Sanofi (SAN) Earnings Call Transcript & Summary

So good morning and good afternoon, everyone. My name is Mark Purcell. I'm one of the analysts at Morgan Stanley covering European Biopharma. It gives me great pleasure to introduce Sanofi today. We have 2 speakers: Dietmar Berger, who's SVP, Global Head of Development and the Chief Medical Officer of Sanofi; and also Brian Foard, who's the Global Head of Dermatology and Respiratory. We're also supported by the IR team. We've got Felix, Arnaud and Eva there in the background. [Operator Instructions] For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any other questions, please reach out to your Morgan Stanley sales representative. So without further ado, Dietmar, I'll hand over to you for some introductory remarks, and then we'll sort of start going through the Q&A.

Yes. Thank you, Mark. And obviously, it's a pleasure to be here and talk to you about where Sanofi is currently and about any questions that you have, obviously. Really, as a quick introduction, we have laid out our strategy in 2019 at the Capital Markets Day. We have highlighted a few key assets at that point in time. We've highlighted our ambition for Dupixent but also for the broader portfolio. And to me, it's good to see how far we've come over the last 2 years that really the strategy still holds and still stands. And we're doing something that I consider it's not without precedent but it's obviously a challenge which is transforming the company and rebuilding the pipeline at the same time. And personally, I feel we have made really good progress on that over the last 18 months. We've significantly transformed the pipeline at a much stronger focus, have added a much stronger focus on immunology and oncology as well. We've rigorously prioritized our project. We started 10 Phase III trials across 4 major assets. And we believe they have transformational potential like Dupixent, tolebrutinib, amcenestrant, itepekimab. And I'm sure we're going to talk about some of those. We've also built a comprehensive pipeline in immunology with earlier assets. We're doing the same in oncology. I think we have a bit further to go on that side. We're advancing in gene therapy. We're taking our new genomic medicines unit really serious and putting a lot of effort behind this because we feel it's a real opportunity for us. And we're also looking forward to really the key milestones coming up for the second half of the year like the Dupixent data in eosinophilic esophagitis and pruritus nodularis and, of course, the amcenestrant second, third-line data. We have data coming with Sarclisa and Libtayo in first-line therapy in myeloma and in non-small cell lung cancer. So I think we are really on a good track here. And we also had a strong performance in the first half of 2021, as you've heard in our second quarter. So that's as an introduction and absolutely happy to speak about any of these topics.

That's really helpful. I mean if we start off with amcenestrant. It's almost seen as a sort of stepping stone to the innovation that you're bringing through within the company. Obviously, it's a significant category. It's a competitive category as well. But you're going to be first in terms of generating pivotal data. When we spoke to KOLs, they seem to think that the [ lexibar ] was relatively low in terms of the standard care in this refractory patient group. But some of our competitors have said it's challenging, and investors seem to be on the fence a little bit here. So can you sort of help us understand or sort of frame your expectation here? And how much should we read through from this first data point to what's coming up, obviously, behind?

Yes. I think that's an important question and a question that we all need to understand. If we go back for a second, we believe amcenestrant, which is an in-house development, is a really differentiated asset. It goes back to the biology and the structure of the molecule, which is different from what we see with competitor molecules, which is also different what we see with fulvestrant. We've got really good target coverage. And the data that we've seen so far, the clinical benefit rate that we spoke about at ASCO earlier this year, also the safety really supports a best-in-class profile in our view. So now we have these different studies coming, AMEERA-3, obviously, in the second and third-line setting. For us, we embarked on that study because it's the fastest way to a potential approval, right? It's not the largest market. The largest markets are definitely in first line and in adjuvant. And also, the profile of the kind of the studies is somewhat different. If you think about the AMEERA-3 study, it's really a study of 1/3 of amcenestrant versus largely a population that's treated with another SERD with fulvestrant, right? So it's a high bar study. And in that sense, we're looking forward to learn a lot from that study. We had a futility analysis earlier during the year, right, which is encouraging us, obviously. We've continued the study. The DMC has decided to continue the study at that point in time. So we're looking forward to the readout. But at the same time, it's important to understand that the readthrough into these other indications is more limited because in the first-line study, which is the study of palbociclib combination of amcenestrant versus an aromatase inhibitor, plus palbociclib is a different kind of bar. And then obviously, in the adjuvant setting, we're looking basically at a restricted high-risk population, which is a larger adjuvant population, but it is a population where we really compare against tamoxifen, which again is a different kind of bar. And I think the unmet medical and the opportunity in the adjuvant setting is just of another magnitude. So what we're really looking forward to is to learn about, overall, the efficacy, learn about how does it compare in the second, third-line setting, also learn more about the safety, obviously. But we believe the read-through to the other earlier indications is also somewhat limited.

