better characterized to lessen the need to do the inhalation -- the nose inhalation at home potentially for patients?

Yes. I think we could see it moving that way. The issue was that sometimes when patients initially take SPRAVATO, they have these dissociative out-of-body like sensations. They typically last only minutes. And some patients don't even get them at all or they only get them on the first few doses. So I think it's something that we will be continuing to have conversations with the regulatory authorities around, is there opportunity to start bringing this more into the home as opposed to having to go to the clinic and sit in a quiet room while you wait for 2 hours for your post years SPRAVATO [ snorch ] so to speak to see how you're faring.

Okay. Maybe we'll pivot to multiple myeloma. You've got arguably an embarrassment of rich with assets here, right? I guess the one thing that I really struggle with -- on the one hand, BCMA-directed therapies, the book says, go with the CAR T first because you'll have lessened efficacy if you use a BCMA-directed bispecific in advance of that, right? But you have data now for both modalities that look pretty competitive, right? And I think you guys have said we're just going to get patients choices and providers choices, right? If you want a one and done, we've got the option for you. And if you want as a community oncologist, not that this is what you all per se, but like community oncologists don't want to give up their patient, right? That's just a practical reality of that, right? So how do you see this playing out?

Well, as you said, we have a lot of tools to work with 5 approved therapies, more in the pipeline. And it is becoming a very dynamic space in terms of how the therapies can come together. That's what we've been doing now is to bring them together in combinations in different lines of therapy. We started the journey with VELCADE, the world's first proteasome inhibitor. And then behind that, [ daratumumab ], DARZALEX, the first biologic for myeloma, the CD38.

And even with those 2 combined with other medicines, when we started this journey at J&J, the average life expectancy of a myeloma patient was 2 years. Now with DARZALEX, VELCADE plus other meds the life expectancy for the transplant eligible is almost 2 decades. And for the transplant ineligible almost a decade, so even there, we have achieved enormous benefits for patients. But we're not stopping there, bringing now the T cell engagers TECVAYLI, our first-in-class BCMA. TALVEY, our first-in-class GPRC5D.

These, together with DARZALEX in earlier lines or giving miraculous data, the most recent approval was for TECVAYLI, where in second line, the data were so impressive that the FDA called us and said, may we offer you a commissioners priority review voucher because we'd like to get this to the American people as fast as possible, 55 days from submission to approval and just unprecedented progression for an overall survival data is seen, now we want to move into frontline, where we've been doing pilot studies and seeing that if we can combine a T cell engager, which could be [ TECVAYLI, TALVEY ] or now we have a trispecific Ramantamig that does both [ TECVAYLI, TALVEY ] in a single molecule with Dara we can get 100% MRD negativity. So minimal residual disease negativity, which that was recognized as a valid surrogate endpoint by the FDA last year for progression-free survival.

So really excited about involving these paradigms, T cell engagers, [ Dara ] in the frontline, CARVYKTI, CAR T cells probably for second line, but even there, who knows one of our investigators at [ Dana Farber ] took patients with smoldering myeloma, gave them CARVYKTI 20 out of 20 have minimal residual disease negativity, no evidence of disease, one-and-done treatment, nipping it in the bud. So there's so many opportunities now to offer patients different ways to try to tackle these.

So as you say, you're testing a lot of permutations in frontline. And if we think about the frontline strategy, do you think MRD would be enough to both enable accelerated approval, but ultimately, be practice changing for physicians to want to adopt. There are certain settings, right, of oncology, right, where you could get by on PFS, but if you don't have a OS data, you're not getting used or you're not getting used at a high rate. So when you think about the maybe the commercial bar, right, for frontline, is MRD enough?

We would always do PFS and OS as well, although it would be nice if the FDA would allow us to have an accelerated approval based on MRD, but we would continue to follow patients. The rest of the world hasn't adopted that standard of MRD might be sufficient. So since we try to bring our patients -- we try to bring our product globally to the patients around the world. We know that we're going to be held to more of the traditional endpoints, but it is exciting to think that, particularly in front line where the current standard of care is so good that you would have to wait a long time to find out.

It is exciting to think that perhaps FDA would allow us to have an accelerated approval so we can bring these innovations to patients faster because we really say we are in the cusp of curing myeloma. And so that would be so exciting if we could use that as a way to just get these new combinations to the patients even faster.

Yes. Well, we've got less than 2 minutes here. So maybe ahead of ASCO RYBREVANT you've got some data in head and neck -- what is the OrigAMI-4 trial Cohort 1, right? That's described in the title as pivotal data. So maybe if you can just set the table because as we think about sort of the opportunities beyond lung cancer, head and neck and CRC have been flagged as big opportunities. And just trying to think through your second-line monotherapy strategy and if these data are filable?

Yes. No, we think they could be. So RYBREVANT just contextualized as a bispecific antibody that neutralizes the 2 growth factor receptors approved in lung cancer for EGF receptor mutant. It was the first bispecific ever approved for a solid tumor indication incidentally. In head and neck, which is the eighth most common cancer, we saw really promising data. KOLs just tell us they've never seen a more active agent in head and neck. So the first entry is in patients who failed frontline so that they're in second line. The bar gets where going, typically, those patients have been treated with either cetuximab or taxanes and overall response rates 10% to 20% on a good day. So that's the bar. And that's why I think the FDA is open even a single mono study, which is where we have breakthrough designation.

So at ASCO, you'll be able to see what kind of responses and durability of responses we're able to bring there. We also, I think, are going to show some of our pilot data in frontline where we're doing combo pembro and Oxaliplatin in frontline and then going against the standard of care regimen, the chemo immunotherapeutic standard of care there, too. That regimen only has overall response rates of about 30 to 35 and the durability of less than 7 months.

So we'll see what RYBREVANT brings. You'll get a little hint of he data, but super excited about RYBREVANT possibility to really create the next standard of care in head and neck. And then we're also pursuing in colorectal. We've got 2 big Phase III studies going there, one in frontline, one in second line. So RYBREVANT is just getting started,.

Awesome. Well, thank you so much. We're out of time, but I appreciate the conversation.

Right, Jason. Thank you.

Good morning, and welcome to Johnson & Johnson's First Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded. [Operator Instructions]

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

Hello, everyone. This is Darren Snellgrove, Vice President of Investor Relations for Johnson & Johnson. Welcome to our company's review of business results for the first quarter of 2026, and our financial outlook for the full year.

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. The description of these risks, uncertainties and other factors can be found in our SEC filings, including our 2025 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 growth drivers. I will then review the first quarter sales and P&L results. Joe Wolk, our CFO, will then close by sharing an overview of our capital allocation priorities and updated guidance for 2026. Jennifer Taubert, Executive Vice President, Worldwide Chairman, Innovative Medicine. John Reed, Executive Vice President, Innovative Medicine Research and Development; 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 approximately 60 minutes.

With that, I will now turn the call over to Joaquin.

Good morning, everyone, and thank you for joining us. We said 2026 would be a year of accelerated growth and impact for Johnson & Johnson and with our strong Q1 performance, including our bid on consensus and raised guidance, you can see we are delivering on that promise.

In the first three months of the year, we delivered operational sales growth of 6.4%. Our focus on areas of high innovation, high unmet need and high growth is delivering results today and for the future. Across each of our 6 key businesses: Oncology, Immunology, Neuroscience, Cardiovascular, Surgery and Vision, we have multiple differentiated assets to drive sustained growth and a strong competitive advantage. Our success is fueled by the strongest portfolio pipeline in the history of Johnson & Johnson. We currently have 28 platforms or products that generate at least $1 billion in annual revenue and we are aiming to add even more. Our unique combination of innovative medicine and MedTech, together with strong execution and industry-leading investment in innovation is delivering resilient growth. We are on track to meet our 2026 target of $100 billion in annual revenue for the first time and we are confident our progress will continue to improve into 2027 with line of sight to double-digit growth by the end of the decade.

Let's start with Innovative Medicine where we delivered operational sales growth of 7.4% in the quarter with 10 brands growing double digits. In Oncology, we are aiming to cure and treat more cancers with the world's leading portfolio and pipeline. DARZALEX remains the gold standard in multiple myeloma and our #1 product with sales of $4 billion and operational sales growth of 18%. CARVYKTI, TECVAYLI and TALVEY also continued to deliver high double-digit growth reflecting the importance of our multiple myeloma portfolio across the full treatment journey. Progress in our pipeline accelerated in Q1 with the FDA approval of TECVAYLI plus DARZALEX FASPRO for relapsed or refractory multiple myeloma. That positions the regimen as a potential new standard of care as early as second line.

In soli tumors, RYBREVANT FASPRO received FDA approval for subcutaneous monthly dosing for patients with EGFR mutated non-small cell lung cancer. RYBREVANT also received FDA breakthrough therapy designation in advanced head and neck cancer with new data showing overall response rate in first-line recurrent or metastatic head and neck cancer when combined with immunotherapy. The treatment is being further evaluated in the ongoing Phase III OrigAMI-5 study.

And in high-risk non-muscle invasive bladder cancer, INLEXZO is outperforming all recent launches based on unique patients treated in the first 6 months post approval.

In immunology, we continue to raise the bar in a category we have built for more than 3 decades from single innovations like REMICADE and STELARA to now a dual powerhouse of ICOTYDE and TREMFYA. TREMFYA had another very strong quarter with sales up 64%. It continues to be the fastest-growing IL-23 therapy in the U.S. and is now the share leader new patient starts in inflammatory bowel disease.

And with last month's FDA approval of ICOTYDE for the first-line treatment of plaque psoriasis, we are once again transforming the standard of care for immunology patients. ICOTYDE is the first and only IL-23 targeted oral peptide and has the potential to fundamentally change how psoriatic disease is treated by offering a convenient once-daily pill. The full launch of ICOTYDE took place the same day as approval with the first patient receiving treatment that very day. While it is just the beginning, we're already seeing strong demand through our patient hub. Together, ICOTYDE and TREMFYA create a complementary category shaping portfolio. ICOTYDE is the first choice systemic treatment and TREMFYA is the first choice biologic treatment for patients with moderate to severe plaque psoriasis. ICOTYDE has the potential to be one of our largest products ever. TREMFYA is projected to deliver more than $10 billion in peak year sales.

In neuroscience, we are focused on meaningfully improving outcomes in mental health. The U.S. launch of CAPLYTA in adjunctive major depressive disorder is building momentum and SPRAVATO continues its strong growth trajectory.

Now let's turn to Medtech, where we reported Q1 operational sales growth of 4.6% with growth across all of our key focus areas. In cardiovascular, we are investing in the growing need for complex interventions. Johnson & Johnson is the market leader in heart recovery circulatory restoration and electrophysiology and we continue to deliver sustained growth. In heart recovery, Abiomed had another strong quarter as this shows with in circulatory restoration. And in electrophysiology, VARIPULSE our post-field ablation platform for atrial fibrillation keeps building momentum. Our confidence of continued leadership in electrophysiology was further strengthened by our recent launch of VARIPULSE Pro in Europe with 5x faster ablation, which helps streamline procedures and improve efficiency as well as our recent [ VARIPULSE ] 12 months data presented just a few days ago, we show a strong safety profile with zero reported strokes.

We also continue to receive strong feedback in Europe for our Dual Energy THERMOCOOL SMARTTOUCH SF Catheter which we expect to launch in the U.S. later this year, having recently submitted a complete platform to FDA. And finally, we recently announced 12-month data for OMNYPULSE, our large focal tip PFA catheter, showing positive outcomes, no safety events and 100% procedural success rate.

In surgery, our strong performance reflects the deep levels of trust and our expanding presence in the operating room. In Q1, we made progress on our OTTAVA robotic surgical system, and we are building on our recent de novo filing for approval with a second investigational device exemption trial now underway for inguinal hernia repair.

In Vision, we are restoring sight to its healthiest state with expanding access globally for our ACUVUE OASYS MAX disposable lenses for presbyopia and astigmatism and our TECNIS intraocular lenses. Most significantly, we received FDA approval of TECNIS PureSee, the first and only extended depth of focus intraocular lens in the U.S. to maintain contract sensitivity comparable to a monofocal lens. 97% of patients reported no very bothersome visual disturbances like halos or glare.

As you can see, we are off to a fast start in 2026, building momentum that will accelerate our impact and growth throughout the year and for the balance of the decade. The depth of our portfolio and pipeline has never been stronger, and I'm confident we'll continue to deliver on our commitments for 2026 and beyond.

And with that, I will turn the call back over to Darren.

Thank you, Joaquin. Moving to our financial results. Unless otherwise stated, the percentages quoted represent operational results and therefore, exclude the impact of currency translation.

Starting with Q1 2026 sales results. Worldwide sales were $24.1 billion for the quarter. Sales increased 6.4% despite an approximate 540 basis point headwind from STELARA. Excluding STELARA, Johnson & Johnson grew double digits for the quarter. Growth in the U.S. was 8.3% and 3.9% outside of the U.S. Acquisitions and divestitures had a net positive impact on worldwide growth of 110 basis points primarily driven by the Intra-Cellular acquisition.

Now turning to earnings. For the quarter, net earnings were $5.2 billion and diluted earnings per share were $2.14 versus $4.54 a year ago. Adjusted net earnings for the quarter were $6.6 billion, and adjusted diluted earnings per share were $2.70 representing a decrease of 1.4% and 2.5%, respectively, compared to the first quarter of 2025. I will now comment on business sales performance in the quarter focusing on the 6 key areas where meaningful innovation is driving our performance and fueling long-term growth.

Beginning with innovative medicine where our financial results reflect the depth of our expertise and innovation in areas of high unmet need across oncology, immunology and neuroscience. Worldwide sales of $15.4 billion increased 7.4% despite an approximate 920 basis point headwind from STELARA which underscores the continued strength of our key brands and new launches. Growth in the U.S. was 9.6% and 4.3% outside of the U.S. Acquisitions and divestitures had a net positive impact of 180 basis points on worldwide growth primarily due to the Intra-Cellular acquisition.

In oncology, starting with multiple myeloma, DARZALEX growth was 17.8%, primarily driven by strong share gains of 5.9 points across all lines of therapy with nearly 12 points in the frontline setting as well as market growth. CARVYKTI achieved sales of approximately $600 million with growth of 57.4%, driven by share gains and continued site expansion. TECVAYLI growth was 30.1% with sequential growth of 14.2%, driven by launch uptake and share gains from expansion in the community setting as well as the U.S. approval of TECVAYLI plus DARZALEX FASPRO. TALVEY growth was 72.8%, driven by share gains through expansion in the community setting.

In Lung Cancer, RYBREVANT plus LAZCLUZE delivered sales of $257 million and growth of 80.5% driven by continued launch uptake in all regions, share gains and rapid uptake in RYBREVANT FASPRO. Share gains in both the first and second lines continue to drive strong sequential growth of 18.8%.

In prostate cancer, ERLEADA delivered strong growth of 16.2% due to continued share gains and market growth.

Within immunology, TREMFYA delivered impressive growth of 63.8%. Our IBD launch is driving significant momentum, and we continue to see share gains across all indications as well as market growth. STELARA declined 61.7% driven by share loss due to biosimilar competition, increasing adoption of novel classes and unfavorable patient mix.

In neuroscience, SPRAVATO grew 44.5% and driven by continued strong demand from physicians and patients. CAPLYTA, which was acquired in Q2 of 2025 as part of the Intra-Cellular acquisition, delivered sales of $270 million for the quarter with continued strong momentum in our aMDD launch. Since aMDD approval in the U.S., CAPLYTA has had its highest ever new patient start volumes across all indications.

Now moving to MedTech, where we delivered growth across each of our key focus areas, cardiovascular, surgery and vision. Worldwide sales of $8.6 billion increased 4.6% with a growth of 5.9% in the U.S. and 3.2% outside of the U.S. Divestitures had a net negative impact of 10 basis points on worldwide growth.

In Cardiovascular, electrophysiology delivered growth of 9.5%, driven by our newly launched products, including VARIPULSE and commercial execution. Abiomed delivered growth of 14.4%, with continued strong adoption of the Impella technology. Shockwave delivered strong double-digit growth of 18.1% driven by continued adoption of coronary and peripheral products.

Surgery grew 1.2% despite a negative impact of approximately 30 basis points from divestitures. Growth was driven by strength of the portfolio and commercial execution in biosurgery and wound closure, partially offset by planned surgery transformation impacts and competitive pressures in energy and endocutters as well as VBP in China across the portfolio.

In Vision, contact lenses and other products grew 2.7%, driven by strong performance in the ACUVUE OASYS 1-Day family of products, as well as strategic price actions, further solidifying our leadership position. Surgical Vision grew 6%, driven by new product innovations, robust demand for premium IOLs and strong commercial execution, partially offset by competitive pressures in the U.S.

Orthopaedics growth this quarter was 3.2% primarily driven by new product launches and strong commercial execution.

Now turning to our consolidated statement of earnings for the first quarter of 2026. I'd like to highlight a few noteworthy items that have changed compared to the same quarter of last year. Cost of goods sold deleveraged by 10 basis points, driven by the impact of tariffs and other operational drivers in the MedTech business, an unfavorable mix in the Innovative Medicine business. This was partially offset by favorable translational currency in the Innovative Medicine business. Selling, marketing and administrative expense deleveraged by 180 basis points, driven by heavier investment in new launches early in the year and increased investment related to the acquisition of Intra-Cellular in the Innovative Medicine business. Research and development remained flat at 14.7% of sales. Interest income and expense was a net expense of $43 million as compared to $128 million of income in the first quarter of 2025. The decrease in income was driven by a lower average cash balance and a higher average debt balance. Other income and expense was a net expense of $294 million as compared to $7.3 billion of income in the first quarter of 2025 with the change primarily driven by the approximate $7 billion talc reserve reversal in the first quarter of 2025. Tax rate on a GAAP basis in the first quarter of 2026 was 12.6% compared to 19.3% in the first quarter of 2025. This was primarily driven by the reversal of the talc settlement accrual in the first quarter of 2025, which did not reoccur and discrete tax benefits associated with employee equity programs in the first quarter of 2026.

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 for the quarter. Innovative Medicine margin declined from 42.5% to 39.7%, primarily driven by heavier investment in new launches early in the year. Unfavorable product mix and certain favorable onetime items recorded in 2025, partially offset by favorable translational currency. MedTech margin declined from 25.9% to 22.3% primarily driven by the impact of tariffs in cost of products sold and certain favorable onetime items recorded in 2025. As a result, adjusted income before tax for the enterprise as a percentage of sales decreased from 36.6% to 32.5%.

This concludes the sales and earnings portion of the call, and I will now turn the call over to Joe.

Thanks, Darren. Hello, everyone. We appreciate you joining us today. As Joaquin noted, we are seeing good momentum across our business, powered by our industry-leading portfolio, sustained investment in innovation and disciplined execution. We continue to advance our pipeline by bringing innovative new treatments to patients, which will meaningfully improve patient outcomes and fortify future performance, giving us a clear line of sight to double-digit growth by the end of the decade.

Turning to cash and capital allocation. We ended the first quarter with approximately $22 billion of cash and marketable securities and $55 billion of debt for a net debt of approximately $33 billion. Free cash flow in the first quarter was approximately $1.5 billion. Clearly, this suggests a run rate below our full year projection as Q1 reflects payment timing changes on certain U.S. rebate programs and increased U.S. capital expenditures. However, these were expected, and we remain confident in our full year free cash flow outlook of approximately $21 billion. Our strong financial position and cash flow generation provides a competitive advantage, enabling us to maintain a consistent approach to capital allocation and investment in future innovation.

Since announcing our plans to invest $55 billion in U.S.-based manufacturing technology and research and development through early 2029, we are well on our way to reaching that target. Through the end of 2025, we invested roughly $12 billion or 22% of the $55 billion with significant investment already underway in 2026. Our manufacturing investments include facilities in North Carolina and Pennsylvania, and we will have more announcements to come in upcoming quarters.

Lastly, we recognize our shareholders value a growing dividend. Today, we were pleased to announce the Board of Directors' authorization for a 3.1% increase to an annual rate of $5.36 per share, our 64th consecutive year of dividend growth.

Turning now to full year 2026 guidance. We are increasing our operational sales guidance to be in the range of 5.9% to 6.9%, with a midpoint of $100.2 billion or 6.4%. As noted last quarter, our financial calendar in 2026 includes a 53rd week, which provides a benefit of approximately 100 basis points. We do not speculate on future currency movements and last quarter, we utilized the euro spot rate relative to the U.S. dollar of $1.17. As of last week, the euro spot rate to the U.S. dollar has stayed relatively flat, with modest benefit from other major currencies. As a result, we estimate reported sales growth between 6.5% to 7.5% with a midpoint of $100.8 billion or 7%.

Turning to other notable items on the P&L. We are maintaining our guidance for adjusted pretax operating margin to improve by at least 50 basis points in 2026. This will be driven by continued operating efficiencies with a portion reinvested to support new product launches and further strengthen the pipeline. As today's Q1 results reflect heavier investment is planned to occur in the first half of the year. As a reminder, our pretax operating margin guidance takes into account the costs from the 53rd week of operations and the announced voluntary agreement with the U.S. government to improve access to medicines and lower cost to U.S. patients. We are maintaining our guidance for net interest expense, net other income and the effective tax rate for the full year.

Turning to adjusted operational earnings per share. We are increasing our guidance by $0.02 to a range of $11.30 to $11.50, representing 5.7% growth at the midpoint. As such, we now expect reported adjusted earnings per share of $11.55 at the midpoint or a growth of 7.1%.

I'll now shift to some qualitative considerations on phasing for your models. As noted last quarter, we anticipate fairly consistent operational sales growth throughout the year with a higher fourth quarter due to the benefit from the 53rd week referenced earlier. In Innovative Medicine, the depth and strength of our portfolio will continue to drive accelerating growth this year. We expect contributions from our newly launched products across oncology, immunology and neuroscience to increase throughout the year. As Joaquin mentioned, we are excited by the launch of ICOTYDE as well as that of INLEXZO, our innovative new therapy for certain types of bladder cancer, which had sales slightly above $30 million in the quarter. On April 1, we received a permanent J-code for INLEXZO reimbursement, which will enable broader patient access and serve as an important catalyst for growth.

In neuroscience, CAPLYTA continued to build momentum following its FDA approval in adjunctive major depressive disorder with new patient starts and total continuing patient growth outpacing the market. We believe this performance supports CAPLYTA's peak annual sales potential of greater than $5 billion, and we look forward to sharing additional data in bipolar mania later this year.

In MedTech, our focus this year is on accelerating the adoption of our recently launched products. ETHICON 4000, our next-generation surgical stapler launched in the U.S. in 2025 is expected to launch in Europe shortly.

In Vision, we continue to expand the TECNIS platform globally and look forward to the U.S. launch of TECNIS PureSee intraocular lens, which enables surgeons to address cataract-related vision loss and presbyopia in a single procedure.

In electrophysiology, VARIPULSE Pro is an innovative step forward, introducing a new faster pulse sequence that reduces ablation time by 85%. We do anticipate some second half impact from volume-based procurement in China for electrophysiology products, which has been factored into our full year guidance.

The Orthopedics business under the leadership of Namal Nawana, delivered a strong first quarter with encouraging momentum across key platforms. We are continuing to make targeted investments in the business and working towards a mid-2027 separation. We look forward to sharing further updates later this year. And as stated last October, we are evaluating all separation vehicles that create shareholder value and set up the DePuy Synthes business for long-term success.

Turning to our pipeline. We have many important catalysts that we are looking forward to in 2026. In Innovative Medicine, we expect regulatory approval for TREMFYA for the inhibition of structural joint damage for patients with psoriatic arthritis. As this chart indicates, we also have many important upcoming data presentations across oncology, immunology and neuroscience including ERLEADA in localized and locally advanced high-risk prostate cancer, INLEXZO in high-risk non-muscle invasive bladder cancer; JNJ-4804 in ulcerative colitis and Crohn's disease and CAPLYTA in Bipolar mania.

In MedTech, we anticipate the following approvals and regulatory submissions: OTTAVA Robotic Surgical System, VARIPULSE Pro in the U.S.; ETHIZIA in biosurgery and the Dual Energy THERMOCOOL SMARTTOUCH SF catheter in the U.S.

Before we move to Q&A, we'd like to thank our colleagues around the world for delivering another solid quarter. Their execution continues to optimize our portfolio, advance our pipeline and deliver on our mission of improving and saving lives. Our diversified portfolio, robust pipeline and strong financial foundation position us to drive accelerating and sustainable growth while creating near- and long-term value for shareholders. Speaking of long term, we look forward to providing an in-depth look at our long-term strategy and the driving forces behind our path to double-digit growth. Please mark your calendars for December 8, the date of our Enterprise business review.

With that, we are happy to take your questions. Kevin, can you please open the call for Q&A?

[Operator Instructions] Our first question today is coming from Terence Flynn from Morgan Stanley.

Great. Congrats on all the progress. I had a 2-part one on ICOTYDE. I was just wondering if you can remind us of how you're positioning that drug in the market now that have full details on the label and pricing? And also, how should we think about the ramp of reimbursement coverage there and any sampling plans?

