Sanofi

Good morning, good afternoon, and good evening to everyone. Thank you for joining us to review Sanofi's first quarter 2023 results, followed by a Q&A session. As usual, you can find the slides to this call on the investors' page on our website at sanofi.com. Moving to slide three, I would like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. I refer you to our Form 20F document on file with the SEC and also our document d'enregistrement universel for a description of these risk factors. With that, please advance to slide four. Our speakers on the call today are Paul Hudson, Chief Executive Officer, Nipma Berger, Global Head of RMD at Interim, the Global Business Unit heads Bill Stibble, Thomas Triomphe, Olivier Charmet, and Julie Van Angeval, and Jean-Baptiste de Chatillon, Chief Financial Officer. For the Q&A, you have two options to participate. Option one, click the raise hand icon at the bottom of your screen, or option two, submit your question by clicking the Q&A icon at the bottom of the screen. And with that, I'd like to turn the call over to Paul.

Well, thank you, Eva, and thanks for joining our call today. Together with members of the executive team, I'll take you through CEMAPI's business and financial performance in the first quarter of 2023. We had a strong start to the year, reporting first quarter sales of 10.2 billion euros, an increase of 5.5%, and delivering double-digit growth across three out of our four businesses. Our specialty care business continues to grow strongly, driven by Dupixent across all geographies, indications, and demographics. We also saw good business momentum from launches in the rare disease franchises, with Nexviazyme increasing its patient share in Pompe. The consistent performance in specialty care is expected to more than offset the decline of Avazio following loss of exclusivity, which we expect to become more meaningful throughout the remainder of the year. Vaccines reported a particularly strong quarter as we keep delivering on our COVID-19 contracts in Europe. In addition, sales of travel and endemic vaccines continue to recover post-pandemic. In general medicines, we continue to execute on our strategy by investing in transplants and other growth assets. while rapidly divesting declining non-core products. Our GenMed core assets continue to grow driven by solid demand. The consumer healthcare business did have a double-digit growth in the quarter across key franchises such as digestive wellness, allergy, and carbon coal. Advancing to slide seven, I'd like to highlight and provide some context around important achievements of the quarter. We have just launched Altubio in the U.S., a best-in-class factor treatment for hemophilia A, with the potential to set a new efficacy standard. The rollout is progressing well and we continue to receive positive feedback from physicians and, importantly, patient communities. Bill will touch more on this in his section. For vituceran, the PACE-3 results were published in The Lancet last month. Scientific evidence is growing that vituceran can become an important addition to the transforming landscape of hemophilia treatments, with as few as six subcutaneous injections per year. For Dupixent, we delivered the first phase three pivotal study in COPD, achieving clinical outcomes never previously seen with a biologic. Remember, in 2019, we outlined our bold approach with our direct to phase three program, shaving years off standard clinical development timelines, And thanks to this, Dupixent is today positioned to be potentially the first approved biologic in a disease marked by a very high unmet need and with huge medical costs that could be offset. COPD today is what atopic dermatitis was six or seven years ago. No advanced therapies, no recent innovation, but with a significant difference. That's that the patient population is already well-identified. We are looking forward to sharing the data with the broader scientific community next month. DeepMath will provide more details in just a moment. Switching gears and moving to another innovation, the acquisition of PreventionBio, which we expect to close today, with T-Zield as its first-in-class therapy to change the course of type 1 diabetes. T-Zield is a great fit to our GenMed business as it provides us with the opportunity to leverage our expertise in diabetes and the existing prescriber network, our strategic focus in immunology, coupled with our deep knowledge in identifying patients with rare diseases, will be critical to the successful launch execution and effective use of patient screening programs. With TSEALD, we are adding another potential blockbuster to our growing GMED core asset portfolio. Coming back to our strategic framework and reminding you of how we continue to execute on our growth strategy as exemplified by the pipeline advances and launches in the first quarter. We are increasingly confident in our ability to fuel our next chapter of growth with innovative compounds and new launches from our pipeline. Specifically in immunology, we are aspiring for industry leadership with an outstanding portfolio of novel molecules. Our immunology assets cover a broad spectrum of inflammatory diseases in areas of high unmet medical need, supporting our ambition to achieve more than 22 billion euros of sales by 2030, generating potential breakthroughs in COPD and acquiring T-Zield with two significant steps towards our goal of launching three to five products with two to five billion euro peak sales potential, each in the second half of the decade. Advancing to slide 9, before I hand over to Dietmar for the R&D update, I want to highlight our upcoming investor events. On May 22nd, we will host an investor call in conjunction with ATF, where the full DUPIX and COPD data will be presented for the first time. We'll combine this occasion with a broader discussion of our growing pipeline in respiratory diseases in vaccine, sorry, in vaccines. Thomas and his leadership team will host an in-person event in London on June the 29th to update you on the progress we're making and our ambition to double vaccine sales by 2030. And finally, we also plan for an R&D day in the second half of this year to provide a comprehensive overview of our early to mid-stage pipeline set to deliver on our ambition to transform the practice of medicine. Imah, over to you.

