Sanofi (SAN) Earnings Call Transcript & Summary

Good morning, good afternoon, and good evening to everyone. Thank you for joining us to review Sanofi's Second Quarter 2023 Results, followed by a Q&A session. As usual, you can find the slides to this call on the Investors page on our website at sanofi.com. Moving to Slide 3, I would like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. I refer you to our Form 20-F document on file with the SEC and also our Document [Foreign Language] for a description of these risk factors. With that, please advance to Slide 4. Our speakers on the call today are Paul Hudson, Chief Executive Officer; Dietmar Berger, Global Head of R&D at Interim; the Global Business Unit Heads, Bill Sibold, Thomas Triomphe, Olivier Charmeil and Julie Van Ongevalle; and Jean-Baptiste de Chatillon, the Chief Financial Officer. [Operator Instructions] And with that, I'd like to turn the call over to Paul.

Well, thank you, Eva, and thanks, everyone, for joining our call today. Together with members of the executive team, I'll take you through Sanofi's business and financial performance in the second quarter of 2023. Starting with our sales performance on Slide 6. We delivered another quarter of growth in Q2. The Specialty Care and Vaccine as the key drivers. In Specialty Care, sales were up double digit in the quarter, driven mainly by Dupixent, which continues its outstanding growth trajectory. Vaccine sales were up by more than 9%, and we shared with you our excitement for this growing business on our vaccine investor event last month in London. The approval of Beyfortus in the U.S. earlier in July and the ACIP meeting taking place next week give us strong confidence to continue to deliver mid- to high single-digit sales growth in vaccines as previously guided. Core assets in General Medicines and Consumer Health care also continued to grow. [indiscernible] , our last meaningful LOE in the decade as well as noncore assets in GenMed declined as anticipated. In summary, based on our solid performance and expected healthy underlying momentum in the second half of 2023, we upgrade our financial guidance for the full year. On the next slide, well, let's have a look at the sales performance in the first half as it looks beyond some impacts from quarterly phasing. Combined, our key growth drivers were up more than 15%, which we believe is a great emerging proof point of our successful portfolio transformation towards innovative medicines. Of note, our stand-alone consumer health care business grew 6% in the first half, while we continue to streamline the CHC product portfolio and divest smaller nonstrategic brands. Now on the next slide, let me take a moment to discuss how we continue to drive shareholder value for our CHC business. Since we embarked on our Play to Win strategy, it has always been our objective to maximize the value of CHC by bringing it back to growth. Julie and the team have successfully executed on their strategic priorities over the last 2 years, and as a result, the business has returned to growth, in line with the market and delivering 8% organic growth annually. At this point, sustaining growth is critical to further drive the value of this attractive business and to further accelerate the strategic execution. In the U.S., the world's largest OTC and VMS market Sanofi CHC has a historically lower revenue base compared to other leading players. The targeted acquisition of Qunol that we announced this morning is addressing the strategic gap in 1 of the fastest-growing VMS categories, and has the potential to unlock the additional value. Julie will tell you more about the acquisition in just a few moments. On capital allocation priorities they will, remain unchanged, focused on investments into science and innovation especially -- sorry, specifically across Specialty Care and Vaccines. Continuing with our biopharma business on Slide 9, we are laser focused on the 3 key launches this year, which -- with each of them representing significant blockbuster potential addressing high unmet needs in large markets. As a reminder, you'll recall that last year, we launched 3 highly innovative products in Specialty Care, which we believe we have a potential of up to EUR 1 billion of peak sales combined. Those 3 products: Xenpozyme and Enjaymo and Cablivi were above EUR 250 million in sales in aggregate, the first year of their launch. This year, we're launching another 3 innovative products each of them with significant blockbuster potential. We believe ALTUVIIIO, Beyfortus and Tzield together can add up to at least EUR 5 billion in peak sales. The sales of these important products will build over time, and we are very encouraged by the early launch indicators. Before I let deep dive deeper into the science behind our recent positive R&D readouts, I would like to take a moment and highlight the extraordinary cadence of positive pipeline catalysts, which we've shared with you during the first half of the year. All these pipeline successes have strengthened our confidence in delivering highly innovative medicines, which have the potential to become significant future growth drivers. We look forward to the PDUFA date for Dupixent in CSU in October this year, potentially adding 300,000 biologic-eligible patients to the broad label of Dupixent. For Tzield, well, we made it clear when we acquired Provention Bio earlier this year that we based the value of the acquisition on the already approved indication and that any additional indications will be further upside. We now have the results of the Phase III PROTECT study in-house. The study met its primary endpoint of preservation of C-peptide and showed encouraging trend in the clinical secondary endpoints. At the American Diabetes Association Congress in June. Key opinion leaders confirm to us that protecting as much of the beta-cell mass for as long as possible is a critical clinical benefit to patients. We believe that the totality of the data is compelling and look forward to presenting the full data set at the Medical Congress in the second half of this year. Given the wealth of news and a series of more readouts expected in the coming months, we decided to host an R&D Day on December 7 in New York City to discuss with you these exciting data in much more detail. We want to showcase the progress of our key innovative molecules from our growing pharmaceutical pipeline and further dimensionalize their future commercial potential to help you understand our growth trajectory until the end of the decade. Now Dietmar, over to you.