Thanks. Well Good morning, Terence. Hello, everyone. And I just wanted to start with a big thanks to the entire innovative medicine team throughout the world, really strong results in the first quarter with over $15 billion in net sales 7.4% operational growth really importantly, [ 11k ] brands delivering double-digit growth. And if you take a look at what is now 96% of our business that is not including STELARA, we actually grew at 16.6%. So really nice accelerating growth across the portfolio.

So I'm thrilled to talk about ICOTYDE, really one of our outstanding products. And I've got to tell you it's off to a very fast start. The product was approved in March. And we're really, really happy with what we believe is a very differentiated label for the product is the first and only targeted oral peptide that precisely blocks the IL-23 receptor. ICOTYDE, maybe as a reminder, delivers complete skin clearance, favorable safety and the simplicity of a once-daily pill, and we think it's got the potential to become one of our biggest products. So we were day one launch ready for the product. And in fact, first patient was actually on medication within 24 hours of approval.

We're seeing very strong early enthusiasm from both physicians and patients that reinforce our confidence in the potential for this product. A number of us were out at the AAD meeting as well. And the KOL receptivity to the strength and the simplicity of the label has been really encouraging things like no lab monitoring, the TV language that reflects the physician clinical judgment, no black box or drug interactions, really is giving us good confidence that this is going to be really the preferred choice and first choice for systemic therapy.

In terms of early uptake, we're seeing so far about 1,500 patients already that prescriptions have been written for that are going into access and patient support service center, so already 1,500 and already over 1,000 unique customers that are writing. In terms of payers, our goal is to have both early and broad access. And we're in the middle of a very, very positive conversations with them to try to drive that early and very broad access. So more to come on that.

In terms of the positioning. I can't think of a better portfolio than being able to have both ICOTYDE and TREMFYA for our folks and really for patients with ICOTYDE being the first and only targeted oral peptide is really going to become the preferred first-line systemic therapy. We know there are so many patients that keep cycling and cycling on topical therapies. Now the international psoriasis Foundation guidelines have changed so that patients after 2 topicals and trials of 4 weeks each really become eligible for systemic and advanced therapies. And so we think ICOTYDE fits right in this sweetspot as that first choice systemic.

Likewise, TREMFYA holds a really unique and distinct position as well. And that really is the first choice biologic. And so TREMFYA is both structurally and functionally different from the other IL-23s. We've been able to demonstrate really durable complete skin clearance and in our case here, it's the first and only IL-23 that's got significant inhibition of structural damage. So we think it's really the first choice biologic, especially in patients that have active or suspected PSA or psoriatic arthritis. So we think that with that 1-2 punch, we have got the portfolio for psoriatic disease in patients and are really excited about both agents going forward.

Maybe I would just add one other thing, John Reed here, our study of ICOTYDE in psoriatic arthritis, should read out later this year. That's important given that about 1/3 of patients with psoriasis also develop psoriatic arthritis. And the studies in inflammatory bile diseases, Crohn's and colitis are often rolling that Phase III program.

Our next question is coming from Larry Biegelsen from Wells Fargo.

Congrats on a nice start to the year here. Tim, sentiment in the medical device space is relatively low right now because of a number of headwinds and concerns. You posted a respectable growth rate this quarter, but it was slightly below the Q4 growth rate and the comp in Q1 was relatively easy. So my question is, what are you seeing in your end markets? And how are you thinking about the remainder of the year?

Let me jump right in and say that, as you know, we've been very clear, Larry, in articulating our strategy, which is focused on higher growth and higher innovation markets, and that includes our deliberate choice to prioritize our 3 focus areas of Cardiovascular, Vision and Surgery as we separate Ortho. And I can confidently say that, that strategy is working. And in short, while we're navigating a dynamic world and market like everybody else for us, Q1 unfolded as we expected the year to start seasonally quieter but operationally solid, and this was also not a one business or one region quarter, as you've seen by the results, we saw growth across the board. And overall, we're pleased with the 4.6% operational growth, especially given that Q1 is typically our most seasonally subdued quarter.

And I think it's also worth noting, Larry, that while there were some easier year-over-year comparisons this by no means throughout the quarter. Specifically, the 210 basis points of onetime impact we referenced in Q1 of last year, which you will recall was a bit of a noisy quarter were almost entirely related to the items that occurred in 2024. And so those prior year events temporarily depressed the year-over-year growth rate, creating a [ lighter comparator ] but they did not affect on the underlying dollar sales. And so onetime items from 2024 fully lapped last year, and our Q1 performance reflects underlying operational execution and normal seasonality rather than any benefit from prior one-timers.

So I'd say in summary, Larry, overall, Q1 played out largely as we anticipated, balancing normal seasonality with solid execution. And most importantly, nothing in the quarter changes our confidence in further acceleration as we look towards Q2 and the remainder of 2026. And we've got a lot of growth catalysts to be proud of.

What I will say in terms of the underlying market is that it's solid and underlying demand is what we expected. Now we did see some procedural softness early in the quarter, but nothing that we would define really as material while certain regions, particularly here in the U.S., you will recall, we experienced some periods of severe weather in late January and early February. That was largely consistent with normal seasonal patterns and while there was some localized impact on procedure volumes due to poor weather in parts of the business, we would not categorize them as material or meaningful at an overall level. And so what I'm proud of is our teams are highly experienced in managing these types of short-term disruptions and our supply chain, our clinical support and commercial teams work closely with health care providers to maintain continuity of service and support patient care.

And so in short, Larry, a strong quarter for us, consistent with our expectations, and we believe strongly in the robustness of our end markets. Thank you.

The next question today is coming from Asad Haider from Goldman Sachs.

Great. Congrats on yet another solid quarter. For Joaquin, just going back to the goal of double-digit top line growth towards the end of the decade, that's still not something that's getting reflected in consensus models. And in light of your comment earlier that ICOTYDE could be one of your largest products ever, that would suggest an opportunity of at least $10 billion. So any updated views on what you see as the key product variances versus the Street looking towards the end of the decade? And related, how important is the BD lever in that growth algorithm?

Thank you very much. And look, again, as you can see, we are off to a fast start with momentum that will accelerate throughout the year in 2027. And as you mentioned, with line of sight to double-digit growth by the end of the decade. And I think it's a fair question. How is that possible for a company that this year in 2026 is going to deliver more than $100 billion. This is grounded in reality, as a matter of fact, it's already happening today. If you look at the first quarter of 2026, we are already delivering double-digit growth as total Johnson & Johnson when you exclude the STELARA. So it's already happening today. And it's based on our Pro portfolio and pipeline, the strongest in our history. And also, as the decade progresses we are going to see increasing impact in our revenue of our new product launches that are largely derisked in particular, as you mentioned, there's still an underestimation of the potential of ICOTYDE, in psoriatic arthritis and IBD, the potential of RYBREVANT in non-small cell lung cancer, head and neck, where we got breakthrough resignation on colorectal cancer and finally, the potential of INLEXZO in high-risk non-muscle invasive bladder cancer. By the way, INLEXZO got the J-code earlier in April. So I believe those are 3 particular products that remain underestimated that are already marketed.

The same is true in MedTech where launches, especially in cardiovascular, including our next-generation PFA catheters and Impella ECP, along with OTTAVA in robotic surgery are not yet fully reflected as well as the fact that the separation of orthopedics will further lift our growth rates. So I think you -- when you take into consideration all those factors, you are going to get into a similar conclusion of double-digit growth by the end of the decade.

Further, I would say that the strong sales growth will also drive operating leverage that will be further amplified when the U.S. DARZALEX royalties roll off in 2029. So taken together, this creates what some of you have called the cleanest growth story in health care. And we are going to be providing additional details in our enterprise review that will take place in December as we have announced today.

Regarding BD, let me be clear, all these numbers do not include business development. This is based in the strong portfolio pipeline that we have today that is largely the risk, which increases the confidence in our ability to get there. When it comes to business development, I mean, that remains an important part of our capital allocation. As a matter of fact, I would say we have been ahead of the curve in our investments in M&A with the acquisitions during the last 2.5 years of Abiomed, Shockwave and intracellular. As I have commented in multiple times, our sweetspot remains early-stage deals like the one we did earlier this year with Halda Therapeutics, which brings a new platform in our oncology business. And at the same, I have to say that given the situation that I just described, our priority from a capital allocation perspective, our priority is to invest behind our portfolio of new product launches and our promising pipeline programs. So that's our priority today. We remain opportunistic from a business development standpoint but we do not depend on M&A to be able to deliver on that promise.

So in summary, we see both revenue growth and operating margins improving and we reaffirm that we have line of sight to double-digit growth by the end of the decade.

Our next question today is coming from Chris Schott from JPMorgan.

Congrats on the progress. I just had a two-parter coming back to ICOTYDE. Maybe the first one, you mentioned 1,500 prescriptions so far. Is there any color on where those customers are coming from as we think about new patients versus those switching off orals versus those switching off injectables? And then just on the bigger picture view of ICOTYDE, as you mentioned, potential for the drug to become one of the company's largest ever. The pathway to get there, should we think about this as a similar dynamic to TREMFYA that skews more towards IBD versus psoriasis or is this one that could have more balanced sales by indication given, as you mentioned, the frontline potential of the drug in the psoriasis setting?

Chris, thanks so much for the question. So in terms of the early information on ICOTYDE. Obviously, it is really early. So we're still getting information and I can tell you that there's a broad range of prescribers for ICOTYDE as we look across the medical community. We don't yet have data that is specific to exactly where that's coming from, what is exactly new, what they're switching off of, et cetera. So hopefully, we'll have greater granularity on that at our next call, next quarter. So obviously, it's pretty new and hot off the press.

I think as we take a look at ICOTYDE, ICOTYDE is going to fit in psoriasis really firmly in that systemic first-line therapy area. And that is also a great opportunity there for market expansion. If you think there are so many patients that are cycling on topicals, they are resistant to moving into biologics for a number of reasons, whether it's needle phobia, perceptions around safety profile and things. We think not only given the size of the current systemic market and having significant impact there, but really being able to expand that broader is going to be key for ICOTYDE's success.

I also think when you think about IBD and having an oral agent, we've got to see the studies pan out. But based on our goals there, we think that, that's going to be a similar very, very large opportunity. I think here, we're going to see maybe more of a balanced scenario given the strength that we really anticipate having in psoriasis, but I think both segments, both psoriatic disease and inflammatory bowel diseases are going to be very big offer a lot of potential and promise for ICOTYDE.

Yes, Chris, maybe just one other comment on that is that across most autoimmune diseases, about 70% to 80% of patients who are eligible for our biologics are not taking one. And so that's why we really think about this market expansion opportunity to offer patients the convenience of a highly effective very safe once a day pill.

Our next question today is coming from Shagun Singh from RBC Capital Markets.

I wanted to touch on some of your growth drivers within the Medical Device business. Abiomed post-ACC, some of our checks are suggesting that within the high-risk population, we could see up to a 30% reduction. How does that compare with your expectation? And it looks like the IDL space is looking to get increasingly more competitive. So how do you manage your market leadership position in that space? And then overall, as I think about all the drivers that you mentioned within medical devices, should we think about MedTech as a high single-digit growth contributor towards the double-digit growth that you've called out for total company by the end of the decade?

Shagun, thank you for the question. And there's a lot in there. Let me try and unpack it. Firstly, we are really excited to be now significantly embedded in the cardiovascular space beyond the leadership position we hold in electrophysiology and with the acquisitions of both Abiomed and Shockwave, we've added to high-growth, high-margin businesses with tremendous trajectory for the future. And, as you know, grew 14%, almost 15% in the first quarter, and this is really driven by rapid adoption of Impella 5.5 and CP and what excites me most going forward is Abiomed's robust pipeline of not only technologies, but ongoing clinical studies showing the benefits of this technology. And you will know that in August of last year, we saw a new data from the DanGer Shock shop randomized controlled trial published in the New England Journal of Medicine, and this really confirmed the long-term survival benefit of Impella. These results found that up to 10 years when compared to the standard of care, routine use of Impella in patients who had a STEMI heart attack with cardiogenic shock lead to an absolute mortality reduction of 16.3%. And to put this in context, when compared with the control arm of 10 years, Impella CP patients gained an average of 600 additional days alive. I mean that is compelling. And so while you're always going to see new data and new studies come about, we believe that our evidence base for the products we have and the indications we have today are absolutely solid and will continue to drive performance in a category where we don't have line of sight to any significant competitor for the foreseeable future.

I'll turn to Shockwave, 18.1% in the first quarter, and we're very pleased with that performance. The IVL market is one we completely have created ourselves through the acquisition of Shockwave and we continue to advance our leadership position. Now clearly, competition is coming. Competition is going to come to any space that is attractive and certainly one as attractive as IVL. But there's 3 reasons that we have confidence in our portfolio and our future. And the first thing really is our portfolio. The second is evidence, and it's our presence. And over the past 7 years, we've had -- we've earned the reputation of an innovative disruptor, launching 9 -- yes, 9 new coronary and peripheral catheters that have introduced a new standard of care when it comes to safely and effectively treating calcified lesions. And as a result, Shockwave IVL has become the preferred treatment strategy in most calcium cases worldwide where it has been used in now more than 1 million cases around the world, and global expansion has also increased since the acquisition as we had transitioned 10 markets to direct sales forces. We've expanded our presence to now cover 17 markets globally with J&J representatives where we can leverage our scale and the broader J&J organization to drive government relations and address any legal and market access opportunities. And while we will never take any competitor for granted, new competitive entrants into the IVL market, validate really Shockwave's robust portfolio in leading specific solutions. And while competitors are introducing some of the versions to our first-generation products from 2017, we're introducing our fifth generation coronary peripheral devices in 2026 and a single catheter offering will be difficult to compete against Shockwave's portfolio strategy and the improvements we've made over the years to reset the standard of IVL. And while new competitors are completing their first regulatory required clinical studies, we're continuing to invest millions in robust real-world clinical evidence with nearly 25,000 patient outcomes published across 600 journals to date, demonstrating our unique safety profile exclusively associated with Shockwave's ultrasonic acoustic platform and what physicians also appreciate is our contact easy-to-use and rechargeable generators, which require minimal capital expenditure. And back to the point of presence, these generators provide widespread access to Shockwave's IVL technology and they're available in almost every cath lab across the United States, and we actually have more than two generators in over 1,700 U.S. hospitals, and so very difficult for competitors to unseat us.

Most importantly, I'd say is we remain hyper-focused on continuing to earn our innovative disruptor reputation with plans to launch at least one new IVL catheter per year that we expect will redefine the future of IVL in new indications and new disease states. And this year, we will launch our C2 Aero new coronary catheter, which from the early feedback we've got from physicians is going to be another standout product.

I think to your final point around long-term prospects. We're excited about our growth profile and the catalysts we have to continue to accelerate MedTech from a mid-single-digit player into a higher single-digit player as we move towards the end of the decade. I will point to some big catalysts, especially in our surgery business. Surgery is one of our larger portfolios. We are a dominant leader, both in the open and laparoscopic space. And we have an expectation to play a big role in the robotics space. As you know, we've submitted OTTAVA for approval. And assuming everything plays out, we expect that by the end of this year, we will be launching not one but two new surgical robotic programs, both with OTTAVA and MONARCH for urology.

Now what we don't expect those programs to be significantly accretive to growth in the short term, they certainly will be accretive as we move to the back half of the decade. So another good example of an important catalyst that will take us from a mid-single-digit player into a higher single-digit player as we look to the back half of the decade.

Your next question is coming from Alexandria Hammond from Wolfe Search.

A few more on ICOTYDE. Can you walk us through the investments you guys are making on prescriber and patient education? And how important do you think advertising will be to kind of engage those new patients who might be nervous to start on a systemic therapy? And then just as a follow-up as well, with ICONIC-ASCEND trial set to read out imminently, how important could this result be those ongoing commercial discussions?

The study you mentioned in the head-to-head against the TYK2 inhibitor is, I think, just illustrates the best-in-disease profile for ICOTYDE in terms of having both that high-level efficacy combined with safety in the once-a-day pill. How much the direct-to-consumer is going to matter, I'm going to let Jennifer answer that question.

Alex, it's safe to say that we are investing big in ICOTYDE to make sure that this brand can do all that it can do for patients. I think that the ease and the simplicity when you combine the clinical profile, the safety, the efficacy and then the ease of the product, we really believe that we've got a winner. And so we're investing to really get off to a very strong launch, that's with all of the appropriate field teams. Additionally, we've invested and built out what we believe are really best-in-class patient access and support services to help patients get on the medicine both get on and be able to stay on. And then we're continuing to evaluate the best way to make sure that both the clinicians, all the appropriate health care providers patients are aware of this important offering. So probably more to come on that, but please know that we're investing what we believe we're investing to win in this area.

Our next question is coming from Joanne Wuensch from Citibank.

Very nice start to the year. I'm going to pause for a moment on the ophthalmology franchise, in particular, your views on the U.S. surgical and U.S. contact lens market. I'm curious in particular about the almost 3% decline in the U.S. Surgical in the quarter and how to think about that recovery throughout the remainder of the year?

Joanne, thank you for the question. Vision overall, delivered a solid first quarter with sales growth of 3.6%, which is really consistent with our expectations. You will recall that business tends to be slower in the first couple of quarters and then accelerate throughout the year. We've seen that over the last couple and certainly, 2025 was no exception. Keep in mind that Q1 is typically our lowest quarter, and we're confident that we will see acceleration through the remainder of the year.

If you break it down into the two component businesses, contact lens grew 2.7%, driven by the ACUVUE OASYS 1-day family. And especially, as you heard earlier from Joaquin, the MAX multifocal products, and these latest launches really complete our family of daily disposables and are solidifying our leadership in the category with exceptional comfort, clarity and stability. And when I look to surgical vision, we grew 6%, driven by normal seasonality. We continue to see strong global momentum in premium IOLs led by TECNIS Odyssey and PureSee where we're outpacing the market globally, and this premium segment remains a key driver of value and differentiation.

I think to your pointed question on U.S. performance, if we look at Surgical Vision growth in the quarter, it was offset in the U.S. due to competitive pressures as new entrants came into the market, which is not unexpected given the fierce stature of this portfolio. We also continue to expect some seasonality in our business as growth won't always be linear. That said, we remain confident in our clinical position with TECNIS Odyssey. And as we prepare for the launch of TECNIS PureSee in the U.S. later this year. And we have seen extremely strong uptake of TECNIS PureSee globally, nearly half -- it's actually almost 0.5 million eyes worldwide have already experienced a clearer uninterrupted vision with this premium IOL and TECNIS PureSee, which received FDA approval, this quarter is the first and only U.S. FDA-approved extended depth of focus IOL with no warning on loss of contrast sensitivity, which is a huge game changer for physicians and the comfort they have in recommending an IOL. In fact, 97% of patients reported no bothersome visual disturbances like halos or glares, which can often occur with other IOLs and we're really excited about the launch of PureSee here in the U.S., which will give surgeons an important new lens option for their patients. And as we continue to focus on the premiumization of our portfolio, we firmly believe that the combination of TECNIS Odyssey, which is in the market and now TECNIS PureSee will be a key driver of value and differentiation. On the back of this, we can confidently say that we expect accelerated growth in the back half of the year for our Surgical Vision business and Vision overall, including here in the U.S. So thank you again for the question.

The next question today is coming from David Risinger from Leerink Partners.

So my question is on JNJ-4804 the coantibody. Could you talk about your vision for its role in IBD treatment paradigms and the readouts that we should be focused on? And then since others have asked multiple questions. Joe, could you just share the [ MFA ] sales like you did in the first quarter for INLEXZO?

Yes. Thanks for the question about 4804. So just to remind the audience, this is our coantibody therapeutic that combines guselkumab, our IL-23 inhibitor, also known as TREMFYA together with our TNF inhibitor, golimumab and we are in a position to potentially be the first with a coantibody therapeutic in the IBD space. Now even with the best of therapies, more than half of patients with IBD do not achieve a complete remission, and so we see for patients where monotherapy is not getting the job done to then offer this dual therapy, the combined therapy is a fixed dose combination. So the Phase II data on that in both Crohn's and Colitis, there were two separate studies will be presented in the coming year at a medical conference. So you'll have an opportunity to see the details of the data there, and that will provide more insights into the specifics around the most ideal patient populations for this kind of co antibody therapeutic. But we're really excited to move this forward now with pace. The Phase III programs are underway and really excited to then try to break through these efficacy ceilings that have limited how many of these patients who battle with inflammatory bowel disease are able to achieve a complete remission and really get that mucosal healing from their therapy.

David, thanks for the extra question there. We actually don't disclose the [ MFA ] sales at this point in time. So more to come on that. We actually have time for one last question.

Certainly, our final question today is coming from Matt Miksic from Barclays.

Great. And congrats again on a really impressive quarter and start to the year. So you mentioned INLEXZO a couple of times, and I know you've talked at length about it in the past. Just wondering if you could give us a sense of what the commercialization plan and rollout looks like for that, given it's a slightly different delivery mechanism than many of your other therapeutics and kind of where you are with that? Any metrics you can provide would be great. And thanks again.

Sure. So maybe as a reminder, despite recent advances in bladder cancer, unmet need in that area really remains significant and this is for bladder sparing options. There's almost 600,000 new patients diagnosed each year and another 400,000 that are recurring. So really, really big market opportunity. We've launched INLEXZO into the BCG unresponsive population and are really excited to be able to move forward in the coming years and to be able to broaden that population. As a reminder, we really designed the product to fit seamlessly into urology practice so that, relatively speaking, easy to insert and to retrieve and fits very, very nicely into practice. So how is the product doing? So INLEXZO's outperforming all the recent launches in the non-muscle invasive bladder cancer space. And that's based on kind of the unique patients that were treated in our first 6 months post approval. 1 in 5 eligible patients are starting on an INLEXZO regimen during the first quarter. And then what I think you really want to know is following our J-code approval which came at the beginning of April. What we saw in the first week was actually a over 50% increase in new patient insertions and the second week we that we have under our belt, we actually saw that jump up to almost 90% increase in new patient insertion. So consistent with what we've articulated on our expectations for this product once there's certainty reimbursement following the J-code, we're seeing play out in practice so far in the first couple of weeks. So very, very excited in that -- in the BCG unresponsive space and look to broaden that into broader populations

Yes. Just to remind with INLEXZO, we achieved the highest complete response rates ever seen for a therapy for non-muscle invasive bladder cancer achieved breakthrough designation from the FDA as well as the rapid review from FDA and in Japan, the PDMA accepted our submission based on the single-arm data, they've never previously accepted a submission based on single arm data just showing how exciting these data are and how much unmet need there is.

I would also draw your attention to INLEXZO is just the beginning. Right behind that, we have the IRDA, intravascular drug-releasing system, this has erdafitinib, that is a small molecule targeted therapy that addresses the intermediate risk non-muscle invasive bladder cancer population. There, we achieved in the biomarker-defined population, complete response rates north of 90%. And that device also custom designed to deliver that payload delivers medicine for 3 months compared to INLEXZO, which is 3 weeks. So we just keep getting better and better as we do the next iteration, the next iteration around this intravascular drug-releasing system.

And then in terms of our go-to-market model, this really represents the best of Johnson & Johnson and something that only a company like Johnson & Johnson with both an innovative medicine and a MedTech business. can do and bring to market. So in addition to the product that we've developed and the reimbursement and access support and that the sort of excellence that's coming out of the innovative medicine business, we've really been able to tap into MedTech and their world-class training institutes, their modular training that can literally go to the site of care. And so we're deploying that throughout the United States to make sure that urologists and their practices are up to speed on INLEXZO and fully trained to begin insertion for their patients as they deem fit. So really bringing the best of Johnson & Johnson to bear for this product.

Great. Okay. Thanks, Matt, and thanks to everyone for your questions and your continued interest in our company. I'll now turn the call over to Joaquin for some brief closing remarks.

Thank you, everybody, for joining us today. As you have heard, Johnson & Johnson has the strongest portfolio pipeline in our history, and we are relentlessly focused on innovation that is delivering real impact for patients. With our Q1 performance, we are off to a strong start, reinforcing our confidence in the year ahead and our ability to raise the standard of care in our 6 key focus areas. Thank you for your interest in Johnson & Johnson. We'll see you at our late December, too, to give you more details on these new products that you were asking and enjoy the rest of your day.

Thank you. This concludes today's Johnson & Johnson's First Quarter 2026 Earnings Conference Call. You may now disconnect.

Still morning. So good morning, everybody. Very happy to have with us this year from J&J, Hani Abouhalka, Group Chairman of Surgery, otherwise known as the man behind the robot. And my name is Matt Miksic. I cover medtech here at Barclays.

So exciting times at Johnson & Johnson in surgery after a bunch of years, we won't go backwards. We'll go forwards, but a long path with lots of twists and turns, but now kind of a final stretch of potentially getting this robot to market.

So maybe with that kind of perspective, we get a lot of questions sometimes on why does J&J want to have a robot, why do they need to have a robot? What can the robot add? Maybe -- so I know that not everything you put together was in response to the marketplace. But at a high level, maybe frame the sort of objectives of the project and the strategy behind the project as you're currently executing it.

Well, good morning, everyone. Thank you, Matt, for the invite. I'm incredibly honored to be here representing J&J and the many thousands of people working on surgery. It's an incredible conference, and we're glad to be part of it. So thank you.

