Sanofi (SAN) Earnings Call Transcript & Summary

Well, good afternoon, and good evening, everyone. This is Mark Purcell from the Morgan Stanley European biopharma team. It gives me great pleasure to be introducing Sanofi today. Before I introduce the speakers, there is some disclaimers I need to read out. So please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. And if you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclaimers. So if you have any questions, please reach out to your Morgan Stanley sales representatives. But I'm going to hand over to you guys at Sanofi and our Q&A. So we're in a very lucky position. We have 2 people today. Dietmar Berger, who's the Global Head of Clinical Development and the Chief Medical Officer at Sanofi; Bill Sibold, who was presented with me 2 years ago; he's the Executive Vice President and Head of Sanofi Genzyme. So we have science and we have commercial, and we've got quite a lot to get through. So gentlemen, thank you so much for joining us. We really appreciate you taking the time. And I'll kick off, and then I'm going to hand over to Thibault to carry on with the Q&A.

But I thought that we'd start with Dupixent. Obviously, you've put out a EUR 10 billion sales target at the Capital Markets Day in December last year. Some people think it's ambitious. You guys obviously feel it's a question of when, not EUR 10 billion. So could you help us sort of understand, I guess, to begin with, how maybe COVID has disrupted the patient flow and where we are in terms of that? Obviously, sales analyzing at EUR 3.5 billion. And so it's done very well despite COVID. And then we'll move on to some of the drivers, obviously, geographical expansion and new indications. So maybe, Bill, I guess to start with you in terms of the COVID situation and what you're seeing trending in the marketplace.

Yes. So thanks a lot, Mark. It's a real pleasure to be here. And with Dupixent, we remain extremely confident about the exceeding EUR 10 billion. This is just a really fantastic asset. I'd tell you, I worked on a lot of things in the industry, and I don't think I've ever experienced anything quite as exciting as Dupixent. So we remain extremely, extremely confident about it. During COVID, you can't avoid the fact that for a large portion of the world, you had offices that were closed, and therefore, patients just couldn't get in. Now telemedicine filled a lot of that gap or some of that gap, but that was starting really from 0 for people trying to adapt to a new way of treating patients. So what we've seen is since COVID-19, and this is -- I'll make this specifically for the U.S. We've seen that, for instance, NBRx has really come back to roughly the pre-COVID levels. So as the practices open, physicians are working around ways to get to patients and patients are making their way in, I would say the business is very much on track. Now thinking about the future and where we're going to get the growth, it really is from 3 areas. It's from our continued bio penetration into the existing therapeutic care or existing indications that we're in with AD and asthma, geographic expansion and then expansion into the younger population and also new type 2 disease indications that we'll go into. So first of all, with the bio penetration into AD and asthma, you saw our Q2 was strong. We had very resilient performance of EUR 858 million globally. That was 70% year-over-year and 11% quarter-to-quarter growth. And that was despite the challenges that I mentioned with COVID-19. From a geographic expansion perspective, China was really the next big market that we've moved into, and we've had some early signs of success there. And then from an age population perspective, the AD 6 to 11 population launched in the U.S. We were approved in May of 2020. And we've already seen 500 unique prescribers. So that is really a testimony, I think, to the efficacy and the safety in our space. And then from new indications, we've got our second COPD pivotal trial that's been initiated and are obviously positive Part A of EoE pivotal trial. So we have a lot going on that is going to fuel this growth for the future.