Thank you, Paul. Let's take a closer look at some of the recent pipeline successes with our innovative assets across key therapeutic areas. Starting with neurology on Slide 12, let me first focus on multiple sclerosis. MS is a condition that often strikes early in life and creates a high burden on patients, families and payers. Frexalimab, our second-generation investigational anti-CD40-ligand antibody is implicated in the CD40 ligand pathway appearing to be involved in the MS-related inflammatory process. The inhibition of the CD40, CD40-ligand access in the periphery, upstream of T cell interaction with B-cells, dendritic cells and microglia prevents activation of these cells and may block the inflammation that drives MS disease progression. We presented exciting Phase II data of Frexalimab in the first CD40-ligand inhibitor randomized controlled study in RMS at a late-breaking session of the 2023 CMSC Annual Meeting. The data highlighted that following 12 weeks of therapy, the number of new gadolinium-enhancing T1 lesions in the MRI was reduced by 89% and 79% in the higher and lower dose treatment arms, respectively, compared with placebo, meeting the study's primary endpoint. At week 24, 96% of participants in the higher-dose Frexalimab arm were free of new gadolinium-enhancing T1 lesions. Based on these unprecedented results, we plan to advance Frexalimab into pivotal trials in MS in the first half of next year. Turning to immunology. We have recently announced positive Phase IIb data for Amlitelimab in moderate to severe atopic dermatitis. Amlitelimab is a fully human, nondepleting monoclonal antibody that binds to OX40 ligand a key immune regulator. It has the potential to be a first-in-class treatment for a range of immune-mediated diseases and inflammatory disorders, including atopic dermatitis and asthma. Amlitelimab acts more upstream than DUPIXENT in aims to restore immune homeostasis between pro-inflammatory and regulatory T cells. In this dose-ranging Phase IIb study treatment with Amlitelimab resulted in statistically significant improvements in the average Eczema Area and Severity Index or EASI score from baseline at 16 weeks compared to placebo for all 4 subcutaneous doses that were studied. Biomarker results support an effect on both type 2 and non-type 2 pathways. Based on these top line data, we are particularly excited by Amlitelimab potential for disease modification and infrequent dosing. And we look forward to sharing the full results later this year. We are preparing for Phase III studies in atopic dermatitis to begin in the first half of next year. Moving on to my next slide at our investor call during the ATS meeting in May, we highlighted very positive results from some of our early-stage molecules in immunology, including SAR-443765 in asthma. SAR765 is a bispecific Nanobody that targets both IL-13 and TSLP. With its unique 2 binding domains, we see this molecule producing a synergistic effect compared to both anti-TSLP and anti-IL-13 as illustrated on the chart on the right. Its target profile has the potential to become the most potent anti-type 2 agent with coverage of non-type 2 patients as well. Based on this exciting early data, we plan to initiate the Phase IIb program by the second half of the year. Now on Slide 15, our regulatory and R&D milestones. As Paul highlighted earlier, we made great progress on delivering our pipeline including the landmark barriers results in COPD and the approvals of ALTUVIIIO and Beyfortus in the U.S. to name just a few. As we have moved to the second half of 2023, let me also update you on tolebrutinib. As you know, we currently have 4 Phase III studies ongoing, of which 3 are fully recruited. The tolebrutinib Phase III trials are event driven and powered based on reaching a predefined number of clinical events defined as 6 months confirmed disability worsening or progression. We use historical data to estimate event rates that led to the original projected time lines. As far as the readouts of the trials GEMINI 1 and 2 in RMS are concerned, the current actual event rate, of course, at a pace that makes us confident that the readout will occur in the middle of next year. In addition, based likewise on event rate analysis, we now expect the results of the non-relapsing SPMS trial called Hercules earlier than expected, also in the middle of 2024. Importantly, we remain on track for our planned submission time line of tolebrutinib in 2024, as previously stated. But now with the added opportunity to file both RMS and SPMS together for a more complete data package. Concerning the ongoing partial U.S. clinical hold on the recruitment of new patients for the PERSEUS study, we are actively working to better understand the tolebrutinib safety profile and [indiscernible] communication with the FDA regarding this work. We will update you once we have meaningful new information. And on my last slide, let me finish with a topic that to my heart and aims at the inclusion of communities that are historically underrepresented in the development of pharmaceutical innovation. We have embarked on a major journey to design and conduct clinical trials with clearly defined diversity goals, which are representative of disease population demographics. Sanofi's efforts in R&D strive to have these communities represented in our clinical trial programs as much as possible. It is our responsibility as a leading biopharmaceutical company to recognize any difference in the safety and efficacy of our drugs and vaccines that may exist between different populations of people. We will continue to address as many of these access barriers as possible at the earlier stages of study design to advance toward a world where the research we conduct and the data we generate are more representative of the patients we aim to help. And with that, I hand it over to Bill.

