Johnson & Johnson’s Next Split & “1929” Hits Shelves 10/14/25

0:00Bring in show music, please. This is Squawk Pod, and I'm CNBC producer Cameron Costa. On today's episode, Johnson & Johnson announcing a spinoff of its orthopedics business. CEO Joaquin Duwato shares what's ahead for the pharma giant. We have a number of important catalysts in our portfolio that are going to drive this new era of accelerated growth. And amid a ceasefire in the Middle East, President Trump answers questions about a potential two-state solution. I think the answer is he didn't give an answer. We're just rebuilding Gaza right now. Plus, it's pub day. Andrew Ross Sorkin's new book 1929 hits shelves today.

0:47When I first started this, I didn't know if I'd finish it. I didn't know if I'd be able to get the material that I wanted to get. Well, he did. And he did. A thriller and an historical account of what happened behind closed doors before the big stock market crash. I was trying in my own way to write the prequel to Too Big to Fail. It's Tuesday, October 14th, and Squawk Pod begins right now. Stand Becky by in three, two, one. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorkin.

1:29It's book day. Book drops today. Oh, thank you. I brought it. Publication day. 1929. There it is. Let's hope it's not. Let's hope it's not. But yes. I saw a bunch of them. I mean, we're very happy. I could have gotten another copy. You could have gotten another free copy. It's available. Yes, we're going to get you a signed copy. But today is the day. Andrew's book is out, 1929. If you haven't already pre-signed up for it, you can buy it right now. You can get it at bookstores today. You can get it. We're going to talk a lot more about the book today. You're very kind. But it's here. It is the day.

2:01Check out Crypto this morning. You will see that Bitcoin's back at$111 ,000. And, yeah, here we go. There's a fascinating article in the journal about these two funds, or they don't know who, mystery accounts, that somehow made out about$160 million by shorting crypto and Bitcoin during that last little drop. Right. It was pretty interesting, but it's all apparently a mystery in terms of who these people are who did this. The amount of... Did they move it? Were they part of the story? No. A historic crypto selloff raised over$19 billion, but two accounts made$160 million. It doesn't seem to know who those are, but you can watch, I guess, the movements.

2:44because it's all in the blockchain. When did they get short? That was the thing I was trying to look at. They have this chart that shows that$80 million was deposited into account on October 9th. On October 10th,$90 million was deposited into a second account, making a similar short bet. And then finally, then, of course, the bets paid off. That's timing. Because you've got to know, I mean, it's a risk-off. It still is, obviously, and it's correlated to stocks. But you've got a big assumption to think, well, let's see if we're going to do, China's going to do something with rare metals and we're going to, you know, Trump's going to do something with 100 % tariffs and that's going to cause the stock market to go down 800 points and that's going to bring Bitcoin.

3:26I mean, that's a big leap. You know, sometimes people are right. Sometimes people, I saw that people were talking about that were short to market. See, I don't think it was that profound to be short. Once China did that, you knew there was going to be some type of retaliation. So I don't think that was that hard, although I didn't do it. But we can't move fast. I would have done it if we could. Well, no, because then you would have thought that the president would have moved against him. But then would have you imagined that he would move the other way, too? Which way? Meaning? Do it one way. You're trying to make the first move.

4:03Yeah. Then the president say, OK, well, I'm going to go up to here. And then then the market moved against us. And then he said, well, actually, maybe we're going to stop in this. Is Taco back? Right. You know, I guess Taco. Yeah, I'll just say, you know, after Fordo and I just don't think Taco is really very accurate that he doesn't follow through on things because he's worried. I mean, he he was in the middle of some other things yesterday. But he definitely, in terms of trade, okay, maybe there's some negotiating and bluffing. But in terms of just bluffing in other ways, I don't think you should always, you know, Iran realized he probably wasn't bluffing.

4:44No, but Besant also said there's probably room for negotiation. Well, hopefully. When it comes to China, it doesn't help anyone for just, you know, co-embargoes on goods. The two biggest economies in the world. Let's talk about the latest in economic tensions between the U.S. and China. China's sanctioning now five U.S. subsidiaries of a prominent South Korean shipbuilder. A spokesperson at China's Commerce Ministry saying that five entities have now supported the U.S. government's investigations into the Chinese maritime and shipbuilding sectors. Also today, we should tell you that China is now confirming it's begun collecting additional port fees on U.S.-linked ships.

