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Modern on Thursday topped estimates for first-quarter earnings and revenue and posted a surprise quarterly profit despite lower demand for Covid vaccines, the only marketable product.

The biotech posted revenue of $1.9 billion in the first quarter, driven by Covid-shot earnings pushed back from 2022. That’s more than 60% down from the $6.1 billion it recorded in the same period a year ago on a resurgence in Covid cases.

Moderna posted net income of $79 million, or 19 cents a share, for the quarter. That compares to net income of $3.66 billion, or $8.58 per share, reported in the same quarter last year.

Here’s what Moderna reported versus Wall Street’s expectations, based on a poll of analysts by Refinitiv:

• Earnings per share: 19 cents per share versus an expected loss of $1.77 per share
• Revenue: $1.86 billion versus $1.18 billion expected

Shares of the Massachusetts-based company closed 3% higher on Thursday. Its shares are down nearly 25% for the year through Thursday’s close, putting the company’s market value at around $51.8 billion.

Cost of sales for the quarter was $792 million. These included a $148 million write-down for vaccines that have passed their shelf life and $135 million for unused manufacturing capacity.

Moderna maintained its annual guidance of at least $5 billion in revenue from its Covid vaccine, which will come from signed government contracts for the vaccine.

CEO Stéphane Bancel told CNBC’s “Squawk Box” on Thursday that he believes the company is “on track to meet that goal.”

In addition, the company is in talks about new contracts with customers in Europe, Japan and the USA

The US will transition the federal Covid vaccination program to the private market as early as the fall.

Bancel noted that the company is actively discussing new vaccine contracts with US government agencies, pharmacy chains and hospital systems. Moderna expects more clarity regarding those deals over the next four to six weeks.

The company will launch additional boosters after the Food and Drug Administration and Centers for Disease Control and Prevention approved additional vaccines last month targeting the Omicron variant for seniors and those with compromised immune systems.

The FDA is also preparing for a vaccine meeting in June, where outside consultants will choose which Covid strains new vaccines will target when they are rolled out in the fall.

Moderna expects the US to need 100 million vaccine doses annually.

However, demand for Covid shots is still falling as the pandemic eases and the US moves to an annual vaccination schedule rather than repeated booster doses. That leaves Moderna and the rival drugmaker Pfizer are scrambling to steer clear of their Covid stings, which made both companies household names during the height of the pandemic.

“It’s going to be a transition year,” Bancel told CNBC. He added that Moderna is “investing aggressively to grow the business.”

That means strengthening Moderna’s mRNA-based drug pipeline.

The company’s products use messenger RNA technology, which teaches human cells to produce a protein that triggers an immune response against a specific disease.

Stephen Hoge, President of Moderna, highlighted on the company’s conference call its efforts to create vaccines that target more than one respiratory disease in a single dose, which he says will be “the future of our respiratory business.”

The company has five different combination vaccines in early clinical trials, he said.

Bancel told CNBC the company hopes to launch a combination vaccine targeting Covid and the flu by 2025. These vaccinations are adapted to the predominant strains of influenza and Covid that are in circulation.

“So you can just go to your pharmacy and take a shot and get ready for the winter,” he told CNBC.

Moderna said in April it hopes to offer a new line of life-saving vaccines for cancer, heart disease and other conditions by 2030.

This lineup includes Moderna’s experimental vaccine, which targets the respiratory syncytial virus. The company expects to apply for full approval of the adult 60+ shot this quarter.

It also includes Moderna’s personalized cancer vaccine, a much-anticipated mRNA syringe co-developed with him note to target different tumor types. Moderna is also developing a flu vaccine, but the company said the vaccine doesn’t meet the criteria for early success in a late-stage clinical trial.

Clarification: This story has been updated to clarify that Moderna’s revenue fell more than 60% in the first quarter.

Johnson & Johnson products on a shelf in a store in New York.

Luca Jackson | Reuters

Johnson & Johnson’s Consumer health company Kenvue valued its IPO Wednesday at $22 per share, at the high end of its quoted range, in a boosted deal that would raise about $3.8 billion.

At this IPO price, the new company is valued at around $41 billion. This makes Kenvue’s debut one of the largest US IPOs in more than a year.

related investment news

The company expects its 151 million shares to be priced at between $20 and $23 per share, according to a preliminary prospectus it filed with the Securities and Exchange Commission last week.

Proceeds from the offering and all proceeds from related debt financing transactions will go to J&J, however Kenvue will retain $1.17 billion in cash and cash equivalents.

Goldman Sachs, JPMorgan Chase and Bank of America are acting as lead underwriters for the IPO.

The shares will trade on the New York Stock Exchange on Friday under the ticker “KVUE.”

