Sanofi (SAN) Earnings Call Transcript & Summary

Well, Good afternoon. We're delighted to have Sanofi with us at Cowen's 44th Annual Healthcare Conference, representing the company is Naimish Patel, who is Global Head of Development for immunology and inflammation and Erik Wallström, who is Global Head of Development for Neurology. There's so much going on in these areas. So we have a lot to cover, and we're going to jump right in.

So let's start out with the immunology and inflammation area. Dupixent is a phenomenal drug. So what unmet need in patient subgroups either for asthma or atopic dermatitis are not well served today that still represent opportunity for Sanofi?

Sure. Thanks, Steve. Happy to be here today. I can start with atopic dermatitis. Its a huge disease of 1.9 million patients in the U.S. alone. And today, the market penetration is very modest, about 10% despite there being Dupixent and JAK inhibitors IL-16. And the reason for this is probably the lack of diversity of mechanisms. Atopic dermatitis is probably a more heterogeneous disease than, for example, psoriasis is. In psoriasis, a single mechanism, IL-17 and IL-23 have delivered a huge level of efficacy where almost 90% of patients have almost completely clear skin. The biology of atopic dermatitis is probably more complex and probably more diverse, so that a single mechanism is not going to have that level of coverage. And specifically, there are subtypes of atopic dermatitis that have a biologic profile where they have some type 2 inflammation, but also non-type 2 inflammation, IL-17, IL-22 driven inflammation and particularly patients who have more chronic disease, older lesions, Asian patients and some groups of pediatric patients. And so these -- and today, Dupixent is delivering IGA 0/1, which is clear or almost clear skin of about 35%, 40%. And so a significant swath of patients still do not have complete control of disease. And there's also a significant number of patients who maybe don't have that severe disease, but they're not well controlled on top goals and they're not yet ready to have a biologic for a variety of reasons. And there's no quite safe oral in the space either that can open up that market like Otezla did in psoriasis. So I think there's different patient subgroups that don't respond to this, the single type 2 agent and also different severities that are maybe not ready for a biologic, and those are some areas. And similarly, in asthma, I think there's probably even better efficacy we can get in terms of lung function improvement and exacerbation reduction in asthma. Asthma is also somewhat underpenetrated today despite their being biologics for a much longer period of time in atopic dermatitis, somewhere around 25% or so. And there's no safe oral for the moderate to severe population, either in asthma. So these are some of the unmet needs we think that can really be addressed by the next wave of therapies.

Naimish, we're going to dig into all those next wave of therapies. But before we do that, Erik, let me ask you also kind of a big picture question to paint your area of responsibility. And after this, if there's any questions throughout the session, please raise your hand. This is for you to learn all you can about Sanofi. So Erik, what is Sanofi's long-term strategy in neurology? Is it more than MS, where are you headed?

Yes. I think -- I mean, first, MS is, of course, where we have our history, but I think there are -- and we are moving forward in MS as well. And I think the good thing is that neuroinflammatory treatment principles can be applied in adjacent areas. So I think that's where we would go first. And of course, there's a lot of discussion on [ new inflammatory ] mechanisms in neurodegenerative conditions. We're following that very closely. But there are also other areas, there is genomic medicine, and there are other adjacencies, for instance, in part of ophthalmology where inflammation may be interesting. So I think those are the areas we would move to with highest priorities.

Actually, the adjacencies was mentioned at the December Analyst Meeting as well. Can you give us some examples of those adjacencies in neurology where there's an inflammatory component.

Yes. Yes. I don't want to, of course, jump ahead of myself. And -- but I think I already touched upon some areas. Of course, neurogeneration is a large area. And there, you clearly have some inflammatory mechanisms. And I think the other one I would highlight, it's some part of ophthalmology where you have some inflammatory mechanisms.

Let's move back to the respiratory areas. So Dupixent COPD, probably one of the largest opportunities that's coming in 2024. Naimish, how is the FDA review going? What's the nature of the questions that you're getting? And do you expect an AdCom?

Great question. We've had a lot of consultations with the FDA over the past year to try to accelerate the program, and we ultimately did this early look of the notice data to accelerate our submission to the FDA. We were working in close concert with them, and it's been a very collaborative discussion in part because COPD it's such a huge unmet need. There's essentially been no new mechanisms for COPD in the last maybe 15 to 20 years. And it's the fourth leading or the third leading cause of death worldwide. So it's a very different immunology indication and the other things that we often get with, there's a huge impact on daily quality of life, but we're really talking about mortality when we're talking about COPD. And the studies were done in the most severe patients with severe -- with COPD. So the patients who are maximal inhaled therapy, yet still having frequent exacerbations and frequent symptoms, and both NOTUS and BOREAS showed an excellent reduction in exacerbations, 30% to 35%, a significant improvement in lung function on the order 100 ml to 150 ml as well as improvement in symptoms. So patients actually felt better on Dupixent as measured by patient reported outcomes. And this -- these last two things are a little bit almost unanticipated by the field because many people thought these are such a sick population of patients, maybe their lung function is fairly fixed, and maybe we can't really do much or for them for that. But for that patient of COPD patients with eosinophils greater than 300 at baseline variables show improvements across all these parameters. And we're still in early days of the interactions with the FDA, but we have a PDUFA date set for June and we're pretty confident in the dossier we have submitted and shipped over hopefully very smoothly, but of course, it will play out as they review the data.