5:24Now, that follows a U.S. decision to hit Chinese ships that are docking at American ports with steeper charges. So a lot of back and forth there. All right. President Trump making some new comments on the Middle East following his visit to Israel. On Air Force One, heading back to the U.S., he spoke with reporters about calls that leaders have made for a two-state solution in an independent Palestinian state. I'm talking about something very much new. We're talking about rebuilding Gaza. I'm not talking about single state or double state or two state. We're talking about the rebuilding of Gaza.

6:02What's the road ahead of the governing Gaza? Well, we'd have to see. I mean, a lot of people like the one state solution. Some people like the two state solution. We'd have to see. I haven't commented on that. Hard to hear on the plane. Yeah, a little bit. So with that in mind, 20 living Israeli hostages were released by Hamas, in addition to more than 1900 Palestinian prisoners and detainees held by Israel. Israel's defense forces said that four coffins of deceased hostages crossed the border from Gaza back into Israel. And at a summit in Egypt aimed at supporting the Gaza ceasefire, President Trump argued the Middle East has a once in a lifetime chance to put old feuds and hatred behind it.

6:45So what did he say? We put it in there for a reason. Did you hear what he said? They were asking him, I think, whether he supported a two-state solution. And I think he was saying, I'm just focused on rebuilding Gaza right now. There are some people who believe in the one state, some people who believe in the two state. They can catch much beyond that. But it sounded like they were pushing him on that. And he demurred, didn't answer. Because that sounded, you know, that's like running a soundbite from President Xi without a translator. It's like, yeah, that was very helpful. But you were able to.

7:13I could hear that much. I think they were pushing him, but I think the answer is he didn't give an answer. We're just rebuilding Gaza right now. Cheese will be next. Coming up on Squawk Pod, Johnson & Johnson this morning unveiling its quarterly financial report and a planned separation of its orthopedics business. CEO Joaquin Duato explains the two standalone companies on J &J's roadmap. Ultimately, it's going to create better innovation for patients and better value for shareholders. We'll be right back.

7:51Welcome back to Squawk Pod. Here's Becky Quick. And it is a very heavy earnings day. Johnson & Johnson, as we mentioned, reporting third quarter results this morning as well. It beat expectations on both the top and the bottom line. The company also announcing that it's going to be spinning off its orthopedics business with the transaction expected to be completed within the next two years. In fact, I think it's a separation. We're not sure exactly how it's going to be separated from the company. But joining us right now to talk about this and much more is Joaquin DeWado. He is Johnson & Johnson's chairman and CEO.

8:23And, Joaquin, thank you for joining us this morning. Thank you, Becky. A lot of news to run through. Why don't we start with the earnings? they were quite a bit better than had been expected, and there was a lot riding on this with the expiration of exclusivity for Stellara. This was a big year, and people were watching to see what you did. So what happened here? Thank you, Becky. It was a very strong quarter, and it's more than a strong quarter. It's a sign that Johnson & Johnson is entering in an era of accelerated growth. The quarter was very strong. Our growth was 5.4%. We beat analyst expectations both in top and bottom line.

9:05We are increasing our full year guidance for revenue and maintaining our elevated EPS guidance. And we answer unequivocally one of the questions that investors were asking from us, which is can you grow through the Stellara loss of exclusivity and the biosimilar entry? When you look at our growth in our pharmaceutical business, if I exclude Estelara, our growth was 16%. So very strong growth. How we did it, in the pharmaceutical business, we had 11 brands growing double digit. Perhaps the standout is Trenfaya, which is the product that operates in the same area as Estelara that grew 40%. So we think that Trenfaya, it's going to be bigger and better than Estelara.