And in terms of the first-line trial, AMEERA-5, I mean, one of the questions that's come up from investors is sort of drug interaction with CDK4/6. Is that something that you think is important? I mean obviously, a number of drugs do have drug interactions with Ibrance, with palbociclib. But what are we sort of talking about here? And do you feel that it is, in any way, a hindrance versus competitors?

Yes. We don't think it's a hindrance also versus competitors. With all these drug-drug interactions, it's important to consider what is the level of the interaction. And by all measures, what we think, it's a moderate interaction. That's also what the data have shown. And there's really no restriction when you combine palbociclib with a moderate interaction here. And that's also -- even if you go back to the label of palbociclib, there's also a lot of dose reductions and dose adjustments for palbociclib that are already actually allowed. And the other point that I want to make around this is that we do have combination data at this point. I think that's also a strength that when you compare amcenestrant versus some of the competitors, that we have combination data, and we're taking a dose forward that we've actually already described data for, right? So we've seen really good efficacy and also, I think, good safety in the combination. And that includes, obviously, this underlying moderate interaction that we see. When you compare that with some of the competitors where they had to really drastically reduce the dose moving forward into the first-line setting and the available data at this point for the dose that they take into Phase III is much more limited, I still believe we're in a good spot here. And we're really looking forward to see the data there. We're also encouraged by the fact that recruitment is going really well at this point. We're actually somewhat ahead of schedule. And we're also encouraged by the fact that we get broad support from cooperative groups also for the combination with amcenestrant, right, what we've seen in the I-SPY study that they have chosen amcenestrant for their study but then also the adjuvant study, AMEERA-6, where we got broad support from groups like the Breast International Group, the EORTC, the Alliance, which is really good to work with these groups and try and move amcenestrant closer to patients.

Got it. And in terms of AMEERA-6, Dietmar, can you sort of help us understand sort of how -- what proportion of the population this captures and whether you plan to start an all-comers adjuvant trial, like one of your competitors, your old sort of house [ Roche ] have actually started there.

Yes. The AMEERA-6 study, just to make that clear, is really a Phase III monotherapy adjuvant study in those high-risk patients that are not able to tolerate AI, right? So that's a subgroup, but it's a large subgroup of the adjuvant setting, and it's actually a subgroup that has a high unmet medical need. We've chosen that population because, again, we believe in the adjuvant setting. This is potentially one of the fastest possible ways to really get patients -- to really get amcenestrant into the adjuvant setting and make it available to patients in the adjuvant setting. We've also really with that study managed to be the first to start a pivotal study with amcenestrant. It's true Roche is, as far as we know, conducting a study in the entire adjuvant setting, including both high-risk and moderate-risk patients. I will remind you of some of the experience we had more recently with the CDK4/6 inhibitors, where really the patient selection and the exact setting where the studies are conducted are of major importance and really impact your probability of success for the different settings. We believe the high-risk patients not able to tolerate AI, the population where we conduct AMEERA-6, has a high unmet need. We'll see events more quickly. That makes the study more rapid. And we also believe that this is a population that will benefit basically from a SERD in that setting, right? And the other question was, do we consider other adjuvant studies? Yes, we are. And we've not spoken about that a lot at this point. But we believe that amcenestrant needs to be available for the -- for really as broad as possible a patient population. We're developing it as an endocrine backbone. And in that sense, we will also obviously discuss additional adjuvant studies.

All right. Thibault, I'll hand to you for some Dupi questions.

Thank you, Mark. So yes, our next set of questions is more about Dupixent, which is obviously one of your key growth driver for the medium and even long term. Maybe first, if we could start with the state of patient penetration in the U.S. and Europe and also the major markets for atopic dermatitis because obviously, one of the key drivers behind the growth of the product has been starting from the very low penetration in the atopic dermatitis market. So could you provide us with an update on where you stand in terms of patient penetration and how we should expect the patient penetration to evolve in the future? Is it more in a linear fashion? Or given the COVID-19 impact, as it slowed down, should you expect an acceleration as we get out of the pandemic? So very interested to know where you stand on this topic.

