Sanofi (SAN) Earnings Call Transcript & Summary

I think at the end of the day, it has to -- it has to work for both parties. -- what is absolutely true is that when the deal was done, the original deal was done, both companies were in a very different space in terms of their ability to contribute capabilities and to work together, and we're taking that into account. But at the same time, we want to make sure that it's a win-win for both sides. And that's what we're working on, and we're making progress.

Okay. Amazing. And when you think about immunology and it's 1 of your core therapeutic areas as you've outlined, how do you weigh whether an asset fits better in the alliance in terms of buying something together with Regeneron, for example, or kind of going asset alone?

So for me, the alliance point is never the starting point. The starting point is always is -- is there a strategic opportunity, and it's the exciting science behind an asset firstly? And then the question is, does that fit best in the alliance? Or does it fit best in a nonalliance play. So that's the way we are evaluating opportunities. And there are opportunities that we're considering in a nonalliance context. And there might be other opportunities, especially in areas where Dupixent already plays dermatology, respiratory in some of those spaces where we would say, yes, it makes sense in the alliance, but it's never the starting point, and I don't think it should be the starting point. For me, that's a how-to-play question rather than, is it amazing science? Is it an opportunity for us to address an unmet need in a patient population that's currently not being addressed. That's always the starting point.

That's very clear. And perhaps we can move on to Dupixent. You recently raised the guidance to EUR 25 billion of sales by 2030. So help us understand kind of where we are on the different indications in terms of what's driving that incremental growth in confidence? Is it a particular disease? Is it geographic expansion? Maybe both help us frame the building blocks?

Yes. I mean we're really excited about the continued growth of Dupixent. We are growing for the first half of this year, north of 30% as you've seen, we've had our first EUR 5 billion quarter, EUR 5 billion quarter for Dupixent. And it's really driven by all of what you just said, it's existing indications. Atopic dermatitis, for example, which is the first indication that we launched in, we have a 20% bio penetration in atopic dermatitis in spaces like COPD you have a single-digit bio penetration. And the same is true across all of the different indications, very low biopenetration rate, even asthma, which is a space that was quite mature when we entered it. Even there, you're talking about 30% bio penetration. So there's a lot of room for growth and opportunity because it means a 20% Bioplan means that out of 10 uncontrolled patients aid that should be on a biologic or not yet on a biologic. So there's a lot of opportunity still to grow that space. And then you think about -- because a lot of these biopen numbers that we are referencing are adult population numbers. But when you look at pediatric population, you're talking about much lower bio penetration rates, even though atopic march is real, right? This is 1 of the areas that we are looking into from a data generation perspective to say, if you treat earlier, can you avoid kids triggering comorbidities basically for children that start with AD, but then potentially develop allergies or potentially develop asthma, other comorbidities. So there's a lot of opportunity for growth in younger groups, younger patient groups. You mentioned geographic expansion as well. And then again, depending on the indication, we're in different life cycles, some of the indications we've just recently -- indications we've just recently launched. Others have been around for a while. And then competition helps, right? It's -- we've always said, with more players coming into fairly immature market spaces and atopic dermatitis is still a very immature market space. COPD is a very immature market space. It helps create the awareness and the education that advanced treatments are available, and it just helps rise boats. So that's how I think about the opportunity. We feel confident about the EUR 25-million ambition by -- and even though when we think about the next couple of years, some of that growth will slow down, right, because you are anniversarying a year where we've also had some GTN upsides. We've talked a little bit about that during the Q2 earnings call. And once you have such sent large base, that you've created. It is harder and harder to show growth rates of 20% to 30%. But this year, we're still able to deliver that, and we're very excited about that.

Amazing, and you touched on COPD and maybe somewhat preempted where I was going. But it's in the relatively kind of nascent stage in terms of market formation. We do have a competitor that just posted very strong data in the [indiscernible], where Dupixent play, how are you viewing competition from IL-33?

