Investar Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
July 28, 2023

There are 19 speakers on the call.

Operator

Good morning, good afternoon, and good evening to everyone. Thank you for joining us to review Sanofi's Q2 2023 results, followed by a Q and 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 d'Or registrement Universelle for a description of these risk factors.

Operator

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 and D at Interim the Global Business Unit Heads, Bill Sibault, Thomas Triomphe Olivier Charmey and Julie Van Langeval and Jean Baptiste Duchetillon, the Chief Financial Officer. For the Q and A later, you have 2 options to participate. Option 1, click the raise hand icon at the bottom of your screen or option 2, submit your question by clicking the Q and A icon at the bottom of the screen. And with that, I'd like to turn the call over to Paul.

Speaker 1

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 Q2 of 2023. Starting with our sales performance on Slide 6, we delivered another quarter of growth in Q2 With 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 seen investor event last month in London. The approval of PayFortis in the U.

Speaker 1

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 Healthcare also continued to grow. Urbazio, our last meaningful LOE in the decade, as well as non core assets in Gen Med declined as anticipated. In summary, based on our solid performance and And with the expected healthy underlying momentum in the second half of twenty twenty three, we upgrade our financial guidance for the full year.

Speaker 1

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 Our standalone consumer healthcare business grew 6% in the first half, while we continue to streamline the CHC product portfolio and divest smaller non strategic brands. Now on my next slide, Let me take a moment to discuss how we continue to drive shareholder value for our CAC 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.

Speaker 1

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 Cunyal that we announced this morning is addressing the strategic gap in one of the fastest growing VMS categories and has the potential to unlock the additional value.

Speaker 1

Julie will tell you more about the acquisition in just a few moments. On capital allocation priorities, they remain unchanged, focused on investments into science and innovation, 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, 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 €1,000,000,000 of peak Those three products, Zempozyme and J. Mo and Cablivi were above €250,000,000 in sales in aggregate the 1st year of their launch.

Speaker 1

This year, we're launching another 3 innovative products, each of them with significant blockbuster potential. We believe Altuveo, Bayfordus and TZIAL together can add up to at least €5,000,000,000 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 Dietmar dive deeper into the science behind our recent positive R and 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.

Speaker 1

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 Prevention 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 confirmed to us that protecting as much of the beta cell mass for as long as possible is a critical clinical benefit for patients.

Speaker 1

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 and 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.

Speaker 2

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. For axelimab, Our 2nd generation investigational anti CD4 D ligand antibody is implicated in the CD4 D ligand pathway appearing to be involved in the MS related inflammatory process.

Speaker 2

The inhibition of the CD4DCD4D ligand axis in the periphery, up Stream 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 2 data of raxelimab in the 1st CD4 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 percent of participants in the higher dose raxelimab arm were free of new gadolinium enhancing T1 lesions. Based on these unprecedented results, we plan to advance raxelimab into pivotal trials in MS in the first half of next year.

Speaker 2

Turning to immunology, we have recently announced positive Phase 2b data for emlitelimab in moderate to severe atopic dermatitis. Emblitelimab is a fully human, non depleting monoclonal antibody that binds to OX40 ligand, a key immune regulator. It has the potential to be a 1st in class treatment for a range of immune mediated diseases and inflammatory disorders, including atopic dermatitis and asthma. Amlitalumab acts more upstream than Dupixent and aims to restore immune homeostasis between pro inflammatory and regulatory T cells. In this dose ranging Phase 2b study treatment with amlutelimab 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.

Speaker 2

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 Emily Telmes potential for disease modification and infrequent dosing. And we look forward to sharing the full results later this year. We are preparing for Phase 3 studies in atopic dermatitis to begin in the first half of next year. Moving on to my next slide.

Speaker 2

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 SARS-four forty three-seven 65 in asthma. SARS765 is a bispecific nanobody that targets both IL-thirteen and TSLP. With its unique two binding domains, we see this molecule producing a synergistic effect compared to both anti TSLP and anti IL-thirteen, 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 2b program by the second half of the year.

Speaker 2

Now on Slide 15, our regulatory and R and D milestones. As Paul highlighted earlier, we made great Progress on delivering our pipeline, including the landmark Boreas results in COPD and the approvals of Altuveo and BayFortis in the U. S, to name just As we have moved to the second half of twenty twenty three, let me also update you on tolebrutinib. As you know, we currently have 4 Phase 3 studies ongoing, of which 3 are fully recruited. The total Brutonin Phase 3 trials are event driven and powered based on reaching a predefined number of clinical events defined as 6 month confirmed disability worsening or progression.

Speaker 2

We used historical data to estimate event rates that led to the original projected timelines. As far as the readouts Of the trials GEMINI-one and 2 in RMS are concerned, the current actual event rate occurs at a pace that makes us confident that the readouts will occur in the middle of next year. In addition, based likewise on event rate analysis, we now 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 timeline 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.

Speaker 2

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 our 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 is close to my heart and aims at the inclusion of communities that are historically underrepresented in the development of pharmaceutical innovation.

Speaker 2

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 and D Strive to have these communities represented in our clinical trial programs as much as possible. It is our responsibility as a leading biopharmaceutical The 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,

Speaker 3

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 Abagio 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.