Yes. Thanks, Thibault, so much, and it's a great question. And again, for us, we've talked about this a lot. It's a really exciting marketplace to go into because prior to dupilumab, there were really no effective therapies and certainly no innovative therapies like Dupixent. And so we are at the beginning of that journey really to drive bio penetration rate. We said that would be a key source of growth. We're really happy. We're extremely static, quite frankly, with the performance that we've had thus far since the beginning of launch in spite of the fact that really, I mean, about 25% of our life thus far for Dupixent has been during COVID times. So it's actually been quite interesting. But -- so today, I think as we've expressed in the past, we have around 6% bio penetration in the 6 years and up. That is actually at a faster rate than we had spoken to about this before in the past that we anticipated a faster rate than maybe you've seen in psoriasis in the past. As an example, if you look at where they were about the same time frame, it's about 4% to 4.5%. So we are seeing a little bit faster pace of bio penetration, which is really great. Now we expect it to continue to develop over time. And actually, if you look at the adult specifically, we're actually even seeing a little bit higher bio penetration, upwards of the 7% range. It's 6.9% now, which is what we anticipate seeing actually in the future as well. We've said over the long term, we think that the bio penetration will grow much like what the psoriasis did but probably a little bit quicker. So upwards of the 25% range. We expect in the very young populations more in 15% to 20% range. So now to your question about over time, how do we expect that to grow, we think it definitely will be an element of linear for sure. I mean there'll be this constant growth as physicians continue to get more and more comfortable with prescribing a safe and effective therapy for patients. They'll move more into the moderate space as well and will continue to grow. Certainly, as additional noise comes into the marketplace, and we've said this before as well, so as additional products and competitors come into the place and there's more awareness around effective therapies, we think that, that will also grow bio penetration. And we've also seen it in other markets. So again, very good spot right now, long way to go. So there's lots of opportunity for continued growth in the market, but we feel like we're in a really great spot.

And I want precisely to follow up on the last point you made. So we start to see competition emerging in atopic dermatitis, at least in the kind of high-efficacy biology drugs. Obviously, I think LEO Pharma recently launched tralokinumab in Europe. We also see some JAK inhibitors, who have been launched in Europe as well. So just if you could tell us what early impact you are seeing or expecting on the market from this emerging position.

Yes. I think we've said it before in the past. It's not often that you get probably the best mechanism of action from the very, very, very beginning. And we really feel like we're incredibly fortunate and [ incredibly unfortunate ] what the science has continued to do to unlock the patient potential here. We really believe that IL-4 and IL-13 are key and central drivers of type 2 inflammation, and they play critical roles obviously in the treatment of diseases like atopic dermatitis. And just anything less than that is incomplete. So when you ask questions about IL-13, we've said they're missing an element. Anything such as the JAKs are a bit too broad. It's kind of the Goldilocks analogy where we've kind of believed we've gotten it just right for these particular patients because IL-4 and IL-13 are so key and central. Now that said, I think that we've also -- the physicians now out in the marketplace and patients and caregivers as well, parents and families have all now -- for multiple years, have gotten a great experience with dupilumab. And so we also feel like that has put us in a great position as new competitors come into the market. Now ultimately, back to what I said before, noise into the marketplace will help grow the market. But as we see it today, we believe each of those key competitors are going to be reserved for second-line therapies or maybe some very small niche patient populations. But broader first-line therapy Dupixent, from everything we're hearing from physicians, is going to be -- continue to be first-line therapy for these patients.

If I can just briefly add an aspect here, which is really the -- it's all going back to the type 2 inflammation and the biology there. And it seems that IL-4 and IL-13 are really the drivers of type 2. And we see that across the board. And also when you look at the IL-13s only, they're just not as effectively addressing the type 2 inflammation. And we see that they failed in other type 2 diseases like asthma and others, efficacious in the studies in AD. So it's really this paradigm again that's supporting Dupixent really in this market.

I just want to maybe insist a little bit on the emerging data we have seen from Eli Lilly and Almirall as they recently disclosed positive headline data with more than 50% of patients reaching the EASI 75 endpoint, so 75% of skin clearance in that Phase III. So we don't have the detailed data, but we see this headline is encouraging for them. And I think their message is focusing on fast onset of action on each improvement and some positive impact on sleep outcomes. So I just wanted to know if you could comment maybe a little bit more precisely on how you see Dupixent being positioned compared to this message.

