Raphael Stevens

The Food and Drug Administration approved GSK’s RSV vaccine for adults ages 60 and older. 
The GlaxoSmithKline shot is now the world’s first fully approved vaccine that targets respiratory syncytial virus.
The FDA’s decision is a victory for GSK in a tight race against drugmakers Pfizer and Moderna to bring an RSV vaccine to the market.
The shot will prepare the U.S. to combat the next RSV season in the fall and winter.  

A GSK lab in London.
Oli Scarff | Getty Images

The Food and Drug Administration on Wednesday approved an RSV vaccine produced by GlaxoSmithKline for use on adults ages 60 and older.
The approval, the first ever globally by a regulatory body for an RSV vaccine, is a decisive victory for GSK in a race against drugmakers Pfizer and Moderna to bring to market a shot that targets the respiratory syncytial virus.

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Shares of GSK rose nearly 2% Wednesday following the approval.
GSK’s chief scientific officer Tony Wood said in a statement the decision “marks a turning point” in the company’s effort to reduce the “significant burden” of RSV.
The company will now focus on ensuring eligible older adults in the U.S. can access the vaccine “as quickly as possible,” he said. GSK will also work toward regulatory review and approval of the shot in other countries.
London-based GSK during an earnings presentation last week said it has “millions” of doses of the RSV vaccine ready to ship. 
The company plans to meet in June with the federal Centers for Disease Control and Prevention’s vaccine advisory committee to hash out potential vaccination schedules for the U.S., according to that presentation.

GSK’s shot is also inching closer to approval in the European Union. Last week, the European Medicines Agency recommended that the company’s vaccine be approved by the EU for older adults. 
The shot would help countries combat the next RSV season in the fall. 
The U.S. suffered an unusually severe RSV season last year. 
Cases of the virus in children and older adults overwhelmed hospitals across the country, largely because the public stopped practicing Covid pandemic health measures that had helped keep the spread of RSV low. 
RSV usually causes mild, cold-like symptoms. But each year the virus kills 6,000 to 10,000 seniors and a few hundred children younger than 5, according to the CDC. 

The FDA said the approval of GSK’s vaccine was based on data from a phase three trial on older adults. 
In March, an independent panel of advisors to the FDA recommended the shot based on those trial results, which found the shot nearly 83% effective at preventing lower respiratory tract disease caused by RSV. Disease was defined as two or more symptoms including shortness of breath, wheezing, cough, increased mucus production, crackles, low oxygen saturation, or need for oxygen supplementation. 
The independent panel unanimously said the efficacy data on GSK’s vaccine was sufficient. 
But the advisors also flagged potential safety issues over a nervous system disorder, Guillain-Barre syndrome, that may be tied to the shot.
A 78-year-old woman in Japan was diagnosed with Guillain-Barre syndrome nine days after receiving GSK’s vaccine, according to an FDA briefing document. She was hospitalized for six months before being released.
The document said the woman was the only case of Guillain-Barre syndrome out of the more than 12,000 people who received the shot. 
GSK said in February that there is insufficient evidence to confirm the woman got Guillain-Barre as a result of GSK’s shot.
But the FDA said at the time that it considers the case to be related to GSK’s vaccine. 
On Wednesday, the agency said it will require GSK to conduct a study to further assess the risk of Guillain-Barre syndrome and another side effect observed in a clinical trial that co-administered the RSV shot with a flu vaccine.
Guillain-Barre syndrome is a rare disorder in which the immune system attacks its own nerves, causing muscle weakness and sometimes paralysis. Most people recover completely from the disorder, but some cases can be fatal or have lasting effects.
The rate of Guillain-Barre syndrome is typically one to two cases per 100,000 people each year in the U.S., according to the National Organization for Rare Disorders.
The FDA flagged the disorder as a potential safety issue with Pfizer’s RSV vaccine for older adults.
Two people developed Guillain-Barre syndrome after receiving Pfizer’s shot in a late-stage clinical trial with more than 20,000 vaccine recipients.
Pfizer in February said it will conduct a safety study to further assess Guillain-Barre syndrome if the FDA approves its vaccine.
The pharmaceutical company is hoping to win that approval later this month.
No cases of Guillain-Barre syndrome were identified during a clinical trial of Moderna’s RSV vaccine.
Moderna plans to file an application for FDA approval during the first half of this year.  More

Darden Restaurants is buying the parent company of Ruth’s Chris Steak House for $715 million.
Ruth’s will join Darden’s fine-dining portfolio, which already includes The Capital Grille and Eddie V’s.
The steakhouse has more than 150 locations worldwide and generated $505.9 million in revenue in 2022.

