Sanofi (SAN) Earnings Call Transcript & Summary

Okay. Good morning, everyone. I think we'll get started. My name is Mark Purcell. I'm one of the European Pharmaceuticals here at Morgan Stanley. I'm joined by Thibault Boutherin my colleague from London as well. It gives me great pleasure seen Sanofi today. We have 2 people. We have Frank Nestle, who is the Global Head of Research and the Chief Scientific Officer; and we have Frank DeRosa, who is the Chief Technology Officer and Global Head of Research and biomarkers for Sanofi vaccines. Before we get started, I just have to read out a statement for important disclosures, please see the Morgan Stanley Research Disclosures website at www.morganstanley.com/researchdisclosures. [Operator Instructions]. So gentlemen, thanks for joining us. It's great to see you in person again.

Pleasure.

Really appreciate you taking the time. We're going to sort of move through pharma and vaccines and go back and forth. But the first thing we've been getting quite a few questions on is the Inflation Reduction Act. And as a scientist and so how do you sort of think about how this might change Sanofi's R&D strategy?

Yes. First, I would like to say thanks Mark. It's great to be here at Morgan Stanley. It's always a fantastic event. Now I think about the inflation Reduction Act as a scientist, as the CSO of Sanofi, I'm obviously disappointed because it could impact innovation. And especially if I think about the over 65-year-olds where there's a lot of need for innovation. And if there's a particular area we are thinking hard about and others have mentioned that, too, is in the oral space where this legislation, obviously, will have an impact. Now talking about Sanofi, we always have been one of the more responsible in terms of pricing. And if you see how we are behaving, I think it's quite industry-leading or competitive, and I also would like to say that from an exposure perspective, there's only minimal if you compare it to some of our other -- some of the other big pharma players. And especially with Dupixent, if at all, we are talking about 2031. And also in terms of channels, Dupixent is mainly via commercial channel. So this is, I don't think, a big impact. Now in terms of a patient perspective, it might lead to greater market access, and that's always good. So there are different elements if we think about the IRA.

Got it. And let me start on innovation side with Dupixent. You've got Dupixent IL-33. So we get quite a lot of questions around the COPD, data readouts in the middle of next year and your confidence in expanding the molecule further into this space. So it'd be great to get your viewpoints on how the IL-33 and Dupixent fit together here because slightly different positioning and level of confidence ahead of that data read out middle of next year for DC and then IL-33 study a little bit further 2024?

Yes. So as a CFO, I'm very passionate to go where there's a huge unmet need, and I couldn't think about a greater unmet need than COPD where there's essentially no standard of care, which is really working. COPD is the third leading cause of that. And now we have 2 potential pathway drugs who could make a dent. The first one is Dupixent and Dupixent is just one kind of a drug. It has been an amazing journey with Dupixent. We just added 150,000 patients. Just last quarter. It's now annualizing at 8,500,000 patients on drug. It's now 5 years in the market. And it's the quintessential pathway drug. It actually tackles type 2 inflammation than I've not seen a pathway drug doing this in other context. And we've been going from atopic dermatitis to asthma to chronic renoticitis with nasal polyps to eosinophilic esophagitis. Now we have great data also in Parago nodularis. And it's absolutely clear that in COPD, there is this type 2 population, and it's defined by a biomarker by eosinophils. So we essentially have a precision medicine approach to moving Dupixent into COPD, and we're very excited. It's actually one of the exciting data readouts for next year. Our confidence is also built on the fact that in some of the Quest trials and some other trials with chronic renesaitis and nasal polyps. We had COPD like features and that gave us also confidence to move the drug into COPD. So the combination of mechanism-based, precision medicine approach plus having features of COPD in other of our trials. I'm also very excited about and just to finish on type 2 is about 1/3 of the population in COPD. I'm very excited about IL-33 as a target. Itepekimab is a very efficient block of IL-33. IL-33 just for the audience is a key alarmin. It's produced by respiratory epithelial cells in the context of, for example, viral infection, and viruses are typical triggers of COPD. So there's a clear rationale why you wanted to move anti-IL-33 into COPD. We also found actually that in a certain subset of COPD patients, the former smokers, there's increased IL-33. Now why this is the case? We don't fully understand, but it looks like in former smokers IL-33 gets this role as a driver of disease pathogenesis. And when we did a Phase II trial, low and behold, it was in this population, which is about 2/3 of COPD that we got literally a dramatic reduction of the annualized exacerbation rate. It was 42%. Now this is unprecedented. I'm very excited about moving this drug into COPD patients and the readout will be a year later than what we see for Dupixent. So it will be around 2024 time frame.