Speaker 3

In rare diseases, our Fabry and Pompe Franchise reported near double digit growth in the second quarter with Nexviozyme as one of the key contributors. We are very pleased with the launch of the NexvioZyme in the U. S. And ex U. S.

Speaker 3

Markets where we continue to successfully drive switches to NexvioZyme 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 percent reaching almost €2,600,000,000 in a single quarter. As highlighted on the slide, The brand drove continuous robust growth in both the U. S. And ex U.

Speaker 3

S. Geographies. Roughly 6 years after the initial launch of Dupixent and AD in the U. S, We remain very excited about the outlook for the brand's outstanding commercial success and expect to cross the €10,000,000,000 mark this year. Our key 2023 regulatory milestones are on track and provide additional sources of significant future growth.

Speaker 3

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 and additional patient populations in key markets such as Japan and China.

Speaker 3

Moving to Slide 20, let's take a closer look at the The brand continues to grow its leadership as the number one MBRx 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 Spirits Global Insights.

Speaker 3

The report highlights Dupixent and prurigo nodularis as the number one 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 Pregu 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.

Speaker 3

Asthma market, Holding the number one MBRx share in respiratory biologics for the last three 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 Ultubio, another exciting launch in specialty care. As Paul mentioned earlier, we are on to unlock the full potential of this important new therapy in hemophilia A.

Speaker 3

We are already seeing very encouraging early launch indicators and strong momentum going into Q3. Altuveo 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 LTVO in the U. S. While still early in the launch, switches are mostly coming from Heme competitor products, including approximately 10% of switches from Henlibra. We believe this positive trend will continue as more patients gain first hand experience with the benefits of high sustained factor levels in the normal to near normal range.

Speaker 3

Commercially, we are making fast progress as well. Over 80% of our priority accounts who represent the majority of volume share in the Heme 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 150,000,000 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 Altubio while their insurance coverage is verified. With this, I'm handing it

Speaker 4

over to Thomas. Thank you, Bill. In the Q2, vaccine sales were up 9%, driven by PPH performance, With strong Pantaxim sales in China and the Exaxim 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.

Speaker 4

S, Pexelis 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 JF sales, The franchise performance was stable, signaling that travel and pandemic vaccinations are back to the pre pandemic level. Of note, in Q2, we recorded an additional €59,000,000 sales linked to the remaining European shipments of our COVID-nineteen booster Be pressed in beta. It's not worthy that during the spring booster campaign in the UK, about half of the COVID-nineteen doses used were Sanofi boosters.

Speaker 4

Overall, vaccines GBU 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 Influenza portfolio. From a phasing perspective, we currently anticipate And H2 flu sales split between Q3 and Q4 of 2 thirds to 1 third.

Speaker 4

The expansion in Europe of Effueta, High dose influenza vaccine gaining market share versus standard dose vaccines 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 fatigue and some price erosion in the standard dose market due to ample supply. 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 H1N1 flu pandemic. And on my last slide, I'd really like to underscore that we are advancing our new vaccines candidates and reported rich flow of data from our pipeline in the first half of the year.

Speaker 4

Following strong Phase III data, our PCV21 candidate SP-two zero two is expected to enter Phase 3 in H1 twenty twenty four, ambitions to be the 1st pediatric vaccines with more than 20 serotypes And has clear blockbuster potential. Similarly, we plan to initiate in H1 twenty twenty four the Phase 3 of SP-one hundred and twenty five, Our RSV tota vaccine candidate designed to protect children entering their 2nd RSV season. Most importantly, we are fully on track to launch Bay Fortis this fall to protect babies going through their 1st RSV season and to relieve parents and the healthcare systems from heavy burden of RSV disease. In the U. S, BayFortis was approved on July 17 for the prevention of RSV lower respiratory tract disease in events.

Speaker 4

Building up on this key milestone, an Ad hoc ACIP meeting is now set for early next week on August 3rd To discuss nirsenumab views for the coming season with both recommendation vote and a vaccines for children program inclusion vote scheduled. Momentum is also very strong in Europe with medical agencies in France and Spain Having published broad infant recommendation for Befortus and where specific budgets have been set to ensure Befortus coverage for the 2023 RASD season. With this, I hand the call over to Olivier.

Speaker 5

Thank you, Thomas. General Metins sales in the Q2 were €3,100,000,000 Our core assets grew 2.4%, driven by double digit growth of Toujeo and Resurox, partially offset by lower sales of Lovenox due to competition and the absence of COVID-nineteen 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. Les Europe continues to grow in the U. S.

Speaker 5

Based on an increased number of patients and a larger pool of prescribing specialists. Sales of non core assets decreased mainly due to Lantus, which continue to be impacted by unfavorable U. S. Channel mix and the related true up adjustment in the Q2. In addition, sales in China were lower to VBP implementation in May last year.

Speaker 5

In summary, we confirm our full year 2023 objective and expect Gen Med sales to decline at a low single digit rate compared to last Sure. Turning now to tZield. Payers have responded favorably with more than 200,000,000 lives in the U. S. Now covered, And we are encouraged by the number of enrollments into our patient support program.

Speaker 5

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 Tizil as a therapy for delaying the onset of Stage III autoimmune Type 1D in Stage II patients. With this, I'm handing it over to Julie.

Speaker 6

Thank you, Olivier. Sanofi CHC sales in the 2nd 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 shared last quarter, while the market continues to grow at a dynamic pace driven by price and mix. Digestive Wellness and Coffee and Cold calories continued to perform strongly with double digit growth.

