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Johnson & Johnson (JNJ) Presents at Morgan Stanley 17th Annual Global Healthcare Conference (Transcript)

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About: Johnson & Johnson (JNJ)
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Johnson & Johnson (NYSE:JNJ) 2019 Morgan Stanley 17th Annual Global Healthcare Conference September 10, 2019 10:00 AM ET

Company Participants

Lesley Fishman - Senior Director, IR

Scott White - Company Group Chairman, North America Pharmaceuticals

Peter Lebowitz - Global Therapeutic Area Head Oncology

Conference Call Participants

David Lewis - Morgan Stanley

David Lewis

Let’s go ahead and get going here. My name is David Lewis, medical device analyst at Morgan Stanley. It’s a pleasure to have with us here several members of J&J here both on the stage with me and in the audience. To my immediate left is obviously Scott White, who is Group Company Chairman, North American Pharmaceuticals; and Peter Lebowitz, who is Global Therapeutic Head of Oncology, and who have been to the MDA or the Pharmaceutical Day for Johnson & Johnson, have seen Peter here the last several years. But before we get going, we’re going to have a statement read by Lesley in the audience on J&J, public Safe Harbor, and then we’ll get going.

Lesley Fishman

Great. Thanks, David. Good morning, everyone. Please note that some statements made today may be considered forward-looking or utilize non-GAAP measures. Please refer to our SEC filings, in particular our 10-K, which discuss the risks and uncertainties around forward-looking statements, as well as our website investor.jnj.com for reconciliations to comparable GAAP measures.

Also please note that finally any remarks regarding financial performance represent results through and including the second quarter of 2019. Thank you. Back to you, David.

Question-And-Answer Session

Q - David Lewis

Oh! That was quick. Thanks so much. So, look, I want to say right upfront, we’ve -- J&J has made a lot of public statements around opioid the last several weeks. So, a refreshing twist. I’m not going to spend any time today talking about the opioid dynamics. We’ve written about this extensively, and I’ll get a respite from I’ve been spending 80% of my time the last two weeks. That’s a good thing. But I do want to ask one just broader general question. I think a lot of investors are concerned about the distraction to the pharmaceutical business because of its opioid dynamic. And from a spending focused strategy perspective, how has this current opioid dynamic affected the core business?

Scott White

Well, in reality, it has, and we focus entirely on the fundamentals of our business. We have an incredible pipeline that we’ll continue to lean in. We’re operating in very competitive spaces and delivering unmet medical needs -- or against unmet medical needs. And so, our real focus has been on the business, the core business, getting products approved, getting line extensions approved, and making sure we’re as strong commercially as possible.

David Lewis

Okay. The big takeaway from this Pharma Day earlier this year was you kind of gave this very bold projection of sort of $50 billion by 2023. And that got certain people excited, and we were admittedly kind of excited. But we frankly already had $51 billion by 2022 too. So, as much as that number seemed to sort of define for people that this is a company whose pharmaceutical business can grow certainly at probably better than market the next several years. And to be honest with you, it seemed to be a conservative number. Why is that number risk adjusted in your mind and where could it prove to be conservative?

Scott White

Sure, as you recall, Joe Wolk mentioned that we could be comfortably above $50 billion. So, he wasn’t trying to give very specifics but just the fact that as a benchmark, it’s something we could certainly exceed. We definitely feel that this goal is de-risked by the fact that 75% of that growth we anticipate is coming from our end market products, as well as line extensions associated with our products. But given the fact that these assets are currently in market, we feel confident we can deliver against that number. Moreover, we have a really robust pipeline. We have 10 assets that are under development right now, each with the potential of $1 billion. And so, we think the combination of both our in-market performance, line extensions as well as new assets can help us achieve that goal.

David Lewis

Okay. Scott, this whole meeting, as last year’s meeting was focused on the pharmaceutical supply chain, and the word in the room is price. Everyone was very concerned about pricing. Help us understand how you’re thinking about the role of price on your business net versus gross? How do you think the broader pharmaceutical market is on prices? Is it stable? Is it likely to worsen? Where is the corporate view on pricing for J&J?