Thank you, Paul. Now, starting on slide 10, let me give you some additional insights into the recent progress we have made in advancing our innovative pipeline across core therapeutic areas. We are extremely proud of the progress we've made in immunology, with the success of Dupixent and the leadership we have built in type 2 inflammatory diseases. Huge potential remains on slide 11 to transform the practice of medicine for patients suffering from diseases driven by type 2 inflammation. We are determined to expand our immunology portfolio beyond type 2 and to drive innovation by deploying disruptive technologies for the development of first and best in class medicines. On slide 12, let me expand on Paul's earlier comments regarding the truly impressive results from Boreas. a randomized phase three double-blind placebo-controlled trial evaluating the efficacy and safety of dupixent in 939 adults who were current or former smokers aged 40 to 80 years with moderate to severe COPD. All patients in the BORIS trial had evidence of type 2 inflammation as measured by blood eosinophils of greater or equal to 300 cells per microliter. Importantly, they all were on triple standard therapy and still had uncontrolled disease. This means they still experience exacerbations and each exacerbation may leave behind permanent irreversible lung damage. During the 52-week treatment period, patients received Dupixent or placebo every two weeks added to their triple standard therapy. Double maintenance therapy was allowed if inhaled corticosteroids were contraindicated. Primary and all secondary endpoints of the study were met, validating the role type 2 inflammation plays in driving COPD in these patients. It also underscores Dupixen's unique profile. It is the first and only biologic to demonstrate clinically meaningful and statistically significant reduction in exacerbations compared to placebo. Exacerbations were reduced by 30%. a rate of reduction not seen before with biologics in these patients that have exhausted all currently available treatment options. And it is the first and only biologic to show rapid and significant improvement of more than 80 milliliters in lung function compared to placebo. The data also showed significant improvements in quality of life and respiratory symptoms with a safety profile consistent with findings in earlier studies. COPD is an urgent and costly global health concern and a difficult-to-treat disease due to its heterogeneity. We are thrilled to share the full data with the medical community at the American Thoracic Society Conference next month, and we invite you to discuss with us the details of the clinical outcomes achieved with Dupixent in this patient population. Now on slide 13, I'd like to remind you that we are developing not one, but two unique targeted therapies with the potential to build clear leadership in COPD. The mechanisms of action are different, and together they are addressing more than 80% of the COPD population with the highest unmet medical needs. This accounts for approximately 2 million patients in the G7 countries alone. Itopekimab is the second biologic we're developing in COPD in collaboration with our partners at Regeneron. We are studying itopekimab across a spectrum of moderate to severe COPD because of the known effects of IL-33 on both type 2 and non-type 2 inflammation. This is supported by published data demonstrating that IL-33 levels in advanced COPD patients who are former smokers are elevated compared to healthy controls. In our phase 2 study published in The Lancet in 2021, itopecumab reduced COPD exacerbations by more than 40% in former smokers. And importantly, this effect was similar in patients with type 2 and non-type 2 inflammation. We hope that itopecumab may become the best-in-class and first-in-class IL-33 treatment option in COPD. The chart on the right side of the slide summarizes our expected timelines for data readouts and subsequent submissions to regulatory authorities in the U.S. and Europe. Notice the second replicate phase three trial for Dupixent COPD is about to finish recruitment and will read out next year. It's a PECIMAB received FDA fast track designation in January 2023. Results of the pivotal trials ARIFI 1 and 2 are due sometime in 2025, and both trials are reading out concurrently. Turning to slide 14, we are also encouraged by recent results of some earlier stage molecules in our immunology pipeline. We introduced these two highly innovative compounds at our immunology event in March last year. Firstly, SARS-764. a nanobody targeting both IL-13 and TSLP delivered Phase 1b results that will be shared very soon at the upcoming ATS conference as well. The target selection was based on the rationale that blocking IL-13 potentially enhances the more modest impact of anti-TSLP blockade on lung function, while anti-TSLP targeting provides the opportunity to treat a range of asthma subtypes. Targeting IL-13 and TSLP in one molecule promises the potential of enhanced efficacy in a broad range of asthma patients with largely de-risked mechanisms of action. Based on the data we now have in-house, we are moving to phase two in asthma in the coming months. We also have data in-house for SAR-566, our oral TNF alpha inhibitor, potentially addressing the largest therapeutic class in immunology. This inhibitor benefits from its unique molecular design. It binds the TNF trimer and then selectively inhibits TNFR1 signaling, but not TNFR2 signaling. That is important because TNFR1 signaling is pro-inflammatory, while TNFR2 signaling is involved in tissue repair and regulatory T cell expansion. The data set that we have generated so far is pointing to a drug profile that is both safe and efficacious. We plan to present the Phase 1b data in psoriasis at a conference later this year. We are now moving to Phase 2 in psoriasis and look forward to updating you on the potential target profile across a spectrum of inflammatory diseases in the future. Concluding my comments on the progress of the immunology pipeline, the table on slide 15 illustrates how we position our industry-leading portfolio of novel molecules in the highly attractive and growing immunology market. With 12 molecules across key inflammatory disease areas, we are laying the foundation today for our ambition to be the leader in immunology. Switching to neurology on slide 16, let me focus on multiple sclerosis and how we are applying our expertise in understanding MS to develop new treatments. MS is a condition that often strikes early in life, is debilitating and ever-progressing, with a very high burden to patients, families, and payers. Significant unmet need remains, most notably the smoldering neuroinflammation and progressive forms of MS. Starting with tolobrutinib, our brain penetrant and bioactive bruton tyrosine kinase inhibitor. Only tolobrutinib achieves CSF concentration sufficient to modulate B lymphocytes and microglial cells. Data shared today at AAN 2023 showed tolobrutinib to be between 10 to 15 times more potent than other BTKIs currently tested in MS. These data also show that holibrutinib inhibits BTK at least 60 times faster. The combination of sub-nanomolar potency, fast reaction rate, and CNS exposure that exceeds the IC50 suggests a unique ability to engage CNS-resident microglia and lymphocytes, the cells that are thought to drive disability accumulation in MS. Our Phase II clinical data, as well as available Phase II data of competitors, have shown clear signs of efficacy. Recent evidence suggests that the rare liver injury cases observed are likely a class effect, which appears not to be linked to potency. We have currently the broadest pivotal program in place to develop BTKI in MS, with three or four studies recruited, and we expect first results in our MS either later this year or early next year. More importantly, Tolibrutinib is the only BTK inhibitor that is currently tested in secondary progressive MS. The pivotal study is fully recruited, while recruitment in the PPMS study continues, mostly in major European countries. Considering the advanced recruitment status of our pivotal studies, we are currently not largely impacted by the ongoing partial hold in the U.S. We're working on a risk mitigation strategy to allow for safe initiation of the drug, which we expect will be ultimately informed by the efficacy data and the overall risk-benefit profile. Beyond BTK, the CD40 ligand pathway also plays a significant role in the regulation of both humoral and cell-mediated immunity and appears to be involved in the MS-related inflammatory process. Inhibition of CD40, CD40 ligand in the periphery upstream of T cell interactions with B cells, dendritic cells, and microglia prevents activation of these cells and may block the inflammation that drives MS progression. Brexalimab is a second-generation antibody against CD40 ligand and, importantly, does not deplete B or T cells. We are excited to present our Phase II data of the randomized controlled study in RMS, at an upcoming medical congress. Lastly, SAR820 is a first-in-class brain penetrant RIPK1 inhibitor. RIPK1 is a newly described pathway and different from apoptosis and necrosis. It is activated in several neurodegenerative and neuroinflammatory conditions, including ALS, Alzheimer, and MS. SAR820 has demonstrated robust target engagement and CNS penetration at doses that were generally well tolerated in healthy volunteers, and is currently in phase two development in ALS. A phase two study in patients with RMS has just started. Moving on to oncology, I'm delighted to see that the work we initiated in research in 2019 is now starting to be presented at important conferences such as AACR. Today, I want to highlight the NTC Chem 5 Topo 1 antibody drug conjugate. You may remember that 2-sumitamab-reftansin, the anti-CCAM5-DM4, is currently studied in non-small cell lung cancer and other cancers where antituvalin agents have been proven to work. In colorectal cancer, the rate of CCAM5 expression is among the highest, around 90%, and the compound delivers a cytotoxic topoisomerase 1 inhibitor payload to the targeted cells. The data recently generated in mouse xenograft models were just presented at AACR, showing a response rate of more than 50%. We're looking forward to moving this asset into the clinic later this year. And with this, I will hand the call over to Bill.

Thank you, Dietmar. Now, looking at our performance in specialty care, we had a strong start to the year. As you can see on slide 19, specialty care delivered another quarter of solid double-digit growth with sales of 4.3 billion euros, representing approximately 42% of total Sanofi sales in Q1. As mentioned by Paul earlier, Dupixent's stellar performance continues to be our core growth driver in 2023. Strong demand for Dupixent from launches and new indications across all geographies drove sales growth in the quarter, adding 700 million euros in sales when compared to Q1 last year. We remain excited about our momentum in rare diseases, up 14.8%. Strong growth in the first quarter was driven by the launch execution of Nexviazyme and Zempozyme, the steady increase in patient numbers across geographies, as well as some positive phasing effects in the rest of world regions. In oncology, Sarclisa continued its fast uptake in approved indications in Q1, capturing share in key markets and partially offsetting increased Geftana competition, as well as the deconsolidation of Libtayo. As anticipated, multiple generic versions of Abagio have entered the U.S. market in the second half of March. We have previously communicated that generic competition is included in our plans, and we continue to expect a meaningful impact on our sales in the U.S. beginning in the second quarter. Now, on slide 20, let's focus on Dupixent. Six years into Dupixent's U.S. launch in its first approved indication, this unique medicine delivered another outstanding performance with 40% growth globally. Sales of 2.3 billion euros in the first quarter give us great confidence in our ambition to achieve the 10 billion euro sales milestone for the year 2023. At the same time, we keep making tremendous progress in achieving new development milestones, which will enable us to address new areas of high unmet need. Dietmar spoke about the progress in respiratory diseases such as COPD. In immunodermatology, we remain focused on pursuing growth opportunities by consistently expanding our leadership position. This is exemplified by the milestones achieved in CSU, where our filings for regulatory approval were accepted by the agencies in the US and Japan in Q1, as well as the approval in AD in six months to five-year-old children in Europe. The readout of positive 52-week data in EOE in the population of 1 to 11-year-old children at the beginning of the year was similarly promising. Now, on my last slide, the U.S. approval of L2VO in the first quarter marked an important clinical advancement for the entire hemophilia A community. With L2VO, we have now the opportunity to define a new standard of efficacy by providing hemophilia A patients with a normal to near normal range of factor VIII levels for most of the week. Commercially available since late March, we are still in the very early weeks of the L2VO launch. We are very encouraged by our early launch indicators, including initial patient switches from both Factor and Hemlibra to L2VO, as well as an enthusiastic response by the physician and patient community. The launch is following the typical process of securing reimbursement, including a permanent J-code. As of mid-April, we had signed direct contracts with customers who account for greater than 90% of all hemophilia A purchases in the U.S. market. Outside the U.S., significant progress has been made, including the positive top-line results from the EXTEND Kids Study. We expect approvals in Japan and Taiwan later this year, as well as the submission in Europe. We are very excited about L2VO as an important future growth driver for Sanofi, building on our expertise in the projected greater than 10 billion euro hemophilia A market. Beyond L2VO, we are looking forward to pivotal phase three results for Pituceran later this year. We are encouraged by the recent results from our small open label extension study for Pituceran, which demonstrated good efficacy and safety in patients who were on treatment for up to seven years. And to remind you, there were patients in this study that were on the new regimen for up to two years, which is the regimen studied in phase three. With that, I hand over to Thomas.

