Why J&J thinks its new psoriasis pill could be one of its biggest drugs ever
Johnson & Johnson is banking 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 became available after the Food and Drug Administration approved it in mid-March for moderate to severe plaque psoriasis. The once-daily medication is the first and only oral treatment to target the same IL-23 receptor as popular injectable drugs, 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 in its April earnings call. Together, J&J aims to strengthen Tremfya’s and now Icotyde’s immunology portfolio and replace and surpass declining sales of Stelara, which peaked at about $11 billion in annual revenue in 2023. Stelara lost exclusivity last year, paving the way for biosimilars to enter the market. This year it is only 2.36 billion dollars, and it is estimated to decrease gradually in the coming years. Tremfya sales have increased steadily since the Stelara peak – from $3.15 billion in 2023 to an estimated $7.13 billion in 2026. It’s too early to tell how much Icotyde will add to the mix, but when J&J reported first-quarter earnings last month it said it had filled about 1,500 prescriptions in less than 30 days. J&J, which is also working on 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 category-shaping portfolio” to meet diverse patient needs and preferences in the psoriasis market. Topical medications have historically been many patients’ first care before vaccines. J&J estimates that about 8 million people in the United States have plaque psoriasis. “We know there are a lot of patients who continue to ride bikes, ride bikes, continue to use topical treatments,” Jennifer Taubert, president of J&J’s pharmaceutical business, said on the April earnings call. He said recent changes to prescribing guidelines now make it easier for these patients to qualify for systemic and advanced treatments. “So we think Icotyde fits right in that sweet spot as the first systemic choice.” Bank of America analyst Jason Gerberry questioned whether the pill’s convenience was strong enough to become the norm. “Given how far behind IL-23 biologics are, the value proposition is not entirely clear,” he told CNBC. “Some might argue that you’d rather have an injection every three months rather than taking a pill every day, especially if you’re used to taking biologics,” as is the case with a large number of patients with existing psoriasis. Skepticism is not necessarily new. Gerberry highlighted Sotyktu as an important comparison. The drug was Bristol Myers Squibb’s first oral TYK2 inhibitor to be greenlit by the FDA in September 2022 for the treatment of moderate to severe plaque psoriasis. It failed to make a significant impact, underscoring how difficult it is for pill-based psoriasis treatments to gain traction over biologic drugs. “At some point investors will want to see if this could be a drug that could have big sales potential,” said Gerberry, who has an equivalent rating on J&J and a $254 price target. Payer access, or the process of securing insurance coverage and reimbursements, is critical to the adoption of new drugs, and Icotyde is no different, Leerink analyst David Risinger said in an interview with CNBC. “We want to see J&J achieve widespread paid access by this summer,” Risinger said. J&J runs a program to help patients pay for Icotyde. Competing shots Tremfya and Skyrizi cost about $100,000 annually. “We expect Icotyde to be available in patients who are new to treatment and might otherwise consider a less effective psoriasis pill,” Risinger said last week, directly mentioning Sotyktu and Amgen’s Otezla. Leerink upgraded J&J shares on Wednesday, raising his price target to $265 from $252; This represents an increase of approximately 17% compared to Friday’s close. Risinger predicts Icotyde sales will reach $10.5 billion in 2032; That’s well above Wall Street’s estimate of $7.4 billion. To reach its full sales potential, Icotyde will need approval for additional conditions such as Crohn’s disease and ulcerative colitis, which fall under the inflammatory bowel disease umbrella. In January, Duato said IBD had proven that Stelara accounted for 75% of its sales, and the use of Tremfya for these conditions was accelerating growth. The same may eventually be true of Icotyde. In his upgrade, Risinger said IBD’s “huge opportunity” for Icotyde should open in 2028. “Icotyde’s potential in psoriasis, psoriatic arthritis and IBD is still underestimated,” Duato said on the April earnings call. As a result, Johnson & Johnson is off to a strong start to 2026; It had a bumpy quarter led by the most important growth drugs. Icotyde’s potential in the coming months and years and a critical milestone that could pave the way for FDA approval of J&J’s investigational Ottawa robotic surgery system are some of the exciting things on the horizon. Robotic surgery has long been dominated by Intuitive Surgery’s da Vinci systems. J&J shares are up 9.55% year to date, compared with an 8.2% gain in the S&P 500. That’s pretty good, considering the healthcare sector is the second-worst sector in the S&P 500 this year, down 6.5%. Financials fell even further, falling only 6.8%. The not-so-good news is that J&J has been on the wrong track since we started the stock on April 8 at just under $240. We bought down to improve our average cost base and are currently facing an unrealized loss of 3.2%. Johnson & Johnson is a high-caliber name known for consistently delivering strong earnings and forecasts, even as the broad pharma sector remains out of sight amid Wall Street’s pivot to the AI game due to the data center boom. J&J has sales of approximately $94 billion in 2025; about two-thirds of that came from the pharmaceutical segment, known as Innovative Medicines, and the other third from the medical products segment, known as MedTech. Executives have recently insisted they have a “line of sight” to double-digit revenue growth by the end of the decade. We are ready to be patient. We have a $265 price target on Johnson & Johnson with a buy-equivalent 1 rating. (Jim Cramer’s Charitable Trust is long JNJ. See here for a full list of stocks.) 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