Sanofi (SAN) Earnings Call Transcript & Summary

All right. Good morning, everyone. So my name is Dave Risinger. I cover diversified biopharmaceuticals for Leerink Partners, and it's very much my pleasure to welcome you to this session with Sanofi. And I am pleased that we're able to be joined by the 2 key leaders of the Immunology franchise at the company. So Shaju Backer to my immediate left, is the Global Head of the Immunology franchise; Naimish Patel is the Global Head of Development for Immunology and Inflammation. And so thank you both for being with us today.

And it's actually great timing on the heels of AAD. And so I thought maybe you could start with just some comments on the momentum for the company and quick takeaways from AAD.

Sure. So Naimish, I might talk about the overall and then hand over to you on the exciting amlitelimab data we presented at AAD. So it's the first time we have showcased the whole pipeline at a conference like AAD. And we have specific events we organized preconference or around satellite meetings. And the feedback has been phenomenal. The number of assets we have in play in the dermatology space for AD, HSPN. And not only just the technology, the platforms we have with the nanobody platform, et cetera, we had great feedback from the experts we met with. One of the experts who didn't want to be quoted, her feedback was, "This is a really exciting time to be partnering with you, the number of assets we have in play and the clinical programs, how you're leading with the science." Another one that got really, personally for me, was a feedback on our acne vaccine that we have in development as well. It's one of the highly unmet need areas, acne, and there was a lot of excitement. Again, it's very early, that particular program, but we had a lot of excitement around that as well. And then we had the late-breaker with amlitelimab. Naimish?

Yes, absolutely. And maybe I'll just say briefly, as we highlighted at our R&D Day recently, we have a very intentional strategy of developing pipelines in a molecule. So targeting a key core immune pathway that has the potential relevance to multiple diseases, getting the proof of concept in a single indication and expanding it to multiple additional indications, all within a scope or areas of interest in which where Sanofi today is in dermatology, respiratory and GI with other areas that are a little bit more opportunistic if there's a need, and dermatology is probably the most important one. As Shaju mentioned, multiple mechanisms in AAD as well as adjacent dermatology indications. And most notably, we had the amlitelimab readout at AAD this past weekend. This was a Phase IIb study in atopic dermatitis, where we previously shared data for the first 24 weeks. So there's a part 1 and a part 2 of this study. Part 1 was taking a few different doses, Q4W versus placebo and looking at efficacy at both week 16 and week 24. And what we showed in that part is that especially at the highest dose, which was 250 milligrams plus loading dose, we showed an IGA 0/1 response of almost close to 50%, which is as good as you'll see for any molecule in atopic dermatitis at week 24. We then had a part 2 to this study where we took the patients who were responders and randomize them to either continue dosing at their current dose level of Q4 or withdrawal for essentially up to week 52, which is 32 weeks off drug. And the data we shared at AAD was that if you included all the data, so patients, including patients who take topical steroids, across doses somewhere between 70% to 80% of patients still had a durable response at week 52, which is essentially 32 weeks off drug. And many of these patients had no detectable levels of even amlitelimab in their blood for the last 8 to 10 weeks. Why is that important? So it shows it's core to the mechanism of amlitelimab where we target the ligand, block the ligand to inhibit both T memory and T effector cell function, so long-term reprogramming of the immune response, while upregulating T regulatory cells. And this is an expected effect of the drug without the need to deplete cells, that we're able to reset a rebalanced immune response because there's a much lower pool of T memory cells sitting around ready to activate inflammation. And the T regulatory cells, the natural brakes on the immune system are also upregulated. An additional data that we shared was that even if you look at the biomarkers of both type 2 inflammation and non-type 2 inflammation out to week 52, that there was still durable decrease in those biomarkers, lending further evidence of deep durable response. What does this mean? So deep control of flares and long-term disease control and really talking about now remission from atopic dermatitis in this population, something a terminology that has never been used before any of the previous mechanisms, but now the field is really talking about remission. And so not only does it mean infrequent dosing with Q12 from the outset, the potential to hit a population that's both of mixed phenotype, having type 2 and non-type 2 inflammation, but also deep durable disease control for the long term, which is really novel for atopic dermatitis.

Excellent. That's a great way to kick off the discussion. Thank you. So maybe we could just talk briefly about Dupixent. The product continues to have tremendous success and you have COPD ahead. If you could talk about that application's progress, whether there are any outstanding questions with the FDA. And talk about the opportunity as you see it, considering the greater than 300 eosinophil count, which will play into the market opportunity.

