How has your week been? For Johnson & Johnson (JNJ), the answer to that question has almost as many ups and downs as most proverbial roller coasters, even if the stock price fluctuations turned out to be less dramatic.
J&J shares closed Thursday at $163.58, which doesn’t sound like any great shakes, being down 1.5% from the week-ago closing price of $166.11. In between is another story—make that, three more stories.
The first story was a descent that happened Tuesday, when J&J shares fell 3%, from $165.67 to $161.01. Two factors accounted for the drop. One was the company reporting first quarter results showing a net loss of $68 million on sales of $24.746 billion, reflecting a $6.9 billion charge against earnings for “litigation-related” expenses, namely talc-based baby powder liabilities (more on that below)—and $300 million in expenses related to J&J’s upcoming spinoff of its consumer health business.
Despite the net loss, J&J beat the expectations of a consensus of analysts surveyed by Refinitiv and reported by CNBC. J&J’s sales came in about 5% above the analysts’ $23.67 billion forecast, while the company’s adjusted earnings per share (EPS) of $2.68 was 7% above the analysts’ forecast of $2.50. Yet J&J only raised its adjusted EPS guidance 10 cents a share, to a range of $10.50 to $10,60 from a range of $10.40 to $10.60 in January.
However, that wasn’t enough to stop shares from dipping on Tuesday, for two reasons. David Risinger, CFA, senior managing director, Biopharma, and a senior research analyst with SVB Securities, observed in a research note Wednesday that investors reacted in part to J&J sticking with a lowering of its investor guidance for 2025 pharmaceutical sales made in March, from its original $60 billion forecast to $57 billion, with the company citing foreign currency fluctuations. Yet J&J also raised its estimated reported overall sales guidance range for this year, from $96.9 billion–$97.9 billion, to $97.9 billion to $98.9 billion.
The second reason is what investors considered disappointing news about one of the company’s drug candidates. During the quarter conference call following release of Q1 results, J&J executives reported that lazertinib survived an interim analysis during the Phase III MARIPOSA trial (NCT04487080).
MARIPOSA is designed to compare the efficacy of a combination of the oral epidermal growth factor receptor (EGFR)-tyrosine kinase inhibitor and Janssen Oncology (J&J)’s Rybrevant® (amivantamab-vmjw) head-to-head with AstraZeneca’s top selling treatment Tagrisso® (osimertinib) alone in participants with EGFR mutation (Exon 19 deletions [Exon 19del] or Exon 21 L858R substitution) positive, locally advanced or metastatic non-small cell lung cancer (NSCLC).
However, investors had expected to hear that lazertinib had shown enough efficacy for J&J to halt MARIPOSA, and sold off shares when that did not happen.
“We still expect MARIPOSA to succeed,” Risinger wrote. He cited J&J comments during the conference call that the trial enrolled much faster than expected, thus data from the median follow-up for this front-line lung cancer trial was immature at the interim analysis.
“In other words, it was likely too early for the trial to clear the interim efficacy bar the company set,” Risinger explained. But as a result of the faster-than-expected enrollment, he added, “JNJ now expects final results two quarters earlier than its previous 2Q24 timeline, suggesting a 4Q23 readout.”
J&J’s stock climbed back 1%, to $162.53, on Wednesday after two abstracts reporting positive data from a pair of clinical trials for Carvykti (ciltacabtagene autoleucel)—a B-cell maturation antigen (BCMA)-directed chimeric antigen receptor T-cell (CAR-T) therapy that J&J is developing with Legend Biotech—were leaked via Twitter.
Most dramatically in the Phase III CARTITUDE-4 trial (NCT04181827), assessing Carvykti following one to three lines of prior therapy, the one-time treatment showed that it lowered the risk of disease progression by 74% compared to standard treatment after 16 months of follow-up. Two types of standard treatment were studied: either pomalidomide, bortezomib and Dexamethasone (PVd) or daratumumab, pomalidomide and dexamethasone (DPd).
Also, in the Phase I/II CARTITUDE-1 trial (NCT03548207) which enrolled third-line and later multiple myeloma patients taking Carvykti , Carvykti treatment was shown to lead to a median duration of response (mDOR) and progression-free survival of (mPFS) of 33.9 and 34.9 months, respectively.
“We believe both of these results are quite impressive and should drive strong uptake of BCMA CAR-Ts expanding the market opportunity,” Baird analyst Jack K. Allen, CFA, wrote Wednesday in a research note. “We believe the data from Carvykti in both early- and late-line multiple myeloma should help significantly expand interest in BCMA CAR-Ts, expanding the commercial opportunity for the class more broadly.”
The data is set to be formally presented in May at the European Hematology Association (EHA) 2023 Congress and the American Society of Clinical Oncology (ASCO)’s 2023 ASCO Annual Meeting.
J&J shares inched up another 1% on Thursday, to $163.58, after Judge Michael Kaplan of U.S. Bankruptcy Court in Trenton, NJ, temporarily halted until mid-June approximately 38,000 lawsuits seeking damages against the company, alleging that its baby powder and other talc-based products led to cancer.
The company has spun off a subsidiary, LTL Management, that has filed for Chapter 11 bankruptcy protection from creditors and now carries J&J’s talc-related liabilities. Earlier this month, J&J disclosed in a regulatory filing a plan to pay $8.9 billion over 25 years to settle talc-related claims against the company and affiliated in North America. The filing also revealed that J&J took the $6.9 billion earnings charge, and that LTL re-filed for Chapter 11.
Leaders & laggards
- Bellus Health (BLU) shares all but doubled, zooming 99% on Tuesday after GlaxoSmithKline (GSK) said it agreed to acquire the company for approximately $2 billion. The deal is designed to strengthen GSK’s specialty medicines and respiratory portfolio with Bellus’ sole pipeline candidate camlipixant, a highly selective P2X3 antagonist now in Phase III clinical development for first-line treatment of refractory chronic cough (RCC). Bellus anticipates regulatory approval and launch of camlipixant in 2026. GSK said the deal—expected to close in the third quarter—will not change its full-year 2023 guidance or its medium-term outlook for 2021-2026, and is expected to start enhancing its earnings per share in 2027.
- Gamida Cell (GMDA) shares soared 39% on Monday, from 81 cents to $1.12, after the FDA approved the company’s allogeneic cell therapy Omisirge® (omidubicel-onlv) for patients aged 12 and older with blood cancers planned for umbilical cord blood transplantation following myeloablative conditioning. Omisirge received the FDA’s priority review and its breakthrough therapy and orphan drug designations, reflecting the unmet need for additional donor sources for stem cell transplant. Omisirge was approved based on positive Phase III data showing a median time to neutrophil recovery of 12 days in the trial’s intent to treat population, compared to 22 days for standard cord blood.
- Prometheus Biosciences (RXDX) shares rocketed 70% from $114.01 to $193.51 on Monday, the first trading day after Merck announced it agreed to acquire the company for approximately $10.8 billion. Based in San Diego, Prometheus develops precision drugs and companion diagnostics for immune-mediated diseases. The company’s lead candidate, PRA023, is a humanized monoclonal antibody indicated for autoimmune conditions that include ulcerative colitis (UC), Crohn’s disease (CD), and Systemic Sclerosis-associated Interstitial Lung Disease (SSc-ILD). The deal is intended to bolster the buyer’s immunology drug pipeline as it faces loss of exclusivity for some of its best-selling products over the next few years.