9:49Is that an autoimmune disease? Exactly. It's approved now both for plaque psoriasis and also recently we are in the middle of the launch in ulcerative colitis and Crohn's disease. We also had great results in our medtech business with sequential growth, 5.7 % in our medtech business. And we had a standout in our cardiovascular business with 12 % growth, which show with our recent acquisition in calcified arterial disease growing north of 20 % and treating its one millionth patient. So as I said, we are in an era of accelerated growth for Johnson & Johnson that we see lasting for the rest of the decade.

10:28Joaquin Carvicti, your multiple myeloma drug, just was kind of pointed out by the FDA earlier this week that you have to have a warning label on this now for fatal impact on stomach or intestine issues. What's the impact of that multiple myeloma? It's a terrible disease, but they did see a couple of instances of patients who were taking that who had intestinal trouble that in some cases could be fatal? Carbicty is a transformational medicine. The growth in the quarter was 80%. When I talk to clinicians, they tell me that the risk-benefit of Carbicty is excellent. Keep in mind that Carbicty is treating patients with late-stage culture myeloma.

11:06Now we have the approval to one to third lines prior therapy, and we have overall survival. This is the closest to a cure that you can get. in the patients that were treated in the initial trials. We have about a third of the patients that are living more than five years disease-free with a single administration. So the risk-benefit of CARVIC-T remains strong. We have already 8 ,500 patients treated. We are unconstraining supply, and we continue to see CARVIC-T as the most successful CAR-T launch ever. This is only a sign of our strength in multidermyeloma. Our other standout there is Darsalex, that grew 20 % in the quarter is our largest medicine today.

11:48Today, out of five patients, four are treated with Johnson & Johnson medicines when they have multiple myeloma. We are not going to stop until we find a cure for multiple myeloma. It is a terrible disease. I'm glad to see you making progress on that. Let's talk about the separation of the orthopedics business. Why this business? Why now? Thank you. We have to be good stewards of our capital, and we have to prioritize Johnson & Johnson to focus in areas where we can identify breakthrough innovation to make progress for patients. And at the same time, we have to be able to recognize where a standalone company may be more able to compete and to win.

12:28So orthopedics is such an area. We think a standalone company, a focused orthopedics company, it's going to have the operating model and the ability to be able to drive the commanding market shares that we have today in a market which is more than$50 billion that is fueled by the aging of the population. I think that a focus company will be able to drive better margins and better growth. When it comes to Johnson & Johnson, it also helps our medtech business to move into high growth, high margin areas. Right of the bet, if I take 25 as an example, our medtech business would be able to increase its revenue growth by 100 basis points.

13:11And it's margin by 100 basis points without our orthopedic business. Why? Oh, your business without that could do that? Absolutely. But this is about 10 % of the revenue of the company. It's$9.2 billion per Depew,$93 billion that you make annually. So that's a big chunk to slice off. Yeah. As I said, we have to be good stewards of our capital. We have to be active portfolio managers, recognize and prioritize the areas in which we can be in breakthrough innovation. and at the same time areas that are going to operate better as a standalone company. This is what we have been doing for a long time.

13:46This is how you manage a large company like Johnson & Johnson and ultimately is going to create better innovation for patients and better value for shareholders. Your stock has been on a tear this year. I don't know if we can look at a one-year or a year-to-date. For the one year, it's up 18%. It's up even more than that over the year-to-date period. Why do you think that is? Year-to-date up 32%. What are investors seeing at this point? What are you seeing? Investors are recognizing that we are in a new era of accelerated growth, which is based on the strength of our portfolio, both in pharmaceuticals and in medtech, and also our pipeline.

14:21We have a tremendous pipeline. We just got the approval of a new therapy for localized bladder cancer called Inlexo that combines our capabilities both in medtech and in pharmaceuticals. It's a targeted release system that delivers a cancer treatment into the bladder. There's about a million patients with a localized bladder cancer every year. It's going to be this platform, our next more than$5 billion blockbuster. Also, staying in pharmaceuticals, we just filed for Ico-trochinra, an oral peptide that blocks IL-23. So far, for treating these autoimmune-mediated diseases, you were using biologics that are injectables.

