Sanofi Q3 2024 Earnings Report

Sanofi EPS Results

• Actual EPS: $1.57
• Consensus EPS: $0.22
• Beat/Miss: Beat by +$1.35
• One Year Ago EPS: $2.55

Sanofi Revenue Results

• Actual Revenue: $13.44 billion
• Expected Revenue: $16.59 billion
• Beat/Miss: Missed by -$3.15 billion
• YoY Revenue Growth: +12.30%

Sanofi Announcement Details

• Quarter: Q3 2024
• Date: 10/25/2024
• Time: Before Market Opens
• Conference Call Date: Friday, October 25, 2024
• Conference Call Time: 8:00AM ET

Sanofi (NASDAQ:SNY) (NASDAQ:SNY) is a multinational pharmaceutical company headquartered in France that researches, develops, manufactures and markets prescription medicines, vaccines and consumer healthcare products. The company operates across multiple therapeutic areas, including immunology, rare diseases, oncology, cardiovascular and metabolic diseases, and vaccines through its Sanofi Pasteur division. Sanofi sells products to hospitals, clinics, governments and retail pharmacies, with a broad global footprint and significant presence in Europe, North America and emerging markets.

Key commercial offerings include specialty biologics and established small-molecule medicines. Notable products developed or marketed by Sanofi include Dupixent (dupilumab), an immunology biologic for conditions such as atopic dermatitis and asthma developed in collaboration with Regeneron, and long‑acting insulin products in diabetes care. Through Sanofi Pasteur, the company produces vaccines for infectious diseases and maintains global vaccine manufacturing and distribution capabilities. Sanofi’s portfolio also encompasses over‑the‑counter and consumer healthcare items alongside its prescription medicines.

The current Sanofi group is the result of decades of industry consolidation and strategic acquisitions that brought together French and international pharmaceutical operations into a single global company. Sanofi invests heavily in research and development, focusing on biologics, vaccines, gene and cell therapies, and targeted small molecules to address unmet medical needs. Paul Hudson has served as chief executive officer since 2019, leading the company’s strategic priorities in innovation, portfolio optimization and global commercial execution.

Sanofi Q3 2024 Earnings Call Transcript

Key Takeaways

• Q3 sales of €13.4 billion (+16% at constant exchange rates; +11% underlying) underscore Sanofi’s strong top-line momentum.
• Dupixent delivered €3.5 billion in quarterly sales, reached over 1 million patients globally and secured COPD approval, supporting a €13 billion full-year target.
• Vaccines revenue rose 26% driven by BayFortis and Fluzone High Dose, with BayFortis on track to become a blockbuster infant RSV protection.
• Sanofi has upgraded its 2024 EPS guidance, reflecting margin improvement, ongoing R&D investment and operational leverage.
• The company agreed to sell a controlling stake in its consumer health arm at a €16 billion enterprise value, with plans to reinvest net proceeds per its capital-allocation policy.

Presentation

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

You can find the slides on Sanofi.com. Please turn to slide number three. 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 risk and uncertainties that may cause actual results to differ materially. 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 a description of these risk factors. As usual, we'll be making comments on our performance using constant exchange rates and other non-IFRS measures. Numbers used are in million euros and for Q3 2024, unless stated otherwise. Please turn to slide number four. First, we have a presentation, then we'll take your questions.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

As last time, we kept the presentation on the shorter side to allow for more questions, and we aim at keeping the call to about one hour. Q&A, we have Brian, Olivier, Thomas, and Julie to cover the global business and Roy, our General Counsel. For the Q&A, you have two options in Zoom: raise your hand or submit your question using the Q&A function. With this, I'll now hand you over to Paul.

[Paul Hudson, CEO at Sanofi]

Thank you, Thomas. Nicely done. Thank you and hello, everyone on the call. We reaffirm strong sales performance this year, with a total of Q3 sales of EUR 13.4 billion, a 16% increase at CER, an estimated 11% excluding the impact of phasing. This robust double-digit growth illustrates the underlying strength of our portfolio. Dupixent continued to be driven by global volume growth across all indications and geographies, now reaching close to EUR 3.5 billion in the quarter. Our vaccines business grew 26%. This increase benefited from an element of phasing in flu and Beyfortus sales. However, the global rollout of Beyfortus provided a strong contribution as well. Our pharma launches have been performing very well, with a 67% increase in sales.

[Paul Hudson, CEO at Sanofi]

This is a result of strong performance across all eight medicines that we have recently launched, and a clear illustration of the value those medicines bring to healthcare systems and patients. Opella's 8% growth was predominantly driven by the strategic acquisition of Qunol in the U.S., which has bolstered our presence in the consumer healthcare market. That is why, with confidence, that we have once again raised our business EPS guidance for 2024 on Monday. This reflects our continued momentum and our commitment to delivering value to our stakeholders. On slide six, Dupixent delivered another quarter of strong growth. It also reached the major milestone of improving the lives of more than 1 million patients currently on treatment around the world across approved indications, age groups, and geographies. Dupixent continues to hold the number one new-to-brand prescription market share across all its approved indications in the U.S.

[Paul Hudson, CEO at Sanofi]

Outside the U.S., Dupixent is now approaching blockbuster status in a single quarter. This remarkable performance reinforces our confidence in our sales ambition of around 13 billion EUR for the full year 2024. The recent consecutive approvals of the COPD indication in the U.S. and China, on the heels of the E.U. approval four months ago, speaks volumes of our ability to move decisively, execute, and meet the need for more treatment options. The expansion of Dupixent and COPD will give hundreds of thousands of additional patients who are living with this devastating disease, the chance to potentially improve breathing and a life with fewer exacerbations. Additional positive phase III readouts in bullous pemphigoid in chronic spontaneous urticaria will also, if approved, create additional near-term growth opportunities.

[Paul Hudson, CEO at Sanofi]

Turning to slide seven, we will continue to execute on the three commercial levers that will propel Dupixent's volume demand and its growth longer term. First, the steady increase in the penetration of advanced therapies within the biologic-eligible patient population. New market entrants of other biologics are expected to help drive market growth through improved awareness and adoption. Second, the geographic expansion with around 30 potential country launches across existing indications by 2026. Third, the expansion into new indications with high unmet need for large biologic-eligible patient populations like COPD and CSU. Specifically in the U.S. market, we continue to strengthen patient access to support new indication expansion, including COPD and other new indications, and expand access across both commercial and government channels.

[Paul Hudson, CEO at Sanofi]

We remain excited by the opportunities ahead of us and in the strong growth outlook for Dupixent, for which we continue to target a low double-digit sales increase at CER between 2023 and 2030 at constant exchange rate. Now, on slide eight, our strong growth in the quarter was accelerated by the outstanding performance of our newly launched medicines. With almost EUR 3 billion in the first nine months, our launches have become significant contributors to Sanofi's accelerated top-line growth profile. Beyfortus leads the way with sales of EUR 645 million in Q3, showing an exceptional market uptake in its second season and underscoring the critical role it plays in all infant protection.

[Paul Hudson, CEO at Sanofi]

With sales of EUR 172 million, Altuviiio further established its position as the new high efficacy standard of care in hemophilia A treatment, demonstrated by patient switches from other factor and non-factor medicines. Other innovative medicines like Nexviazyme, Rezurock, and Sarclisa continue to perform well and are contributing to a total of EUR 1.4 billion in sales for this quarter alone. These results show the power of our launch engine and how, with the right focus and sharp execution, we are increasingly delivering transformative treatments to patients around the world. Moving to slide nine, our leading respiratory vaccines, Beyfortus and Fluzone High-Dose, have established new standards of efficacy. Beginning with Beyfortus on the left side, we continue to build an outstanding body of evidence to further strengthen our position as market leader in all infant protection....