That's very clear. And if I could stay with commercial and then flip to some of the new indications with maybe with Dietmar. People are sort of looking at something like psoriasis or even going back further RA in terms of areas where you've seen biologic penetration increase. Obviously, RA has taken a long time. Psoriasis, we got into the 20s fairly quickly. Obviously, there are several parts to the jigsaw. And I'm not going to sort of pull you on specifics. But what's to stop AD being like psoriasis in terms of the level of uptake of biologics? And obviously, you've talked to JAKs, maybe drugs that come after Dupixent for various reasons. But a rising tide will kind of carry all boats. And so how do you think about sort of penetration rates into AD, for example, as you sort of build out and you see other treatments coming through? So that's one for you. And then the second one for you, before moving to Dietmar, is thinking about something like China. I mean, we all follow the U.S. prescription data because we have the information in front of us. And we're very lucky we get European prescription data. But it's tough for us to understand China, in the sort of best of times, really. But it seems that sort of digital is going to be very important there. We've seen that with other launches recently, reaching out to sort of the middle class Chinese who are here on social media and respond to digital ads. So could you talk a little bit about how we should think about the contribution, specifically, from China?

Okay. So maybe the bio penetration question first. Let me jump to the answer then back up. So we think that the bio penetration is going to be similar or better than with psoriasis and AD. Now you have to consider that psoriasis has had about a 15-year head start, but the derms are used to biologics. So we would expect that the penetration rate should be a little bit faster with AD for biologics than it was for psoriasis. Also, we believe that what's going to drive that is that the safety profile is far better with Dupixent than it was with any of the early psoriasis products, which really hampered some of that uptake. You have to remember, the dermatologists are inherently quite safety conscious. And that is going to absolutely impact the uptake of products. Now we think that there's plenty of room, obviously, then to expand in AD. We're the trailblazers here. As the competition comes on, to your point earlier, we think that will help to accelerate the penetration into more advanced therapies. Specifically, with China, look, China is a big priority, not only for Dupixent but for Sanofi overall. It's one of our largest markets. We hold great promise for it for the future. And early launch, we think that we've had some pretty good successes so far. In the first week, we had over 200 patients that were receiving Dupixent, and we really believe that Dupixent can be a blockbuster in China. And China is really in this interesting state at the moment where it is transitioning, and we've seen that just from the speed of events taking place. Our launch, first of all, was done in record time between approval and availability. So from the time of approval till availability, it was 25 days. And we cut in half what had been the former high watermark, if you will, being with Cosentyx at 50 days. So we've moved incredibly fast and our approval was just 6 months after submission. So it's really changing fast in China. Now the NHSA announcement on August 17 allows us to think about an earlier submission of Dupixent for NRDL. And that's obviously a big point for us. And that's better than what we had communicated on our Q2 earnings call on, I think, July 29. So this is another example of how China is moving quicker. We're actively considering the opportunity to accelerate potential inclusion of Dupixent in the NRDL. Obviously, that opens up China in a pretty more significant way for us. And we'll be able to report out on that. You're right. The data is just not as readily available for the performance in China, and we'll be reporting out on it on a regular basis so that you can keep track. But we expect it's going to be an important market for us. We see blockbuster status. We're really excited about it.

Super useful color. Thank you, Bill. Dietmar, over to you. I guess, COPD, most people are sort of treating as a bit of a call option. It's a sort of tricky one. But when you sort of look through all the other indications that are coming through and you had your Dupixent Day earlier this year, and you sort of reflect on the investor feedback, et cetera. Where do you think you have the easier wins? Some of these indications, we don't know so well. This is new to all of us. But it's something like CSU or PM, these are these are significant opportunities. So could you kind of talk to the indications where you feel maybe a little bit sleepers and to when we should expect the data as well?

