Sanofi Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
January 30, 2025

There are 20 speakers on the call.

Operator

Welcome to the Q4 and full year 2024 Conference Call for Investors and Analysts. As usual, you can find the slides on cenuver.com. Please turn to slide number 3. Here we have the usual forward looking statements. We would like to remind you that information presented in this call contains forward looking statements, which are subject to substantial risks and uncertainties that may cause actual results to differ materially.

Operator

We encourage you to read the disclaimer in our slide presentation. In addition, we refer you to our Form 20 F on file with the U. S. SEC and our France registration document for description of these risk factors. Financials reported are under the new reporting scope that excludes Opela Consumer Health.

Operator

As usual, we will be making comments on our performance using constant exchange rates and other non IFRS measures. Numbers used are in 1,000,000 of euros and for Q4 2024, unless stated otherwise. Please turn to Slide number 4. First, we have a presentation, then we will take your questions. Because this is full year results, we have a few more slides.

Operator

We still have time for lots of questions as we added 15 minutes to the call time on top of the usual 1 hour. For Q and A, we have Brian, Olivier, Thomas to cover our global businesses as well as Roy, our General Counsel and Brendan, Head of Manufacturing and Supply. For the Q and A, you have 2 options in Zoom. Raise your hand or submit your question using the Q and A function. With this, I'll hand you over to Paul.

Speaker 1

Well, thank you, Thomas. Hello, everyone, on the call. We made significant progress in 2024 towards becoming a focused science driven biopharma company. Our strategic progress was emphasized by the decision to sell a controlling stake in Appellate and further prioritize R and D. On the business, we achieved double digit sales growth with strong contribution from launches.

Speaker 1

This included Bay Fortis that achieved blockbuster status in its 1st full year of sales. In R and D, we're pleased with the positive Phase III results of fitusiran, riluzabrutinib and tolebrutinib. They provide the foundation for potential launches this year, underpinning our sustainable growth. We are thrilled by the Phase 2 of duvacatode that is ready to move to Phase 3, pending regulatory feedback. Pooman will share more pipeline details later.

Speaker 1

Looking at Q4 on Slide 6, we reported double digit sales growth for a 3rd consecutive quarter, supported by our key drivers, vaccines, Dupixent and pharma launches. Taking a closer look at the launches on Slide 7. In Q4, Bay Florida sales were as high as those in the 1st 9 months of the year combined. We now have expanded RSV protection to more than 6,000,000 babies around the world. In hemophilia, an increasing number of patients switched to ALTUVIO from both factor and non factor therapies.

Speaker 1

We're seeing strong patient benefits, and sales reached almost €250,000,000 in Q4. We are confident in our expectations that Ultivio will become a blockbuster this year. Moving to Slide 8. Dupixent exceeded the target of €13,000,000,000 in sales, driven by the demand for more than 1,000,000 patients globally. In Q4, Dupixent grew by 16% from strong prescription trends in all geographies.

Speaker 1

In the U. S, Dupixent continued its leadership in unibram prescriptions across all indications, in line with the 1st 9 months of the year. U. S. Sales growth in the quarter reflected fewer business days compared to prior quarters and the normal year end gross to net adjustments.

Speaker 1

In countries outside the U. S, Dupixent delivered more than €3,500,000,000 on a full year basis. In COPD, we are in the early stages of the launch, and we're seeing positive feedback from patients and prescribers. Expect the inflection point to be this year and COPD to become an important growth driver due to the large unmet medical needs. As we expand the benefits of Dupixent to more patients, we're pleased with the continued work on new indications, including, EoE for children in the EU, CSU outside Japan and BP globally.

Speaker 1

New uses, increased penetration in approved indications and further geographic expansion are all important future drivers for Dupixent. Moving to Slide 9. 2024 marked a sales record for our vaccines business, crossing the €8,000,000,000 milestone, up by 13.5%. This performance was driven by BayFortis, offering a marked reduction in hospitalization across more than 20 countries with all infant programs. We are the only RSV mAb with real world data showing greater than 80% effectiveness in more than 100,000 babies.

Speaker 1

Our flu franchise was resilient, keeping its status as the world leader. 2024 sales exceeded initial expectations, driven by our differentiated Fluzone high dose and flu block. In Q4, we also made significant progress with our vaccines pipeline with the start of 6 new vaccine studies, including the Phase III study for a pneumo vaccine, PCV21, in children. Our R and D efforts in vaccines continue to be recognized by health authorities with the FDA granting fast track designation to our 3 new Phase III programs. I'm pleased to share with you Sanofi's remarkable achievement in the 2024 Access to Medicine Index.

Speaker 1

We have improved our ranking and moving from 8th to 3rd place, underscoring our commitment to global health. Important factors for this result are governance of access, R and D and product delivery. The Sanofi Global Health Unit plays an important role by delivering crucial medicines from the Impact Brand portfolio to 30 low- and middle income countries. Ending on such a positive note, I would like to take this opportunity to thank all Sunfjans for their continued commitment to improve the lives of millions of patients. Thank you.

Speaker 1

I'll now hand over to Francois, our CFO, for more details on the financials.

Speaker 2

Thank you, Paul, and hello to everyone. Before I begin, just a reminder that our Q4 and full year results reflect our new reporting scope, excluding Opelar. In the quarter, net sales increased by 10.3% at constant exchange rates to €10,600,000,000 marking our 3rd consecutive quarter of double digit growth. As mentioned earlier by Paul, growth was driven by new product launches as well as Dupixent. Gross margin was 74.3%, down slightly from the previous year, primarily due to the absence of COVID revenues in 2024.

Speaker 2

Excluding this COVID impact, our gross margin increased by 0.8%. The increase in operating expenses was driven by R and D, reflecting a high activity level in the quarter and brought us in line with our commitments for the full year. Business EPS was €1.31 mainly reflecting a lower gross margin and the increase in R and D and a higher tax rate following the OECD Pillar 2 implementation. Now turning to our full year results. Net sales increased by 11.3 percent at constant exchange rates to €41,100,000,000 driven by our new product launches, including Befortus that became a blockbuster, as well as Dupixent that exceeded our ambition of €13,000,000,000 in sales.

Speaker 2

Gross profit grew by 10.3% at constant exchange rate to €31,100,000,000 with a gross margin of 75.7%. Our gross margin declined slightly due to the absence of any COVID revenue in 2024 and the remaining impact of the Obaggio LOE. R and D expenses increased by 14.6% at constant exchange rates to €7,400,000,000 fully in line with our ambition to step up investments in our pipeline in 2024. SG and A expenses increased by 4.5%, providing an attractive gross leverage benefit. Business EPS increased by 4.1 percent at constant exchange rates to €7.12 exceeding our full year guidance.

Speaker 2

We landed our 2024 business EPS more than 6 percentage points above our initial guidance at the beginning of the year. These results reflect our ability to drive strong growth while investing for the future and while carefully managing our cost base at the same time. Looking ahead to 2025, we would like to provide an overview of anticipated key business dynamics, which may be helpful for modeling purposes. As a reminder, at the beginning of the year, we expect to see the usual impact from the annual reset of insurance deductibles, which leads to higher utilization of our co pay assistance program for specialty medicines in the U. S.