[Paul Hudson, CEO at Sanofi]

A recent study demonstrates that Beyfortus continues to protect infants against RSV hospitalization over a full six-month duration without waning efficacy. Furthermore, in the U.S., real-world evidence showed an 87% efficacy in reduction of hospitalization rates. This reinforces the real-world effectiveness that Beyfortus has consistently shown, with more than an 80% hospitalization reduction in over 75,000 infants. Importantly, we've been able to secure supply to extend protection against RSV to millions of infants in about 20 countries where Beyfortus is currently launched. To summarize, we're on our way to making Beyfortus our next blockbuster, thanks to its unique ability to provide all infant protection. Transitioning to influenza, we are glad to see that regulators have increased their focus on the quality of studies supporting the efficacy of flu vaccines by requiring large-scale randomized controlled trials against standard dose.

[Paul Hudson, CEO at Sanofi]

As a reminder, this is what we've done for Fluzone High-Dose, the only vaccine that has demonstrated statistically superior superiority to standard dose, with a 24% superior efficacy in a randomized controlled trial with 32,000 participants. In contrast, the adjuvanted and mRNA flu vaccines of other companies still must pass that high bar with their ongoing studies. On my last slide, let me conclude with how we advance our ESG commitments in and beyond the workplace. As a responsible employer across the world, we're committed to ensuring a living wage for all our employees. This is why we've adopted the recognized standard of the Fair Wage Network, which guarantees wages above local benchmarks. Going beyond our workforce, our commitment extends to our key supply chain partners. By taking direct responsibility for our employees and partners, we are improving employee well-being and strengthening local economies.

[Paul Hudson, CEO at Sanofi]

As always, when it comes to our commitment to society and our industry leadership, we hope that others will follow and help set new standards. That, and I hand over to François, our CFO.

[François-Xavier Roger, CFO at Sanofi]

Thank you, Paul. Good morning, and good afternoon to all. Before I start, let me clarify that financials for this quarter's include Opella operations. Now, let me discuss our strong sales momentum. Our top line growth was strong at 15.7% in Q3 at constant exchange rates, with sales reaching 13.4 billion EUR. This performance was partially supported by the early shipments in the flu season and Beyfortus strong momentum. Excluding this phasing benefit, we still achieved an underlying double-digit growth, estimated to be around 11%, similar to what we achieved in Q2. Our solid growth in Q3 was broad-based across businesses and geographies. The strategic decisions we have made across our business units are delivering attractive results and give us confidence to continue delivering strong performance in the coming quarters. Now, moving to the group P&L.

[François-Xavier Roger, CFO at Sanofi]

Gross margin improved by a full percentage point in the quarter, driven by a positive mix effects, partly offset by currency impacts on the Aubagio loss of exclusivity. Higher R&D expenses are aligned with our committed increase for 2024, reflecting our continued investment in innovation. SG&A grew substantially less than sales, underscoring our focus on operational efficiency. Business operating income saw a significant increase of 19.9% in the quarter, primarily driven by higher gross profit and operating leverage. Our business EPS increased by 17.6% in Q3. Previewing our business outlook for Q4, we expect continued solid year-on-year growth, although at a lower level than in Q3. Do remember that there is one less invoicing than in the US in Q4 versus Q3. Beyfortus Q4 sales are projected to be in line with their Q3 level, supported by the approved additional industrial capacity.

[François-Xavier Roger, CFO at Sanofi]

We expect Beyfortus sales to reach around EUR 1.5 billion in 2024, a remarkable performance in its first full year of marketing. For Q4, please remember that we had around EUR 400 million of one-off COVID revenues in Q4 2023, as well as the associated margin. We confirm our full-year guidance to increase R&D costs by around EUR 700 million this year, and we will also marginally increase our investment in sales and marketing to support sales growth, with a specific focus on digital investments. For the full year 2024, we expect flu sales to decline by a low single-digit % due to a soft vaccination rate, while we continue to gain market share. The total vaccines franchise is now expected to grow by a high single-digit %. Our insulin franchise, more specifically, Lantus, is very resilient, and sales are stabilizing.

[François-Xavier Roger, CFO at Sanofi]

We expect divestments to reduce sales by about EUR 300 million in 2024, and we anticipate capital gains from divestments to be around EUR 400 million in biopharma only. Gross margin is expected to decline slightly in Q4 and for the full year due to one-offs last year, such as COVID revenues and Aubagio sales. As disclosed earlier this week, we upgraded our guidance with 2024 business EPS, expected now to grow by at least a low single-digit % at constant exchange rates from previously around flat. This reflects a strong business performance over the last two quarters, and this reflects our confidence in our outlook. Turning now to Opella. This transaction marks an important strategic step for Sanofi to become a pure-play and science-focused biopharma leader. On Monday, we announced that we entered exclusive negotiation with CD&R to sell a controlling stake of Opella.

[François-Xavier Roger, CFO at Sanofi]

Sanofi will keep a significant stake in the company to support Opella in their independence journey and to retain part of their future value creation. We eventually selected the private option, namely partnering with a world-class PE firm, as it creates the highest value for our shareholders. The valuation at 16 billion EUR EV is very attractive. The 14 times 2024 estimated EBITDA is equivalent to the trading multiples of industry peers. We expect the transaction to close in the second quarter of 2025 at the earliest. The expected proceeds from these sales will be redeployed in accordance with our capital allocation policy, ensuring we continue to invest in growth assets and deliver value to our shareholders. Regarding share repurchases, we are fully aware of shareholders' expectations, and we will provide more specific details as we get closer to the receipt of the cash proceeds.

[François-Xavier Roger, CFO at Sanofi]

On the other hand, we always look at external growth opportunities to complement our attractive pipeline. We are more thinking of bolt-on acquisitions, and we are not working on any large acquisitions, as evidenced by our willingness to maintain our current strong credit rating, basically double A and A1, or almost double A. We will also consider how to inform investors and analysts in the future about the business performance of Opella, as this will be a significant investment on our balance sheet. That concludes my presentation. I now hand over to Houman for further positive news on the pipeline.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Thanks, François. We've achieved several milestones this quarter, showing our continuous strong pace of delivery. Dupixent is now approved for COPD in more than thirty countries, including the U.S. and China, where COPD is a huge unmet medical need due to widespread smoking in the local population. Another great milestone is the approval of Sarclisa in the U.S. for adult patients with newly diagnosed multiple myeloma ineligible for transplantation. It's the first anti-CD38 with this data in this setting. Finally, we've shared several positive phase III readouts, including Tolebrutinib, one of our BTK inhibitors, which is notable for its effect on disability improvement in MS. Business development, including strategic investments in external innovation, is a well-integrated part of the Sanofi efforts to continually access promising scientific developments and to replenish our pipeline. We invested in MeiraGTx, with high interest in their technology within immunology and neurology.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

We've invested in Ventyx, focused on autoimmune and inflammatory disorders, with an NLRP3 inhibitor in phase II. Another biotech company that piqued our interest, focused on immunology, was AnaptysBio, with its potential, best-in-class phase IIb PD-1 agonist tested in RA and UC, and in Vicore, with their potential best-in-class phase IIb angiotensin II type II receptor agonist in IPF. Lastly, we completed a licensing agreement with RadioMedix and Orano Med for AlphaMedix, a best-in-class radioligand based on alpha-emitting isotopes for rare cancers. We will keep you updated as we continue to access external optionality for our pipeline and complement the work we're doing internally in research. On the next slide, last month at the ECTRIMS conference, we presented Tolebrutinib's phase III data in RMS and NR-SPMS. We didn't meet the primary endpoint in the relapsing multiple sclerosis study.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

However, pooled analysis of six months data for CDW, this key secondary endpoint, showed a considerable delay in time to onset, which supported the impressive results in non-relapsing secondary progressive SPMS. In SPMS, Tolebrutinib delayed the time to onset of six months CDP by 31%, with further analysis secondary endpoint showing that the number of participants who experienced confirmed disability improvement increased by nearly twofold, so a significant effect on the lowering of the annualized rate of new or enlarging T2 lesions compared to placebo. Liver enzyme elevations are common to the BTKI class. In our studies, most cases resolved without sequelae. They all occurred in the first ninety days. Accordingly, we focused our intense liver monitoring in that period.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