Thank you, Dietmar Now looking at Specialty Care, where we delivered yet another strong quarter with solid double-digit growth despite the anticipated impact from generics on Aubagio in the U.S., which started in the second half of March. Dupixent performance was excellent in the quarter with demand-driven growth across all approved indications and geographies. In rare diseases, our Fabry and Pompe franchises reported near double-digit growth in the second quarter with Nexviazyme as 1 of the key contributors. We are very pleased with the launch of the Nexviazyme in the U.S. and ex U.S. markets, where we continue to successfully drive switches to Nexviazyme as the next standard of care in Pompe disease with an established efficacy and safety profile. Now moving to my next slide. DUPIXENT sales were up 34%, reaching almost EUR 2.6 billion in a single quarter. As highlighted on the slide, the brand drove continuous robust growth in both the U.S. and ex U.S. geographies, roughly 6 years after the initial launch of Dupixent in AD in the U.S. We remain very excited about the outlook for the brand's outstanding commercial success, and expect to cross the EUR 10 billion mark this year. Our key 2023 regulatory milestones are on track and provide additional sources of significant future growth. For example, we talked to you about the filing and upcoming PDUFA date for DUPIXENT and CSU which is a significant opportunity for expansion into a large population of 300,000 patients in the U.S. alone. Outside the U.S., we continue to roll out the rollout of additional approved indications in additional patient populations in key markets such as Japan and China. Moving to Slide 20. Let's take a closer look at the impressive performance of DUPIXENT over time. The brand continues to grow its leadership as the #1 NBRx across all specialties in the U.S. market. In dermatology, Dupixent is the gold standard in AD across all age groups. Our strong execution of launches has been recognized by Spirit's global insights. The report highlights DUPIXENT and prurigo nodularis as the #1 recent dermatology launch based on dermatologist familiarity and user base 3 months after launch. PN has further strengthened our position with dermatologists, reinforcing DUPIXENT's strong efficacy, including on itch across multiple inflammatory skin diseases. With the positive experiences in AD down to the age of 6 months and approval in prurigo nodularis, dermatologists continue to build their strong confidence and familiarity with the brand. In respiratory, Dupixent continues to demonstrate its leadership position in the U.S. asthma market. Holding the #1 NBRx share in respiratory biologics for the last 3 quarters among pulmonologists and allergists combined. As you know, advanced therapy penetration is an important marker of both potential and success in these markets. The penetration data on this slide will remind you of the very significant growth potential, which remains in AD and asthma, for approved therapies, and we are more confident than ever that Dupixent will continue to take the largest share. Now on my next slide, let's switch to ALTUVIIIO, another exciting launch in specialty care. As Paul mentioned earlier, we are on track to unlock the full potential of this important new therapy in hemophilia A. We are already seeing very encouraging early launch indicators and strong momentum going into Q3. ALTUVIIIO is capturing an increasing share of switches and has quickly positioned itself as the factor of choice capturing over 70% of all switches to factor products with over 250 patients already prescribed ALTUVIIIO in the U.S. While still early in the launch, switches are mostly coming from heme A competitor products including approximately 10% of switches from Hemlibra. We believe this positive trend will continue as more patients gain first-hand experience with the benefits high sustained factor levels in the normal to near normal range. Commercially, we are making fast progress as well. Over 80% of our priority accounts who represent the majority of volume share in the heme A market have already prescribed the product. And from a market access perspective, we have received very favorable feedback from payers. Granting coverage aligned with label and no step edits for more than 150 million lives. Importantly, we have implemented a robust patient support program, including reimbursement education and a 30-day free trial program to help accelerate patients starting Altuviiio while their insurance coverage is verified. With this, I'm handing it over to Thomas.