I think they -- you're absolutely right. They are large indications. And let's just step back for a second and say, what Dupixent really does, it addresses type 2 inflammation. We understand a lot more about that now. It's about IL-4. It's about IL-13. It's about targeting those and hitting those hard, which then gives you strong clinical outcomes in any kind of type 2 inflammatory disease. And that's what has driven our future investment into these additional indications. And you've been speaking about COPD. We had the COPD readout. I was thrilled to see that we passed the hurdle. As you know, this was actually only seen by a data monitoring committee, but it ungated our second Phase III study. And that study, we actually started immediately within a month after the readout. And then we have a whole host of additional studies ongoing. We have 2 readouts in the second half of '21. One is prurigo nodularis. The other one is chronic spontaneous urticaria. And while these are all mouthfuls, right, they are pretty large indications for CSU, for chronic spontaneous urticaria, there's about 300,000 biologic-eligible patients at this point in time. Xolair is currently the only biologic therapy in that area, and it has reported $900 million in revenue, right? So we believe there is a clear benefit. And again, because it's a clear type 2 inflammatory disease, we believe in the potential of Dupixent in the indication. Prurigo nodularis, U.S. prevalence, around 300,000; about 1/4 of those, around 75,000, is biologic-eligible. No current treatment option out there. So again, we believe this is a really exciting opportunity. And that's how we designed the overall development program, and we have additional indications that we've lined up. And we're kicking off several studies also this year.

Okay. That's really clear. Very exciting. I'm going to pass over to Thibault for hemophilia. Thibault?

Thank you, Mark. So I guess my next question is about the -- a couple of assets, which are in late-stage pipeline and obviously, about transition to the commercial organization. And obviously, this is fitusiran and BIVV001. And my first question is to Dietmar. What should be looking into -- what should we be looking for in the pivotal data for both of these programs next year in terms of further building the clinical differentiation for these 2 assets? And then, if I can ask Bill, to follow up on the commercial positioning of these assets and will you see very competitive hemophilia marketplace?

Yes. So I'll start. And as you say, the hemophilia marketplace is very competitive. However, we believe what's really missing for those patients is protection from bleeding events beyond what you see in the current limitations. And we do see that patient preference and what patients are looking for is very different, right? Some people say, I'm getting all the benefits I need out of a factor therapy, but what really bugs me is I need to infuse that like 3 times per week. Others are saying, I'm looking for a nonfactor therapy. I want less frequent injections, right? So we are -- from what we have as a portfolio, we're actually very well positioned with these 2 new agents that you mentioned with BIVV001 and with fitusiran. And they're essentially, in my view, they are complementary. BIVV001 is a factor therapy with much improved pharmacokinetics. It's very elegant engineering. There was just a paper in the New England Journal of Medicine this year, and the editorial called the molecule an amazing achievement, right, amazing progress. Which basically means you inject this drug once a week. That's the vision for it. You get near-normal levels or normal levels of protection for these patients for 3.5 to 4 days, and then you get protection at really strenuous levels. So people can conduct strenuous activities for the remainder of the week before you have to inject again. So we're looking for normalization. We're looking for benefit when it comes to joint protection. And we're looking for patients really being able to lead a normal life. With fitusiran, which is obviously an RNA-based therapeutic that reestablishes the balances between procoagulant and anticoagulant activity, you're going to a low volume once a month subcutaneous injection. So this would be the first true once-monthly injection, subcutaneous, and that with really good efficacy and safety in the early studies, we see an annualized bleeding rate of 0.84 with a monthly injection, which is about half than what we see with other nonfactor therapies and the factor therapies you cannot even use on a monthly basis. Plus, fitusiran can be used because of the mechanism of action in hemophilia A and B and in patients with inhibitors and non inhibitors. So back to your question, what you're looking for in those data is obviously, for BIVV001, joint protection, the type of bleeding events or any bleeding events that we see. In the early studies, we haven't seen any bleeding events. It was good. We've just presented an early 4-week study where we didn't see any bleeding events over the 4 weeks with prophylactic use, but also no adverse events, no antibody development. So really clean profile. And then for fitusiran, we also presented early data. That's this low ABR rate, but also no thromboembolic events in patients that were adequately treated. So we're very encouraged by the profile, and you're basically looking at this benefit/risk profile in both of those readouts next year.