For people that don't know, maybe I'll spend a few minutes about talking about J&J MedTech surgery. Our company was founded actually in surgery more than 140 years ago. I'll -- it's an anecdote that actually will resonate here. Our founder, Robert Wood Johnson, was attending a Centennial Expo to celebrate the 100th anniversary of the independence of the U.S., which is this year is 250 years. He walked in and Sir Joseph Lister was talking about antiseptic techniques for surgery.

And our founder found an incredible opportunity to go back to New Jersey and years later, found J&J with incredible technologies that changed surgeries since then. Our first catalog had antiseptic gargles, had antiseptic style sutures, which back then, if you walked into OR, it was 50-50 if you survive. And that was the first moment where actually surgery changed.

And we've been at the forefront of surgery changing ever since, whether it's open laparoscopic -- whether open safe surgery across the world, whether it's laparoscopic surgery in the '80s and '90s. And today, we're super excited to be working on bringing robotic surgery to the market.

Why the excitement? It starts off by taking a step back and looking at the last 25-plus years, incredible progress has happened in robotic surgery. But when we talk to surgeons, surgical teams, hospital CEOs, they tell us a lot still needs to happen. There's still a lot of unmet needs. And it starts off really a basic premise from a design perspective.

The world of robotics globally across all companies is stuck in 2 worlds, either booms or cards. And we think there is a different approach to this. We believe there is a unique approach to this. And that's why one of our big bets and choices have been around design. And that's why when we look at Ottava, we're bringing a robot that is actually the table.

The arms are integrated. We believe that design other than -- and if you remember, Matt, you saw it, it's beautiful. But other than it's being beautiful, it also have incredible implications on workflow, on reducing the tension and friction between the surgical team and the robot.

And we believe we've addressed that with our design philosophy and principles. Other than that, we're also excited to be the leaders to really take this forward from here around across all surgery. And that's why this means instruments. It means our digital ecosystem with Polyphonic. We were the company that disrupted and changed surgery over the last 140 years, we believe we're at the moment where we will take this forward from here also.

Okay. So a couple of follow-ups. There's been kind of an evolution of thought in the last 10 years about what the next robot should look like with Intuitive in the marketplace. It's big. Maybe there was a time when maybe there still is a time when folks will say, well, robot should be smaller, maybe smaller for an ASC. There's a number of those filtering through different levels of commercial strategy now from other competitors like separate arms and single arms or more limited footprint. You took the strategy of retractable arms and essentially a bed that can be used for laparoscopy or for robotics. So maybe talk a little bit about why that was important.

Yes. And first, I have to tell you, the physics and engineering behind it is incredible. Our people worked really hard to solve for something that we felt is important other than the design principles that I do believe is important. We felt that having an ability to create space and give back to hospitals and the surgical teams is incredibly powerful.

Think about it this way. Right now, if you go to a hospital, robotic ORs have to be dedicated to robotics. We believe that OR should be ORs to serve all surgery, whether it's open lab and robotics. Our solution, Ottava, the arms are integrated on the table. When you don't need them, they're stored invisibly, you don't see them. When you need them, you can deploy one or multiple arms based on the need of the surgery.

We think that's very powerful choice, and that's incredibly powerful for surgeons to be able to do that. But we didn't stop there. We believe that the ability to have the arms integrated also allows surgeon to use gravity to do manipulation of organs. That's something that's native with our design. You don't need to unlock or relock, you don't need software. The architecture of it allows using gravity, which is something surgeons use comfortably in the laparoscopic minimally invasive setting.

But the other things also we're excited about from Ottava, and that's why we're excited about going forward is also we're bringing our instruments, our technologies that are trusted across open and lab exclusively on Ottava. Recently, we launched in the U.S. last year and this year across the world, our ETHICON 4000. It's our most secure staple line ever. That is important from surgeons and their teams because think about it.

There are surgeons today, 25 years into robotic surgery that they choose to go to the table and do a manual firing using one of our instruments because they trust that staple line. We believe having that consistency of experience across open lab and robotics is very powerful from a surgeon, surgical team perspective, but also from a hospital perspective, you know when complications happen in surgery, and unfortunately, still 25% of surgeries come with post-surgery complications, having a trusted staple, secure staple line is something that will be different and important, not clinically but also economically. We believe that's something that Ottava will also bring.

Last but not least, we also believe that an area of where we looked at where it is today and what needs to go is digital surgery. And we believe that by creating polyphonic from the ground up, it's something that allows us to connect surgery across agnostic from the technologies, our technologies. It's what hospitals and surgeons need and expect, and we can talk about that a bit later also.

Sure. And then maybe you mentioned the ability to keep the OR flexible. From a hospital's perspective, they're performing a certain number of laparoscopy procedures and a certain number of robotic procedures, they're already using your instruments in laparoscopy and elsewhere. What does the introduction of the robot into that platform, let's say, a typical platform that has a mixture of those technologies. What's the value add for a hospital?

Yes. So if you look at the instrument side, I think having that consistency and experience across all modalities, we believe and we know it will be differentiated for surgical teams and hospital administrators from outcomes and procurement, all of that. So that's one lens.

The second lens, if you think about how important a minute in OR is having your ORs work efficiently across all modalities is important. So there is the lens of -- we believe that the table being the robot gives flexibility to ORs across the world where our robot can work natively, if you want. But the second piece in many hospitals, what we hear is that robotic ORs don't work as efficiently as open or lap ORs.

So we believe instead of "having ORs that are dedicated to robotics" and if a case is canceled or postponed, that OR is idle. We believe having that OR being an OR for all surgery is quite powerful. Then the third pillar of this is also this also gives the surgeons flexibility to deploy different arms at different times based on the needs they need.

So not only we're bringing robotic arms, robotic ORs to be in ORs, which is something we believe will work to improve workflow, will improve efficiencies. And that's something surgeons and their teams tell us is important. But most definitely, hospital administrators and CEOs, this is an incredibly important asset for them and have it be working efficiently with less friction, with less special cases is quite powerful.

Okay. That makes sense. And then the natural question, any time someone comes out with a less obstructive, smaller footprint robot, everyone looks at that and says, well, that's got to be great for the ASC because it's smaller. So I'm assuming there's some amount of ASC benefit that you're thinking about and maybe clinicians are thinking about with Ottava.

One of the other elements, of course, is what it's going to take to get this in the door. And so maybe that's changed. The market leader has changed the way they bring their products to their additional systems to hospitals, more leasing, more contracting. Maybe talk a little bit about what you're anticipating that way.

Matt, we're not -- as you would expect, we're not going to share specifics around our commercial launch. There'll be more to share as we come, but I'll say a few things. If you look at our history, when we bring innovation and technology, we bring it with the sole purpose as an Arcredo to serve patients and nurses and surgeons. And we do it across the world. We do it everywhere we are. We're present in more ORs than any other surgery company out there. So that's something that's deeply rooted in who we are and what we do.

So our intention, like we've done in our past, is to be there to serve surgeons and patients where they are across surgery across the globe. We intend to win in surgical robotics, which means we need to be everywhere. Now the design choices we've made gives us some benefits, but not only in site of care, but even I can tell you, I've worked with Genome [indiscernible] across the world, the certain OR designs across different geographies, different regions are different.

So even in hospitals that are entrenched and tertiary centers, ORs don't look the same everywhere. We believe the flexibility of our design and how it fits will be a benefit regardless. But our intention is to serve and be where surgeons are everywhere and be leaders in that space everywhere.

Okay. So to drive utilization and benefit to the clinical team and the patient and so on. That makes sense. So other folks have -- we'll come back to the ecosystem in a second, but other folks have looked at this market and said, well, we don't want to go head-to-head against this market leader in maybe their power alleys or ways in which we think it's hard for us to make an argument that you should be using our technology.

You mentioned a couple in terms of the usability, flexibility, OR commitment. What in terms of the types of procedures again, this is a -- different companies are coming at this differently. Let's go where the most procedures are done in robotics or maybe let's go to a place in robotic surgery, where our design is particularly well suited to perform this procedure, maybe as well or better than the leader. Talk about your procedure strategy.

Yes. And I'd love to talk about that because we're very confident and excited about our strategy from an expansion and geographic indications. I'll talk about that. But also, I think it's important just to take a step back and understand what a defining moment this is because we believe this is the right time based on where we are to bring something that's unique, differentiated and innovative in the U.S. and globally going forward.

And I say that because a lot has changed and improved and good progress over the last 25 years, and we're thankful for that. And any progress in health care is something we cheer on. But also, we believe that listening and talking to surgeons, surgical teams and hospital in sellers, there's still unmet needs we need to solve for.

And we believe bringing this forward, we'll do that. I've been in medtech for 26 years. It's incredibly inspiring to see on the market, cheering from more competition to cheering for you to come in. I think that's something we cherish. And it's a responsibility and accountability we take seriously and doing it right will be something of the utmost importance. Takes me to our choices around expansion geographically and procedures.

I'll start in geography. We chose to come to the U.S. first. That was by design as you know, the U.S. is the largest market. It's a very sophisticated market. And that's a sign of confidence in our program, but also a sign of excitement to bring an incredibly innovative technology to the U.S. market. But also our approach there is to follow it as a close second in key robotic markets like Japan, like countries in Europe, Middle East and Africa.

So that's our lens from a geographic perspective. And what excites me there is being the leader in surgery across the world, we have incredible teams in commercial and education across the world today, and that's something that will help us do that with precision, with incredible partnerships with our partners across the world.

For the procedure expansion, we also -- what we did share is, first, we're going in first for an umbrella indication, and that's what our submission was for upper GI. And that's an umbrella procedure that covers key procedure in upper abdomen. That's exciting and different. And the second -- we also announced earlier this year that we got our IDE to go for inguinal hernia, which is one of the largest procedures in the U.S. and globally. We're not going to stop there, clearly. We have an incredibly strong regulatory team with our clinical team that's working on a rapid expansion from a procedure perspective after that.

Our intent is to be a surgical leader in robotics, which means we need a platform that works across different specialties, and that's what we believe we have with Ottava. And I don't want to miss also the fact that this is a double exciting year because we took robotics, specialty expansion, and this is with the lens of soft tissue robotics, but I don't want to miss also something really exciting happening for us in endoluminal percutaneous robotics, which is Monarch.

It was the first robot in the market for robotic endoscopy. And this year, we shared that we're also on plan to launch it in urology for kidney stones, talking about a new specialty new indication. This will be the first and only robotic endoluminal and percutaneous access for treating something that all of us know someone, friends or family, who have dealt with kidney stones. We think we're bringing meaningful innovation from a specialty procedure. So we're in it for the long term. We're in it to be leaders in a very exciting space for the future.

Okay. So maybe back to the ecosystem. So Intuitive has been building case history, put out case insights a couple of years ago. I think we're still -- as much as we hear about AI, I think we're still in the kind of like loading up Google Earth with data to figure out, okay, how are we going to use those, which I think for Google Maps was a bit more obvious, right?

But where are you in terms of aggregating your data, which is considerable on the laparoscopy side and then thinking about where the combination of that, as you described, and robotic will help starting building a -- I don't know, if it's the best route to -- for the patient or other kinds of features and data-driven value that you can give to clinicians and hospitals.

And this is an area that excites us, inspires us because, first, we're building it from scratch. Two, we have access and reach, and we know surgery across the world better than anyone, and that's incredibly powerful.

We have the trust of our partners and our surgeons to work with them on solving for this. And third and not least by margin, we also have the humility to understand that this is not a problem for one company to solve for. This is going to require a coalition of the willing, if you like, to come in and do something that's incredibly meaningful for surgeons, for patients for outcomes.

And we're building it from the ground up. And we made some choices that are very different than what's available today most solutions today are either siloed or directly linked to certain technologies or certain robots. I'll give you an example. In ORs on average, there's 7-plus software solutions. There's 5-plus data streams. There's 97% of surgeons that tell you they don't have and their teams, they don't have the right data at the right time to make meaningful difference, whether it's for workflows or for clinical decision support. And they say something needs to be better and have to be better, and we believe that.

So we made a bet on building Polyphonic. We created it with this approach of being open, secure, agnostic to whatever the data came from. Yes, clearly, it works seamlessly more with our products and technologies, but it's open to data from whatever it comes. And we're working with incredible tech partners, work with academia, working with hospitals to create the foundations, whether on building the data sets that need to be de-identified, structured in a manner that allows companies, academia, hospital, surgeons to build AI algorithms and automation to bring value that we have not seen yet in this industry.

I can tell you, everyone we talk to, they tell us is what is needed. And we believe what's available right now does not fall for this. We believe this is the right approach.

And everyone I talk to, whether it's CEOs of hospitals, nurses or surgeons, whether it's our tech partners, whether it's academic hospitals, whether it's 2 or 3 company setups, start-ups, this is what is needed. And I urge and ask everybody to come work with us on this journey. It's incredibly rewarding.

Okay. Well, that's exciting. And I mean, the first -- I know it's hard to pin down exactly where and when the benefit is going to come from sort of this seemingly obvious collection of all this historical wisdom and data and doing something with it. But what do you think will be some of the first?

Yes. I mean I'll give you a couple of examples. There are very "basic chapters" that are unfolding as we speak that are big unmet needs today, whether it's in education, whether it's using some of the capabilities to dynamically collaborate across centers, across hospitals. It's around integrating what's hours and hours of surgical video to use them in ways that they can train, whether it's performance analytics. These are very powerful use cases today that makes a difference.

But where the future is headed and what's needed, there's a lot of similarities will happen in other industries. Take, for example, the automotive industry. We understand that to get on a journey where whether it's decision support, whether it's intelligence-guided support, whether it's orchestration, you need to create data sets that are structured, that are identified, that are built on very secure privacy standard regulatory enterprise level, where you can make them available to bring the best of the minds of whether it's AI engineers, whether it's software engineers across the world to build something that not only will help that hospital that OR, but they can actually -- because it's built with scale in mind, that can actually be shared globally.

And the first use cases are exciting. What's possible from surgical video and data science and data engineering and data surgery of this HORIZON 2 and 3, I can tell you in the next 5, 10 years, we'll see stuff we've never seen possible. We've seen it happen in our industry. I go back, this is the right time to do it in surgery again. And I don't know, any better company to do it than us with the help and support of our partners.

Okay. So maybe if we roll forward a year or 2, what do you think investors will see from the surgical business? What will be the signs of success for Ottava as you get to the market and start rolling it out?

Yes. I mean I start by our credo saying when we serve our patients and our surgeons and our surgical teams, it's -- we take it very personal. We're very proud and inspired by that. We never lose sight of that.

Two, we talk about J&J being an innovation powerhouse. Some of the most exciting innovation is in surgery is in J&J, and I think that's something to be really proud of. And we have the [indiscernible] to bring it forward. But also, I start where it matters most, which is if you think about it, we have incredible businesses today that's making a difference in bleeding, in leaks, and solving big issues.

25% of surgeries have complications today. We have a long way to solve for this. What I want to make everyone know is when we bring all our technologies across all of surgery, we will partner with surgeons, hospitals and CEOs to make sure that we're the company that will take it from here and solve for what's next. And the biggest intent starts in robotics specifically you asked about that is to lead in that space.

And the best measure of success other than serving patients, bringing incredible innovation, how competitive we are in our placements going forward. And when we do all of this, we feel incredibly proud and the people are working on something that, once again, like we've done in our past, will change surgery once again.

Okay. So we're down to just about at the bottom here, but I'd say automation, just I'll leave it on this sort of this is a future topic. It's been -- it feels like a future topic, but I think we've been talking to surgeons about it for 10 years, like when does surgery start to take some element of automation. And so you're just about to begin to launch your robotic platform. Is that 3 years away? Is it 5 years away? And what do you think the demand is for that kind of?

Yes. And I'll end what I started. It's super important to realize when you're in a moment of history where you really believe it's a defining moment. We've seen in other industries. I think the acceleration and the intersection of science and technology. Health care will always be driven by incredible science, will always be driven with incredible surgeons and nurses who are dedicated to make a difference for patients.

I think we're entering this moment where bringing the best of both worlds. We're going to see innovation in the next 5 years like we've never seen in the last 50 years. And someone with the resources we have, the talent that we have, the engineers that we have, the scientists we have, the educators that we have, the commercial folks that we have, we just want to partner with our surgeons and our -- whoever is interested in this journey to create what's next. And that's why the future is super exciting. And I can't wait to share with you more and with everyone here what's coming in the coming weeks and months.

All right. Well, I look forward to hearing about it.

Matt, thank you so much for the time. Thank you, for your time.

Good morning. I'm Josh Jennings from the TD Cowen Medical Devices Research Team, and we are thrilled to have Executive Vice President and CFO, Johnson & Johnson, Joe Wolk, joining us. Joe, it's great to see you in person. Thank you for participating this year. It's been a little while since I've seen you in person. So great to see you.

It's nice to see you, Josh, and thank you for your interest in Johnson & Johnson. Certainly do appreciate it.

Absolutely. We're going to focus a little bit on the high-level strategy and the MedTech franchise. That's our wheelhouse. I know you guys have a much bigger wheelhouse with the pharma unit. It's been an incredible stock performance year in 2025 for Johnson & Johnson, and a lot of that was driven by both MedTech and Innovative Medicines, but Innovative Medicines is kind of battling through. The STELARA LOE headwind was quite impressive, and you guys had laid that out that, that was probable and you executed and delivered. So that's been a fantastic run, and there's more to go. I don't know if there's any high-level thoughts that you want to share on the Innovative Medicines franchise or we can just dive into...

No, Josh. Thanks for the kind words. I do think it has been a nice run for Johnson & Johnson stock. If you think about the STELARA loss of exclusivity, some questions in our MedTech business, how would the pipeline in pharmaceuticals emerge. Those cards kind of flipped over about this time last year, and they've all been flipping over with some face cards and some ACEs, as I like to say, in there. So if I think about our pharmaceutical competitive set, the LOE event is still in front of a lot of folks, where for us, it's a rearview mirror event.

It just speaks to the breadth and depth of our pharmaceutical team in terms of the products that they have, the products that are emerging. If you take out the STELARA loss of exclusivity impact, that business grew close to 15% last year, right? And we're still only the second company -- we're still the only company, quite frankly, and we've done it twice now to overcome a loss of exclusivity of that size, the first time in 2018 with REMICADE and now last year with STELARA.

The MedTech story is also a good one, though. I think if -- we would -- a couple of years ago, we probably had some spotty performance. We made some really nice acquisitions with Abiomed and Shockwave to bolster our cardiovascular franchise. The growth is much more predictable now. We've got strong holds, obviously, in cardiovascular, in surgery and vision. And then we announced late last year that we would be separating our Orthopedics business. That's still a very good business. It just doesn't fit into what Joaquin and the Board desire to have in terms of our portfolio for higher growth, higher-margin businesses going forward.

In terms of share performance, we've been pleased. I've personally been pleased for the organization because there's been a lot of effort that's gone on over the years in advance of the STELARA loss of exclusivity and some of these other events. But make no mistake, we still have work to do, right? So it was a great 1-year return. But if you look in 3 and 5 years, we still have some ground to make up. And so we like to say, as Joaquin likes to say, 2025 was a catapult year. We think it was a catapult to really have a nice series of years here ahead of us with a line of sight towards double-digit growth as an enterprise.

And that's an intriguing and compelling metric, the double-digit growth target you guys put on the tape, and we'll dig a little bit into it. But I think we want to also venture into the discussion on the MedTech unit and Joaquin Duato has stated that -- I think in early days of his tenure as CEO that the turnaround of the MedTech unit would be a part of his legacy as CEO. I mean, you mentioned some of the M&A initiatives and you're building out that cardiovascular business, some high-growth assets, separating lower growth DePuy Synthes ortho business. And overall, that should drive the weighted average market growth rate of the MedTech portfolio higher, both of those initiatives. And I mean, how does the strategy evolve from here? You mentioned the focus on cardiovascular, surgery and vision subsectors? I mean, do you double down on the cardiovascular build-out or consider additional silos outside of those 3? Any just -- I mean, I'm sure there's multiple strategies that are being tossed around and discussed, but any help just thinking through as you talk about moving to that double-digit growth trajectory for you?

Yes. Listen, I think we feel really good. Let's stick with MedTech about the portfolio that we have in MedTech. If you think about Vision, in the end of '23 and '24, that business was lagging. We have market leadership in contact lenses, but we didn't have a lot of new innovation coming out. Last year, we were able to build upon the ACUVUE brand with our OASYS 1-Day MAX multifocal and then multifocal for stigmatism. That is kind of how people live. It's still a very underpenetrated market with only 10% of people needing corrective lenses using contact lenses. So we think there's still a big opportunity. We are significantly the market share leaders, but that market share is going to depend on the innovation that we continue to bring forward. We saw some of those results last year.

On the surgery side in Vision, I would say we had a really nice year, approached double-digit growth with TECNIS, again, another traditional brand, but launching Odyssey and PureSee overseas and then PureSee will come a bit later this year for people who suffer from cataracts, the most prevalent surgery of all surgeries out there. Again, a very underpenetrated market. So we think we've got the right cadence in Vision.

With Cardiovascular, Abiomed and Shockwave, I think, were very strategic acquisitions. They did bolster our position, I think, in a responsible way with respect to adding to the Cardiovascular portfolio, adding to our success in EP at the time and acquiring businesses that, quite frankly, were clinically differentiated and had nice competitive moats around them, right? What we like about those 2 units is they continually are looking to innovate. Probably the best example I've seen of innovation and just having that constant mindset has been Isaac out at Shockwave. They're always thinking about how can they make that outcome better.

With respect to Electrophysiology, I think it was -- after Q1 results last year, I think people were writing off our EP business for fourth or fifth place. You saw how Tim and Michael Bodner -- Tim Schmidt and Michael Bodner kind of focused the team to make sure that we found our footing within the fastest-growing segment of pulsed-field ablation to complement our leading position in RF that is tied to our CARTO system as well as some ultrasound capabilities, and we are vying for. We're still #1 today, and we have every intention to maintain that position.

And then with Surgery, I think you've seen kind of -- the business has done well on the wound closure side, the biosurgery side. Maybe where we've lacked a little bit in recent years is the instrument side of the business, and that's been impacted by robotics. We were proud to announce the filing of a de novo submission to the FDA for OTTAVA, our soft tissue surgical robot, which we hope will get approved later this year, certainly no later than early next. We were late to the game on that one. We should have -- given the presence that the Ethicon brand had in the OR, we should have been there sooner. But it's a very complex machinery to develop. We've now developed the expertise, really a tremendous credit to Tim, focusing the organization to make sure we set a time line, we hit it. And we think we're going to come out with a differentiated product. If you think about what that's set up to do, there's integrated architecture. So the arms are part of the table. That reduces the overall footprint in the OR. There's no carts. There's no boom. So we think that's an advantage. It's got twin motion. So the arms and the table move together. That means there's no repositioning or stoppage. The patient is kind of positioned as they need to be, making surgeries more efficient.

We do have that instrumentation that I spoke about in Ethicon. It's still highly revered in the operating room. As matter of fact, most robotic procedures today still utilize some form of Ethicon, Johnson & Johnson instrument.

And then lastly, we're going to surround it with some digital capabilities and digital ecosystem, we like to call it with POLYPHONIC, where we collect not just value from the hardware, but also the data and the insights that come from these procedures, making the next procedure better than the last. So we feel pretty good about where that all stands. And while it's important to have the OTTAVA robot approved later this year, we're not overly hyped up or overly counting on it from a financial performance point of view. We think it's much more important to get the launch right, get the feedback from 10 to 25 accounts, whatever we place in early on to create that buzz in the market as opposed to have a failed launch. So we're going to go slow to go fast. And I think that's critically important when you think only 8% today of surgeries are done with some robotic capability. So there's a lot of room to run yet. These are early days. That will be -- we're aiming to make sure that, that's a significant pillar of growth for the next decade.

No, it's been a nice turnaround, and there's clearly some momentum in play as we're moving here or already in 2026, credit to your team and Tim's leadership. And then just getting back to the out-year corporate-wide double-digit performance level that you guys cited is attainable. I mean, is it -- by our math, you guys have kind of laid out the current 5% to 7% growth rate for that MedTech unit ex ortho that could move to the high end of the range. But then potentially it seems like it may need to accelerate to contribute at the level to get the entire franchise to doublt digits. But I mean, is that the right assumption that potentially you guys can get north of 7% for MedTech and does that include any external business initiatives and assets that you guys are bringing into the M&A channel?

So at the risk of not getting Tim mad at me, I won't sign them up for any numbers. We're going to have an Investor Day in December of this year. The Orthopedics separation does add about 75 basis points of growth, about 75 basis points of margin to the overall outlook, as you mentioned. That's still a very, very good business, I will say. It just doesn't fit into the portfolio that Joaquin and the Board are desiring to have with higher growth, higher-margin businesses. But you think about what they were able to do just in the fourth quarter alone, right? I think a lot of people are probably expecting some distraction at the announcement. They were able to post 4% growth. I think with the right focus, and believe me, Namal Nawana is a really good leader for this space. He's already demonstrated that. He has the organization energized and focused. I think with the right focus, they could be 6%. And they won't battle against the rest of J&J for capital deployment, right? So this is a strong business, profitable. It's got good cash flow. It's going to do probably better on its own than it would under the guys of Johnson & Johnson.