Thank you, Bill. In the second quarter, vaccine sales were up 9%, driven by PPH performance. With strong Pentaxim sales in China and the Hexaxim introduction in new public markets in our rest of the world region. PPH also benefited from favorable phasing. As I highlighted before, in the U.S., VAXELIS continues to expand and gain market share from pentavalent vaccines and these sales are not booked in the Sanofi top line. Meningitis, Travel and Endemic franchise decreased by minus 6% due to the divestment of Japanese Encephalitis vaccine last year. Excluding JEV sales, the [franchise] performance was stable, signaling that Travel and Endemic vaccinations are back to their pre-pandemic level. Of note, in Q2, we recorded an additional EUR 59 million sales linked to the remaining European shipments of our COVID-19 booster interesting data. It's noteworthy that during the Spring Booster campaign in the U.K., about half of the COVID-19 doses used where Sanofi boosters. Overall, Vaccines [indiscernible] delivered a very strong first half performance with plus 12% growth. Moving now to flu on Slide 23. We do expect to achieve in 2023, the same record sales of last year at constant exchange rate, thanks to the recognized quality of our differentiated intense portfolio. From a phasing perspective, we currently anticipate an H2 flu sales split between Q3 and Q4 of 2/3 to 1/3. The expansion in Europe of Efluelda, high dose influenza vaccine gaining market share versus standard vaccine will be a primary driver as well as the conversion from trivalent to quadrivalent vaccines all over the world. In parallel, we continue to observe relatively low vaccination rates due to post-pandemic vaccination fatting and some price erosion in the standards market due to ample supply. But overall, the elderly demographics remains very positive. And based on historical data, we generally expect a rebound in flu vaccination rates in the coming years, similar to what was observed after the H1 and [indiscernible]. And on my last slide, I'd really like to underscore that we are advancing our new vaccine candidates and reported rich flow of data from our pipeline in the first half of the year. Following strong Phase I/II data, our PCV21 candidate SP0202, is expected to enter Phase III in H1 2024. Ambitions to be the first pediatric vaccines with more than 20 serotypes and has clear blockbuster potential. Similarly, we plan to initiate in H1 2024, the Phase III of SP0125, our RSV toddler candidate designed to protect citral entering their second RSV season. Most importantly, we are fully on track to launch Beyfortus [infants] to protect babies going through their first RSV season and to relieve parents and the health care systems from the heavy burden of RSV disease. In the U.S., Beyfortus was approved on July 17 for the prevention of RSV lower respiratory tract disease in infants. Building up on this key milestone an ag ACIP meeting is now set for early next week on August 3 to discuss nirsevimab use for the coming season with both a recommendation vote and vaccines for children program inclusion boat scheduled. Momentum is also very strong in Europe with medical agencies in France and Spain, having published broad infant recommendation for Beyfortus. And where specific budgets have been set to ensure Beyfortus coverage for the 2023 RSV season. With this, I hand the call over to Olivier.

Thank you, Thomas. GenMed sales in the second quarter were EUR 3.1 billion. Our core assets grew 2.4%, driven by double-digit growth of Toujeo and Rezurock partially offset by lower sales of Lovenox due to competition and the absence of COVID-19-related demand compared to the same period last year. Toujeo Q2 sales grew by 15%, driven by solid volume growth, mainly in the rest of the world markets, including China, which we consider to be a key market for this product going forward. As Europe continues to grow in the U.S. based on an increased number of patients and a larger pool of prescribing specialists. Sales of non-core assets decreased mainly due to launches, which continue to be impacted by unfavorable U.S. channel mix and a related true-up adjustment in the second quarter. In addition, sales in China were lower to VBP implementation in May last year. In summary, we confirm our full year 2023 objective and expect GenMed sales to decline at a low single-digit rate compared to last year. Turning now to Tzield. Payers have responded favorably with more than 200 million lives in the U.S. now covered, and we are encouraged by the number of enrollments into our patient support program. Improved family support and a shorter time between enrollment and infusion are expected to further drive positive outcomes for at-risk individuals and accelerate the uptake of this innovative therapy. At the same time, scientific organization, patient groups and policymakers have started to highlight the need to screen for type 1 diabetes proactively. Importantly, at this year's American Diabetes Association meeting, the ADA updated its guidelines to now include a recommendation for Tzield as a therapy for delaying the onset of Stage 3 autoimmune type 1D in Stage 2 patients. With this, I'm handing it over to Julie.

