Thanks for joining us, everybody. I'm Terence Flynn, the U.S. Biopharma Analyst, Analyst here at Morgan Stanley. This morning, I'm very pleased to be hosting Johnson & Johnson. Today from the company, we have Joaquin Duato, who's the company's Chairman and CEO, and John Reed, who is Executive Vice President of Pharma R&D. Thank you both so much for joining us. Really appreciate the time today. Before we get started, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Well, you know, maybe I thought we'd get started. Joaquin, you've been in the role as CEO now for almost a year. And so maybe you could provide us an update, kind of first on your strategic priorities and capital allocation strategy. The other big change of the company is the consumer separation. Now J&J is a pharma MedT ech company, following the separation to Kenvue, a few weeks ago. Thank you, and thank you for joining this fireside chat. We are very pleased of having completed the consumer separation. It was a 2 and half year process, and at this point, the consumer company, Kenvue, is an independent company, and we are enthusiastic about the Johnson & Johnson that has come out of that, exclusively focused on R&D and innovation, on MedTech and pharmaceuticals. This increased focus is gonna help us being more productive, and at the same time, having higher margins and higher growth rates, because consumer had lower margins and lower growth rates compared to MedTech and pharma. So I firmly believe that this positions us especially well to be a multi-decade company and to bring success, not only in the coming couple of years, but into the future. When I think about Johnson & Johnson, there are things that remain the same. It's our mission around healthcare and difficult-to-treat diseases with medical technology or with pharmaceuticals. It's our principles of our Credo. This is the 80th anniversary of our Credo. It was written in 1943, and those are things that are not going to change. Looking at the priorities for this decade, I have stated two when I started to be a CEO. One is to drive our MedTech group to be a best-in-class group, a top-tier grower, and we are clearly moving into that direction. Our H1 of the year growth for MedTech was 8%. The second one is to continue to deliver growth, competitive growth, in our pharmaceutical side. Not only in the short term of 2024, 2025 period, overcoming the STELARA patent expiration, but also in the H2 of the decade, and to continue to deliver significant growth during that period. So I'm sure we will discuss about these two aspects later, but those are the two goals. Top-tier growth in MedTech, increase the profile of our growth in the H2 of the decade in the pharmaceutical group. When I think about Johnson & Johnson now and in the future, and when I think about where medicine is going, I firmly believe that having a company, the only company that has MedTech and pharmaceutical capabilities, it's going to be important for us to be successful where medicine is going. Most of the diseases do have a component of treatment, of, surgery or pharmaceutical, and we are going to be the only company that will have both capabilities, so we can do things that no other company can do. Now, the proof, it's gonna be in our results, and when I look at the H1 of the year, I think we are delivering on that promise. Our total, Johnson & Johnson growth in the H1 of the year was 8%. We have provided updated guidance, post the consumer separation, for full year 2023, and the midpoint of our guidance for the combined company is $84 billion, 8% operational growth, and north of 12% of EPS increase. So I'm pleased with that trajectory that we're having in 2023, and it delivers on the promise of being a top-tier company. When I think about capital allocation priorities, which is your second question, we aim to be a very disciplined financial company. We have an excellent credit profile. We have a very robust free cash flow generation, and we want to maintain that solid financial profile for Johnson & Johnson. Our priorities are clear and have not changed. The first thing is to continue to invest in our business, especially in R&D, and I'm sure you have opportunities to discuss with John how we are doing that. Second one is to continue to pay a competitive dividend. We have had 61 consecutive years of dividend increases, and we don't plan to change that. The other one is to use part of that for M&A, for value-creating acquisitions, expanding into markets that we are today or adjacencies, and if appropriate, for share repurchases. If I tell you the numbers, in the last five years, we invested $64 billion in R&D in the last five years. We used $60 billion for dividends and share repurchases, so about 60% of our free cash flow, and $33 billion for M&A. So that gives you a picture of what our capital allocation priorities are, and this is something that we don't plan to change. We want to maintain our robust financial position. Okay, great. Well, to set the stage perfectly, the one, I guess, segue question just relates to M&A. I know, you know, you and I have talked in the past, and you've been very proud of some of the deals you've done on the pharma side, where you guys have gone very early stage. You know, when I think of the IMBRUVICA deal, DARZALEX deals, those were kind of very early-stage assets, and you've generated, you know, a great return on those, given the success of those assets. And so, you know, my question is, I guess, is that your preference on the pharma side? And then in MedTech, should we think about more of kind of Abiomed-type deals as kind