Sanofi (SAN) Earnings Call Transcript & Summary

European health care spec sales of Bank of America. Today, I'm with Manuela Buxo and Elizabeth Laws of Sanofi. They're going to start off with a quick intro. And then the omnipresent voice you're going to be hearing is Graham Parry, our European research analyst who's going to be leading the Q&A. In any case, you do have a question that pops up throughout the Q&A, I'll be up here kind of looking for any hands to call on you in case you do want to ask a question during the presentation. With that, I'll hand over to Manuela.

Thank you very much, and thank you for joining us, and thank you also for those that are joining us online. My name is Manuela Buxo. I'm the Global Commercial Head for Dupixent and Itepekimab. And I've been with Sanofi for almost 10 years now across a variety of commercial leadership roles. And I'm joined here by Liz Laws, who is a fearless R&D leader and the Global Program Head for Dupixent and really somebody that has created a playbook for Dupixent together with her team. And we're really excited to have the session with all of you today. As you've heard in our Q1 earnings call, Sanofi is off to a great start, 7% growth in sales in Q1, which is driven by multiple launches, including, of course, the new and existing indications on Dupixent. Dupixent continues to grow very strongly in demand and that is driven by, of course, U.S. demand growth but also ex U.S. demand growth, EUR 2.8 billion in sales in Q1, growing 25% versus previous year. Ex U.S. growth has accelerated to over 50% driven by indication expansions. And we now have 850,000 patients on therapy with Dupixent across the world. And the growth that we see, especially in markets like Germany, Japan and China, shows you how much potential there still is for this brand to further expand given the highly underpenetrated spaces that we're in. Dupixent is, of course, the foundation of our immunology pipeline. And we're very excited about the pipeline that we are building. We have a bold ambition in the I&I space, and we believe there is a lot of opportunity for growth still in that space. It's a highly underpenetrated market. We know how to succeed in this market. And it's not just about meeting the needs of patients that are already on therapy on immunology treatments, but it's really about the opportunity to expand penetration into -- or expand the penetration into innovative therapies and large patient populations that are eligible but are not yet on advanced therapies. And that's what we are here to do. And of course, the starting point of that vision and that ambition is the transformation journey that we've been on, especially on the science side of things. And I'm handing it over to Liz to talk a little bit about the progress on Dupixent but also on other I&I assets.

Thank you, Manuela, and thank you and hello to everyone in the room and on the webcast. It's very echoey. So as Manuela mentioned, I've been with Sanofi R&D leading Dupixent for the last 9 years, actually. I've been with Sanofi R&D overall for the last 14 years. And I've actually seen us build Sanofi I&I into an industry leader. As mentioned, we sort of wrote the blueprint for building a multi-indication and a blockbuster, and we continue to refine that blueprint, and we're doing it faster and better with our new assets. We have a -- we continue to have a steady news flow with our I&I assets, as you saw in our Q1 earnings for Dupixent for COPD, we filed globally for eosinophilic esophagitis. We had the U.S. approval. And for chronic spontaneous urticaria, we got our approval in Japan. For amlitelimab, we showed the new Phase IIb data showing potential for best-in-class efficacy for maintenance of response in atopic dermatitis patients. And then for rilzabrutinib, we saw the positive Phase III data in ITP as well as encouraging data from the asthma high-dose arm of the asthma Phase II trial. I'll reiterate what we said at R&D Day. We have the right assets, we have the right strategies with the right people and support from all levels of our organization to really deliver on our ambitions for our programs. So I'll turn it back to Manuela.

Yes. And we're going to get right into the Q&A. But given the strong Q1 results, given what we're building, of course, we're convinced that we will hit the EUR 13 billion target that we have given for Dupixent for this year in terms of net sales. And we're also very excited about the transformation journey that we've really gone on as a company, end-to-end transformation, from targeting all the way to launch. On Dupixent alone, we will launch at least -- hopefully, at least 8 new indications including COPD, as Liz was just saying. And we're also excited about itepekimab, which complements very nicely the COPD Dupixent franchise. We can talk about that a little bit later. So we're really excited to answer all of your questions, and I'll hand it back over to you, Dominique.

Graham, we're ready to start the Q&A.

Great. Thanks, guys, and thanks, Manuela and Liz, for that. And thanks, everyone, in the room. So if we could just a kick off with the rough contribution you're seeing on the commercial side to the growth now across the different indications. How much of that's coming from AD, is in eosinophilic esophagitis, nasal polyps, et cetera, it just helps us understand where the growth is coming from now?