15:00For the first time, you're going to have a medicine that is oral for treating these conditions with a similar efficacy and tolerability and biologic. We think it's going to be our next blockbuster. In MedTech, we continue to progress with our surgical robotic system called Otava, and we plan to file with the FDA beginning of next year. So we have a number of important catalysts in our portfolio that are going to drive this new era of accelerated growth. Again, year-to-date, you're up 32%. It's certainly been some momentum after five years of that stock really kind of languishing because of the talc lawsuits that were out there.

15:38Can you give us an update on where things stand with the talc lawsuits? I think there was recently a judgment of almost a billion dollars made against the company. Absolutely. And let me use the example of that judgment that you mentioned. We are fully confident that this verdict is unconstitutional and that we are going to be able to overturn an appeal. But let me tell you, the earlier days before, Or we had another verdict with the same law firm with a very similar case in which we prevail. That shows... Your strategy has been to take on every one of these cases. You're not willing to settle.

16:12You're going to fight them case by case? Absolutely. That shows what I was saying to you. Because we have a strong case. We think that what the plaintiff lawyers have presented is fake evidence. We are now looking to our Dauber hearing, in which a federal judge is going to re-examine the fake evidence, the junk science that the plaintiff lawyers are using to base their claims, and we think we're going to come out stronger out of that re-examination of the junk science. We are now back in the tort system. We're going to fight every single case. We have not paid a dime, and we do not intend to pay a dime because we're going to win either in first instance or in appeal.

16:51So we are very confident in our position there. What happened to the settlement that you all had orchestrated at one point? We have reversed that amount of money that we reserve, and now we are focused on going back to the tort system and fighting every single case. Wow. Joaquin, let's talk a little bit more about this spinoff of the orthopedics unit, or spinoff separation. You're open to doing a spinoff, but you could pursue other options. Is the business up for sale potentially? Absolutely. Our orthopedics business, as I said, operates in a large$50 billion market. It's a company that is profitable.

17:27We're going to call it the Pew Synthes. That's going to be the name. We're going to appoint an industry veteran as the person who is going to take it to the next phase. And our view is that we are open to different alternatives there. Our preparations is as if it were a spin-off because that's the longest process. It's going to take 18 to 24 months. but we are open to anything that is going to create shareholder value and is going to take the company to the next level. Have you had any bids of interest or any calls? No, we just announced today this is breaking news. It's only for today, but we expect to have multiple alternatives, and we're going to select what makes more sense for us and creates more value for shareholders.

18:09Protagonist, another company, that stock is up 30 % after the Wall Street Journal reported that you were in talks to buy that company. Are you? We don't comment on these rumors. We have to tell you that we already own the majority of the value of the main asset of Protagonist, which is ICO Trokinra, the oral IL-23 that I described. We have a great working relationship with Protagonist, and we are very happy with that arrangement. I think this is a sign of how good we are in business development. We signed a global licensing agreement with Protagonist in 2017. It didn't even make the headlines.

18:46And now we have a medicine that we have the global rights that is going to be another blockbuster. So it's another indication of how we are able to identify opportunities early on, invest in them, and make big impact on patients and big impact for our investors, too. What would you ask for the Pew? We are open to different alternatives. Just give me a range. I cannot give you a range now. We are open for different alternatives. Is it worth$10 billion? I cannot give you a range. Is it worth more than$3.5 billion? Is it bigger than Brad Bess? Look, I cannot give you a range. 1998, I think, J &J paid.

19:20And we were talking, we remember, because we're... Investors will value it, and we'll see... But I think it was$3 billion was what... So they've got$9.2 billion in sales now. $9.2 billion in sales. So I wonder, what does an orthopedic company trade at as a price to sales? Just for the industry. Price to sales. The market will value it. We are working as if we are going towards a scale. Yeah, we make money. It's a profitable company. 27 years. We have been in the orthopedic business for a long time. We have great positions in all the segments of orthopedics, in trauma, in joint reconstruction, in sports, in spine.