I'm confident in Tolebrutinib for SPMS patients, which could offer a first option where no effective treatment helping improve disability has yet been approved. Turning to Amlitelimab, our OX40 ligand inhibitor molecule, we recently presented new phase IIb atopic dermatitis data from the sixty-eight-week DREAM-AD study at the EADV conference. The study had three parts. The first one, where the primary endpoint, percentage change in EASI, was met at sixteen weeks, followed by a second part for twenty-eight weeks, where most patients saw a durability of clinical response after withdrawal at twenty-four weeks, and the safety follow-up at sixteen weeks. Throughout the sixty-eight weeks, Amlitelimab demonstrated a pleasing safety profile, with most patients reporting TAEs, which were very mild or moderate in severity, and none led to discontinuation of the treatment, emphasizing the differentiated safety profile, complementing its confirmed efficacy.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Durability was demonstrated with a sustained percentage of EASI change after Amlitelimab cessation. Potential dosing interval of up to twelve weeks, with the potential for disease modification and therapy for drug-free remission, not seen with any current medicine, is envisioned. All phase 3 studies in the OCEANA program are ongoing. Readouts are planned in twenty twenty-six. The objective of the next slide is to present our work in immunology to the community, where we present the breadth of our immunology portfolio, where we persist with innovation to serve patients' needs. We're increasingly focused across all stages and grades of diseases and patients we serve, which are being addressed by approved in-development medicines. Each of these diseases has distinct characteristics leading to the informed use of our medicines in specific progression stages of disorders.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Increasing options can only be beneficial to patients in areas where there is still significant unmet need. I'd like to conclude with my signature slide, displaying our eighteen-month news flow, which continues to evolve and highlights the exciting progress supporting our increased R&D productivity that keeps on delivering. We plan six phase 3 readouts, 11 submissions, and 10 regulatory decisions in multiple countries, and we look forward to keeping you updated on progress. We are humble in the face of disease, and regrettably, not everything will work. But I am optimistic about this unique pipeline and our core focused therapeutic areas in the service of patients. Before handing back to Paul, I would like to extend a warm welcome to our new head of research, Michael Quigley.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

I'm eagerly anticipating our future collaboration and confident that his expertise will contribute to our continued efforts to enhance our R&D productivity and the quality of our pipeline over time. With this, I hand back to Paul for Q&A.

[Paul Hudson, CEO at Sanofi]

Thank you, Houman. When I open the call to your questions, as a reminder, we would like you to limit your questions to one or two each. We say that every time. I'm not sure anybody hears it, but say it anyway. You'll be notified when your line is open to ask a question. At that time, please make sure you unmute your microphone, or option two, submit your question by clicking the Q&A icon at the bottom of the screen. Your question will be read by our panelists. Now, we take the first question, please. Go ahead.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, first question from Richard Voser from J.P. Morgan. Richard?

[Richard Vosser, Analyst at JPMorgan]

Hopefully, you can hear me. It's Richard Voser from J.P. Morgan. Two questions, please. First question on Beyfortus. How are you thinking about the commercial potential beyond this season, following the ACIP meeting, discussing the Merck clesrovimab, oh, I can never say it, data this year? Just to continue with that. And then second question is just on the Opella deal. You know, how should we think about the high single-digit billion proceeds? How much of that would be realized by debt pass-through from Opella, passed down to Opella? Thanks.

[Paul Hudson, CEO at Sanofi]

Thank you, Richard. Beyfortus is very easy to say. Thomas?

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

No, I can't say the other one either.

[Paul Hudson, CEO at Sanofi]

Yes.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

Thanks for the question, Richard. Very good point indeed. A few first points to start with. First of all, there's still a lot to go when it comes to monoclonal antibody penetration. So we really welcome, but there is more players to come because it will increase the size of the playing field, basically. What is very important is that monoclonal antibodies have shown they are the only pathway to be able to really protect all infants, and will be more than one to actually sing that song and make sure that more and more babies get protected moving forward. Now, in terms of the ACIP presentation, as you were pointing out too, they were showing still some important differences between the two products.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

It's still early data for our competitor. We've seen just some data, not all of it. We're very confident in the data that we have demonstrated in both our phase three and our real-world evidence data, be it in actual efficacy or in its pristine safety or the duration of protection, so looking forward, and I'm sure we'll have many opportunities, we'll be able to show the differences between the two products.

[Paul Hudson, CEO at Sanofi]

Thank you, Thomas. François, Opella deal and proceed?

[François-Xavier Roger, CFO at Sanofi]

Yes, so, on the Opella deal, indeed, I confirm that we expect to receive at the earliest in Q4 2025, a high single-digit number in billions of EUR. Once again, not earlier than Q2. Just one small comment on the amounts. It's equivalent to the disposal of slightly more than 50% stake in the company. We will get the benefit of the debt push-down because obviously the company will be fairly highly leveraged, minus we need to pay taxes, and there are some transaction costs, as well. The cash proceeds, so we don't expect to get them, the earliest in Q2, so it's a little bit early to talk about that.

[François-Xavier Roger, CFO at Sanofi]

Obviously, its use will be fully in line with our capital allocation policy, which is essentially around investing in our business, which is already what we do. On the M&A side, we keep on looking at opportunities in the market. We are talking essentially on bolt-on acquisitions. We are not talking of large acquisitions, as evidenced by the fact that we gave some assurance on our intention to retain a double A rating. We will maintain our dividend policy to increase our dividend in absolute value in euro, as we have always done already over the last thirty years, and we will obviously look at anti-dilutive share buybacks. We heard loud and clear our shareholder expectation regarding share repurchases, so which is something that we have discussed in the past.

[François-Xavier Roger, CFO at Sanofi]

So we heard very, very clearly the appetite of our shareholders for that part of our capital allocation.

[Paul Hudson, CEO at Sanofi]

Thank you. Next question, please.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, next question is from Emily Field, from Barclays. Emily?

[Emily Field, Director and Head of European Pharmaceuticals Equity Research at Barclays]

Hi, Emily Field from Barclays. Thanks for taking my question. I'll ask two. First one on Dupixent. I was just wondering, I know it's very early days for the launch in COPD. You know, if you could give us any sort of early metrics about how you're seeing that launch in this new indication, and just how you're thinking about the swiftness of the launch curve now that you're, you know, out there, in the field. And then that was a very helpful answer on use of proceeds for Opella, but I just-

[Emily Field, Director and Head of European Pharmaceuticals Equity Research at Barclays]

... wanted to see if I could get perhaps a little bit more color, just because one of the questions that we've been getting frequently this week is with regards to just how much of the dilution from the sale of Opella could be offset with a share repurchase. So I was just wondering if perhaps you could provide any more specific comments on that point, that would be very helpful. Thank you.

[Paul Hudson, CEO at Sanofi]

Thank you, Emily. Brian, Dupixent, early thoughts on COPD launch?

[Brian Foard, EVP Head of Specialty Care at Sanofi]

Yeah, Emily, thank you so much for the question. Obviously, we share your excitement for COPD, as has the marketplace as we've seen it. Now, it's very early days, so we're just under a month of being out there in the United States. But as we had articulated before, this is a disease state, third leading cause of death worldwide, no new meaningful innovation in the past ten years. So you can imagine the marketplace is very excited. It's too early to comment on trends, but what I can tell you is that the feedback has been extremely positive in the marketplace, and this really sets us up very nicely. I think as we've talked about before, this is just the beginning of our COPD journey.

[Brian Foard, EVP Head of Specialty Care at Sanofi]

We've another pipeline asset as well that's coming directly behind this, and I think the early feedback gives us even more confidence in that, in the guidance that we previously provided, that the two of those will likely be somewhere in the range of EUR 5 billion at peak.