Thank you, Oliver. Sanofi CHC sales in the second quarter were up 0.7%, negatively impacted by the inventory phasing related to the upgrade of our ERP system in the U.S. and Brazil, as I showed last quarter. While the market continues to grow at a dynamic pace, driven by price and mix, digested wellness in cough and cold categories continued to perform strongly with double-digit growth. And when looking at the first half sales performance, I'm glad to highlight that all categories reported growth, except for pain care, which was down versus the exceptional COVID-related demand last year. Sales of others were down 13.4% in Q2 as we continue to streamline our portfolio and divest smaller nonstrategic brands. In the past 3 years, we have successfully simplified our brand portfolio and have halved our number of brands. And over the last 2 months alone, we completed 1 divestment in Europe and signed a second in Japan. Excluding divestments, our organic growth was almost 2% in Q2 and 7.5% in the first half. In parallel, we're regularly assessing growth opportunities to strengthen and scale our portfolio of brands and geographic footprint. As Paul introduced earlier, I'm very happy to present to you our acquisition of Qunol. Once the acquisition closes, Qunol will allow us to participate in the VMS category, 1 of the biggest and fastest-growing categories in the world's largest market, which is the U.S. Qunol is focused on healthy aging, 1 of the most dynamic segments within GMS and is the #1 brand in the U.S. of CoQ10 for Hearts health as well as the #1 brand of Turmeric for Joint health. With a strong science-backed product portfolio, Qunol enjoys above category brand loyalty and has delivered double-digit sales growth due to its premium positioning. Qunol will be joining Sanofi CHC top 5 brands in sales. Integrating this brand into our existing U.S. commercial infrastructure will enable us to unlock future value within the healthy aging segment. Continuing on our ambition in North America, I'm also extremely happy to announce that Sanofi CHC U.S. and Canada were recently granted the B Corp certification. As you may know, B Corp is recognized to be a gold standard among ESG certifications and awarded to companies who have achieved verified high social and environmental standards. This certification will help us to continuously progress and is fully aligned with our ambitious sustainability strategy, which is focused on better self-care and goes hand-in-hand with health care communities and a health care finance. This achievement also enables us to further connect our brands with consumers. As we know that despite high inflation, 66% of Americans and 80% of young Americans, aged between 18 and 34 are willing to pay more for sustainable products. We also have seen net products marketed as sustainable, grew 2x faster than those that were not. We are the first large health care company to be B Corp certified in North America, and I hope many others will follow. With this, I'm handing it over to Jean-Baptiste, our CFO.

Thank you very much, Julia. And well done, both for Qunol and the B Corp notification is really great. On Slide 31, before taking the P&L perspective, let me highlight the underlying sales performance in H1 by separating out some of the special current drivers. We reported sales of EUR 19.7 billion in the first half of '22. When taking out sales loss due to product divestments or [indiscernible] LOE and EAP carve-out, the base becomes just under EUR 19 billion. From there, we added almost EUR 1.7 billion in H1 this year, a growth rate of 8.9% at constant exchange rate. Dupixent across its multiple indication is a key contributor, but I'm also encouraged to see that the recent launches in Specialty Care, plus REZUROCK in GenMed are starting to play a more significant role. Vaccines remain strong on sales were additionally supported by COVID vaccine sales this year. And in totality, we are offsetting the decline in the U.S. glargine business. On Slide 32 when we look at the Q2 group P&L, we see again a slight improvement in gross margin due to favorable specialty care product mix, efficiency gains in manufacturing and supply and COVID vaccine contracts. This was partially offset by generic competition for Aubagio and lower net pricing of Lantus in the U.S. R&D expenses were up slightly driven by the growing vaccines pipeline. Pharma R&D spending was lower in Q2 due to a high base effect as several mid- to late-stage oncology trials were still in progress in the same period last year. BOI grew 6.6% to EUR 2.7 billion this quarter, and it included higher capital gains related to portfolio streamlining compared to the same period last year. More importantly, we continue to benefit from the increased share of profit that is paid by Regeneron towards development cost of the antibody alliance. In Q3 this year, there will be an inverse effect as in Q3 2022, we recorded a true-up related to Q2 2022 development balance. On Slide 33, let me briefly comment on the CHC P&L. As already signaled in Q1, we expected a softer quarter. This was mainly due to the inventory built in the 2 largest markets in anticipation of an important software switch linked to ordering and billing. As anticipated, G&A also continued to grow because of further implementation of the stand-alone organization. This year's Q2 was also supported by a meaningful capital gain linked to product divestment. To summarize, we finished the first half growing EPS, again, almost double digit. This was supported by a strong underlying sales performance when excluding Aubagio. The improvement in profitability was further supported by COVID vaccines-related sales and revenues, capital gains phasing on last year's amended antibody alliance, but more an offset our investments in launches on the CHC standalone organization. Let's move to the outlook. On Slide 36, we are recapping the H2 business outlook. Dupixent is expected to continue its strong performance, thanks to its many indications and also the still low biologics penetration, especially in atopic dermatitis. We assume high rate of generic erosion for Aubagio with the product also going low in Europe in Q4. Flu sales in the northern hemisphere are expected to be similar to prior year level, and then GenMed sales decline is expected to decelerate. We also expect significant contribution from our 3 innovative launches this year, mainly ALTUVIIIO and Beyfortus, which combined could be over EUR 400 million in sales in H2 based on our plans. On the P&L side, we expect our last COVID vaccine revenues of approximately EUR 400 million in H2 to be reported in the other revenues line. Capital gains in the second half will be most likely lower than in H1 and could reach around EUR 200 million. This brings me to my final slide, the full year outlook. Based on our retain business performance in the first half on our COVID-19 revenues, we are raising guidance and expect now EPS to grow mid-single digit at constant exchange rate. We continue to experience headwinds from currency, approximately minus 6.5% to minus 7.5% for full year based on July average exchange rate. Let's now move to Q&A.