A pedestrian wearing a protective mask walks past a Ruth’s Chris restaurant in Washington, D.C., on Monday, April 20, 2020.
Andrew Harrer | Bloomberg via Getty Images

Darden Restaurants said Wednesday it is buying Ruth’s Hospitality Group, the parent company of Ruth’s Chris Steak House, for $715 million.
The deal values Ruth’s at $21.50 per share in an all-cash transaction. The steakhouse has more than 150 locations worldwide and generated $505.9 million in revenue in 2022.

Ruth’s shares spiked nearly 34% in premarket trading, after closing Tuesday at about $16 per share. Darden’s stock was flat.
Ruth’s will join Darden’s fine-dining portfolio, which already includes The Capital Grille and Eddie V’s. In Darden’s most recent quarter, its fine-dining restaurants reported same-store sales growth of 11.7%. The segment’s average weekly sales had more than doubled compared with pre-pandemic levels.
The steakhouse is Darden’s first acquisition in six years. It bought Cheddar’s Scratch Kitchen in 2017 for $780 million. CEO Rick Cardenas signaled in January that the company was looking to add a tenth chain to its portfolio, for the right price.
Darden plans to hold a conference call Thursday at 8:30 a.m. ET to discuss the deal.
The agreement breaks a drought for restaurant dealmaking. Rising interest rates have made acquisitions more expensive.

On top of that, many restaurant giants like Yum Brands and Restaurant Brands International have instead focused on turning around the laggards in their portfolios and expanding their newer chains. A turbulent stock market, inflation and concerns about a recession have also kept some restaurant chains from going public.
But one big deal is expected on the horizon: the upcoming sale of Subway. The sandwich chain is reportedly seeking at least $10 billion to end more than five decades of family ownership.
Darden’s acquisition of Ruth’s precedes the steakhouse’s first-quarter earnings report, which is expected to be released before the bell on Friday. The company said Wednesday it is canceling the conference call scheduled for that morning.
Last quarter, Ruth’s reported same-store sales growth of 4.5%.
Darden expects that acquisition and integration expenses will cost the company between $55 million and $60 million. But it also anticipates $5 million to $10 million in pre-tax synergies in the first year and an additional $15 million to $20 million in the second year.
The deal is expected to close in June if customary closing conditions are met. Ruth’s CEO Cheryl Henry will stay on as president of Ruth’s Chris and report to Cardenas.
Ruth’s Chris was founded in 1965 after Ruth Fertel bought Chris Steak House in New Orleans. The terms of the sale kept her from reusing the name at other locations, so she chose to name new locations Ruth’s Chris Steak House. The company went public in 2005.
As of Tuesday’s close, Darden’s stock had risen nearly 10% this year, giving it a market value of $18.4 billion. Ruth’s shares had increased 3% this year as of Tuesday, bringing its market value up to $525 million. More

Johnson & Johnson’s consumer health business Kenvue is expected to go public this week in the largest U.S. IPO in more than a year. 
Kenvue is expected to set an initial public offering price Wednesday night and trade Thursday morning.
The spinoff will list on the New York Stock Exchange under the ticker “KVUE.”
That business unit is chock full of household names such as Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena and J&J’s namesake baby powder and shampoo.

Johnson & Johnson products on a shelf in a store in New York.
Lucas Jackson | Reuters

Johnson & Johnson’s consumer health business, Kenvue, is expected to go public this week in the largest U.S. IPO in more than a year. 
That business is chock full of household names familiar to investors and the larger public, such as Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena and J&J’s namesake baby powder and shampoo. 

Kenvue is expected to set an IPO price Wednesday night and start trading Thursday morning on the New York Stock Exchange under the ticker “KVUE.” 
The company aims to sell more than 151 million shares in the IPO at between $20 to $23 each, the company said in a preliminary prospectus filed with the Securities and Exchange Commission last week. That would raise roughly $3.25 billion at the midpoint price of $21.50. 
Proceeds from the offering and any profits from related debt-financing transactions will go to J&J, but Kenvue will retain $1.17 billion in cash and cash equivalents.
Kenvue would be valued at around $40 billion at the proposed share range, based on the 1.87 billion shares expected to be outstanding once the deal closes. J&J would hold nearly all of those outstanding shares, amounting to more than 1.71 billion shares, according to the prospectus.
Goldman Sachs, JPMorgan Chase and Bank of America are acting as the lead underwriters for the IPO. 