[Paul Hudson, CEO at Sanofi]

Okay. Yeah, François?

[François-Xavier Roger, CFO at Sanofi]

Maybe on the use of proceeds on the dilution, let me clarify something first, because I saw some analysis saying that the dilution linked to the separation of Opella was 11%. It is linked to the year 2023. Actually, for 2024, it will be closer to 9%, given that our biopharma business has grown quite a lot in the meantime. I'm not going to provide you more color on the dilution and the anti-dilution activities that we could do, and especially share buyback, and the portion of it that will mitigate the dilution.

[François-Xavier Roger, CFO at Sanofi]

What I can tell you, though, is that don't be too worried about the dilution in 2024, because our business EPS in 2025 will increase over 2024 in absolute value, regardless of, I mean, even before any anti-dilution activities that we could go for. So our business EPS will increase, I must just say, in, at constant exchange rate, will increase in 2025 over 2024, and it will increase over 2024, even with or without Opella. So the dilution will be anywhere, even before anti-dilution activities will be absorbed.

[Paul Hudson, CEO at Sanofi]

Thank you. Next question, please.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, Graham Parry from BofA. Graham?

[Graham Parry, Head of Pharmaceuticals & Biotech Research in Europe at BofA]

Great, thanks for taking my question. So, firstly, on Beyfortus, just wondered of the 1.5 billion EUR guidance that you're pointing to for the year now, just which countries are assumed in that? And roughly, what sort of penetration do you target in key markets such as U.S., France, Germany, and are there any more markets to come still that are not mentioned in the press release today? And then secondly, on buybacks, just could you remind us of your current buyback authority that you have from the board, and how much of that is left to execute independently of Opella or any cash receipts there? Is there anything that stops Sanofi from executing a buyback today or before Q2 next year, for example? Thank you.

[Paul Hudson, CEO at Sanofi]

Okay, thank you. I mean, Graham, thank you. Yeah, Beyfortus countries.

[François-Xavier Roger, CFO at Sanofi]

Yeah, Graham. So as we indicated, we launched in 2024 in close to 20 countries, which includes, of course, North America, Western Europe, biggest market. Of course, last year, we do know very well that we launched in Spain and in France, but we expanded to various markets, including, and we talked about it in the past before, that includes Portugal, that includes Germany, that includes Italy, that includes Belgium and a few others. And we had a couple of Southern Hemisphere countries that we also disclosed in previous earnings. So most of the, I would say current launch have been done in those markets, so really focusing on North America and Western Europe, and there are more markets in which we'll launch next year.

[Paul Hudson, CEO at Sanofi]

Thank you, Thomas. And then to the other part about the buyback. Just as you would imagine, particularly having you know entered into this period with Opella, we have an ongoing and active conversation with the board on buybacks, as you would expect, and when we're ready to communicate our capital allocation decisions, we will, of course, share that with you immediately. Okay, next question.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, next question from Seamus Fernandez from Guggenheim. Seamus?

[Seamus Fernandez, Senior Managing Director and Senior Equity Research Analyst at Guggenheim]

Oh, thanks for the question. So, just a couple first, on your strategy with amlitelimab, just wanted to get a better sense of the importance of asthma in that data set, and then also how you're deciding to move forward with your OX40 ligand, given the data that are coming roughly around similar timeframe for that bispecific antibody. And then incremental to you know some of the questions that have been asked, just wanted to get a better sense of your commitment to the strong growth recovery that you've talked about in the past. I think now the consensus expectation is for anywhere from 15%-18% growth year over year.

[Seamus Fernandez, Senior Managing Director and Senior Equity Research Analyst at Guggenheim]

You know, and it seems like there's a potential acceleration in the overall biopharma business that could be coming with the removal of Opella from the base business. So just wanted to get a better sense of how we're thinking about the year over year growth expectation and opportunity there. Thanks so much.

[Paul Hudson, CEO at Sanofi]

Okay, Seamus. Well, why don't we start with Houman on amlitelimab in asthma and the OX40 ligand TNF, and then François, ask you to comment on the strong recovery for next year and the numbers, which I'm unfamiliar with, that you mentioned.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

... Seamus, thank you for the question. We're more confident than ever about the importance of the OX40, OX40 ligand pathway in disease, as you've seen from our data in atopic dermatitis. We feel that we are best in class by virtue of targeting the ligand, which gives us a biological distinction, both from a durability and efficacy perspective, but also from a safety perspective to mitigate, for example, chills and other impacts. Specifically with respect to asthma OX40 ligand is an apical node in many inflammatory processes. We have a great target credentialing across multiple indications, and we have been deeply committed to patients with asthma already with Dupixent and a number of other agents.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

We are committed to the asthma franchise, and we hope that Amlitelimab will, in due course, next year, provide the data to support forward motion in that position. A short comment on your bispecifics. Thank you for bringing that into focus. Of course, they're internally developed molecules. We're confident now about our internal research and discovery activity. We're humble in the face of disease. We're not complacent, but we're excited to be generating a suite of internal molecules. This one is, of course, the second one you know about. The first is Lunsekimig, again, showing you our commitment with asthma. We look forward to the results of the double punch of blocking TNF and OX40, in a disease that we know is, from a credentialing perspective, influenced by TNF and OX40.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Both of those results will come in the first half of next year, and we look forward to discussing.

[Paul Hudson, CEO at Sanofi]

Thank you, Houman. Yeah, I mean, we have the, you know, AD is obviously a huge opportunity for amlitelimab, but asthma, based on the internal, if we can get there, would be a really great play. Okay, so François, strong growth recovery.

[François-Xavier Roger, CFO at Sanofi]

Yeah, Seamus, first and foremost, what is important to understand is exactly what you said, which is with Sanofi as a pure biopharma company, we'll have a better growth profile and margin profile as without Opella. We confirm as well the fact that we expect a strong rebound in business EPS in 2025. The figure you mentioned is significantly above the consensus, which is around 12%-13% for the time being. Don't forget one thing, is that we have accelerated already in 2024 our business EPS. We revised our guidance upwards twice, at the end of Q2 and just now and at the end of Q3. So we have, we are bringing forward, to a certain extent, the rebound.

[François-Xavier Roger, CFO at Sanofi]

That being said, we do confirm still a strong rebound for 2025, but over a higher base in 2024, given that we have accelerated the rebound already, starting in 2024.

[Paul Hudson, CEO at Sanofi]

Okay, thank you. Next question.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, next question from Jo Walton from UBS. Jo?

[Jo Walton, Analyst at UBS]

Thank you. Just to clarify, to confirm that when you present your full year 2024 numbers, they'll be on the new basis. So we won't be, at least on the headline basis, seeing the sales of Opella and all the earnings through. That will all be just a single discontinued line item that won't be in your business EPS? And-

[François-Xavier Roger, CFO at Sanofi]

Absolutely correct, Jo.

[Jo Walton, Analyst at UBS]

Excellent. And the other clarification, if you could give us any help on, the tax rate that might be expected in FY 2025, just given the comments about potential higher tax in France. If you could just give us a sense of, what that might do. But my main question is, please, any help you can give us on negotiations for IRA for next year in the U.S.? Other companies have said that the loss of rebates, particularly in immunology, because of the loss of the Humira rebates, has made PBMs particularly, hard in their negotiations for 2025 for rebates. And of course, we note that Dupixent gets the first sort of proper competitor with Ebglyss from a major player that can also give heavy rebates for next year.

[Jo Walton, Analyst at UBS]

So I wonder if you could talk a little bit about that, please.

[Paul Hudson, CEO at Sanofi]

All right, Jo, so just to be clear, because we sort of talked as well while you were talking, no Opella in the full year results, right? Yes.