No FDA AdCom?

Too early to say, but we're hoping not, of course.

Questions from the audience? So a drug that frequently comes up in conversations with other companies is Tezspire. So in indications where Dupixent and Tezspire overlap, why is Dupixent, the better option?

So Tezspire has an indication -- for the only indications in asthma today and it covers all of asthma, where Dupixent is an eosinophilic subgroup of asthma, which is for Dupixent, 150 eosinophils or greater or a FeNO exhaled nitric oxide level of 25 or greater. And that leaves about 20% of the asthma population uncovered by Dupixent. But in that type 2 population, if you look at the level of type 2 biomarkers and lung function improvement, Dupixent is clearly the best agent for blocking type 2 inflammation and thus improving lung function in that segment of asthma. Tezspire has that role for the low type 2 that's unique to it. And I think that's a clear differentiation from Dupixent. But in that type 2 asthma population still -- most of that beyond just exacerbations and improvement in lung function is very important. And we've actually done a -- where ongoing study in ATLAS study with Dupixent to show long-term that we're able to change the course of disease and prevent long-term lung function reduction. And only the compound like Dupixent can really even try to approach looking at long-term outcomes like that. So we think that's the true differentiation aspect of Dupixent.

Maybe we can move to amlitelimab, also a very exciting drug. How confident are you that it could improve upon the efficacy profile of Dupixent. And Sanofi is pretty confident that you'll beat roclutelumab. If that doesn't happen, where would the analysis have gone wrong?

So first of all, if you look at our -- the Phase IIb data, we have, especially at 24 weeks, unprecedented efficacy with amlitelimab, where over 50% of patients have clear, almost clear skin IgA-01 in the highest dose group. And this is really particular to the mechanism of amlitelimab where blocks OX40 ligand. The ligand refines OX40 receptor, which is on T-cells, and the ligand is inducibly expressed at sites of inflammation. So the blockade is fairly specific to where the disease is in terms of the skin. And we think that's really important for providing differentiation with respect to safety. The one -- the real [indiscernible] is a T-cell depleting antibody that -- will deplete T-cells even far away from the sites of inflammation if they [ suppress ] OX40 receptor. And we think this is a true differentiating factor in terms of the potential for safety, where you're already seeing fever and chills on a high percentage of patients when they start [ procab ] in their studies, indicative of T-cell depletion. And then all you also see a different adverse event profile such as oral ulcers in the 16-week study that they did, which is sometimes indicative of T-cell depletion. We'll look at longer-term studies, of course, to see if there's more evidences of differentiation with respect to immunosuppression and risk of infections, specifically would be the thing to look out for between the 2 compounds. But I think that safety differentiation plus that efficacy at week 24 highlighted its potential. And I mentioned just previously how AD, there is a component of patients who have non-type 2 type 17 inflammation. And if you look at the biomarkers for amlitelimab in our Phase IIb study, it not only gets type 2 biomarkers such as bloody eosinophils IL-13 and TARC, it also reduces IL-17, IL-22, the non-type 2 biomarkers. So it's well positioned to get a slightly different set of patients than Dupixent has today, but with at least an equivalent safety profile.

Questions from the audience? Yes.

[indiscernible]

Just paraphrase the question.

So the question is, are we selecting for those patients? And -- so we prefer not to have a diagnostic to select patients, and there's clear clinical criteria that you can -- that haven't identified -- that will identify patients more likely -- with that IL-17. The strongest one is just the chronicity of the lesions that the patient has. The very old lesions have this specific look with cross forming and almost looking like psoriasis. And there's also patients who are of Asian background and also pediatric patients that often have this IL-17 profile. And so we prefer to have those type of clinical criteria to determine decision-making, and that's what we're looking for, a little bit more difficult in terms of having biomarkers that may or may not be predictive.

Other questions from the audience? Maybe we can move back to neurology for a moment. So tolebrutinib , a very exciting opportunity. But we're obviously attuned to the safety issue. Has Sanofi seen additional pieces of liver enzyme elevation post institution of the risk mitigation procedures and in clinical practice, is it likely that liver monitoring will be necessary?