Speaker 2

Market. We anticipate only modest headwinds from the introduction of changes to Medicare Part D under the IRA. We continue to simplify our portfolio of other medicines, and we expect around €250,000,000 of sales reduction from disposals. We expect Befortus to grow further with additional penetration on geographic expansion. Our gross margin is expected to increase in 2025.

Speaker 2

R and D expenses will be slightly up, and there was a one off Sobe item last year. SG and A will also slightly increase in preparation for upcoming launches, and we expect capital gains from portfolio simplifications to be again around €500,000,000 Our effective tax rate should remain broadly stable compared to 2024. For our 2025 guidance, we have decided to expand our disclosure by providing sales growth in addition to EPS growth. For 2025, we project sales to grow at the mid- to high single digit percentage at constant exchange rates. This guidance now excludes any impact from hyperinflation, which accounted for about 1.8 percentage point of sales growth in 2024.

Speaker 2

We estimate a positive foreign exchange impact on sales of approximately plus 2% to 3% in 2025. Business EPS growth is expected to grow at a low double digit percentage at constant exchange rates before foreign exchange and before share buyback impacts. We estimate a positive business EPS impact from currency of approximately plus 2% to 3% as well. Shifting to our free cash flow in 2024, which was mainly impacted by 3 one offs: first, the impact of price cuts of Lantus in the U. S.

Speaker 2

In H1 for €1,100,000,000 second, the entire elimination of all factoring of receivables for €1,400,000,000 and third, an unfavorable exchange rate impact of €800,000,000 all of it resulting in a closing free cash flow of €6,000,000,000 We expect our free cash flow ratio to be back to our historical levels steadily over 20252026. The slight increase of our net debt at the end of 2024 reflects our strategic investments, including the acquisition of INBREAKS as well as our value proposition to shareholders in the form of a growing dividend. Our net debt to EBITDA ratio, which is actually pretty close to our net debt to BOI ratio, was at 0.7x at the end of 2024. This showcases a low gearing ratio and an optimal balance between strategic capital allocation and financial flexibility. In 2025, Sanofi will receive a cash consideration in the high single digit in 1,000,000,000 of euros from the Opela transaction at the earliest in Q2 while retaining a significant stake in the company above 48%.

Speaker 2

Let me conclude by confirming our existing capital allocation policy. Our primary focus is to invest in our business to drive growth, demonstrated by our increased investment in R and D last year as well as ongoing investments in manufacturing, in AI, in digitalization as well as in sales and marketing. We will continue to explore external growth opportunities to strengthen our 4 existing therapeutic areas and potentially cover white spaces. In all our external investments, we maintain strict discipline and focus on value creation for our shareholders. Our preference remains for investments in the range of €2,000,000,000 to €5,000,000,000 each.

Speaker 2

We are committed to maintaining our AA credit rating in the short to medium term. In line with our commitments to shareholders, Sanofi intends to execute a share buyback program of €5,000,000,000 in 2025. These repurchases will be conducted preferably through block trades and in the open market. Shares acquired will be canceled and will have an accretive effect to Sanofi's earning per share, mitigating part of the Opela dilution. This commitment underscores our confidence in Sanofi's future and our commitment to delivering long term shareholder value.

Speaker 2

Our proposed dividend of €3.92 per share for 2024 marks the 30th consecutive year of dividend increase, further reflecting the emphasis we put on shareholder reward and the dependability of our dividend policy. With the proposed dividend and the share buyback combined, we will reward shareholders with almost €10,000,000,000 in 2025. This would be a record year in terms of shareholder return for Sanofi. I now hand over to Uman to provide an update on the progress of our innovation pipeline.

Speaker 3

Thank you, Francois. 2024 accelerated the transition into a company with increased focus on science with our pipeline starting to deliver meaningful benefits for patients and healthcare systems and growth opportunities for our company. We presented convincing clinical trial results, recent medical meetings, including fotolubrutinib in SBMS, riluzubrutinib in ITP and fitusiran in hemophilia. The molecules from our pipeline that we are incidentally preparing for launch this year. As we look holistically at R and D productivity, scientific publications in high impact journals underpin our commitment to developing science and bringing new medicines and treatments to patients.

Speaker 3

We have an increasing trend of high impact publications and we now plan to closely track this leading indicator of improved productivity over time. Our pipeline has continued to deliver positive results including 8 positive Phase III readouts in 2024. We've initiated 18 mid to late stage studies with 7 Phase 3s and 6 new molecular entities moving into the clinic. This increased level of activity is the main driver of R and D spend that Francois covered earlier. On the regulatory side, we've made substantial progress with 21 acceptances of our regulatory submissions, including for the 3 new molecules for this year.

Speaker 3

Some of these are benefiting from priority review. We received 14 approvals supporting the ongoing new launch. Please turn to the next slide. We are pleased with the significant progress made for Sarclisa in 2024, including approvals of the IMROL study in the U. S.

Speaker 3

And EU last week. During the ASH meeting, data were presented in the frontline treatment option in multiple myeloma, both for patients eligible and ineligible for autologous stem cell transplant. On the left, we have the PFS curve from the HD7 study where Sarclisa added to a standard frontline combination demonstrated a 43% improvement in PFS based on a hazard ratio of 0.7. We're very pleased that Sarklesia continues to shine in terms of patient benefits by offering a new standard of care. On the right, we reference the iRACLEA Phase 3 study of subcutaneous sarklesia meeting both co primaries, non inferiority endpoints in addition to confirming a safety profile.

Speaker 3

Additional data from ongoing studies in combination with different standards of care and across multiple lines of treatment will support a broad application for subcutaneous administration which we think will bring new benefits to patients in healthcare systems. The first regulatory submission is expected in the first half of twenty twenty five. On slide 21, our commitment to rare diseases remains steadfast. Rilzabrutinib is one of the new additions to this portfolio with potential in ITP and far beyond. At ASH, we shared the Phase 3 data in ITP with rilzabrutinib being its primary endpoint of a durable response in 23% of patients compared to 0% on placebo at week 25.

Speaker 3

In addition, a platelet response defined as a platelet count achieving at least 50x10 to 9 liter or a platelet count between 30x10 to 9 per liter and 50 10¢ to 9 per liter that double from baseline was achieved in 65% of our patients after only 15 days of treatment. As riluzibrutinib pleiotropically addresses the underlying immunological mechanisms of the disease instead of just boosting platelets per se, as some existing medicines do, it confers an improvement in the quality of life of clinical symptoms and fatigue even in non durable response. We anticipate global approvals this year and launch as regulatory reviews are ongoing in EU, China and in the U. S. With the PDUFA date of 29th August.

Speaker 3

In addition, we now have meaningful benefit in Weihir IgG4 related disease from our Phase 2 programs with IgG4 being shared for the first time today. We're evaluating the move into Phase 3 with at least one of these two indications. As we remain committed to rare disease, we believe rilzabrutinib can bring significant patient benefit as we unleash the potential of pleiotropic immune modulation. On slide 22, our partner Teva recently announced positive dvatikook Phase 2b results in IBD. IBD remains an important unmet medical need in immunology where we are underrepresented today.