And I realize I didn't answer one of your questions about M&A and broader. The way I'd like to answer that, there's -- for us, it's more opportunistic than it is a particular time in the market, macro, right? So a lot of times, we'll hear, well, it's a bad environment for M&A. It's a good environment for M&A. We kind of look at it very simplistically, and 80% of the discussion with our Board of Directors is about what's the strategic fit. Why does Johnson & Johnson have some unique scientific expertise, scientific capability, maybe it's a commercial capability or global reach that makes that asset better in our hands than where it currently resides. And then if that kind of box is checked, then we'll go to the financial discussion, making sure that we reward shareholders for the risk that we're bearing on their behalf.

But the great advantage I have, Josh, in my role is we have a lot of conviction and confidence in the assets that we have to be #1 or #2 in the market, but we're very disciplined in the pursuit of new assets, right? So we consider ourselves portfolio managers. That's a key responsibility for the executive committee, but we don't do things out of desperation. And that's a really nice place to be, especially when you have a AAA rating, you're generating more than $20 billion of free cash flow. We have license to do just about anything we want. We want to make sure that we do that in a way that people can look back a few years later like we are doing with Abiomed, Shockwave and although it's early days, intracellular and saying, boy, they made the right move and that asset is performing better.

Great. And just on the opposite side of M&A, just portfolio optimization, some pruning. You guys have been doing that annually, I know, in some bigger moves than others, including the separation of ortho that's not necessarily a pruning as you just described, right, what I wouldn't label pruning, but I mean, is that part of the portfolio, being active portfolio managers. I mean could other lower growth units find a new home or...

I guess over time, right now, we really like the construct of the 3 franchises, if you will, in Innovative Medicine, Pharmaceuticals and then the 3 franchises in MedTech. And all of them right now represent really solid growth with really strong margin performance. So we like the construct of our portfolio today. Will we always look to add? Yes. I mean if you just look back over the last 3 years or so, we deployed about $56 billion in capital on acquisitions, 3 of them made up $45 billion. We did 20-plus acquisitions with the remaining $8 billion to $9 billion. Those are the ones that really drive value. And those are earlier stage. They don't get headlines when we do the deal. But they often make headlines when the product launches or when we have success with the product. So we're going to look to continue to do that balance of earlier, smaller stage deals to tuck into our business, but could become very, very big platforms.

Maybe we could hone in a little bit on the near term. At your fourth quarter call, you issued 2026 guidance. I think for the MedTech unit, the message, and you don't guide specifically to Innovative Medicines and MedTech. But 2026 could be better than 2025 for the MedTech. And you already kind of described some of the drivers within cardiovascular, vision and surgery. But maybe just review some of the fundamental assumptions on the macro side, procedure volume growth. It seems -- I think your message is that there should be sustainable kind of momentum, maybe not a surge in '26, but maybe not a real decel CapEx environment, purchase environment in the United States by hospitals. Anything else you can just review and share any updates to the macro thinking?

Yes. I think in terms of our business, I would say we do benefit from just an accounting calendar phenomenon with a 53rd week. So we've got almost a point of growth there. But even when we subtract that out, it still portends to be -- we expect a better year out of MedTech. One, I would go to the cardiovascular platform, specifically in electrophysiology, right? It took us a couple of quarters to find our way in pulsed-field ablation. Despite all the mapping capabilities that we have, despite our leadership in RF, we were slower to the market with PFA. And then we had a little bit of a misstep with a pause at that point in time.

Just to speak about that pause, that was the responsible thing to do. And as it turned out, there was nothing malfunctioning with the unit itself. It was a matter of updating the IFUs, the instructions for use. And I think that built credibility, not just for the platform, but for Johnson & Johnson with electrophysiologists. So that was a smart move. We continue to innovate on that platform. But we will do better than what we did the first half of last year in EP, specifically in PFA.

With respect to Vision, I think you're going to continue to see the growth, the market leadership. I know on the contact lens side, we're looking to parlay some of that innovation we launched last year into better market share even though we already are the market leaders. And that's where I would point to in terms of our improved performance.

That makes sense. And...

Listen, I shortchanged orthopedics there, but orthopedics was flat last year for our business. They will be part of our '26 results. We expect something better than that out of them.

And there is, unfortunately, a conflict in the Middle East ongoing. I know it's very, very early days, but is there anything to share just in terms of Johnson & Johnson's business over there? We hope and -- everyone is safe from the J&J franchise and others, but...

Yes, that was really -- it is early days, Josh. I can't comment really with respect to the impact on the business. Some of the -- being so geographically diverse, having 28 platforms or products that generate more than $1 billion in revenue. We're not subject to any one dynamic per se. But our priority since Saturday night has really been the safety of our employees and people in the region, and that's really where we're still focused at this point in time. I wouldn't anticipate material impacts to our financial performance.

Okay. Okay. Maybe just circle back on some of your comments on your PFA franchise and the Biosense Webster franchise as a whole doing better than last year. I mean, as you described, there were some pauses in the PFA launch and you guys made some corrections. I guess my follow-up question is really is on the pipeline. I think you have dual-energy STSF and OMNYPULSE in development and coming on board in the coming quarters and even next year. Is that enough to build out your portfolio? And I'm sure there's other pipeline initiatives ongoing, maybe new waveforms, new modes of energy delivery. But is the message that you guys are comfortable with your current arsenal of ablation catheters? Clearly, you guys are still #1 and super strong on the mapping side and some of the ancillary technologies like intracardiac ultrasound, but focusing on the ablation catheter side of the portfolio, is that -- do you guys have what you need for the next 2 years to maintain that market leadership?

Yes, I do think. So you mentioned STSF dual energy that's already launched in Europe. We're getting some really good feedback in terms of the familiarity with how it's handled. Certainly, it's important for extending our leadership in point-to-point ablation, giving the users that dual modality for energy selection. So we expect in the first half of this year that we would be able to launch that. And then with OMNYPULSE, the IDE trial will be completed likely again in the first half of this year. You might have seen in recent weeks up here in Boston at an Afib conference some really compelling safety data, no safety events whatsoever. So there was no MRI detection of cerebral lesions or emboli, no worsening, no new neuro events. So we feel pretty good about the next 2-year to 3-year time frame that you mentioned.

I do appreciate you mentioning CARTO too. We do think that is the gold standard in terms of mapping. We think that it is important with all the catheters we've launched that there is -- it's easily integrated into what that mapping system does. And because it's so important, we call it the backbone of our electrophysiology franchise. We continue to innovate there as well. So we've got SONATA coming out, CARTO [indiscernible], likely over the coming quarters. That will add additional computing power. It will provide AI enhancements, better visualization, and it all leads to better outcomes. Some of the data that was recently shared in a publication was that they took 2,900 procedures that utilize CARTO, 2,000 that utilized our competitors' mapping, and there was a 61% reduction in terms of readmission for arrhythmia events just post 30 days after the initial procedure. We think that really speaks to just the outcomes that the CARTO mapping system drives. And it goes with something that's probably understated from us, and that's really the mappers and the clinicians that support these systems. So we've got 5,000 mappers. They are part and parcel to the success of all these procedures, and they're highly respected in those settings. And that is a great advantage for Johnson & Johnson.

And I think your team made the decision to open CARTO to integrate the competitors' ablation catheter technologies, I think maybe in 2025. I think by the time of HRS, you guys have made that move. And with your installed base, that's been a nice win, I think, is our understanding. I mean, is that the expectation going forward that the CARTO mapping revenues will be able to also be enhanced by when other competitors' ablation catheter technology is used.

Yes. I mean, hopefully, it's with our catheters, right? To be candid with you, that's kind of the goal here. But yes, I think that's one way to benefit. But there is just a nice seamless interchangeability, integrate it with our CARTO platform with all of our catheters. But yes, we thought it was the right thing to do to open that up.

Understood. I wanted to circle back to some of your comments on OTTAVA and the overall robotics effort or initiatives by Johnson & Johnson. And you have MONARCH as well. You have VELYS and VELYS will go with the orthopedic separation. And I think on -- earlier this year, Joaquin relayed that in terms of revenue contributions from OTTAVA and MONARCH, I know you have MONARCH in a pulmonary indication already, but becoming more meaningful, maybe kicking off in 2028. Is that the right way to think about? Maybe just walk us through, you submitted, you get approval, you need to have the launch, but maybe 2028 is the year where you start to see impactful contributions for [indiscernible].

That's what makes Joaquin so good because he's pushing the team. From a financial perspective, that line of sight to double-digit growth is not heavily dependent on OTTAVA, right? And I know Joaquin is thinking this way, too, as is Tim Schmidt and the leadership team. We want to make sure those early launches are done extremely well. That will create the buzz in the market. Given there's only 8% penetration today, we're thinking about this as a pillar of growth for the next decade. So when you hear a line of sight to double-digit growth, you don't have to be overly concerned about that coming from OTTAVA. We've got so many other platforms in both the pharmaceutical and MedTech side that's going to drive that growth. It will be a contributor. Don't get me wrong because you're going from 0 to something. But getting it right out of the gate, I think, is much more important in terms of creating longer-term buzz, longer-term value for the franchise overall.

And in the recent past, I think over the last couple of years, you and your team have called out some assets in the Innovative Medicines business that were underappreciated by the Street as you guys peruse the out-year estimates that were in play. I was hoping you'd be willing to maybe do that same exercise for the MedTech franchise. Is there any product lines or pipeline products that are underappreciated and just not be incorporated into the revenue growth trajectory of this MedTech franchise?

So I'll partially answer that. So I'll do a little bit of an advertisement for December 8. We'll have an Investor Day as long as I get license from the Investor Relations team to show a chart like that. I will certainly do that on the pharmaceutical side, and I plan to do it for the MedTech side as well. I would say it's a different equation because hundreds of millions of matter on the MedTech side where it's difference of billions on the pharmaceutical side. But in looking at that in advance and some of the preparation that Darren and I have done for that Investor Day, I would say consensus is a little bit shy on the cardiovascular side. And then I would also say probably a little bit shy on the surgery side. So we'll give you some specifics. At least we're planning to give you some specifics in December, but that should give you some appetite as to where there may be a disconnect in '28, '29.

Okay. I appreciate those early clues. With the MedTech unit fully stabilizing and gaining momentum over these last couple of years. I was wondering if you could just talk about the commercial organization. I know it's big. There's a number of -- the 3 MedTech silos and then business units within. But maybe just talk about the stability. Are you seeing any lower attrition rates from sales reps, general managers of businesses. I mean, I think with success, you typically get more stability. And then had that been an issue in years past 2, 3 -- I mean more like 3, 4 years ago? And has that stabilized and have contributed to some of this momentum that's being generated?

Yes. I think the simplest way I could put that is Tim Schmidt is doing a great job with his leadership team, right? You've got the right folks running our vision, our cardiovascular and our surgery units. I will say that because of the orthopedic separation, we're very cognizant and mindful just as we were with the consumer health separation of stranded costs. So we are taking an opportunity to look at the organization, are we rightsized for what the organization will be in the future. You may recall, we were pretty aggressive with the consumer health separation in terms of -- we didn't even have a chance to talk about stranded costs after the separation because we had gotten rid of them.

It was a different, and I would say, even easier separation because we were taking a segment out of Johnson & Johnson and a segment that really didn't have a lot of interdependencies with the other 2 segments. Here, we're taking certainly a business out of MedTech and then taking that business out of Johnson & Johnson. So there's a lot more operational dynamics with that, but it also gives us the opportunity to look at our cost structure and make sure we're utilizing new capabilities, whether they be AI or just advancements in terms of the information that we receive to get a little bit leaner in terms of supporting the R&D budget as well as improving EPS down the road.

Appreciate that. Just a couple of minutes left here, but I wanted to touch on operating margin guidance for 2026 here. You're calling for, I think, at least 50 basis improvement in that pretax margin. Maybe just walk through the major drivers of margin improvement. And just this pre and post ortho separate for MedTech, I mean, there seems to be some outsized margin expansion potential from the MedTech business, especially as you get some benefits from stronger revenue growth, volume contributions, et cetera. But maybe overall corporate-wide and then maybe hone in on the MedTech business.

Yes. I think some of it relates to my prior answer with respect to getting a jump start on some of these stranded costs. So we'll be able to take some of those out this year that will help improve margins. I had higher hopes, I got to be honest with you, in October for maybe something better on the margin profile. We, quite frankly, owed you guys 50 points from last year. We said it was going to be around 300 basis points. We came in about 250. We just had so many good opportunities to invest in some newer launches on the pharmaceutical side, specifically INLEXZO for bladder cancer, ICOTIDE for psoriasis, RYBREVANT LAZCLUZE for lung cancer as well as getting a commercially ready organization for the launch of OTTAVA sometime in the near future, right?

So we wanted to make sure we weren't being penny-wise and pound-foolish and for -- because we were meeting the other metrics, we said, let's make that decision to still meet targets that the Street expected from us, but have the opportunity to invest for the long term. We did that.

I did have higher aspirations, I would say, in October, November. But you've got to remember, we came out with 50 basis points of improvement. We still, I think, exceeded what consensus was for EPS for 2026 in our guidance. And that was digesting probably higher tariff costs than what the analysts were assuming. It certainly didn't have any estimates for the MFN deal, and that's all price. That's all margin that's gone away, and that was not trivial. So we felt pretty good about coming out with the guidance we did, although I'd hoped it was going to be higher at one point to be able. To digest it really speaks to the strength, the breadth and depth of Johnson & Johnson these days.

Well, that's about to wrap it up there, Joe, but thank you so much for the discussion, taking my questions, delivering on these answers and helping us think about 2026 and beyond for Johnson & Johnson and specifically the MedTech franchise.

It's always a pleasure, Josh. Thank you very much for your interest.

Good morning, and welcome to Johnson & Johnson's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]

This call is being recorded. [Operator Instructions]

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. Welcome to our company's review of business results for the fourth quarter and full year 2025 and our financial outlook for 2026.

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. We're 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. The 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 growth drivers. I will then review the fourth quarter sales and P&L results as well as full year 2025 results for the enterprise. Joe Wolk, our CFO, will then close by sharing an overview of our cash position, capital allocation priorities and guidance for 2026 as well as key milestones and qualitative considerations for 2026.

Jennifer Taubert, Executive Vice President, Worldwide Chairman, Innovative Medicine; John Reed, Executive Vice President, Innovative Medicine, Research and Development; 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 up to 75 minutes. With that, I will now turn the call over to Joaquin.

Good morning, everyone, and thank you for joining us. I'm excited to discuss our very strong full year results. We said 2025 would be a catapult year for Johnson & Johnson, and that's exactly what it was. It was a year that launched us into a new era of accelerated growth, fueled by the strongest portfolio and pipeline in our history, Johnson & Johnson today has a leading and expanding position in each of our 6 key businesses: oncology, immunology, neuroscience, cardiovascular, surgery and vision. In each of these areas, we have multiple differentiated assets to drive growth and a strong competitive advantage, which you can see in the success of our recent launches.

In recent years, we have increased our focus on areas of high growth and high unmet need, and we will continue this transformation with the planned separation of our orthopedics business.

In 2025, we invested over $32 billion in R&D and M&A, including the acquisitions of Intra-Cellular Therapies and Halda Therapeutics. We also initiated billions of dollars in new, state-of-the-art manufacturing facilities in the U.S., which will accelerate delivery of our next wave of innovation. These moves fuel our confidence that growth in 2026 will be faster than in 2025, and we have line of sight to double-digit growth by the end of the decade, which is notable as Johnson & Johnson is the only health care company that will soon deliver more than $100 billion in annual revenue.

How is that possible? It's possible because we have tremendous strength and depth, both in Innovative Medicine and in MedTech. We are different from other companies. We are not focused on 1 or 2 growth drivers. In fact, we now have 28 platforms or products that generate at least $1 billion of revenue annually, and that makes our growth more sustainable. This, together with our strong balance sheet and free cash flow, creates the resilience and durability that will power our future.

Turning to our results. Over the full year, we delivered 5.3% operational sales growth. The strength of our commercial execution and relentless focus on innovation drove strong momentum throughout the year, firmly placing the STELARA LOE in the rearview mirror. In Innovative Medicine, we reported operational sales growth for the year of 5.3%. Full year sales for our pharmaceutical business exceeded $60 billion for the first time with 13 brands growing double digits.

The foundation for these results and for the acceleration we see ahead is our unrivaled portfolio and pipeline. In 2025 alone, we secured 51 approvals and filed 32 submissions across major markets. We delivered positive readouts from 17 key studies and initiated 11 new Phase III programs. These milestones are not just numbers. They are the seeds of our best-in-class medicines that are improving and extending lives.

Let me now talk about our key areas of focus. In oncology, we are working to cure cancer, and our depth of expertise is unmatched. In 2025, we delivered 21% operational sales growth, and we expect to exceed $50 billion in annual sales by 2030. We are the #1 company in multiple myeloma where 80% of patients are treated with at least 1 of our 4 medicines over their treatment journey.

DARZALEX is the largest medicine by sales in our pharmaceutical portfolio and is considered the foundational gold standard treatment in multiple myeloma. With annual sales over $14 billion, DARZALEX grew an impressive 22% across the full year.

CARVYKTI is the leading CAR T cell therapy in multiple myeloma with more than 10,000 patients now treated across 14 markets. And we are not stopping there. Last month, we published and presented results for TECVAYLI plus DARZALEX that show reduced risk of progression or death by 83% in relapsed refractory multiple myeloma as early as the second line. We also recently announced top line findings from a second Phase III study, MajesTEC-9, which showed TECVAYLI monotherapy reduce the risk of disease progression or death as early as first relapse in patients with multiple myeloma. We are predominantly refractory to anti-CD38 and lenalinomide therapies.

We are also seeing significant momentum in our solid tumor portfolio. In Q4, we received FDA approval for RYBREVANT FASPRO as the first subcutaneous therapy for EGFR-mutated non-small cell lung cancer, reducing administration time from hours to minutes and improving patient experience.

We are making strong progress in bladder cancer with the introduction of INLEXZO for novel drug releasing system, which received its initial FDA approval in September. This is a revolutionary treatment that offers a life change in alternative for patients who otherwise would have lost their bladders to radical surgery. Future approvals addressing larger patient populations are anticipated. And our Q4 acquisition of Halda Therapeutics added a promising clinical stage treatment for prostate cancer with potential across multiple tumor types.

In immunology, we are focused on transforming the standard of care by increasing remission rates in immune-mediated disease. In 2025, TREMFYA became the first and only IL-23 inhibitor with a fully subcutaneous treatment regimen for both ulcerative colitis and Crohn's disease. It is now the fastest-growing IL-23 therapy in the U.S. delivering Q4 operational sales growth of 75% and 65% worldwide. And with [ global ] full year sales of TREMFYA accelerating to more than $5 billion for the first time, we are increasingly confident that TREMFYA will exceed $10 billion in peak year sales.

But in health care, leadership means continually raising the bar, which is why we are focused on what's next in immunology. In the coming months, we look forward to the anticipated U.S. approval of icotrokinra, to be marketed as ICOTIDE, which will expand our immunology innovation -- for psoriasis and inflammatory bowel disease.

Turning to neuroscience, where 2025 operational sales grew [ 10% and ] more than 200,000 patients now treated worldwide. In November, we solidified our leadership with the U.S. launch of CAPLYTA for adjunctive major depressive disorder, further strengthening our confidence in its $5 billion peak year sales potential.

Now turning to MedTech where operational sales for the year grew 5.4%. In 2025, we delivered nearly $34 billion in sales with strong performance in cardiovascular and accelerating momentum across surgery and vision. Our success over the last year was supported by 15 major launches and more than 40 regulatory approvals in major markets. And with more than 60 active clinical trials, we have significant momentum going into 2026.

Johnson & Johnson today is a leader in 3 cardiovascular segments with the portfolio delivering 15% operational sales growth in the year. Abiomed and Shockwave performed particularly well, delivering operational growth of approximately 18% and 23% in the quarter. We remain the market leader in electrophysiology, and we plan to expand our position in [ pulsed field ] ablation. VARIPULSE has now been used to treat nearly 40,000 atrial fibrillation patients globally, and we look forward to submitting our dual energy [ Thermocool SmartTouch SF ] catheter for use in the U.S. market in 2026. We are also seeing positive data for our [ OmniPulse ] catheter, which has the potential to further redefine post-field ablation. In fact, we anticipate launching a new catheter every year through the end of the decade as we build an industry-leading portfolio in PFA complemented by at least 2 CARTO updates each year.

In surgery, we are reinventing procedures through robotics and digital. This year, we will launch a first-of-its-kind robotics platform for urology with MONARCH. The technology was first to market in bronchoscopy, helping diagnose and treat lung cancer. And this year, we will create another first with MONARCH, becoming the only robotic endoluminal and percutaneous platform for the treatment of kidney stones and other renal conditions.

We also recently announced the FDA de novo submission of our OTTAVA robotic surgery system. With continued innovation in surgical instrumentation, including our recent launch of the ETHICON 4000 stapler, we anticipate continued growth as we reduce complications and elevate the surgical experience across specialties.

And finally, vision, which delivered robust annual operational sales growth of 5.3%, with particular strong momentum in surgical vision. In 2025, we launched ACUVUE OASYS MAX disposable lenses for astigmatism and [ presbyopia ] and completed the full market release of TECHNIS ODC IOL, which is the fastest-growing intraocular lens in the U.S. Looking ahead, we are planning to launch TECHNIS PureSee in the U.S. later this year.

As you can tell, we are starting the year from a position of strength. You have heard me talk about the unmatched depth and strength of our business. In 2026, that will translate into accelerated growth and impact with game-changing innovation, reaching more [ patients ] more quickly than ever before.

I will now turn the call back over to Darren.

Thank you, Joaquin. Moving to our financial results. Unless otherwise stated, the percentages quoted represent operational results and therefore, exclude the impact of currency translation.

Starting with Q4 2025 sales results. Worldwide sales were $24.6 billion for the quarter. Sales increased 7.1%, despite an approximate 650 basis point headwind from STELARA. Growth in the U.S. was 7.5% and 6.6% outside of the U.S. Acquisitions and divestitures had a net positive impact on worldwide growth of 100 basis points, primarily driven by the Intra-Cellular acquisition.

Turning now to earnings. For the quarter, net earnings were $5.1 billion and diluted earnings per share was $2.10 versus $1.41 a year ago. Adjusted net earnings for the quarter was $6 billion and adjusted diluted earnings per share of $2.46, representing an increase of 21.5% and 20.6%, respectively, compared to the fourth quarter of 2024. Items of note include a $0.22 IP R&D charge associated with the [ V-Wave ] acquisition in 2024 and $0.10 of dilution due to the acquisition of Halda Therapeutics in 2025.

For the full year 2025, worldwide sales were $94.2 billion. Sales increased 5.3% despite an approximate 620 basis point headwind from STELARA. And if you do the math, Johnson & Johnson grew double digits for the full year excluding STELARA. Growth in the U.S. was 6.9% and 3.4% outside the U.S. Acquisitions and divestitures had a net positive impact on worldwide growth of 110 basis points, primarily driven by the intraCellular and Shockwave acquisitions.

Turning now to earnings. Net earnings for full year 2025 were $26.8 billion and diluted earnings per share was $11.03, including the $7 billion talc reserve reversal from Q1. This compares to diluted earnings per share of $5.79 a year ago, which included $0.67 of dilution due to acquired IP R&D charges on various transactions. Full year 2025 adjusted net earnings were $26.2 billion and adjusted diluted earnings per share was $10.79, both representing an increase of 8.1% compared to full year 2024.

I will now comment on business sales performance in the quarter, focusing on the 6 key areas where meaningful innovation is driving our performance and fueling our long-term growth.

Beginning with Innovative Medicine. Worldwide sales of $15.8 billion increased 7.9% despite an approximate 1,110 basis point headwind from STELARA, illustrating the continued strength of our key brands and new launches. Growth both in the U.S. and outside of the U.S. was 7.9%. Acquisitions and divestitures had a net positive impact of 170 basis points on worldwide growth, primarily due to the Intra-Cellular acquisition.

In oncology, starting with multiple myeloma, DARZALEX growth was 24.1%, primarily driven by strong share gains of 6.5 points across all lines of therapy and nearly 12 points in the frontline setting as well as inventory dynamics and market growth. CARVYKTI achieved sales of $555 million with growth of 63.2%, driven by share gains and slight expansion. TECVAYLI and TALVEY growth was 18.9% and 73.1%, respectively, driven by continued expansion in the community setting.

In prostate cancer, ERLEADA delivered strong growth of 18% due to market growth and continued share gains, partially offset by the impact of Part D redesign. In lung cancer, RYBREVANT plus LAZCLUZE delivered sales of $216 million, a growth of 76.5%, driven by continued launch uptake in all regions. We continue to see share gains in both first and second lines of therapy.

Within immunology, TREMFYA delivered remarkable growth of 65.4%. We continue to see share gains across all indications with particularly strong momentum from our IBD launch as well as market growth. STELARA declined 48.6%, driven by share loss due to biosimilar competition and Part D redesign.