We will now open the call to your questions. [Operator Instructions]

The first question will be with Emily Field from Barclays.

I'll just ask 2. On the first one, we've been getting a lot of questions about how a potential competitor entrant in atopic dermatitis could influence Dupixent, particularly from a pricing perspective. I was just wondering if you could provide some thoughts there and sort of your share expectations moving into the back half of the year? And then also just on flu, what impact are you expecting vaccine fatigue to have on volumes for 2023? And then just any other color you can provide there would be great.

Thank you, Emily. Bill, pricing.

Well, look, thanks for the question, first of all, Emily. And we're excited about the quarter that we've had. We're excited about the future, and we're excited about the competition coming actually. I think it helps us grow the market. I think 1 of the key things that you have to remember that the future growth is partially driven by bio penetration. And when we have more products there, it helps drive that bio penetration. Now the other side of that is that the best profile wins. And we have the best profile. I think anything you look at that's coming in the pipeline is either incomplete or just inadequate to compete with what Dupixent has already shown in well over 500,000 patients already globally. So I think anyone coming in has a tough time competing just against the best profile, as I said in the remarks, the gold standard. However, it is a competitive market. And whenever you have a competitive market over time, there's always some impact on price. But we've taken all the competition, the new indications, everything into consideration, and it's all considered in our strong growth that we expect for the future.

Thanks, Bill, and very well said. There is -- people forget we already have a lot of competition, and they're doing a really great job and maintaining the right price and the right balance. So thanks, Bill. Thomas, over to you. Volumes for flu.

As a segue, talking about competitive fields where we have a great product. I think flu is a very good example. Thanks for your question, Emily. It's difficult to quantify what's going to be in volume, the vaccine [indiscernible] impact. But traditionally, you know that we are not communicating specifically a number of fluid doses in terms of volumes but rather on flu sales. Why? Because we are differentiating our portfolio and that's the strategy that has been successful for many years. We focus on products that provide protection beyond to and that's why we are able to really move the market to super product and to a superior here. That's why in a competitive field, we are doing very well. And of course, we remain totally ready to take any opportunity in the market. We do very well. It's a changing market and should the [indiscernible] will be ready to move forward.

Thank you. Thank you, Thomas.

Next question is from Richard Vosser from JPMorgan.

Just 1 more on DUPIXENT just on the quarter. The growth rate in the U.S. fell a bit more in line with the TRx growth. So -- is that -- the mix is now stabilizing in terms of Medicaid and commercial patients? Or is there a little bit more price pressure or a rebate adjustment just some idea of what's going on in the quarter? And then secondly, on the CD40 ligand, efficacy clearly looks pretty good. How differentiated is this? Could this be on safety, convenience, just versus some of the high efficacy products that are clearly taking over the market in MS?

Okay. So maybe, Bill, just to show on, just to cover that off.