Speaker 6

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 of the month last year. Sales of others were down 13.4% in Q2 as we continue to streamline our portfolio and divest smaller non strategic 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 One 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.

Speaker 6

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 CUNA. Once the acquisition closes, CUNA will allow us to participate in the VMS category, one of the biggest and fastest growing categories in the world's largest market, which is the U. S. Qdol is focused on healthy aging, one of the most dynamic segments within VMS and is the number one brand in the U.

Speaker 6

S. Of CoQ10 for heart health as well as the number one brand of turmeric for joint health. With a strong science backed product portfolio, Tunel enjoys above category brand loyalty and has delivered double digit sales growth due to its premium positioning. Tuning will be joining Sanofi CHC Top 5 Brands in Sales. Integrating this brand into our existing U.

Speaker 6

S. Commercial infrastructure will enable us to unlock and 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.

Speaker 6

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 healthier communities and healthier clients. This achievement also enables us to further connect our brands with consumers. As we know that despite high inflation, 66% of Americans 80% of young Americans aged between 18 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.

Speaker 6

We are the 1st large a healthcare 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.

Speaker 7

Thank you very much, Julien. Well done both for Kunal and the B Corp certification. It's really great. On Slide 31, before taking the P and L perspective, let me highlight the underlying sales performance in H1 by separating out some of the special current drivers. We reported sales of €19,700,000,000 in the first half of twenty twenty two.

Speaker 7

When taking out sales lost due to product divestments or Badgio LOE on euro API carve out, The base becomes just under €19,000,000,000 From there, we added almost €1,700,000,000 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 Resiroc and Genmell are starting to play a more significant role. Vaccines remain strong and sales were additionally supported by COVID vaccine sales this year. And in totality, we are offsetting the decline in the U. S.

Speaker 7

Margin business. On Slide 32, When we look at the Q2 group P and 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 Bombaggio on lower net pricing of FLONTOYS in the U. S. R and D expenses were up slightly driven by the growing vaccines pipeline.

Speaker 7

Pharma R and 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 BY grew 6.6 percent to €2,700,000,000 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 CHG P and L.

Speaker 7

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, SG and 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.

Speaker 7

This was supported by a strong underlying sales performance when excluding OPAIO. The improvement in profitability was further supported by COVID vaccines related sales and revenues, Capital gains phasing on last year's amended antibody alliance that more can offset our investments in launches and the CHE Store the Loan organization. Let's move to the outlook. On Slide 36, we are recapping the H2 business outlook. UBIXANT is expected to continue its strong performance, thanks to its many indications and also the still low biologics penetration, especially in atopic dermatitis.

Speaker 7

We assume high rate of generic erosion for Aubagio with the product also going LOE in Europe in Q4. Flu sales in the Northern Hemisphere are expected to be similar to prior year level and then Gen Med sales decline is expected to decelerate. We also expect significant contribution from our 3 innovative launches this year, mainly Altovio and Befortus, which combined could be over €400,000,000 in sales in H2 based on our plans. On the P and L side, we expect our last COVID vaccine revenues of approximately €400,000,000 in H2 to be reported in the other revenues line. Capital gains in the second half would be most likely lower than in H1 and could reach around €200,000,000 This brings me to my final slide, the full year outlook.

Speaker 7

Based on our resilient business performance in the first Half on our COVID-nineteen 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 rates. Let's now move to Q and A.

Operator

We will now open the call to your questions. As a reminder, we would like to ask you to limit your questions to 2 each. For the Q and A, you have 2 options to participate. Option 1, click the raise hand icon at the bottom of your screen. You will be notified when your line is open to ask a question.

Operator

At that time, please make sure you unmute your microphone. Or option 2, submit your question by clicking the Q and A icon at the bottom of the screen and your question will be read by our panelists. Please go ahead.

Speaker 8

The first question will be with Emily Field From Barclays, Emily?

Speaker 9

Hi, thanks for taking my question. I'll just ask 2. On the first one, we've been getting a lot of questions about how potential competitor entrants in atopic dermatitis could influence PIXENT, 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.

Speaker 9

Thank you.

Speaker 1

Well, thank you. Thank you, Emily. Bill,

Speaker 4

pricing? Well, look, thanks for

Speaker 3

the question, first 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 one of the key things that you have to remember that the future growth is partially driven by biopeneration. And when we have more products there, it helps drive that biopeneration.

Speaker 3

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.

Speaker 3

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

Speaker 1

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.

Speaker 4

As a segue talking about competitive fields where we have 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 fatigue impact. But traditionally, you know that we are not communicating specifically on number of flu doses in terms of volumes, but rather on flu sales. Why?

Speaker 4

Because we are differentiating Our portfolio, and that's the strategy that has been successful for many years. We focused on products that provide protection beyond flu, And that's why we are able to really move the market to superior product and to superior. 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 know very well it's a changing market.

Speaker 4

And should the epidemiology During the 2 season, be strong. We'll be ready to move forward.

Speaker 1

Yes, great. Thank you. Thank you, Thomas.

Speaker 8

Next question is from Richard Vosser from JPMorgan.

Speaker 10

Thanks for taking my question. Just one more on Dupixent, just on the quarter. The growth rate in the U. S. Fell a bit more in line with the TRx growth.

