Operator  Good morning. Welcome to Johnson & Johnson's second quarter 2026 earnings conference call. All participants will be in a listen-only mode until the question-and-answer session of the conference. This call is being recorded. If anyone has any objections, you may disconnect at this time. If you experience technical difficulties during the conference, you may press star zero to reach the operator. I will now turn the conference call over to Ryan Kurz from Johnson & Johnson. You may begin.  Ryan Kurz  Hello, everyone. This is Ryan Kurz, Vice President of Investor Relations for Johnson & Johnson. I'm excited to be here today and to lead the Investor Relations team moving forward. Welcome to our company's review of business results for the second 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.    They 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 second quarter sales and P&L results. Joe Wolk, our CFO, will 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.    Joaquin Duato  Thank you, Ryan, and welcome to your new role. I'm pleased to share the top-line results from our strong second quarter. We said 2026 would be a year of accelerated growth and impact for Johnson & Johnson, and with our Q2 beat on the top and bottom line and raised guidance, we are delivering. Across oncology, immunology, neuroscience, and cardiovascular, the strength of our business is built on our unique combination of scientific expertise, scale, and disciplined execution.  We have the strongest portfolio and pipeline in our 140-year history, with 28 products and platforms that each deliver more than $1 billion in annual sales. In Q2, we reported operational sales growth of 5.6%. Excluding STELARA, we grew double digits in the quarter.  With sales in the quarter of more than $25 billion, we are on track to meet our 2026 target of more than $100 billion in annual revenue for the first time in our company's 140-year history. We are pleased with the progress of our new launches, including ICOTYDE, INLEXZO, and RYBREVANT, instilling confidence that momentum will accelerate into 2027 and beyond, with line of sight to double-digit growth by the end of the decade.  ICOTYDE, in particular, has significant early launch momentum, with uptake accelerating and performance outpacing competitors at comparable points in their launches. Since launch, more than 10,000 patients have initiated therapy on ICOTYDE, underscoring the unmet need for patients seeking first-line systemic treatment with a unique combination of efficacy, safety, and the simplicity of a once-daily pill. In Innovative Medicine, we delivered operational sales growth of 6.8% in the quarter, with eight brands growing double digits.  In oncology, our commitment to transform patient outcomes has never been stronger. We are on track to be the number one oncology company by 2030, with sales projected to exceed $50 billion. Leading the way in Q2 is DARZALEX, the foundational treatment for multiple myeloma, which continues to be our largest product. Once again, DARZALEX delivered sales of more than $4 billion, growing close to 18%.  When we talk about the depth of our portfolio, nowhere is that more evident than in multiple myeloma. We have treatments in every line of therapy, with 80% of patients receiving one or more of our medicines during their treatment journey. CARVYKTI, TECVAYLI, and TALVEY continue to deliver high double-digit growth.  We are not standing still, with new data this quarter showing the combination of TALVEY and DARZALEX delivered deep and durable responses with more than 80% of patients progression-free at two years and overall survival up to 89%. In solid tumors, we continue to see strong performance from ERLEADA and RYBREVANT. We shared important new data for both at ASCO that could change clinical practice.  For ERLEADA, we opened the ASCO plenary with our phase III PROTEUS study, showing that treatment before and after surgery significantly reduces the risk of metastasis or death in high-risk localized prostate cancer. With RYBREVANT, we demonstrated durable responses in head and neck cancer, an area with limited options, and have submitted a filing to the FDA to build on existing lung cancer indications.  While we are not yet reporting quarterly sales for INLEXZO in bladder cancer, we are encouraged by the early momentum. During the second quarter, nearly one in three eligible patients started on an INLEXZO regimen, and new patient insertions grew approximately 75% versus the prior quarter. Building on our recent acquisition of Ambrx, we also announced plans to acquire Firefly Bio, adding another antibody platform that strengthens our leadership in next-generation oncology innovation. We expect the transaction to close during the third quarter.  In immunology, we have built one of the deepest and most differentiated portfolios in the industry. TREMFYA remains the fastest-growing advanced therapy in both Crohn's disease and ulcerative colitis, delivering exceptional overall sales growth of 71% in the quarter. With a dual powerhouse of TREMFYA and ICOTYDE in psoriasis, we now have a complementary portfolio of both first-line biologic and first-line systemic treatments.  We continue to see strong upscale of IMAAVY in generalized myasthenia gravis and recently received FDA priority review status in warm autoimmune hemolytic anemia. In neuroscience, we are developing treatments to transform care for complex brain and nervous system disorders. SPRAVATO and CAPLYTA both performed strongly in the quarter. CAPLYTA new patient starts were up 122% versus the prior year, significantly outpacing the market leader. With FDA approval for the prevention of relapse in schizophrenia, we anticipate continued momentum.  Now let's turn to MedTech, where we delivered Q2 operational sales growth of 3.6%. In cardiovascular, we are the global leaders in electrophysiology, circulatory restoration, and heart recovery. VARIPULSE, our pulsed field ablation platform for atrial fibrillation, continues to build momentum with more than 85,000 AFib patients now treated worldwide.  