Speaker 3

DIVATICU represents a meaningful opportunity for Sanofi to begin to bring new science and benefit to IBD patients, continuing immunology and far beyond. We saw statistically significant and clinically meaningful benefits in ulcerative colitis and Crohn's disease with all endpoints met and faring pleasingly competitively within the TL1a class. It is the 1st and only TL1a to demonstrate benefit in Crohn's disease. Patients achieved strong placebo adjusted responses across both indications as high as 27.4 percent clinical remission in UC and 34.8% endoscopic response in Crohn's disease, both at the high dose level tested. Combined with a favorable safety and tolerability profile, these positive results offer an opportunity to advance the program into Phase 3 development and potentially offer an improved outlook for patients with moderate to severe inflammatory bowel disease relatively soon.

Speaker 3

Additionally, data will be presented at the ECHO meeting later this month. I'd like to conclude with my usual news flow slide now with 2026 news flow for the first time. We plan 12 Phase 3 readouts, 15 regulatory submissions and 13 regulatory decisions in multiple jurisdictions increasingly capturing the improving value of our clients. Importantly, we also see the intensity of the news flow increase over the coming 2 years, building on our earlier comment about our focus on improving R and D productivity. The cadence and the volume of the R and D drumbeat continue to quicken.

Speaker 3

We look forward to updating you on our progress. As I regularly say, we remain humble in the face of disease and regrettably not everything will work. However, I'm optimistic that the impact of talented science focused teams coupled our increasing exposure to breathtaking digital technologies will drive this unique pipeline in our core focus therapy areas in the service of patients. I would like to thank all of my brilliant R and D team members and colleagues across the company for the positive progress made this year. We are indeed chasing the miracles of science to improve people's lives.

Speaker 3

With this, I hand back to Paul for Q and A.

Speaker 1

Well, thank you, Uman. Thank you, Francois. We'll now call to your questions. As a reminder, we'd ask you to limit your questions to 1 or 2 each. I said this every time everybody hears that part.

Speaker 1

You'll be notified when your line is open to ask your question at that time. Please make sure you unmute your microphone or option to submit a question by clicking the Q and A icon at the bottom of the screen. Your question will be read by our panelists. Now we'll take the first question, please.

Speaker 4

Yes. The first question will be from Riza Ekfert from Berenberg. Riza?

Speaker 5

Hi there. Thanks for taking my question. On the buyback, perhaps you could just comment on the rationale for the size, the $5,000,000,000 and how soon you might start the buyback? And then any color on plans for the rest of your proceeds? So essentially, just latest thoughts on M and A targets by development stage, therapy area, size, etcetera.

Speaker 5

Perhaps then I could move to vaccines. I would like to ask Thomas some questions, maybe on the pneumococcal vaccine. So the Phase 3 entry, very exciting. Perhaps a bit more color on what you're looking to show in Phase III and how you see the competitive landscape because there are others coming forward with vaccines perhaps with higher valence C2431, so how you see a 21 valent vaccine fitting in? Thank you.

Speaker 1

Thank you, Louise. I counted 8 questions. So okay. So buyback, sizing, timing, proceeds, over to you, Francois.

Speaker 2

Yes. Good morning, Louisa. See, the rationale for the €5,000,000,000 actually, we wanted to mitigate part of the dilution of Opelas. So I think that we are addressing that with the €5,000,000,000 What we did as well was to listen to you as analysts and to listen as shareholders as well. And we found that €5,000,000,000 was actually the amount that on which there was a consensus as well on your side.

Speaker 2

The starting point, we expect to start the share buyback in the middle of next week actually or relatively quickly. The rest of the proceeds, it's part of our capital allocation. You saw that 1st and foremost, we want to invest in our business, which is what we did in R and D last year, which is what we do as well on a permanent basis in AI, in manufacturing. There will be more coming in, in sales and marketing ahead of quite a few launches coming in. Obviously, we are looking as well very seriously at external growth opportunities, BD and M and A, without any pressure because we have a strong growth outlook ahead of us, because we have a strong pipeline as well.

Speaker 2

I mean, Uman just covered it a few minutes ago. That being said, we have a strong balance sheet. As you could see, we have a limited amount of debt as at the end of 2024, so which gives us a certain number of opportunities. But we don't feel any pressure to go crazy on M and A and BD. So we will remain very disciplined while having the opportunity to complement whatever we have in our pipeline.

Speaker 2

So the main focus will be essentially on our 4 therapeutic areas, which you know, plus potentially some white splices, once again, without feeling any pressure and always focused on creating value for our shareholders.

Speaker 1

Thank you. Thomas, PCB 21, competitive landscape?

Speaker 6

Thank you, Louisa. Indeed, Sanofi was very pleased to announce the start of the Phase III program for our PCV21 panel product. The study is progressing as per plan. And in total, we are expecting to include more than 7,000 infants into the overall Phase 3 program. More broadly and in line with the question, as you know very well, first of all, it's exactly at the heart of what we're doing today at Sanofi vaccines.

Speaker 6

It's reaching either the pediatric for this Phase 3 program or the elderly segments, both segments where we are very well positioned. So it fits perfectly with our portfolio. It will be nicely complementary. It's a big space today, but pediatric is about 70% of the normal business altogether. And basically, as per the competitiveness of the program, I think I have a couple of things to highlight.

Speaker 6

First of all, PCV-twenty one program is going to be the 1st pediatric vaccines against pneumococcal disease that we enter into a national immunization schedule, The first one with more than 20 valences. So I think that we position well as a starting point. As you've noticed also from our December announcement, we've announced a refocusing of the alliance with our partner SK, which means that it's a starting point. It's not an ending point. We'll start with PCV21.

Speaker 6

And of course, our objective is to be competitive all over the marketplace. Therefore, we'll keep going forward with more and more balances. So we appreciate, obviously, that other companies are working on other candidates in this space, but we do believe that we are very well positioned to start a significant entry into that place and we remain competitive

Speaker 1

in the future. Great. That's it. The first is you said '21 or 'twenty one valences and a couple of years ahead in the pediatric market, which is the biggest segment of all in that market. Next question?

Speaker 4

Next question is from Graham Parry from BofA. Graham?

Speaker 7

Thanks for taking my questions. So firstly on Dupixent and just the gross to net adjustment in the Q4. Can you just clarify that was just a one off adjustment catch up for channel mix rebate levels through the whole year of 2025? And just the extent to which that drove the €150,000,000 miss, is that just the majority of that compared to, say, invoicing days? And then just any comments you've got on how that could progress into 2020 5?

Speaker 7

And then secondly, on Bay Fortis, just given plasorovimab potential for approval this year, possible inclusion in the season, do you are you what are you assuming in your guidance for the year on Bay Fortis? Is it expected to grow? And then finally on tolebrutinib, if you could just update us on the indication that you're expecting for tolebrutinib in non relapsing SPMS. Is it classically defined non relapsing SPMS you're discussing? Or is there any potential here to get a broader label for progression independent of relapse activity?

Speaker 7

Thank you.

Speaker 1

Thank you, Graham. Brian, DP goes to net and outlook to 25.

Speaker 8

Yes. Thanks so much, Graham, for the question. And I'll first start off by reiterating what Paul said in his opening remarks. We couldn't be more pleased with Dupixent's full year performance delivering greater than $13,000,000,000 As you guys know, we provided the target of $13,000,000,000 for the year, 23% growth this previous year. And again, it's underlying demand driven is what's happening here.