Thank you, Bill. Vaccine sales in Q1 were up 15% due to strong travel and anemic vaccine sales as they continue to recover and have now almost reached pre-pandemic levels. In addition, sales in the others category benefited from COVID-19 booster shipments mostly to EU member states. By now, almost all existing COVID-19 country supply arrangements have been fulfilled. In the PPH franchise, sales decreased 11% following the discontinuation of the oral polio vaccine at the end of quarter one last year, in addition to an unfavorable phasing of IPV. In China, Pantaxim sales grew in the quarter, while Vaxelis in the U.S. continues to get market share at the expense of Pantacell. For reminder, we do not consolidate vaccine sales. Profit is booked in the line share of profit and loss of associates and GV. As for influenza, our Q1 sales were up 6%, benefiting from improved time to market in the southern hemisphere. As previously mentioned, the relevance of south hemisphere flu to predict the broader northern hemisphere season is very limited, with currently many moving parts influencing the flu market dynamic we will be able to provide you with a fluid look for the year at the Q2 earnings goal. My second slide focuses on BFOTUS and our vaccine R&D engine. Across multiple studies and endpoints, a single dose of BFOTUS demonstrated consistent and high efficacy of around 80% against RSV lower respiratory tract disease throughout the entire duration of the RSV season. Unlike maternal immunization, Bay Fortis is the first and only preventive option designed to protect all infants against RSV, regardless of their month of birth. In the U.S., we are progressing on multiple fronts. At the February ACIP meeting, we were encouraged by the committee's positive feedback on Bay Fortis' efficacy and safety. There was a clear desire to work on implementation for all infants in the 2023 season. In parallel, we are working closely with the FDA to expedite the review. Outside the U.S., our interactions with health authorities and scientific societies clearly demonstrate RSV being a public health priority to them. In Canada, Bay Fortis was just approved six months ahead of schedule. In Spain, the first all-infant regional program has been announced. And in France, Bay Fortis has been recommended for all infants by the French Pneumology Society. Finally, with the Harmony Study, which measures the efficacy of BF-R2s against RSV hospitalization in a real-world setting in three European countries, we continue to enrich the strong scientific evidence of this product. The Harmony Study results will be presented at the SP Congress as soon as May 12. Please don't miss this day to discover new outstanding hospitalization results. Moving beyond B40s, our Vaccines R&D team is working on a broad range of programs, from RSV toddler and RSV older adults to mRNA flu, pneumoconjugate, and meningitis vaccine. We will present new data at our upcoming Vaccines Investors event, so I warmly invite you all to join, and I look forward to exchanging with you on June 29th. With that, I hand the call over to Olivier.

Thank you, Thomas. General medicine sales in the first quarter were 3.3 billion euros. Our core assets grew 1.6%, driven by the double-digit growth of Pralvent, Regiroc, Trimoglobulin, and Soliqua. Lovenox sales decreased in the quarter due to bias-similar competition and a high base in Q1 2022. 2GEO sales were up 4.4%, with a strong performance in Europe and in the U.S. We remain committed to growing our core assets, mid-single-digit CAGR, over the period of 2020 to 2025. We expect Lovenox sales will start to stabilize in the second half of 2023. We aim to establish 2GEO as the basal insulin of choice in China through WBP Wave 6, making it an important growth driver in 2023 and beyond. Sales of non-core assets decreased 20.5% in Q1, mainly due to lower launch sales and strategic product divestiture. The legacy oncology products were impacted by COVID-driven overall slow start to the year in China. The Euro API spin-off will analyze in April, and we expect for full year 2023 GenMed sales to decline low single digits versus last year. Now moving to slide 25, let me summarize the strategic rationale of the acquisition of prevention bio that we just closed. TZILD is the first and only disease-modifying treatment for the delay of stage 3 type 1 diabetes in adults and children starting from 8 years. Type 1 diabetes is a complex and substantial burden of disease on individual and care system alike. EZIL is an innovative first-in-class therapy with the potential to bring life-changing benefits to people at risk of developing stage 3 type 1 diabetes, particularly to young people. The median age of diagnosis of type 1 diabetes is 12 to 14 years, and life expectancy is significantly impacted, reduced by up to 16 years. Less than 20% of adolescents with type 1 diabetes achieve glycemic control. For the first time, we can disrupt the autoimmune attack, delaying the need for insulin treatment for almost three years. This means children can just be children without the burden of disease. For them, every day counts. For the currently U.S.-approved indication, delay of onset of stage 3 type 1 diabetes, when diagnosed at stage 2, we see a peak sales potential up to 2 billion euros. The path to peak sales will take time. We will work with the respective systems to increase screening program that will help identify people at risk. In the second half of the year, we expect the readout of the product study, and if successful, could lead to a second indication in the early intervention population. Now moving to slide 26, the recently signed partnership with the Ghana Ministry of Health delivered SlujanMed, is a proof point of our commitment to improve access to diabetes care in low- and middle-income countries. The health care authorities in Ghana will be able to purchase affordable, high-quality Sanofi Analog insulin products while we collaborate in the deployment of diabetes management solution and HCP training program. Through our commitment, we are aiming to impact the lives of 1,000... 1,900 people living with either type 1 or type 2 diabetes in low-middle-income countries within the next five years. With that, I hand over the call to Julie.