Yes, sure. Thanks, Richard. So the U.S., it's 70% commercial, right? And that's been incredibly stable over time. Look, if you're looking at the quarter versus Q1, gross net unchanged and versus last year, there is some additional contracting and rebating built in there but it's all anticipated. And as I said, we've taken this into consideration for the future growth that we expect.

Thank you, Bill. And maybe Dietmar, CD4ligand and how it will be differentiated.

Richard, thank you for the question. I mean, obviously, there are different medicines available right in MS. The data that we've presented at the MS conference at the MS centers conference actually, we feel is unprecedented, right? When we look at the -- when we look at the efficacy, when we look at the reduction in the gadolinium-enhancing lesions, especially the 96% reduction, that really provides a lot of potential benefit for patients. On the positive side as well, when we look at the safety profile that we've also presented at the same conference. It actually looks very, very well tolerable. So we feel we have both on the safety and the efficacy side. a really important new product, a really important new option for patients. It's a new mechanism you know that patients do develop resistance, do we develop progression to the currently available mechanisms and bringing this new mechanism with this profile to patients will be a real benefit. So really looking forward to that.

Thanks, Dietmar. I was about to that actually, that patients still progress, even with standard of care. And we know there's always enthusiasm for a different level of efficacy with the right balance on safety and this will be first and best-in-class. So I think it's pretty exciting for us the data certainly supports that at this point. Next question?

Next question is from Peter Welford from Jefferies.

I've got 2. Firstly, on before. I wonder if you could just talk a little bit about ahead of the ACIP meeting. Your thoughts on the pricing that you'll disclose to -- and also how we should think about for the ACIP what a positive, I guess, recommendation and vote looks like. And I say that just because there was some confusion, I guess, after the meeting for the adult vaccines as to the implications of it. So I wonder if you could just set up your selling as the sort of debates that would be and what a positive outcome looks like from your perspective. Then if I could just go back to the CD40-ligand. Just curious, could you talk a little bit about what the Phase III plan is going to be in that study in terms of -- does a Phase III trial now in that setting, do you have to look at CD20s as the comparator -- or what sort of comparison arms can you use in a study like that now for ethical grounds.

Thank you, Peter. Maybe Beyfortus right around the corner Thomas.

Yes, right around the corner, as you know, very well, registered July 17, ACIP next week, August. We are very excited and confident about the forthcoming recommendation and the voting. Why? I think I want to explain that there has been great work with the ACIP over the past few weeks, and we've been really reassured by the ACIP recognition of the burden of RSV disease for all infants. So a clear recommendation for all infants is critical and will be successful in my view, to ensure equitable access across the population, which is a very important part to look at when it comes to prevention. So during ACIP meetings in the past, key stakeholders have clearly expressed their interest in ensuring that broad and equitable access and therefore, that gives us confidence. Similarly, we expect inclusion into the VFC program because this decision is critical, again, to ensure equitable access for all infants. So moving forward with confidence about ACIP.

Thomas am I right in saying that we're the only preventative RSV on the agenda at.

We are, absolutely. And the second part of the question, sorry, Peter, was on price. Very similar to what we said in the past, we want to mature -- and that's very much linked to the ACIP recommendation. So both go together. If there is a broad ACIP recommendation, we want to ensure there is equitable access for this product to everyone. And therefore, it will be a premium innovative vaccine price well aligned with what was discussed in terms of pricing during the previous ACIP meetings.

Thank you, Thomas. Deitmar Peter had some ideas on how you should run the Phase III for the CD40 ligand. So over to you.

No, thank you for the question, Peter. I mean we're obviously looking at what the right studies are. We will communicate as soon as we really taken those decisions and have discussed them also with regulatory authorities. Let me just point out that this is an important new mechanism. And looking at the role that CD40 plays, now as we have a molecule that has that right safety and benefit ratio, right? We will really look at what are the right studies across the spectrum of MS, right? So there's definitely broad potential for the medicine. And I also want to highlight that CD40 ligand is implied across a variety of diseases, right? So this is a major opportunity for us, not only in neurology, but more broadly really in inflammatory diseases.

Thank you, Dietmar.

Next question is from Seamus Fernandez from Guggenheim.