So with the PDUFA date, we have announced in June 27, we put out a press release. So far, we haven't had any questions, I believe. So we're waiting for the next milestone date by the PDUFA date, we have announced with the market opportunity and the patient numbers, the way we stratify is there are around 1 million patients in the U.S. alone GOLD E patients. They are the ones who will be eligible for a biologic treatment. Of that 36 percentage, so roughly 350,000 biologic-eligible patients at the time of launch of Dupixent who would have this elevated deals over 300. But we have the itepekimab assets coming right behind as well, which is designed more for their prior smoker population. So if you look at the total population, we will reach 80 percentage of the GOLD E biologic-eligible population across the 2 assets. So initial launch with Dupixent reaching that 350,000. When you add EU5, by the way, that goes up to 500,000 patients. That's 0.5 million population that will be bio-eligible with -- at the time of Dupixent launch, and then expanding from there to reach the 80 percentage of that population with itepekimab launch as well.

Excellent. That's very helpful. So I'm interested in just talking a little bit about I&I as a commercial category. You're obviously in a phenomenal position to leverage your success to date, your position to date and continue to build on it. And I was hoping to maybe start with having you talk a little bit about AbbVie's success. I know that you worked there previously and you're an outsider. But clearly, they've generated compelling data, but they've also leveraged Humira to help with market access, which has also been very important to their success. So could you speak to that at a high level? And then -- and maybe talk about how you see the opportunity for your company to leverage its assets and I&I in the future.

So in the short term, definitely the opportunities with the itepekimab and Dupixent coming into play in COPD indications. So there, we have an immediate opportunity that's with the data readouts, et cetera. The long -- that's a short-term opportunity for sure. In the longer term, I'm sure you've heard Paul talk about this. At this stage, it's too early to even look at there's a changing dynamic with the PBMs and everything, so we need to take that into consideration as well. AbbVie did that 5 years ago now and -- sorry, 3, 4 years ago now. So we can't look at that model and try to expect the market environment and everything will remain the same. But assuming that we have to explore all options, but it's too early to determine or predict how we're going to do that at that point in time. We still have time. And right now, our focus is to really maximize Dupixent, as we have multiple indications we're launching in Dupixent between now and the end of the decade. In many ways, the life cycle management is not over for Dupixent yet. And then with coming with itepekimab, really maximizing that in COPD, explore more life cycle opportunities for itepekimab as well. So maximizing that remains our #1 priority. Then in the longer term, we'll explore what we need to do as each asset comes into play, and we'll take it forward.

Excellent. So with respect to itepekimab, could you talk about additional life cycle opportunities that you hinted at?

Yes, certainly. I think going back to the mechanism that you're starting there, IL-33 seems to be very relevant, especially in pulmonary indications as a key modulator inflammation, both type 2 and non-type 2 pathways in the lungs. And this is apparent in the COPD data that we have today, where we're the only study with -- only compound in the 33 class with a 350-patient COPD study in Phase II where we reported that in patients who were former smokers, there is a greater than 40% reduction in exacerbations. And the effect was there, whether or not the patients had high or low eosinophils. And so this is a large -- 70% of COPD population is former smokers with either high or low eosinophils. And if you combine that with dupilumab where there's some overlap, it will be greater than 80%, as Shaju mentioned. So we're looking at that population in COPD former smokers. And in that sense, we're really poised to be both first-in-class and best-in-class. Recently, tozorakimab revealed some asthma data where they were not able -- they did not meet the primary endpoint. It also showed relatively low exposures with the dosing regimens that they had. And they've added a third COPD trial with a shorter dosing duration to help risk mitigate for that. So they also have announced delays in their other trials. So we think our 2025 readout now, now they're projecting past 2025 for their readouts, that will be the first to read out in COPD. And potentially with the efficacy data already in hand and good pharmacologic characters because we have a much longer half-life than they do, that we're poised to show efficacy. And then we've also looking at non-CF bronchiectasis as a second indication, very similar and somewhat overlapping lung disease that has to do with chronic inflammation. Also largely non-type 2 driven with neutrophilic inflammation, where there's also probably more indications beyond that, that we haven't announced yet, but looking towards the future as really a potential molecule that can address a number of both type 2, non-type 2 diseases within the airways.

Excellent. And then obviously, TEZSPIRE is going to be generating Phase II COPD data soon, and you obviously are working on TSLP assets, including a combo. So could you just maybe provide a high-level framework for TSLP and COPD? And if it does show efficacy similar to Dupixent, what are the potential implications?