Thank you, Olivier. The OTC market continues to pose sustained growth with a progressive conversion to historical growth levels. The growth is primarily driven by price due to the inflationary environment along with positive volume contribution. The strong cough and cold category performance is the key growth driver of the market. In this environment, our absence in key cough and cold markets like the U.S. has impacted our growth versus market in recent months, yet our overall performance approximates that of the market. Our success is mainly driven by three key levers. First, growth in key categories such as our digestive wellness, which delivered another quarter of outstanding growth and continues to outpace well ahead of market. Second, geo-expansion. Our strategy to expand key brands into new geographies is contributing positive early results. As an example, Allegra launched in the UK in February 2022, reached the number two position in the category within just nine months. Building on that success, we launched in Germany in January of this year, and we look forward to seeing similar performance there. Third, launching new brands. With the recent approval of Cialis Together in the UK, We are entering the intimate wellness category, specifically erectile dysfunction. Cielus Together will launch in the second half of this year, bringing a new self-care solution for an estimated 8 million men in the UK suffering from erection difficulties. Moving to net sales, I'm proud to share that we have delivered our eighth consecutive quarter of growth. In Q1, we posted 11.2% growth versus prior year, and actually 12.7% growth when excluding divestments. Most of our categories portfolios posted growth in Q1 with cough and cold, digestive wellness, and allergy of double digits. Q1 did benefit from higher stock and trade in the U.S. and Brazil ahead of the deployment of our new ERP system. Excluding this favorable phasing effect, our performance was in line with market driven by price and to a lesser extent by volume. I'd like to call out a few outstanding performances. In Europe, our cough and cold category grew 44%. boosted by our fully integrated Don't Hide the Cough multi-channel campaign, which I shared with you last quarter, and was deployed in more than 35 countries. In allergy, our lesion brand in Japan is overperforming the market in a context of record allergy season. And this quarter again, digestive wellness is our champion category with a strong growth trajectory and market share gain. Today, I would like to specifically highlight Entero Germina, 48.5% in Q1, one of our love brands that exemplifies how a 65-year-old brand can be nurtured for growth and impact people and communities worldwide. Let me explain how. Like 29, Entergemina was born in Italy and was originally focused on pediatric diarrhea relief post-antibiotic use. Its differentiated science with unique strengths, formula, and format has led to positive recognition from healthcare professionals and consumers. With this solid foundation, in 2020, we identified the opportunity to ride the wave of growing consumer interest in probiotics and gut health, expanding the brand beyond kits and recovery to include the entire family and address other gut health occasions like unhealthy diets, stress, or travel. EnteroGermina today is present in 55 countries, became the number one probiotic brand worldwide. Its sales has more than doubled versus three years ago, and it has delivered seven consecutive quarters of market share gain in an accelerated category. Contributing to our ESG journey, Endel Germina is also committed to fighting, according to WHO, the second leading cause of death in children under five years old, which is childhood mortality from diarrhea. The brand has partnered with several NGOs to provide from water filters to education on good hygiene. The program has already reached 161,000 people, mainly children, in 19 countries in 2022. Recently, Endel Jamina renewed its partnership with several NGOs, such as Save the Children or the Hope Foundation, which I personally met in Vietnam two weeks ago. And our ambition is to extend our effort to 30 countries by 2025, and more importantly, make an impact on 1 million people. With that, I'm handing it over to Jean-Baptiste, our CFO.

Thank you. Thank you very much, Julien. In terms of the healthy sales growth, 5.5% this quarter, including one of the payments we received from COVID-19 booster shipments. The gross margin increased 1.9 percentage points due to favorable product mix and was also supported by the Euro-API deconsolidation. SG&A was up mainly due to launch costs in specialty care as well as increased costs for the standalone structure in CHE. We also recorded a high level of capital gain due to product divestment, 75 million more than in the same quarter last year. As a reminder, UPXN still benefits from the step-up in repayment of upfront development costs. EPS grew 11.9% in the quarter, helped also by increased short-term interest rates on our cash. On slide 32, I want to take a moment to also look at the new CHE segment reporting. CHE sales were up 11%, also driven by higher stock in trade in advance of a change in ERP system in certain countries, as just mentioned by Julie, and the gross margin increased plus 12% in good part due to price increases. Operating costs in CHE were up 10.2% this quarter, many driven by R&D cost phasing versus last year, on a higher standalone cost. The strong seasonality of consumer health drives a high-level Q1 margin, even though it is lower than last year due to a lesser positive impact from divestments on a higher cost due to the standalone ramp-up. Moving to slide 33, earlier this month, we made a significant step towards simplifying our Bay Fortress collaboration. As you may recall, under the initial agreement, Sanofi and AZ were sharing the U.S. economics 50-50. AZ had subsequently transferred its economic rights to Saudi under a separate agreement in 2019. Starting Q2 2023, Sanofi will have full commercial control of defaulters in the U.S. and consolidate 100% of the economics in business operating income. More details are available on the accounting of the calibrations that you can find in the financial appendix. On slide 35, for full year 2023, we expect continued growth in DPCN, the OBAGEO full LOE impact starting from Q2 onwards, a low single-digit decline of GenMed, mainly driven by divestments on lower net price for launches. For CHE, please keep in mind for full years that the sales in Q1 were positively affected by seasonality on higher stock-in-trade. On the P&L side, we expect the gross margin to improve on a full year basis due to growth of our remaining specialty care franchise despite the obligatory. As said previously, capital gains from divestment are expected to reach around 600 million in 2023. In Q1, we recorded 307 million. For the moment, we expect that the majority of the remaining 300 million will occur in Q3 and Q4. Advancing to my final slide, slide 36, based on the business outlook just described, we continue to expect full-year 2023 business EPS to grow in the low single digits at a constant exchange rate. On foreign exchange, we see a negative currency impact of minus 5.5 to minus 6.5 based on April 2023 average exchange rate. And now let's open the call for Q&A.

We will now open the call to your questions. And as a reminder, we would like to ask you to limit your questions to your questions. For the Q&A, you have two options to participate. Either click the right-hand icon at the bottom of your screen, and you will be notified when your line is open to ask your questions. At that time, please make sure you unmute your microphone. Or option two, use the Q&A icon at the bottom of the screen. We have the first question. Yes. First question from Lisa Hector from Bellenberg. Lisa?

Hi there. Thanks very much for taking my questions. I wondered whether you could update us on Bay Fortis and how price discussions are progressing around Europe. And then thank you for the detailed pipeline update today. It links well to my next question, which is, if we look from next year, we see a very clear runway for your top line in terms of LOEs. And then we have the strong growth potential from the marketed assets. And, you know, you highlight the impressive 10 billion milestone for Dupixent this year. So, If we bring that together with the fact that you have expanded your early stage pipeline significantly, how much confidence do you have that these pipeline assets will be making a meaningful contribution to your top line at the end of the decade?

Okay, Louisa, thank you.

Or maybe I'll start with Thomas on BayFortis. Thank you, Louisa. And thank you for starting with BayFortis. We are very excited about the coming out of BayFortis. So where do we stand now? We foresee a launch in 2023, both in North America and in Europe. And the launch dynamics is very positive. As you've seen during February at the ACIP, I think the burden of disease is very well understood. And there is a clear signal from the committee to move forward for all infant program as soon as 2023. Same thing, we've made great progress with recommendation in OAPS. And as you've seen, there has been a a couple of regional programs already announced for all-infant protection in Spain. Now, I think your question was relating more specifically to the pricing discussion. I think the burden of this is being well-recognized. Our pricing policy has always been to have a product that is available for all infants, and therefore, we've signaled from the get-go that we will go from innovative premium vaccines pricing. This is well understood, and I'm confident we're moving forward properly in this direction for 2023.

Thanks, Tom. I've been taking phone calls myself from health ministers and others. It's really getting quite exciting. So the broader question is, and to be honest, for me, it's a great question to start because if you look at Bay Fortis and the excitement, the excitement Bill shared on Altubio, this year alone, two first-in-class, best-in-class assets are going to be in flight. Last meaningful LOE of Azure. And if you look carefully, I think DMAR has shown oral small molecule TNF, L13, TLCP to name two really out of them because they come out of immunology. Our confidence and our ability to deliver these new assets to contribute significantly in the second half of the decade is really high. I mean, really high. You know, between Paxilumab, L13, TLCP, oral TNF and on, that we're going to be in a really strong shape. And, you know, we say it internally. I'm happy to say it externally. By the end of this year, it's the new sort of steady state Sanofi, all about launches, all about new data, all about the marketed first-in-class, best-in-class assets, and really, you know, a new setup. And we build that confidence through this year. I think that's just really exciting. Thank you, actually, for A nice question to start, which is how we feel is how things are coming together. And we feel like we're becoming a very, very different company and still delivering financial performance, you know, with whatever else is going on and absorbing that LOE. So it's getting exciting for us.

