J&J Signals Optimism With Covid Vaccine Use in Limbo in U.S.

Johnson & Johnson indicated that uncertainty regarding its Covid-19 vaccine could ease in coming days, as regulators review whether the shot can cause rare blood clots and inspect a factory that’s key to the drugmaker hitting its production targets.

The U.S. paused use of the vaccine last week after six women who received it developed serious but rare blood clots in the brain. A panel of medical experts reviewing data on the clots could vote Friday on whether the hold should end. No additional cases of the clots have been confirmed since the pause began, according to Jason McDonald, a spokesman for the U.S. Centers for Disease Control and Prevention.

“In the next couple of days we will have a very solid path forward, and we’re going to do all we can to make sure that’s a positive outcome,” J&J Chief Financial Officer Joseph Wolk said in an interview.

Shares of J&J gained 2.6% at 11:22 a.m. in New York, a sign that investors expect that the vaccine could soon be returned to use in the U.S. and elsewhere.

The European Medicines Agency’s safety committee warned on Tuesday that there was a link between the rare clots and the vaccine, but said the potential benefits outweigh any risk. The ruling clears a path for European Union countries to decide whether to restrict access to the shot for any patient groups. The committee recommended that a warning be added to the shot’s product information.

As of April 15, some 7.7 million people in the U.S. had received the J&J shot. J&J said Tuesday that it brought in $100 million in sales for the company in the first quarter.

While the J&J shot had earlier been seen as critical to the U.S. immunization program, the Biden administration has said it expects other currently available vaccines will make up for any shortfall caused by the pause. In Europe, where a wider vaccine rollout has gone more slowly, access to the J&J shot could help cover more residents and stem the spread of viral variants that have contributed to higher infection rates.

Forecast on Hold

New Brunswick, New Jersey-based J&J didn’t provide a full-year forecast for vaccine sales because of uncertainty around the pause in its use, Wolk said in an interview Tuesday. J&J is offering the shot on a not-for-profit basis, at no more than $10 a dose, for the duration of the pandemic.

“We don’t want to be presumptuous and perhaps maybe even offend regulators, we want that process to play out and make sure that we’re being respectful of it,” Wolk said. “Since it’s a not-for-profit construct, it’s not going to have a material impact on earnings.”

This week, U.S. regulators will likely finish an inspection of an Emergent BioSolutions Inc. facility responsible for making the underlying drug substance used in the shot, said J&J Vice Chairman of the Executive Committee Joaquin Duato during a call with investors.

On April 16, Emergent was told by U.S. regulators to stop work at the Baltimore facility. Some 15 million doses worth of a key ingredient in the J&J shot had to be discarded after a manufacturing mix-up. J&J executives said Tuesday that it’s too early to determine how the hurdle will affect the timing of deliveries of 100 million doses to the U.S.

J&J also said on Tuesday that it expects adjusted earnings per share this year of $9.42 to $9.57, narrowing the guidance of $9.40 to $9.60 given in January. Wall Street analysts expect $9.50 a share, on average, according to data compiled by Bloomberg. First-quarter revenue was $22.32 billion, outpacing the average analyst estimate of $21.98 billion.

The company’s pharmaceutical unit continues to account for more than half its sales, as revenue in the division jumped 10% to $12.2 billion in the first quarter. Medical-device sales rose 11% to $6.58 billion.

Wolk said he expects device trends to continue to improve. In the Asia Pacific region, medical devices rebounded by 70% this quarter, and he said that other regions will follow suit. “Elective surgeries seem to be a little bit soft yet in terms of the market,” he said.

But consumer sales slipped 2.3% year-over-year to $3.54 billion. Within consumer health, J&J saw sales decline in over-the-counter products driven by comparisons with last year’s pantry loading and a weaker cough, cold and flu season.

Overall, J&J reported first-quarter adjusted earnings per share of $2.59, up from $2.30 a year earlier. It also boosted its dividend on Tuesday by 5%, from $1.01 a share to $1.06 a share.

©2021 Bloomberg L.P.

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