So I think, as I already mentioned, I think tozaracumab data is strong data. And given the space, the COPD space being so nascent, I really believe it requires more players to help educate both pulmonologists, but also patients that there are more treatment options out there for them and that an add-on therapy to what they're currently using is really important. I would encourage everybody to look at not just exacerbation reduction in that space, but also look at lung function improvement and quality of life data. We've seen that, especially in the case of Dupixent, where patients especially the lung function improvement that's actually something that they can feel in their everyday life. For example, 1 of the patients that was treated with Dupixent was -- couldn't actually dress himself anymore. His wife had to dress him because the COPD was so severe after having been on Dupixent for a few months, he was able to dress himself again. So these are the small improvements that might not matter for us that don't suffer from that disease, but a really meaningful improvement. And you tend to see that more when you have lung function improvement and you have quality of life improvement. But I really hope that with more options available now in the COPD space, that we can get more biologics usage overall.

Amazing. And you also touched on Q2 having perhaps a nonrecurring gross to net component but also recurring -- of which 340B is a component. So how should we think about the 340B benefit moving forward to the extent you can quantify, that would be useful. And then separately, when thinking about 340B and the legislative changes, how impacted is Sanofi by this?

Yes. So I think Q2 and in general for the first half of this year, the vast majority of the growth is driven by demand, and we expect that to continue. And then there was, to your point, there was a recurring GTN component that was driven not only by 340B, but also by operational efficiencies in general, we always think about how do we improve our go-to-market model and how do we drive efficiencies overall in our business. Part of that was 340B. And while we are aligned with the core principles of the 340B program. There's quite a bit of abuse going on with that program. So we welcome the current discussions. They're still ongoing. It's too premature to say where they will lead but it's definitely helped us to really say, how do we get more control around 340B. We call it 340B scrubbing that we've successfully done. Again, 1 of the elements that has driven the operational efficiencies and some of that will be recurring, but some of the GTN benefits that we saw in Q2, in particular, was a one-off effect of some accrual releases from prior periods. So -- and that, of course, won't recur. And then just a plug for 2027 as we anniversary some of the GTN benefits from this year, you won't, of course, see that happening again because you reach a moment especially from a 340B benefit perspective where you can't do more. So I don't expect that to increase significantly over time.

Okay. Very clear. And Sanofi have outlined kind of multiple life cycle management opportunities to detect and whether it be Q4 weekly high dose co-formulation, how should we think about the strategy here? Is this to strengthen IP? Or is it they can be commercially meaningful? And if so, are these upside to the EUR 25 billion target?

It's all included in the EUR 25 billion target, even though like we definitely look at those as opportunities to help drive better patient satisfaction. And there are 2 elements to it. There is a 600-milligram alpha opportunity that we are pursuing, which is specific for asthma, Q4 and -- and then there is the co-formulation with [indiscernible] that we had talked about in our Q1 earnings call, which is also a Q4W dosing opportunity, and I'm thinking about it more from a -- how can we deliver better experiences for patients in general. That was always part of our strategy to think about how do we provide more convenience in general for Dupixent. IP, we will always strive to protected with IP, but it's much more of a patient opportunity play than an IP play, at least for me personally.

Okay. And we're seeing longer acting kind of competitors pursue the AD market, particularly [ Apergy ] AbbVie, for example. So how should we think about some of these longer action players as we move forward? Is your own Q4 weekly enough of the defense?

I don't -- yes, I don't see it as a defense. First of all, I think when you think about longer-acting drugs, for me, the first thing that any player needs to or any asset needs to hit is efficacy and safety, right? Because if you don't have a proper efficacy profile that can compete with the standard of care, and that is true in any of the indications you need to be good at relieving itch and skin clearance in atopic dermatitis. And as we talked about in COPD, it's not just about exacerbation reduction, it's about function improvement, and it is about quality of life. So first of all, you need to hit on efficacy properly. And then safety, and I think that's where Dupixent really has just years of safety data that is unmatched in 1.5 million -- more than 1.5 million patients on therapy today but many more patients that we have treated over the years, that matters. It matters especially to dermatologists, but also to many other specialties that we work with. And then to your point, if there's a long-acting opportunity on top of that, that's great. A lot of these programs are in earlier stages, right? We have not seen Phase III pivotal data yet. So that will hopefully come. And then I really believe that there is opportunities for more players to play in the current context, given what I said earlier about bio penetration rates, et cetera. So let's see where the data goes and how they read out and then we'll be able to talk more about those.