Speaker 8

So we have strong TRx growth across indications and across geographies. And that's the same actually for Q4. Q4 was really strong performance with double digit growth in terms of sales and TRxs. And it's just exactly as you said, I think you said it in your question, it was really due to the Q4 net sales reflect some one off items in the U. S, so there's some true ups there.

Speaker 8

And of course, there is a little bit of the fewer business days. There's a little bit of each of the 2 mixes. But overall, again, really this doesn't affect volume. We're in a really strong position as far as volume goes. And now having 2024 behind us, it even further reinforces our commitment to our longer term guidance that we provided.

Speaker 8

So feel like we're in a very good shape exiting 2024 and entering 2025.

Speaker 1

And you see the script trends as we started the year, so very encouraging already. Bay Forward has guides, Tom, on competitive set?

Speaker 6

Yes. So thanks for the question, Graeme. First of all, maybe before we switch on to 2025, a couple of those on 2024, very happy about the 1st year of B42's 1st full year of sales. We reached close to €1,700,000,000 unprecedented pediatric immunization launch in the history of pediatric immunization. So I think that's a proof point of our capabilities.

Speaker 6

Now it's also a proof point of the capability of the product because you've seen that not only we are happy about the sales but most importantly we are very happy about the impact we have seen on hospitalization in the newborn population. Now moving forward from 2024 to 2025, we see further growth in 2025. That's very clear when you look at the penetration on the number of countries we can go to. There's more penetration in some markets and there's a couple of more markets notably in Europe or Asia where we could grow in the coming year in 2025 and after in 2026. So obviously, we also recognize that there are more competition coming down the road.

Speaker 6

You've pointed another molecule antibody that could come in 2025. We expect this other molecule antibody to come in 2025 in the U. S. As we discussed before, I think first impact would be the fact that we will talk more about the importance of RSV prevention. So it will raise the importance of the awareness of RSV disease.

Speaker 6

That's the first thing. And then of course, while there will be more competition down the road, we believe that we have a competitive profile with Nercythemab. We have an extensive amount of reward dividends. You've seen many countries showing 80% or 90% reduction in hospitalization. And you've seen the very pristine safety on a large scale that is provided with the Bifortus moving forward.

Speaker 6

So I think that from the very broad evidence, from the competitive profile, but we have also with a significant half life compared to the other molecular antibody, we are well positioned to grow in 2025.

Speaker 1

Thank you, Tom. Buman, Tolubrutinib and potential label?

Speaker 3

Yes. So thanks for the question, Graham. Tolubrutinib has been submitted in line with our previous guidance last year we're excited about the data for tolebrutinib as you suggested secondly progressive MS and we are equally excited about the readout later in this year for PPMS. This is a demonstration of Sanofi's commitment unwavering commitment to patients that ask.

Speaker 1

Okay. Next question.

Speaker 4

Next question is from Shamus Fernandez from Guggenheim. Shamus?

Speaker 9

Hello, thanks very much. I'll just go simple and try to abide by the one question request. So actually the question is for Paul and Hooman, sort of simultaneously, if you each wouldn't mind offering up the catalyst that you're most excited about in 2025 in particular. I think most investors anticipate the results of idapicamab most eagerly, but love to just kind of hear your thoughts on maybe your top 3. And if perhaps they might differ slightly, it would be fun to hear that as well.

Speaker 9

Thanks so much.

Speaker 1

All right. So the old, which is your favorite child?

Speaker 6

For me,

Speaker 1

it's the one that called me most recently. But given things for maybe human you start now.

Speaker 3

Yeah. So I'll be very quick, top 3. I think we're excited about the launch of UP and COPD, which my beloved colleague Brian has already talked about. I think bringing etopemapetopecmaab alongside that for patients with who are former smokers will be very exciting and reinforcing our position in pulmonary inflammation and immunology. I think it's an exciting time for amelotilumab as we continue the quickening drumbeat, particularly in disorders like asthma and in hyperadnitis suppressiva.

Speaker 3

And finally, I'm very excited about the ongoing activity around our and completely internally generated bispecific activity in the Linsek and Inc. So those are my 3, but it would be remiss of me not to comment on our 3 launches that are coming up.

Speaker 1

I'm excited about all of our Phase 2 programs. Just to give it I think the quality of what we're putting in means that we're more confident what comes out, of course, the normal risks around that. Probably a bit of overlapping with you, I mean, the Itypekimab, COPD is game changer and former smokers. So I think that is going to be really interesting. And I could pick from 3 or 4 other things.

Speaker 1

But on the later stage, I think it's primary progressive MS with tolebrutinib. I think they're all a big deal, and I think we can go a bit deeper into Phase IIs. But it's exciting year for us. No LOEs, mid high single digit growth, strong rebrand in EPS and pipeline catalysts. I mean, that's where we want to go, top line pipeline.

Speaker 1

Next question?

Speaker 4

Yes. Next question from Peter Welford from Jefferies. Peter?

Speaker 10

Hi. Thanks for taking my questions. I hope you hear me. So I'll ask these 2. Firstly, just on Bayfortis, can you just comment there on 2 things both in terms of you said growth for 2025.

Speaker 10

Can we expect U. S. Growth within your assumption for 2025? And what's regarding the is the actual doses that you shipped at the moment in the U. S.

Speaker 10

Or indeed other markets, have they been used? Or are there still doses at the moment that are outstanding that are presumably likely to be used during the 1st part of the year as the season continues? And then secondly, I just wonder if you can comment on the potential for Luncekimig there. I think our catalyst has been pushed into 2026. Is that does that reflect any changes to the data you're awaiting or any change to the Phase 2?

Speaker 10

Or is that purely just a timing from the point of view of recruiting and getting sufficient data on board for the decision in ASPR Phase 3? Thank you.

Speaker 1

All right. Peter, thank you. Thomas, on Bay Fortis, U. S. Growth and doses shipped?

Speaker 6

Yes. We don't thanks for the question first, Peter. We don't provide exact number of doses shipped by provider or to each country. But I can still give a bit more color on 2025 versus what I've done in 2024. So I think what's at the heart of your question for 2024 is how did we deliver the growth on 2024?

Speaker 6

And what does that mean for how should you think about 2025? So first of all, we had a significant increase in supply in 2024. All the teams have been remarkably working on both sides of the partners to deliver that. That has enabled us to deliver in Q4 2024 enough doses to cover for the 2024 needs and the Q1 2025 needs because as you know very well, RSV is not flu. And therefore, you have babies being born in January and February and some more catch up.

Speaker 6

So there will be RSV mutation in January, February March, and we've shipped doses in Q4 2024 for that to happen. So this is what accounted for. I still believe that when it comes to penetration, there is an opportunity to increase in the U. S. In the coming years.

Speaker 6

Of course, as always, when it comes to VCR, it's year by year progressively. There's a lot going on in the U. S, as you know very well. So we'll know more in the coming few weeks. But when you look at the profile of the product, we believe that there is a good space for the product moving forward.

Speaker 1

Thank you, Tom. Umer and Sekimik?

Speaker 3

Yes. So as I said, thanks for asking the question. We're very proud of Linsekhemig combining the potency of TSLP and IL-thirteen, best in class, 1st in class, unprecedented molecule or the best pheno data that's out there. Your specific question was about the implication of the move into into 'twenty seven of that. I just want to I want to take a step back.

