During the company's earnings call, Johnson & Johnson (JNJ) confirmed a delay in its robotic surgery program, with the company now targeting first in human trials in the second half of 2022. Goldman Sachs analyst Amit Hazan argued that Johnson & Johnson’s news is a "significant positive" for Intuitive Surgical (ISRG).
ROBOTIC SURGERY PROGRAM DELAYED: Discussing the company's robotic surgery program, Johnson & Johnson's CFO Joseph Wolk said that "in General Surgery, we will incorporate elements from the general surgery robotic platforms of both Verb and Auris, which we believe enhances our value proposition and increases our ability to create a differentiated platform for surgeons. We continue to have ongoing conversations with regulatory authorities around the world. And based on these conversations, we will not be following a 510(K) regulatory pathway in the U.S."
"After analyzing time to market compared to overall value proposition, our goal is to initiate first-in-human studies with our robotic solution in the second half of 2022. We continue to be very excited about the overall program and that our continued investment here will offer a differentiated and competitive product to the market with better outcomes for patients. The new time lines are based on what we know today, reflecting a world that is very different than what it was just a few short months ago," the executive added.
A 510(K) is a premarket submission made to FDA to demonstrate that the device to be marketed is as safe and effective, that is, substantially equivalent, to a legally marketed device (section 513(i)(1)(A) FD&C Act) that is not subject to premarket approval. A premarket approval, or PMA, is the FDA process of scientific and regulatory review to evaluate the safety and effectiveness of Class III medical devices and is "the most stringent type of device marketing application required by FDA," the agency states.
POSITIVE FOR INTUITIVE: Following J&J's announcement, Goldman Sachs analyst Amit Hazan noted that the delay is partly driven by the company’s decision to combine the acquired Auris surgical robot prototype with their organic Verb surgical robot prototype. The analyst also added that "perhaps even more importantly," the company acknowledged that that the FDA filing will no longer be a 510(K), but a PMA, which he believes represents "a major new barrier to entry for robotics" likely to impact Medtronic's (MDT) U.S. robotic timelines as well. Hazan argued that the new development should be viewed as a “significant positive” for incumbent Intuitive Surgical. The analyst has a Buy rating on Intuitive’s shares and a Sell rating on Medtronic.
WHAT'S NOTABLE: Johnson & Johnson also said it expects to begin a late-stage human trial for a potential coronavirus vaccine ahead of schedule in late September. "As you know, we announced our lead COVID-19 vaccine candidate on March 30. And since then, we have made significant progress. We have seen strong preclinical data so far, which were published in the Journal of Science in May. These data validate the preclinical vaccine challenge model and showed that DNA vaccines were able to create strong immunity. Based on these data and interactions with regulatory authorities, we were able to accelerate the clinical development program of our COVID-19 vaccine candidate," Chief Scientific Officer Paulus Stoffels said.
"Since then, we have initiated a study of a final Ad26 vaccine candidate in nonhuman primate challenge model. These results will be published in a major scientific journal in the coming weeks. Based on this total package of results, we are very comfortable moving forward with Phase I/IIa studies later this month. This represents an acceleration of our time line from our original date of September to the end of July. These studies will establish both the safety and immunogenicity of our vaccine candidate as well as evaluate the single dose and the booster dose regimen. […] We are also in discussions with the National Institute of Health with the objective to start the Phase III clinical trial ahead of its original schedule potentially in late September to evaluate the effectiveness of our vaccine. We are using epidemiology data to predict and plan where our study should take place. We also announced that, in parallel with the clinical development, we are working to expand our global manufacturing capacity to be able to deliver more than 1 billion doses of our COVID-19 vaccine by the end of 2021."
PRICE ACTION: In late morning trading, shares of J&J have dropped about 1% to $147.33. Meanwhile, shares of Intuitive Surgical are down about $7.45, or 1.2%, to $600.35 in a broadly lower market.
Johnson & Johnson
-0.83 (-0.56%)
Medtronic
-0.75 (-0.77%)
Intuitive Surgical
-6.9 (-1.13%)