Why J&J thinks its new psoriasis pill could be one of its biggest hits ever
Johnson & Johnson is counting on its newly launched psoriasis pill to be its next cash cow. Investors want to know if it can live up to the hype. Icotyde went on the market after the Food and Drug Administration approved it in mid-March for the treatment of moderate plaque psoriasis. The once-daily drug is the first and only oral treatment that targets the same IL-23 receptor as popular injections, including J & J’s Tremfya, which is also indicated for psoriatic arthritis, ulcerative colitis, and Crohn’s Disease. IL-23 inhibitors, including AbbVie’s Skyrizi, are biologic drugs used to treat chronic inflammatory diseases. “Icotyde has the potential to be one of our biggest products ever,” Johnson & Johnson CEO Joaquin Duato said on an April earnings call. Together, J&J aims for Tremfya and now Icotyde to improve its immunology portfolio and replace and surpass the declining sales of Stelara, which exited in 2023 with approximately $11 billion in annual revenue. Stelara lost exclusivity last year, paving the way for biosimilars to enter the market. It is estimated that it will pull in 2.36 billion dollars this year, and gradually in the coming years. Tremfya sales increased slightly from Stelara – from $3.15 billion in 2023 to $7.13 billion in 2026. It’s too early to say how much Icotyde will add to the mix, but J&J said last month when it reported first-quarter earnings that it had about 1,500 days written down from 1,300 days written. 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 calls a “complementary portfolio” to address different patient needs and preferences within the psoriasis market. Subjects have historically been the first line of care for many patients before shots. J&J estimates that about 8 million people in the US have plaque psoriasis. “We know that there are a lot of patients who continue to cycle and cycle and cycle their medications,” J&J’s head of pharmaceuticals, Jennifer Taubert, said in an April earnings call. Now, he said, recent changes in prescribing guidelines are making it easier for those patients to qualify for more systematic and advanced treatments. “So we think Icotyde is getting into that sweet spot as that first system option.” Bank of America analyst Jason Gerberry questioned whether the pill’s ease of use is strong enough to become a standard. “The value proposition is not entirely clear given how far along IL-23 biologics are,” he told CNBC. “Some would argue that you’d rather take a quarterly injection than take a pill every day, especially if you’re used to taking biologics,” as is the case with a large number of existing psoriasis patients. Skepticism is not really new. Gerberry highlighted Sotyktu as an important comparison. The drug was Bristol Myers Squibb’s first oral TYK2 inhibitor, greenlit 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 if this can be a drug that can reach a potential peak,” said Gerberry, who has an equal hold 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 getting insurance and reimbursement, is critical to new drug adoption, and Icotyde is no exception. “We want to see J&J reach more paying customers this summer,” Risinger said. IJ & J developed a plan to help patients pay for Icotyde. Shots of rivals Tremfya and Skyrizi are worth about $100,000 a year. “We expect Icotyde to be adopted by newly treated patients who may be considering a less effective psoriasis pill,” Risinger said last week, specifically referring to Sotyktu and Amgen’s Otezla. Leerink upgraded J & J shares on Wednesday and raised its price target to $265 from $252, which is about a 17% increase from Friday’s close. Risinger now projects Icotyde sales to reach $10.5 billion by 2032, ahead of Wall Street’s consensus of $7.4 billion. Reaching its full commercial potential will require Icotyde to gain approval for additional conditions such as Crohn’s disease and ulcerative colitis, which fall under the umbrella of inflammatory bowel disease. IBD accounted for 75% of Stelara’s sales, Duato said in January, and Tremfya’s use in these conditions boosted its growth. The same thing happened with Icotyde in the end. In his development, Risinger said a “huge opportunity” for IBD should open up by 2028 for Icotyde. “Icotyde’s potential in psoriasis, psoriatic arthritis, and IBD is still underrated,” Duato said on the April earnings call. Importantly Johnson & Johnson is off to a good start in 2026 – delivering a beat-up quarter led by high-value growth drugs. Icotyde’s potential in the coming months and years, and a milestone that could pave the way for FDA approval of J & J’s investigational robotic surgery system in Ottawa, are some of the exciting things on the horizon. Robotic surgery has long been dominated by Intuitive Surgical’s da Vinci systems. Shares of J&J have gained 9.55% year-to-date compared to an 8.2% advance in the S&P 500. That’s great when you consider that health care is the second-worst performer in the S&P 500 this year — down 6.5%. Only financials, down 6.8%, fell the most. The not-so-good news is that J & J has gone in the wrong direction since the stock debuted on April 8 at just under $240. We bought on the downside to improve our average cost base and currently have an unrealized loss of 3.2%. Johnson & Johnson is a high-profile name known for delivering strong earnings and forecasts, even as the broader pharmaceutical industry remains out of favor amid Wall Street’s shift to artificial intelligence games linked to data center development. IJ & J is expected to generate approximately $94 billion in sales by 2025, with approximately two-thirds coming from its pharmaceuticals division, known as Innovative Medicines, and another third from its medical products division, known as MedTech. Management recently asserted that they have “line of sight” for double-digit revenue growth by the end of the decade. We are willing to be patient. We have a $265 price target on Johnson & Johnson with a buy rating of 1. (Jim Cramer’s Charitable Trust is long JNJ. 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