The spinoff, the biggest IPO since electric-vehicle maker Rivian went public in November 2021, may not fully reverse the ailing IPO market that plummeted in 2022. But it could be a sign of life for IPOs in the US

Kenvue’s debut also marks the largest restructuring in J&J’s 135-year history. J&J announced the split in late 2021 to streamline operations and refocus on its pharmaceuticals and medical devices businesses.

Meanwhile, Kenvue is chock full of household names familiar to investors and the general public, like Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and J&J’s eponymous baby powder and shampoo.

Here’s everything you need to know about Kenvue’s IPO this week.

Post-IPO ownership

J&J will control 91.9% of Kenvue post-IPO — or 90.8% if underwriters exercise their options to purchase additional shares, according to the prospectus filing.

J&J plans to distribute the remaining common shares to its shareholders later this year.

Until then, Kenvue is considered a “controlled entity” under the NYSE’s corporate governance rules, the filing said. This allows Kenvue to avoid certain listing standards, including the requirement that the company’s board of directors be composed of a majority of independent directors.

J&J will generally be able to control matters that shareholders vote on, such as electing directors to Kenvue’s board, the filing said.

“Johnson & Johnson will continue to control the direction of our business, and concentrated ownership of our common stock may prevent you and other shareholders from influencing important decisions,” Kenvue said in the filing.

business performance

Kenvue is profitable and expects modest growth over the next several years, the company said in the filing.

According to the filing, global annual sales growth is estimated at around 3% to 4% through 2025.

Kenvue reported 2022 sales of $14.95 billion and net income of $1.46 billion on a pro forma basis. For the first quarter ended April 2, Kenvue estimates revenue of $3.85 billion and net income of approximately $330 million. These first quarter results are preliminary.

Ten of Kenvue’s brands generated sales of at least $400 million last year.

Overall, Kenvue said 2022 sales are “balanced” across the company’s three businesses.

The company’s self-care unit, which includes products for eye care, cough and cold, and vitamins, had net sales of $6 billion in 2022, accounting for 40% of total sales.

Skin health and beauty products accounted for $4.4 billion in net sales last year, or 29% of total sales. These products include shampoos, conditioners, hair loss treatments, and skin care.

And products in the essential health division, including baby products, mouthwash and dental rinses, sanitary protection, and wound care, posted net sales of $4.6 billion, or 31% of total sales.

Each of the three businesses was profitable on an adjusted operating income basis, the company said in the filing.

Kenvue noted that its global footprint is “well balanced geographically,” with approximately half of its 2022 net sales coming from outside North America.

According to the filing, the company will have net debt of $7.75 billion.

Managing directors

Kenvue rounded up several J&J executives to run the company, according to the file.

Thibaut Mongon, executive vice president and global chairman of J&J’s consumer health practice, will serve as CEO of the newly public company. He will also sit on the board.

Paul Ruh, J&J’s chief financial officer of consumer health and a former PepsiCo executive, will serve as CFO, and Meredith Stevens, global vice president of J&J’s consumer health supply chain, will serve as COO.

Kenvue’s Chief People Officer, Chief Corporate Affairs Officer, Chief Technology and Data Officer, Chief Scientific Officer and Group Presidents for various regions around the world are also from J&J.

According to the preliminary prospectus, the executives will lead a team of more than 22,000 employees in 165 countries and 25 own production facilities.

Kenvue’s global headquarters will be in Summit, New Jersey.

Talc Cancer Lawsuits

J&J faces thousands of allegations that its talc baby powder and other talc products cause cancer. Some of these products fall under the company’s consumer health business.

But Kenvue will only take on talc-related liabilities arising outside of the U.S. and Canada, according to its January IPO filing.

“As stated unequivocally and unequivocally, Johnson & Johnson has agreed to retain all Talk-related liabilities – and to indemnify Kenvue for all costs – arising out of litigation in the United States and Canada,” Erik Haas, Vice President of Litigation at Johnson & Johnson said in a statement last week.

But Kenvue said in the filing that “such compensation may not be sufficient” to protect the new company against the full amount of the liabilities.

J&J will continue to fight talc claims in bankruptcy court.

A federal bankruptcy judge halted nearly 40,000 talk lawsuits in April through mid-June. This decision was part of J&J’s second attempt to settle talc claims in bankruptcy proceedings.

The suspension will give J&J time to seek court approval of its proposed $8.9 billion settlement with the plaintiffs in the Talk cases.

– CNBC’s Leslie Picker contributed to this report.

An Eli Lilly and Company pharmaceutical manufacturing facility is pictured at 50 ImClone Drive on March 50, 2021 in Branchburg, New Jersey.