Scott White

Sure. Right now, it’s really hard to predict where the market is going to go based on the uncertainty that exists around pricing policy in the United States. With that being said, we’ve been a company that’s not focusing on price as a mean to drive growth. If you look at the last two full years in 2017 and ‘18, we’ve been in net negative pricing situation. And despite that negative price position, we’ve been able to post really strong growth across our business. And that’s because we continue to focus on large unmet medical needs for driving volume based on our ability to compete in the market as well as establish the need for the use of our product in addition to our overall investment and the evidence that we provide to support the growth of our asset base.

David Lewis

And Scott, some people say, “That’s not really negative.” If you adjust for REMICADE, it’s not negative. Even adjusted for REMICADE, do you think your net pricing is still negative?

Scott White

Yes. So, if you look at our 2018 transparency report, on there, we provide the -- our net negative position for both overall pharm U.S. as well as without REMICADE. So, in both cases we were negative. Obviously without REMICADE a little bit less but was still in net negative position.

David Lewis

Okay. So, many people don’t know this, but J&J’s growth over the last 10 years has always been very strongly correlated -- performance of the stock has been very correlated to pharmaceutical growth. So, to the extent that pharma is poised to accelerate into 2020, you probably can notice pretty decent things for the stock. So that acceleration’s really defined by two things, getting comfortable with some of the headwinds that the business has faced the last two years and getting comfortable with some of the acceleration of many of these products, obviously within Peter’s domain. But, let’s start talking about the headwinds. The first one that we’d focus on top of mind is REMICADE. And REMICADE business was a big debate into this year but it’s been relatively stable. What are you seeing from a price perspective on REMICADE and a volume perspective on REMICADE and some of the rebidding [ph] dynamics that are going on? And can investors expect that this upper teens like degradation 15%, 20%, that’s a good level to get comfortable with for ongoing basis?

Scott White

Sure. One thing I’d say is that when looking at REMICADE, a couple of key factors are driving its current performance. The first is, it’s been in the market now for -- I thought that was salt and milk.

David Lewis

No, it’s -- we do push milk here, but we also got saltwater.

Scott White

As we look at our REMICADE performance, it’s really predicated in a variety of drivers. The first is the fact that the product has been in the market now for more than 20 years. It’s a well established product with a high degree of comfort and familiarity in the marketplace. It’s also one of the most widely studied biologics in the space of autoimmunity. And the other thing to recognize is that we’re still competing with the brand. The brand is competing against the backdrop of a larger immunology market, of which there are nice -- good last count, 26, 27 biologics that it’s competing with. And as a result, REMICADE is competing in the market of which biosimilars are part of. So, as we look at REMICADE, it’s going to continue competing. Volume for infliximab has remained relatively stable. It’s close to 2Q, we’ve had just a little bit north of 90% market share. And again, it’s because we’ve been competing on the basis of value and price as well as physician overall reluctance to make switches with stable patients. That whole physician position has been something that’s been in the market well in advance of launch of biosimilars. Physicians have been reluctant to switch stable patients and usually look at the opportunity to switch a patient either when they are forced to switch or if the patient is losing clinical help.

David Lewis

So, that dynamic of stable patients versus unstable patients, really the transition to be more acute in de novo patients kind of suggests that whatever trajectory we’re seeing here in 2019 is a decent way of thinking about the future?

Scott White

It’s hard for me to project on future performance of the brand. But, I can tell you that REMICADE will continue to be a competitive asset. It will continue to compete for the remainder of this year, and we’ll continue with the asset moving forward.

David Lewis

Okay. ZYTIGA actually had better performance in the second quarter than many of us were expecting. So, what are some of those -- the factors that are contributing to -- you kind of broke from that historical generic trend line?