Speaker 10

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?

Speaker 10

Could this be on safety, convenience, just versus some of the high efficacy products that are clearly taking over the market in MS?

Speaker 1

Okay. Thank you, Richard. So maybe, Bill, just a short one just to Cover that off.

Speaker 3

Yes, sure. Thanks, Richard. So the U. S. It's 70% commercial, right?

Speaker 3

And that's been incredibly stable over time. Look, if you're looking at the quarter versus Q1, gross to 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.

Speaker 1

Thank you, Bill. And maybe Dietmar, CD40 Ligand and how it will be differentiated?

Speaker 2

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 efficacy, when we look at the reduction in the gadolinium enhancing lesions, especially You know 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.

Speaker 2

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 we develop resistance? Do we develop progression to the currently available mechanisms? And bring this new mechanism with this profile to patients will be a real benefit.

Speaker 2

Really looking forward to that.

Speaker 1

Thanks, Timo. And I was about to add 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 1st and best in class. So I think it's pretty exciting for us the data certainly supports that at this point.

Speaker 8

Next question is from Peter Wenfeng from Jefferies. Peter? Hi,

Speaker 11

thanks for taking my questions. I've got 2. Firstly, on Bay Fortis, I wonder if you could just talk a little bit about ahead of the ACIP meeting, your thoughts on the Pricing that you will dispose to ASEP and also how we should think about for the ASEP, 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 if you could just set up your setting as facility base that will be and what a positive outcome looks like from your perspective.

Speaker 11

Then If I could just go back to the CD40 ligand, just curious, can you talk a little bit about what the Phase 3 plan is going to be in that study In terms of does the Phase 3 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 the study like that now for ethical grounds? Thank you.

Speaker 1

Thank you. Thank you, Peter. Maybe Bay Fortis, right around the corner, Tom.

Speaker 4

Yes. Right around the corner. As you know very well, registered July 17, ACIP next week, August 3. We are very excited and confident about the forthcoming recommendation and the voting. Why?

Speaker 4

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 towards SOP.

Speaker 1

Tom, am I right in saying that we're the only preventative RSV on the agenda at ASEP? Next question.

Speaker 4

We are. 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 ensure and that's very much linked to the SAP recommendation.

Speaker 4

So both go together. If there is a broad SAP recommendation, We want to ensure there is equitable access for this product to everyone. And therefore, it will be a premium innovative vaccine price while aligned with what was discussed in terms of pricing during the previous SAP meetings.

Speaker 1

Thank you, Thomas. Dietmar Peter had some ideas on how you should run the Phase 3 for the CD40 ligand. So over to you. No. Thank you for

Speaker 2

the question, Peter. I mean, we're obviously looking And what the right studies are, we will communicate as soon as we've 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 So, this is a major opportunity for us not only in neurology, but more broadly really in inflammatory diseases.

Speaker 1

Thank you, Dietmar.

Speaker 8

Next question is from Seamus Fernandez from Guggenheim.

Speaker 12

Great. Thank you. So just a follow-up on Bayfortis 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.

Speaker 12

So just trying to get a better understanding of the trajectory of growth there. And then separately, on amlutelimab, 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. Thanks.

Speaker 1

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

Speaker 4

Always appreciated. Thank you, Thomas. The important thing, first, we are really ready to launch. And again, you will know that it's First time ever, there will be a broad preventive measure to avoid RSV and bronchiolitis in newborns. So very exciting, obviously.

Speaker 4

Now we too seamless. We first going to get the SAP recommendation. Those two votes, As per the previous question from Peter, obviously very important. If we go for an equitable and broad access, which we count on, I believe that it will take, as always, for vaccines a few years to reach peak sales. It tends to be steady progressive ramp up over a certain number of years.

Speaker 4

But again, we are talking here altogether about a €2,500,000,000 market, and we believe there's no asset like Bifortus in this market. So we are confident about our trajectory for blockbuster.

Speaker 1

Yes. Good. Well said. Tima, amlutelimab, some questions about differentiation against Between NOK 40 lag and maybe NOK 40 and then maybe some suggestion about interval?

Speaker 2

Yes. 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, How's the molecule designed? It hits the OX40 ligand, right?

Speaker 2

It doesn't hit OX40. It's a non Eating monoclonal antibody, whereas others that are actually depleting and in that sense then can lead to, you know, 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 inflammatory disorders. But it actually acts more upstream, right, as I said before. So it really

Speaker 8

gets to that homeostasis between pro inflammatory and

Speaker 2

regulatory T cells. And you get Between pro inflammatory and regulatory T cells. And you get that specifically when you hit the ligand, not so much when you hit 40 itself and that really gets to this distinction between do you see all immune phenomena, do you get the right benefit risk, etcetera, etcetera. What we are also really interested in and what we are 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.

Speaker 2

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 That's there. There's a lot of really positive potential characteristics to this molecule and we're very much looking forward to share the full data set later during this year.

Speaker 1

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 NHS. And I think that's also a little bit of Something that could be a new standard, of course, we don't know. Exactly.

Speaker 1

But I think we're trying to do something that's not been done before.

Speaker 2

It's Part of our Nanobind platform.

Speaker 1

Yes, exactly. Okay. Thank you.

Speaker 8

Next question is from Peter Verdult from Citi. Peter?