Fresh Mike | Reuters

The Alzheimer’s treatment Donanemab, which is manufactured by Eli Lillisignificantly slowed the progression of the mind-numbing disease, according to clinical trial data released by the company on Wednesday.

Patients who received the monthly antibody infusion during an 18-month study showed a 35% slower decline in memory, thinking and their ability to perform daily activities compared to patients who did not receive the treatment, according to Eli’s data Lilly showed.

According to the study results, patients taking donanemab were 39% less likely to progress to the next stage of their disease during the study.

But the benefits of treatment must be weighed against the risk of brain swelling and bleeding, which in rare cases can be serious and even fatal. Three study participants died from these side effects.

According to the company, Lilly plans to apply for Donanemab approval from the Food and Drug Administration later this quarter. The study looked at people in the early stages of Alzheimer’s disease who had a confirmed presence of brain plaques associated with the disease.

dr Daniel Skovronsky, Lilly’s Chief Scientific and Medical Officer, said donanemab has shown the highest efficacy of any Alzheimer’s treatment in a clinical trial. The company is working to get donanemab approved and on the market as soon as possible, he said.

And Skovronsky believes the FDA feels the same sense of urgency.

“Every day that goes by, there are some patients who go through this early stage of Alzheimer’s disease and become more advanced and don’t benefit from treatment,” he said in an interview with CNBC. “It’s a very pressing sense of urgency.”

Lilly previously applied for accelerated approval of donanemab.

The FDA denied that application in January and asked the company for more data on patients who had received the antibody for at least 12 months. Lilly said the data wasn’t available at the time because many patients were able to stop taking it after six months because the treatment quickly cleared plaque.

Almost half of the patients — 47% — who received donanemab showed no disease progression a year after starting treatment, compared with 29% who did not receive the antibody, according to data released Wednesday.

More than half of the patients stopped treatment in the first year and 72% stopped at 18 months due to brain plaque removal.

In a separate measurement, patients who received donanemab showed a 40% less decline in their ability to perform daily activities after 18 months. This means they are better able to manage their finances, drive, pursue hobbies, and have conversations than those who did not receive treatment.

“This is the strongest Phase 3 data yet for an Alzheimer’s treatment. It further underscores the tipping point we are at in the field of Alzheimer’s disease,” said Maria Carrillo, chief scientific officer of the Alzheimer’s Association, in a Explanation.

Brain plaque reduction

Donanemab targets brain plaques associated with Alzheimer’s disease. According to Lilly, the treatment significantly reduced plaque just six months after treatment. Many patients saw reductions so significant that they tested negative for the presence of plaque on their PET scans, according to the company.

Donanemab cleared plaque after six months in 34% of patients who had intermediate levels of a protein called tau, which can become toxic and kill neurons. At 12 months, donanemab cleared plaque in 71% of patients with the same tau levels.

“It should be clear that drugs that remove plaque, especially if you can remove plaque completely and quickly, can result in very significant clinical benefits for the patient,” Skovronsky said in an interview.

“The earlier in the disease process you do this, the more you can slow down the disease,” he said.

dr Eric Reiman, executive director of the Banner Alzheimer’s Institute, said the results don’t necessarily mean the plaque is completely gone, but donanemab cleared the plaque to such an extent that the treatment eliminated measurable evidence of it. Banner Alzheimer’s Institute had two physicians who were principal investigators in the donanemab study.

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Brain swelling and risk of bleeding

Donanemab can cause brain swelling and bleeding in patients, which in some cases can be serious and even fatal. According to Lilly, three study participants died from these side effects.

This type of side effect has been seen with other Alzheimer’s antibody treatments like Eisai’s and Biogen’s Leqembi, which received accelerated FDA approval in January.

Reiman said he’s encouraged by the potential clinical benefits for patients, but it’s important to be clear about the risks.

“We also need to be aware that there are side effects, including an unusual but potentially catastrophic risk,” Reiman said. “And we must continue to do our best to understand what that risk is for individual patients, to educate patients and caregivers, and to do what we can to mitigate that risk,” he said.

About 24% of patients receiving donanemab showed brain swelling on MRI, but only 6% showed actual symptoms. Around 31% of patients had small bleedings in the brain, called microbleeds, compared with 13.6% of patients who did not receive the treatment.

Lilly said most cases of brain swelling and bleeding are mild to moderate and patients stabilize with the right care, but cautioned that serious and life-threatening events can occur. According to Lilly, about 1.6% of cases of swelling and bleeding were serious.

Skovronsky said every patient needs to have a conversation with their doctor, who will weigh the potential benefits of donanemab against the possible risks.

“On a population basis, in our view, the benefits outweigh the risks,” Skovronsky said.

“The FDA is the US steward for this,” he said of the risk-benefit analysis that will determine whether donanemab receives approval.