Scott White

Sure. Well, I think, a lot of it has to do with the dynamics of generic entrance into the space. As we look at ZYTIGA for the second half this year and beyond, we do expect to see a faster generic erosion.

David Lewis

Okay. And just lastly, the last three generic pieces, VELCADE, PROCRIT, TRACLEER. What should we think about the outlook now for that, that portfolio?

Scott White

Yes. Let me start off with TRACLEER. As we look at TRACLEER, it takes some time for a generic entry to come to market. The first was launched in mid-June. Now, I think there are several generics in market right now for TRACLEER. So, we would expect and anticipate traditional generic erosion.

David Lewis

Okay. So, these headwinds you are referring to, your sense is, these headwinds, generally speaking, probably don’t get a lot worse heading into next year. Generally speaking, ZYTIGA is going to anniversary, REMICADE is relatively stable. So, from a headwind perspective, moving into next year, generally speaking, things should not be getting worse?

Scott White

Well, we would expect to see continued trends that we’ve seen around REMICADE. With ZYTIGA, as we mentioned before, we do expect to see faster generic erosion. I think, the real opportunity for Janssen isn’t so much as our performance on -- against generics and biosimilars, it’s really the performance on the rest of the portfolio. If you look at the portfolio, we’ve had really strong growth and just in Q2 alone we delivered 4.4% growth globally, $10.5 billion in total sales, and this was really driven by nine key assets that had double-digit growth. So, it’s actually looking at the portfolio in its totality is what’s supporting the overall business.

David Lewis

Okay. So, let’s talk about some of the catalysts for acceleration. If the headwinds are stable or getting easier from a comparable perspective, the pipeline-driven acceleration is probably going to be a more markedly in 2020, so we should see acceleration. How confident are you just broadly in U.S. pharmaceutical global acceleration for the pharma business in 2020?

Scott White

Well, if you look at our global pharmaceutical business, we have continued to focus in on transformational medical innovation. We’ve had, I want to say, nine breakthrough therapies, we’ve actually had 10th right now with the RSV vaccine. As we look at our overall portfolio on a global basis, we continue to drive growth across all of our key therapeutic areas, especially oncology has been a core driver for us as well as immunology. Assets like TREMFYA, STELARA, DARZALEX, IMBRUVICA, INVEGA SUSTENNA and TRINZA and so forth, pulmonary arterial hypertension, all these portfolios continue to drive significant growth. So, we think -- we remain confident about our ability to grow in both the short and long-term.

David Lewis

Okay. So, it is the combination for J&J in terms of what drives the portfolio. Your new blockbuster therapies maybe have a significant indication expansion. Sort of one of the areas that’s been pretty remarkable from an indication expansion has been STELARA. So, maybe just talk about sort of the penetration into Crohn’s? And that growth rate I think has surprised a lot of people and the sustainability of sort of growth rate at the sort of 20%, 30% level.

Scott White

One of things to recognize about Crohn’s disease, it’s really challenging disease to treat, first of all. It’s very complex disease. When looking at current anti-TNF therapy, which is really the standard right now, most patients, about 80% to 90% of patients are non-remission after one year of therapy, which means there’s ample opportunity for alternative mechanisms of action to step in and drive growth and really address this large unmet need.

The good news about STELARA is that it’s got really robust data in Crohn’s disease, and it’s the total clinical product profile, which is driving its adoption in the marketplace. That unmet need is huge. Plus, when you’re looking at within Crohn’s disease, there’s still significant opportunity to drive penetration and growth in the space. Very often, patients wait as long as seven, sometimes as long as 10 years to get under first biologic, even though they’ve been in the moderate to severe categories. So, there’s an opportunity to drive market growth, there’s an opportunity to provide new value because you’re providing different remission rates than what’s traditionally been seen. And even though, STELARA launched a couple of years ago, a few years ago, it’s still relatively new as a paradigm into the space. So, we’re really excited about that. Moreover, we’re hopeful to get a UC indication before year end for STELARA. And we believe the combination of both Crohn’s disease as well as ulcerative colitis will help accelerate the brand’s growth and drive its growth in the future.