If successful, Kenvue would be the biggest IPO since EV maker Rivian went public in November 2021.
The spinoff alone may not completely turn around the moribund IPO market, which plummeted in 2022. But it may be a sign of life for initial public offerings in the U.S. 
Kenvue’s debut would also mark the largest restructuring in J&J’s 135-year history. J&J announced the split in late 2021 as a bid to streamline operations and refocus on its pharmaceutical and medical device divisions. 
Here’s everything else you need to know about Kenvue’s upcoming IPO this week. 

Ownership after IPO

J&J will control 91.9% of Kenvue after the IPO — or 90.8% if underwriters exercise their options to purchase additional shares, according to the prospectus filing.
J&J plans to distribute the remaining shares of common stock to its shareholders later this year.
Until then, Kenvue will qualify as a “controlled company” under the corporate governance rules of the NYSE, the filing said. That will allow Kenvue to avoid certain listing standards, including a requirement that the company’s board be composed of a majority of independent directors. 
J&J will generally be able to control matters that shareholders vote on, such as the election of directors to Kenvue’s board, the filing said. 
“Johnson & Johnson will continue to control the direction of our business, and the concentrated ownership of our common stock may prevent you and other shareholders from influencing significant decisions,” Kenvue said in the filing. 

Business performance 

Kenvue is profitable and expects modest growth over the next few years, the company said in the filing.
Annual sales growth through 2025 is projected to be about 3% to 4% globally, according to the filing.  
Kenvue posted $14.95 billion in sales for 2022 and a net income of $1.46 billion on a pro forma basis. For the first quarter that ended April 2, Kenvue estimates it raked in sales of $3.85 billion and net income of around $330 million. Those first-quarter results are preliminary.
Ten of Kenvue’s brands had approximately $400 million or more in sales last year.
Overall, Kenvue said 2022 sales were “well balanced” across the company’s three business divisions.
The company’s self care unit, which includes products for eye care, cough and cold and vitamins, generated $6 billion in net sales for 2022, accounting for 40% of total revenue.
Skin health and beauty products accounted for $4.4 billion in net sales last year, or 29% of overall revenue. Among those products are shampoos, conditioners, hair loss treatments and skin care. 
And products in the essential health division, including baby products, mouthwash and dental rinses, sanitary protection and wound care, saw $4.6 billion in net sales, representing 31% of all-in revenue.
Each of the three divisions was profitable on an adjusted operating income basis, the company said in the filing.
Kenvue noted that its global footprint is “well balanced geographically,” with roughly half of 2022 net sales coming from outside North America. 
The company will have net debt of $7.75 billion, according to the filing.

Executive management

Kenvue rounded up several J&J executives to helm the company, according to the filing. 
Thibaut Mongon, J&J’s executive vice president and worldwide chair of consumer health, will serve as CEO of the newly public company. He will also sit on the board.
Paul Ruh, J&J’s chief financial officer of consumer health and a former PepsiCo executive, will serve as CFO, and Meredith Stevens, J&J’s worldwide vice president of the company’s consumer health supply chain department, will serve as COO.
Kenvue’s chief people office, chief corporate affairs office, chief technology and data officer, chief scientific officer and group presidents for different regions around the world are also from J&J. 
The executives will lead a team of more than 22,000 employees across 165 countries and 25 in-house manufacturing sites, according to the preliminary prospectus. 
Kenvue’s global headquarters will be in Summit, New Jersey. 