Yes. So maybe -- I mean, Dietmar covered a lot of it about how we're thinking about it and what the attributes are of each product. I think as we take a look at this market, obviously, we've been in it now for quite a while through our Bioverativ acquisition. And you see -- you've got your factor and nonfactor segments emerging, so to speak. Gene therapy, I think, remains a question mark for the moment based upon kind of the latest evolution of the products in the space. So if we just focus on the factor and nonfactor, even with a nonfactor in the market today, the factor represents the overwhelming majority of patients. And we believe, as Dietmar so eloquently talked about, that BIVV001 really is taking factor therapy to a whole new level from an efficacy perspective and from a convenience perspective being truly once a week. And if you have patients that want to remain active and almost have a normal -- be able to resume a normal life, that really is a wonderful opportunity. And clearly, it's got all the experience that the community has and patients have with factor. Now if you're looking at patients that are in the non-factor world, and obviously, we've seen with emicizumab, the interest there. I mean, here, with fitusiran, we have a potentially transformative best-in-class nonfactor for all patients. And we're the only truly once-monthly with a single subcutaneous dose. And one of the learnings over the last 2 years in hemophilia is that convenience does matter as well and that people are really interested in having a subcutaneous option. So as we see the market go into those 2 segments, factor nonfactor, for the moment anyways until gene therapy arrives, we think that we have really kind of the best-in-class for both. And that puts us in a really strong position to be able to compete effectively.

That's very clear. I would like to now move on to the BTK inhibitor '168 that you partnered with Principia and then that you directly acquired. I think the field got a little bit more crowded recently with Roche starting a pivotal study for their own BTK inhibitor, fenebrutinib. And in the past, you talked -- I mean, Sanofi talked extensively about the differentiation between your BTK and the one from Merck. So could you give us your view on the differences between, obviously, your product and what you see in the clinical profile of fenebrutinib? And if I can just quickly follow on. Now that you own Principia, you have complete freedom to pursue additional clinical trials in other indications with '168. So could you give -- talk to us a little bit more about your ambitions in additional neurology indications beyond multiple sclerosis?

So maybe I'll start and -- the -- so if we go back to what we want to achieve in multiple sclerosis, then it's about addressing unmet medical needs in relapsing-remitting, which is really about the progression that you still see in those patients. And then, it's about addressing progressive disease. And those are clear unmet medical needs that the current therapies do not cover, and we believe it's due to progression in the CNS. And there are some expressions of that, for example, when you look at MRI pictures, that describe that type of progression. We honed in on BTK as a key mechanism because we know that the B cell space plays a role, but we are extending beyond that. It's not only peripheral B cells. It's also B cells and microglia in the brain. That's where we think the progression is driven. And it's also this balance of innate and adaptive immunity, meaning you need a brain-penetrant molecule that really inhibits at the level of the B cell receptor of the BTK and that impacts that kind of biology. And when we look at our data, we've done a Phase II study that's only a 12-week study that led to an 85% reduction of the gadolinium-enhancing lesions with a once-a-day oral medicine, which in my mind, is unprecedented and puts us right up there as a potential best-in-class medicine. That data for us has been so convincing that we've kicked off a large program with 4 Phase III studies, 4,000 patients. We did that in record time within 4 months after readout of the Phase IIs, and with a focus on relapsing-remitting and progressive MS, right? When you look at the competition, we've spoken a lot about evobrutinib, so I will skip that. If you look at fenebrutinib, then it's a different molecule, right? The brain-penetrant seems to be lower than what you see for our molecule. By the way, we just mentioned the name, it's tolebrutinib. We just published that a week ago. So fenebrutinib brain penetration seems to be lower than tolebrutinib. Also, they have this non-covalent binding mechanism, which means that, most likely, you need more drug at the target site. And when you look at their RA data, they're actually dosing the drug twice a day. So you need a different type of pharmacokinetics. There's no data out there currently besides, let's say, an initial poster about preclinical activity that was at ACTRIMS that seem to indicate higher activity for tolebrutinib, actually. But there's very little out there about fenebrutinib at this point in time. But I have to say, putting all these pieces together, I'm very encouraged about the profile of our molecule. And I really think it has the potential to be best-in-class even in the face of new competition coming in.