Beyond that for STELARA, we’re also studying the brand in lupus, which is a new area for us and that could be really interesting result. So, that’s in Phase 3 right now. We’ll have to wait and see the results of the trial.

David Lewis

Okay. Peter, in the oncology portfolio, the two products that define about 80% of the investment debate are obviously IMBRUVICA and DARZALEX. So maybe if you could break this down, and we’ll talk about both. So, for IMBRUVICA obviously frontline CLL and MCL are the focus, as well as combo therapies. Where are we sort of in development of that franchise? And sort of what are the key indication expansions and drivers of the pipeline from here?

Peter Lebowitz

Yes. So, I mean, the major data that came out over the last year were frontline regimens in CLL with IMBRUVICA, and these were regimens that -- the very best regimen that we’ve had for many, many years is FCR. And the results of that ECOG-1912 were dramatic and IMBRUVICA was superior, and across the board.

So, establishing IMBRUVICA in that frontline setting with the right regimens and the next generation regimens will be combinations with BCL-2 inhibitors and other things, some of which are in our portfolio actually entering into Phase 1. So, that’s really the strategy with IMBRUVICA, is to continue to improve on outcomes through developing best regimens.

David Lewis

Okay. And DARZALEX, can you just talk about what’s driving growth today and the opportunities sort of in frontline myeloma?

Peter Lebowitz

Right. So, the same thing with DARZALEX. Right? we had a number of trials that we presented in different settings of frontline multiple myeloma transplant, non-transplant, new regimens that are coming, and DARZALEX is superior in every one of those. So, combinable with almost every regimen that we’ve tried and now getting established in frontline.

In addition, with DARZALEX, we’ve talked a lot about subcutaneous DARZALEX. That is a novel technology, which has really yielded very impressive results that we presented. So instead of an infusion time of a few hours, we’re now down to 5 minutes or less. The infusion reactions are decreased and numerically it looks very strong versus the IV. So, establishing that subcu in offsetting is going to be a critical component. And then working DARZALEX in as standard-of-care into various regimens with new emerging multiple myeloma drugs, many of which are in our portfolio is also going to be critical.

The thing looking forward with DARZALEX and this is a big push of the Oncology Group at Janssen is that, we are looking to move therapy even before patients have a formal diagnosis of malignancy, and we call this cancer interception. We’re one of the only companies to do a company-sponsored study in premalignant multiple myeloma and smoldering myeloma. That study is ongoing. And what’s important to note about that is every patient who has multiple myeloma, at one point, had premalignant disease, had smoldering myeloma or MGUS.

And so to start thinking about the treatment paradigm differently and moving treatment regimens into those -- into that premalignant settings, we believe is the future of multiple myeloma treatment.

David Lewis

Could you just -- a strategic question, this came up a little bit at the Pharma Day, J&J is typically a leader in most of the drug categories, sort of thematically. IO has been one category where the company has been deemed in oncology to be behind. Why do you think J&J sort of fell behind it in IO, what’s sort of the plan to get more aggressive in that category going forward?

Peter Lebowitz

Yes. Well, I would say we actually have been really aggressive. Look, our strategy -- just going back to the past, our strategy was to focus on certain things where we believe we can make a big impact, and we focused on certain diseases. And we -- if you look at our portfolio, and we’ve gotten nearly a new oncology drug approved every year since 2011, and many of those drugs are transformational drugs. So, we were focusing on what we were focusing on.

We’ve now entered in with CAR-Ts and we have a BCMA CAR-T that now is in Phase 2 in the U.S., and we’re planning on presenting, hopefully, at the end of the year. We are expanding what we’re doing in that cell therapy. We’re also -- and we’ve been doing this for some time, which probably hasn’t been recognized as much as it should, looking at T-cell redirection approaches with CD3 bispecifics.

