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Here's a Multibillion-Dollar Market for Johnson & Johnson

By Brian Orelli, PhD and Keith Speights - Apr 13, 2021 at 8:43AM

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However, the healthcare conglomerate might be too late to find a niche in multiple sclerosis.

Johnson & Johnson (JNJ 0.09%) gained approval from the Food and Drug Administration for its multiple sclerosis drug, Ponvory, last month.

In this video from Motley Fool Live, recorded on March 22, contributors Brian Orelli and Keith Speights discuss the prospects for Ponvory, which may be narrow because of its late entry into the space. But while the drug's prospects may be limited, they note that revenue from Ponvory is largely a bonus, on top of the pulmonary arterial hypertension drugs that Johnson & Johnson received through its acquisition of Actelion.

Brian Orelli: Johnson & Johnson gained FDA approval for Ponvory. How are we pronouncing this?

Keith Speights: I think that's it.

Orelli: Ponvory, P-O-N-V-O-R-Y, for relapsing forms of multiple sclerosis, last week. This is an S1P1 modulator. It's got quite a bit of competition. Gilenya from Novartis (NVS -0.65%), that's a $3 billion drug. Mayzent, also from Novartis; and then Zeposia from Bristol Myers Squibb (BMY 0.34%), which it got from Celgene, was approved in March. Do we need another S1P1 drug? Johnson & Johnson proved that it was better than Aubagio, which is from Sanofi (SNY -0.28%), but that's not an S1P1, so it didn't compare apples to apples with the S1P1. Seems like the benefit is due to the side effects of the S1P1 drugs, and that Ponvory doesn't last very long in the bloodstream.

Speights: I think it's important to note that Johnson & Johnson picked up this drug, Ponvory, with its acquisition of Actelion back in 2017, but it was really just an extra with that deal. The crown jewels that Johnson & Johnson was really after are Actelion's pulmonary arterial hypertension drugs, and those have been very successful for J&J since that acquisition closed. Ponvory was just gravy. It was just an extra drug.

I think what J&J's anticipating here is that they're thinking, OK, individuals with multiple sclerosis can, and oftentimes do, respond differently to different therapies. They're thinking that hey, having a new S1P1 drug on the market should still have an opportunity, because of that difference between how individuals respond.

I think you're right. I think one of the big things that they are going to really push as they promote this drug is the safety profile, like you said. It exits the bloodstream within around a week. For most patients, the immune-system effects wear off within a couple of weeks for most people, and that's really good. I think that's especially attractive right now. Because let's say there's a multiple sclerosis patient who wants to get a COVID-19 vaccine. Well, they don't want to have Ponvory in their bloodstream when they get that vaccine. That could be helpful if they -- I'm assuming that's the case, by the way, that's something Johnson & Johnson is playing up -- that might be helpful, that it exits the bloodstream. They can get a vaccine and then resume taking the drug. Also, sometimes it's good to be able to address other infections, to not have the effects of the drug in their bloodstream. There's some advantages there.

Brian, I've seen some analysts' projections like Ponvory might hit peak sales of between $200 million to $400 million. And that's not an insignificant amount by any means, but admittedly just pocket change for a healthcare giant like Johnson & Johnson. It's less than what some of these other S1P1 drugs such as Zeposia are expected to make. This isn't going to be a huge winner for Johnson & Johnson. But they got it with the Actelion deal. They're going to give it a go, and probably achieve some modest success with it. Probably.

Orelli: Do you think it's too late to the game, and not enough benefits to compete with the ones on market?

Speights: I don't think it's going to be a market disruptor. Any drug promoted by Johnson & Johnson has a pretty good shot at achieving some level of success, but I don't think it's really going to upset or take away, for example, Bristol Myers Squibb's potential for success with Zeposia, or anything like that.

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Stocks Mentioned

Johnson & Johnson Stock Quote
Johnson & Johnson
$178.30 (0.09%) $0.16
Sanofi Stock Quote
$50.04 (-0.28%) $0.14
Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
$76.22 (0.34%) $0.26
Novartis AG Stock Quote
Novartis AG
$83.73 (-0.65%) $0.55

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