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J&J R&D execs see $1B sales from top 11 drugs in pipeline in 5 years

May 18, 2017

Over the last six years, J&J has nailed 11 new drug approvals. Looking forward over the next five years, the pharma giant is forecasting that it can double that, with more than 10 new approvals for blockbuster meds out of its late-stage pipeline. And it needs them all to keep up with an ambitious growth forecast for its pharma division revenue.

Joaquin Duato, J&J’s worldwide chairman for pharmaceuticals, committed to seeing J&J’s branded drug market maintain a clip of 5% annual growth through 2020, despite some stiff “headwinds” on prices — “where price growth is flattening” — with three approvals slated for 2017 and four more which the pharma giant expects to usher into the market in 2018.

These new drugs are one leg of the company’s three-leg strategy for growing revenue, with a promise that it can improve significantly on existing drugs — like Stelara, Invokana and Xarelto — while beefing up on a new core focus on pulmonary arterial hypertension through the Actelion buyout.

Bill Hait, global head of R&D, said he expects 14 new meds to arrive in next five years, with 50 line extensions on already approved therapies.
The next nine potential blockbusters cover a range of core focuses, with a major concentration on oncology. They are:First up, the two new immunology drugs already filed for approval and well known to investors: guselkumab for psoriasis; and sirukumab for rheumatoid arthritis.

  • Apalutamide (ARN-509) for pre-metastatic prostate cancer. J&J picked up this drug with its $1 billion deal for Aragon.
  • Esketamine for treatment-resistant depression. This is an intranasal version of ketamine, a horse tranquilizer and well known party drug (Special K) known for rapid onset with a host of side effects.
  • Talacotuzumab (JNJ-56022473/CSL362) for acute myeloid leukemia. This drug, originally from CSL, uses Xencor’s antibody tech.
  • Erdafitinib (an FGFR Inhibitor) for solid tumors.
  • Niraparib for prostate cancer. Already approved in the US earlier this year as Zejula, J&J picked up commercial rights on this PARP inhibitor in a $500 million deal.
  • Imetelstat for myelofibrosis. Geron revealed a few weeks ago that J&J’s review of the data from two studies of its drug imetelstat warranted continued work in myelodysplastic syndromes and myelofibrosis. But the pharma giant $JNJ is still reserving the right to quit if the data doesn’t hold up later in the year. That’s not a big vote of confidence.
  • Pimodivir (JNJ-3872) for influenza A. J&J picked up this one from Vertex in 2014. Not much has been heard about it since then.
  • Lumicitabine (JNJ-1575) for respiratory syncytial virus (RSV) infection. J&J got this in their $1.75 billion buyout of Alios in 2014, which also netted drugs for hep C — a market that is being flattened by some very effective cures.
  • JNJ-7922 (orexin-2 antagonist) for adjunctive treatment for major depressive disorder. This is a new one on me.

Geoff Meacham at Barclays gave J&J’s presentation today solid marks for the longterm, but he sees an uphill struggle at the pharma giant as it wrestles with some disappointing revenue numbers. His note:

JNJ’s increasing emphasis on oncology (Darzalex, apalutamide, niraparib, talacotuzumab for AML) is a positive step, which should offer better pricing protection vs. other therapeutic categories such as immunology (biosimilars) and diabetes (SGLT-2s).  JNJ is targeting above-market growth over the next decade, which we think is likely achievable, but our sense is that investor conviction is low in converting the portfolio from legacy assets to new launches (e.g. apalutamide for Zytiga, guselkumab/sirukumab for Remicade). Indeed, while there is likely a sustained period of acceleration of internally driven, organic growth in the intermediate-to-longer term, the next 1-2 years may be tough with the pending Actelion deal providing a fix but not one that is likely to drive multiple expansion.

It’s important to remember that the success rate for Phase III drugs is about 50%, and payers have been radically altering the landscape for new drug prices. That all presents J&J with some big potential pitfalls along the way to achieving its goals. But with a $7 billion annual budget for R&D, Duato and Hait want investors to know what they can expect for the money.

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