Yes, great question. So maybe I'll start with -- in asthma. Tezepelumab today is indicated for all of asthma. But if you really look at the data, it's -- most of its efficacy is really within the type 2 population. It reduces exacerbations and improves lung function. But if you look at the true non-type 2 patients, the patients have low eos or low pheno, there's really not much efficacy. It's more in the type 2s population. And in that sense, in that population, do beat the data. If you take the similar patient populations, frequent exacerbators with type 2 markers, dupilumab does seem to perform a little bit better, especially with respect to lung function improvement. And so we think tezepelumab may show efficacy in COPD but likely in the type 2 population, and likely, we think not as good as dupilumab, which is part of the reason we designed this other molecule, lunsekimig, to add an IL-13 moiety to boost that type 2 anti-inflammatory response. TSLP is a very upstream cytokine activating inflammation in lungs, largely type 2. And IL-13 is, of course, is a downstream cytokine that mediates much of the tissue, changes in the tissue damage you see in, say, asthma or other airways diseases. We think the combination of these 2, we are shown and preclinical data has synergies. So the 2 together, 1 plus 1 equals 3 or even 4 in terms of the effect. And we are able to show preliminary data along these lines in the Phase Ib asthma results that we shared last year, where we took patients with [ ultra moderate ] asthma who had elevated pheno at baseline exhale -- a fraction has exhaled nitric oxide, which is a biomarker of airways inflammation commonly used in clinical practice. And we were able to show that it's just a single dose of lunsekimig, you get greater than 40 parts per billion decrease in pheno. Whereas if you look at comparator trials but with either TSLP -- anti-TSLP alone, or anti-IL-13 alone, the reduction is in the order of 10 to 15 or so. So we got greater than -- a little greater than 40. So evidence of true synergies. So we're projecting that to be potentially the most efficacious biologic in asthma and potentially COPD as well in the future in that high-eosinophil type 2 COPD space. We'll see also, of course, we'll test it in the low eosinophil population, both in asthma and in COPD as well to see what kind of efficacy we get comparative both to teze, Dupi and anti-IL-33, but we see really as the most efficacious for that most severe population in asthma and potentially COPD with high type 2 biomarkers.

If I can segue on the tezepelumab question, I mean, just to highlight what Naimish said on the asthma front. If you look at the forest plot in asthma, they work well in the high eos spectrum. They actually don't work very well in the low eos spectrum. So when they launched, initially, the all-comers something for the non-type 2 patients, and we saw a slight dip in Dupixent share at that time. Very quickly, the clinicians realize it works much better. And it became almost a replacement for the IL-5s. And if you look at the share evolution since its launch, Dupixent has continued to grow. And tezepelumab has continued to grow, but the IL-5s, it's coming at the cost of the drop in IL-5s. And the other part also from an execution standpoint, I remember when I joined 2.5 years ago, Paul said, you have one of the toughest jobs because in asthma, I was heading up Dupixent, respiratory and gastroenterology at that time. And that's the time when AbbVie was entering the AD space, for example. And he said, the analyst will -- you look at Sanofi and say, "Oh, Sanofi can do it really well when there's no competition first in disease." Whereas in asthma, we have fourth biologic to market and the fifth actually, if we count Sinclair in the U.S. And he said the external world is going to look at how we do well -- how we do in asthma will determine how you will view us as our ability to compete and execute in the marketplace. And last year, in asthma, we became the #1 NBRx with Dupixent. So that was our proof point. Not only can we bring some great assets to market, but we know now we are becoming very good at execution as well. That to us was the biggest proof point, because if you look at our other diseases, Dupixent was first in disease and first biologic in AD, first in nasal polyps, first in EoE. Asthma was the one we have fought the market and came to the forefront.

That's phenomenal. Congrats on that success. So maybe we could -- maybe I could ask another commercial question or 2 before we go back to the pipeline. So clearly, you have what could be a very compelling opportunity with your oral TNF, but many observers get nervous when they see AbbVie's ability to basically completely block any adoption of the biosimilars in the country through tremendous [ rebating ] success. So the concern will be that an oral TNF would be held for injectable TNF failures and the market opportunity might be quite small. But I think you see it a little bit differently. So it would be great to hear your perspective on the commercial opportunity.