In Q2, our position was further strengthened with the debut of CARTOSOUND SONATA, bringing new AI-powered imaging and mapping capabilities to electrophysiology. We also received FDA authorization for our dual-energy THERMOCOOL SMARTTOUCH SF platform, which integrates pulsed field and radiofrequency energy in a single system to give physicians greater flexibility in tailoring ablation treatments for patients.  In circulatory restoration, the Q2 global launch of Shockwave C2 Aero expanded our ability to treat more complex coronary disease and broadens the reach of our intravascular lithotripsy platform. In heart recovery, while Abiomed growth slowed in Q2 as a result of increased physician selectivity weighing on procedural volumes, we are working to strengthen confidence in our extensive clinical evidence and real-world experience. In surgery, we are unlocking a new era powered by robotics and digital innovation.  We are progressing towards potential FDA authorization of OTTAVA, the world's first table-integrated robotic surgical system. This is one of the most significant MedTech innovations we will bring to market this decade. OTTAVA's unique architecture, automated features, and next-generation robotic instruments help address surgeons' unmet needs, while integration with our Polyphonic open digital ecosystem provides data-driven insights and analytics to better support surgical teams. This quarter, we also received CE mark approval for the ETHICON 4000 stapler, the latest advancement in our line of surgical technologies.  In vision, we have a bold ambition to make vision possible for more than 40 million people each year. In Q2, we announced the expanded U.S. availability of TECNIS PureSee as we accelerate the rollout of this extended depth of focus intraocular lens. Our ACUVUE portfolio delivered strong quarterly growth across all regions.  As a part of our commitment, we recently announced an investment of more than $1 billion to scale our U.S. Vision manufacturing, packaging, and distribution capabilities as we expand capacity to meet growing demand for these products. Our progress in Q2 reflects what makes Johnson & Johnson unique, a company innovating across the full spectrum of healthcare, delivering strong performance today while building a pipeline that will transform care for patients tomorrow.  As we look ahead, our confidence is rooted in the breadth of our innovation, from transformational medicines to next-generation medical technologies. That combination of science, scale, and disciplined execution is what uniquely positions Johnson & Johnson to lead the next wave of healthcare innovation. I will now turn the call back over to Ryan.  Ryan Kurz  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 Q2 2026 sales results. Worldwide sales were $25.3 billion for the quarter. Sales increased 5.6% despite an approximate 460 basis point headwind from STELARA. Excluding STELARA, Johnson & Johnson grew double digits for the quarter. Growth in the U.S. was 7.3% and 3.4% outside of the U.S. Acquisitions and divestitures had a net negative impact on worldwide growth of 10 basis points.  Now turning to earnings. For the quarter, net earnings were $5.5 billion and diluted earnings per share were $2.27 versus $2.29 a year ago. Adjusted net earnings for the quarter were $7.1 billion and adjusted diluted earnings per share were $2.90, representing an increase of 5.7% and 4.7% respectively compared to the second quarter of 2025.  I will now comment on business sales results in the quarter, focusing on the key areas where meaningful innovation and strong commercial execution are 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 $16.4 billion increased 6.8%, despite an approximate 760 basis point headwind from STELARA, which underscores the continued strength of our key brands and new launches. Growth in the U.S. was 8.9% and 3.6% outside of the U.S. Divestitures had a negative impact of 10 basis points on worldwide growth.  In oncology, starting with multiple myeloma, DARZALEX growth was 17.6%, primarily driven by strong share gains of five points across all lines of therapy with nearly 11 points in the frontline setting as well as continued market growth. CARVYKTI achieved growth of 47.7%, driven by share gains and continued site expansion. TECVAYLI growth was 56.1%, with worldwide sequential growth of 29.2% and impressive U.S. sequential growth of 46.2%, driven by launch uptake and share gains across earlier lines of therapy following last quarter's approval in the U.S. for TECVAYLI plus DARZALEX FASPRO and from expansion in the community setting. TALVEY growth was 62.6%, driven by share gains due to increased depth of prescribing in the community setting.  In lung cancer, RYBREVANT plus LAZCLUZE delivered growth of 61.6%, driven by continued launch uptake in all regions, share gains in the first and second lines with rapid uptake in RYBREVANT FASPRO. In prostate cancer, ERLEADA delivered growth of 7.6% with continued share gains and market growth, partially offset by unfavorable patient mix and inventory dynamics.  Within immunology, TREMFYA delivered impressive growth of 71% as the IBD launch is driving significant momentum and we continue to see share gains across all indications as well as continued market growth. STELARA declined 55.7%, driven by share loss due to biosimilar competition, increasing adoption of novel classes, and unfavorable patient mix. Growth in other immunology is driven by U.S. new product launches, IMAAVY and ICOTYDE.  In neuroscience, SPRAVATO grew 40%, driven by continued strong demand from physicians and patients and strong sequential growth of 24.8%. CAPLYTA showed significant growth of 70.9%, driven by strong continued launch momentum in adjunctive major depressive disorder.  Moving to MedTech, where we delivered growth across each of our key focus areas

Ticker	Company
PFE	Pfizer
NVS	Novartis
NVO	Novo Nordisk
AZN	AstraZeneca
ABBV	AbbVie
GILD	Gilead Sciences
SNY	Sanofi
AMGN	Amgen
UNH	UnitedHealth Group
MRK	Merck

Johnson & Johnson Q2, 2026 Earnings Call Transcript (JNJ)

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