And do you say that it's going to be for the COPD if the data prove positive, is it going to be important for physicians when they're considering asthma in COPD together? Is there a sort of synergy there in terms of worrying about giving the right drugs to the right patients.

Yes. I think currently, we don't have any options -- so hopefully, we have too many options in 2024. We always have to be humble in terms of tackling a massive disease opportunity like COPD. Here, we have 2 great shots on goal. Very excited to see what the data will tell us.

Great. And then CCAM 5 DCs and other hand Ativo and vaccines. So could you help us understand the near-term data we're going to get from proof-of-concept trials, frame the sort of opportunity ahead of the Phase III data next year. And then you did the deal with Seagen. And I guess, to replicate chemotherapy in colorectal cancer is potentially one of the goals here. But it would be great if you could talk more generally around the Seagen collaboration as well.

Look, it's probably not widely appreciated, but Sanofi is quite a deep expertise in ADCs and our tusamitamab ravtansine, which is the CEACAM5 ADC with the DM4 payload is a very interesting compound. CEACAM5 is proprietary to Sanofi. And CEACAM5 is expressed in about 20% to 30% of. Non-squamous non-small cell lung cancer. So that's quite a significant population. And we are tackling non-small cell lung cancer from multiple angles. We have a Phase III trial, which is going to read out in 2023, where we are going for a second, third line in monotherapy, and this will be a very exciting readout. But we have also multiple Phase II trials to tackle that population in other ways. Now if you ask me as a scientist, the most exciting opportunity would be to move this into first line. What the ADC does CEACAM5 is it induces what's called immunogenic cell death. It attacks tumor cells, releases neoantigens and then makes those accessible to the immune system. So it's really prone to work very well with the checkpoint inhibitors. So this is what we are doing in this Phase II first-line aspiration, Tusa plus checkpoint inhibitors. So we'll be excited to see that readout. But we're also then going into the second and third line and combining it with drugs like Cyramza, the VEGF receptor inhibitor. And so we'll see which one will work out. But if you ask me, the greatest opportunity is probably that first-line setting we might even think about then going late lower in terms of the requirements of CEACAM5 expression because it's just a few cells killed neoantigens presented, checkpoint inhibitor will amplify the response. So that would be a great mechanistic scenario. But then CEACAM5 is also expressed in other cancers. It's in 20% to 30% of gastrointestinal cancers. We have a trial going on there and then also in pancreatic cancer with a basket trial. So lots of potential interesting readouts over the next year or so with Tusa.

How broad should we feel that the Seagen collaboration could end up I'll be able to say very much.

So when -- for the non-ADC aficionados, it's not only about the targets and CEACAM5 is a great target is also about the payload. And DM4 is essentially a taxane equivalent, and we know that taxane are in the context of colorectal cancer, it's better to have a Topo1 inhibitor. So for us, it was fantastic to have CEACAM as a partner coming in. They have one of the leading Topo1 payloads. And we have not formally announced what our ADC will be taking advantage of the CEACAM playload, but I can tell you, this has been one of the fastest moving programs I've had in my portfolio, and we'll update you soon about its entry into the clinic and what exactly the target will be in the patient population.

Great. And now if we move to vaccines and maybe starting with the M&A platform. So you launched the MLM Center of Excellence in June 2021. You supplemented it with acquisition of Translate Bio, which closed in September of last year. So could you give us some insight into what was achieved so far and the next key milestones to come for this part of your business? And as your approach and vision for this technology change in some ways since you started the journey?

