Why J&J thinks its new psoriasis pill could be one of its biggest drugs ever

Livestream Menu Make Itselect USAINTLLivestream Search quotes, news & videos Livestream Watchlist SIGN INCreate free account Markets Business Investing Tech Politics Video Watchlist Investing Club PROLivestream Menu

Why J&J thinks its new psoriasis pill could be one of its biggest drugs ever Published Sat, May 16 20268:20 AM EDTUpdated 3 Hours Ago Natasha Abellard Johnson & Johnson is counting on its newly launched psoriasis pill to become its next cash cow. Investors want to know if it can live up to the hype. Icotyde went to market after the Food and Drug Administration approved it in mid-March for moderate to severe plaque psoriasis. The once-a-day drug is the first and only oral treatment targeting the same IL-23 receptor as popular injectables, including J & J's Tremfya, which is also indicated for psoriatic arthritis, ulcerative colitis, and Crohn's Disease. IL-23 inhibitors, which include AbbVie's Skyrizi, are biologic medications used to treat chronic inflammatory diseases. "Icotyde has the potential to be one of our largest products ever," Johnson & Johnson CEO Joaquin Duato said on the April earnings call. Together, J & J is aiming for Tremfya and now Icotyde to shore up its immunology portfolio and to replace and exceed the waning sales of Stelara, which topped out in 2023 at nearly $11 billion in annual revenue. Stelara lost exclusivity last year, paving the way for biosimilars to enter the market. It is estimated to pull in just $2.36 billion this year, and less and less in the years to come. Tremfya sales have steadily climbed since peak-Stelara — from $3.15 billion in 2023 to an estimated $7.13 billion for 2026. It's too early to tell how much Icotyde will add to the mix, but J & J said last month when it reported first-quarter earnings that roughly 1,500 prescriptions have been written in less than 30 days. J & J, which is also studying Icotyde for Crohn's disease and ulcerative colitis, sees the new pill as a much-needed alternative. Tremfya and Icotyde are what Duato called a "complementary category-shaping portfolio" to address different patient needs and preferences within the psoriasis market. Topicals have historically been the first line of care for many patients before the shots. J & J estimates about 8 million people in the U.S. have plaque psoriasis. "We know there are so many patients that keep cycling and cycling and cycling on topical therapies," the head of J & J's pharmaceutical unit, Jennifer Taubert, said on the April earnings call. Now, she said, recent changes to prescribing guidelines make it easier for those patients to become eligible for systemic and advanced therapies. "So we think Icotyde fits right in this sweet spot as that first systemic choice." Bank of America analyst Jason Gerberry questioned whether the convenience of a pill is strong enough to become the standard. "The value proposition isn't entirely obvious given how far behind the IL-23 biologics are," he told CNBC. "Some would argue you'd rather take a quarterly injection than you would take a pill every day, especially if you've gotten used to taking biologics," as is the case for a large number of existing patients with psoriasis. The skepticism isn't necessarily new. Gerberry highlighted Sotyktu as a key comparison. The drug was Bristol Myers Squibb 's first oral TYK2 inhibitor, green-lighted by the FDA for the treatment of moderate to severe plaque psoriasis back in September 2022. It failed to generate significant traction, underscoring how difficult it has been for pill-based psoriasis treatments to gain traction against biologics. "At some point, investors are going to want to see that this can be a drug that can live up to the large peak sales potential," said Gerberry, who has a hold equivalent rating on J & J and a $254 price target. Leerink analyst David Risinger said in a CNBC interview that payer access, or the process of securing insurance coverage and reimbursements, is critical to new drug adoption, and Icotyde is no different. "We want to see that J & J achieves widespread payer access by this summer," Risinger said. J & J is running a program to help patients pay for Icotyde. Rival shots Tremfya and Skyrizi cost around $100,000 a year. "We are anticipating Icotyde's uptake to be in patients that are new to therapy that may otherwise consider a less effective psoriasis pill," Risinger said last week, directly mentioning Sotyktu and Amgen 's Otezla. Leerink upgraded shares of J & J on Wednesday and lifted its price target to $265 from $252, implying about 17% upside from Friday's close. Risinger now projects Icotyde sales reaching $10.5 billion in 2032, well ahead of the Wall Street consensus of $7.4 billion. Reaching its full sales potential will require Icotyde to secure approvals for additional conditions such as Crohn's disease and ulcerative colitis, which fall under the umbrella of inflammatory bowel disease. IBD proved to be 75% of Stelara's sales, Duato said in January, and Tremfya's use for these co