of the preference? How do you think about just kind of, you know, stage of deal in pharma and MedTech? Yeah. So I know there's a lot of focus in M&A, but I, I also would like to underline that the majority of the growth of Johnson & Johnson, the overwhelming majority of the growth, is gonna come from our existing R&D and our existing portfolio. So M&A does is important. It's important in creating future growth, but the majority of the growth, if you look at the five-year period, is gonna come from our existing portfolio and our R&D efforts. So, our preferred way, and that reads both for MedTech and for pharma, is to be able to go earlier on in order to do deals that can be licenses, partnerships, or acquisitions, to be able to leverage our scale in development, in manufacturing, in commercialization, and to capture the most value we can. So clearly, if we could, it would be all these type of deals, and we have a great track record in pharma in being able to do that. You mentioned some of them. And we also have a good track record in MedTech to do that. It does take longer to mature these deals in MedTech, that's clear. Yeah. So with that differentiation, you know, our preferred way in pharma remains the same. We have a tried-and-true formula. We have not departed from that formula. And in MedTech, you know, we want to be able to go earlier on, too, and to increase the number of shots on goals that you have there. And sometimes, if we see the right opportunity, expand into markets that are faster growing, that are adjacent where we are. For example, what we did with Abiomed. That would be an example of that. How is Abiomed doing? Abiomed is doing really well. I mean, it's growing around 20%, and we think that the Abiomed deal is very, very prototypical of what Johnson & Johnson should do, which is platforms that are gonna have a multi-decade growth profile, and that's what we are trying to do. And Abiomed has a number of opportunities in different products and indication expansions that are going to make it a core part of our cardiovascular business there. But I want to underline that we remain disciplined, and the same way that I was describing our capital allocation priorities, that plays in our M&A strategy. And that while we are open for M&A, as we have been with Abiomed, we remain focused in making sure that we do very well with our existing business, because that's the core of the growth that we'll deliver to investors in the coming years. Okay, great. So maybe just moving on to the pharma business. Obviously, this is gonna be on a percentage basis, much higher percentage of the company now, post the consumer separation. The company's provided 2025 pharma guidance of $57 billion on an FX adjusted basis. I think consensus stands around $55 billion, despite the recent STELARA settlement. So maybe just walk us through what you see as the biggest disconnects, and this goes back to some of your earlier point on just the underlying franchises driving that- Absolutely out of your growth. Absolutely. I have to tell you that the consensus is moving closer to the$ 57 billion now. So I I didn't look this morning. Yeah, so the consensus has moved closer to the $57 billion, and I see in the investor side an increased confidence on the $57 billion, and I will explain to you that. Sure. We have always been confident on getting into $57 billion in 2025, and we are very confident that we are gonna be able to do that, just to be clear. So why are we confident on the $57 billion? There's a number of factors that I go one by one, and then I will go at the end to the disconnects, which are not as, you know, as wide as we had before. Yeah. So what are the factors? First, we have a very strong, marketed portfolio of products that are growing well. TREMFYA, our IL-23, ERLEADA, our prostate cancer medication, our long-acting therapy, our long-acting antipsychotic franchise with INVEGA SUSTENNA, our pulmonary arterial hypertension franchise, and our biggest asset today, which is DARZALEX, which is doing really well, being a standard of care now in first line in newly diagnosed multiple myeloma patients. So those ones that we have identified as core products of our existing portfolio that do have legs during the H2 of the decade, are doing really well, all of them growing north of double digit. Then, at the same time, I think we have provided increased visibility to our new product launches. Four. One is CARVYKTI, our BCMA cell therapy, which has had best-in-class results, and I'm sure John will talk about CARTITUDE-4 later and what it means to be able to go to earlier lines. The TECVAYLI, which is teclistamab, our BCMA CD3 bispecific, and then our recent approval of talquetamab, TALVEY, our GPRC5D, CD3 bispecific, which was approved a couple of weeks ago. So those are three new products, with the addition also of SPRAVATO, which is our medication for treatment of seasonal depression, which we are now disclosing in our sales tables, and you're gonna be able to see the progression of these four new products. So all these new products are gonna be substantial contributors. Then on top of that, because those products are marketed, I think there's more visibility to some of the latest stage products in our pipeline that will have some important role in these coming couple of years. One, you have more visibility on amivantamab and the combination of amivantamab plus lazertinib, with the PAPILLON data and the MARIPOSA-2, that I'm sure we're gonna get a question, and I'll let John talk about that. You have more visibility on nipocalimab, in which we are gonna have upcoming