Speaker 3

I think the Sanofi has adopted a new discipline. This is part of our freedom now. We're an organization that is robust in our use of data and what all we've done, as you can see, by outlining and dimensionalizing our pipeline timing, what we've tried to do is align that beautifully with ClinicalTrials dot org. That's all we're doing. There is no implication for Linsekumig.

Speaker 3

In fact, our commitment both to moderate to severe asthma as well as high risk asthma underlines the importance of this potential molecule to both increase the efficacy ceiling and possibly drive durability. So simple answer

Speaker 1

to your question, we remain super confident. Thank you. It is really actually quite an exciting product given in particular on high risk asthma. I mean really I've been in asthma 35 years and I think this is a real incredible opportunity. Okay, next question.

Speaker 4

Next question from Joe Walton from UBS. Joe?

Speaker 1

Joe?

Speaker 11

Thank you. Can you hear me?

Speaker 6

Yes.

Speaker 11

Excellent. Mike, I have two questions, please. Firstly, can I push you a little bit more on vaccines? Perhaps you can give us some idea of what you think the penetration today in relevant infants is in the US and what that would be compared to some other, you know, sort of early pediatric vaccines, just to give us a sense of what the upside for the market there is? And also within vaccines, can you tell us, a bit more about the proportion of your sales that go to, let's say, adolescents, with mandates, because I think people are fearful that whilst everyone is going to be allowed the choice to have a vaccine going forwards, perhaps some of the mandates that really pushed people to vaccination may weaken, anything to do with individual choice, and you do tend to see lower vaccination rates.

Speaker 11

So, I'd like you to discuss that a little bit in more detail, if you could. And could you also just please tell us a little bit more about healthcare reform in the US, your assumption of how much more you're going to have to pay for the Part D for those patients who are in catastrophic cover? And whether you see any offsets in terms of increased volume from lower patient co pays, more adherence, for example, for things like DUPIXENT in the elderly.

Speaker 1

Okay. Thank you. And Francois may go to you on the last part of the assumptions. Some very specific questions, Tom. I'm not sure that you can answer them specifically, but you can certainly hear what you think.

Speaker 6

Yes. And if I cannot answer them specifically, please go. That's why we're having quarterly calls. It might be some other quarters on the road. What I mean by that sorry, Joe.

Speaker 6

And back to your first question on the penetration in the U. S. It will be today in January a bit premature because I said before, you have the full data a few weeks after injection. And we know very well that RSV and Musicians are going to go see in January, February March. So it's a bit early to say.

Speaker 6

I would expect the significant percentage of the U. S. Birth cohort has been protected against RSV this year, but which means more than the majority, more than half, if you wish. But it's way too early to be a bit more precise. Wait for a couple of 1 or 2 earning calls, and we'll do a bit more.

Speaker 6

It will give you more idea of further room to play. But there is as for any immunization coming into the market, it takes 2 or 3 years to pick in terms of VCR. So I think that's what we should expect for the product, especially the whole category. Now on your second question, which is very different on percentage of adolescents with corresponding to mandated or potentially mandated immunizations in the U. S, I understand where the question is coming from.

Speaker 6

A bit early there, I would say that if you want to have an idea, the immunizations you're talking about are some boosters in adolescents and some meningococcal shots in adolescents, so mening and boosters. However, if you're looking at the heart of your question, I personally do not believe that mandatory or not monetary situations will make a big difference into the taxation coverage rates. So we are not specifically worried for that. Of course, it's something we are monitoring as a field. But when you look at the clear benefits risk of our products moving forward between disease and not disease, those onetime immunizations are very clear in terms of safety and benefits.

Speaker 6

So again, there are some decisions that will happen in the coming few months or quarters, maybe. Let's see. Let's not have too many hypotheses. But whether or not monetary situation are removed, I do not foresee today a major impact on ourselves.

Speaker 1

Thank you. Maybe Francois will let you

Speaker 2

go. Francois speaking. On the Medicare Part D, as I said, we expect a modest impact. It has been fully built in our 2025 guidance and budget, obviously. You talked about the volume elasticity.

Speaker 2

There is very difficult to assess, but we don't expect a significant positive volume elasticity out of it. But maybe I'll let Brian complement what I said.

Speaker 8

Yes. I think as Francois said, we're a little bit less exposed versus some of the other organizations as well based upon the nature of our portfolio. Again, more innovative medicines and vaccines. So you tend to have a little bit less exposure there. As well, you see a lot of our business even for Dupixent, we've said 70% of our business really primarily comes from commercial versus again in the government channels.

Speaker 8

But nevertheless, I think, Joe, you hit the nail on the head a little bit. What we haven't seen yet is, will we actually have a little bit of volume improvement based upon the 2,000 annual out of pocket cap for patients which could lead to improved compliance for patients as well. So that's really to be determined, but that could be a potential slight offset if you will, but we feel like we're in a very good position as we enter into 2025.

Speaker 1

Okay. Thank you. Next question.

Speaker 4

Next question is from Richard Vosser from JPMorgan. Richard?

Speaker 12

Hi, thanks for taking my questions. 2, please. 1 on amlutelumab. Just as we think about the asthma data that's coming up and the 12 week dosing, could you just talk through your level of confidence that you'll see no detrimental reduction in efficacy there through the data? And then secondly, question on itupacumab.

Speaker 12

Obviously, Dupixent in COPD has a broader label. The launch is going exceptionally well from the script trends. But what implications does that have for the residual opportunity for itepacumab in COPD? Thanks very much.

Speaker 3

Okay. Hooman? Yes. Thanks, Richard. Two quick answers and thank you for both questions.

Speaker 3

So just categorically, I obviously haven't seen the data, just to be clear, but I don't expect based on the pharmacodynamics of amlutilumab in atopic dermatitis, a condition which is both clinically overlapping and pathophysiology overlapping, I don't expect any drop off at week 12. In fact, what we saw with Amelie is progressive increase throughout the duration of atopic dermatitis over 52 weeks, so I'm actually, comfortable that the pharmacodynamic half life of Amelie will continue to grow throughout the course of asthma. We remain studiously awaiting the outcome of the amelitholumab asthma result which should be this half of the year and then specifically talk about itepecimab. Just to challenge a little bit of the underlying premise of the question, while we were appropriately rewarded with a broad label for dupilumab with type 2 inflammation and chronic bronchitis, I think that it's the population of former smokers is a very substantial one, and one that we led to science with both genetically and in terms of characterization of the patients while IL-thirty three secondretion is substantially increased in bronchial alveolar lavage. So actually, if anything, the opportunity is very substantial in the form of smokers that have significant morbidity and mortality, so you said, with COPD, and we remain steadfast in our view that in a success scenario, which we'll know fairly soon, the combination of products will reach a peak sales of more than $5,000,000,000 a year.

Speaker 3

Brian, any further thoughts?

Speaker 8

Yeah, I'd like to compliment that with, again, like other therapeutic areas or disease states that we've gone in with our immunology portfolio, again, we are the 1st mover into the marketplace. So the biopetentration rate today is, again, just what we're doing with Dupixent and CVD, number 1. And so as we go in there with both of these agents, we're gonna be able to continue to grow patients, I think, on those therapies. But just nicely, as you said, this is gonna open up the population and across the 2, we've shown you that 2 by 2 before in the past. At tepecumab plus Dupixent will open up the opportunity to reach more than 80% of the COPD population.