So just a follow-up on Bay Fortis and sort of the growth expectations based on the ACIP recommendation and the opportunity in hospitals. Just hoping to understand the trajectory of growth. I think historically, for pediatric vaccines, we've seen a substantial uptake perhaps even approaching peak penetration within 3 to 4 years. So just trying to get a better understanding of your thoughts on the trajectory of growth there? And then Separately, on Amlitelimab, just trying to get a better understanding. You're speaking about a broad mechanism of action, longer-acting potential as well as competitive efficacy results in that patient population in atopic dermatitis. Just trying to get a better understanding of how long a duration you're looking at, and also differentiation from other OX40 targeted agents that you've discussed outside of this, where safety of targeting the ligand was viewed to be a potential advantage.

Okay. Thank you, Seamus. Thank you for raising the expectations for Thomas on the [indiscernible]. So Thomas, I'm interested in the shape of the curve, too. So maybe you can answer that.

Thank you, Seamus. Now the important thing, first, we're really ready to launch. And again, you will know that it's the first time ever there will be a broad preventive measure to avoid RSV and Bronchiolitis in new borns. So very exciting, obviously, now when it comes to the curve of that launch, a bit early to say, SMEs. We're first going to get the ACIP recommendation. Those 2 votes as per the previous question from Peter are obviously very important. If we go for an equitable and broad access, which we count on, I believe that it will take, as always, of vaccines a few years to reach [indiscernible]. It tends to be a steady, progressive ramp-up over a certain number of years. So again, we are talking here altogether about a EUR 2.5 billion market, and we believe there is no asset like before in this market. So we are confident about our trajectory for blockbuster.

Good. Well said. Dietmar on amlitelimab, some questions about differentiation against between OX40 ligand and maybe an OX40 and then maybe some suggestion about interval?

Yes. Yes. The I mean obviously, we have not communicated the full data yet. They will be at a conference later this year. But even if you look at, if you step back and look at the mechanism, when you look at the data that we have communicated up to now, there is clear differentiation, first of all, from how is the molecule designed. It is the OX40 ligand, right? It doesn't OX40. It's a nondepleting monoclonal antibody, whereas others that are actually depleting and in that sense, then can lead to, for example, autoimmune phenomena, which we have not seen in the studies that we've communicated. So far. OX40 ligand, the OX40, OX40-Ligand axis, again is broadly implicated in different types of diseases in immunology and in inflammatory disorders, but it actually acts more upstream, right, as I said before. So it really gets to that homeostasis between pro-inflammatory and regulatory T cells. And you get that specifically when you hit the ligand, not so much when you hit OX40 itself, and that really gets to this distinction between do you see our immune phenomenon, do you get the right benefit risk, et cetera, et cetera. What we're also really interested in, and what we were -- what we're looking forward to further discuss then is, by targeting OX40, can you actually also lead to a reset of the immune system somewhat? Do you have an extended effect, which I think is really important with this medicine. And then how often do you have to dose? And I think you're going well beyond with this, well beyond, like, for example, 4- to 8-weekly application then. So I think there's a lot of really positive potential characteristics to this molecule, and we are very much looking forward to share the full data set later during this year.

And maybe later this year, get also to give more specifics on interval, for example, which could be a significant opportunity, we'll find out. I don't want to miss the sort of last bit on -- we have a readout coming on the OX40 ligand TNF in HS. And I think that's also a little bit of something that could be a new standard. Of course, we don't know. But I think we're trying to do something that's not been done before.

It's part of our [indiscernible] platform.

Yes. Exactly exactly.

Next question is from Peter Verdult from Citi.

Peter also 2 questions. On Tzield, I don't know whether this question is for Paul or Olivier or Bill, physician feedback on the drug is pretty impressive in the current indication. So just can I push you on any further launch metrics, number of patients on treatment number of sites that you've got open in the U.S. to offer this 14-day infusion treatment. And then Paul, on PROTECT, I mean, the primary endpoint was positive in recently diagnosed patients, but it was only a numerically trend -- numerical trend on time and range and interesting us. I'm just trying to work out sort of over and above that $2 billion peak sales. Is that proposition still intact without those secondary end points. And then Bill, I apologize, I'm going to come back to Dupixent only because it's probably near term, going to be an area of focus. I mean a lot of people talk about rebating and price, but I'm just more interested in just Dupixent today in the U.S., what is the split between commercial and Part D. I'm just trying to work out -- we all know that Dupixent is going to be a huge drug based on where penetration is today in the current indications and the label expansion plans you've got -- but what we -- we need to balance that with potential short-term volume pressures in terms of your competitor -- the only thing they can do is do a very aggressive bridge program. So commercial patients, high deductible plans, would that create some sort of short-term volume pressure on the Dupixent franchise. So we can explore that a little bit in a little detail, that would be great.