19:59So it's very attractive. It's going to be the largest orthopedics company in the world, and it's going to be poised for success. Who are your big competitors? The competitors there are Stryker, Smith & Nephew, CIMB Biomed, that's the area where we compete. And we are convinced that this is going to be poised for success, and there's going to be a lot of investor interest. And at the same time, as I said, it shows that we manage the company for the long term. It shows that we are an active portfolio manager. That's what our investors are asking us. We place Johnson & Johnson in a better place to deliver breakthrough innovation, and we create a standalone company which is going to succeed.

20:35You got a bone saw? I want to. We have all type of instruments. You got a bone saw. I think it's from when Steve McMillan used to bring this stuff. Yeah, he used to bring bone saws in, and he's going to use them all. We have a robot for knee replacement. We are launching a robot for spine, and we have different navigation techniques and software to help in hip replacement and other ADS. Little, amazing, whatever you make, like a hip replacement. We make hips, knees, shoulders, wrists, everything you can imagine, and we have leading positions in all markets there. Happy Halloween. Joaquin, very quickly, the Trump administration obviously has been very focused on the pharmaceutical industries.

21:15We've seen the deal that Pfizer cut to offer cheaper drugs directly to American consumers. Are you in talks to do something along those lines too? We have been talking to the Trump administration since day one, or I would say even before day one. And we shared with them similar goals about making sure that innovation is affordable for American patients, that foreign entities do not free ride in our innovation, that we bring manufacturing jobs into this country, and we announce our$55 billion plan, which is going to essentially make us be able to manufacture all the medicines that are used in the U.S.

21:51And I cannot announce anything today. I cannot share anything with you today, but rest assured that we are in direct communication with this administration, and I think we have common ground. So there's something in the works. We have common ground. Well, we hope you'll come back when you have something to talk about with that, too. We appreciate your being here today. Thank you. Thank you. And I'm glad to be here in a day that I can tell you confidently that we are in a new cycle of accelerated growth for Johnson & Johnson. And I think investors are recognizing that based on the strength of our innovation and our pipeline.

22:22Joaquin Duarte, thank you. We appreciate it. Thank you. Still to come on SquawkPod, today is publishing day for Andrew Ross-Organ's newest book, 1929. Eight years in the making to bring us inside the big stock market crash. The truth is, you know, I kept you in the dark about this project. I know. For like about seven years. I thought it was 10. Part history lesson, part true crime, complete passion project. If you're a nerd, you might like it because there's lots of end notes. And hopefully if you like it as a beach read, it's a thriller too. How he wrote it and what drove him throughout the very lengthy process.

23:01That's all right after this.

23:09Welcome back to Squawk Pod. You're watching Squawk Box on CNBC. I'm Andrew Ross Sorkin, along with Joe Kernan and Becky Quick. A lot of big stories. It's also Pub Day. Publication. Taco Tuesday. Pub Day. They call it Pub Day. In the book business. Really? Yeah. Some people have streamers come down. It's a totally different thing over in the UK. Oh, Pub Day. Well, yeah, but on Pub Day, you could publish your book, and you could drink at a pub. There you go. Is there something called a pub? Is it Pub Crawl got anything to do with publishing? Probably not. Pub Crawl is from pub to pub. The book, 1929, is out today.

23:50And I already had my copy. I guess I got an advance copy. You got an advance copy. I got an advance copy. It's not signed. I'm going to get you a signed copy. I have mine. You can just sign it. I can sign it. I want to thank you. Can I thank you just for your support of this whole thing? And the truth is, you know, I kept you in the dark about this project. I know. For like about seven years, maybe the last year. I worked at it for about eight years, and I didn't want to tell you that I was working on this. I kept asking you about the TBTF2. I know, but to be honest with you, when I first started this, I didn't know if I'd finish it.

24:25I didn't know if I'd be able to get the material that I wanted to get. I mean, I was trying in my own way to write the prequel to Too Big to Fail. And I wanted that kind of detail. And I would travel the country. It's kind of a prequel to that. It's written. I mean, the goal was to try to bring you inside the room of 1929. Because most, I mean, I think. And no one's ever done that, which is weird. We all have this general conception something terrible happened in 1929. And people are like, look, Kenneth Galbraith wrote a brilliant book. He was an economist. There's a whole bunch of people who have made different types of efforts in the 30s and the 40s.