[François-Xavier Roger, CFO at Sanofi]

So that I confirmed already, and maybe François speaking, I can give you a little bit more color on the tax rate. As you probably saw with the new scope, without Opella, our underlying tax rate will go down from 21% with the former scope to about 20% with the new scope. I want to mention as well that with the new tax laws in France, we do expect an increase of our taxes in France. You may have seen that some of our peers in the CAC 40 have already disclosed significant amounts of tax increases. We will be probably at the lower end of some of the figures that have been mentioned by some of our peers in France.

[François-Xavier Roger, CFO at Sanofi]

I want to reassure you as well that we do expect that, probably in twenty twenty-five, with what we know today, it's still early, that our underlying tax rate should remain relatively similar globally, in spite of what's happening in France. Similar to what we expect in twenty twenty-four, around 20%, given that we have ways to mitigate it outside of France, and we have some other countries that are reducing their tax rates and so forth. With the mix of our geographies and activities, we should be able to maintain in twenty twenty-five, with what we know today, the tax rate around 20% next year.

[Paul Hudson, CEO at Sanofi]

Thank you, François. Maybe, Brian, you want to respond to the IRA question?

[Brian Foard, EVP Head of Specialty Care at Sanofi]

Yeah, I'm happy to tackle it overall. So first and foremost, Jo, I think as from an environment standpoint, the Inflation Reduction Act, there's a couple of things in there, and as we've said before.

[Brian Foard, EVP Head of Specialty Care at Sanofi]

... Our position is it's not really good for innovation, just in general, the Inflation Reduction Act. That said, there are some pieces in there that we do agree with, which one of which is actually quite good for patients, is the no more than $2,000 out of pocket, and the ability to spread that across the months could potentially allow these patients to have access to medicines that they haven't had before in the past, and we think that that's, that's a good thing. So that's a positive side of things. From an IRA standpoint, our portfolio actually lends us very well to this, because we have an innovative portfolio, we have an innovative pipeline coming, and that's what you see is the U.S. marketplace really values, you know, innovation.

[Brian Foard, EVP Head of Specialty Care at Sanofi]

And so we don't really see any meaningful impact on our portfolio there, in, for any reason, for that matter, especially in relation to how the pricing provisions that are in place. Now, it relates to overall negotiation with payers. Again, I'll remind you specifically now on Dupixent, because that was where the question was coming from probably. We find ourselves in an excellent position. First and foremost, we have great underlying demand growth. That's where our growth is coming from. And we find ourselves in a good position because we've been executing a very clear strategy with the payers for quite some time, to ensure as we expand indications, that we're able to gain access, whether it's new channels, and we find ourselves in a good position.

[Brian Foard, EVP Head of Specialty Care at Sanofi]

This is all taken into our guidance as we've provided to you for EUR 13 billion this year as a target, or around EUR 13 billion, and a double-digit CAGR growth from 2023 through 2030.

[Paul Hudson, CEO at Sanofi]

Thank you, Brian. Next question, please.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, next question from Peter Welford, from Jefferies. Peter?

[Peter Welford, Senior Research Analyst at Jefferies]

Hi. Thanks so much for taking my questions. Two: one, first of all, coming back to the twenty twenty-five, I wonder if you could provide perhaps a little bit more help for us on a few items that would help perhaps narrow the range a bit for consensus. Firstly, is there any potential stranded costs that we should think about from Opella in twenty twenty-five, that will then become freed in perhaps in twenty twenty-six? And also, just you made the comment on the sales and marketing, that you've brought forward some of the investments to support the launches. How should we think about that, perhaps going into twenty twenty-five? And then the second question is on phase three trials for new vaccines.

[Peter Welford, Senior Research Analyst at Jefferies]

And I guess the question here is, first of all, with the Novavax and the deal you've done for the combination flu, you know, would your intention be to run an efficacy study, as you talked about, for that? And similarly, there's an FDA VRBPAC meeting, I think, that's been called on the twelfth of December to discuss pediatric RSV. Curious if you've been asked to participate in that, because as far as I'm aware, you're the only phase 3 pediatric RSV vaccine currently that is in the clinic. Thank you.

[Paul Hudson, CEO at Sanofi]

Okay. Peter, thank you very much. So François, stranded costs, anything they need to know about with the Opella?

[François-Xavier Roger, CFO at Sanofi]

Yeah, stranded costs, no, there will be some, but it's there is nothing material on anywhere stranded costs. By definition, we will have to eliminate them, eliminate them over time, so I would not be specifically worried about that. We can absorb them, even including in twenty twenty-five. In sales and marketing, as you can see, we invest a little bit more than we originally planned, but given that we have a very strong momentum on the top line, I'm comfortable with it. I think it makes sense anyway, and we are. So I think that there will be probably a bit of it in twenty twenty-five as well, but nothing major.

[Paul Hudson, CEO at Sanofi]

Thank you. Thomas, Novavax and pRSV December meeting?

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

Yes. So, thanks for the question. The pedRSV meeting that was called for, you probably have seen the invitation, is a very generic one, so we've not been particularly invited, but we will show up at the gate, and we'll be there, as you mentioned, with our RSV total vaccines, which is currently in phase 3, doing very strongly with the enrollment. I think we are very well positioned for that field, pending, of course, the phase 3 outcome. Second point you were mentioning, Novavax. Our strategy is absolutely the same as the first day on.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

We are moving forward to start a phase one-two this year, where we want to showcase that we can do our flu with Novavax COVID-19 together in a combination vaccine that does not compromise neither on safety nor on efficacy. And our intention is, once we have results, if positive, we will immediately move next year towards phase three, by assuming phase one-two positive data.

[Paul Hudson, CEO at Sanofi]

Thank you. Next question, please.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Next question from Louisa Hector, from Berenberg. Louisa?

[Luisa Hector, Head of Global Pharmaceutical Equity Research at Berenberg]

Hi there. Thank you for taking my questions. The first one for Thomas, just to continue on the flu franchise. How soon do you expect a COVID flu with an ACIP recommendation to be on the market? And then second question is for Paul. Five years, well done. So you've made enormous progress transforming the Sanofi business. But looking forward, R&D is the outstanding challenge. So what or when do you see as the most critical inflection points for determining progress in the R&D transformation? And how is the organization positioned to really maximize on pipeline successes, but as Houman mentioned, the inevitable failures that come with the territory? So essentially, is the pipeline big enough, and is the spend, both internal and external, sufficient? Thank you.

[Paul Hudson, CEO at Sanofi]

Okay, oof! My mid-year report, apparently. Okay, so a flu COVID ACIP.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

Yes, thanks for the question, Louisa. A bit early to say. Again, what I think is very important to think is, combination vaccines have a place moving forward, and we believe in it, provided and assuming that those combination vaccines do not have any compromise on safety or efficacy. I start by that because, as you know very well, it's our intention with Novavax moving forward. Now, you also know that there are some competitors that are moving forward on this. Interestingly, Moderna, not to name it, has recognized that they need to provide efficacy data asked by the regulator on the flu component. You've seen that they are engaging on a very large phase 3 scale-up to show if there is or not superiority clinically demonstrated with clinical outcome against standard dose flu.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

And I think it's going to be very important, because you need to demonstrate clinical, statistically meaningful, superior efficacy versus standard dose to have a chance to be in the ACIP recommendation for 65 and above in the US. So let's put things first in order. First, we need to see what is the efficacy bar they can pass with their product. Second, they will need to go indeed through registration and through ACIP recommendation. In any case, I don't see them as any competitor being there in 2025. We will be there, and our vaccines are leading the marketplace and have shown strong ability to have very good efficacy and very good tolerability. Will they be there in 2026 or later on? We still need to see the data which is still not coming.

[Paul Hudson, CEO at Sanofi]

Thank you, Thomas. For me, it's an interesting question. I mean, you know, we studied a lot, particularly in the early part of the strategy of play to win, how long it takes to do an R&D turnaround, and it was sort of five to seven years was the average if you look at some of the success stories. You know me a little bit now, and, you know, I'd like to have been faster. It wasn't to be, and, so we're literally, we see ourselves at the beginning now of that journey. More proof points, more chances for success rather than failure. But we and we built the pipeline that well, particularly in areas that we really know, like immunology, neurology, vaccines, rare, and I think there's quite a bit to come.