Speaker 13

Thank you. Pete Verdult, Celine. Two questions. On to Zeel, I don't know whether this question is for Paul or Olivier or Bill, position feedback on the drug is pretty impressive in the current indications. So just Ed, 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?

Speaker 13

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 numerical trend on Time in range and interesting news. I'm just trying to work out sort of over and above that €2,000,000,000 peak sales. Is that proposition still intact without those secondary endpoints?

Speaker 13

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 rebasing 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.

Speaker 13

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 more detail, that would be great. Thank you.

Speaker 1

Okay. So two questions, I think, became 3. So thank you, Peter. So Olivier, any more color you want to add on tZIL launch?

Speaker 5

Yes. Peter, I think you said it right. The interest around tZIL now with our customers, with The opinion leaders has surpassed our expectation. Some of us are just back from San Diego and we have been very impressed by the excitement within the Type 1 diabetes community. We are, of course, very happy with the recent updates of the ADA guideline that we were not expecting so early.

Speaker 5

We know that, Of course, we still have a lot of work to do and we took the product beginning of May and we are getting structured. We need to work and we added in mind from the beginning, of course, on the screening programs in order to make sure They are consistent.

Speaker 13

There are

Speaker 5

a lot of initiatives that are emerging both in the U. S. But also outside of the U. S. In the past, there was no, of course, a limited interest to SCREEN, but it's clear that since The registration of teblizumab, the interest of first cleaning has increased dramatically and Even some countries are going to go in the direction of systematic baby bone screening in the upcoming years.

Speaker 5

We need to work, of course, in order to make sure that there is a limited time line between the intent to Hybe and Infusion. So we are conscious that it's a slow burn, but we are, of course, very excited And very impressed, of course, by the positive feedback on the from KOL. Continuous rollout in terms of education, In terms of understanding the different stages of Type 1 Diabetes, Stage 2, Stage 3, That is not always fully understand. Understood. So we will provide you more detail during The call in the next quarter.

Speaker 5

What I can say about PROTECT is that we have a positive trial with a strong result on primary endpoint of presentation of C peptide. With KOL affirming at ADA that protecting the Beta cell mass for as long, of course, is a clinical benefit. So, more to come in the upcoming weeks. But for the time being, very impressed by the initial feedback of the Type 1 diabetes community and KOL. I think, might you

Speaker 1

want to add something maybe about time and range or some of the other nuances?

Speaker 2

Yes. Peter, I think that this is really important, right, to discuss this because when you step back, we are really blazing new trails With this program, how long have we waited to have a medicine available for patients with Type 1 diabetes, Right. And the initial data delay of onset were already unprecedented. And now having positive Data in the setting of early intervention is another really important data set and very clear data on the on the primary endpoint. That's important.

Speaker 2

The study is Positive. The secondary endpoints describe more the clinical benefit. And when you look at time in range, when you look at insulin use, that's really what gets People excited. We've had discussions at the ADA meeting. Very, very positive feedback, as you have heard yourself, right?

Speaker 2

So when we look at the totality of data, This is a very convincing package and we're really looking forward to discussing those data further.

Speaker 1

Thanks, Dietmar. I think that both summed it up very well. We said when we took this asset that we had some work to do in terms of building the infrastructure and helping Support patients. So I think that that's going to be a journey for us, but a positive one given the scale of the unmet need and the lack of Competition through the rest of the decade. I think Olivia said it really well.

Speaker 1

I think we've all been very pleasantly surprised by the demand And what that can mean is very early days, but I think it's really great to see so many centers wanting to get started. Bill, the Dupixent

Speaker 3

Thanks, Peter. So just specifically, it's 70% 7 0 percent commercial in the U. S. And that's remind you now that we have 5 indications in the U. S, also multiple age ranges.

Speaker 3

And I think The thing to take into consideration here is as you look ahead and just where we are today are kind of 2 key numbers. Atopic dermatitis Biopen is 12%. Asthma Biopen is 22%. And we have 3 other indications beyond that and other indications coming. So you've heard me say it now for a bunch of years that we are Kind of at the beginning still.

Speaker 3

In many ways, we are at the beginning. We're at the beginning in new indications, new age groups, new geographies. So I think there's still a lot ahead of Dupixent. We're really excited about it. You've heard me describe it as a rocket ship.

Speaker 12

It's a

Speaker 3

rocket ship.

Speaker 13

Thank you. Very clear.

Speaker 1

Yes. Thank Thank you, Bill. I mean, I understand particularly when people have been over interpreting the immunology marketplace for Q1 and Q2 in other disease areas That is a high level of questioning, but you have to understand we already have competition in both AD and elsewhere. As Bill said, we We have 3 more indications. We're first and only pretty much.

Speaker 1

And then we have this low penetration as Bill said. The market opportunity is So vast. And frankly, because so many patients are suffering, let's not forget that. We have so much work to do on that. There's such a pull.

Speaker 1

So we really are still only at the beginning, and I think people have to really understand it that way. And it's exciting, 33% growth, I think it was Q2 on a medicine of this size. I think And for us to be talking in these terms is really a privilege to be involved in it. Okay, the next question?

Speaker 8

Next question is from Thibault Boutin from Morgan Stanley, Cboe?

Speaker 14

Yes. Thank you for taking my questions. I just have 2, please. The first one on the on U. S.