Next question from Richard Vosser from J.P. Morgan.

Hi, thanks for taking my questions. Maybe on the oral anti-TNF, obviously PSO is a very significant or has very significant competition. How do you see the target profile of the product? I mean, anti-TNF injectable have been superseded by other injectables, IL-23s and IL-17s. So where do you think this fits and can it be more efficacious than an injectable anti-TNF? And then second question, just one for Tom, I think on the the flu market, I was intrigued by the moving parts and lots of. So what are the different moving parts that are different this year to other years on the flu market? Thanks very much.

I'll maybe start with Thomas and the annual moving parts. So Thomas, over to you.

The flu season is a new season. Thanks for the question Richard. As I was mentioning in the call, it's still a bitterly strong outlook for the coming northern hemisphere flu season due to the moving path. But let me give a bit more color and specificity, sorry, about what I mean. I think from a tailwind perspective on one end, I see positive momentum in terms of our own execution. When I look at first the expansion of the flu in Europe, you know, if you had our best in class flu vaccine in Europe, Second point there, the continuous switch that we see of standard dose to vaccines from trivalent to quadrivalent formulation in sizable volume countries like China or Mexico. And third, positive momentum in terms of execution on the solid ongoing supply execution that I see in our factory. On the other hand, when I look at the headwinds in front of us, we are all observed. some vaccination fighting in North America, and the U.S. flu vaccination coverage rate, more specifically, remains for me the key unknown for the coming season. So because of this back and forth movement, if you wish, we will give you another look more at Q2, including at that time the expected Q3 versus Q4 split for influenza.

Thanks, Thomas. I mean, let's be clear, you know, we literally played a win on flu every year. There are variables. There are every year. But we'll be well prepared to take advantage of what the opportunities are. We will. We will. Maybe, Bill, some headlines on the oral TNS.

Yeah. Well, Richard, thank you for the question. You know, look, as you know, TNS have been a mainstay in immunology now for 25 years, or getting into that range anyways. And one question people always have is, can you make it a pill? Well, that was the objective, and that appears where we're headed towards. You know, talking about kind of where the indications, where do you go, I mean, you know where the TNFs are. There's a broad group of indications. You know, clearly with a program like this, if it becomes what we hope, there would be a plan to, you know, go after a broad group of indications, which are, as I said, they're pretty well-defined. So, you know, really excited about it. You know, stay tuned. We'll have a little bit more on this at an upcoming meeting in the future.

Yeah, thanks, Bill. I mean, I think it's really interesting. I know a lot of companies have tried to make a small molecule, too, after the reasons Bill said. And, you know, of course, we think we cracked it, but it's a small study until we get the big data. We look forward to sharing the data to Congress later this year. I think what's really interesting is – You took some of the competitive stuff. I mean, if the efficacy and safety are right, you can compete with biologics. But remember, there's a big gap between, for example, in sciences, so Tesla and biologics. So Tesla's a mega blockbuster by being effectively not as good as biologics. It's a step through on the way to something else. It's a good option for a lot of patients. So you end up with an efficacy somewhere between the two and a good tolerability profile. You're really a go-to before everything else. Let's also remind ourselves that I think there are two IL-17s and two more to launch, an IL-12, 23, and everything else all doing very well, all targeting the same, effectively, the patient population. There is lots of opportunity because biologically eligible penetrations are so low, I think it's 25% of those eligible in psoriasis. So there's an opportunity for everybody and for every patient to get what they need. Let's be clear, you know, we are ambitious for the product profile. If the profile delivers, it's a big deal. But of course, there's some way to go on that. But I think you appreciate it's on its own uniquely in terms of what it can do. So we're excited. Maybe we'll share data later this year, as we said, at the Congress. And I feel we know immunology very well. And so we're in a good spot. Okay. I think another question, maybe?

Next question is from Peter Verdul from Citi. Peter?

Thank you. Peter Verdul, Citi. Two questions, please, maybe starting with Julie. It feels a little bit like Groundhog Day when we ask the question, but this is Charles from Rx to OTC switch programs, just checking in to see whether there's been any progress made with the FDA in terms of getting these actual use studies started. And then at a more high level, Can you discuss the scope for BOI margin expansion at consumer with and without these OTC switches? And then a quick one from Paul, just high level. Do we need to wait until the second phase three CFPD study before Sanofi provides an update on peaks in sales? And I think the reason I'm asking this question sort of plays onto what you were opening remarks. I mean, you are free of LOEs for the rest of the decade after this year. you're offering more attractive growth versus your peers. So I'm just wondering, are you now willing to move your sort of mid-term targets to more revenue-based targets, or will you be updating us on a margin basis going forward?

Thank you. Okay, Peter, I have some questions. I think, Julie, maybe we'll start with the update, U.S. Cialis and Tamiflu, and you did touch on it in the U.K. launch, but the U.K. launch is quite important for getting a sense of what the over-the-counter opportunity could be and the appetite to stop there.

We're obviously extremely happy to be able to launch in the UK in the coming months. On the US, I wish I had more to share. If I had, I would. Basically, while we continue to work with the FDA on the OTC approval for Cialis in the US, we're advancing on the execution of our strategy to lift the clinical hold and including the generation of the necessary data that was requested. So we're still moving. And same, actually, on Tamiflu. We're still moving as well. There is no specific update on the Tamiflu switch, and we continue to work with the FDA to gain the important feedback on our program. So progress, but no new news.

Okay, thanks, Julie. So, you know, I think... I'm not at risk of repeating myself, but I think, you know, we continue to have very active and encouraging dialogue with the FDA. I mean, it's been quite a journey, but we still maintain a lot of confidence in getting there. And again, I think the UK experience will be a good bellwether to what the market opportunity could be if scaled to the size of the US. You know, so that's good. That's exciting. Your other question is an interesting one. We, you know, the COPD data, I think, you know, from what we've shared is extraordinary and hopefully we'll see you at APS and the call will, you know, have right after that to go through in some detail. It is game changing. We know that. We've been signaling, we signaled 10 billion back in the day in 2019 and, you know, there's people smiled and we're going to analyze about that, but we're going to achieve more than that this year. We gave you a waypoint of 13 billion, I think, plus COPD. And I think later this year, we really want to really sit down with everybody and go through the immunology pipeline broadly and really lay out the full data set on some of the assets that we've shared today and some yet to come and help people understand what is the shape of our immunology piece and then And then, you know, perhaps what Dupixen will play in that. But the overall that we're really very much interested in. As for the, I think you said, will we move to a top line story? I think you said that. I think we have to earn the right for that, to be honest. I think if our science reads out like we would like this year, I think you'll probably tell us before we tell you that you think we have enough going on that's exciting. We, you know, that's our goal. We just never put a timeline on it because we have so much to do. So, you know, we will keep doing the job and delivering the guidance until the scientific news flow accumulation is enough for you to all say, we think there's something special going on here. I know it's been a long time coming. For us, it feels like it's getting really close in terms of the scientific news flow and credibility. So thanks for your question, Peter. Thank you.

Next question is from Graham Parry from Beaufort. Graham?

