If we’re clear to go a little bit deeper, the Federal Circuit’s April 1st decision did not invalidate our patent. It just remanded the case back to the New Jersey District Court, the one that had ruled in our favor originally. Likewise, there was another ruling and another case on this patent against a different company that also did go in our favor. So it’s going back to the original judge that ruled in favor of the patents, and we’ll have to see what comes. We don’t speculate on that, but we remain really confident on the strength of our patents.
John C. Reed: Yes. Thanks for your interest in the platform that we have, the drug device combo for early bladder cancer. Clearly, a great unmet need and as much as there are more than 600,000 people every year who are diagnosed with early bladder cancer and the vast majority of those patients go on to have their bladders removed, which clearly has a very detrimental effect on quality of life. With our drug device system which I think, again, is a great example of how MedTech and pharma can come together in a synergistic way, but we delivered really, I think, exciting early data. Those were presented at the ESMO conference last September and showed, for example, with the TAR200 product that has gemcitabine, an impressive complete response rate of over 75% and nice durability with 21 out of 23 patients, we showed at that meeting is still ongoing and no patients having had to progress to a radical cystectomy.
So I think at the AUA, because those data are not yet disclosed, I can’t provide the details, but I think you can expect to see more of the same now with longer follow-up and with more patients. We’ve expanded those cohorts and do believe that we’re on track to deliver pivotal data in that first indication, which is in the BCG nonresponsive patients recollect that in early bladder non-muscle invasive bladder cancer. Standard care is this attenuated micro bacteria BCG. Unfortunately, fewer than half patients receive — achieve a complete response. And the therapy is — has tolerability problems to say the least where patients feel like they have a chronic urinary tract infection. The discontinuation rate with TAR200 has been very low. So we’re very delighted with the excellent tolerability profile as well as these impressive deep efficacy, deep and durable efficacy.
So yes, so please watch that AUA presentation. I think we remain on track for a filing early next year based on these pivotal data, and we look forward to sharing those results at that congress.
Operator: Thank you. Next question is coming from Matt Miksic from Barclays. Your line is now live.
Matthew Miksic: Hi, thanks so much for taking the question. So a follow-up maybe on some of the device trends, in particular, cardio and EP very strong in the quarter. Wondering if you could provide some color kind of geographically as to how some of the product launches have either driven overseas or competitive environment in the U.S. has affected U.S. performance so far? And then just one quick one on Ortho, if I could.
Timothy Schmid: Sure, Matt. Firstly, let me start on cardio. As Joaquin mentioned, we’ve made a lot of progress in building out our portfolio. And until recently, we only participated in one high-growth category within cardiovascular and that being electrophysiology, which I will touch on performance in a second. We are and have had a 20-year lead in electrophysiology and now have built on that position in cardiovascular with the acquisition of Abiomed. We’re now over a year into integrating that business and couldn’t be more proud of the progress we’ve made. We continue to perform ahead of the deal model. And once again, this quarter did so with growth in excess of 15%. That gives us now two leadership positions within cardiovascular care.
Once we close the acquisition of Shockwave, that will be our third very thoughtful and deliberate move to only participate in high-growth, high-margin cardiovascular areas where there is significant unmet need and tremendous opportunity for us to grow. And so we’re very excited by the fact that we will be one of the only strategics with only high growth, high-margin businesses in the largest category within MedTech, $60 billion market, growing roughly 8%, incremental $5 billion of growth coming out of that category each and every year. So very excited by those moves. Specifically, to your questions on EP, we’ve seen growth across the board in excess of 20%, both in the U.S. and ex U.S. And I think it really talks to the trust that our customers have in our technology today.
RF and our portfolio of RF products are the most trusted and tested products with 20 years of experience. And by the way, we’re not going to miss PFA, the progress we’ve made on ensuring that we can build our presence in that category with the approval in the EU as well as in Japan. We’ve also submitted for FDA approval. And while we don’t control the timing, we expect that approval to come through by the end of this year or early next year. And so very confident in our ability to build on our leadership position in EP. Was there a specific question to Ortho?
Matthew Miksic: Just a comment on Ortho generally was sort of low to mid-single digits, but in hips and knees, sounded like 9%-ish, we added back the selling day and you’re at double digits is just kind of really off the chart growth, I think, in that category. And I’m just wondering should we see like some sustainability of that rate or ramping down of that rate, how can you help us think about the rest of the year, in particular, in hips and knees?