Very clear. And taking a step back, Sanofi have also outlined our EUR 10 billion sales target for your PhRMA new launches. What are the 1 or 2 assets within this portfolio where you see kind of the biggest upside or you are most excited about versus Street expectations.

I think the I'll mention 3 because I feel there's a diverse set of assets that is included there. So on the 1 hand, Avid from the Blueprint acquisition in systemic mastocytosis -- it's a really important drug that is addressing a real unmet need in a space that is underserved today. And there are many patients who are diagnosed on systemic mastocytosis, but they are not yet on the appropriate therapy. So our ability to put our rare disease capabilities behind Ayvakit and working together with our rare disease teams, especially the customer-facing teams also the knowledge that we have when it comes to how do you work with advocacy groups, how do you find patients, how do you diagnose them? How do you convert them on therapy? And how do you keep them on therapy -- all of these things will really help us continue the growth trajectory and the patient uptake on Ayvakit that we're currently enjoying and there's a lot of opportunity there still. The second 1 is ALTUVIIIO. We have reached blockbuster status with ALTUVIIIO in 2025, and we see continued growth for ALTUVIIIO. It's the most switched to product. in the [indiscernible] space and really something where we see a lot of opportunity for growth still going forward. And then Sarclisa, where in multiple myeloma space, we are getting into earlier lines -- we're now -- we've now launched a subcu formulation for Sarclisa with an on-body injector, which we believe from a physician experience, but also from a patient experience perspective can really help differentiate us from DARZALEX. So those are the ones that I'm excited about that hopefully will drive continued growth in the future.

Okay. Amazing and Belen has spoken a lot about the kind of Phase I to Phase III date when we think about R&D and more rigor and being driven by the science. So how early can commercial be involved in the decision-making make sense scientifically, but the commercial hurdle, it doesn't meet it or it may not be attractive in your view. What role is commercial now playing at the Phase II to Phase III gate?

Yes. So Paulo and I really believe that this is a partnership between commercial and R&D. And that's the way we want to work. We co-own the TPPs, the target product profiles. -- and we're working really on this together because there needs to be great science, but the science needs to really -- by the time it launches, address an unmet need, be differentiated, as you said, versus the competitive set that you will likely encounter and then have sustainability to it over the time frame that you have when you commercialize it. that's how we look at things. There is definitely a desire for more rigor and more discipline around how we make those decisions to go from 1 phase to another. And that's what Paulo is very focused on. I'm very focused on in Berlin as well. And that's what we're continuing to work in partnership to get on.

Okay. And perhaps in the last few minutes were just to finish. So we've talked a lot about M&A, Regeneron collaboration. What do you think the market is missing or misunderstanding about the Sanofi equity story from here? And is there 1 asset or program that you're particularly excited about that you would like us to focus on.

So when I think about the story, our story, it's -- I think about the fact that we don't have any meaningful in this decade. It's going to happen in the earlier part of the next decade. So we have runway. We definitely -- our story is all about increasing R&D productivity so that we can drive internal innovation, and we will complement that with external innovation. We talked about the desire to go for a later stage and commercial deals potentially to help with that. And from that perspective, I really believe that we don't get maybe enough credit for our pipeline because we have 60 assets, 6 big programs in the pipeline, but I understand why. I understand that we've had some setbacks, and we've had -- we've also made some decisions on not moving forward with some of our assets. I believe those were the right decisions. I'm very convinced about that because if you don't bring meaningful innovation to a market, then you should move forward with it. But now it's up to us to actually let actions speak louder than words. So we can talk about intentions, and we're very focused on moving forward with some of the things we talked about. And hopefully, next time we meet, we can talk about some of the actions we've been exercising and implementing, and that's what we're focused on, making sure that we can deliver on some of the things, some of the plans we have so that you can see that we are literally moving on the things that are key priorities for us.

Okay. Amazing. Thank you so much, Manuela.

Thank you.

Great. Thank you.