Speaker 8

Again, around 2,000,000 patients if you think about it across the G7, if you will. So they're both uniquely sit in unique places. They overlap ever so slightly, I think in the above 300 EOS level in the Type 2 COPD patient population. But I think the complement of the 2 really shows that we're going after this disease state from all angles because there will be different patient populations that will benefit from both drugs. Brian, just

Speaker 3

a quick addition before you go back to Paul, which is, I just want to remind everybody, that itepicumab works in the high zenafil and the low zenafil population equally in terms of relative risk reduction and we do have a life cycle management strategy for itepicumab with CRS with MP. Our Dupixent story is now being rolled out in conjunction with our extremely valued partners, Regeneron.

Speaker 1

Thank you, Richard, allowing human an opportunity to hijack the call. Perfect. Next question, please.

Speaker 4

Next question is from Florence Espeles from Bernstein Securities.

Speaker 13

Good afternoon. Florence Espeles from Bernstein. Two questions, please, on the pipeline. 1st on R and D budget, with a long list of phase 2 products. So how will you manage the R and D budget going forwards?

Speaker 13

Good problem to have, but any color would be great. And my second question is for Thomas. We see more and more vaccines projects on the pipeline and on the new slot tables. I like the Phase 3 and the RSV for toddlers. Could you maybe elaborate a bit even Zoe for 2026, but how you see these projects nicely, good addition to your existing RSV franchise?

Speaker 13

Thank you.

Speaker 1

Thank you, Florent. Managing the R and D budget. Francois?

Speaker 2

Yes, Florent. Good afternoon. So for 2025, we expect a moderate increase in terms of R and D spend and investment. But don't forget that this comes over €900,000,000 plus increase in 2024 over 2023. And don't forget either that, obviously, as it is a case every year, we have projects being completed and new projects coming in new clinical trial coming in and out.

Speaker 2

So we are comfortable with the amount that we have for 2025 with a slight increase over 2024. Once again, euros 900,000,000 plus increase. For 2026, we have not provided any indication for the time being. We are working on it.

Speaker 1

Thank you. All right. Good. Thomas?

Speaker 6

Thanks for the question, Florent. Indeed, I like the way you frame the question, Florent. We're really looking forward to beat an aggressive franchise. So the first proof was the Befortus that we just talked about at the beginning of the call. And as highlighted before, we want to make sure that we complement that with an RSV toddler approach for 2nd season and thereafter as well as with an elderly approach moving forward with respiratory combinations.

Speaker 6

For the RSV toddler candidate you're talking about, indeed, when Phase III, 2026 readout will be an important one. Why am I particularly excited about this one? Because it really complements very well what we're doing on Befortus. 1st season, you get your newborn protected with Befortus. 2nd season, you want to make sure that you're able to provide what we call complete protection, I.

Speaker 6

E, we're targeting by e. G. Financial product, we go to the mucus and immunity and to prevent not only lower respiratory disease, but also upper respiratory disease, which is why we're going for the international approach. We think it makes a lot of sense. There's a significant burden of disease still in kids 1 year, 2 years and 3 years of age.

Speaker 6

And we believe that we have a step forward that of any competitor in this area. That's why we're so excited about it.

Speaker 1

Thank you, Thomas. Okay. Next question, please.

Speaker 4

Next question is from David Risinger from Leerink. David?

Speaker 8

Yes. Thanks very much, and congrats on all the strong business momentum. So my two questions are, first, what amount of navaxovid sales are factored into 2025 sales guidance? And second, should we expect top line press releases on Phase 2 trial results? Or will we need to wait for you to provide updates on them in conjunction with quarterly results calls?

Speaker 8

Thank you.

Speaker 1

Okay. Thank you. Novak, Sved, Samat?

Speaker 6

So maybe thanks for the question, David. As you know very well, we've announced last year the collaboration with Novak's to make sure that we are really looking forward at building what we believe could be a competitive not only competitive, but a winning ticket for flu and COVID-nineteen combination. We always highlighted a couple of things that I like to stress again here today. First of all, the big objective of this alliance is really to get to the right commission vaccines, flu and COVID. And we believe this market to be well served needs to ensure that there is the right level of safety, efficacy and making sure that we have thermal stability.

Speaker 6

And of course, when you have 2 winning leaders in flu with frozen high dose and free blood, that's why we're very happy that we have received the fast track designation for both Phase III trials then with nevaxovir. Of course, in 2025 and in the UK26 months forward, we're going to start commercializing nebuoxavid 1st and foremost in the U. S. This in 2025, the first reason is to learn about the COVID-nineteen market. It will be our first time in the U.

Speaker 6

S. So we need to understand, first of all, how is the market behaving there on COVID-nineteen. And if our hypothesis or the fact that there is room for actually a better tolerable COVID-nineteen vaccine is indeed confirmed into the marketplace. You know very well that there is a PDUFA date in the U. S.

Speaker 6

For this product in April. So let's make sure that we first move forward to the PDUFA date, the level we have. And of course, we have not disclosed any sales targets specifically for COVID-nineteen in 2025 and 2026. But as you know very well, this has been already included with the guidance that has been shared with Francois. Again, it's going to be progressive learning, building on the market and then really launching at scale our combination.

Speaker 1

Yes. Thanks, Tom. And I think you said it about safety. I mean, it'd be interesting to have a non mRNA COVID opportunity. And if that has a lower burden, we don't know.

Speaker 1

But from a safety perspective, and that leads to being a stronger choice, we'll find out.

Speaker 6

It could be what changes the COVID-nineteen BCR rate, which has been collapsing recently.

Operator

I think

Speaker 1

so. I think we all remember what it was like to get the safety challenges on route. But anyway, okay. Hooman, over to you. Are you going to do press releases for Phase 2?

Speaker 14

Well, let

Speaker 3

me start with a very simple comment that we are very conscious of our materiality requirements. We will remain great stewards of that. That's the very first point beyond anything else. Now speaking specifically about clinical trials, we're also conscious of the embargo requirements of major meetings, and we need to be very thoughtful about that. So we will absolutely not commit to publishing top line Phase 2 data as they come, except where their material or as part of a broader story.

Speaker 3

Please watch the broad story development around R and D and pipeline and Sanofi as we go. We are now becoming a science company.

Speaker 1

Thank you. What's that? Okay, next question.

Speaker 4

Next question is from Peter Verdult from BNP Exane.

Speaker 14

It's Peter Verdult here from BNP Paribas Exane. Two questions. Hooman, just on TL-1a, really interesting asset in light of your data in UC and particularly Crohn's and also given the market seems to describe all the value of this class to competing assets. So recent KOL checks point to biomarker led strategies being keenly sought. So I'm just seeking confirmation from you and your partner, Teva, that a biomarker will be deployed in your Phase III program, timings on the Phase III start and whether you're considering going beyond IBD in your clinical development program?

Speaker 14

And then a very quick one for Francois on Dupixent, just simply on profitability dynamics in light of the COPD launch accelerating volumes and the manufacturing changes that you're putting through? The simple question, Francois, I'm not asking for numbers, but just will 2025 be a significant sort of gross margin driver as it relates to Dupixent? Or do we need to be a little bit more conservative and wait until 2026? Thank you.