In neuroscience, SPRAVATO grew an impressive 67.8%, driven by continued strong demand from physicians and patients. CAPLYTA, which was acquired in Q2 as part of the intraCellular acquisition, delivered sales of $249 million for the quarter. Since AMDD approval in the U.S., CAPLYTA has had its highest ever new patient start volumes across all indications.

Now moving to MedTech. Worldwide sales of $8.8 billion increased 5.8%, with a growth of 6.6% in the U.S. and 4.9% outside of the U.S., driven by strong performance in our 3 focus areas: cardiovascular, surgery and vision. Acquisitions and divestitures had a net negative impact of 10 basis points on worldwide growth.

In cardiovascular, electrophysiology delivered growth of 6.5%, driven by procedure growth within our comprehensive portfolio, commercial execution as well as VARIPULSE and other new products. partially offset by competitive pressures in PFA.

Abiomed delivered growth of 18.3% with continued strong adoption of Impella technology. Shockwave delivered strong double-digit growth of 22.9%, driven by continued adoption of coronary and peripheral products, becoming our 13th billion MedTech platform.

Surgery grew 3.7% despite divestitures negatively impacting results by approximately 60 basis points. Growth was driven by accelerated launches of new products in biosurgery, technology penetration in wound closure and strong commercial execution, partially offset by competitive pressures in energy and endocutters as well as VBP in China across the portfolio.

In vision, contact lenses and other products grew 5.3%, driven by category growth, strong performance in the ACUVUE OASYS 1-Day family of products and continued strategic price actions, further solidifying our leadership position. Surgical vision grew 10.8%, driven by new product innovations, robust demand for premium IOLs and strong commercial execution.

Orthopedics growth this quarter continued to gain momentum and increased to 3.5%, primarily driven by new product launches and strong commercial execution, partially offset by the orthopedics transformation and VBP in China.

Now turning to our consolidated statement of earnings for the fourth quarter of 2025. I'd like to highlight a few noteworthy items that have changed compared to the same quarter of last year. Cost of goods sold deleveraged by 80 basis points, driven by unfavorable product mix and Innovative Medicine and the impact of tariffs in MedTech. This was partially offset by the onetime prior year fair value inventory step-up associated with the Shockwave acquisition.

Selling, marketing and administrative expense leveraged by 110 basis points, driven by lower administrative expense across the enterprise. Research and development leveraged by 620 basis points, primarily driven by prior year acquired IP R&D expense from the [ V-Wave ] acquisition in MedTech as well as pipeline investment timing and Innovative Medicine.

Interest income and expense was a net income of $23 million, as compared to $144 million of income in the fourth quarter of 2024. The decrease in income was primarily driven by a higher average debt balance. Other income and expense was a net expense of $483 million, as compared to $161 million of income in the fourth quarter of 2024. This increase in net expense was driven by higher litigation costs of $0.9 billion primarily related to the [ Auris ] shareholder resolution and a $0.2 billion nonrecurring charge related to Halda employee equity awards. This was partially offset by a $0.3 billion contingent value rate reduction associated with the Abiomed acquisition.

Tax rate on a GAAP basis in the fourth quarter of 2025 was a benefit of 3%, compared to an 11.7% cost in the fourth quarter of 2024. The decrease in the effective tax rate is primarily driven by a nonrecurring tax benefit related to a loss on certain international subsidiaries. More information can be found in the company's forthcoming Form 10-K.

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 for the quarter. Innovative Medicine margin improved from 32.5% to 36.3%, primarily driven by administrative expense leveraging and phasing of R&D expense, partially offset by unfavorable mix in the cost of products sold. MedTech margin improved from 10.8% to 17.4%, primarily driven by prior year acquired IP R&D expense from the V-Wave acquisition, partially offset by the impact of tariffs in cost of products sold. As a result, adjusted income before tax for the enterprise as a percentage of sales increased from 24.1% to 28.7%.

This concludes the sales and earnings portion of the call and I will now turn the call over to Joe.

Thanks, Darren. Hello, everyone. We appreciate you joining us today. As you've heard from Joaquin and Darren, the employees of Johnson & Johnson delivered impressive results in 2025 driven by strong execution, important new launches and significant pipeline progress that launched a new era of accelerated growth. Our performance demonstrates the depth and strength of Johnson & Johnson's business centered on 6 core areas: oncology, immunology and neuroscience in Innovative Medicine; and cardiovascular, surgery and vision in MedTech. This has enabled us to exceed financial expectations that existed at the beginning of 2025 on both the top and bottom line. We entered 2026 with powerful momentum and anticipate another solid year ahead.

Let me briefly address yesterday's Daubert rulings in the talc MDL. The Special Master correctly decided to exclude the opinions of certain plaintiffs experts who preponded junk science. In other parts of the ruling, the court did not uphold its proper gatekeeping duty with respect to the reliability of plaintiffs experts' opinions, and we will appeal.

The decision only serves to bolster our overall litigation strategy. We will continue to defend against these meritless claims at trial and through the appeals courts where we've largely prevailed.

Before we move into 2026 guidance, let's address cash and capital allocation. We ended 2025 with approximately $20 billion of cash and marketable securities and $48 billion of debt, for a net debt position of approximately $28 billion. The company generated $19.7 billion of free cash flow during 2025, on par with 2024 despite increased capital investment in the U.S. and the impact of tariffs. Our financial strength is a competitive advantage that allows us to both invest in our future and return value to our shareholders. As we move forward in 2026, we expect to elevate free cash flow generation to approximately $21 billion.

As it relates to the separation of our orthopedics business, we are making good progress towards a mid-2027 separation and look forward to providing updates later this year.

Turning now to guidance for the full year 2026. We anticipate operational sales growth in the range of 5.7% to 6.7%, with a midpoint of $100 billion or 6.2%. Acquisitions and divestitures are expected to favorably impact operational growth by approximately 30 basis points, resulting in an adjusted operational sales growth midpoint of 5.9%. We do benefit in 2026 as our financial calendar includes a 53rd week, which is worth approximately 100 basis points.

As you know, we do not speculate on future currency movements. And last quarter, we utilized the euro spot rate relative to the U.S. dollar of $1.17. As of last week, the U.S. dollar has stayed relatively flat to the euro spot rate. And as a result, we expect reported sales growth between 6.2% to 7.2%, with a midpoint of $100.5 billion or 6.7%.

2026 sales growth across our Innovative Medicine business will be driven by TREMFYA, DARZALEX, CARVYKTI, ERLEADA and SPRAVATO as well as new launches of RYBREVANT plus LAZCLUZE in lung cancer and CAPLYTA as adjunctive therapy for major depressive disorder. In MedTech, we expect growth to be driven by continued uptake and market expansion of new product launches across our cardiovascular, surgery and vision portfolios, including VARIPULSE in electrophysiology, ETHICON 4000 in surgery and the OASYS MAX family in vision.

Turning next to other items on the P&L. In 2026, we expect to drive continued operating efficiencies, the majority of which we plan to invest in our business to power our new product launches and pipeline with heavier investment at the outset of the year. Despite that increased investment, we are planning for our 2026 adjusted pretax operating margin to improve by at least 50 basis points.

Our pretax operating margin guidance takes into account the costs from the 53rd week of operations and full year MedTech tariffs of approximately $500 million, which is significantly above the 2025 amount. It also includes the impact of the recently announced voluntary agreement with the U.S. government to improve access to medicines and lower costs to U.S. patients.

We expect net interest expense between $300 million and $400 million. We anticipate net other income to be $1 billion to $1.2 billion for 2026, relatively flat to last year. Finally, we are projecting an effective tax rate in the range of 17.5% to 18.5%, with the increase largely due to a mix change with income in higher tax jurisdictions.

Turning to adjusted operational earnings per share. We expect growth of 5.5% at the midpoint, for a range of $11.20 to $11.48. By utilizing the exchange rate we mentioned earlier for our adjusted earnings per share for the year, we estimate a positive impact of $0.15. As such, we expect reported adjusted earnings per share of $11.53 at the midpoint.

Regarding our share count, due to the rapid share price appreciation in the second half of 2025 into early 2026, our diluted share count is increasing to approximately 2.44 billion shares based on U.S. GAAP accounting rules for the diluted share count calculation, in line with how the fourth quarter of 2025 landed. The incremental dilutive shares for next year are worth slightly more than $0.05 headwind versus 2025.

Relative to current analyst expectations, our EPS and margin outlooks absorb the previously referenced incremental tariffs, the impact of the voluntary U.S. government agreement and a higher share count.

We will now shift to some 2026 phasing considerations to help inform your modeling. We are well positioned to build upon our accomplishments in 2025, continuing to make advancements across our Innovative Medicine and MedTech portfolio and pipeline. We anticipate fairly consistent operational sales growth throughout the year, with a higher fourth quarter due to the benefit from the 53rd week referenced earlier.

Regarding Innovative Medicine, we expect a more pronounced impact from newly launched products throughout the year. We anticipate STELARA to continue to follow the HUMIRA erosion curve, which accelerated as we moved to the second half of 2025 compared to the start. While not nearly as impactful as STELARA, we do anticipate generic impact for both SIMPONI and OPSUMIT to begin in 2026, both of which are contemplated in our full year guidance.

In MedTech, we will continue to accelerate our newly launched products and expect normalized to seasonality. The surgery transformation progress will accelerate throughout the year, and we anticipate some additional rounds of volume-based procurement in China, all of which has been incorporated into our 2026 guidance.

Regarding the P&L, it is important to consider onetime items that impacted our EPS results in 2025. Specifically, in Q1 2025, the impact from STELARA biosimilars was pronounced given that the erosion accelerated starting in Q2. The Intra-Cellular acquisition anniversaries in Q2. And tariffs will be relatively linear in 2026, unlike last year where the P&L cost was largely recorded in Q4 2025. Given these factors, we expect higher earnings per share growth in the second half of the year versus the first half.

We are excited about how our pipeline is anticipated to advance in 2026. For example, in Innovative Medicine, we expect regulatory approvals for ICOTIDE in psoriasis, TECVAYLI in combination with DARZALEX in relapsed refractory multiple myeloma as early as second line, and TREMFYA for the innovation of structural joint damage for patients with psoriatic arthritis. As this chart indicates, we also have many important regulatory submissions and data presentations across oncology, immunology and neuroscience.

In MedTech, we anticipate the following approvals and regulatory submissions: OTTAVA robotic surgical system, ETHIZIA in biosurgery and the Dual Energy Thermocool SmartTouch SF catheter in the U.S. Here too, we are also excited for new launches and continued expansion of new products as seen in the chart.

To close the prepared remarks, I hope it's evident that Johnson & Johnson is entering 2026 with significant momentum. We are positioned to lead where health care is going to tackle areas of critical unmet need. Our strong financial position enables us to invest in our business and the next generation of scientific breakthroughs that will help improve patient outcomes while simultaneously delivering value for our shareholders.

None of this would be possible without the hard work and dedication of our incredible colleagues worldwide who always keep patients at the center of everything they do.

With that, we are happy to take your questions. So I will now turn it to Kevin to provide instructions for those seeking to participate in the Q&A.

[Operator Instructions] Our first question is coming from Asad Haider from Goldman Sachs.

Great. Congrats on the quarter. Joaquin, maybe just a big picture question for you. You're entering this year in a clear position of strength, following what's been one of the best performance years for the stock in about 20 years. You've had momentum in both business segments, you're generating tremendous free cash flow and that you're saying is going to continue to elevate. And you've now started to talk more about double-digit revenue growth by the latter part of the decade, although Street consensus is currently modeling something in the 6% range.

So if you could just maybe double click a little bit more on what the key levers are to bridge to that double-digit growth profile from where we sit today, particularly in the context of the current revenue base that's now approaching $100 billion and remains sizable through the end of the decade even with the ortho spin? And I guess what we're really trying to understand is how much of the acceleration comes from the organic pipeline versus acquisitions versus portfolio pruning? And I guess related, what innings are we in of the strategic repositioning away from lower-growth segments like you're doing with ortho towards higher-growth segments?

Great question. Sure. I mean we came out of a really successful 2025, leaving the STELARA biosimilars in the rearview mirror and initiating a cycle of accelerated growth for Johnson & Johnson. And you have seen that we have provided a guideline -- guidance for 2026 which is strong and ahead of expectations. And as I said before, we have line of sight to double-digit growth in the later part of the decade, which is especially remarkable for a company that, according to our guidance, would be $100 billion in sales in 2026.

So what are the reasons to believe? The reasons to believe are focused on the strength of our portfolio and pipeline. And let me now take you through the 6 areas of focus that we are investing into the future.

Let me start with oncology. Our ambition with oncology is to become the #1 oncology company, reaching $50 billion by the end of the decade, sustained by our success in multiple myeloma and also in solid tumors with lung cancer, prostate cancer and bladder cancer. We are very confident on our progress there in our pipeline, and I'm sure we'll have some time to discuss that later in the call.

In our second area in Innovative Medicine, which is immunology, we are focusing on 3 major blockbusters. One is TREMFYA, which has been very successful in IBD. You have seen the growth in the fourth quarter, really spectacular 65%. TREMFYA in IBD launch is doing really well. And as a reminder, in the case of STELARA, IBD was 75% of the sales. So there is significant growth for TREMFYA ahead of us. We see TREMFYA more than a $10 billion asset.

The second one is ICOTIDE. ICOTIDE is the trademark of icotrokinra, our oral IL-23 blocker. We see IL-23 blocker expanding the market, becoming a new blockbuster for us. We expect to have the launch of ICOTIDE in 2026, initially in psoriasis. This is going to be a transformational change for the treatment of these diseases. And we plan to continue to develop ICOTIDE too in IBD, in inflammatory bowel disease.

And finally, the third blockbuster in which we will see data this year is our co-antibody therapeutic for patients that are refractory to biologics. I think that's a great solution for these patients; many of them relapse. So 3 major blockbusters in immunology, which are largely derisked, some of them are approved, filed or you're going to see data very, very soon.

To end in Innovative Medicine, we are very encouraged by the progress of SPRAVATO, more than 60% growth, and also the very successful launch of CAPLYTA in adjunctive treatment of major depressive disorder. We're seeing the first data coming in very, very encouraging. We see CAPLYTA, as we discussed, as additive to our growth and more than a $5 billion business. So all positives in our Innovative Medicine group clearly driving this line of sight to double-digit growth by the end of the decade.

If I move to our MedTech business, our cardiovascular sector, very strong growth in 2025, a double-digit growth, is reaching $9 billion, is one of the largest cardiovascular franchises in the industry. We are in 3 major markets, which are specialty markets with high growth, cardiac ablation where we are the leaders and we plan to expand our leadership in PFA with the launch of a new catheter every year and new CARTO versions, Tim will explain later, our strong position both in -- with Abiomed and Shockwave in heart recovery and in calcified arterial disease. So that's going to be a growth driver for us into the rest of the decade.

In surgery, we have had strong results both in wound closure and in biosurgery, which are high single digit in both areas. We just filed for OTTAVA, which is going to make us a relevant player in the surgery robotics market, which is an area in which we have all the right to compete. Let me remind all of you that we are in all hospitals in the world and we already participate in all surgeries, and we plan to be a relevant player in robotic surgery with OTTAVA and also with the launch of MONARCH in urology in which we are going to have a unique position.

Then finally, in vision, you see our results in vision. It's a market with growth. We're gaining share. And it's an area of innovation in which we plan to invest.

So we have about that dozen new product launches for the company. Some of them are already approved, most of them submitted. So I would say that in that sense, it's essentially what I would call derisked. And some of you have called our story of growth in the second half of the decade as one of the cleanest stories of growth for the health care sector, for the health care entire sector overall. So we feel very confident about our outlook is reflected in our guidance for 2026. And I can assure you that everybody here at Johnson & Johnson is focused on doing exactly what we do best, which is looking for innovation in medicines and medical technologies to improve the standard of care of the millions of patients that we serve. And we are convinced that that will translate in strong business results.

Our next question is coming from Larry Biegelsen from Wells Fargo.

I'll echo my congratulations on a nice end to the year here. So Tim, there's some dynamics in the MedTech that you called out in the slides as well as the loss of coverage in the U.S. from the enhanced subsidies expiring. How are you thinking about the MedTech market in 2026 relative to 2025? And how are you thinking about J&J's adjusted operational growth in '26 versus '25. Do you expect an acceleration? And it would be helpful if you could touch upon the outlook for your EP business, which is growing below market.

Let me touch quickly on the first question around ACA subsidies and put that one to bed. Firstly, based on what we know today, we do not expect the loss of ACA subsidies or any potential policy changes under the Big -- The One Big Beautiful Bill to have a material impact on our MedTech performance. And we'll continue to monitor how coverage dynamics evolve. At this stage, we see no indication of an impact on our growth trajectory. The primary constraint as you know, Larry, in our business is really more about clinical capacity, not coverage levels, and procedure demand remained very robust across our portfolio, which I think really speak to the resilience of the businesses that we decided to participate in.

Turning to your question about the year, we do expect to see accelerate -- we expect the year to be better in 2026 than it was in '25. And I think it's important to maybe hedge this question on really our strategy. And I think you know for the last couple of years, we've been very clear in articulating our strategy focused on shifting our portfolio into higher innovation, higher growth and higher margin markets. And you just heard from Joaquin, we have deliberately chosen to focus on our 3 focus areas of CV, surgery and vision.

And I think our results, Larry, speak for themselves. Our strategy is working. We said we would accelerate our performance in the back half '25, and we did exactly that, beating consensus for the third consecutive quarter. And what we're most proud of, Larry, is that we saw acceleration across the board. As you heard from Joaquin, cardiovascular, now one of our largest businesses at $9 billion, grew 15.2% operationally in 2025, driven by success of Abiomed and Shockwave, both double-digit growers, and increasing performance in [ EP ], which I'll touch on a little later.

Vision, strong high -- mid- to high single-digit performer. Double-digit growth in surgical vision. And of course, we couldn't be more excited by the growth opportunity that will come with OTTAVA as we look to commercialize that first in the U.S., hopefully this year.

We've also seen continued improvement of ortho. You would have expected maybe some distraction as a result of the announcement we made. We've seen exactly the opposite with sequential growth during the quarter and 3.5% in Q4.

And so I'll finally reinforce, Larry, that [indiscernible] business today, we have roughly half of our assets participating in higher-growth markets growing north of 5%. That's compared to about 20% in 2018. And this will catapult to north of 70% following the ortho separation.

So as a result, we believe, frankly, that our best days are ahead. And we remain very confident in our ability to drive accelerated operational growth as we further push into higher areas of innovation, growth and margins.

Let me touch quickly on EP because I think that was another part of your question. The results speak for themselves, and they're speaking loud and clear. We're seeing continued acceleration in the markets that matter most, especially here in the U.S. and in Europe. You will have seen that in the fourth quarter, our growth accelerated to 9.5%. We're on the cusp of once again double-digit growth here in the United States, which is by far away the most important market. We're seeing this driven by success of VARIPULSE, more than 40,000 cases today, Larry, with a benchmark safety profile, that you heard from Joaquin, we made a commitment to an additional catheter each year for the foreseeable future, starting with Dual Energy as TSF, followed by OmniPulse, which is a large [indiscernible] catheter.

And we're also doubling down on our leadership position in mapping. And we now see really customers shifting back to CARTO based on the integration we have across our portfolio. And just to put this -- put a point on this, Larry, for example, our CARTO 3 system is widely recognized as the industry benchmark in mapping, in fact, in a recent study, it found that patients treated with PFA devices, whether that be ours or the competition's, using CARTO, was 61%, once again, 61% less likely to experience afib-related readmissions, which I think further reinforces the competitive advantage we have in this portfolio.

So I've said this before, Larry, and I'll end by saying that we are not rolling over. J&J's strength lies in our comprehensive portfolio of integrated EP solutions, mapping, ablation and cardiac imaging technologies, combined with our best-in-class mappers. And we remain resolute and confident that our deep EP expertise earned over 30 years and our robust pipeline position us well to continue to drive global leadership in this important space.

Next question today is coming from Chris Schott from JPMorgan Chase & Company.

Congrats on the results. Joe, can you just elaborate a little bit more on how to think about margin progression over time at J&J. You've obviously highlighted the potential for accelerating top line growth over the next several years. Should we think about that higher level of top line growth being associated with greater margin expansion or is this kind of 50 basis point year type improvement that you're seeing this year a reasonable proxy to think about margin expansion for J&J over time?

Chris, thanks for the question. Yes, it's a great question. As we look at the margin expansion, the idea would be to continue to improve our infrastructure. What gives me confidence with respect to 2026 outlook of at least 50 basis points is, as you know, with the orthopedic separation, much like we did with the consumer health separation, we're going to take this opportunity to look and see where there's areas of opportunity and efficiency to eliminate [ stranded ] costs. While that will probably need to be in place for 2027, we're going to get a jump start on that in 2026.

There's also, as you know from recent calls, efforts underway to improve our operating margins, our gross margins specifically, in our manufacturing footprint, largely in the MedTech space.

And then lastly, while we will have continued STELARA erosion, it will be off a smaller base, so that will have less of an impact going forward. And so I wouldn't want to give you a longer-term outlook. What I can say is I'll harken back to our last Investor Day where we said that earnings would be commensurate with sales growth. So you can expect that the margin profile will improve in conjunction with the sales growth profile as we move out to the next couple of years into the back half of this decade.

Next question today is coming from Joanne Wuensch from Citibank.

I'll add my congrats on a good quarter. I just want to spend a minute or 2 talking about vision care. You highlighted that as 1 of the 3 growth areas in Medical Technology. It looks like in your surgical business, it was a little bit slower during the quarter versus what we saw -- in the United States versus what we saw outside the United States. I mean if you could tease that apart a little bit and your views on the health of the contact lens market would be really welcome.

Joanne, thank you for your note. Once again, we have doubled down and really focused on vision as 1 of our 3 priority areas within MedTech. And as you highlighted, a strong fourth quarter at growth of just under 7%. Strong underlying performance within our contact lens category. While we did see a little softness, Joanne, in Asia Pacific, underlying demand is robust and we saw a tremendous growth at roughly 5.3% with share gains driven by the continued rollout of our ACUVUE OASYS 1-Day family, which I think you probably know that we've added to with the addition a product focused on multifocal astigmatism, the only product or only daily disposable available for patients suffering with both presbyopia and astigmatism. So we believe that's going to be a nice growth driver for the future.

Turning to surgical vision, growth of close to 11% in the quarter and all driven by our doubling down of our focus on premium intraocular lenses, both TECHNIS Odyssey launch here in the U.S. last year and PureSee more broadly globally. As you look to 2026, we're going to be further enhancing that performance building out the portfolio, specifically with the launch of PureSee here in the United States.

You touched on our fourth quarter performance. Underlying performance of our premium IOLs here in was outstanding. We did see that offset somewhat by some ongoing market declines in some of the legacy categories, which we're working to address. But we're confident that our surgical vision business can continue to be a strong double-digit growth for the foreseeable future.

A couple of other areas I'll focus on here is that we are expanding global market share, both in contact lens and surgical vision, not just winning here in the United States, but, more important, globally. We're focusing very much on portfolio optimization, and I do think the ortho separation enables greater capital allocation to vision, supporting both R&D, commercial execution and digital transformation. And so we're thrilled with the continued improvement in surgical vision and have great confidence in that continuing.

Next question is coming from Terence Flynn from Morgan Stanley.

Congrats on the quarter. Obviously, multiple myeloma is another one of your key growth drivers here. I was wondering, post a lot of the earlier stage data -- earlier line data we've seen for TECVAYLI, if you could speak to how you're thinking about positioning here of that franchise relative CARVYKTI. And then the related question is, I know FDA published some final guidance regarding MRD negativity and CR's endpoint. So just thinking about how you might implement that across your development portfolio and what that could mean for time lines.

Thanks for the question, Terence. Yes, for multiple myeloma, we were absolutely thrilled with the data that we saw for TECVAYLI plus DARZALEX in the second line plus setting as well as most recently the TECVAYLI data in patients who are refractory to anti-CD38 lenalidomide therapy. And maybe if I take a step back, over the past 20 years, J&J therapies have dramatically improved survival for people with multiple myeloma from 3- to 5-year survival rates to 10 to 15 years now or more.

Yet despite these advances, multiple myeloma is still -- it's a complex disease, a heterogeneous disease. And about 40% of patients are currently in the second-line and third-line settings. So how do all of these agents fit? And why do we say that this is such an extraordinary opportunity?

Well, first, if we start off with the [ TEC DARA ] information, plus TEC-9 and CARVYKTI, together, they really provide highly effective agents that allow treatment that's tailored to the treatment goals the patient setting, access, the patient status and the prior therapy. So there's a number of things that get taken into account. So if we start off with TEC plus DARA, this is really community ready therapy that's proven an unprecedented efficacy rate in the second-line plus setting. The hazard ratio was 0.17. And so this is for patients who are CD38 naive or are CD38 experienced. And this is about 70% of the population in that second line and third-line setting.

You take a look at TEC-DARA, data, again, extraordinarily impressive, 71% reduction in the risk of disease progression, 40% reduction in overall survival. And this is for patients who are refractory to anti-CD38 therapy and ledalidomide therapies. And so you can see the 70% TEC-DARA and then the 30% for the TEC-9 data.