So, we’ve been working in this area for a while. And now what you’re starting to see is you’re starting to see molecules that are going to be presented and will show pretty remarkable results.

Going to the future, our strategy is you can have mechanisms that use the immune system, we now need to direct that more specifically, with the right targets, with the right platforms, and bring that forward to get even better results.

David Lewis

CAR-T kind of reminded me, so within DARZALEX, there is a lot of multiple myeloma therapies coming in the market, Bluebird’s CAR-T therapy, as well as GSK’s belantamab. How are you thinking about DARZALEX growth kind of relative to that increasing kind of competitive landscape?

Peter Lebowitz

Yes. So, I’ll let Scott comment on the commercial piece. But each one of these therapies will have its place in multiple myeloma. And some of them, it will be hard to introduce into the earliest lines of the therapies, and some of them it’ll be really hard to introduce to the premalignant setting. DARZALEX is one where we can actually treat with almost any regimens and move it into our earlier line settings where tolerability is important. Scott?

Scott White

Yes. From a commercial perspective, we believe the subcu formulation is something that’s going to open up a lot of doors for us, especially in earlier lines of therapy. If you look at DARZALEX, its utilization to market, about 50% is being used in hospitals, half is being used in the community setting. With community doctors, there’s a capacity issue, especially with long infusion times, especially when you’re looking at line 1 and line 2 patients.

We believe the subcu is going to give us an opportunity to move earlier, to move wider in the audience and we’ll be able to solidify our position in that frontline position.

David Lewis

XARELTO, Scott, has always been an interesting one here. On one hand with a CAD/PAD indication, the market should be expanding very dramatically. But then the competition obviously in the TNF space has been pretty dramatic. And I can’t get a sense of what’s the direction now for XARELTO. We’re seeing full quarters of sort of disappointing growth. Based on those CAD/PAD indication expansions in ‘20 and ‘21, can this business get back to growth, can it accelerate into 2020?

Scott White

Yes, we have confidence it will. One of the challenges we had especially in the first half of this year and we covered some of this on Analyst Day is some of the challenges that we’ve had with the products are really twofold. The first is the doughnut hole impact of 50% to 70%. Increase in Medicare population for drugs is largely used by Medicare patients. And secondly, we had an increased cost for access for the medicine. Now, the brand does enjoy really wide access and that’s a positive thing about the brand but that was an increased cost for us this year. As we move forward, as a reminder, CAD/PAD launched less than a year ago. So, we’re still very early into the launch phase of CAD/PAD. As we look at the launch line curves between XARELTO versus BRILINTA and ENTRESTO, we’re on track or ahead of both of those products in terms of launch trajectory.

We are changing the standard-of-care in CAD/PAD and that does take time. But given the size of the population and the clinical data and evidence that’s available, we feel really confident about that.

Moving forward, we’ve -- our entire strategy for the brand has been an expansive indication approach. And so, we’ve invested a lot into the evidence especially new patient populations. And we have CAD/PAD right now where we have a complete year yet. We’re hopefully going to receive news from the FDA towards year end around medical yield. And beyond that we have three other indications that we think will expand utility, as well as the populations that we can target with the brand. So, we continue to have a lot of confidence in the brand and we’re looking forward to seeing data sets at the end of the year.

David Lewis

Okay. Let’s spend the last 10 minutes talking about the portfolio, the portfolio of products which are actually very exciting next several years. So, I’m going to start with prostate cancer, Peter. And so, it’s kind of remarkable how you sort of managed through the ZYTIGA headwinds and how you sort of built that multiyear prostate cancer portfolio. So, let’s just talk about how ERLEADA fits into the portfolio sort of in a post-ZYTIGA world, first off, and kind of also curious relative to Pfizer’s XTANDI sort of how you think the products are differentiated, where you think the data stacks ups?