Speaker 1

Okay. Thank you. The biomarkers question Hi,

Speaker 3

Peter and congratulations. I should start by saying the TL1A story, yes. We did a great deal around the TL1A and we were quiet until the science began to speak for itself. Based on preliminary data, we're very excited about how competitive our molecule is. I don't share necessarily your KOL calls feedback that standard of care will require biomarker based stratification as an obligatory option.

Speaker 3

But of course, we are active in thinking about how we design our Phase III trials to deliver the maximum value for patients. And in terms of life cycle management options, we are working diligently with our partner Teva to establish the best path forward with life cycle management options. More on this space in February, ECHO meeting, And with that, I'll hand over to Francois and Brian for the next level of question.

Speaker 2

Peter, on the question of gross margin, let me give you a little bit of insight. First of all, if you look at it 4 5 years ago, we were 4 to 5 percentage points lower than our peers in terms of gross margin. We have gone a long way because if you look at it in 2024, we were basically at par with our peers, which gives a good illustration of the way we manage our portfolio and we manage some efficiency program as well. In 2025, we expect to see some further progress in our gross margin, which is partly coming from Dupixent, but not only. By the way, our growth even in 2024 and this is the case in 2025 and in the coming years, I I would say we are not Dupixent dependent just to increase our gross margin.

Speaker 2

So it's a combination of factors, but there is a fair contribution from Dupixent, but it's not only Dupixent. And I must say, the other new product launches have a fair contribution to it as well.

Speaker 1

Thank you. Anything to add? No. Okay, good. And Peter will allow a little bit more time in the next call given the length of your new title.

Speaker 1

Right. Next question, please.

Speaker 4

Next question is from Steve Cano from TD Cohen. Steve?

Speaker 15

Thank you so much. Also on TL1A, has the best in class profile held up when the data is cut by biologic naive and biologic experienced patients? So that's the first question. And secondly, are you highly confident FDA will not ask for additional data such as the PPMS data for approval of tolebrutinib and is the every week monitoring for 3 months likely to be what's in the label? Thank you.

Speaker 1

Okay. I think we're straight to you, Hooman. Yeah.

Speaker 3

Well, I don't want to undermine the discussion at ECCO later this month in terms of biologically naive and biological experience. Suffice it to say that we warmly invite you to the ECHO meeting to come and see the breadth of our data. I think you'll be pleasantly surprised. And then very specifically with PBMS and SBMS, as you know, we're working closely with the FDA who encouraged us to submit SBMS now. As you know, the results of the PPMS result comes out later in the year.

Speaker 3

You can infer exactly what the dataset requirement will be for SBMS in that regard.

Speaker 6

Of

Speaker 3

course, any decision is subject to regulatory final active review. And then with respect to the label and monitoring, I think you'll see that the FDA will adhere pretty closely to the phase 3 clinical trial protocol that's been the standard in this kind of space in terms of intensiveness and regularity of the monitoring, and we anticipate that that will play out in the label. We should be upfront and straightforward in saying that Sinofi will support any decision by the regulator to provide the most thoughtful and safe path for patients to take this disease modifying drug.

Speaker 1

Thank you, Hooman. Next question, please.

Speaker 4

Yes. Next question is from Emmanuel Papadakis from Deutsche Bank. Emmanuel?

Speaker 16

Thanks for taking the question. Yes, Emmanuel Papadakis, Deutsche Bank. So maybe a question for Francois on the outlook for the operating margin. Just talk a little bit about potential for margin leverage. I know it's presumably we should see revenue growth beyond well beyond 2025.

Speaker 16

We obviously have some financial considerations to take into account, the Regeneron co development lines, royalty lines perhaps. Just your thoughts on whether steady modest margin improvement in the midterm is a reasonable assumption? And then maybe a question for Herman on one of the handful of Phase II interesting Phase II data points are due this year, belinutantib, the oral TNF. The Phase I data last year showed moderate efficacy. You've emphasized the potential as a combination opportunity with biologics.

Speaker 16

In that setting, we do this right to say it relatively soon. What are you hoping to see in that? And is the plan to take it forward now as a Biologics combination Phase III?

Speaker 2

Okay, Francois. It's Emmanuel. For the medium term, I don't want to give a guidance, but directionally, I can help you a bit. Obviously, we expect a strong level of growth in the coming years, solid level of growth, let's say. Gross margin should continue to increase as well over the next coming years, as I said earlier.

Speaker 2

R and D, still early to say because, I mean, it depends on what the readout will be in the coming months. Directionally, G and A, you can expect that there will be flat to declining growth for the G and A part, but the sales and marketing part could increase a little bit because we have a fairly heavy program coming in. You were mentioning one important item, which is the profit sharing with Regeneron and the end of the reimbursement for R and D there, which is coming at the end of 'twenty six, beginning of 'twenty seven. So this will put a little bit of pressure probably on in 'twenty seven on BOI. That being said, not in absolute value.

Speaker 2

I can tell you anyway. Our BOI will increase in absolute value each and every single year, but there is a possibility that it could be a little bit under pressure as a percentage of sales in 'twenty seven from what we can see today. It's still early. Let's not forget that we have other items that are coming in like the Ambutra royalties, which is going to grow significantly in the future as well. So I think that's directionally that's what I can tell you without once again, I'm not providing a guidance for the medium term in terms of the UI.

Speaker 2

Yes.

Speaker 1

Thank you. And I think you mentioned what you mentioned, the Ambuetro. Yes.

Speaker 2

That's what I just mentioned.

Speaker 6

So I

Speaker 1

think that is an important point to consider. Hooman, oral TNFR1?

Speaker 3

Yes. Thanks for the question. So firstly, we had pleasing results last year. The data are on track as we always committed to releasing that in the first half of this year and that's exciting. Just to dimensionalize that for you.

Speaker 3

Yes, of course, there's a logic for it to be used in combination treatment strategies, particularly in the modern era

Speaker 6

where

Speaker 3

we have seen the combination cytokine blockade can both increase the efficacy ceiling or surpass the efficacy ceiling and also provide durability, but I just want to be clear that as well as combination therapies, remember Sanofi is now becoming the premier immunology powerhouse, and we have network effects internally where we can combine our molecules to generate greater value for patients. So just to be clear, in plaque psoriasis, not only is there optionality for combination therapy, but depending on the results, we'll certainly consider using it as monotherapy as a pre biologic small molecule TNFR1 signaling inhibitor. I should remind everybody however that rheumatoid arthritis will read out later in the year and that's an even more classically TNF mediated disorder. We're excited to see that in monotherapy and combination therapy and there are further indications supporting our broad lifecycle management strategy in immunology.

Speaker 14

Yes. I think let

Speaker 1

me just add on to the RA data will be important in the TNF driver. I think the question was also what are you hoping to see. If safety is right, the combination opportunity is significant. And then we'll see on mono as well. But we look forward to that.

Speaker 1

Okay, next question, please.

Speaker 4

Yes. Next question from Shirley Chen from Barclays. Okay. So we'll come back to

Speaker 17

you. Sorry.

Speaker 1

The last moment.