[Paul Hudson, CEO at Sanofi]

I think the reason we changed the guidance last year is because we knew 2024 and 2025 were going to be important years for really seeing how far we have come. Now, of course, internally, we can be optimistic, but we're never far from people saying, "You know, you're as good as your next success or failure." So we've got our heads down. We're doing hard work. I think our internal governances under Houman's leadership are much more demanding, so that we try not to stub our toe on that journey. We've got more chance of really following the pathway and seeing if it gets done. And of course, there's some really exciting assets in the pipeline, but they're still early, some of them, TNF, for example.

[Paul Hudson, CEO at Sanofi]

So, if we can get these things advanced, you know, I think it really does change the nature of the company, and I've sort of learned over time in this job, that it's about getting more successes than failures, and it's such a balance. It's been a journey for me personally, as a leader, but also I think for the organization as it's pivoted towards R&D. So, too early to say, I guess, do we think we're there? I think we're not. But I do think we have more shots on goal that are better governed, that have better profiles, and that we've improved our POS, and if we can turn that into readouts, then I think we'll be extremely well-positioned for the company and versus our peers. Okay, next question.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Next question from Thibault Boutherin, from Morgan Stanley. Thibault?

[Thibault Boutherin, Equity Research Executive Director at Morgan Stanley]

Yes, thank you. Just a couple of questions on radioligands. You in-licensed a project for GEP-NET. There is already a radioligand in this indication, so just wonder if you could comment on the positioning versus the standard of care and what you think you can achieve here. And second question, still related to radioligand, if you could comment more broadly on your ambitions here. You also invested in a joint venture with Orano Med. So if you could comment on, you know, is this kind of a one-off because you saw something specific here, or is it a way for Sanofi to maybe be more present in the oncology space in a targeted way?

[Thibault Boutherin, Equity Research Executive Director at Morgan Stanley]

And also, if you could comment on anything regarding the supply chain for this, how it's handled between you and your partner and, yeah, your ambition on the space. Thank you.

[Paul Hudson, CEO at Sanofi]

Okay, thank you. Houman, radioligand, is it a one-off? What drew us to it, and what about supply chain? And maybe Brendan has a view on that, I don't know.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Yeah. Thanks, Paul. I'll start and hand over to my great colleague, Brendan, as we go. So, simple question. Simple answer, the radioligand space has been validated by others with different modalities of treatment. We are extremely excited about developing innovative treatments for patients with large unmet medical needs. lead-212 is a particularly interesting modality. It's an alpha emitter that has both direct effects on tumors, but also in line with our adjacencies in immuno science, is a way of activating the immune response in tumors. So it has a double punch again, a theme that is beginning to come through in our strategy in Sanofi. So we're excited by the modality. We're excited by lead-212.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Investing in promising innovative drugs is at the core of our strategy, and I have to say we are increasingly focused on under-delivering and over-performing, and in this case, the way this is manifest is in GEP-NETs. The Lead-212 molecule that we've started looking at has really very promising data in this rare form of cancer that, again, fits onto our rare disease franchise. So the beauty of this opportunity is it knits together many, many of the areas in which we have the right to play, and offer superior clinical benefits, as well as limiting damage to adjacencies, to these GEP-NETs and other tumors. With respect to supply chain, Brendan, I wonder whether you can help?

[Brendan O’Callaghan, EVP Industrial Operations at Sanofi]

Sure. So yeah, getting treatment to patients in a timely, efficient manner obviously is paramount. And in that regard, we're working with Orano Med, who are true experts in this space, and we're quite confident in our ability to meet the supply requirements. We have ample quantities of the base isotope thorium-232 available, which will cover multiple years, and the process from which we then extract the isotope of interest, which is lead-212, does not. You know, it's a very robust chemical process, does not rely on nuclear reactors or particle accelerators or any complex technology like that. So we're quite confident in their ability to secure a seamless supply chain.

[Brendan O’Callaghan, EVP Industrial Operations at Sanofi]

We're building specialist alpha therapy labs close to the points of treatment, close to major distribution hubs, which will allow us to secure the availability of product within the timelines that are required for treatment, so in summary, we're very, very confident in Orano Med and the provisions they're putting in place.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

Just one other comment, Brendan. One of the things we're incredibly proud of is the ability to leverage talent and technology in France, which is a unique differentiator we have, and the ability to work with a French leader in nuclear technology is something that is uniquely available to us, and I think we're very proud to be working with this partner.

[Paul Hudson, CEO at Sanofi]

Yeah, and I think that on my last point, 'cause it was asked by Thibault about supply, I think it's sort of noticed, isn't it, that it's one of the more difficult things to do? 'Cause they're all advances, frankly. So hopefully we can take advantage of that with that technical capability too. Okay, next question.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, next question is from Simon Baker, from Redburn. Simon?

[Simon P. Baker, Analyst at Redburn]

Thank you very much for taking my questions. Two if I may, please. Firstly, on Beyfortus, could you just remind us where we currently are, where you currently are with capacity and how that will evolve in 2025 and 2026? And then the second question, going back to Opella. I wanted to ask about the influence that Bpifrance will have, specifically any influence they have beyond their one board seat. Thanks so much.

[Paul Hudson, CEO at Sanofi]

Okay, thank you, Simon. Beyfortus capacity.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

Great. There has been a lot of work that has been done by our manufacturing partner and all stakeholders involved. As you know very well, we've added two filling lines up and running, and we're going full speed. With the 20 markets we just launched in 2024, we don't see any capacity limitation. And we'll grow that supply for next year and the year after to make sure that there will be, again, no supply constraints anticipated at all in 2025 or 2026.

[Paul Hudson, CEO at Sanofi]

Okay. Thank you. François, any comment?

[François-Xavier Roger, CFO at Sanofi]

On the BPI, so the fact that BPI is joining us shows the attractiveness of the business case as far as Opella is concerned. Typically, I mean, when you have 1-2% shareholding in a company, I mean, the governance attached to it is relatively limited, so this is a classical. This is what happens in that case. It's in line with market practice for a stake of around 1-2%.

[Paul Hudson, CEO at Sanofi]

Okay, next question.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, next question is from Steve Scala from TD Cowen. Steve? Yeah.

[Paul Hudson, CEO at Sanofi]

Steve, do we have you?

[Steve Scala, Analyst at TD Cowen]

Can you hear me?

[Paul Hudson, CEO at Sanofi]

Yeah. Yeah.

[Steve Scala, Analyst at TD Cowen]

Thank you. Does Sanofi have any efficacy data for Beyfortus, which supports protection through six months, and what % of RSV cases fall between five and six months? This would appear to be one advantage that Merck may indeed have. And then second, is Sanofi on track to initiate phase III trials for its 21-valent pneumococcal vaccine this year, and is it still commercially viable given the competitor's 31-valent data?

[Paul Hudson, CEO at Sanofi]

Thank you, Steve. Excellent questions. Thomas, on durability.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

It's a great question. First of all, do we have data over six months? Absolutely, and we made the reference in a slide that is today in today's presentation. We've just made this data published, and they are available, and as you will see, what's very nice with this data is that there is no waning efficacy after six months. We still see 83% efficacy against hospitalization after six full month, and we are very confident that we have kept running for another data points after that, the efficacy will still go very well. So I actually believe that duration of protection is significantly in favour of Beyfortus compared to nirsevimab, which I would recommend to look at a couple of points.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

I would suggest that people look at the available data relating to the half-life of both product, where you see a significant difference. One is above 40 days, the other one is above 70 days, half-life, so a significant difference between both product, and I remind also everyone that for the coming ACIP discussions, our competitor will need to show the Kaplan-Meier curves of their phase III efficacy data. That will show what is the number of new cases and the associated protections in the fourth month, fifth month, and sixth month, which will be very different, we believe, than what we have observed with Beyfortus, because we believe that most of the cases in our competitor's phase III were in the very early phases.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

So, I do believe that duration is going to be a very important point to look at in the coming months.

