Johnson & Johnson is launching its new psoriasis pill, Icotyde, aiming to replicate and exceed the success of its former blockbuster Stelara. Icotyde targets the same IL-23 receptor as popular injectables and is the first oral option of its kind.
Johnson & Johnson is placing a significant bet on its newly launched psoriasis pill, Icotyde, to become its next major revenue driver, as investors eagerly await its market performance to determine if it can live up to the considerable hype.
Icotyde received FDA approval in mid-March for the treatment of moderate to severe plaque psoriasis. This once-daily oral medication is distinguished as the first and only oral treatment that targets the same IL-23 receptor pathway as widely used injectable biologics, including J&J's own blockbuster drug, Tremfya. Tremfya is also indicated for psoriatic arthritis, ulcerative colitis, and Crohn's Disease. IL-23 inhibitors, a class that includes AbbVie's Skyrizi, are advanced biologic medications crucial for managing chronic inflammatory conditions.
“Icotyde has the potential to be one of our largest products ever,” Johnson & Johnson CEO Joaquin Duato stated during the company's April earnings call. The strategic aim for J&J is for Tremfya and Icotyde to bolster their immunology portfolio, effectively replacing and surpassing the declining sales of Stelara. Stelara, which peaked in 2023 with nearly $11 billion in annual revenue, lost its market exclusivity last year, opening the door for biosimilar competitors. Its revenue is projected to drop significantly, to an estimated $2.36 billion this year and continue to decrease in the coming years. In contrast, Tremfya sales have shown consistent growth since Stelara's peak, climbing from $3.15 billion in 2023 to an anticipated $7.13 billion by 2026.
While it's still early to quantify Icotyde's exact contribution, Johnson & Johnson reported in their first-quarter earnings that approximately 1,500 prescriptions were issued within the first 30 days of its launch. The company is also investigating Icotyde for Crohn's disease and ulcerative colitis, positioning the new pill as a vital alternative treatment option.
Duato described Tremfya and Icotyde as a “complementary category-shaping portfolio,” designed to cater to diverse patient needs and preferences within the psoriasis market. Historically, topical treatments have been the initial choice for many patients before transitioning to injectable therapies. Johnson & Johnson estimates that around 8 million people in the U.S. suffer from plaque psoriasis. Jennifer Taubert, head of J&J's pharmaceutical unit, noted on the April earnings call, “We know there are so many patients that keep cycling and cycling and cycling on topical therapies.” She added that recent updates to prescribing guidelines now make it easier for these patients to qualify for systemic and advanced therapies, making Icotyde a prime candidate as a “first systemic choice.”
However, challenges remain. Bank of America analyst Jason Gerberry expressed skepticism about whether the convenience of a pill is sufficient to establish it as the new standard of care. “The value proposition isn't entirely obvious given how far behind the IL-23 biologics are,” he told CNBC. “Some would argue you'd rather take a quarterly injection than you would take a pill every day, especially if you've gotten used to taking biologics,” a sentiment shared by many existing psoriasis patients accustomed to injectable treatments.
This skepticism is not unprecedented. Gerberry pointed to Sotyktu, Bristol Myers Squibb's first oral TYK2 inhibitor approved in September 2022 for moderate to severe plaque psoriasis, as a cautionary tale. Sotyktu struggled to gain significant market traction, highlighting the difficulty oral psoriasis treatments face in competing with established biologics. “At some point, investors are going to want to see that this can be a drug that can live up to the large peak sales potential,” Gerberry commented, maintaining a hold-equivalent rating on J&J with a $254 price target.
Leerink analyst David Risinger emphasized the critical role of payer access – securing insurance coverage and reimbursements – in the adoption of new drugs. “We want to see that J&J achieves widespread payer access by this summer,” Risinger stated. Johnson & Johnson is implementing a program to assist patients with the cost of Icotyde, which, like rival shots Tremfya and Skyrizi, carries an annual cost of around $100,000. Risinger anticipates Icotyde’s uptake will primarily be among patients new to therapy who might otherwise consider less effective oral treatments like Sotyktu or Amgen's Otezla.
Leerink recently upgraded J&J shares, raising its price target to $265 from $252, signaling an approximately 17% potential upside. Risinger now projects Icotyde sales to reach $10.5 billion by 2032, significantly exceeding the Wall Street consensus of $7.4 billion. Achieving this full sales potential hinges on Icotyde securing approvals for additional indications, such as Crohn's disease and ulcerative colitis, which are part of the inflammatory bowel disease (IBD) category. IBD accounted for 75% of Stelara's sales, and Tremfya's use in these conditions has accelerated its growth. Risinger forecasts that Icotyde could unlock its “massive opportunity” in IBD around 2028.
“There's still an underestimation of the potential of Icotyde in psoriasis, psoriatic arthritis, and IBD,” Duato reiterated on the earnings call.
Bottom Line: Johnson & Johnson has started 2026 strongly, delivering robust earnings driven by its key growth medicines. The promising outlook for Icotyde and the potential milestone for its investigational Ottava robotic surgery system are significant developments on the horizon. While J&J shares have gained 9.55% year-to-date, outperforming the S&P 500's 8.2% rise, the healthcare sector as a whole has lagged. Despite a recent dip affecting some investors, J&J remains a stable high-caliber company with strong earnings consistency. Executives are confident in achieving double-digit revenue growth by the decade's end, and the company maintains a buy-equivalent rating with a $265 price target.