Peter Lebowitz

Yes. So, as you said, we’ve made a commitment in R&D, and we do R&D in somewhat a different way than others. And if we commit to disease, we really deeply understand the science as well as all the other pieces in development, and we become the best in prostate cancer. And we make sure that we’re addressing the disease well out into the future. Right? So, ERLEADA has had some pretty spectacular results with SPARTAN. And our strategy all along with ERLEADA was not to replace therapies but instead to advance the standard-of-care. And one way in which we do that is by going earlier and earlier in the treatment paradigm. So, we have studies now in locally advanced prostate cancer.

And if you look at the unmet need where we’ve been with AR antagonist and ZYTIGA is in the metastatic castrate-resistant populations. We’re now moving into these earlier populations where the population is larger and the potential impact in terms of patient numbers is clearly going to be favorable. So, those studies are ongoing and they’ll continue.

The other piece of this is, is by forming a foundation with an AR antagonist. We can then begin adding on in other scientific mechanisms of action that we believe are high priority in prostate cancer. One with niraparib with a PARP, which is advancing through in addition adding in now IO approaches. And we have a number of really good prostate antigens that we’re now taking into directly targeted biologics that can come into the whole treatment paradigm.

David Lewis

And then, immunology, other than prostate cancer has been another category for J&J with this kind of consistent multi-decade leadership and that it continues now with TREMFYA on pace for a $1 billion product in this particular year. So, just talk about the indication expansion, frankly, Scott, for TREMFYA, and your sort of confidence that that is able to the supplement growth as STELARA kind of approaches more biosimilar competition?

Scott White

Sure. Right now, with STELARA, we’re not really sure when the IP -- internal IP event is going to. We continue to invest in STELARA. We have lupus study that’s ongoing. We believe there is a potential to capturing additional IP.

But beyond that, for TREMFYA, we are studying it in PSA. So, we expect to file for a PSA for year-end. So, we should see an approval next year. We’re developing in Crohn’s disease, we have a Phase 2b/3 study that’s ongoing for Crohn’s disease. We will be studying in ulcerative colitis, and then we have a pathway approach that we’re targeting for TREMFYA looking at a variety of diseases for IL-23, as implicated.

And so, within that portfolio, it looks really strong. Within the larger immunology portfolio, we have other opportunities especially in area of IBD. In Crohn’s disease specifically, we have an asset we are developing called NKG2D that works off the stress mechanism. That’s a completely new mechanism of action for Crohn’s disease that’s under development. We also are developing an oral JAK that’s locally acting, that’s non-systemic and we think that can open a lot of doors in both CD and UC either as a monotherapy or potentially in combination.

So, all this we mentioned at our Analyst Day back in May but there is a significant opportunity ahead of us, as we continue to build out our immunology portfolio for the future. So, TREMFYA will be an important component of that, but it’s certainly not the only component.

David Lewis

Okay. And look, I sort of shamefully admit, a lot of your products, we have good presence to kind of predict what that rate of acceleration to $1 billion in peak sales or $5 billion in peak sales can be. With SPRAVATO, it’s a bit of a different animal and we don’t have a good precedent for trying to how to figure this one out. Can you just help us understand how we should think about the launch curve for SPRAVATO, how we are thinking about center development here in the U.S. here in 2019 and any frame where you can provide in terms of where this growth is going and how quick you can get there?

Scott White

Sure. And I can speak from 2Q results perspective. As we get to SPRAVATO, there is no other analog we have in the industry that can give us any key indicator as to look at and figure out what direction it’s going. And that’s because it represents a significant paradigm shift and change in standard-of-care for patients with treatment-resistant depression. In the case of psychiatry, which is predominantly a place that’s a retail script, write a script, go to local pharmacy and get your medicine. This represents a new change in terms of how the patient is treated, how the patient is dosed, and even from a reimbursement paradigm perspective. The brand does enjoy wide access but for us it’s making sure that, that first experience is the best possible experience. So we’ve been very deliberate in our approach and setting up these centers, making sure they certify and apply for REMS and also making sure that they can safely and effectively dose the medicine.