Absolutely, Graham, and it's nice to hear your voice. So on contributions, we're not going to, of course, give indication-specific details. However, what I can tell you is atopic dermatitis is, of course, our most important indication, will remain our most important indication. We've previously communicated that on atopic dermatitis as well as asthma and nasal polyps, we have reached blockbuster status for other indications. PN has been communicated as one of the most successful launches in dermatology. Eosinophilic esophagitis has also been a very successful launch, and we will continue to grow across all of these indications over time. As I mentioned earlier, all of them are highly underpenetrated areas. We're talking in AD across some major markets around 9%, 10% bio penetration. So there's still a large part of the eligible patient population that is not on treatment on asthma that is slightly above 20%, right? So in the U.S., it's a little bit higher because we've been on the market for longer. But there is so much opportunity for growth in those indications. And at the same time, we also need competition to help us grow the market. There is space for more than one product. There needs to be more than one product in those spaces because to some extent, they're also heterogeneous patient populations. So looking forward to -- for more growth in those spaces, but definitely a lot of things have already been achieved.

Got it. And then on AD, I think you touched on the penetration in the U.S. Where do you think that can get to over time? And if you could actually address the fact that it's more of the growth now, if anything, seems to be coming ex U.S. So just the time scales on increasing the penetration rates. So I think you'd said mid-single digits across most European markets. And what drives that up?

Yes. So maybe first, your question on AD specifically. So in the U.S., we are still below 15% bio penetration on atopic dermatitis. And we expect that to double. You can see that in other areas that are more mature that have had -- like rheumatoid arthritis, psoriasis that have had biologics for a longer period of time. And we definitely believe there's a lot more room for growth in AD and, as I said, the other indications as well. When I look at the accelerated growth ex U.S. versus U.S. growth, first of all, let's remember that even in the U.S., TRx growth was 25%; NBRx growth, 22% in Q1, right? So there is a lot of growth in the U.S. But ex U.S., it's simply a timing question, right? We have launched several indications later in markets like China, for example, where we currently have atopic dermatitis launched. We just got approval for asthma in November 2023. We're looking forward to hopefully launching COPD there. But you can see that we are, ex U.S., a little bit more delayed in terms of when do we launch new indications and also when do we launch demographic expansions into younger populations. So that's what's driving more accelerated growth. But across the board, demand growth is very, very strong.

Okay. And when do you start contracting for 2025 in the U.S.? And do you think lebrikizumab is going to be coming into those conversations given the expectation that should be approved before the end of the year?

Yes. So I think in terms of contracting, we are in the midst of contracting for 2025 as we speak. And in general, our -- we have a very favorable payer coverage, as you know, right now. And we have a very robust long-term access strategy. So we have anticipated competition coming in. We have anticipated indication expansions, new indications coming in. So that has always been part of the mix. And overall, of course, if you have -- if you're expanding through new indications or if competition comes in, it will create some pressure. Again, that has been planned for, but at the same time it also helps you grow the market and helps you grow the overall pie. So that's just part of the game, and it has all been planned for. And we really -- the long-term access strategy is all around profitable growth for Dupixent, and I'm very confident that we can continue that and achieve it.

Got it. Okay. And then in terms of where you see or expect to see the new biologics coming into the market, so you've got lebrikizumab but also likely the IL-31 nemolizumab from Galderma as well coming in. Do you see those as being competing for de novo patients? Or do you think Dupixent will retain the bulk of that and these are going to be sort of second-line agents and patients not getting optimal outcomes on Dupixent?

Yes, I can ask Liz also to talk a little bit scientifically how they compare as molecules. I think at a high level, I would say, first of all, as I reiterated at the beginning, the more players in that market -- we've seen it in psoriasis, we've seen it in rheumatoid arthritis. The more players, the more it helps us grow the overall market. We need to grow bio penetration in those markets, and one product alone cannot do that. So we always welcome competition for that reason alone. When I look at lebrikizumab, for example and, Liz, please correct me if I'm wrong, but we always look at it as an incomplete product. It -- Dupixent will continue to remain first-line. It has a very established efficacy and safety profile, safety data, real-world evidence for more than 5 years. And lebrikizumab is an IL-13 but misses the IL-4. It doesn't -- it's not differentiated from Dupixent. So yes, it has a space in the market, but Dupixent will continue to be the first-line treatment and will continue to be the market leader for sure. And the same with Nemo, when we look at the results, it's -- we have very strong itch data on Dupixent. And when we look at PN, for example, it's undifferentiated. When I look at the efficacy data in AD, I don't think it's that impressive. But again, more players help us grow the market. They will have a share of the market, but we will definitely remain a key player. Anything, Liz, that you'd add?

Yes. No, maybe just one thing to add. We like to say that we're a pipeline and a product. And so of course, we have had more type 2 diseases approved in both lebri as well as IL-31 have not really expanded beyond the dermatology space. So serve in terms of overlapping diseases, type 2 -- underlying type 2 inflammation driving your overall systemic course of your presentation, I think there's opportunity there for us to really differentiate.

Absolutely. Great point.