So first of all, I think we mentioned this at the R&D Day. Mechanistically, we want to make sure there's a clear understanding. This is not an oral Humira. It's a TNFR1 signaling inhibitor. It's a different mechanism. And at least in our preclinical data, our TPP right now is to be as good or better than TNF, but without the black box warning. The reason we say that is we shared -- Naimish shared the preclinical data and obviously, the modeling, we are seeing no infections at all. If we can extrapolate that into our clinical trials, then we have a differentiated, a new molecule. So that's our first. From a regulatory standpoint, we've had discussions with our internal regulatory team, how do we engage the regulatory bodies to dealing. So that's our starting point because that's important to coming to you the pricing question, mechanistically, we need to delink. That's our first priority. The second one is about clinical differentiation again. If you look at the various diseases, I'm keeping the part aside for a minute from just talk about the clinical differentiation, which will then pull through from the payer part. You talked to -- I mean, we've done a lot of research with this molecule, especially preparing for the R&D Day. At the rheumatology space, there's a strong need for safe orals. And I use the word the safe orals, that's a key. If you look at today, you have the JAKs, which comes with a big safety baggage in rheumatoid arthritis. You look at the IBD space, you look at that, again and you've got the JAKs there as well, but again with the safety baggage. What surprised me was even in dermatologists, you asked them, is there room for another oral? And the way they described it was with the Otezla adoption, even though Otezla never delivered from an efficacy standpoint, never good as the biological, they still adopted it because of the safety. The safety profile was so good. So the feedback was, if you can give us something that gives us a mAb-like efficacy in psoriasis, but Otezla-like safety profile, yes, there is still room. So to replace Sotyktu, the Sotyktu has the efficacy but not the safety profile. So there is definitely a need for safe orals as prebiologic gateway medicine to biologics. There's definitely a need across all the therapeutic areas, at least we have exploded. So the question then is if you create that clinical differentiation, then the payer piece comes into play. The question is, can the payers mandate step through, et cetera? But if we have enough clinical differentiation and that's a different class, then we are going in as a completely prebiologic positioning. Now will some payers still push for that? Yes. So the pricing, we are looking at the elasticity from a pricing standpoint, we'll explore all options. We will see where we can generate the most value for this molecule. The second piece is we also discussed at R&D Day that we want to make this the backbone of combination therapies. So in AAD, another hot topic was this, orals in immunology is becoming a big play for many companies. And we saw the IL-33 data at AAD. We saw BTKi and HS data. So this is becoming a paradigm shift in many ways in immunology, that's the next growth opportunity. But within that, the beauty of orals is the combination. So that's where we want to take a TNFR1si into looking at fixed-dose combinations. Could we combine 2 mechanisms, known mechanisms, again, the same way we do with the nanobody and with the mAb? Could we apply the same methodology in orals? So looking -- doing some CMC work with, say, for example, we could look at the TNFR1si with the IL-23 mechanism in IBD, that will really lift the efficacy. And if we can get a -- do the CMC work and get the fixed-dose combination in that space, that creates a completely different -- and it will be a new entity, from a fixed-dose combination standpoint will be a different completely molecular entity. So we're looking at multiple ways to differentiate both on the clinical standpoint but which will also play into the pricing element you're talking about.

Excellent. So maybe Naimish, you could talk a little bit more about the profile of the oral TNF from a safety standpoint. It's a small molecule and just why it's so much safer. And then just to follow on, on the potential for an IL-23. So J&J is an oral peptide, which obviously has manufacturing and food constraints. Would yours be a small molecule or a peptide if you pursue an oral IL-23 down the line?

Yes. No, great question. So with respect to the mechanism, I think for the TNFR1si, I could start from, so it's a small molecule that binds to the soluble primers of TNF, which is the form that typically binds to TNFR1, the receptor 1. And that is the receptor that's largely responsible for inducing inflammatory signaling. The other receptor, TNF receptor 2, binds only surface for membrane-bound TNF. And that is more responsible for tempering inflammation and helping with upregulation of T regulatory cells. And sometimes, if you get lack of that T regulatory cell element, you can actually get severe infections because of the counter-inflammatory part of it is not properly suppressed. So we think -- and this borne out in a preclinical model of Listeria infection that Shaju alluded to, where a bacterial infection model compared to the TNF biologic, our molecules actually led to less mortality in that model. Of course, this is still early days. We'll have to develop the data with longer-term dosing in the clinic to actually show reduction in severe infections. But we think that, that profile that's unique might be safer than TNF biologics. And also, the other aspect of it is that most TNF biologics have been observed in the clinic to lose efficacy over time, both especially in RA and the IBD space. And it's thought to be maybe one reason is because of the development of antidrug antibodies, and secondly might be the same T regulatory cell effect. And so we think, of course, a small molecule you wouldn't have antidrug antibodies developing, you block the activity of a small molecule like TNFR1si. And so we think long-term efficacy could be potentially better than the biologics because like sustained response, because lack of ADAs and T reg proliferation as well as potential differentiation, long-term safety. So in those respects, it's potentially a unique molecule. We have -- we're not -- maybe -- we haven't shared too much information on internal molecules. We have an oral IL-17 that we're developing internally that we have discussed externally as well as other cytokine targets internally, which is IL-23, et cetera. And I think there's a potential for a combination of TNF with any of these molecules with co-formulation. I think we have to do some more work around co-formulation to look at it. But even recently, we also have an IRAK4 in the clinic and a BTKi in the clinic. And these are also potential future combinations in other indications to think of. So there's a lot of sort of mix and match potential if you have a number of small molecules in the portfolio to bring combination therapy to raise the efficacy ceiling. So both as monotherapy in the long term but also combination therapies.

Excellent. We're over time. I'd love to go into those assets and more in your pipeline. I know that you have a lot that's exciting, but we need to wrap up here. So thank you so much for your time.

Thank you.

Thank you.