Yes. And again, I think it's a good question. That data just recently came out -- or that news just recently came out. So I think as you appropriately stated, we really didn't see much from the press release. There really wasn't much in there. But we obviously have their Phase II data. We obviously have the data, obviously, for the current IL-13 that has just recently been approved, Adtralza or tralokinumab actually as well. And again, what we're seeing pretty consistently, if you go back to the Phase IIs and the Phase IIIs, you see this inadequate response from just targeting IL-13. So back to what Dietmar was saying as well, it goes back to the science. So we believe that the IL-13s that -- whether it be lebrikizumab or whether it be tralo, we believe these agents will act and be positioned more as second-line therapy because they are just incomplete in the nature in which they target the disease. And again, I think as Dietmar said, it's a pretty consistent trend with each of those IL-13s. They've bounced around to a few different organizations after failed trials in other type 2 inflammatory diseases. And again, while they may have some level of efficacy in atopic dermatitis, we believe that we will maintain that first position as first therapy chosen for those moderate to severe atopic dermatitis patients even once these IL-13s are on the market.

Maybe my last question regarding the Dupixent franchise will be on the growth opportunity within the asthma market. Competition is ramping up here. Obviously, there will be the launch of tezepelumab soon. But just if you could give us an update on where you see the franchise here and kind of the balance between growth opportunities and increasing competition.

Yes. This is another really exciting space. I mean we're so fortunate to be unlocking potential for patients with this innovative therapy in diseases like atopic dermatitis and diseases like asthma and diseases like nasal polyps and hopefully many more to come. But the story is pretty consistent about the science. This is one of those diseases that we see as a very heavy type 2 inflammatory disease. We -- today, actually in the U.S., as we previously communicated, we're the #1 new patient respiratory biologic among specialists in the U.S. And that is in a marketplace and in action at a time where this particular patient population has been most impacted in the COVID environment. They've been a little bit more reticent to seek care or to switch therapies. And so we've seen -- and as we've previously spoken in the past, this is a marketplace that definitely saw some level of -- or certainly a pretty significant impact based upon patient flows into the offices. And exacerbation rates as well. Actually, due to a lot of really great people, mask wearing and social distancing and things of that nature, a lower flu season didn't actually trigger so many of the exacerbations. So we saw a little bit lower rate of those exacerbations for a while. But we are seeing that start to come back for sure. And what we've seen is that by having the strongest best-in-class type 2 profile, it really does allow us to have this great position for these severe -- moderate to severe uncontrolled asthma sufferers. And most of these physicians actually are continuing to choose for a couple of reasons, can they reduce the levels of exacerbations and hospitalizations, can they improve lung function, quality of life and OCS sparing or some of the typical reasons. And if you look at our data and compare our data across trials, again, when you do that and compare it across trials, and we don't always recommend that for sure, but what you see is that we have an incredibly strong profile in those key reasons why physicians would actually choose an agent for their uncontrolled asthma, moderate to severe asthma sufferers. So we feel like we're in a great spot here. We actually continue to release longer-term data in this patient population as well that further shows that we actually keep those exacerbations away. We keep -- not only do we reduce them, but we minimize the number of exacerbations that patients will have over time, and we continue to improve lung function. So again, we feel like we have a great profile in a very competitive space and a really great team around the world delivering our launches in asthma.

I will now pass on to Mark for the next set of questions.

I mean, Dietmar, you mentioned some data coming out in your eosinophilic esophagitis. When you sort of think about the new indications that are coming through, obviously, we've seen a taster in terms of the data coming through in hives, which are the most exciting -- putting COPD to one side, which you have done in terms of your sales target, which would you consider are the most exciting ones we should look out for? And how many of these need to hit before we potentially revise that EUR 10 billion peak sales target you gave at CMD?

Yes. The most exciting ones are obviously always the ones that are coming next, maybe. No. But joking aside, the -- you did mention some of the most exciting, which are obviously COPD because there's no biologic penetration yet. I think the CSU was also quite exciting because there's a larger patient population, the chronic spontaneous urticaria. There's a larger patient population. We were actually not entirely sure how much of that is type 2, how much is non-type 2. I think we can do more for those patients, but we've seen great data at this point with Dupi. And we think that's really exciting. The eosinophilic esophagitis, I'm really looking forward to that because that has a clear type 2 biology. And prurigo nodularis as well has a clear type 2 biology. And beyond that, we've got a few other indications in the coming years that will also be interesting. But those, I think, really frame nicely this additional opportunity in type 2 inflammation. I don't know, Brian, you have to comment on the EUR 10 billion.