Yes. So I think the profile has been so far with the revised monitoring that we have that I think the profile has been looking very good. Of course, that is always caveated by the number of subjects. Most of the subjects were, of course, recruited to the trial before we implemented the new measures. And then in terms of monitoring in the clinic. We do, of course, expect monitoring in the clinic. And we actually have our own experience with that from teriflunomide that's required quite extensive liver monitoring, especially in Europe where it was more frequent during many years than in the U.S. So we do expect some -- certainly liver monitoring in the clinic. What's important to know is that there appears to be a time profile with these elevations, particularly month 2, month 3, NMS is, of course, a chronic disease that goes over many months and years.

So is it likely the monitoring would only be initially?

I think the intensity of monitoring would certainly be time dependent. I think that's fair to say.

Okay. And do you expect the [ rent? ]

I don't want to speculate in exactly what kind of -- that regulators will, of course, have to assess the file. So I don't want to jump ahead of ourselves.

Let's jump to another very exciting MS drug that Sanofi is working on that's frexalimab.

Frexalimab

Yes. Have to work on the pronunciation. So the Phase III program, how will it distinguish this molecule? And what's the target profile of this product?

Yes, yes. So the Phase III program actually includes both an RMS part and also one trial with nonrelapsing SPMS, which is quite unusual compared to other programs. That's not something that is standard in MS development. Of course, we do have such a trial with tolebrutinib but if you look across the MS landscape in terms of new development, it's not particularly common. So that's one aspect. But I think more of the differentiation will come from the mode of action. This is a first-in-class in MS. And of course, this is a costimulatory molecule. It does not deplete B cells, which is an important feature. And of course, immunologically, we're looking into what the blocking a co-stimulatory molecule can do. What about -- we are, of course, intrigued by the OX40 ligand data with this long-term effect. And another aspect that is important in the context of MS is this potential effect on innate immune mechanism. Of course you have to see the 40 ligand on the at T cells. T cells interact with B cells. We know that that's important for MS. But we also know that some of the unmet needs is in the innate immune system, and that is most likely important for the long-term development of MS and -- and there, we have a possibility with this mode of action to make a difference for patients.

So can I come back to tolebrutinib for a moment. I think a lot of folks in this room -- since the liver safety findings came out kind of discounted the potential of tolebrutinib in their minds or maybe in their models. Do you think that's fair, can tolebrutinib, given what you know about its current clinical profile, could it still become a dominant MS drug?

I think it can still make a difference for patients. And there's a couple of data points I would like to bring up for tolebrutinib. One is if the clinical pharmacology, we have done and also shared with the community. We have done side-by-side comparison with evobrutinib, tolebrutinib and fenebrutinib. And to summarize these experiments, if -- you know, the combination of brain penetration and potency makes it much more likely that tolebrutinib surpasses [ isonite ] is in the CSF and has a better chance of having a central effect. I think another data point. The second I would like to bring up is the Phase II data. Of course, with caveats of comparing trials side-by-side, but we -- I do think it's fair to say that the Phase II data for tolebrutinib looks stronger than fenebrutinib, for instance. And then the third data point I would like to bring up is the collaborative study we have together with NIH where we're looking at patients that are B-cell depleted on CD20 agents and transitioning to tolebrutinib where we can see with prolonged treatment a reduction in neurofilament in the CSF. So think if we put this together, I think there is a good chance that we will see a differentiated profile and a profile that can help patients in areas that are not well covered by other MS therapies today.

Questions from the audience? Yes, let's move back to respiratory and we'll ask a question about itepekimab in COPD. So the company has alluded to designs that are more informed Phase III designs that are more informed than those of the competitors, which are Astra and Roche. So can you be specific as to what these more informed trial design features are? And perhaps you can give us your view that they're likely to show a difference in [indiscernible]?

Sure. Absolutely. So just to remind the audience, so itepekimab was the first study, first anti IL-33 to be studied in COPD, and we had a fairly moderate size study of 350 patient study looking at exacerbations in COPD. And in this study, which has been published, we showed in specific subpopulation, former smokers greater than 40% reduction in exacerbations. And we saw a signal whether or not there was eosinophils greater than 300 or less than 300. And this is -- this data is what really stimulated the onset of the Phase III program, which is 2 parallel studies with 2 dose arms versus placebo, looking at exacerbation. And subsequently, both AstraZeneca with their anti-IL-33 and Roche with their anti-SC-2, the receptor blocker started their studies. But we concentrate on our former smokers, which is not the case with Astegolimab. And with AstraZeneca, we had much better informed, I think, dose arms. The designs are pretty similar, but Astra recently released some data with their asthma study that failed the primary endpoint and they showed some pharmacokinetic data, a PK data showing low trough levels of drug, and they subsequently added a third Phase III study with a more frequent dosing regimen, which will now read out later. And so we're pretty confident that we had -- because we had -- we went into the trial with data already, both in asthma and COPD about the dose regimens that we have and the population we've identified for this study. And so we're confident. The studies are planning to finish recruitment this year and read out next year, and we really look forward to that.