Speaker 14

Insulins and launches. You highlighted the step down in sales this quarter for U. S. Launches due to net price decline. Was there a specific negative Adjustment in the quarter or any other one off negative one off or should we consider that the sales this quarter in the U.

Speaker 14

S. For launches It's a good proxy for what to expect in the future. And then the second question on the COVID-nineteen one off revenues. Can you confirm that these revenues are relating to agreements previously made with European countries? Your slide indicate that you will book them the revenues in other revenues.

Speaker 14

What margin should we assume On this revenues, is it just usual vaccines gross margin? And I saw just a quick clip on that. Should we expect that this revenue will not persist beyond 2023? Thank you.

Speaker 1

Okay. So JB, we'll come to you on COVID-nineteen one offs. And Tommy, put your hand up if you want to add something. Olivier, insulin?

Speaker 5

Yes. So Thibault, thank you for your question. Yes, there was some gross to net elements in the Q2. So the Q2 is not a good proxy for the end of the year. You could use as a good proxy See more our first half decline, which is a little bit above 55%.

Speaker 5

Even if we think that we are going Better in the 2nd part of the year. We are in a declining market, large in 3% to 4%. And of course, you know that the volume are holding pretty well. Our market share has been pretty stable on the Badal plus market, 33% to 34%, Very consistent across the last 5 or 6 quarters. But of course, more sales in the Channels at IAB discounted 340B and, of course, Medicare coverage gap.

Speaker 5

So Overall, you should expect a much better second part of the year on Lantus in the U. S.

Speaker 1

Thank you, Olivier. It's I touched on it in my presentation about this sort of transformation of the portfolio we're on. The team have done exceptionally well with Lantus. But it very much we were the Lantus company for a very long time. And as we transition Our portfolio and our pipeline Dupixent and beyond, it gets TZL is a good example of that.

Speaker 1

We're becoming a new company and a new portfolio and I think it shouldn't be lost as we move from one horse to the other, which is pretty much what our job is to do is to make Successful transition. I think the team, Olivia's team did a really outstanding job on that. So JB, COVID

Speaker 7

Yes. COVID revenues, I confirm that EUR 50,000,000, EUR 400,000,000 will be booked in other revenues. And as a proxy, you can take the average gross Margin of vaccine applied to that as it is normal.

Speaker 4

Maybe the only thing I will add is that Thibault, no, we don't expect 2024, similar revenues. So we expect it to be really one off in 2023.

Speaker 14

Great. Thank you.

Speaker 1

Thank you.

Speaker 8

Next question is from Graham Parry from Beaufort.

Speaker 13

Graham?

Speaker 15

Great. Thanks for taking my questions. So, first one is just on your guidance The launch products for Bay Fortiselt of 400,000,000 in the second half. I think consensus sales for those is around 2.70 5 at the moment. So just where are you more optimistic there?

Speaker 15

Is this you're anticipating a fast launch of Bay Fortis than the 150 ish that consensus This is forecasting at the moment or an acceleration in Naltuvio, for example. And then secondly, on the TZIL PROTECT study, you sort of seem shied away from saying whether you think you can file or not. So just to be clear, do you intend to take this data to regulators? And is it your expectation at the moment that to file in that indication you may need more data or a new trial looking

Speaker 2

Thank you.

Speaker 1

Hi, Graham. Thank you very much. The difference, I think, between what you have in consensus and what we put out there for the launches. Firstly, to remind you that We wanted to give some type of number to give you a sense of how quickly we're transforming the portfolio. I mentioned that a moment or 2 ago.

Speaker 1

I think that's one of the biggest gaps in versus consensus on B Fortis. And I think we can really close some of that With the end market performance, especially after the recommendation, we get it If we get the recommendation next week, I think back to your original question about shape of launch, I think we'd expect to do certainly better or close to consensus sorry, Better than consensus on pay for this. I don't know whether I mean Olivia has already touched on cheese yield. I don't know whether We'll come back to Protect in a moment. But Bill, do you want to add anything other than you've already said on Altuveo?

Speaker 1

I mean

Speaker 3

No, look, it's early days, but it is a great product and it really has the potential to redefine what is Possible for hemophilia A patients because it does get their factor level to normal or near normal. So that takes some time for the Community to digest, if you will. But out of the gates, I think we're real strong and really excited. This is kind of the factor. And there's been a lot of questions about does it start to make gains with other competitors, Non factors, for instance.

Speaker 3

And as I said, about 10% of the switches are coming from Hemlibra. And it's not a question of frequency. And I think some of our competitors may make that comment or have. It depends if patients want what is possible from a factor level. And ultimately, why don't they deserve the same right to be closer to normal like non hemophilia patients.

Speaker 3

So we think it's going to take some time for the market to Get used to having that possibility and reimagine what's possible. So very excited about that launch.

Speaker 1

And Deepak, anything on the filing? Yeah.

Speaker 2

I mean,

Speaker 8

the

Speaker 2

again, stepping back for a second, right? You have a positive study. You have preservation of beta cell mass, Which is really important for this disease. You have secondary endpoints that show a positive trend, that really show that there There's clinical benefit. We talked about time in range.

Speaker 2

We talked about insulin use. And keep in mind, this is on top of continuous glucose monitoring. So this is on top of the best available therapy that these patients can have these days, right? They have their continuous glucose monitor on one arm and their insulin pump on the other arm And they're treating themselves continuously, which means showing additional benefit on top of that is really important, right, for And I'm looking forward to discuss this data with regulators to say it very clearly.