Yes. Great. Thank you very much, and thank you again for the invitation and the opportunity to be here and to be with everybody. It's been a year. In fact, I think this week, it's been a year since the closing. I actually came from TBIO of Translate Bio. And so I have certainly a unique perspective, I think of it. It's been a great year. It's actually been quite a busy year, and we made a lot of progress on every aspect of this platform, if I had to summarize maybe into 3 areas, I would say, major progress on the people, major progress on clinical efforts and major progress on manufacturing. So just breaking that down from a people perspective, we've established the full leadership team as well as all of the departments across the entire platform, down across diagonally, you name it. We're bringing in some great talent, which is fantastic. And it's a hot market. It's not easy to bring in talent in this competitive market, but I think we've got a real good story here in the sense that we've got a fully owned mRNA platform within a large pharma with fantastic capabilities. And the goal there is to really keep that biotech field, that biotech mindset, that biotech agility which we have done, and I have to say, coming from TBIO, I wasn't sure when we first came into Sanofi would that happen, but it actually has happened. It's been fantastic. So I think that's recognized when we bring in this talent as well. So from a clinical perspective, we've been moving very, very fast and making a lot of progress there. Multiple clinical trial candidate will be in the clinic this year and those will cover platform trials, those will cover flu as well as RSV. So we're on track with all of those as we had communicated last December. The third point I would say is manufacturing, which, again, we've been able to tech transfer all of that manufacturing knowledge across the company in Sanofi. We've also broke Grant, as you've probably seen in the news on new EBS facilities in France as well as in Singapore, and that's going to allow us in the coming years to be able to manufacture not only for mRNA, but also for other modalities as well, it's going to give us that flexibility. So we're excited on that front also. With respect to the vision it's largely intact from where we set out. Now we are certainly flexible. We adapt to what's out there, whether it's with the rest of the mRNA field, whether it's to the science and new discoveries and innovation. So we're always adapting to that. But we set out a course last year to put forth to build a second generation, next-generation mRNA platform, and that's exactly what we're doing.

That's great. Very clear. And if you could come back a little bit more detail on your flu program in mRNA. So I just started the clinical trial at Phase I/II cemiplimab So if you could just give us a bit here in terms of the next time lines and the next step on this flu Program?

Certainly. Thanks for the question. So with respect to flu, we've had multiple clinical trials already started from a platform perspective, one in clinic now for a monovalent modified mRNA flu vaccine, which we should be delivering data on that sometime in 2022 before the end there. We're also starting our quadrivalent candidates, multiple candidates this year, 2022 on track for that. Now what's the goal there? The goal there is, again, second-generation formulations. One that lowered the reactogenicity compared to these first-gen pandemic type formulations, which did a great job for the pandemic, no question, but also to increase the thermal stability, as we know what the standard of care is there, which is prefilled syringes, stable of 4C liquid. And so that's the approach that we're taking now. So we're on track with our quadrivalent to start Phase I/II trials in 2022, and we anticipate starting our Phase III in 2023 as expected.

Very clear. And if we move out of mRNA, and I think you are expecting Phase II data for your RSV toddler vaccine with a Phase III go-no-go decision. So just if you could give us an update on this as well? And maybe after we can touch on the landscape here.

Yes, yes, absolutely. So with respect to the RSV toddler program, this is a live attenuated vaccine that's actually given intranasally to toddlers it kind of mimic the pathway of infection for that. That is ongoing. This is with actually a rationally designed product through collaboration with the NIH. So we're excited about this. We're hoping this gives us stronger immune response and longer duration as well. With that, we're on track there to provide a readout by the end of 2022 with the anticipation of starting Phase III in 2023.

Okay. And just if you could touch on the advantage and disadvantage of the technology. I think Moderna has a vaccine for toddler as well in development. So just to comment here on the platform difference and why you think.

Yes, certainly. So it's a live attenuated vaccine. We think this mimics the virus obviously is the virus, just attenuated with a lot of different antigens associated with that compared to just the prefusion F, which I believe Moderna is going for. They are behind us right now. We appreciate their efforts, certainly, but we are ahead of them in this space. We think we're going to be first-in-class and best-in-class in this field in terms of RSV toddler for this.

So switching back to pharma and oncology. So its SAR'245, the non-alpha IoT. I guess we we're expecting some sort of Phase III go-no-go decisions. And it's an area where clearly John feels his expertise and the differentiation over previous molecules. But what should we sort of assume here in terms of the go-no-go and the potential breadth of the program in terms of how you're thinking about this asset?