Questions from the audience? Let's move back to neurology for a moment. So you have a RIP1 inhibitor in development in a Phase II trial in ALS for which an interim readout apparently is coming soon. Obviously, there's not a lot of drugs for ALS. So this could be a real breakthrough. What should our [indiscernible] focus and confidence be in [ this data ].

Yes. So I think it has been publicly released already that trial -- unfortunately, the primary endpoint was negative for ALS. We have the same compound in a trial for MS, and it actually has a little bit nonstandard trial design because we're looking at the 1-year trial duration and looking at more at the -- looking at neurofilament as a primary endpoint. So I think we have more hopes obviously than for MS than for the ALS trial that recently read out.

Okay. And let's move on to your TL1A. So you licensed or you're collaborating on this molecule front with Teva. Maybe you could talk about its profile. And I think we could probably assume that Merck and Roche looked at this molecule in past. So what did they miss?

Absolutely -- I mean I think the -- it's an earlier stage molecule. We don't have IBDs data in hand today where the other ones did, and that's an obvious difference. But I think -- if you look at the preclinical in vitro data, the Teva molecule is much more potent than the other TL1A and also,it's more selective for the blocking interaction between TL1A and the receptor. There's a DR3-receptor that binds to TL1A, and there's a decoy receptor that doesn't signal but serves as a natural sync for TL1A. And that interaction is preserved. So when you treat somebody with the Teva molecule, the decoy receptor still removes the native TL1A from the circulation, which is a differentiation from the others, which also block it. So if you measure free TL1A levels, even a single low dose of the Teva molecule has a very potent effect on decreasing free levels of TL1A to under [indiscernible] levels. And we think this will afford potential efficacy differentiation. We'll have to see, but at least a very competitive dosing regimen. We feel that we have a good chance of getting to subcutaneous dosing, even on induction with this molecule, which is differentiated from -- we don't -- we're not sure where Roche is going, but Merck has an IV induction regimen. And I might also point out that we're currently doing a Phase IIb in Crohn's and ulcerative colitis in parallel where only Prometheus had some open-label data in Crohn's, but -- and the Roivant molecule hasn't studied Crohn's at all. And so we could potentially be first-in-class or close to first-in-class in Crohn's, and you see a little bit behind a potentially more favorable dosing regimen.

When we speak with GI specialists, one of the things they pointed about the TL1A mechanism there's excitement around the potential for a biomarker driven patient selection. Do you see it that way as well? Or do you think there's much broader potential for TL1A antagonist?

It's interesting. So the both Prometheus and Roivant released some data on the subgroups that have -- and TL1A is very genetically validated in IBD where certain polymorphisms that increased TL1A expression, increase the risk of having IBD. But the differential efficacy with respect to clinical remission in the biomarker positive, negative populations was not huge, even the negative population had a fairly good response to TL1A, and so I think any biomarker, you'd have to look at the size of the population that you're selecting for and the relative difference in efficacy, if it's less than half, and there's not a big difference in efficacy why only go after a small population, where there could be other patients that benefit. So I think that is a general approach. We don't have a biomarker in hand today in terms of the Teva -- Sanofi collaboration, but it's certainly something we'll look at when the studies read out.

[indiscernible]

The [ Spire ] compound is quite early. So I don't know as much about that one. So I couldn't really comment on it.

Any other questions? Okay. We're actually out of time, but allow me one more. Please just tell us both what you think the biggest surprise will be in your areas in the next decade at Sanofi. So you know what we think. What do you know that we don't, that's going to be a big surprise. I'll start with you Erik.

Oh, it's hard to look into the future. But maybe I'll pick complement. I mean we have our little [indiscernible] , but I think a complement there, of course, many companies involved in complement. But I think there are still areas where we -- and that may be a little bit unexpected where we can see interesting effects of complement inhibition.

I think especially in asthma is a great example. We're really trying to make -- go beyond where we are today with advanced therapies with focus on moderate to severe patients and go into early-stage therapies where we're going to a more preventative paradigm and 2 compounds, both lunsekimig, or IL-13 TSLP bispecific targeting patients at risk of developing lung function decline in severe asthma in the future and rilzabrutinib addressing patients who are symptomatic, but not exacerbating but both trying to intervene much earlier in disease, which is a larger segment of the population, but -- and going to a more preventive paradigm and really making inroads there. I'm hoping that's where we can really surprise some people and do something just very different than other people are doing in these spaces.

Great. I wish we had more time. There's so much to talk about, but thank you for a great discussion.

Thank you.

Thank you.