Speaker 17

Thank you. Hi, Shirley Chen here on behalf of Emily Field. Just moving back to Bay Fortis, if I can. So when we're ordering and contracting for Bay Fortis for the next ISV season happen, So just trying to understand a bit more about how much of 1st mover advantage we still have here for the next season? And how do you consider the pricing of Bay Fortis year over year?

Speaker 17

So in 2024, we saw a slight price increase by 5% according to the American Academy of Pediatrics. So would you keep this trend or would you consider the price slightly differently for the next season due to the potential competition? Another question on broader vaccine business. So obviously, there's a lot of attention on nominee to adjuvantages. So are you concerned about like vaccine hesitancy as impacting your broader vaccine business, given how widely publicized this is, even this there are no changes in policy?

Speaker 17

Thank you.

Speaker 1

Great. Thomas?

Speaker 6

Two great questions. Thank you very much, Shirley. First of all, on Befortus, maybe a couple of points on your questions on the ordering patterns and price. First of all, from an ordering pattern perspective, I think it's very important to be clear that RSV is not flu, so the product is not changing every year. It's not a seasonal product because of that.

Speaker 6

Even though immunization are much more focused on some part of the year, it's the same product all year long. So you don't have the same pre book effect that you have, for example, in Influenza. I think that's an important differentiator to have in mind. Having said that, more specifically for 2025, I think the zest in your question was about the fact that is there a 1st mover advantage? I would say yes, just because of the product profile.

Speaker 6

Again, if you look at our product profile, we have an unprecedented body of reward evidence showing massive reduction of hospitalization for newborns in countries that have used Bifortus. And by the way, not the same drop in hospitalization in countries that have decided to go other ways than with Bifortus. So I think that's an important factor to look at. Now there will be maybe specifically for 2025 a little bit of a first mover advantage just because if you look at the U. S.

Speaker 6

Market, physicians, practitioners have used Bifortus this year, are comfortable with it, have really appreciated not only the safety profile. And now that we have full supply, we are able to deliver whenever they want it in 2025. So we are really moving forward with this. On the price point of B42 in 2025, we are seeing the situation as no erosion of price point in 2025. We will hold there.

Speaker 6

On the second part second question, sorry, that you had on vaccine hesitancy, I don't think we are in the position to make a lot of conjecture about the future. But a couple of points I think that are important and valid to your questions. First of all, is vaccine hesitancy a concern? Yes, vaccine hesitancy is a concern for any vaccines head on this planet, but also on the fact that actually when there is vaccine hesitancy, there is less protection and there is more disease. Interestingly, and that's what I want to close this point on, it's interesting to see that after 3 or 4 years of soft flu vaccination coverage rate, you see a comeback of influenza in the U.

Speaker 6

K, in France, a little bit in Japan and many other markets, where actually there is an increase in the severity and the number of hospitalization due to influenza this winter. I think it's a good wake up call. And if vaccine goes too much the wrong way, we will see more and more disease. So we need more vaccines. We are welcoming 2 delegates about those, about the safety and the benefit they provide.

Speaker 6

And we feel confident about the future due to the quality of our products.

Speaker 1

Thank you. Next question?

Speaker 4

Yes. Next question from Eric Leberico from Cifen.

Speaker 18

Eric? Yes. Good afternoon. Thank you. Two questions.

Speaker 18

First on Sotlisa. Any chance to get a better understanding of what your ambition is with the drug? It's a 2 player market where the other guy is having 95% market share. So if you are successful in closing the gap could be an exceptional opportunity for you. But it was first about data and now you have the data.

Speaker 18

It was then about formulation, you will soon have formulation. So probably the remaining question is the willingness to invest and support on the commercial side, a relaunch or a stronger launch based on those data. So where are you? What's the market intelligence is telling you? Is it too late?

Speaker 18

Is it becoming too much your market or you're not having too much time given patent Blackstone Royalties, anything to help us understand whether it can be a blockbuster for sure, but a multi blockbuster maybe. And the second question, a very short one, given the current dynamics with Altuveo, is that one your next blockbuster and no later than this year? Thank you.

Speaker 1

Well, I'll take the second part. It will be a blockbuster this year, Altuveo. Brian, Sarkis' ambition.

Speaker 8

[SPEAKER THOMAS E. SALMON BERRY GLOBAL GROUP, INC.:] Salmon Berry Global Group, Inc.:] Yeah. And thank you so much for the question. I think you framed it really nicely. If you look at that CD38 marketplace, again, this is a marketplace where they've the physicians like the CD38 target for multiple myeloma, we estimate that that marketplace could be somewhere in the range of 16,000,000,000 by the 2,030 timeframe.

Speaker 8

Well now, as Uman said, we've had a real strong drumbeat of new information coming out, of course, really favorable data, I think putting us in the first line therapy, but also the recent data that we've had for the on body device. And I think that's not to be underestimated. The subcu formulation offers a significant advantage in terms of patient and nurse experience. Utilizing an on body delivery device, we believe this could ease the use and reduce some of the treatment burden along with the strong efficacy and safety that we provided. So we absolutely do not think it's too late.

Speaker 8

We absolutely believe we have all of the elements we need now to compete in the marketplace. We are investing behind this asset as we've said before and we believe it's going to be a multi blockbuster.

Speaker 1

Yes, maybe I'll just add to just Altuveo blockbuster this year. So please have potential blockbuster next year. I think Brian Tifman with the on body device opportunity for nurse to manage multiple patients simultaneously is still from an oncology office perspective, still a major advantage because we do have great data. We do have an incredible medicine, and these things matter in a head to head race. Okay.

Speaker 1

Last question, I think.

Speaker 4

Yes. Last question from Ricardo Benavides from Santander.

Speaker 19

Hello, everyone. Thank you for taking my question. Wanted to ask you regarding your outlook on tariffs. The Trump administration has openly stated that it has been considering placing tariffs on both APIs and pharmaceuticals. Right now, we know that the tariff outlook is still a bit uncertain.

Speaker 19

But could you give us some light on how your top line or operating income could be affected if either 2.5 percent universal tariffs are implemented or more aggressive 25 percent tariffs to China are applied? And in more qualitative terms, how could you protect yourself against these measures? Post potentially increased production activity in the U. S? Try to ration for any potential medicine shortages?

Speaker 19

Thank you.

Speaker 2

Ricardo, Francois speaking. Just a couple of comments. First of all, it's difficult for us to comment on something that is not real today. So very, very difficult to comment. Just be aware of the fact that we have a significant industrial base in the U.

Speaker 2

S, which about 25% of what we market is coming from the U. S. So we are a little bit under indexed versus our commercial presence there. But once again, very difficult to comment on something that is still planned for discussion.

Speaker 1

That's it. Okay. Thank you very much, Francois. Thank you to everybody for the comments. We've got a busy year, I think, ahead of us.

Speaker 1

We made significant progress in 2024. We upgraded our EPS guidance twice and exceeded it. We continue to advance to becoming a focused science driven biopharma company. And as we entered 2025, we provided new guidance today, including mid- to high single digit sales growth expectation and a strong rebound in earnings as well as a solid outlook for our pipeline. So thank you for your interest in Sanofi.

Speaker 1

And with this, we'll now close the floor. Thank you.

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Earnings Conference Call
Sanofi Q4 2024
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