Speaker 1

Yes. And we are Spending some time looking at the data because I think you said it very well. These patients were effectively very well managed. So to show the difference was always a high bar, but there are differences. And I think we hope to get to that point where we can do that.

Speaker 1

I just want to go back just quickly. I mentioned upfront that last year it was very important medicines, but Smaller potentials empezam and J. Mo Cavalier this year, it's Altuvio, Bay Fortis and TZL, much bigger potential. And as we keep getting into the launch sequence here, we'll be getting to the amnitalumabs and big indications like Dupixent's COPD. You're seeing the order of magnitude as the pipeline matures become much more significant.

Speaker 1

And that's our role is to deliver that and to show how that Cuts off the things that have been in decline for a number of years. And that again, that transition is management's responsibility, and we're really happy about how that's trending so far.

Speaker 8

Next question is from David Risinger from Leerink. David?

Speaker 16

Yes. Thanks very much. I have two questions, Paul, please. First, So just to follow on, on what you just mentioned, could you discuss the opportunity for accelerating sales growth prospects Following the annualization of Obagio generic impacts in 2024? And second, Could you comment on the outcome of your discussions with the FDA regarding a potential early filing of dupi for COPD?

Speaker 16

Thanks very much.

Speaker 1

Okay. Thank you. Thank you, David. Thank you for pointing out that OVAGIO is our last meaningful LOE The of the decade. So anniversarying that is going to be quite an important moment for us because it's been it's a great medicine and it's Been given a lot to the company, but it's our last meaningful LOE.

Speaker 1

Not sure about the suggestions for growth next year. On the back of that, JB, do you want to make [SPEAKER

Speaker 7

JEAN FRANCOIS VAN BOXMEER:] The comment? Well, what we see when you look at what we published at Q1, looking at Having drugs really blockbuster to launch, I suppose, 26 going to the salvia of Dupixent, we are really looking at the growth profile by having 3 to 5 drugs and 2 to 5,000,000,000 to 5,000,000,000 potential sales. So it's really when you take this potential for growth, of course, we are aiming at growth And that's what we want to deliver. Don't forget that our underlying growth right now is quite impressive already and which gives us a big great opportunity If you look at H1 2023, when you take just our growth drivers, Dupixent, Specialty Care products. And when you take the core assets of Gen Med on the vaccine sales, it's 15.3% just in H1 2023 and I was also showing when you take out the divestments on the LOE But you on your API carve out, we are already enjoying a great growth.

Speaker 7

We want to stimulate that. We want To be a growth company, yes. So that's what we do every day.

Speaker 1

Thank you, JB. It's quite an important point and we did put it in the deck for that reason And I didn't come into

Speaker 8

this Q and A to start talking about our portfolio transition, but

Speaker 1

we wanted to make it quite clear that 15 plus So we recognize that it's taking off things that are coming to the end of that journey. But the reality is That's a big number. And well, we're not suggesting what it is for next year. You can see where our ambition lies with accelerating the underlying To get it to something that we would hope to compete with the best in the industry. So that's what we think.

Speaker 1

Dupi's COPD filing, Dietmar, anything you want to add? Yes.

Speaker 2

David, thank you for the question. I would love to tell you more, But we're still ahead of those discussions, right? But let me again also just briefly step back here because I think the Boreas data in COPD are very important for patients, for us, for the community. What we've seen there in efficacy with a well known safety profile is just and will just be an entire change, Right, in how these patients are treated. So I think it's very important that we have those discussions with regulatory authorities.

Speaker 2

The unmet medical need for patients with COPD is very high. So it's the 3rd most important reason for death on a global basis. And we are coming back from the ATFs meeting from the American Thoracic Society meeting, right, where we had the discussion of the data, where we presented the data with very positive feedback from the community and key opinion leaders. So we are very much looking forward to have those discussions with the regulatory authorities.

Speaker 1

Okay. Yes. Thank you. And just to keep making it clear, since Q1 One update. I think you've touched on this a little bit.

Speaker 1

We're still ahead of any significant regulatory conversations. Nothing has changed for us on that. So we remain very enthusiastic. I think it's just worth to say. And I think you touched on it, but of course in Q2, we have the chance to be at ACS and meet a lot of opinion leaders.

Speaker 1

And this is very exciting, let's be honest, this is an unmet need, this is advanced therapy. And so you should know that we will bring our best forward in that regulatory interaction. Okay.

Speaker 8

Next question is from Gary Stevenson from Exane BNP.

Speaker 17

Hi, there. Thanks for taking the questions. Firstly, just on the guidance. I guess, how should we think about your ability to continue to ramp up Investment in R and D and behind new launches over the near term. And commentary on growth and the contribution from the new launches, pretty encouraging.

Speaker 17

So I'm just wondering How close or not you might be to a point where it's more difficult to reinvest that near term growth given that the extra COVID Vaccine revenue seems to have supported the guidance upgrade. And then secondly, just on consumer actually and the strategic priorities here. I mean you've slimmed down the number of brands and improved growth. We've got the divisional P and L and today's deal helps to strengthen that U. S.