data. We also have presented data on our oral IL-23 receptor antagonist peptide, which creates an additional avenue for growth. And we also have presented data on our drug-eluting device studies that is implanted in the bladder for earlier stage bladder cancer, which was very promising. So I think there's more visibility into some of the key assets of our pipeline, and I think that gives enhanced confidence to the investor. There are other elements of our pipeline that we have more visibility, for example, milvexian, that we have started all the three phase 3 studies. So we are executing well on our pipeline, and that gives increased visibility. So I think that is the combination of our existing products, our new product launches, the visibility in our pipeline, has increased the confidence on the $57 billion. What are the disconnects that they still exist? One is with TREMFYA. I think that TREMFYA and the impact that the IBD indications are gonna have in TREMFYA is not yet well recognized, right? We are going to present data on the studies, both in UC and in CD, very soon, and that's gonna be a new leg of growth in TREMFYA, which is not yet well recognized. For background, on STELARA, that could be a good proxy, 75% of the sales of STELARA are in IBD. So when you look at TREMFYA today, you have to think about the potential, because 75% of the sales of STELARA in IBD, TREMFYA, it's only in psoriasis and in psoriatic arthritis, so I don't think that's well captured yet. ERLEADA is not yet well captured because we are in the process also of having results of a study on high-risk localized prostate cancer. Two studies there, and that would be a new leg of growth for ERLEADA, our prostate cancer medication. Finally, I don't think that SPRAVATO, our treatment-resistant medication, rapid-acting antidepressant, is still well captured in its potential. SPRAVATO was the first medication with a different mechanism of action in treatment of depression. It got two breakthrough designations by the FDA, and while it takes longer to introduce new antidepressants because the psychiatry group is more conservative, it's building up very well, and you're gonna see strong progression quarter-over-quarter. So these three products, I believe, are the ones that may have more of a disconnect versus what the street is projecting in $57 billion. But again, I believe that the confidence of the $57 billion has increased. Now our goal is to provide more reasons to believe in our growth profile in the H2 of the decade. Yeah. So does that mean we should expect 20-30 guidance at the R&D day that's coming up later this year? We are going to—I mean, we have an upcoming enterprise business review at the end of this year. Our goal there would be to provide more conviction around the next couple of years, both in medical and pharmaceuticals. At the same time, give you more visibility, both in medical and pharmaceuticals, to our pipeline, so as to be able to have a better view of the growth profile in the H2 of the decade. Yeah. The same way that it took some time to get into the $57 billion, I think that we have some work to do in showing investors what is our growth profile in the H2 of the decade. So our main goal in that meeting would be to give you more visibility, so you are in a better position to model and to profile what is gonna be our growth in the H2 of the decade. Okay, understood. I wanna get to myeloma, 'cause that's one of the important franchises. But first, I just thought I'd ask one on RYBREVANT, lazertinib. You mentioned this, Joaquin, the MARIPOSA-2, but also we're waiting on the MARIPOSA-1 study, which again, would open up the frontline opportunity. So maybe, John, this is more for you in terms of weighing the importance of efficacy versus tolerability here in that first line setting, because I think that's one of the debates is, you know, we get physician feedback is it's an IV plus an oral, but where does efficacy, heavyweight efficacy versus the tolerability of, you know, the infusion- Right. Right. Infusion reactions, et cetera, as you think about first line setting? Yeah. No, thanks. Well, first, I just wanna say, while Joaquin's been the CEO for one year, I've been the head of R&D now for five months, but I have to say it's just been great to join the J&J team. Great pipeline, great people, great purpose-driven culture. The RYBREVANT program is one of the exciting gems of the portfolio and really giving us now an anchor in lung cancer. As you know, we're number one in hematologic malignancies, and you referenced some of the groundbreaking products that we've brought to market there. But solid tumors now is an area where we're starting to build momentum beyond prostate, where we've had a strong track record, but now in lung and bladder. That ongoing study, I think it really comes down to efficacy and whether we can move the needle on that, preferably showing disease-free survival improvements of at least six months to offset. There will be additional EGF-driven side effect profile. In terms of convenience, I would say we're making rapid progress with a sub-Q formulation of RYBREVANT, which actually is better tolerated as well. So I think once we've got that, then that part of the argument around convenience becomes moot. That'll be quite easy then for patients and healthcare providers. So it really comes down to the efficacy, and you know, the data will be the data, but in the pilot study we did in Frontline with Ammi and Laz, we recently, t he so-called CHRYSALIS study, we recently reported progression-free survivals of around 33 months. If you look