And then when you bring CARVYKTI in, CARVYKTI is really the most successful CAR T therapy. We just announced we're 10,000 patients who've been infused with this. And this is a single-dose therapy with a tremendous shot at what we would count as cure. And we're the only CAR T therapy that's got that superior overall survival versus the standard of care.

And so really when you take a look at what the goals are for that patient, what their prior lines of therapy would be and what the practice setting is, J&J now has an option for every one of those patients in that second line, third line setting. So we see a lot of growth potential ahead for these agents, as well as DARZALEX in the frontline setting.

Yes, maybe to get into your MRD, but first, just to supplement a little bit. I'd also note that the TECVAYLI regimens, whether it's monotherapy in CD38 refractory patients or the combo with DARZALEX in patients who are CD38-naive or have been exposed but still remains sensitive, these are dexamethasone-free regimens, which means that patients aren't on high-dose steroids, which really is an improvement on quality of life.

The other thing I wanted to note is that the FDA, in fact, was so impressed with our MajesTEC-3 data that, unsolicited, they contacted us and offered a priority review voucher to accelerate bringing this new regimen to patients. So really excited with that recent interaction with the FDA.

Indeed, on MRD, that is exciting for us. Last year there was an ODAC that endorsed that concept of using this biomarker, if you will, approach to finding those rare residual malignant cells. Much of the evidence behind that, frankly, was pioneered by J&J over the year. So we're excited that that is an option. We are mindful, however, that it's only an option in the United States, so we, at this point, we'll still have to deliver progression-free and overall survival data for other territories. So I suspect that will continue to be an element of our protocols. But indeed, we will be speaking with the agents we had opportunities to accelerate some of our development. And in that regard, I think, a place where this could be particularly apropos is with our new trispecific antibody for myeloma, [ Romantimig ], which brings the features of both TEC and TAL into a single molecule with unprecedented efficacy, improved tolerability as well, fewer, for example, of the taste effects that you might see with TALVEY, less weight loss, et cetera. Really improved tolerability. And then great convenience that makes it [ apropos ] for the community setting with only 1 step-up dose and Q4 week dosing for monthly dosing. Really excited about the pilot data we're seeing in newly diagnosed myeloma in combination with DARA with that trispecific. And that could be a really apropos place to discuss with the FDA using MRD negativity.

Next question today is coming from Danielle Antalffy from UBS.

I'll echo everyone's [indiscernible] strong into the year, and happy new year. Just a question on this move to higher growth end markets. Appreciate that you've done a lot of and are doing a lot of portfolio pruning now. You mentioned the 70% in a few years here. I mean, ultimately, I guess it's too [indiscernible] do you see that 70% moving higher? Or do you think that's like sort of the aspirational peak? That's the first part.

And the second part is, what are some other growth markets, whether it's in Innovative Medicines or MedTech where you guys are participating today that you see [indiscernible] to participate over that time frame, whether it's via organic or inorganic moves?

Danielle, thank you. I mean our aspiration is not to put a limit on the high-growth markets in which we participate. And I think we can conservatively say that, once we separate ortho, we'll be at least at 70%. And there is tremendous opportunity even just focused within the 3 business units we've decided to focus on within MedTech, both in cardiovascular, in surgery and in vision. I think we build your confidence around cardiovascular continuing to be a strong double-digit grower. Surgery, one of our profitable businesses where we maintain leadership positions, both in contact lens and surgical vision, we believe it's going to be a strong middle to high single-digit grower.

And then surgery is the major opportunity really to catapult our growth. And that comes down to our belief in OTTAVA. As you heard from Joaquin, we are absolutely resolute in our commitment to play a bigger role beyond open and laparoscopic surgery in robotics with OTTAVA. And what we are most confident about is that we have something that is unique and different and something that surgeons and health system CEOs tell us every day that they need.

And so while we're excited by the recent milestone and the submission for approval, we're just getting started. And what really highlights the fact that this is different is you'll recall that this is a very different regulatory pathway we chose. This is a de novo pathway. And the reason we chose that pathway is that there is no predicate device, nothing that can be compared against. And so this is a novel platform where there's no reference or predicate device. And so that, coupled with the fact that we're going after the U.S., should further reinforce our confidence in the fact that we believe we have something that is really different.

Now we're not stopping in the U.S. We're building our submissions in a parallel path fashion outside of the U.S. with a focus on Japan and some select U.S. markets. And you will have recalled from the announced we made 2 weeks ago, we're also already expanding into our next IDE clinical study in the lower abdomen. And so make no mistake that we believe that we can and will be a formidable player in surgical robotics. We don't take the current incumbent for granted by any means, but we do think that presence we have in open, laparoscopic and soon-to-be robotic surgery give us a right to play and a tremendous opportunity to drive to those high levels of growth that we've committed in the back half of the decade.

And then in Innovative Medicine, we are looking to expand in a number of really exciting areas, right now where we've got clinical work already underway. And so to give maybe a few examples, RYBREVANT in head and neck cancer and colorectal cancer, which is clinical trials underway. IMAAVY, which we haven't spoken about yet today, but areas such as Sjogren's disease and SLE, lupus, areas of really high unmet medical need, atopic dermatitis, of which we made a number of key acquisitions and licensing at the end of 2024, that give us a stable of assets there that we're working towards B cell malignancies with our [ BICARD ] that's in development. And even Milvexian that we're developing in partnership with Bristol-Myers Squibb and that we're very, very excited about for atrial fibrillation and secondary stroke prevention.

So a number of additional really key diseases that could be growth drivers for us in the future.

Next question today is coming from Vamil Divan from Guggenheim Securities.

Great. I just want to ask on INLEXZO, it's a couple of questions here. But just one, any sort of initial feedback you can share with us in terms of the initial launch and kind of what doctors and patients are saying, if there's any update on when you expect the government J-code? And then finally, just I see you listed SunRISe V data and potential submission on your events list for 2026. So that's good to see. I'm curious if you can just talk about how that data and how that might impact the addressable population for the product? And then tied to that SunRISe-3, I thought might come this year. You didn't include that one on the list. So just curious if you have any update on timing on when we might see data from SunRISe-3.

Great. Thanks so much for the question on INLEXZO. So we are really pleased with the launch and what we're seeing in terms of interest and receptivity by both urologists as well as the patients who had application of the device. As you recall, we've really launched into the BCG unresponsive population. And as you noted, we're actually looking to further expand that through SunRISe-5, the BCG experienced, and then SunRISe-3 population, the BCG-naive population. So so far, the interest and enthusiasm on this has been really, really robust.

We are anticipating the permanent J code at the beginning of the second quarter, sort of in that April time frame, which we think is going to be a really nice catalyst for utilization. And so we do continue to believe strongly that this is one of our $5 billion plus assets and really look forward to getting that permanent J code in the second quarter. John, do you want to talk about -- yes.

Yes. Just we're making great progress with this sleep product, INLEXZO. But I would also remind that we see a whole series of innovative products where we use these devices in the bladder to deliver different payloads. The next one on deck is containing erdafitinib that's the same targeted therapy that is currently marketed as BALVERSA for metastatic bladder cancer, but here delivered through a unique device, a customized device. It's not the same one as INLEXZO, but works in much the same way to deliver that targeted therapy. There, we are focusing on the so-called intermediate risk population, whereas INLEXZO is targeted for the high-risk population. So this broadens our coverage of patients with bladder cancer.

And just to remind people that localized bladder cancer is -- represents about 600,000 new cases per year and another 400,000 cases annually of patients who've relapsed and are looking for a solution that would allow them to save their bladder. So it's about 1 million patients a year. Between INLEXZO and now TAR-210, the erdafitinib carrying device, we'll be able to really address a very large percentage of these patients with these bladder sparing technologies. With TAR-210, the success rate we've been seeing with complete responses have been north of 90%. And so we're super excited about that, and there will be other devices with different payloads to come over time.

So we see this as a platform that will address this incredible unmet need and that will be a big growth driver for J&J. I would finally close by just giving a shout out to our colleagues in MedTech because this is just a wonderful example of how Innovative Medicines and MedTech can come together, bringing devices and drugs together in an unprecedented way, and we're looking for more ways to do that in the future.

The next question is coming from Shagun Singh from RBC Capital Markets.

Joaquin and Joe, could you spend some time and elaborate on your next steps with respect to the talc litigation, implications of the initial Daubert decision? I know you indicated it will be appealed, if the reserves need to be stepped up? And then most importantly, what are your plans for an eventual resolution and risk mitigation here? I think this may be contributing to the modest [ drop down ] today, even though you reported strong results and you have a very strong outlook through the end of the decade.

Yes, I'll start, Shagun, and then, Joaquin, I'll turn it over to you. So thank you very much for the question. And I want to thank you for acknowledging the strong results and outlook of the business, which is really what is at the heart of Johnson & Johnson. .

So last night, the Special Master reviewing the Daubert motions in the talc MDL issued what is known as a report and recommendation. So that really has no legal import until the judge actually accepts this recommendation. The recommendation itself excluded certain aspects of the plaintiffs expert witnesses and their opinions. And simultaneously, the recommendation also endorsed virtually all of our opinions of our experts.

However, there were other parts of the recommendation where the Special Master clearly failed to apply the new federal rules of evidence, known as Rule 702, which really reinforced, starting in December of 2023, the gatekeeping responsibilities that the Special Master should have had. We will certainly appeal those erroneous parts of the recommendation to the district court. Again, this recommendation from the Special Master has no legal consequence until the appeal is resolved.

The bottom line is this is not going to change our strategy. We will continue to aggressively fight in the court system each and every one of these meritless claims. We will do so whether it's at original trial or through appeal. And we will continue to really bring to light the actions of the plaintiffs as far the tactics that they use, the third-party litigation financing, all of which is really undermining U.S. business and U.S. competitiveness overall. Joaquin?

Thank you, Joe. Shagun, I would tell you and I would tell investors we have been navigating this talc issue already for a decade. And we have been able to continue to deliver excellent results, invest in our business and continue to return value to shareholders. So let's focus on the real story here. The real story is our successful 2025, the strong guidance for 2026 and, what you said before, our line of sight for double-digit growth in the later part of the decade. This is a clean story for us, one of the cleanest stories in the entire health care sector, and we're in a position of strength today.

And as Joe said, we are continue to fight these meritless claims and we're going to continue with our strategy of litigating every single one. What I can assure you and all investors is that every single employee of Johnson & Johnson does not get distracted. They wake up every day with the intent to bring new medicines and medical technologies that improve the standard of care of the millions of patients that we serve every day, and that's really our goal. Let's focus on what really matters. Let's don't get distracted.

I think we probably have time for one more question.

Our final question today is coming from Alexandria Hammond from Wolfe Research.

On your vaccine, can you talk a little bit about your confidence in this asset? What do you think you'll need to show to be competitive in what's already a pretty crowded space with another potential next-generation Factor XI from Bayer? And I guess as a quick follow-up, how can you leverage your past experience of commercializing Xarelto to make another multibillion-dollar opportunity for J&J?

So on Milvexian, we're expecting data readouts later this year for both secondary stroke as well as atrial fibrillation. We often get asked about atrial fibrillation because the competitor molecule had failed in that indication. And we cite a couple of things. One is that Milvexian, at least in vitro, is about 10x more potent than the other molecule that is being developed by another company. And we know from monitoring the APTT biomarker, the [ thromboplastin ] time, that we have very effective reductions in clotting at the dose that we have selected for atrial fibrillation, which is 100 milligrams twice a day. So we feel that we've got the right dose and the right study design. So we'll be looking forward to those data later this year.

We're really excited about the opportunity with Milvexian. And what we're really looking to show there is clear superiority in terms of safety and bleeding risk. We know from all of our experience in the market with Xarelto that there are a lot of patients that are not treated or are undertreated because of fear of safety risk. And so we think there's extraordinary need for highly efficacious and highly safe with low bleeding risk product in the market, both for atrial fibrillation and then we're very excited about the possibilities in secondary stroke as well.

So we're looking forward to this product that we're developing in collaboration with Bristol-Myers Squibb. It is absolutely one of our $5 billion plus assets on our list.

Okay. Thanks, Alex, and thanks to everyone for your questions and your continued interest in our company. I will now turn the call over to Joaquin for some brief closing remarks.

Thank you to all of you for joining the call today. As we have commented in the call, we are starting the year from a position of strength. We have the strongest portfolio and pipeline in our history, and we have a leading and expanding position in our 6 key business areas of focus. 2026 will be a year of accelerated growth and expanded impact and I look forward to sharing our progress with you in the remaining of the year. Thank you very much, and this finalizes the call.

Thank you. This concludes today's Johnson & Johnson's Fourth Quarter 2025 Earnings Conference Call. You may now disconnect.

Good morning. I'm Chris Schott from JPMorgan. And it's my pleasure to be hosting this fireside discussion with Joaquin Duato, the Chairman and CEO of J&J.

Joaquin, happy new year.

Thank you.

Great speaking with you today.

Let me just open up the conversation, we're coming off of a year with significant outperformance for the stock, some really impressive kind of underlying fundamentals, would love just to hear about your top priorities for the company as we enter 2026.

Thank you. So first, thank you for organizing this impressive meeting. Every year JPMorgan does a very good job in bringing us all together and kicking off the year. So thank you for doing that.

And thank you for recognizing the performance of the company in 2025. Really we're very proud of how we performed in 2025, and it's kicking off a cycle of accelerated growth for Johnson & Johnson. We see the company doing better in 2026 than in 2025. And when we look at the later part of the decade, we have visibility for double-digit growth. And that is, I would say, impressive when you think about a company that, pretty soon, it's going to be the largest health care company with more than $100 billion in sales. So we are very optimistic about the cycle we are kicking off.

How is that possible? It's possible because we have tremendous strength and depth both in Innovative Medicine and in Medical Technology. We are focused on 6 areas, 3 in Innovative Medicine, that I'm sure we will discuss, oncology, immunology and neuroscience; and 3 in Medical Technology, cardiovascular, surgery and vision. So different from other companies, we are not focused on 1 or 2 growth drivers, and that makes our growth more sustainable and deeper.

Our execution this year has been really good, and I'm going to give you just a single data point. In the third quarter, which is the last thing that we reported, our Innovative Medicines group, when you exclude STELARA, grew 16%. That is a more than $50 billion business growing 16%. That's really pretty impressive. And I think that's what investors have recognized. If you ask me, frankly, that was in plain sight. But I think finally, they recognize that, and that has made us the top 3 Dow Jones performing stock across all sectors.

So how do we do that again, I'm sure you're asking me that, in 2026? And what are our priorities after such an impressive 2025? So 2026 is a year, as you have mentioned, that all the industry is leaving behind some of the policy overhangs and we are going to be focused on the fundamentals. And there's basic 2 fundamentals. How do we advance therapy for patients with our existing portfolio and new product launches? And also, how we continue to build our future through completing and fortifying our pipeline?

So when it comes to the new product launches, we have about a dozen new product launches, largely derisked, when you combine MedTech and Innovative Medicine. Some of them are ongoing, like, for example, TREMFYA in IBD or VARIPULSE in ablation. Some of them will occur in 2026, for example, the launch of ICOTIDE, icotrokinra, the first oral IL-23 blocker, or the launch of our new coronary catheter, Shockwave C2 Aero. So that's fundamental for us, how we are successful with some of these new product launches, which are driving our growth. And I'm sure we'll have opportunities to discuss that further later.

Then when it comes to building our pipeline, that is always a priority for us. And we have very recent examples of the progress we are making. One of them is the announcement that we did this month about the filing of OTTAVA de novo with the U.S. FDA, which is going to be our robotic soft tissue surgical system. And we plan to be a very relevant player in the robotic surgery space. Another one is what we announced also in December with the acquisition of Halda, a precision oncology platform that has an asset that we plan to develop in prostate cancer.

So that's really the fundamentals for us. And that is underpinned, as you know, with a very strong financial position. We have a AAA-rated balance sheet, a very strong cash flow generation. And that enables us to do 2 things at the same time. We can continue to invest, and at the same time, we can return value to our shareholders.

So when I look at 2026, I'm optimistic. And I want to be clear, we will provide guidance on 2026 when we announce our fourth quarter earnings, but we see 2026 being a better year than 2025.

Great. Before we jump into the core business, and there's a lot to dig into there, at the industry level, I think you mentioned there was a significant focus on policy last year with MFN, tariffs, et cetera. Just helpful to get your views of where we stand today, I know you have an agreement with the government, but just where J&J and the industry more broadly stands on these policy topics?

Yes. I mean I said it before, 2025 was very colored by these policy topics. I believe that now with the agreements that have been made with the Trump administration, we are going to be able to focus more on the fundamentals. What are the agreements? They are relatively similar. I mean on one hand is opening access and lowering prices for many medicines for Americans, and that's a positive step. On the other hand, it provides an exemption of pharmaceutical tariffs, which was an overhang.

And I think in totality, these agreements are positive and are a step in the right direction that would enable companies to do what we do best, which is focus on developing and manufacturing and commercializing medicines and medical devices. So I see that as a step in the right direction and I think it's going to be a positive factor for Johnson & Johnson and the rest of the industry.

In the meantime, in our case, as we announced on the occasion of the agreement last week, we continue to deliver on our plan to invest $55 billion in the U.S. in R&D, technology and manufacturing. And we also took the opportunity to announce the opening of 2 new plants, 1 in North Carolina in biologics, and another 1 in Pennsylvania in cell therapy. Our goal is that, at the completion of our $55 billion investment plan, essentially all the advanced medicines that are used in the U.S. will be manufactured here in the U.S. And I think that's great. It's great for the country, it's great to create jobs and it's great to create more resiliency in our supply chain.

Great. Coming back to the core business, I guess, roughly 2 years or so, I think you put out this annual top line growth target of 5% to 7% 2025 through 2030. I think since that time, you seem increasingly bullish on that growth outlook. Just how comfortable are you with that target today? And when you consider the growth drivers, what's performing better than expected? Anything you need more progress on? Just maybe kind of talk a little bit about the...

Yes. So in 2023, we provided this guidance of a growth for the entire company of 5% to 7%, compounded average growth, from 2025 through the rest of the decade. If you ask me now, I think I told you before, I feel increasingly confident that that's going to be the case. And as a matter of fact, when you look at 2025, we're going to exceed the forecast that we gave in 2023.

So why do I feel increasingly bullish on that forecast? We have a pipeline which is largely derisked. And as I said before, the value of our pipeline is in plain sight. If I go by our 6 areas that I mentioned before, we have incredible strength in all of them. Let me start with Innovative Medicine pharmaceuticals and with oncology.

We not only have said about the 5% to 7%, but we have set our goal for oncology to be a $50 billion business for Johnson & Johnson by 2030, being the #1 oncology company. I'm sure we'll have an opportunity to discuss that, but it's based on different factors.

One is our strength in multiple myeloma. With our DARZALEX, which remains the backbone therapy, our bispecifics and our cell therapy and the progress we are making also in R&D there. And then the strength that we are developing in lung cancer with RYBREVANT plus LAZCLUZE. RYBREVANT also, we have shown data already in the neck cancer and in colorectal cancer, so it's going to be a large product.

The strength that we are developing in prostate cancer with ERLEADA, but also now with our T-cell engager that we have presented data at KLK2-CD3 bispecific. And finally, in bladder cancer with INLEXZO, that it's going to be a new standard of care in non-muscle-invasive bladder cancer. So that's in oncology.

In immunology, we have tremendous opportunity. The most important one is TREMFYA, which is having a very successful launch in IBD. IBD is the biggest part of the TREMFYA market. We have signaled TREMFYA as being a more than $10 billion product. It's going to be bigger than STELARA, and I think the results that you are seeing in 2025 confirm that.

The second area of strength in immunology is icotrokinra. It has a commercial name now, ICOTIDE, which is going to be the first oral IL-23 blocker. It's going to essentially expand the market for people that didn't have access to advanced therapies or didn't want to have an injectable, and it's going to be the first option as an oral systemic therapy. And as I said, we plan to have the launch of icotrokinra 2026, this year.

And then finally, IMAAVY, our FcRn inhibitor, that is approved now for myasthenia gravis. We are going to file this year for warm autoimmune hemolytic anemia. And you may have seen the data that we have shown already both in Sjogren's and in lupus, showing very promising data. We also see IMAAVY as a $5 billion asset down the road as we continue to build the different indications.

And then the third area of strength in Innovative Medicine is neuroscience. The results of SPRAVATO are very impressive. I think they have exceeded all expectations. It's a multibillion-dollar product and it's growing north of 50%. And we are very excited about CAPLYTA, which comes from the acquisition of Intra-Cellular. And we just got the approval of CAPLYTA in adjunctive treatment of major depressive order in December, and we are off to a terrific start there.

So those are all the growth drivers that you are going to be seeing in our Innovative Medicine pharmaceutical business. All of them are largely derisked.

If I move to MedTech, our MedTech business is now squarely focused on high-growth areas of cardiology, surgery and vision. We have announced the separation of our orthopedics franchise, which is ongoing. And when it comes to cardiology, we have one of the largest cardiology franchises in the industry, it's close to $9 billion and is growing double digit. It's focused on cardiac ablation, on heart failure, heart recovery with Abiomed, and in calcified arterial disease with Shockwave, and we are very optimistic about the trajectory of our cardiovascular business there.

In surgery, we have leadership positions in biosurgery and also in wound closure. They are all growing high single digit in 2025, very strong franchises for us in which we have leadership positions. And we plan to be a very relevant player in robotic surgery. One effort is OTTAVA, that I mentioned before, in soft tissue robotics. And the other one is MONARCH in urology. So we are also planning to launch our MONARCH robot in urology. It will offer both percutaneous and endourology access. And the first indication would be in difficult-to-treat kidney stones.

And then finally, in vision, we have a strong position. We are the leader in contact lenses, a great franchise for us, a very reliable grower. And we are gaining share strongly in our surgical vision franchise with the launch of our premium intraocular lenses.

So overall, I feel very confident about our position in these 6 areas in which we have depth and strength. And as I said before, we don't depend on 1 or 2 drivers. We have a bunch of them, And that's going to make our growth more solid, more reliable.

I know the past few years you've highlighted some large disconnects between J&J's internal forecasts and analyst expectations. I think some of us were -- had some skepticism at first, but you've consistently beaten numbers and we've seen Street revisions going higher. When you look at where the Street is today, is there anything in particular that stands out to you in terms of how the Street is modeling key growth drivers or where there's still -- you see still upside to numbers?

As I look at it, there's 2 products now that I think are still underestimated. One is TREMFYA, especially because the success in IBD has not yet been reflected. And in the case of STELARA, if you remember, IBD was 75% of the sales of STELARA. So TREMFYA in IBD is one. We see TREMFYA, as I said, as a more than $10 billion product.

The second one in the short term is RYBREVANT. RYBREVANT, we just had the approval of the subcu formulation. It offers overall survival which is unmatched. It's likely to be able to double the overall survival -- the 5-year overall survival, the percentage of patients that are alive after 5 years, compared to the standard of care. And we have presented data both in head and neck and in colorectal cancer which is very promising. So RYBREVANT still remains underestimated.

If I look to the later part of the decade, perhaps the one that is less valued is INLEXZO. INLEXZO, the first indication is in BCG unresponsive patients. But it's going to continue to grow as we expand the indications there with patients that relapse on BCG or patients that are BCG-naive. So I would focus on these 3 products as products that are still underestimated by the Street: TREMFYA, RYBREVANT and INLEXZO.

I guess digging into the immunology portfolio a little bit more, I mean, obviously, we're seeing some real traction with TREMFYA here, can you talk about what you've been seeing and how it's been relative to your expectations, these IBD launches so far and kind of the new share that you're taking there? And then when we kind of layer in the oral IL-23, how more broadly does that portfolio evolve in the next few years?

Yes. So TREMFYA, it's a dual-acting IL-23. So it's structurally and functionally different from the other IL-23. It does block the cytokine IL-23, but also it blocks the receptor on the CD64 cells that produces IL-23. So it has a unique mechanism of action.

And when it comes to the data on inflammatory bowel disease, both in UC and in CD, it has unmatched histologic and endoscopic response rate. So we were very bullish on TREMFYA knowing that the clinical profile was unmatched, consistent with the type of structure and functionality of the medicine.

We also have a particular advantage that is consistent with that differentiation, which is we are the only IL-23 that has subcutaneous both in induction and in maintenance. And you may think, okay, is that important? For the physicians, that is a game changer. And that is giving us an advantage during this period of launch, and we are exceeding our expectations, as you will see when we present our results of the fourth quarter.

There's other elements that prove this TREMFYA superiority, and one is, for example, in psoriatic arthritis. We presented data of our APEX study in which we had very strong inhibition of structural damage, being the only IL-23 that has proved inhibition of structural damage in PSA. So we feel very strongly about TREMFYA being a product of more than $10 billion that is going to lead in the class, which is preferred by physicians today, which is the IL-23. I think there's no question that IL-23 are now preferred in IBD versus any other category. So we see TREMFYA leading there and continue to grow in psoriasis and psoriatic arthritis.