Yes, we are all in with SAR'245. And it just so probably the recent news that 1 of our competitors are doubling down in the IL-2 Phase 2 is the PD-1 IL-2. So there's quite -- that story of IL-2 is just being written. It's not an obituary at all. IL-2 in its native form, we know works very well in melanoma and renal cell cancer, but it has dramatic side effects with vascular and league syndrome and other issues, hypertension and so forth. So the key trick is how can you design a molecule which gets the full power of the native IL-2 but gives you a therapeutic window so that patients can sustain it and T cells can be maximally activated. Now with our Synthorx platform where we can induce or include a novel amino acids into IL-2 and then specifically, like a surgeon specifically attach a pack in a way that it becomes this non-alpha IL-2. And we have the most specific non-alpha 2 out there, full stop, not a single bit of alpha signaling -- and the clinical data we've been seeing support that. We can go up to 40 micrograms per kilogram, where some of our competitors could only go to 6-microgram per kilogram. But it's not only about the dose. It's also about the sequence. So what is the optimal sequence. So all of those variables, we are currently optimizing. We believe we have the best designed IL-2 out there to explore those variables and whoever will crack the code to essentially do not harm to any patients with safety issues, maximally activate T cell will have a very potent next-generation cancer immunotherapy drug at their hands. And I should say that we also have now targeted cytokine therapeutics via our acquisition of Kadmon. We have a PDL1/IL-15 -- so we certainly believe that between IL-2 and IL-15 targeting its specific activity with the IL-2 beta-gamma receptor, but there's a lot of opportunity in that space.

And when you say all in and trying to think about strategy, are you going -- there's obviously some obvious tumors where, I guess, melanoma people have discussed in the past, but are you feeling let's go after some areas where there is less -- there's less robust data with single-agent checkpoint inhibitors. I'm just trying to understand if you're going into sort of more higher risk, higher opportunity sales or if you're trying to strike a balance across the program?

Yes. So clearly, the philosophy of Sanofi is always setting the bar high and going to unmet needs. I guess melanoma is not necessarily where we think there's a lot of excitement. Non-small cell lung cancer, gastrointestinal cancer, lymphoma, head and neck cancer, there's a lot of opportunity for IL-2 to make a dent in those indications. The other key deciding factor in addition to finding the right pharmacology is also a combination. If you think about cetuximab, ADCC competent antibodies, which require a strong NK cell activation. And we have sevenfold expansion of NK cells, a sixfold expansion of CD8 T cells. So that's a natural, for example, a combination approach. So -- so it's going to be a multiparametric optimization approach. And I think we have all the moving parts under control, and now we just need the data to give us confidence.

Got it. And then the last time we met was on the 29th of March in Boston. And we get questions on 2 of your earlier-stage immunology assets, the OX40-Ligand where, I guess, when we spoke last, waiting for the Phase IIb data, looking at some doses before moving into Phase III. One of your competitors is sort of stepping back a little bit in terms of looking at different dosing regimen, et cetera. So be interested to understand where you are on that journey. And if you're on time to submit the Phase IIb data to the FDA to have that pivotal decision discussion. And the other 1 was the IRAK4. So shortly after -- we discussed that in Boston. There's been more of a focus on QTc Prolongation from your competitors in stocking or modifying programs. So It'd be great to understand from your perspective, is the QTc Prolongation? Is it an on-target activity? And how do you mitigate for that? And how should we think about the chances of that molecule going forward? And what you have as a sort of fairly significant portfolio of assets, where I guess you're going to make a portfolio decision?

Yes. Thank you, Mark. I mean, I'm obviously very excited about where we are with our immunology portfolio as the foundational therapeutic area in immunology a few years back, seeing now 14 molecules in the clinic, all with first and best-in-class properties is truly gratifying. And if you think about amlitelimab, our anti-OX40 ligand, it was absolutely clear for us from the beginning from a science perspective, that it would be a very interesting pathway in AD. We saw that in our molecular data in our precision medicine data. And early on, we thought this is a great target to go after. And the other part is we absolutely didn't want to go for the receptor OX40, which some of our competitors are going after, but we want to go after the ligand. And -- and the reason is that the ligand is essentially express an antigen presenting cell in a transitory fashion. It is driving type 2 inflammation. While the receptor OX40 is widely expressed on T cells, but it's not only on T cells, it's on regulatory T cells. So if you deplete, and this is what some of the competitor molecules are doing, if you deplete OX40, you get several consequences. One is you might get fevers, CRS-like symptoms. And some of that is seen. We don't see any fever at all. The other thing is that you potentially deplete regulatory T cells, and that means that you actually then make disease worse. So I don't know what we're going to see with OX40, but we are very convinced about OX40-Ligand blockade because OX40-Ligand blockade is actually increasing Treg activity. So we're excited about our Phase IIa data, and we are on track to get the Phase IIb data next year. And just one more word on that amlitelimab. It's a very different approach. If you think about immunotherapy, there are 3 major areas you can target. One is what's called Signal 1. This is a T-cell receptor and the antigen driving autoimmunity. The other one is Signal 3. This is where cytokines are, and this is where we are with Dupixent, for example. But then you have Signal 2. This is the gas pedal and the break. This is where co-stimulation is. And these co-stimulatory blockers are quite exciting because they have the potential for durable disease modification. And amlitelimab is the first co-stimulatory blocker we're moving now in type 2 inflammation. And guess what we are seeing. We're seeing an early data set that if we have responders, these responders are durable. And this all of a sudden, opens up the opportunity of durable disease modification, very differentiated from what cytokine blockade is doing. So we're quite excited about that. In terms of IRAK4, we agree with Chimera. It's a really interesting target. We had that in our own laboratories. We had an IRAK4 kinase inhibitor, and we've just seen from some of the competitors, not shooting the lights out in RA and in hidradenitis suppurativa either. But it requires this degradation protein degradation because there's a scaffold function of IL-4. And Chimera was a great partner or is a great partner because they had an orally bioavailable. And that's why we have the very first orally bioavailable IRAK4 degrader moving into the clinic. Now the QT signal, just to remind you, it has not been dose dependent. We will have 28-day data and in AD and hidradenitis suppurativa. So this will be all data-driven, but we're -- at this moment in time, I think the molecule can make it. And until the end of the year, we'll have much more information about the 2 data sets. I'm data-driven. As long as the data will tell us, we'll go for it.