at the historical same context, single-arm pilot data that was done with osimertinib back in the day, that was around 18-19 months. So not a trivial difference, you know, really almost a doubling of progression-free survival was seen. So, you know, we're gonna have the data any day now. I think it really all comes down to, do we move the needle on the efficacy for patients that make a little bit extra side effects worth it? Yeah. One, I guess, segue, because there was some data that was presented at World Lung and from the, the FLAURA study, I think it was with osimertinib plus chemo versus osimertinib. And it looked like that PFS in the control group was a little bit lower than the 18 and 19 months, and I think they attributed it to maybe some like, slightly later stage patients. Anything you can comment there about how to think about your population, your trial versus that study that came out? No, you know, I mean, the eligibility requirements are not that different. But I would just say, if you look at those data, notice the discontinuation rate. It's not a very well-tolerated regimen. And then let's also understand that what really matters is in the lung cancer patient's journey, how long are they actually going to live? And, you know, chemo, we tend to reserve for when they failed everything else, and so to use that up front with a lot of dropouts for side effects, it really, I think, raises the question, what will the overall survival be for patients that go that route versus what we're proposing, which is to use the two targeted agents, RYBREVANT, lazertinib, and then in a second-line setting, you know, go to chemo at that point. So, yeah, let's see what the data are. Can't wait, any day now. Certainly, within another week. Yeah. All right. Looking forward to it. We'll stay tuned. Now, maybe going back to myeloma, you know, Joaquin, we've been talking about this for a decade. You guys have a long history going back to VELCADE, of innovating the space. DARZALEX, as you mentioned, standard of care in front line, has been transformative drug and now CARVYKTI and two bispecific. So I guess the big picture question I have is just how, how do you guys position for the next five years? We know right now a lot of these drugs are being used in late-line patients because there aren't any options, unfortunately. But as you think about the medium to longer term in myeloma, how do you think this will play out in terms of segmenting the market? Because you have so many different options for patients now. Thank you. And I will, John, elaborate on the studies that we have there. I mean, as a headline, multiple myeloma is the best example of our disease-centric approach, and the combination of internal and external innovation that we have done there. We have internal assets, partner assets. We've been able to develop five major assets in multiple myeloma, starting VELCADE, DARZALEX, CARVYKTI, TECVAYLI, and now TALVEY. So really a good example. And our aim here, as I have commented, and I say that humbly, is to change the paradigm from treating to progression, to treating to cure. And you know, we think that a cure in multiple myeloma is something that is reachable with the existing therapies. We have now four products like DARZALEX, which we believe will remain a backbone of therapy. Every single time that DARZALEX has been combined with any regimen, it has improved the results. And, it's today, as you mentioned, a standard of care in newly diagnosed multiple myeloma patients. CARVYKTI, that we plan to move into earlier lines. CARTITUDE -4 is an example of that, but we have other studies there. And, I'm sure when we talk about CARVYKTI, you think about supply of CARVYKTI. You're gonna see improvement, quarter-over-quarter in CARVYKTI, so the proof will be in our improvement there. We are expanding capacity internal and externally. We have in-sourced the lentivirus production, so we are in a better position to supply the demand, and you're gonna see progress in our supply of CARVYKTI, as you saw when you look at the quarter-over-quarter sales of CARVYKTI this time. TECVAYLI and TALVEY, which just been approved in later lines, and we have a number of studies combining both and moving them also into earlier lines that John can comment. So overall, it's a very strong portfolio, one that we believe is gonna be the major growth driver in absolute terms for our pharmaceutical group now, and also in the H2 of the decade. So this is a situation where we believe we have a clear position of leadership. So I'll let John comment on the different studies that we have in order to try to sequence and combine all these pieces. Yeah, I think it, it's what it's all about, is sequencing and combining. And, you know, for example, in the frontline, of course, we've been really focusing on DARZALEX as a combination for the more standard of care kind of regimens, and the readouts are coming shortly on one of the more popular ones, the VRd, the VELCADE, one of our molecules, Revlimid, dexamethasone in combo. But then, as you know, patients, if they're eligible, go on to a stem cell transplant, so here's where we are doing studies to look at whether CARVYKTI could substitute for that, and this is where you can really start to think about cure. You know, might that be the road to cure, where you get people into a very deep remission? You know, we can do these minimal residual disease testing after the initial therapy, and then see them go into a CAR-T therapy rather than an autologous stem cell, and the same thing in the transplant ineligible. So that's just one example. And