Talc-cancer lawsuits 

J&J faces thousands of allegations that its talc baby powder and other talc products caused cancer. Some of those products fall under the company’s consumer health business.
But Kenvue will only assume talc-related liabilities that arise outside of the U.S. and Canada, according to its IPO filing from January.
“As unequivocally and unambiguously stated, Johnson & Johnson has agreed to retain all the talc-related liabilities – and indemnify Kenvue for any and all costs – arising from litigation in the United States and Canada,” Erik Haas, vice president of litigation for Johnson & Johnson said in a statement last week.
But Kenvue said in the filing that “such indemnity may not be sufficient” to protect the new company against the full amount of liabilities. 
J&J will continue battling talc claims in bankruptcy court. 
A federal bankruptcy judge last month temporarily halted nearly 40,000 talc lawsuits through mid-June. That decision was part of J&J’s second attempt to settle talc claims in bankruptcy proceedings.
The temporary hold will give J&J time to try to win court approval of its $8.9 billion proposed settlement with plaintiffs in the talc cases. More

CVS Health reported revenue of $85.28 billion, an 11% increase over the year-earlier period.
The company booked $2.20 cents in adjusted earnings per share in the quarter, beating Wall Street expectations of $2.09.
But CVS also lowered its earnings guidance for the year, reflecting costs related to recent acquisitions.

CVS Health on Wednesday reported first-quarter results that beat earnings and revenue expectations, but the company lowered its full-year profit guidance due to costs related to recent acquisitions.
Shares fell more than 1% in premarket trading Wednesday.

Here’s what CVS reported compared with Wall Street’s expectations, based on a survey of analysts by Refinitiv:

Earnings per share: $2.20 adjusted, vs. $2.09 expected
Revenue: $85.28 billion, vs. $80.81 billion expected

For the quarter ended March 31, CVS posted profit of $2.14 billion, or $1.65 a share, compared with $2.35 billion, or $1.77 a share, a year earlier. Excluding one-time items, the company reported earnings of $2.20 per share for the period.
CVS reported total revenue of $85.28 billion, an 11% increase over the $76.83 billion a year earlier.
CVS lowered its 2023 adjusted earnings guidance to a range of $8.50 to $8.70, which is 20 cents lower than its previous projection of $8.70 to $8.90.
The company lowered its guidance due to costs associated with its $8 billion acquisition of Signify Health and its $10.6 billion purchase of Oak Street Health, among other items.

CVS’ health services segment booked revenue of $44.59 billion, a 12.6% increase over sales of $39.62 billion in the same quarter last year. The division includes its pharmacy benefit manager CVS Caremark and health-care services delivered in medical clinics, through telehealth and at home.
Pharmacy claims processed in this division increased 3.7% compared to first quarter 2022 due in part to an elevated cough, cold and flu season.
CVS’ health insurance segment generated revenue of $25.88 billion, a 12% increase from the year before. The division includes Aetna Affordable Care Act, Medicare Advantage, Medicaid and dental and vision plans. Total membership in CVS medical plans increased by 1.1 million to 25.5 million.
The insurance plans’ medical benefit ratio increased to 84.6% from 83.4% a year earlier. This ratio is a measure of total medical expenses paid relative to premiums collected. A lower ratio typically indicates that the company collected more in premiums than it paid out in benefits, resulting in higher profitability.
And CVS’ retail segment booked revenues of $27.92 billion, and increase of 7.8% compared to sales of $25.89 billion in the first quarter of 2022. The division includes prescriptions dispensed in its 9,900 brick-and-mortar drug stores, infusion services, testing and vaccine administration.
Prescriptions filled increased 2.5% compared to the same period last year, again due in part to the elevated cough, flu and cold season. The increase was offset in part by a decline in Covid vaccinations. Excluding this, prescriptions filled increased 4.5%.

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Patients who received donanemab demonstrated a 35% slower decline in memory, thinking and their ability to perform daily activities, according to clinical trial data from its maker, Eli Lilly.
The monthly antibody infusion also significantly reduced brain plaque that is associated with Alzheimer’s disease.
Though the results are promising, donanemab also carries a risk of brain swelling and bleeding that in rare cases can be severe and even fatal.
Lilly plans to apply for Food and Drug Administration approval of donanemab as soon as this quarter.

An Eli Lilly and Company pharmaceutical manufacturing plant is pictured at 50 ImClone Drive in Branchburg, New Jersey, March 5, 2021.
Mike Segar | Reuters

The Alzheimer’s treatment donanemab, which is made by Eli Lilly, significantly slowed progression of the mind-robbing disease, according to clinical trial data released Wednesday by the company.
Patients who received the monthly antibody infusion during an 18-month study demonstrated a 35% slower decline in memory, thinking and their ability to perform daily activities compared with those who did not receive the treatment, Eli Lilly’s data showed.