Then we move into icotrokinra. And I want to stress, icotrokinra is a breakthrough; it's completely different. It's going to be the first oral medicine that has a profile and an action like an injectable biologic. It's different from the others. It's blocking IL-23. It's an oral peptide that blocks IL-23.

The initial indication is going to be in psoriasis. There's a lot of room for extending the penetration in psoriasis. We believe that the psoriasis market is about 30% to 40% penetrated. So an oral medicine is going to increase access, is going to increase penetration. And it's going to bring patients in every aspect in psoriasis, psoriatic arthritis and in IBD that were afraid of injectables. So that's going to clearly expand the market.

We plan to develop icotrokinra or ICOTIDE not only in psoriasis and psoriatic arthritis, but also in IBD in which we are going to start Phase III study. So I see ICOTIDE as a major product and I see ICOTIDE becoming the systemic therapy of choice in all indications, expanding the market, being a very significant product for us, which is, again, largely derisked as we have seen the data.

In terms of that positioning, so it sounds like it is more market expanding versus trying to pit the 2 products against each other. So in terms of an organizational standpoint, will these be the same sales forces selling these drugs? Or how do you think about kind of the go-to-market strategy with this?

The go-to -- I mean, we are going to let the physician and the patient decide what is best for them. So some patients may prefer an oral, some patients may prefer an injectable. Physicians may have different algorithms in how we do it. But we don't see any reason why we should not put TREMFYA as a first-line injectable and ICOTIDE as a first-line oral. So we are going to put all our best effort behind both of them.

So we are not going to prioritize one versus the other. We're going to let the physician and the patient decide what is the best therapy for their patients. And clearly, I think there is room for both and it's going to expand the market and bring us a very strong position in IBD.

I would tell you, it's not only what we are doing with TREMFYA that we discussed, but also what we are doing with orals. The third element of the stool here is what we are doing in combination therapies too. Because despite of all the progress with TREMFYA and ICOTIDE, there are still a number of patients that relapse. So we are working in combination therapies and we have an injectable combining a TNF and an IL-23.

In this case, guselkumab, TREMFYA, and golimumab, SIMPONI, in a single subcu vial that would be the therapy of choice for refractory patients. So we'll cover the entire space in IBD: orals, injectables and combination therapy for refractory patients. So that's why I am so confident on the success of our immunology franchise, which today is the largest franchise within Johnson & Johnson.

Yes. Some great momentum there. Switching over to myeloma. You've got obviously a very large portfolio here, a very large pipeline. Maybe just set the stage, how do you think about the key drivers for growth within those various assets that you have in market or presumably coming to market?

Yes. So let me take a step back and talk about myeloma, how Johnson & Johnson has advanced the standard of care for myeloma patients in the last decade. I mean the life expectancy for a myeloma patient was measured in years, and now is measured in decades. We have developed half of the therapies in multiple myeloma in the last decade. And our goal is to have about 4 out of 5 patients that have myeloma with 1 Johnson & Johnson product in the regimen that they use. So we have a very strong role in improving the life expectancy of the myeloma patients in multiple areas.

Starting with DARZALEX, which is our largest product, is the backbone of therapy of most of the myeloma regimens. When people talk about myeloma, they normally are talking about combining with DARZALEX. Everywhere, right? So we know that most of the clinical studies that are on multiple myeloma have DARZALEX as the backbone, and the results are there.

CARVYKTI, which is our cell therapy, has demonstrated overall survival versus the standard of care as early as second line. So very impressive. And sometimes, patients prefer to have this one-and-done type of therapy because they don't want the fact of having to come to the hospital for continuous infusions. So CARVYKTI is doing very well. We are unrestricted from a supply perspective, and you're seeing the growth that CARVYKTI is giving us.

And then finally, our bispecific antibodies, our BCMA, CD3 and GPRC5D, CD3, TECVAYLI and TALVEY. Very recently we have presented very impressive data of the combination of TECVAYLI and DARZALEX in second-line patients. Very impressive, perhaps the most impressive data ever seen in multiple myeloma. We plan to have the approval of this combination this year. And it's going to make TECVAYLI and DARZALEX in patients in second-line therapy of choice. And that's going to help to expand the use of the bispecifics in the community side. And we plan to do a similar development pathway with TALVEY.

So I see multiple options in first line, multiple options in second line, and in later lines, also options with cell therapy. So I see a clear growth of our multiple myeloma franchise. And we've been bold there and we've said that, look, we see our multiple myeloma franchise being more than $25 billion by 2030, and it may be even conservative.

Yes. A couple -- we've seen a number of companies that are going after myeloma space with next-generation therapies. What do you think J&J needs to do to enable this -- kind of sustain this leadership position that you have in this category?

We have a full dedication to multiple myeloma. I mean our organization is disease focused, and we focus on the disease, and we have multiple platforms in multiple myeloma: cell therapy, bispecifics, antibodies. And we have the experience and the reach to be able to be always one step ahead in our search for cures.

Examples of why we are one step ahead. The combination of bispecifics and DARZALEX is an example of being one step ahead. Our trispecific, which is going to enter Phase III pretty soon, which is a GPRC5D, BCMA, CD3 redirector is an example of being one step ahead. And we have collaborations in in vivo CAR-T, for example, with Kelonia, to work in multiple myeloma too. So our goal here is always being one step ahead in the search of a cure for patients with multiple myeloma. And what you see is that the rest of the company, the rest of the company is just following our tail.

Absolutely. Just as we -- maybe one more on pharma before we go to MedTech. Just beyond immunology and oncology, what are some of the things you're most excited about in the portfolio that you think don't get enough attention or we should be really focused on as growth drivers?

Yes. So our neuroscience franchise is a strong one. SPRAVATO is growing very fast. And it's the only and best therapy for patients that have failed multiple therapies in major depressive disorder. I am very excited about CAPLYTA. CAPLYTA has 3 indications: schizophrenia, Bipolar 1 and 2 and, recently, major depressive disorder, which is the largest one. The launch is off to a very good start. We have signaled CAPLYTA of more than $5 billion product, and we are very confident on that.

And we know this space really well because we've been there for many, many years too. And it's a growth driver that was not factored in when we were talking about the 5% to 7%, so it's additional to that growth. So I'm very excited about our presence in neuroscience. And we will continue to invest there in neuroscience and we have a number of other assets that are coming in neuroscience.

And then another growth driver that we have not discussed, but I have my colleague from BMS discussing that before, is Milvexian, which by the way is a 50-50 collaboration between Johnson & Johnson and BMS. We have good experience there with XARELTO. And this could be another important medicine for patients and it could become a significant growth driver in the short term.

So that's really how you see the pharmaceutical group. When I look at the opportunities in front of us and the number of new product launches, I have never seen something like that and I am in the company 37 years. I mean if I go one by one, you have TREMFYA in IBD, RYBREVANT and LAZCLUZE in lung cancer, INLEXZO in bladder cancer, IMAAVY in myasthenia gravis and pretty soon in warm autoimmune hemolytic anemia, CAPLYTA in major depressive disorder. So all together look at a very strong show-up for Johnson & Johnson in 2026.

Absolutely. Pivoting over to MedTech. I know improving the growth prospects of this franchise was one of your key priorities in your tenure as CEO. We're a few years into that process. Just would like to get a sense of where you think we are in that repositioning of the MedTech portfolio.

We are making strong progress there. And you've seen our results in 2025 and it's been a continuous progression of improvement in MedTech. In MedTech, we have also said that we plan to grow 5% to 7%, with a bias towards the higher end of that area. We are now, as I said before, focused on high-growth markets of cardiology, surgery and vision. And we are separating our orthopedics franchise, which is going to create a leading orthopedics franchise and a strong competitor. And at the same time, it's going to help us improve our growth rates and also improve our margins and focus on areas where we have strong medical innovation.

So what are our priorities there? Number one is to continue our growth in our cardiovascular franchise. And the most important area there is cardiac ablation and atrial fibrillation. We're gaining back share in PFA with VARIPULSE, and we plan to have a 2026 in cardiac ablation which is going to be better than the one we had in 2025.

Why is that? We are going to continue launches of new catheters and improve -- we are going to continue to improve VARIPULSE. We're going to be launching a dual-energy catheter, which will have PFA and RF, which is the STSF catheter. We're going to continue to improve our diagnostic tools. We continue to improve our imaging tools and also our CARTO mapping system. So we plan to continue to invest in electrophysiology to maintain and expand our leadership there, being the fastest growing market now in the cardiology space.

When it comes to heart recovery and Abiomed, we are utilizing the data coming from this DanGer study that shows significant improvement in survival for patients in cardiogenic shock that had heart attack, in a 10-year follow-up, 600 days of improvement over survival, almost 2 years. And that's helping us to move up our Impella pump in the AHA guidelines, and that's driving market growth. And we have limited competition in that area.

And then with Shockwave, as I said earlier, we are about to launch a new coronary catheter, and coronary is the most important market in Shockwave, which is going to provide more maneuverability and ease of use. And we plan to continue launching new catheters every year in order to provide more options to interventional cardiologists. So I feel very confident of our progress in cardiology, and that's our #1 priority now.

When it comes to surgery, our #1 priority is to carve out a relevant presence in the soft tissue robotic surgery market. We're going to do it with OTTAVA. We will do it with MONARCH Urology. I have to be clear, look, we are in all hospitals in the world. We are a global company from a surgery perspective. All surgeons use our biosurgicals and our sutures, our instruments, both staplers and energy devices. And we are fully determined to carve out a significant space in the robotic surgical area. And our OTTAVA system has significant elements of differentiation in order to accomplish that. And ultimately, hospitals, physicians and surgeons want to have competition and want to have options. And we plan to capitalize on that fully and put the strength of Johnson & Johnson behind that.

And then finally, vision is a great space for us. Contact lenses, we are the #1 company. We are launching a new line of contact lenses, ACUVUE OASYS MAX, that are giving us growth in our share. And also we continue to launch our premium IOLs. So I see a very positive trajectory for our MedTech business.

And I believe the combination of having these 6 areas in which we have leadership and strength makes Johnson & Johnson unique and a stronger company down the road. And that's why you can see the type of growth rates that you see in Johnson & Johnson, is because we don't depend of a single platform. We have multiple options to be able to improve the standard of care of patients.

Yes. Let me just back to the decision to separate the orthopedic business. Just why now for that? What led to that decision? Why is that the right move for J&J?

Yes. So look, we have to be able to be active portfolio managers. So our goal is to be a company which is squarely focused on medical innovation. So we have to go to the areas where we can make a bigger difference in improving the standard of care of patients. That's part of who we are. And you have to see this in the context of the separation of our consumer business that now follows the separation of our orthopedics business. It's bringing more clarity about what is our mission, which is about medical innovation. It's about bringing transformational therapies or medical devices that improve the standard of care of patients.

So we think that by focusing in cardiology, surgery and vision, we bring more clarity to do that, and we facilitate rich allocation to those areas where we think there's more medical innovation. And at the same time, we reduce the complexity of our MedTech business.

Orthopedics is a great business. It's one that has very stable cash flows. It's driven by the aging of the population. So we are all going to need some type of orthopedic support. But as far as medical innovation, frankly, it's not comparable to surgery or what we are seeing in cardiology.

So that's why we wanted to be active portfolio managers. It enables us to increase our growth rate and our margins. And at the same time, we are creating a company which is going to be the leading company in orthopedics. And we are putting all the elements to make it a real leader in orthopedics. The separation will take some time. We'll have experience in doing that as we already did in the consumer. So we see the trajectory moving into a situation of a spinoff sometime in the second part of 2027.

Okay. Great. Just last one maybe on MedTech. Major milestones we should be thinking about for the portfolio this year, what would you highlight?

I mean the most important milestones that you should be thinking about the portfolio this year will be the approval of OTTAVA, that should happen sometime in 2026. Would be the approval of MONARCH Urology that should happen also sometime in 2026. The approval of the new coronary catheter for Shockwave C2 Aero. And then finally, there's a number of things going on, both in orthopedics and in surgery, that will help us continue to complement our product lines today.

But the most important one will be the approval of OTTAVA in robotic surgery. We have 1 indication, upper abdominal procedures, and we have to meet the second one, inguinal hernia. So that would be the most important milestone for us in 2026.

Right. And with those '26 approvals, how do we think about the robotics platform starting to really contribute to growth? Is that something we should think about in '27 or would that take a little bit of time to get to...

You should think about -- I mean, we have a large MedTech franchise. So you should think about our robotic platform, including MONARCH and including OTTAVA, playing an important role for growth from 2028 onwards. That's when the growth would be material for Johnson & Johnson. Will start to have some impact in 2027, but if you're going to think about materiality of the impact, you should think about 2028.

Right. Bigger picture question, think about capital deployment. J&J has obviously had a very strong history of kind of early to mid-stage licensing partnership type of deals. As we think about 2026 and the growth platform you just outlaid, obviously, lots of things going in the right direction, how do we think about further portfolio expansion via business development? Kind of what's the priority right now? What's the balance when you think about smaller deals versus more commercial-stage deals? Just any perspective would be great.

The focus and the sweet spot for us has always been the same: early-stage deals. So that will continue to be our focus. Some of them are deals that do not even make a press release. For example, icotrokinra, ICOTIDE, was a small deal, or INLEXZO was a small deal too. Some of them are deals that do make a press release but are relatively small, like the Halda Therapeutics deal.

So that is the sweet spot for Johnson & Johnson, and that's where our R&D and business development teams are focused, is to be able to identify technologies or medicines that are going to have a promise to disrupt the standard of care, to be real transformational early on. So then we can put all the strength of our early development group, of our chemistry group sometimes, of our manufacturing, of our commercialization to maximize value of that. I have to be clear, that's the goal.

Now we have the financial strength too to be opportunistic and to do what it takes. Sometimes we do it, like we did with Intra-Cellular or what we have done in MedTech with Abiomed and Shockwave. But the sweet spot for us is early-stage deals. We are fortunate that in order to deliver in our growth trajectory, we don't need to do any type of large M&A. So investors have to be confident that we are going to be focused on early-stage deals and be opportunistic if the right opportunity come our way.

Great. Well, just as we wrap up here, any closing remarks on the J&J story and how you're thinking about things?

J&J story, I mean, I go back to the beginning. Pleased about 2025. We are now kicking off a cycle of accelerated growth. We don't depend on a single platform, we have multiple growth drivers. And we see '26 being better than '25. And we have line of sight to double-digit growth by the later part of the decade, which is really impressive for a company that pretty soon will be more than a $100 billion company.

Absolutely. Thank you again for coming today.

Good afternoon. I'm really ready to do that. But I am Joanne Wuensch. I am the medical technology analyst here at Citibank and thrilled to have with us Michael Bodner from Johnson & Johnson.

Thank you.

Michael, thank you for joining us.

It's a pleasure. Thank you for having me.

We do not get a lot of exposure to electrophysiology from J&J. And so I would love to just sort of start off big picture. How do you think about the health of the medical technology market and particularly as you think about it in terms of procedures and CapEx?

Well, look, it's an honor to be here, and thank you for inviting me. Maybe to start, because this is the first time I'm addressing this group, I can do a quick introduction. I've been at Johnson & Johnson roughly 9 years. And just before this role, leading our electrophysiology and neurovascular businesses, I was leading the acquisitions of Abiomed and Shockwave. And then prior to that, I was our Worldwide President for Biosense Webster, but I've got an extensive experience both in the U.S. and internationally across cardiovascular devices.

To address your question, when we look at the health of the MedTech industry, it's strong and resilient. And it's driven by the aging population, but also continued access to care around the world. When we look at those capital cycles, those are in balance at the hospital level on being mindful of near-term cash and capital constraints, but also being competitive amongst other hospitals and bringing technology in that improve patient outcomes and drive more efficiency.

And in our MedTech business, we're focused on 3 core areas. Number one is cardiovascular; number two is surgery and number three is vision. Within the cardiovascular space, that's where we've been making some of our boldest moves, particularly with Abiomed and Shockwave of late. And EP is the cornerstone of our investments and activity within the cardiovascular space. And it's really high-tech MedTech at its best, right? Lots of innovation, lots of unmet need and lots of procedure volume, particularly driven by atrial fibrillation.

Excellent. And when you think about J&J's electrophysiology franchises, what are its strength and weaknesses, both in the U.S. and outside the United States?

Yes. In the U.S. and outside the U.S., we're the clear leader in electrophysiology, and that's anchored to our benchmarking CARTO System. That's our world-leading imaging system.

Now when we're involved with these cardiac procedures, it's a soft tissue procedure and the physicians really need to know where they are in 3D electroanatomical space. And our strength there is around a full ecosystem of mapping technologies, software, ablation catheters and the imaging, and it all works together.

We have the most extensive network of CARTO Systems worldwide and really strong clinical mappers that really partner hand-in-hand with their physicians on how to diagnose and best guide on where to ablate to best treat those patients.

When you look at some of the unique features of CARTO, it's the integration with cardiac imaging. And that gives physicians additional safety parameters. We also have a zero-fluoro workflow. That means that physicians don't need to expose patients to unnecessary radiation, and they also don't need to wear heavy letted aprons or expose their staff to radiation or wearing those heavy letted aprons.

We also have the ability to provide physicians with intraoperative queues. Now with the shift from RF to PF, the intraoperative queues that they used to have like signal attenuation and impedance drops that guided them that they were doing a good ablation, those no longer exist with pulsed-field ablation.

So they're relying on the mapping system even more to understand are they truly touching the tissue and have they delivered the right dose of therapy to the right areas of the heart, and they need to know where they've been and where they still need to go.

And how many CARTO Systems do you have worldwide?

We have over 5,000 systems worldwide.

And are the majority of those in the United States? Or how do we think about that geographically?

They're very well distributed worldwide.

And I think I want to spend just a minute talking about international EP because in that market, PF arrived several years before it arrived here in the United States. What was your experience having that stronghold of CARTO?

So there's -- with the value of having a mapping system and the shift from those queues like I stated before, from seeing signal attenuation, seeing impedance drops that enabled us to be even more in the cases and partner even stronger with the physicians. The physicians really wanted to understand how the PFA was working, right? It's a very early modality, right?

We have over 20 years of experience with RF and PF is new. And PF is very varied and differentiated amongst the different companies. It's based on the type of voltage. Is it bipolar? Is it unipolar? Is it biphasic? Is it monophasic? There are so many variabilities that can be addressed. But the #1 is are they touching cardiac tissue? How much are they applying the energy and where else do they need to be? And so they are anchoring to the need for the mapping system even more with PFA than what we saw before with RF.

So sticking outside the United States because I'm going to switch shortly. Other imaging modalities exist and are being introduced. And what have you found in terms of the stickiness of CARTO?

So CARTO is a platform that's been around 30 years. This month is actually its 30th birthday. And it's a system that physicians have been trained on. It's what they learned on in fellowship, and we have been constantly updating CARTO. We're on a cadence of major updates with CARTO at least twice a year, and we will continue that cadence into the future.

And so it's what they learned on, it's what they trained on. And CARTO is very comprehensive. It can treat all arrhythmia types. So we're talking about Afib, but Afib is roughly 60% of the market. There's also super ventricular tachycardias. There's atrial tachycardias. There's flutters and there's ventricular tachycardias. And those are very sophisticated arrhythmias to treat, and you need a sophisticated system to do so.

So CARTO has the ability to treat from the simplest to the most complex arrhythmia types, and it gives those physicians the workflow that they're most accustomed to and data that helps them get the best outcomes for their patients.

So when the other systems came on the market, you found it highly sticky is what I'm hearing you say.

Very sticky.

And so are hospitals taking space for a second navigation or a third navigation system? Or are they just using other PFA catheters on the CARTO System?

So historically, it's been a duopoly. It's been basically Johnson & Johnson MedTech electrophysiology, previously known as Biosense Webster and Abbott. Medtronic was also playing in the space with cryo, but not with mapping. Boston, then came in with a mapping system as the third, and now Medtronic is coming in with the fourth. It's starting to get crowded from a mapping system perspective.

Now we partner closely with our physician community, and they wanted to be able to map competitive PFA with CARTO, and we enabled that with software updates. And now as we're launching our own PFA with VARIPULSE, we're seeing the shift from competitive PFA to VARIPULSE because of the fully integrated applications of VARIPULSE with CARTO. They get those real-time indicators; they get really strong procedural indicators that they've delivered the right lesions, and they need -- and they know where they've been and where they need to go. They can also do this with a complete zero-fluoro workflow.

And are you finding -- we spoke first about OUS. Are you finding the same dynamic here in the United States?

Yes, even more so. In the United States, mapping is a cornerstone of the procedure. I would say it's 100%, but let's say, it's greater than 99% of electrophysiologists in the United States are mapping.

Are you finding people are doing more mapping with PF than they did with RF or cryo?

Well, they're mapping. It's just depending on the clinical situation, if it's a simple procedure, which is becoming less and less, by the way, patients are becoming more complex, if their workflow is to treat just the veins, they can do a simple math to treat just the veins. But if it's beyond the veins, also known as like PVI plus, then they need sophisticated mapping catheters that are high density like an [indiscernible] that then gives them guidance on where to ablate beyond the veins, and that can be quite complex.

So I want to spend some time on J&J's PFA catheter VARIPULSE. And the product was launched earlier in the year, paused, relaunched. What have you seen in the uptake? And how is the momentum continuing?

Yes. So we have done over 30,000 cases since the pause and the momentum is building rapidly week-over-week. We had a really nice data readout back in September at ESC. We saw our VARIPURE data. So this is a real-world data set of 791 patients. And this is a registry, but it was also core lab adjudicated. And a lot of times, what you'll see is that in the real world, you may not always match what you see in an IDE study. And a lot of times in an IDE study, those are simpler patients. In the real world, they're more complex.

Well, in the VARIPURE study with 791 patients, we saw a 99.7% acute success rates. And this was across 20 different centers and 62 different operators. So you got variability in technique, clinical practice and site of care. We also saw 0 strokes in an extremely low event rate. So it's emboldening us with the safety that we have. We're doubling down on building additional evidence, and we're starting to see that momentum coming through in the United States.

We're also using the opportunity to turn VARIPULSE into a complete platform. So the first step was updating the irrigation rate to open up the therapeutic window. The next step is optimizing the pulse sequence. Right now, we have a very efficient workflow. It's only 4 ablations per vein, right? And that makes it a procedure that's easily completed in less than an hour, safely and efficiently. It also has a waveform that enables 0 general anesthesia. It can be done with conscious sedation, which enables us to recover the patient quickly and also enables the same-day discharge opportunity, which we just presented at APHRS as a sub-study in our U.S. IDE trial.

And so we're developing a new pulse sequence that will make it even more efficient. Today, each pulse is 21 seconds. And again, we do 4 per vein. The new pulse sequence is 3.8 seconds. So it's already very efficient. It's going to get even more efficient.

So what do you think that will do to the procedure time?

It will significantly reduce it.

Less than an hour?

It's already less than an hour.

So less than an hour...

Most physicians...

I think your guessing.

Okay. Most physicians are less than 45 minutes. We should see times approaching 30 minutes.

Okay. And what percentage of the market -- and again, this is a U.S. OUS question, do you think has already transitioned to PFA?

In the United States, we estimate about 70% within atrial fibrillation. And again, atrial fibrillation is one segment of the market.

We'll get to the other.

Yes.

So let's stick with that. I like that. And then outside the United States?

It's less than that.

Okay.

Hard to say because the data is a little bit muddier, but it's less than that.

And do you think at some stage, the OUS market catches up to the U.S. market in terms of share?

It might. It will take longer. A lot of that is based on country approvals, reimbursement and cost considerations.

And what do you think J&J share is within that market?

We're not disclosing that.

You're not disclosing that. I would like to ask. Okay, fair enough. But procedures are increasing month-over-month, feeling good about VARIPULSE?

We're feeling good about VARIPULSE, building nice momentum.

Okay. I'm there. So you were specific in talking about this as just being an AF platform right now. How do you think about bringing PFA into the other areas of EP?

Into the other arrhythmia types. Like atrial fib -- like flutter and BT, et cetera. Well, I think it's important to talk about and take a step back on where RF plays and where PF plays today and what may be needed in the future.

Yes.

We have over 20 years of experience as an industry with RF, and it's evolved, right, from 25 watts to 50 watts to 90 watts and high-power short duration workflows with really sophisticated catheters that improve safety and efficacy. We're still in the early innings with PFA.

Now PFA today has great benefits in terms of safety and efficiency. It's extremely fast. It also helped democratize the procedure. Many physicians who were high volume and point-by-point operators with focal catheters, they were able to do the procedure in less than an hour. But many, it took them more than 2 hours. But with PFA, particularly using regional ablation catheters, and we'll talk about form factors in a minute, they were also then able to -- be able to do the procedure in less than an hour. So it democratized the technique, particularly in atrial fibrillation.

Right now, PFA struggles to go deeper than 5 to 7 millimeters. So in certain anatomies, we need to go deeper. Now in certain parts of the heart, if you go deeper with PFA, you can run into the risk of creating a coronary spasm because that's where the coronary arteries are laying. There's also some challenge with the precision of the lesions that are created with PFA. So with VARIPULSE, we move the pulse sequence between the electrodes, so it's extremely precise, but it's a large footprint device. If you need precision, that's where a focal catheter can fit.