[Paul Hudson, CEO at Sanofi]

Thank you, and the pneumococcal?

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

And on PCV21, thank you very much because it's a very important product for our pediatric portfolio. We are fully on track to start phase III in 2024, I confirm that. And the next part of your question was, is it a viable product? Absolutely, and you fully understand that our goal is not just to do a PCV21, stop, and that's it. Our goal is to have the first and the first-ever pediatric pneumo conjugate vaccines product with more than 20 valents available on the marketplace. And from that first base, that will already be a first milestone, then we will build further with additional serotypes. Once you're in that race, you always want to remain competitive, Steve.

[Paul Hudson, CEO at Sanofi]

Thank you. Very clear. Next question, please.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes. Next question from David Risinger, Leerink Partners. David?

[David Reed Risinger, Analyst at Leerink Partners]

... Yes. Can you hear me okay?

[Paul Hudson, CEO at Sanofi]

Yeah.

[David Reed Risinger, Analyst at Leerink Partners]

Great. So congrats on the financial results. I have two questions. First, regarding Amgen's OX40 phase three efficacy, since it was lower than expected, did the weak efficacy results impact your expectations for forthcoming Amlitelimab efficacy? And then, sorry about the noise. Second, Sanofi has several I&I pipeline readouts over the next year. Could you please provide a framework on how the company plans to disclose the slew of results that are coming in, including, for phase two data readouts, which will be, you know, important proof of concepts? Thank you.

[Paul Hudson, CEO at Sanofi]

Okay, thank you, David. So comments, Houman, on OX40 ligand and the sort of results from Amgen.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Yeah. So, thank you so much for the question. We remain very excited about the OX40 pathway in general. We were very detailed in our credential in this target before we went into the space, and all the publicly available data do support an even stronger perspective on the importance of the OX40 pathway. However, the differentiation of the OX40 receptor versus the ligand may be manifest in the data that's come from Amgen. What I'm confident in being able to say is that targeting the ligand with its impact on not deleting T-cells, but retraining them, may well and is likely to translate in greater durability and higher efficacy. But also, it's now very clear that the side effect profile of the ligand is much better than the receptor. That...

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

To give you a very simple and clear summary, we think that the presence of another molecule, the tide raises all boats. It's great to have other players in the atopic dermatitis space, 'cause it allows a much greater education to the population and a greater biopenetration. However, I think targeting the ligand has now been shown to be a better, more effective intervention. And, extremely quickly, to your second question, you are right, we are blessed to have a number of very significant readouts coming out in the next year. We will focus on presenting and disclosing our results in the appropriate forum, most of which will be in scientific congresses.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

We are, however, deeply conscious of our compliance responsibilities and our responsibilities to the street, and if they are material, of course, we will hasten to convey them to the street as quickly as possible.

[Paul Hudson, CEO at Sanofi]

Great. Thank you. Next question.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, next question is from Richard Parkes, from BNP Paribas Exane. Richard?

[Richard Parkes, Analyst at BNP Exane]

Hi, thanks very much for taking my questions. Just coming back to Beyfortus and expectations into 2025, I wonder if I could just push you a little bit more on that. If, in the worst case, competition does materialize, just wondering whether you would be willing to commit to still being able to grow the franchise, even with or without competition, maybe through international launches? And then related to that, I think at the Vaccine Day a couple of years ago, you put up a slide implying RSV infant market forecast of $2.4 billion by 2030. I'm sure your thinking's evolved since then. So could you just update us on your current thinking over the total commercial potential? Thank you.

[Paul Hudson, CEO at Sanofi]

Okay. Thank you for that, Richard, so Beyfortus market, how it's gonna develop?

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

No significant change on our RSV overall market anticipation for 2030. You also noticed, though, that on top of the RSV newborn, there will be the RSV infant, the so-called RSV toddler vaccines coming down the road for kids to be protected at age one and above. So that will, of course, be a very interesting part for us. But back to the initial part of your question, on the 2025 outlook and what's the outlook with or without competitor, let me be very clear, but I might have missed it in the first time, but with or without competitors, 2025 will be a year of growth for Beyfortus. Again, there is a significant number of newborns that do require RSV protections.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

We believe that it's not reasonable, and it's totally unfair from an ethical perspective, to make sure that there is RSV protection for some baby and not for some others. That's why we're 100% on all infant protection. All infant protection can only be provided by monoclonal antibodies and not maternal immunization. That's why it's very good to have further voices pushing on all infant protection. The playing field will increase with or without a competitor, and therefore, with or without a competitor, Beyfortus will grow in 2025.

[Paul Hudson, CEO at Sanofi]

Thank you, and thanks, Richard, for going back and looking at that deck. It was a good deck with other nuggets in there about how things would develop. We should probably take another look at that, too. Okay, next question, please.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Next question is from Rajesh Kumar, from HSBC.

[Rajesh Kumar, Analyst at HSBC]

Hi, thanks for taking my question. Another one on Beyfortus versus clesrovimab. When you know one of the points which Merck are making is you know stocking up is much easier if the dose is body weight not dependent on the body weight. So, you know, how do you help the providers with stocking up of inventory for different body weight infants, and you know how can you ensure that doesn't become a significant disadvantage for you? Obviously, efficacy and all the data points you've made are well noted, so but this aspect of practical ordering might be helpful to understand. And just a clarification on Opella.

[Rajesh Kumar, Analyst at HSBC]

Can you just run through, in terms of the cash proceeds you've guided to, that's after tax or before tax? Thank you.

[Paul Hudson, CEO at Sanofi]

Okay. Thanks, Raj. Pay for this, stocking.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

Yeah. So the matter on dosage, I'm coming back to that in a second, Rajesh, but as you started to ask in your questions, indeed, it's two monoclonal antibodies. They are both targeting RSV, but they have significant differences. I think the coming ACIP meeting will be very interesting to highlight those. First and foremost, Beyfortus has demonstrated RSV protection in the real world and had been studied in more than 75,000 infants. That's a very significant number of kids, showing a very high bar of efficacy.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

Second of all, when you look specifically at the efficacy for the primary endpoint against RSV, medically attended LRT disease, with the usual caveat, of course, that when you're comparing across trials, you've seen that Beyfortus has shown a higher efficacy estimate points around 75% versus nirsevimab at 60%. I do believe it's important because while we absolutely want to make sure that we prevent hospitalization, one of the most severe outcome, we also want to make sure, and I'm sure parents want to make sure, that they can increase their chance of not missing one, two, or three days of work in order to have to bring their newborn at multiple doctor's visits. So I think that we have, with Beyfortus, a product that has shown high efficacy against both severe and less severe outcomes.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

And finally, the safety profile is a very important point. This is the newborn population. That's the most fragile part of the population, and we've shown a pristine safety profile year on year, and a very high duration with a hundred and eighty days. Now, back to your question, does that mean that the dosage on Nirsevimab is a significant differentiator? Actually, we don't think this is an issue at all. First of all, because we've thought a lot about this, having two doses or two dosages, should I say, is important because the right dose is fitting the right channel. The smallest babies, typically at newborn time, are weighing less than five kilograms. They should receive a fifty-milligram dose. These babies usually do get those doses in the hospital channel or within a maternity setting.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

On the other hand, babies that are weighing more than five kilograms should receive a 100-milligram dose, which are normally older babies that get it within the pediatrician clinic setup. So each channel has a very well corresponding specific dosage that goes their way. And finally, on the dosage point, I think it's going to be very interesting for doctors to see that our findings in clinical studies is that 50-milligram doses for our product for newborns is exactly the right choice, as it delivers the best efficacy with the smallest possible dose for newborn babies. I think we have good arguments on those point, too.