Patients who took donanemab were 39% less likely to progress to the next stage of the disease during the study, according to the trial results.
But the treatment’s benefits will have to be weighed against the risk of brain swelling and bleeding that can be serious and even fatal in rare cases. Three participants in the trial died from these side effects.
Eli Lilly’s stock was up more than 6% in premarket trading Wednesday.
Lilly plans to apply for Food and Drug Administration approval of donanemab as soon as this quarter, according to the company. The trial studied individuals in the early stages of Alzheimer’s who had a confirmed presence of brain plaque associated with the disease. 
Dr. Daniel Skovronsky, Lilly’s chief scientific and medical officer, said donanemab demonstrated the highest level of efficacy of any Alzheimer’s treatment in a clinical trial. The company is working to get donanemab approved and on the market as quickly as possible, he said.

And Skovronsky believes the FDA feels the same sense of urgency. 
“Every day that goes by, there are some patients who pass through this early stage of Alzheimer’s disease and become more advanced and they won’t benefit from treatment,” he said in an interview with CNBC. “That’s a very pressing sense of urgency.”  
Lilly previously applied for expedited approval of donanemab.
The FDA rejected that request in January and asked the company for more data on patients who received the antibody for at least 12 months. Lilly said the data wasn’t available at the time because many patients were able to stop dosing at six months because the treatment cleared plaque quickly.
Nearly half of patients — 47% — who received donanemab showed no disease progression a year after treatment began, compared with 29% who did not receive the antibody, according to the data released Wednesday.
More than half of patients completed the treatment in the first year and 72% completed it in 18 months due to clearance of brain plaque. 
In a separate measure, patients who received donanemab showed 40% less decline in their ability to conduct daily activities at 18 months. This means they could better manage finances, drive, pursue hobbies and hold conversations than those who did not receive the treatment. 
“These are the strongest phase 3 data for an Alzheimer’s treatment to date. This further underscores the inflection point we are at for the Alzheimer’s field,” said Maria Carrillo, the Alzheimer’s Association chief scientific officer, in a statement.

Brain plaque reduction

Donanemab targets brain plaque associated with Alzheimer’s disease. The treatment significantly reduced the plaque as early as six months after treatment, according to Lilly. Many patients saw such significant reductions that they tested negative for plaque presence on their PET scans, according to the company.
Donanemab cleared the plaque at six months in 34% of patients who had intermediate levels of a protein called tau that can become toxic and kill neurons. At 12 months, donanemab cleared the plaque in 71% of patients with the same tau levels.
“It should be unequivocal that drugs that remove plaque, particularly if you can remove plaque completely and do it quickly, can lead to very significant clinical benefits for patients,” Skovronsky said in an interview.
“The earlier in the disease course you do this, the more you can slow the disease,”  he said.
Dr. Eric Reiman, executive director of the Banner Alzheimer’s Institute, said the results do not necessarily mean the plaque is completely gone, but donanemab cleared the plaque to such a degree that the treatment removed measurable evidence of it. The Banner Alzheimer’s Institute had two physicians who participated in the donanemab trial as principal investigators. 

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Brain swelling and bleeding risk

Donanemab can cause brain swelling and bleeding in patients that in some cases can be severe and even fatal. Three trial participants died from these side effects, according to Lilly.
These types of side effects have been observed in other Alzheimer antibody treatments such as Eisai and Biogen’s Leqembi, which received expedited FDA approval in January. 
Reiman said he’s encouraged by the potential clinical benefit to patients but it’s important to be clear about the risks.
“We also need to be clear that there are side effects, including an uncommon but potentially catastrophic risk,” said Reiman. “And we need to continue to do our best to understand what that risk is for individual patients, to inform patients and family caregivers, and do everything we can to mitigate that risk,” he said. 
About 24% of patients who received donanemab showed brain swelling on an MRI, but only 6% displayed actual symptoms. About 31% of patients had small brain bleeds called microhemorrhages, compared with 13.6% among patients who didn’t receive the treatment.
Lilly said the majority of the cases of brain swelling and bleeding were mild to moderate and patients stabilized with the right care, but cautioned that serious and life-threatening events can occur. About 1.6% of the swelling and bleeding cases were serious, according to Lilly. 
Skovronsky said every patient would need to have a discussion with their doctor that weighs the potential benefits of donanemab with the possible risks. 
“On a population basis, our view is its benefits outweigh risks,” Skovronsky said.
“FDA is the steward of that for the U.S.,” he said of the risk-benefit analysis that will determine whether donanemab wins approval. More