That's clear.

And if you come back to the vaccine pipeline and in particular, the RSV older adult program that you have. So there is Tregs activity in the field right now, Pfizer released some headline data for the older adult vaccine. GSK hinted at exceptional protection with their own program. We are still waiting for GN Moderna data. So the low sale is quite competitive. So I just wanted to know if you could come back into more insight into your own program and the differentiation here you have compared to this emerging competition?

Yes, certainly, thanks for that. It is certainly a competitive field, no question to unmet medical need there. We won't comment on the -- our peers' data per se, but our approach is twofold. We are on track, as I mentioned earlier, to start our RSV older adult mRNA product in Phase I/II trials this year in 2022. And again, this is utilizing what we've built and where we continue to go with this technology, whether it's improvements in the mRNA in terms of potency, code and optimization, in terms of the delivery systems that we use, there's a lot of expertise within our organization on lipid nanoparticle development. But -- moving towards the differentiation side, we view that differentiation is coming in a combination form. And so that's where we're heading with that. We're looking to do RSV, NPV and PIV combination drug for our mRNA product and our technology there, which we anticipate will start Phase I in 2023 there. Now why do we choose those? We chose those targets because there's a real unmet medical need there, certainly, when you look at the hospitalizations due to those disease certainly in the older adult population, they actually when you add them up, more than influenza. And so there's definitely an unmet medical need there. But also, there's a much lower viral evolution rate in those also a mutation rate. So less chance of variance forming and therefore, much easier in terms of drug product development and manufacturing.

That's very clear. And you also have a program in pneumococcal disease, so vaccines against 21 serotypes. So could you give us an update here? I think we're expecting results of Phase II by end of the year, Phase III initiation 2023. So just wanted to confirm that -- and also just if you could put this in the context of GSK's recent acquisition of Affinivax and the 24-valent vaccine, which is in Phase II, so just if you could your view on the competition? I mean how your program stands in.

Yes. Certainly. So look, we're excited about this is our PCV21 product, where we've added the 9 and 0 type there. We look at that as adding anywhere from 5% to 7% in terms of patient population there for invasive pneumococcal disease, IPD. So we look at that as certainly being an advantage, we're excited about what this trial will bring us in terms of data by the end of this year. So we've communicated that earlier and we anticipate starting our Phase III next year on that. With respect to how we're approaching this, this is in collaboration with SK bioscience. So it's a really great collaboration there, where they've got very strong formulation expertise even though you can go up and up in numbers of serotypes, it doesn't mean you can formulate those properly. It doesn't mean you're going to get the results you want. As we've seen out there in some cases, you don't always get your non-inferiority across all of your antigens, but we anticipate and we're hopeful that we will see that, of course, with ours based on the proper formulation and manufacturing expertise between the 2 companies. So we're excited to see where that goes. In addition to that, just to answer your question at the end there also we are looking, again, always to improve upon that. So there's always efforts going on to increase that number above 21 as well.

Okay. That's very clear.

Great. Well, we're just coming up to time when we started a bit earlier. So gentlemen, thanks so much for joining us here. I really appreciate your comments and insights, and thank you, everyone, for attending the session.

Thank you.

Thank you.

Thank you.

Thank you.