[Paul Hudson, CEO at Sanofi]

Thank you very much, François.

[François-Xavier Roger, CFO at Sanofi]

Yes, on the tax, no, on the amount of cash that we will receive at the earliest in Q2 2025 for Opella, we confirm it's a high single-digit number in billions of EUR, net of tax, net of any other costs, such as transaction cost as well. So this is really a net cash possible that we will get at the earliest in Q2.

[Paul Hudson, CEO at Sanofi]

Thank you. I think we have two questions left. I think Eric and Florent. So over to the next question.

[Rajesh Kumar, Analyst at HSBC]

Yes, next question is from Eric Le Berrigaud from Stifel. Eric?

[Eric Le Berrigaud, Analyst at Stifel]

Yes. Thank you. Good afternoon. Two questions. First, in recent interactions with investors, it looks like there's a topic that come through more often around Dupixent LOE extension. I'm unclear whether it comes from you, from your partner, or from any other source, but maybe you can update us on where you stand about extending LOE of Dupixent. And the second question, maybe I missed it, but I don't see any update into your pipeline agenda about the anti-TL1A. Do you expect this to come from Teva, or what can you, where, when can we expect some phase two update on that specific asset? Thank you.

[Paul Hudson, CEO at Sanofi]

Okay, Eric. Thank you. Roy, over to you on our loss of exclusivity.

[Roy Papatheodorou, General Counsel at Sanofi]

Sure. The Dupixent compound patent expires in the US in March 2031. This is the patent term extended expiration date. In Europe, it's March 2033, which is the SPC extended expiration date with pediatric exclusivity, which is in the process of being granted across EU member states. We are referring to these compound patent expiration dates as the LOE dates. On top of that, in both the US and Europe, there's further patent and patent applications covering inventions related to Dupixent, which have expiration dates ranging from 2033 to 2044. It is too early to speculate on later LOE dates for Dupixent at this stage.

[Paul Hudson, CEO at Sanofi]

Okay. Thank you, Roy. And our strategies are, you know, internal because, of course, lots of people are interested in which way we decide to go. Okay, and then Houman, anti-TL1A.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Briefly, thank you for the question. As you've seen in the deck, duvacitug, as it's now known, and the anti-TL1A, reads out in H2 2024. You should expect a comment from our partner, Teva, and ourselves later this year or early next year, and we'll be very excited to share that with you when we see the data.

[Paul Hudson, CEO at Sanofi]

... Okay, thank you, and I think it may be the last question for Florent.

[Julie Van Ongevalle, EVP Head of Consumer Healthcare at Sanofi]

Yes, last question from Florent Cespedes from Société Générale.

[Florent Cespedes, Head of Pharmaceutical Research at Société Générale,]

Good afternoon, Florent Cespedes from Société Générale . Two quick questions, please. First, for women on hidradenitis suppurativa. In fact, next year, first half, you will have three phase 2 trials will read out on this and for this indication with three different mechanism of action. I was just wondering if you could give us a little bit more color on your strategy on this population, as you have already your products on the market are quite successful. So some thoughts on this would be great, and notably also in terms of potential of this market. And my second question is for Thomas. It's a follow-up on before this. I was just wondering if we could have a little bit more color about manufacturing capacity for 2025.

[Florent Cespedes, Head of Pharmaceutical Research at Société Générale,]

Is there a third manufacturing line that will be ready next year? And when you mentioned, Thomas, that there will be growth in 2025, I was just wondering if you could give us a little bit more color on this, if you can't clarify this. Many thanks.

[Paul Hudson, CEO at Sanofi]

Thank you, Florent. HS, Houman and Brian, if you have a comment, but certainly Houman to start with.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

Yeah, Florent, thank you for the question, and thank you for focusing the lens on HS, which is a highly unmet medical need, highly heterogeneous condition with multiple stages, in fact. The early stage being inflammatory and later on having massive multiple fistulous disease with requiring surgical debridement. It's a complicated disorder with substantial stratification, and as you'll know, I was involved with the first-generation molecules in HS. HS really does exemplify our strategy very clearly. Firstly, we are committed to franchises rather than individual molecules. We want to serve our patients and the physicians in all stages and grades of disease. In this case, we use the well-credentialed target of OX40 ligand in this situation as part of our signal seeking and lifecycle management strategy with Amlitelimab.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

We have always said that we want to go bio-better by understanding the targets more clearly and leveraging our internal technologies here, combining TNF, highly validated, and OX40 ligand, which is pre-clinically credentialed. Putting those together using our own Ablynx technology, the nanobody technology, gives us an opportunity to serve patients with a bio-better, as well as the anti-TNF, which is already on the market, and amlitelimab. Then moving one step forward, we've always expressed the view that as well as antibody, we'd like to provide optionality for patients with small molecule. That's why IRAK4 degrader, which we work very closely with our partner, gives us further optionality in the space, and we look forward to seeing what the data in this space shows.

[Houman Ashrafian, EVP, Head of Research and Development at Sanofi]

When we think about HS, we think about franchises, we think about stratification, and we think about optionality to ensure that we serve the whole strata of every patient.

[Paul Hudson, CEO at Sanofi]

Okay, great. Thank you very much. I think, on Beyfortus.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

Beyfortus, capacity, Florent. As you know very well, we are shooting, and we've communicated this to triple capacity in 2024, and we've done that. So you were talking about third line. Let me be very clear. We have already started to release and distribute Beyfortus doses from the third line as we speak already. So this is already installed, and that's why I'm very confident that there is no supplier challenges that I can foresee in terms of constraint for 2025 and beyond. In addition, I think you were going back to the growth in 2025. A bit too early to give you some further color on this.

[Thomas Kudsk Larsen, Head of Investor Relations at Sanofi]

As you know very well, when it comes to immunization schedule, first, there needs to be recommendation set up by the new countries in which we're gonna launch, and then we'll be able to see more clearly the overall landscape we have for 2025. Where I do see growth coming down the road is North America increase, I would say, penetration of antibodies, but also an increase of Beyfortus in Europe and in the international zones with more countries we're going to launch into.

[Paul Hudson, CEO at Sanofi]

Thank you, Thomas. Thanks for that. The last question: Our strong business momentum continued in the third quarter with an estimated underlying 11% growth at CER. We continued to execute on our launches, we kept advancing our pipeline of new medicines, and we recently upgraded our 2024 EPS guidance. I'm pleased with our progress in becoming a pure play and science-focused biopharma company committed to serving patients and accelerating growth, and thanks to all of you for your interest in Sanofi.

Participants

Executives

• Brendan O’Callaghan, EVP Industrial Operations
• Roy Papatheodorou, General Counsel
• Julie Van Ongevalle, EVP Head of Consumer Healthcare
• François-Xavier Roger, CFO
• Brian Foard, EVP Head of Specialty Care
• Houman Ashrafian, EVP, Head of Research and Development
• Thomas Kudsk Larsen, Head of Investor Relations
• Paul Hudson, CEO

Analysts

• Emily Field, Director and Head of European Pharmaceuticals Equity Research at Barclays
• David Reed Risinger, Analyst at Leerink Partners
• Seamus Fernandez, Senior Managing Director and Senior Equity Research Analyst at Guggenheim
• Luisa Hector, Head of Global Pharmaceutical Equity Research at Berenberg
• Eric Le Berrigaud, Analyst at Stifel
• Steve Scala, Analyst at TD Cowen
• Jo Walton, Analyst at UBS
• Peter Welford, Senior Research Analyst at Jefferies
• Simon P. Baker, Analyst at Redburn
• Florent Cespedes, Head of Pharmaceutical Research at Société Générale
• Thibault Boutherin, Equity Research Executive Director at Morgan Stanley
• Richard Parkes, Analyst at BNP Exane
• Richard Vosser, Analyst at JPMorgan
• Rajesh Kumar, Analyst at HSBC
• Graham Parry, Head of Pharmaceuticals & Biotech Research in Europe at BofA