So generally, what we're looking for is where we need precision and depth that's still mostly RF and where we want speed and efficiency and safety that's more PF. At some point, PF probably will get deeper and be able to achieve that, but it has to be in a way that's safe for the coronary arteries and not create coronary spasm.

I think one of the things when you and I were speaking that really struck me is that we're all sort of focused on the transition to PFA in the AF market and that there's an opportunity that's just beginning, and we're hearing other companies talk about it, too, an SVT and VT, maybe atrial flutter?

Maybe. The unmet need was in atrial fibrillation because the downside risk of an esophageal fistula was massive, right? The 2 negatives of RF is that there can be esophageal fistula and there can be phrenic nerve injury, very rare and very low incidence, but devastating when it happens.

When you're treating flutter or right-sided procedures, ATACs, et cetera, these are very discrete burns. It's not a very long procedure generally. The hard part of that procedure is generally trying to assess where to ablate. That's where the strength of the mapping system comes in to help physicians understand this is the spot that you need to ablate in the soft tissue.

VT, there may be a play because a lot of times with ventricular tachycardias, there could be large areas that they need to ablate and there could be an efficiency play for ventricular tachycardias. But it needs to be deeper.

And one of the products which I spoke about on the earnings call or a couple of different calls is the dual energy SMARTTOUCH SF Catheter. Just got CE Mark approval. I don't know the timing here in the United States, but could you just talk a little bit about what makes that special?

Yes. And maybe I'll step back. I talked about form factors, but I didn't explain that. Historically, the form factor that physicians have been using is a small focal catheter, a 3.5-millimeter tip catheter like STSF. There was balloon usage, cryoballoon usage, and that was more of a single-shot approach.

We estimate that the market will stabilize with 4 types of form factors: regional ablation, which is VARIPULSE; small focal, which is like dual-energy STSF; large focal, which is like OMNYPULSE, which is a 12-millimeter basket and then a single shot, and we are also developing a single shot that we can talk about in the coming years.

Dual-energy STSF is the same form factor that they've been trained on. It's the market-leading RF catheter from the last decade. And it has the muscle memory and the workflow that they're accustomed to and that they really appreciate. and it obviously is seamlessly integrated into CARTO.

Now the dual energy toggles seamlessly between RF and PF. And depending on the complexity of the patient, there are times where a physician wants PF, particularly when they're near the phrenic nerve or the esophagus and there are times where they want RF, particularly when the tissue is thicker or they're near discrete conduction zones that need to be preserved because if they take out the conduction zone by accident, the patient may need a pacemaker.

Okay. And timing in the U.S.?

We are just getting geared up to submit next year for our approval.

Excellent. And then you sort of [indiscernible] use the word teased about OMNYPULSE. Can you describe that product? Because as we talk with physicians, that comes up a lot.

So different physicians like different workflows. The traditional workflow was point by point, which was dual-energy STSF. And I do think it warrants taking a minute and talking about contact force, if you'll just bear with me on that.

Go for it.

When you think about the evolution of electrophysiology and how things really took a big step forward, 20 years ago, the success rates were 50-50, right? Now they're 70, 80. Maybe we can get them beyond that as we implement artificial intelligence and new energy modalities and more sophisticated ways of doing ablations. But that big step change from 50 to 80 was contact force. Prior to contact force, physicians didn't know if they were truly touching cardiac tissue.

Many times, they would be ablating just in the blood because they didn't know if they were touching the tissue or how many grams of force they were actually pushing. And many times, they could actually inadvertently burn through the heart because they didn't have that contact force information intraoperatively. We brought that to the market with ST, which was SMARTTOUCH. That's what SMARTTOUCH means contact force. And then SMARTTOUCH SF gave a very nice cooling technique to that catheter.

So the contact force that the physicians are used to, particularly in a point-by-point workflow comes with dual-energy STSF. We've taken that same technology, and we've applied it to OMNYPULSE. OMNYPULSE is an all-in-one catheter. So STSF is 3.5 millimeters in diameter. OMNYPULSE is a large format. It's 12 millimeters in diameter. Many physicians prefer the point-by-point workflow, and we're able to give them a point-by-point workflow that's extremely efficient with that larger format. Now OMNYPULSE is also a high-density mapping catheter. So they're able to map with high density that helps them understand where to ablate beyond the veins for non-PVI triggers.

And the timing of OMNYPULSE in the U.S. and outside the U.S.?

We're just enrolling our IDE at the moment. We've completed our European IDE, and we're preparing for CE Mark.

And so when you go to market what kind of portfolio will you be having in terms of your catheter base?

At the end state or in the next year?

You can answer the other way or both.

Well, we anticipate that we will have a full portfolio. We also -- right now, we have the most comprehensive portfolio within electrophysiology from mapping catheters to ultrasound catheters, everything being integrated to the most sophisticated diagnostic software to help physicians know where plate.

But we have been on a cadence of launching 2 major software releases every year, and we will continue that cadence over the long-term. So 2 major releases a year. We also are working on our next-generation CARTO, which will implement more artificial intelligence and really see us through to the next decade.

On the therapeutic side, we are going to get into a cadence where we're launching a new therapeutic catheter every year, and we're going to be marching to that drumbeat. And so we will have VARIPULSE and VARIPULSE will evolve with the new pulse sequences, the fast sequence at 3.8 seconds. We will also have dual-energy STSF, then we will move to OMNYPULSE, which has the large format, and then we'll be moving to an easy-to-use single-shot basket.

And how do you think about physician reception to all of these different choices. I mean, today, is the physician just not able to do all of the ablations that they want to do because they don't have these choices? Or how do you -- I'm trying to understand because there's a moment where people want a portfolio or they want a toolbox, whatever the word is that we use. And then there's a moment where doctors are like, I don't have time to learn all of that. I like this one.

Yes. So we see that today. There are physicians that prefer that point-by-point workflow, and they don't like the regional ablation. So the initial PFA catheters that have come on the market are regional ablation. Some very much like the small focal, the 3.5-millimeter because that gives them complete versatility. When it's 3.5 millimeters, they can get into every aspect of the chambers of the heart. When it's a large format, like a 9-millimeter or a 12-millimeter, it's not able to get in every aspect of the heart. So it really is a case-by-case basis.

What are they trying to achieve with that patient and what is that patient's characteristics? If it's an early paroxysmal patient, which means they may only do the veins, they may be able to line up cases that are veins only that day. And then a single-shot approach may be suitable. But sometimes, the arrhythmia is beyond the vein. Even though they thought it may just be the vein, they'll see that there's other arrhythmia is emerging beyond.

And so having that flexibility is quite useful. That's where a VARIPULSE could fit in the future. But if it's a long-standing persistent patient with lots of complexity, they may want to have that versatility of a dual-energy STSF because they may need to go to the right side of the heart and do a CTI line, which is where they want to use RF.

One of the things that comes up when I speak with physicians is this concept of I've been using J&J's CARTO for a long time. I trust J&J. I'm going to try their catheters. I'm going to assume you find that in the field also.

Yes. We've got a very large network of CARTO that we talked about before, but we also have an extensive, highly trained group of clinical mappers. We have the largest group. We spend a lot of time and effort investing in them to make sure that they're the category experts. And they are, by far, the trusted advisers with the electrophysiologists. They are working hand-in-hand with the electrophysiologists during those procedures, helping to guide them on what's happening from an arrhythmia perspective. And that relationship is really important with our path forward.

We spend a lot of time talking about the changing EP landscape in the United States and somewhat Europe. There's a big old world out there. How do you think about bringing the new technology into other regions?

So we have an extensive network of J&J employees in Europe and in Asia, and we bring those technologies as rapidly as we can into those markets. We're currently launching VARIPULSE in China, in Japan, across Europe, in Australia. We're launching dual-energy STSF in Europe and in Hong Kong. And so given the strength of our team and the depth of our team, we rapidly launch in these markets.

Excellent. I do want to switch. We're a different [indiscernible] also hat in neurovascular. And another area that doesn't get a lot of attention inside of the J&J family. What can you tell us about the products that you're developing or you're most excited about in that franchise?

Well, look, there's a lot of unmet need in neurovascular, still a lot of unmet need in stroke, but still a shift from traditional surgical to percutaneous approaches. We're in process of launching a new family of aspiration catheters called CEREGLIDE. And we've been just doing our early experiences in the United States and the feedback has been excellent. So this is a complete portfolio that's being launched at this time, and that's for acute ischemic stroke.

We're also looking at indication expansions for our TRUFILL liquid embolic. Now TRUFILL has on the market for about 25 years. And there is a new use case for that product. Many patients, particularly the elderly that are on anticoagulation can fall, they bump their head, and they get a chronic subdermal hematoma. So that's where they've got a bleed, but it becomes chronic. And the way to treat that historically has been through surgery. We can now treat that percutaneously by embolizing the middle meningeal artery using the TRUFILL glue.

Now that's going to be a very large patient population, but it's still early, and it's a nascent way of treating this, but it's going to be an exciting space.

And how much energy and effort goes into J&J's development and participation in the stroke market?

We have a pretty extensive R&D team that's working on multiple different platforms right now beyond CEREGLIDE, looking at hemorrhagic stroke, ischemic stroke and looking at innovations on aspiration, aspiration mechanisms, but also on stent retrievers and novel ways of enlarging the tip of the catheter in order to ingest even more clot.

And you in sharing your bio shared that you were part of the Abiomed and the Shockwave acquisitions and integrations?

There was.

You were. Can you share some of the learnings from bringing those high-profile products into the portfolio?

Yes. These are high-growth businesses with tremendous amount of talent. They're first-in-class new to the world companies, and we want to incubate them within J&J, give them the resources they need to thrive. What I'm really proud of is the integration process went extremely well. The turnover was extremely low, and the key talent all stayed, and the inventors and the innovators stayed with us, and they're continuing to develop the next-generation products within that pipeline.

Sometimes when you acquire a company, if all the knowledge and know-how and capability disappears, you're just look for the product. You want to make sure you keep the secret sauce, which is the people, the people that really understand how the technology works. At Abiomed, that's Thorsten Siess. He's the inventor of the Impella, right? This was his PhD thesis, and he continues to work diligently at developing the next-generation Impella devices. At Shockwave, the original R&D team, they are still with us developing the next-generation devices.

Excellent. What do you think investors are not understanding about the franchises that you are aware of or the franchises that you have knowledge of, let me word it that way.

I think there's sometimes confusion about our position in the market. So...

[indiscernible] with that...

Clear.

Please clarify.

We are the clear market leader in electrophysiology today, and we will be in the future, given the strength of our current portfolio and the cadence of launches that we have coming. We are in a super cycle of innovation. We are committed, as I stated earlier, to 2 major mapping releases per year. We're developing a new CARTO that is going to be the next-generation mapping system that will be the new benchmark. And then we have a cadence of therapeutic catheters and PFA that excites our physicians.

And when we were talking a year from now, given all of this product development, what do you think we're going to be talking about?

We'll talk about the next phase of innovation that we haven't discussed yet. We are developing new...

Could you share with us what that is.

I'll say it this way. We are developing new material science that is unique to us that changes the physics by which we do ablation.

Say those words again. Changes the physics of the way we do ablation.

Correct. I can't talk about it more yet, but I will. I promise you.

Okay. You promise.

But we are developing new material science, which we've developed in-house. It took us many years to figure out the physics, but it completely changes how we will do ablations in the future.

Michael, thank you so much for joining us today. This has been very enjoyable and enlightening.

Thank you. Thank you for having me.

Good morning, everybody. My name is Alex Hammond, and I'm the biopharma analyst here at Wolfe.

So it's my pleasure today to have J&J. So we have Candice Long, Worldwide VP, Immunology, Global Commercial Strategy; and we have David Lee, Global Immunology Therapeutic Area Head. Thank you guys so much for joining us.

Thanks for inviting us.

So obviously, a lot going on at J&J. Maybe starting off with icotrokinra. So obviously, we know that there is a submission to regulators. How should we kind of think about next steps? When could we see approval? And have you guys started preparing for launch as of today?

Sure. Well, I maybe will start. Let's start with icotrokinra. It's the first targeted oral peptide to the -- highly selective to the IL-23 receptor. We see this as a transformative next-generation therapy for the field. And we see that because it is the only asset that provides the unprecedented combination of complete skin clearance, favorable safety, of course, with the simplicity of a single pill once a day.

Now our development program has been robust to inform questions, and we see this profile as now becoming first-line systemic therapy for psoriasis. We say that because of the data that we have provided in our large Phase III studies with adults with moderate-to-severe psoriasis, with adolescents with moderate-to-severe psoriasis, as well as in our special area study, those hard-to-treat areas like groin, scalp and others where we see that profile.

We continue that development to inform with head-to-head studies against a leading other oral psoriasis option, of course, showing superiority there. And we are continuing our robust program by going head-to-head with a standard of care biologic therapy with STELARA, seeing that readout. And what we see with this asset is increasing the impact of our portfolio, informing people who -- and we know that the minority of patients actually go on advanced therapy. Reluctance often being needed to go on a biologic. And here, we will show that you don't need to compromise to go on a biologic, and therefore, we think that will expand.

Now you did ask about timing of approvals and things like that. Submission went in, in July in the U.S., and we're very confident in a 2026 launch. We won't speculate on the exact date because interactions with health authorities aren't highly -- aren't completely predictable.

Maybe I'll do one last comment on the momentum of that icotrokinra program. We're now beyond psoriasis and we've launched our pivotal studies for Crohn's and colitis. And we see that momentum continuing informing that unprecedented combination of efficacy, safety and then, of course, the convenience of a once-a-day pill.

Perfect. That's a great introduction for an asset that we're also very excited about. And I guess this goes to you, Candice. As you think about Street numbers for icotrokinra, do you think that they're under-appreciating how big this opportunity could be, particularly, I believe, is it 5 million Americans with either psoriasis or IBD that are not on a biologic?

So yes, we think it's -- there's a disconnect. It's actually 5 million moderate-to-severe in psoriasis, IBD, PSA that are eligible not using these therapies.

So why do we think there's a disconnect? In the first quarter of this year, we actually took an opportunity to reference the consensus. And we're seeing it as being significantly higher for the reasons that David just chose to call out: the unprecedented combination, what that has an opportunity to do for a significant number of individuals that are eligible. And quite honestly, we see that they're making trade-offs. They're not stepping into therapies, they're not getting that outcome. And as a result, we have indicated that we think the consensus is too low.

That makes sense. I believe we're quite a bit higher than consensus. So how do you think about -- David, you mentioned the head-to-heads as well. So you guys are running the head-to-head versus STELARA. So how can you kind of frame your confidence there in that trial?

So at several levels. We, of course, all the deep profiling we've gotten on the studies we've seen so far and the efficacy levels that we've already seen in the pivotal studies that are part of our submission package. That gives us a lot of confidence that we will be showing those superior attributes to STELARA and beating in a head-to-head biologic standard of care.

And I think beyond just simply beating, we're a global company, we want and we will drive global access. And so these head-to-head studies are also part of our core strategy to bring this asset worldwide, not just to get approvals, but to get access and adoption having informed those key questions.

And I guess from a global launch perspective, so this is a drug that has a higher API necessary, right? It's a small molecule. So how should we kind of think about the manufacturing capability that you guys have in-house?

I'll take that one too. I'm the R&D guy. That's a really key question. We are leading in oral peptide use in autoimmunity. Look, I would underscore that we're an innovator company. We invest in innovation, the targets we choose, how we develop them, and here's what's key, how we formulate and manufacture them. And there is just as much innovation that happens in the formulation and manufacture as there is in the discovery and development process.

We've been investing heavily in the manufacturing approach for icotrokinra since we entered the clinic. So now we have that years of experience. We also see this as a big market. So we know that the demands on our manufacturing are going to be substantial. I will say with a lot of confidence that we are fully capable to meet the needs with our global manufacturing footprint, both for psoriasis and for anticipated subsequent large launches in IBD as well.

Do you see this as a funnel across the board for higher utilization of biologics, particularly of TREMFYA as well?

So actually, as an organization you probably heard us say before, any time there's a new therapy that gets approved, we actually think there's a really positive set of circumstances. First and foremost, there's a different conversation that tends to happen with clinicians and with patients when new options are available. That conversation can really highlight things that have been holding back the ability to consider different types of therapies. Perhaps they just haven't had such a transparent conversation in particular.

So the ability to actually talk about this, what we anticipate actually happening with icotrokinra is this elevation of the trade-off that people have been thinking about. And very specifically, that trade-off often comes between "I can get efficacy if I want, and I'm willing to use an injectable biologic." We have a lot of experience with those. But they do come with safety-related concerns. That route of administration causes some hesitancy. Or I can choose to use something that's not a biologic, lower efficacy. And what we're really seeing is those aren't connecting with a lot of individuals in terms of what they are seeking.

So absolutely, we think that the introduction of icotrokinra, it represents a significant step forward, both in terms of the treatment options there, the dialogues that will be happening. But probably more importantly, we think that there's going to be an expansion as a result of this. Now you asked specifically on biologics. Our expectation is there's going to be a market expansion in terms of the utilization of this because you're not making those trade-offs that have historically been there.

That makes complete sense. And I guess, you guys ran, was it, the ENCOMPASS study. Can you kind of frame what you saw and how that can kind of impact patient utilization?

Sure. I'll comment on that. So one of our, I'd say, differentiating strategic approaches of J&J is we have these disease area strongholds where we invest deeply to understand patient insights, unmet medical need. This is an example of that. So what we did was we -- it's actually a global study in our dermatology group, where when we released the data in the U.S. cohort, so far, we pulled 400 adults with moderate-to-severe plaque psoriasis, 200 adolescents and 200 providers. We both confirmed many of the things we knew, deepened our insights and we saw some new things.

On the confirm side, psoriasis has a huge impact on quality of life. We knew that. We also now, with more efficacious therapies, seeing the really dramatic impacts -- meaningful impacts of restoring life to living. It's even more impactful for adolescents. And you can imagine why at that time of life with that going on in your skin, how that is impacting that quality of life. I will underscore that our development program included adolescents in our registrational studies that are part of the submission. It's based on those insights. So bad disease.

How do they -- what is important to patients and providers? Efficacy, first and foremost. But in this space, very close second is safety. Have to have a safety -- a superlative safety profile.

And then, how do they want to take a medicine? The substantial majority are looking for an oral. Say that again, substantial majority are looking for oral. Some are looking for parenteral, some are looking for topical. But the substantial majority are looking for that simplicity of a once-a-day pill.

We even did a double-click on that and asked, if you're on a biologic, how many of you would switch to an oral that has the attributes that we described? We didn't name the compound, just attributes of the compound. 90% of people on an injectable therapy said they would want to switch to an oral that doesn't compromise efficacy, safety and it has that simplicity.

So that actually was a bit of a surprise for us. We thought it'd be around 70%. That's what we've been communicating. It's actually over 90%. And so it's that -- those kind of insights that are giving us confidence about what this will bring to the market. And we look forward to continuing. We've got the rest of the global population data coming in and we'll continue to get insights.

And we're really excited to kind of see what else you can share with us. And I guess one last follow-up as well, Candice. How should we kind of think about the present on sampling drug? So is that something that can kind of help kind of pave the way for what we anticipate to be a very successful launch?

We are really excited about the 2026 potential for the introduction of icotrokinra. And while I won't get into specifics of what that commercial specific strategies will do -- will include, what I will say is if you look at Johnson & Johnson overall, look at the immunology business, it is broad, it is comprehensive. The capabilities will all be brought forward.

And we're really building on this ongoing legacy that we've had in immunology. That connection into this community allows us to understand what's meaningful and important. We build those into the launch strategies. And at the end, we're really excited to actually make this a reality for individuals when we think about those unmet needs, as David just were highlighting, that exists, first in psoriasis, and then as we have those additional readouts, hopefully going beyond that space as well.

So I guess, looking to IBD, should we kind of use the proxy of what the drug does from a psoriasis launch perspective and kind of use those same learnings and apply it to IBD as well?

So I think there's a couple of things. So first, when we look at IBD overall, what we do recognize is that there is a continued need. Less than about 40% of people are using the current therapies that are out there and available. And icotrokinra, the ANTHEM data, and maybe I'll turn it over briefly to David, were really exciting in ulcerative colitis, to give us initial perspectives of what to expect.

But at the highest level, you heard David talked about the combination, unprecedented combination, of these efficacies, the favorable safety and that route of administration, that is being shown again in the ulcerative colitis space, which has informed the approach that we've taken in terms of moving forward in both ulcerative colitis as well as Crohn's disease. So David, I'll turn it over to you.

Yes. So based on those ANTHEM results, and we're deeply embedded in the ecosystem with patients, providers, opinion leaders, who are all highly enthusiastic about that profile and have given us a lot of input into the design of our pivotal studies, and those are launched. So we've launched Phase III in both Crohn's and UC. They are recruiting at pace. We're very pleased already with the way -- like we saw with the psoriasis studies. In fact, many of those finishing less than half of the time we've ever seen.

I would also underscore, because of our confidence, we're also running an adolescent substudy in the ulcerative colitis study so we can bring at launch those insights not just to adults, but to adolescents.

And Alex, I think you had asked a question around the ability to transfer information over. So when we look at STELARA, when we were hitting the peak sales there, about 75% of the STELARA sales were actually coming from IBD. And we actually think that is, while not a precise number to use, we think that that's highly likely to be the case for TREMFYA and as we look into other spaces, that there's going to be robust utilization in IBD overall.

So certainly, we'll get some insights and perspective from what happens as we now have the TREMFYA asset out there for both ulcerative colitis as well as Crohn's disease. We'll see how the data plays out overall. But again, a really amazing portfolio that we have that allows us to address these needs in a more all-encompassing way than we've been able to do.

I'm very excited to get to TREMFYA, but I have one quick question. One pushback that we've gotten on icotrokinra has been the food restriction. How do you guys kind of think about that based on your discussions with clinicians?

Yes, great question. So like many oral peptide molecules, there is a food effect with icotrokinra. We deeply assessed this in our clin-pharm studies in our comprehensive package. And we're very pleased that our food requirement means taking a pill on an empty stomach and waiting 30 minutes before high caloric food.

What does that mean practically? For a patient, you take your pill when you get up in the morning with a sip of water. You go make your cup of coffee. You drink your cup of coffee or tea. You make your bed, brush your teeth. By the time you're done with that, it's time for breakfast. So it's present, but it's a very modest 30-minute effect.

The other reason we have a lot of confidence in that is we looked at what was the utilization in our large pivotal studies. And for drugs that are hard to take or not as well tolerated, what you typically see is, over a 52-week study, you start seeing loss of efficacy and dropout of subjects. We saw none of either. So we saw very durable responses. We didn't see patients dropping out. And when we talk to patients and providers -- and the trialists that were doing this, nobody had any inconvenience with the approach.

Yes, we hadn't heard any kind of pushback from the clinician side either, but you know how investors are, so I have to ask.

So I guess with that, on TREMFYA, how should we kind of think about continued growth in psoriasis and psoriatic arthritis? Obviously, we're now focusing on IBD, but would love to initially kind of think about those 2 indications.

Yes. So it's been an exciting year. We're seeing growth across TREMFYA overall in the PsO, PsA indications. What is underpinning that growth is a couple of things. So one, in the psoriasis space, the durability of skin clearance, that we've seen the continuity of that safety profile that we've seen before. Nothing new coming up, just really reinforcing that ability.

And in the PsA, some new data did come out this year, meaningful. Oftentimes, one of the key things that is assessed when looking at PsA is inhibition of structural damage. So earlier this year, we showed the APEX results where actually TREMFYA is the only IL-23 that is able to provide the inhibition of that structural damage. And as we've spoken previously, what's really important about that is once that structural damage happens, you can't get it back. So you want the ability to inhibit that from the beginning.

Now overall, TREMFYA is different than other IL-23s. It's blocking that IL-23 receptor, it's binding to the CD64. We're seeing continuity of those robust results. And we are seeing growth across the board in PsO as well as PsA.

Perfect. And then IBD. Obviously, it's very exciting. I believe, are you getting -- is it over 50% of the new patient starts in the IL-23 class?

Over 50% of the new starts for ulcerative colitis, yes, which is just about a year out from when we initially introduced the product and we didn't have the subcutaneous option for induction available yet.

How do you kind of see that subcu induction kind of shaking out from a new patient -- I mean that's really exciting.

It is. What makes it meaningful is what this means for clinicians, what this means for patients. So subcutaneous, we think, is going to be a very significant component of what TREMFYA is able to offer.

When we look at ulcerative colitis, you highlighted the 50% new to brands. When we look at Crohn's disease when we actually introduced that indication with both options for induction subcutaneous as well as injection, we saw even faster adoption than what we had seen in ulcerative colitis. And it's actually when you look launch aligned, the Crohn's disease launch is surpassing many other recent introductions into this space.

The reason it's meaningful has to do with the simplicity, not only in terms of how it's administered, but what this means for offices, the speed at which you can do that. You don't have to try to schedule the infusion time. Oftentimes that's a couple of weeks out. And that is something that a lot of clinicians are experienced doing. And that subcutaneous option creates that alternative that they haven't had before to get that medication to a patient earlier than what they would have been able to do before.

So we absolutely believe it will continue to be a really important component because of that simplicity that it's offering for all those that are involved.