then, with the two bispecifics, and y ou know, we were the first to bring a bispecific into the myeloma market. The most recent one, TALVEY, is exciting because our scientists actually discovered that target, so it just shows how deep our expertise goes in myeloma. There we. You know, looking at combos of the two bispecifics, and at ASCO last this year, earlier this year, you know, we showed tantalizing data, small number of patients, but, you know, it really looked like bringing those two T-cell engagers together was giving you CAR-T-like activity with a pair of biologics. So we're digging deeper into that, but we're also running combos with DARZALEX plus Tec, DARZALEX plus Tal, working out dose schedules so we get tolerability well-nailed, and then we'll be looking at how we bring those as combos in further into the frontline product, possibly. So I think the take-home message is we'll be able to cover all lines of therapy essentially for myeloma patients, and we really, with some of these new regimens, I think we can really start thinking about how do we get from, you know, decades of successive therapies to one of, might we actually come up with a curative therapy for this disease, and wouldn't that be wonderful? Our goal would be that the vast majority of the newly diagnosed multiple myeloma patients would be treated with a Johnson & Johnson regimen. Yeah. I think you just said on the earnings call, three out of four- Yeah Patients by end of decade. What can I just ask one question about the kind of current dynamics? Because you mentioned the supply, you know, constraints around some of the CAR-Ts, including CARVYKTI. Are the bispecifics being used as kind of a bridge to CAR-T therapy currently? Is that what's part of what's happening right now, or is it just there's not enough supply, so patients are really embracing the bispecifics? I mean, there's two cell therapies in the market, and the bispecifics now are used, I mean, in a similar setting- Yeah Than the cell therapies are, given the current indication. They are all BCMA, right? So it's more the vision and preference of using cell therapy or a bispecific, and it depends also on how quickly and the type of patients they are using. But there's not really, I cannot tell you an answer there. I mean, I have yet to see how TALVEY, as a GPRC5D and a different antigen is going to be positioned, right? Right. Because TALVEY may open a new line of therapy but also offers possibilities of combinability that John was describing, and we have yet to see. It's been only three weeks since we launched TALVEY. We already have commercial patients of TALVEY in the U.S., and there's significant enthusiasm for a modality like that. But I would say that the vast majority of the patients that are receiving these therapies today are patients which had relapsed/refractory, that have gone through multiple lines of therapy, you know, both in cell therapy and in bispecific. Okay. Maybe just in the last 30 seconds, another asset I think may be somewhat underappreciated is nipocalimab FcRn. You know, obviously, there's a competitor out there who's, you know, ahead of you. You guys have talked about your broad strategy, but maybe just remind us, what data are you expecting near-term? Well, as you know, we see this as kind of a universal solution to autoantibody-driven diseases, and there are about 80 different ones out there. We're in parallel development in 10 different indications, but I guess the one I'm personally most excited about is what we're doing in rheumatoid arthritis, where we're gonna have some data that we'll disclose later this year. And just, I think, a day or two ago, we also disclosed on ClinicalTrials.gov that the next chapter two will be looking at combos with TNF therapies in RA, where we hope by combining these mechanisms, we might break through efficacy ceilings and get a higher percentage of RA patients into complete remissions and keep them in remissions and really allow them to enjoy, you know, a pain-free, inflammation-free lifestyle. So I'm very excited about where we can take that molecule. You know, we've got proof of concept now in three different big segments, sort of demonstrating the broad utility. The epitope we're using drives the lowest levels of IgG, so we think it's the most potent. We also have what appears to be the best safety profile in terms of not having much effect on albumin and lipids, and we've even taken into pregnant women who are having autoimmune-driven hemolytic anemia with their babies and have shown safety in a context like that. And a lot of these autoimmune diseases do strike, they, disproportionately women and in their childbearing years, and so to have that kind of safety profile there, along with the efficacy, on an average of nine out of ten cases, we were able to save babies, and they were born, whereas, you know, the results would have not been very good otherwise. So, so that safety profile in the right population, potency, very excited about where we can take nipocalimab. Could I ask, I know we're out of time, but can I just one follow-up on the RA side? I know in the past you guys have talked about some, a kind of biomarker strategy there. Is that still the plan? It's part of the studies, so, we'll be sharing some of those data as they unfold. Of course, a precision medicine strategy in the autoimmune diseases has always been a holy grail. There, you know, many attempts, few successes, but we are, we are going at it there, and we'll see how that pans out for us. Great. Well, Joaquin, John, thank you so much. Thank you. I appreciate it. Thank you.