Thanks for taking my questions. So firstly, just going back to CAPD, could you just touch on the ability potentially to file in Boreas alone to have you actually met regulators? And is it fair to characterize this as one trial with great results? And if you have a highly significant P-value, could that be enough to get it over the line on a single trial given large unmet medical need? And then secondly, on the oral TNF, I just want to follow up on, I think it was Richard's question earlier, just on target product profile, though, is best case here as good as an injectable TNF, or are you thinking when you reference biologic-like efficacy, could we even see something in the IL-17 or IL-23 range? And it sounded to me, correct me if I'm wrong, that your sort of best base case would be that this sits somewhere between a Tesla and an injectable TNF on efficacy. Thanks.

Okay, well, I'll let you start people with, um, yeah, sure.

No, the, the, uh, thanks. Thanks for the question. Graham. Um, you've heard already that, you know, the, the data is, is really unprecedented, right? We've spoken to, to. opinion leaders about it. We've spoken to trialists about it. They call it a landmark in COPD treatment, and they actually urge us to move this forward as quickly as possible. So we are obviously having the discussion with the FDA. The early interactions have been encouraging, but we're not going to go beyond that at this point in time. But really, this is a highly, highly interesting data set, and we're trying to bring it to patients as quickly as possible.

Thank you. Thank you. I mean, it is incredible. It's a landmark. Agreed. I like that word. Thank you. And so, you know, we really, we would hope on behalf of patients to make progress, but we take nothing for granted, of course. Bill, I think the second part of the question was around the position of the product profile.

Yeah. Look, Graham, you know, again, first study, small study, big program ahead of us potentially. You know, I think as Paul laid out, he said, you know, if it were like biologics-like efficacy, you know, yeah, you can have that exact level or in the range regardless of the biologic, you know, if it's TNF. That is certainly a winner, but there are lots of steps between there as well that give a lot of flexibility for how this asset can ultimately be positioned. So I think as we're looking through it, it's going to be driven by the data, driven by the studies, but we think that just given what we think we have, we've got a big range of potential outcomes that make the target product profile extremely, extremely attractive to the market.

Thank you. Thanks. Thanks, Bill. I mean, we'll go through the data later this year. But I think, you know, this is what's fascinating. Just to couple that back to Peter's question, maybe Louise's question just a little bit. This is what's so special, I think, about the year. You know, we accumulate the science. We pick really smart positioning, particularly of the data this year, where it can help patients. You know, we have T-Zield in flight, Altuvia, Bay Fortis. And I just want to be clear, in case everybody misunderstands, you know, we will do all this and deliver our guidance. That's what we do. We have earned credibility that we don't miss numbers whilst we reinvent the company. And that's non-negotiable internally. So I just want to be really strict with me and you that you should expect that deliverable at the same time as hopefully changing the practice of medicine in some of these areas and That's why it's so exciting, 2023. Next question.

Next question from Seamus Fernandez from Guggenheim. Seamus?

Hi, this is Colleen. I'm for Seamus. I think you're taking our question. On flu, are there any updates to how you feel positioning following some of the competitor updates we've seen? And are you still on track for the mRNA flu candidate to enter phase three this fall? And are quadrivalence targeting HA sufficient, or could we see a next-gen construct enter the clinic sometime this year? And separately, will the vaccine event this June provide meaningful updates on the path forward and plan for the 21-valent pneumococcal?

Thanks. Okay. Well, you come at it pretty strong there. I was expecting a lowball from Seamus, but okay. Tom, maybe we'll go to you.

No, so different questions already lead to flu, I get that part. So on the first part of the question, for the coming flu environment, that's pretty much what I was saying before. We believe we have definitely the right assets, you know, that fluzenylose or FUELDA, sorry, as it's called in Europe. He's doing very well. We want to make sure we keep our strategy of changing the standard of care in the 65 plus. That's extremely important. And that journey is ongoing in North America and in Europe, as you know very well. Execution is strong. Now we need to see where is the US VCR. The second part of your question was much more related to the future of flu, mRNA flu. Where are we? You've seen that some others have disclosed some results that are not convincing in terms of really challenging the standard of care. So as you alluded to, I think, in your question, you have part of the answer in the fact that we are going to have a vaccine event on June 29th. And our goal, as I was sharing in the call before, is really to show you A significant amount of data. It will include RSV, both B4-2s and the RSV-tobler clinical data. It will include mRNA flu. It will include, you were listening to it, our pneumoconjugate 21,000 program, as well as our meningitis vaccine program, which people might not have realized, but we're going to have also some data to share there. So it's going to be a very complete review of our portfolio. So really come and see what I said there. We feel very strong in terms of the progress we have made on R&D in the vaccine space, and we really want to share that with you. That will include mRNA flu, and that will include PCV21. Thank you, Thomas. That's June the 29th. June the 29th, indeed, in London. Physical presence is much better because you can ask all the questions and more relaxed.

It's a hot ticket, apparently, Tom. Okay. So, next question, please.

Next question from Joe Walton from Credit Suisse.

Thank you. We've talked a lot about R&D, and I do have one R&D question, but I'd like to go back to the outlook for the new commercial products. It's very difficult for us to assess how quickly we might see the uptake of something like Bay Fortis or even L2VO because we have to think that some of the sales will presumably come from Loctate. But the consensus at the moment, the company provided consensus for this year is around 130 million for L2VO rising to 370 next year and for Bay Fortis 170 this year rising to 480 next year. Just wondering if you feel that together we've got sort of the cadence of that right, appreciating that these will be very big products. There'll be a lot of focus on the speed at which you'll be able to do that ramp. And my second question is about the RIP kinase. So you're talking about those. You've now got at least three different RIP kinase drugs entering the clinic. Can you tell us what's different about them? Are you able to tweak them so that one is uniquely suitable for ALS and one is uniquely suitable for other conditions? Or why do you need so many of them? Thank you.

Okay. Thanks, Jo. Well, then, maybe there's two components to it. We're not going to comment on consensus for sure. You know, we work hard to positively do a good job, but we can't come to those numbers. Maybe, Thomas, you know, a sort of feel for, you know, what you could expect from shape of curve, if not numbers themselves.

So definitely not specific numbers, but a few things. So as I alluded to for the first question, I think, which was from Louisa, in terms of the qualitative part, Clearly, we all line up to be ready to launch in 2023 in North America and in Europe. And so, when it comes to North America, it's all about registration and the CIP meeting coming, as well as the inclusion of the product into VFC. You remember that the inclusion into VFC is an important part for the curve definition of the U.S. program. Feeling strong in Europe with what we've seen in terms of recommendation. You know very well that having said that, for both North America and Europe, we are talking about changing national immunization calendar. And you also know that for like for every vaccine, even though it shows that it's appreciated like a vaccine and goes very well on that pathway. So as for any vaccine that is being launched, there is a progressive uptake, just because we're in preventive measures, and we need to change physician practices, practice after practice, which takes a bit of time. But again, feeling confident about moving forward on the trajectory of the launch, North America and Europe.

Yeah, thanks. So I mean, we're obviously well prepared. There's a great deal of interest, fair to say. I think some of the interest, of course, is around the fact that it's quite unique that it would you know, the value proposition is almost in the very first season. I think that's why we're seeing this level of excitement that is a bit different.

It's unique, and I really invite you to go at the ESPED European Pediatric Infectious Disease Society Congress in May because, again, we need to remember that this is the number one cause of hospitalization in newborns in those geographies, and you're going to see a first significant data set in terms of efficacy against hospitalization for those newborns. So interesting data that you need really to have a look at, which is promising when it comes to that.

Yeah, but I think that's why it is difficult to be precise. And I think what I chose question is quite important because there's a real appetite, but there's still some unknowns. So we just, you know, there's guidelines on one hand. There's also a shortage of pediatric ICU beds, you know, in general in that time, in that seasonal time. So we will see.

And as you say, from year one, we can solve this.

Well, I think that's the exciting thing. It's really about organization. Bill, Altuvio?