Yes, exactly. Well, we always said the plus part of that was -- we've gotten this question a few times. We've always said the plus part of that is so important in this journey. And again, I think that -- and we get asked this question a lot, and we're excited about all these. It's kind of almost hard to pick which ones in the future because I think it's going to do a lot for our leadership in the -- unlocking the science and helping individuals understand around the world the science of type 2, which I think is absolutely fascinating on top of actually the potential to treat these patients. But I'll take it back to the original patient population that we just talked about, is that we still have so far to go. You just saw some of our readout for patients down to the -- I mean, below the age of 6, actually. I mean this is incredible in atopic dermatitis. We have so far to go in atopic dermatitis. We have so far to go in asthma, so far to go in nasal polyps because each of these diseases are significantly underpenetrated. There's many, many patients out there suffering that could absolutely benefit from a safe and effective advanced therapy like Dupixent. So we're excited about the next ones, but we're excited about the current ones as well.

Okay. In the limited time we got left, there was 2 I wanted to touch on sort of earlier stages. One was the OX40-Ligand. So obviously, you made the acquisition through Kymab. And then Amgen have been licensed, struck a partnership with Kyowa Kirin. And I think they have data at the EADV conference coming up. So how should we think about OX40-Ligand fitting into the portfolio beyond -- sorry, alongside Dupixent as well as life cycle management beyond?

Yes. There was recently a really interesting article about cytokines and nodes in immunology in the New England Journal. I think that's how we think about immunobiology and the different opportunities. And OX40 is another one of those key nodes where we need to evaluate, right, what role can they play. The early data are really encouraging. When you compare to the Amgen molecule, I would ask you and others to look into the difference between targeting the OX40 itself and then targeting the OX40-Ligand. Our molecule is targeting the OX40-Ligand, and we think that difference is really important. If you look into the biology, OX40 is an activated CD4 positive T cells but then also regulatory T cells, which are more dampening the immune response. So targeting there, you take away some of the T cell response, but you also take away some of the dampening, right? So you get a bit of a counter activity immediately whereas the OX40-Ligand is an activated antigen presenting cells but then not on the Tregs. So you do get really a dampening of the T cell response, the T cell mediated inflammation. But at the same time, you're maintaining the regulatory T cells. So from a scientific perspective, that should have clear advantages. And we believe the Phase II data that we've seen with the molecule has been very positive. We're really looking forward to move further into additional studies. But obviously, it's early days, and we need to demonstrate that difference. But from a science perspective, I'm really encouraged by the fact that we have an OX40-Ligand antibody.

Yes, maybe -- sorry...

Maybe I can add to this also, one again, kind of linking it back to what I said a little bit ago as well, which is, again, we're extremely confident. We're extremely pleased with our Dupixent performance. But again, we're also at the beginning of this journey, and what an exciting time as you look into atopic dermatitis. I mean imagine at this time in the psoriasis journey and the discussions, we would have been having about the interesting targets and what -- how they may play out in the future. And I think what everybody would agree is that in a space like this with a population that's this big with such a low penetration, more agents coming into the marketplace are going to help grow that penetration for sure. And so exciting targets like OX40-Ligand are certainly going to be something, I think, that will be of interest, especially in such a heterogeneous disease as atopic dermatitis that is, again, underpenetrated. So I think it's also exciting to have these types of targets coming in the future for a growing marketplace.

Okay. Last one as we've running out of time. Anti-CEACAM5 ADC, this is an interesting one. Nobody really talks about this. Somebody gets very excited about anything in lung cancer, whether it be KRASes or ALKs or anything that hits a subset of patients. And this has its own defined patient group that it's going after. Just a sort of word on this. Is this on track in terms of pivotal trials? I think they'll start to report out in the second half of next year. So is it on track? Is this something you're excited about, Dietmar?

Yes, absolutely on track at this point in time. And yes, I'm very excited about this. Obviously, oncology is my background. And we've seen good data with some of the ADCs more recently, and I think it's an important concept. 25% of patients are positive. They have high CEACAM5 expression. I think there's a real unmet need both in the checkpoint inhibitor resistant population but then also bringing more new mechanisms of actions into first-line therapy. And to us, this is a really unique molecule. It's a unique antibody. Other companies have tried to target CEACAM and the different versions of CEACAM with little success so far. So we're in a unique position. We have encouraging early data, and we feel the unmet medical need is there. And you know what we see so far in the clinical trials is definitely a lot of interest from the investigator. So we're definitely on track for 2022 here.

Fantastic. Thank you. We're pretty much out -- well, we are out of time. There are a couple of questions around Translate Bio, and I'll ask the Investor Relations to get back on those. But Dietmar and Brian, thanks so much for your time. I really appreciate you supporting the conference again. And thank you for Investor Relations for helping putting this together, and thank you for the audience for also supporting our health care conference. I'll leave it at that.

Thank you, Mark. Thanks, Thibault.

Thank you.

Thank you.