Joseph J. Wolk: Well, Matt, I think it’s a testament to the progress of our team but then also in building out our portfolio. We had some gaps in the past and now filling those gaps both in hips and then even more notably in knees with the launch of our VELYS robot is really what is creating the tailwind that we’re enjoying today, and we do expect that to continue. Now this was a strong quarter. Can we see that sort of growth every single quarter, not absolutely sure, but we do expect high single-digit growth out of both of those categories going forward. I will also say that the work we’ve done in the orthopedics areas hasn’t been just about growth. It’s also about improving our margin profile. And you know that in the second quarter of 2023, we announced a major restructuring, which is focused on really simplifying our portfolio and focusing our business on where we could drive the greatest impact for patients and for shareholders.
That effort is resulting in a 20% reduction in our implants. And just to put that in context, we have 100,000 implants today within our orthopedics business. And so a real testament to the effort of group to not only drive top line performance but also evolve the portfolio to improve margins. Thank you again Matt.
Jessica Moore: Thanks, Matt. Kevin, we have time for one more question.
Operator: Thank you. Our final question today is coming from Vamil Divan from Guggenheim Securities. Your line is now live.
Vamil Divan: Great, thanks so much for taking my questions. Maybe if no one is after me I will just lead into it. One, I just was curious on SPRAVATO and sort of where like very strong growth again this quarter. If you can just provide a little more context there on where the growth is coming from, what sort of practices, what that the patients are given that product to be hopefully get a sense of that trend? And then just the other question we get a lot from investors is on the drug price negotiations with Medicare on the 10 drugs that are selected for this year’s program through IRA. I know you probably won’t get too much into the specifics, but I’m curious if you can just share some high-level thoughts on how the progress of those discussions are going and is it sort of in line with what you expected, is there anything sort of very different from what you expected as the process plays out? Thank you.
Jennifer L. Taubert: Well, thanks for the question, and thanks for asking about SPRAVATO. We continue to be really pleased with the uptake of SPRAVATO as we continue to launch that product globally. You saw that there’s over 70% growth in the quarter as it continues to perform well for patients with treatment-resistant depression. And so we’ve got a bold outlook for SPRAVATO as we continue to launch it into more markets and as we are able to even further penetrate the existing markets that we’re in into a bit more of the community setting there. In terms — so good — really, really good outlook. We’re also just to put in a plug for neuroscience. We talk a lot about our oncology business and our immunology business. Neuroscience is also a key area for us, so SPRAVATO is a key platform.
We’ve also got aticaprant and seltorexant coming, and we had mentioned the long-acting therapies with the INVEGA SUSTENNA franchise earlier. So back on IRA, we’ve been really clear that we do think that these — the IRA’s drug setting provisions are damaging to the health care innovative system. It just — it is not something that is going to help reinforce the tremendous investments that we’re making in R&D to develop the next types of treatments and cures. That being said, we do focus on patient access and are trying to make sure that our products are available to the patients who need them. And so we’re working appropriately with the government and in line with the process to start going back and forth around what the ultimate price will be.
So there has been a round or two of going back and forth. And so we’re still in the middle of that process. I can’t really provide any more details on that. What I will say is that the products that we have that are going through the process, they are not our growth drivers for the future. Those are — they are our products that are more at end of life. And so they’re not the ones that are going to be really key for us both in the coming years as well as out through the end of the decade. And what I’d love to also reinforce is that we do remain confident that we’ve got a clear path to achieving our $57 billion commitment that we made back in December at our Enterprise Business Review as well as from 2025 to 2030, delivering above market growth with the 5% to 7% compounded annual growth rate and with growth in every year that being 2025 as well as all of the years beyond that.
So irrespective of the IRA, when I take a look at our growth drivers and how our pipeline is coming in, we feel really confident about the state of our business.
Jessica Moore: Thank you, Vamil, and thanks to everyone for your questions and your continued interest in our company. We apologize to those that we couldn’t get to because of time, but don’t hesitate to reach out to the Investor Relations team with any remaining questions you may have. I will now turn the call over to Joaquin for some brief closing remarks.
Joaquin Duato: Thank you, Jess, and Johnson & Johnson’s solid first quarter performance reflects our sharpened focus and the progress in our portfolio and pipeline. Our impact across the full spectrum of health care is unique in our industry and the commercial, clinical, and capital allocation milestones achieved in Q1 reinforce our position as an innovation powerhouse. One of the most significant milestones this quarter was the announcement of our planned acquisition of Shockwave that will further strengthen our leadership position in cardiovascular. We continue to make strong progress towards the goals that we set out at our December Enterprise Business Review, and I’m looking forward to all that we will achieve through the remainder of 2024.
Operator: Thank you. This concludes today’s Johnson & Johnson’s first quarter 2024 earnings conference call. You may now disconnect.