Got it. I just wanted to move on to COPD. commercial opportunity first and I am sure there are others in the room would have questions on regulatory pathway as well. But when you talk about the 300,000 U.S. patients with type 2 COPD, could you just clarify how you define the type 2? Because in -- I think in the sort of pre-Phase III worlds, actually used a fairly broad number of things to define it that Phase III trials just looked at eosinophils greater than 300. So is that 300,000, is that effectively what you see as the -- is eosinophils greater than 300 cells per microliter population? Or is that a broader population that have other things like tracking this reversibility, for example?

So the patient population is pretty clearly defined also in terms of our clinical trials. It's the GOLD E population with an EOS higher than 300, as you say, Graham. And this is exactly the 300,000 population that we have looked at, right? So if you look at EU5, Japan and the U.S., it's 1.7 million patients that are uncontrolled. So GOLD E patients with an EOS higher than 300. And for the U.S., that's the 300,000 patients that you're talking about exactly.

Yes. Got it. Okay. And in terms of accessing that population, once you're commercially approved, do you see that you're already effectively addressing most of the prescribing community through the asthma indication, and this is just a matter of education around getting people to do eosinophil testing in COPD patients? Or do you need to actually have any commercial capabilities?

So I think it's a mix. There's a large part of pulmonologists who -- we are already visiting that know Dupixent very well because of our asthma indication. And of course, they will -- it will be easier to talk to them about COPD because they have experience with Dupixent. There is a population of pulmonologists in the U.S. that are really focused on COPD. So we will have to educate them. And then in general, I think we have to educate around EOS testing in COPD, right? It is something that given the heterogeneous patient population in COPD, it is important that the type 2 patient is clearly identified. So that's the work that we need to do, working on really identifying what is that patient clearly, what's that patient profile, how do you identify it. But given the urgency to treat, let's remember COPD, the third leading cause of death globally. 150,000 people in the U.S. alone die every year from COPD. It is a significant health care cost burden as well. So there is a real urgency to bring patients and get access -- give those patients access to treatment. Having said that, though, we need to educate patients. There hasn't been innovation in this space similar to what we've seen in atopic dermatitis space for almost a decade. So we need to educate patients, make them aware that there's a new treatment. We have to educate pulmonologists, and we also have to create access -- broad access, which is our ambition in this space. So we really see an inflection point in 2025 for COPD, assuming that we get approval, of course. But there's definitely an urgency. And at the same time, we're very clear who we are treating, how do we need to create awareness and how do we need to educate.

Got it. Okay. And then just on that, you talked about this sort of different pulmonology space. The target prescriber population, how many -- what proportion do you think you're already addressing? And what proportion are those COPD specialists that you will, I guess, need to educate de novo?

I think we are addressing already between 70% and 80% of the pulmonologist population, specifically in the U.S.

Great. And then perhaps if we could just shift on to the regulatory part. So you'd said that, if approved, and there's obviously been some turn pro with the FDA. So we general set on earnings call that had requested additional data on subgroups or subpopulations. I think they most recently said that they do expect the FDA to review in time. But just if you sort of get your sort of commentary on what it is that the FDA is requesting. And is there concern here that the efficacy is being driven by a narrower group than the EOS greater than 300? So are they looking at a narrower subpopulation here? Or we are looking at the potential threshold, you have a broader label?

Maybe I'll start with, as you know, BOREAS and NOTUS were 2 replicate, highly positive statistically significant and clinically meaningful studies in COPD patients with the eosinophilic phenotype. So we're very excited by the results. As is usual with the agency, we go back and forth with discussions with them in terms of analysis of data. As you were well aware during the review, we had submitted some additional efficacy request from them. We're not discussing specific subpopulations at this moment, but we can rest assure that all populations that have been analyzed have seen consistent and clinically meaningful results. So we are -- we continue to remain positive on the overall filing. And we will see in the -- we sought PDUFA for June 27 at the moment.

Got it. Okay. I think the indication that you file for is COPD with type 2 inflammation. I noticed on their core, Regeneron referred to as eosinophilic COPD. Is there a subtle difference between the 2?

So we studied the patient population that has screening EOS of 300 or above. If you take a look at some of our publications at baseline, about 40% of them fall below 300. So I think for us, type 2 is sort of -- there's no set defined cut point for that. So type 2 is more descriptive of the patient population, but eosinophilic is sort of what we studied. So we'll see where we get with that discussion.

Got it. Okay. And if it was description of the label included is eosinophilic, do you see that would limit the commercial opportunity to your patient population in any way at all?

No, we don't. The same population that we talked about earlier, Graham, the 300,000 would be the same population that we would consider for that label.

Got it. Okay. And then just remind me the timing of data submission of what they've requested and when you would actually know if this is a major amendment and if you do have a 90-day delay or not.

So I think Regeneron indicated on their earnings call that the deadline for the response was end of May and that we would be responding soon ahead of that time. So we will hear, I guess, after at some point between now and June 27, I guess.