Right now, as we close the second quarter, we treated about 600 adult patients in U.S., we have about 1,600 centers that are signed up or have been certified in the REMS program, and we continue to build more each day into the program.

Again, we are being very deliberate with this and want to make sure that we have a good possible first experience. And we believe that with the patient experience, more will come. There’s clearly a large unmet medical need in this space, and so the question of patient demand is not a question that’s actually there. There is a lot of demand. We just need to make sure that we set up these centers in a right way and that’s something we have been focusing in on commercially.

David Lewis

So, you are -- you sound good and happy definitely. You sound good about acceleration in 2020. I’m confident. I see the pharmaceutical business accelerating into 2020. The next phase that everyone considers is the durability of that business. So, 2021 feeling very good. ‘21 to ‘23, the outer year of the LRP, what’s giving you the confidence from a pipeline portfolio perspective in ‘21 to ‘23 that acceleration in 2020 is durable?

Scott White

Sure. I mean, if you look at just within our existing in-market assets, we have significant opportunities for growth. We’re competing in the market, we’re driving adoption, we are changing standards of care. We also have 40 line extensions that we’re looking at within those same set of products. And 10 of those line extensions have a potential of having over $0.5 billion each. And the final thing, as I mentioned earlier, we have 10 assets that are under a clinical development right now, each has a potential for $1 billion. So, as I look into the short and long-term, I feel confident we can continue to drive growth. And that growth is predicated on the principle that we’ve had for more than a decade, which is focused in on transformational medical innovation. That strategy has helped us in the past, it’ll help us in the future, and it’ll help us weather some of the uncertainties that we face in the market, whether it’s a price competition or changes in technology.

Peter Lebowitz

Just to add one thing to what Scott is saying, the other key piece of that strategy, which Paul Stoffels was a champion of, is open innovation. And our ability to pursue an internal pipeline, but at the same time really understand what’s going on externally and make the right moves at the right time in a disciplined way, we have a really good track record of doing that, and we’re going to continue doing that.

David Lewis

That’s a genius segue, Peter, because I was going to go right there. So, here’s the thing. Janssen has always been in my opinion more about JVs and internal innovation. And you never get to go out and buy expensive oncology assets, at least you have in the last 10 years. So, does that shift at all, I mean the market dynamic, we’re seeing some pretty large transformational pharmaceutical deals. So, do you think that that strategy frankly has to change? J&J has always been internal JV. It’s never really been big deals. Actelion was one sort of large transaction. But generally speaking, you’re a JV business, it’s an internal innovation company and JV.

Peter Lebowitz

Yes. So, look, I think certainly, the market dynamics have changed since the time when we did the deal with Pharmacyclics and with Genmab. At the same time, what we’ve been able to do is, because of our expertise -- and so, we have had to change with that. What we’ve been able to do with our expertise in certain diseases is really plot out the best opportunities at the best times, and be disciplined about how we end up doing those deals. Right? And so, some big deals where we like the assets but the cost and value didn’t seem to quite match up, we passed on. But, we dive into deals where others haven’t yet recognized the potential value, and we’re willing to go in there and take the risk a bit earlier. And that’s the strategy that we’ve started taking.

David Lewis

And it doesn’t sound like that strategy is on the precipice of changing. At least in your pipeline intermediate term there’s plenty of growth here, doesn’t really need significant external supplements from M&A.

Peter Lebowitz

I would say that we’re always open toward innovation wherever it sits. So, we’ve always kept that open door. We’ve -- as mentioned earlier, we’ve done collaborations. We’ve done outright acquisitions. We have home grown assets we develop. So, we continue to be really open where the next opportunity sits. We invest heavily into R&D. We talked in the past about our investment is north of $8 billion into R&D. That commitment remains as a company, because we have a lot of opportunities and a robust pipeline. So, we’ll be open to opportunities as they come.

David Lewis

Okay. We’re out of time, Scott, Peter. Thank you so much for being here. Thank you all for listening.

Scott White

Thanks.