Speaker 17

Presence. So other than making progress on the OTC switches and I think an update there would also be very much appreciated. What do you see really as the next steps for consumer on that roadmap? And then just quickly, you mentioned the new deal being a top 5 product, so any further Quantification there would also be helpful. Thank you.

Speaker 1

Okay, Gary. Thank you. JB, How are you threading the needle?

Speaker 7

Well, we've been threading it for a while. And each time we have this challenge to do new arbitrage, to do 1 in, 1 out, to improve permanently our gross profit and our pipeline. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And as you hear me say often, we still have a lot to do in our transformation. On the cost base, it's It's still presenting a lot of opportunities. Some are longer to deliver.

Speaker 7

We are doing a deep work with all our M and S, manufacturing and supply team to improve some basics. And we know also that we will have some trade off within our own portfolio because that's the story that we are in. To build the growth, we need to thread that needle. We reinvest in R and D, that's Why we are

Speaker 1

here. Yes, maybe also I could just add that there is a business management team that we've done a lot of great work on reallocating For adding giving back to the bottom line, I think you were now working transversely on Other sort of structural systemic opportunities to try and free up more resources. And I think we have a good plan. And I think there's some confidence in the team to be able to do that. Nothing too Crazy, but definitely enough to be able to make sure we don't miss a value creation opportunity.

Speaker 1

Julia, a whole host of things for you To answer, ranging from don't forget the switches, maybe make a comment about the top 5 And what's sort of what's the next big moment for you and the team?

Speaker 6

First of all, Gary, thank you so much for Because this quarter is a big moment for CHC. And I think overall, what I can say is that our ultimate goal is to Maximize the value creation of CHC. And what we've been doing in the past 2 years, we really focus on our existing portfolio, divesting for Pruning and divesting a part of it, double downing on the brands that we believe have the most potential. And today, we are Ready to welcome a new brand that is helping us to really fill one of our strategic gaps and strengthen our geographic footprint. And that's really what we want to continue to do, obviously, is to everything that will drive max value creation for CHG.

Speaker 6

On Cunil specifically, again, high quality assets, strong science in a very special healthy aging segment And what it really enjoys high category, I mean brand loyalty. Top 5 brand means that Again, it has a brand that still has a lot of potential also in the future because it has a premium positioning and also because of its in its category but also because of its model and that we believe there's opportunities potentially for other chronic diseases. So, a lot of obviously looking forward to welcome the brand at closing and to expand it. Then on switches, there is nothing new. Obviously, we continue to work with the FDA on the approval of the switches and we're advancing on the execution of the on their strategy of to get the clinical hold including the generation of the necessary data.

Speaker 6

And I hope that we'll have more information in by the end of the year.

Speaker 7

Yes. So that's part of our next steps. Of course, we would like to unlock the value of those switches on it's still on. We will work on it. Apart from that, we have not departed from what we said In December 2019, we want to grow consumer health.

Speaker 7

We want to maximize the value. We want really to give some management teams the maximum opportunity to grow this value. So that's where we are.

Speaker 1

Okay. Thank you. Thank you, Julie, JB.

Speaker 8

Last question from Joe Walton from Credit Suisse.

Speaker 18

Apologies for that. I just have two questions, please. I noticed that So Dietmar isn't on the Executive Committee just looking at the on your website. I wonder if you could tell us when you're going to be in a position to announce a new Permanent Head of R&D. And could I just ask another R and D related question?

Speaker 18

It's a couple of years now since you bought Tidal IP for the targeted delivery, CAR T, certain cell types. I wonder this area still looks to be facing real challenges. Is it still an area of focus for you? Can you tell us when we may hear next steps on it, please?

Speaker 1

Okay, Joe. Thank you. As with all internal announcements, we'll communicate them when we communicate them. So thank you for the update there. Dimart, Tidal, I think the question was.

Speaker 2

Yes, Tidal. That is a Very interesting program within our oncology research at this point in time. It is the Approach to use mRNA based therapeutics to generate CAR T cells in vivo basically, give the mRNA and to generate the CAR T cells within the patient, which could be entirely disruptive. As you know, Joe, right, for the CAR T cell space, We are progressing that program. It's moving forward.

Speaker 2

We will give an update once we can. But Let me just tell you that this is part of our broader genomic medicines unit and our genomic medicines initiatives that we have and also synergies there that we realize Our first product from this genomic medicines unit is Coming into the clinic this year, it's now the title program, but it's really showing you that progress that we're making on the genomic medicine side. And so far the program is actually moving forward very well in the research arena and I'm looking forward to bring that closer to

Speaker 1

the clinic. Okay. Thank you. Yes. So thank you.

Speaker 1

Maybe just the last couple of comments. I I think we said upfront, it's a solid quarter. We've given an upgrade to the guidance. We've advanced the pipeline. We are Reallocating resources to R and D and growth opportunities.

Speaker 1

I think this is the work that needs to be done, and I think we're really happy with the progress that we're making. Of course, we expect to see an even better performance in some areas as we get through the rest of the year, but time will tell. But we're no, we're very excited about the progress we're making in the company. So thank you to everybody for dialing in, making time for asking questions. And we look forward to Reconnecting the next available opportunity and hopefully many of you just made a note for December 7, New York City.

Speaker 1

I think that would be Good day. All right. Thank you very much.

Powered by Quartr
Earnings Conference Call
Investar Q2 2023
00:00 / 00:00