Yeah. Thanks, Joe. So, you know, Altuvio, our first-in-class high-sustained factor VIII replacement therapy, we are really, really excited about that. You know, just to kind of go back a little bit to some of the comments made in the opening remarks, you know, the – Switches that we're seeing, and it's going to be a switch product, right? People are going to be coming to it. We think initially it's going to be from the other factor products. However, what we're seeing in the early switch data is we're getting hemoliber patients as well. Aloctate will absolutely be impacted as it should, as all factors should, because this is, we believe, just a far better product offering a potentially new level of efficacy. So early feedback is very strong from the community. Physicians are excited. Patients are excited. And they are, depending on the practice, thinking about how to switch patients, either as patients are coming in for their visits. Some are a little bit more proactive than that. We're still really early but incredibly encouraged. And, you know, just as we think about the sizes of the markets here, you know, the hemophilia non-inhibitor market is in about that $8 billion range, and we expect it to grow to over $10 billion. And of that eight, about five of that is factor. So, you know, if you think – and that's on a global scale, and about 50% of that is U.S.-related. So, you know, you think of those – that opportunity with a product like this, And we see a very significant opportunity with L2VO. Thank you.

Dietmar, RIP kinase? Yeah, RIP kinase. Thanks for paying attention to our portfolio really closely, right? The RIP kinase is an important pathway, an important inflammation pathway. It's involved in neurodegeneration, neuroinflammation, also other types of inflammatory diseases. It's different from necrosis or apoptosis. we feel it's an important pathway to explore, both from a research perspective and from a clinical perspective. And at this point, we have two RIP kinase inhibitors in the clinic, not three, two. We've spoken during this call about SAR 120, right, which is the one that we're testing in ALS, in amyotrophic lateral sclerosis, and also in MS. We have a different molecule, SAR-122, in immunology that we're also testing in different immunological indications. And obviously, we need two molecules because you require different pharmacological properties in these different types of diseases, for example, when it comes to brain penetrance, et cetera, et cetera.

So I hope that answers the question. Yeah, thank you, Dietmar. And Joe, thank you. Great to get a question about two launches and our pipeline. That's how we sort of like it.

Next question from David Riesinger from .

Thanks very much. Can you hear me?

Yes.

Great. So, congrats on the progress and thank you for the pipeline commentary and plans for additional pipeline updates this year. I have two questions. First, with respect to the tolibrutinib liver tox concerns, I'm sure the company must be frustrated that the FDA hasn't lifted the partial clinical hold after receiving the additional data. Is there any additional color you can provide about what concerns persist for the FDA and what that may mean for the potential approvability of the drug? And then with respect to the PCV21 update on June 29th. Obviously, you have the adult phase two data in hand, but should we expect infant data as well? Thank you.

Okay. Maybe talk about the FDA partial hold.

Thanks for the question. So, the FDA partial hold is still in place, but Let me first say it really only affects recruitment into the PERSIA study, only into the PERSIA study in the U.S. The other trials that we have, three out of four trials that we have in MS, are fully recruited, and we're working to address the issues raised by the FDA, right? We continue to work closely with them. What they're looking for, obviously, is further understanding of the patient population. We're working closely to do that. have our program ongoing with regards to, you know, safe initiation of the drug, with regards to really close monitoring. We have not seen any new cases of liver toxicity in the same way, you know, since we introduced that level of monitoring, which is important to understand. Obviously, FDA is looking for more data on that, and FDA is also looking eventually then for benefit-risk information, which we will have at the time when we will read out the study. In addition, what's important to understand is, you know, we just presented that data, and I also talked about it during the presentation here, that totobrutinib is a potent drug. It acts fast. At the same time, we have these data about drug-induced liver injury and really rare cases of that drug-induced liver injury. across different BTK inhibitor, which seems to really underline it. It appears that, you know, this drug-induced liver injury is more of a class effect and is not linked to potency. That's important also as, you know, we are the only company at this point that has studies in the progressive setting and especially in the SPMS setting where no other treatment for these patients is available at this point in time. So we are really confident about the potential of toliprutinib, and we're really looking forward to work with FDA on the future of toliprutinib in these patients.

Yeah, I think it's worth adding, isn't it, of course, that when you see partial hold, you automatically assume studies are stopped and, you know, milestones are missed. As Dietmar said, it's just not the case. you know, three studies fully enrolled and will be event driven. So unlike pretty much everybody else, you know, we're enrolled and the post-year study, the primary progress study, still recruiting, as you said. So our program is pretty much exactly where we needed to be. So I think there's, we always, we do get the question about partial, what's more important probably is that before we get the readouts is that we have a fully understood with the FDA. how to initiate a BTKI, because that's going to be important. And as you said, after the change of protocol, there are new cases. So it's quite clear that there are ways to do monitoring. And then as you add the weight of evidence, particularly SPMS, secondary progressive disease, which nobody is studying, it's worthless, I think, taking our time with the regulator to reach the very best outcome in anticipation of the results. Our timelines did not change. They're not changed at all. I think that's really important for everybody. So, you know, we're optimistic, and we really think of the other data that keeps amassing around how potent and effective this could be, and we now know that that has to be unrelated to safety. That really starts to get very compelling. Thomas, PCV21?

Short response, David, is yes. Seventy-five percent or more, actually, in the market is in pediatrics. So we wouldn't want you to come in London on June 29th and be disappointed by not seeing pediatric data for PCV21. So, yes. Great.

Great, David. Thank you. Looking forward to seeing you, David, in London for the meeting. Okay. Next question.

Next question from Gary Stevenson from Exxon. Gary?

Hi. Thanks for taking the questions. So first, just to follow up on celebration, you mentioned earlier you see the observed liver tox as a class of So can you just talk to how you view perhaps the predictability and management of those events and maybe any views you have on whether you think or have feedback that there may be any perceived impact on uptake or perception from neurologists? That's the first question. And then secondly, one on T-Build and the prevention deal, please. So you flagged the up to 2 billion sales potential. Could you just help us understand how you split that between the opportunity and delaying the onset of stage 3 type 1 versus the protect opportunity. You know, big potential market, but screening and awareness are more challenging. So also any color on how you've addressed those points in that figure would also be helpful too. Thank you.

Okay, I'll come to Olivia in a moment. I think we've covered polybrity a little bit back and forth, but it's not uncommon for monitoring initiation in MS, right? I think that many drugs have had that. What matters is that you have great efficacy data. and that it's worth monitoring. And so we know that's early monitoring at the early stage. That's what we're working through. As Dima said, there's been no new cases. So, you know, it's quite an interesting time, the TOL improvement, because, you know, we look forward to the data. That's going to be the next most important thing. And then we'll share with you how we hope to approach the monitoring. But frankly, if the efficacy data is what we hope, the monitoring is really not a barrier to uptake. Olivier, any news on T-Zield and and where you see that.

So we are thrilled to bring on board TZIL within GenMed. We, of course, as you know, have been working in the last few months on a co-promotion agreement, and we have been impressed by the reception. I've talked myself to many key opinion leaders, and the feedback is very positive. We have always been very clear that for the first indication, the delay, onset of stage three for patients that are in stage two. We have always been very clear that it's going to be a slow burn. It's going to be about a progressive, you know, spinning. But what is amazing is that in the last few months, and we have seen that in the US, but also in other parts of the world, and specifically in Europe, it's clear that there was no incentive to screen people and young kids or young adolescents because there was no medicine. And we see a lot of traction now in the momentum around screening. So this will take some time. On our end, we are going to focus for first, of course, not on general population, but we are going to focus on the first degree relative where the prevalence is 10 times that in general population. So for us, today is a great day. The deal has just been closed. Regarding the second indication, which is a perfect study, We made our offer based on the first indication. So any good news on protect would be, of course, an upside. Of course, with regard to protect, it's about early intervention for people that have been identified as having type 1 diabetes. So the population is much more well-defined. In the US, we are thinking about 60,000 to 65,000 new incidents and new patients are getting type 1 diabetes. And of course, we would like to get a share of that part. Thank you.

Thank you, Olivier. And I think you said it, but to be clear, there is really nothing coming to compete in the class or in this patient population before us maybe at some point in our future. We'll see at least this decade, which gives us time to do the work to make sure that we get those patients that need it. So it's exciting. It's exciting. Is there another question maybe?

Next question from MDC from Baxes.

Hi. Thank you. Maybe I'll just have a quick one on financials. I was noting the slight improvement in gross margin that's expected for the year instead of the Obagio LOE. I mean, I believe consensus had been modeling for a little bit of compression. So maybe just any details on the driver of that. You know, is that just operating leverage from the growth that you picked in or some of the new manufacturing process? Any colors you could give would be great. Thank you.

Okay. Thank you. JP, maybe you want to comment? Yeah, thank you for the question. As I explained, there are some cool-down pushes on 2023. We are launching. We have a very good start in the year. With the right, of course, the growth of Dupixent will, of course, help to grow profitability and take us to a nice place in spite of the LOE of Obagiose that will kick in from Q2 onwards. So nice situation on the gross margin. It's mainly linked to this balance, which goes in the right direction. We are pursuing all our efforts to be able to finance more R&D, so efficiencies are still being delivered by all departments in the company. Thank you, Jean-Baptiste. Next question.

Yes. Next question is from Peter Wellfront. From Jeffrey, Peter?

Oh, hi. Thanks for taking me in. Just two quick ones. Firstly, just on the oral TNF again. Obviously, one of the indications where we are seeing oral TNF still be used and actually not facing the same competition is HS, where I think you've also got some other programs looking at as well. I'm curious, I guess, why necessarily the focus on psoriasis, which is a pretty competitive market, and I guess not some other potential segments that there are where there's really perhaps less competition of that at a more amenable level for you to be at the entrance And then just coming back to the vaccines event again, it would be just outlined with regards to the 21-valent PCV vaccine. Will we get data? Will maybe you look at, as usual, as often with these early stages studies, data that's highly extrapolatable, you know, to the commercial setting? And perhaps you can just talk about then the strains you're particularly looking at. How should we compare this to some of the other vaccines that have been developed as well that have higher valences than perhaps 21? I know it's an advantage you're looking to get that. Thank you.

Tom, a vaccine event until the 29th.

I see we are starting to raise some interest, which is good news. When it comes to PCV21, our goal, to be very clear, is to, because you're alluding, Peter, to the competitive space, our goal here is to be the first pediatric registered and used pneumoconjugate vaccine with more than 20 valencies. And that's why we want to share with you at this event our face-to-data. Of course, it will include the strains, the results of those, our position, and what are the next steps. So we really believe that it's going to be a competitive asset. Of course, we keep monitoring the environment. We know very well who are the players, where are they going, and what are their pros and cons. And we'll elaborate more together on June 29 on those.

And Peter, then back to your original question on the question on the oral TNF. I just think, I think you said, why do we start with psoriasis? I think just two things, one I touched on and maybe another additional point. There is the biologic penetration of these incredibly distressing illnesses is still less than 30%. So even if there are six, seven, eight biologics, patients need something else or patients may not want to go to an inject. whatever it may be. That's why all of these medicines tend to do pretty well. Some do better than others. When we embarked on the program with the old TNF, one of the reasons we chose psoriasis is because from a proof of mechanism, we can move really quickly. If you start with an RA study, you know, it takes longer. And so we wanted to see quickly whether we could be in the biologic ballpark and have the right safety in patients where it would be explicit and not even patient reported. So that's where we started there. But I think what it tells you, it should tell you, and I'm trying to remember the exact word on the slide, that we start in psoriasis. I think that's how we say it. Because our ambition, and we'll update you as we go forward, is to go beyond it. Of course, our profile has to deliver. We have to feel confident. But I think you have to imagine, Peter, that if the profile holds together through a succession of TNF currently treated diseases, we should go there. So give us a bit of time. And it's a good opportunity, I think, at an event in the second half of the year, for us to update you very specifically about, you know, what that could mean. So thanks for the question. It is an important question, but hopefully it's just the beginning. Eva, where are we? Near the end?

So we're near the end, but we have a question that came in online from Florence Espedet, Société Générale. Two questions. The first one is on Zantac. Could we have a quick update on the case and the arbitration with BI? And the second one is on the IL-13 TSLP. Why are you confident to show benefit to this product when Roche paid R13 in 2017?

Okay. Well, I would love to take the second part of that question, but, Roy, maybe you have to take the first part of the first question on Zantac.

Thanks, Paul. On the Zantac cases, you've seen the MDL ruling on Zantac, which we're very pleased with, and, of course, we agree with. There are a number of cases now in state courts where there are less cases here and there. We are not a defendant in any of those cases that are scheduled this year. I guess we'll be up next year. We're encouraged by the decision in Daubert and hope that everything ends up that way, which is what we feel very strongly. On the arbitration, as you know, we have been expecting the outcome of this for a while now. We do believe it's going to come out in the coming weeks. What's more important is that given the strength of our case as proven by the overwhelming scientific evidence, we feel that regardless of the outcome of the arbitration, the potential exposure for Sanofi is manageable in the usual course of business and is not going to be something that will impact our delivery of our strategy or the pipeline use that you heard today. Thank you.

Thanks, Roy. So regardless of the outcome of arbitration, we feel that it's absorbable in the normal course of business. I think it's an important point for everybody because as these things are, we get the announcement, we put it out. I'd like people to anchor to what we've said today. So, Roy, thank you very much for sharing that. It's, I guess, a nice last question. I have 13 PSLP. I think the comment was about another medicine that is not done so well, I can't remember. maybe it was IL-13. We know IL-13s work quite well in AD, quite well, better than IL-4. We know they don't work so well in asthma. We know reciprocally PSLP works quite well in asthma, but it doesn't really work in AD. So one of the benefits of this nanobody excellence that we have is potential almost potentially a synergistic effect, and we'll see. And we just look to ourselves to say, as I said earlier, there's room for many biologics in these diseases, number one. Number two, we set a high bar on our profile. And if we land it, then it's, you know, really compelling. I think maybe the difference to this to some other diseases is we know both those pathways have drugs that are approved for different diseases. So we know that the risk is a lot less. technically, as long as our nanobody can really deliver. And if there is a synergistic benefit, then we're really in a good spot. It's the ifs, right? But if we're there, then there's a high degree of confidence. So we will see, and we will share data at a Upcoming problem with the data at ATS, right?

As we said during the presentation, we have the data in-house, right? We're moving into phase two. And on top of what Paul has said, which I absolutely agree to, right, these are direct pathways where we have data with individual molecules. We have data in-house, and those data give us a lot of confidence.

Oh, DMOS, wow. You know, love it. Good place. So maybe just, I know people will be dropping off and have other places to be, but just while I can say it, you know, back to Louise's question, we did, it's an important year for us. Scientific News Flow is building really credible, interesting, first-in-class, best-in-class science. Two best-in-class, first-in-class launches. The last LOE behind us, you know, by the end of the year. And still putting together, without wavering, a commitment to deliver guidance. You know, it's a good moment to reflect on how far we've come and proud of the team and the work done. But if you're looking at us carefully, I think you can feel the difference in how we're moving. So I look forward to rushing quickly through 23 and showing people what we're capable of. So thanks, everybody, for connecting.