Sanofi

This is Thomas Kuzlaev from the Zenofi IR team. Welcome to the Q2 2024 Conference Call for Investors and Analysts. As usual, you can find the slides on zenofi.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 active results to differ materially. We encourage you to read the disclaimer in our slide presentation. In addition, we refer you to the Form 20F on file with the US SEC and our friends registration document for a description of these risk factors. As usual, we will be making comments on our performance using constant gains rates and other non-IFRS measures. Numbers used are in million euros and for Q2 2024 understated otherwise. Please turn to slide number four. First, we have a presentation, then we take your questions. We have kept the presentation short as other companies report today, and we aim at keeping the calls to maximum one hour. For Q&A, we have Brian, Olivier, Thomas, and Julie to cover the global business units 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. And with this, I'll hand you over to Paul.

Well, thank you, Thomas. So much better when you do the intro. Thank you and hello to everyone on the call. Our strong business momentum continued in the second quarter. We delivered double-digit sales growth at CR and we continue to execute on our former launches and we keep advancing our pipeline of new medicines. Our growth was driven by a strong quarter for Dupixent seven years into its launch and the broad-based performance of our new medicines. Our vaccine sales were stable when excluding the effect of last year's COVID sales. The sales of Apella, the new name of our consumer healthcare business, grew by 10% with the U.S. wellness brand Cunol as the main driver in the United States. Based on the robust growth we've seen in the first half, we are confident about the strong business outlook for the remainder of the year. And that's why we are upgrading our earnings per share guidance for 2024. And Francois will provide more details in a moment. Turning to slide six, Dupixent reached a significant new milestone for the first time. Sales exceeded the 3 billion euros mark in a single quarter. This new quarterly sales record highlights continuous strong volume growth across approved indications, age groups, and, of course, geographies. Dupixent's growth of 29% in the quarter was fueled by its consistent and robust U.S. performance. Given the timing of July the 4th holiday week, we saw a slightly stronger volume trend at the end of June. The rapid expansion in key markets outside the U.S., such as Japan, China, and Europe, further boosted Q2 performance, throwing it almost double the pace as the U.S. Looking ahead, we remain excited by the near-to-mid-term growth outlook for Dupixent, which is bolstered by a series of upcoming regulatory catalysts inside and outside the U.S. We've recently obtained the EU approval for COPD, and we're looking forward to the US PDUFA decision at the end of September, which is expected to be a significant driver for Dupixent's continued expansion. Overall, we remain on track for our target of around 13 billion in 2024, in line with our low double-digit compound annual growth rate goal set from 2023 to 2030. Now on slide seven, turning to our launches and how we bring innovation to patients, Quarter after quarter, the growth of these new medicines increasingly contributes to our top-line growth. Francois will explain the key contribution of these successful launches to the accelerated business dynamics in a minute. Growth of Nexviazyme due to patients converting from legacy treatments in Pompei franchise remains a key driver. Most eligible patients in the US are now on the new standard of care with Nexviazyme, and patients continue to convert outside the US. Altuvia annualized its launch at the end of March. Growth rates remained very strong, with high sales predominantly in the U.S., where it was driven by patient switches, of which an increasing majority came from medicines other than a Loctane. Other medicines also did well in growth in absolute terms, including Sarkales' fast expansion in Europe and Japan. As expected, Bayforda sales in Q2 were low due to vaccine seasonality. Looking ahead to the upcoming RSV season in the Northern Hemisphere, We remain excited by the opportunity for Bay Fortis to advance towards all-in from protection and reach blockbuster status globally in 2024. As the world leader in flu vaccines, Sadovia has a pivotal role to play in bringing forward innovative solutions against this disease by addressing current challenges and building strategic partnerships. In May, we announced a new partnership to combine Novavax's COVID-19 vaccine with our differentiated flu vaccines with the goal to create a best-in-class combination This new combination will include our flu vaccines that have proven efficacy in preventing flu infections and its severe consequences, such as pneumonia and hospitalizations, and of course has received an ACIP referential recommendation. We believe our truly differentiated combo vaccine will demonstrate favorable tolerability compared to current COVID-19 mRNA-based combination vaccine candidates, ultimately driving higher vaccine rates and To clarify, we believe that combination vaccines developed by competitors that would compromise tolerability or proven level of efficacy would damage vaccine confidence and further impact vaccination rates negatively. In addition, Sanofi will commercialize Novavax's COVID-19 vaccine from next year and book the sales. Thanks to our leading commercial capabilities, we hope to be able to further drive broader acceptance of COVID-19 immunizations. Considering the recent public concern about H5N1 avian influenza, we take responsibility in pandemic preparedness with two pivotal programs. Our egg-based protein adjuvanted vaccine is set to begin a study in Q3 in collaboration with BARDA, and our mRNA pandemic flu program will enter clinical studies in the coming months. In summary, our commitment to innovation continues to drive our leadership in the flu vaccine market, ensuring we are prepared to meet current and future challenges. Well, let me conclude by highlighting a separate positive note relating to our ESG commitment. Time Magazine recently ranked Sylvia as the world's seventh most sustainable company across industries and first in pharma. This ranking reflects the progress of our integrated ESG strategy, and thanks to our comprehensive carbon transition plan, We are now on track to meet carbon neutrality in 2030, in line with our science-based target initiative commitment. To achieve this target, we focus on key decarbonization levels presented on the slide. For Scopes 1 and 2, 43% reduction of our activities was already achieved, and we are targeting 55% reduction by 2030. For Scope 3, 10% reduction was accomplished so far. We're aiming for 30% across our value chain. That, I hand over to Francois. I'll see you at 5.

Thank you, Paul. Good morning and good afternoon to all. Let me start with our self-development on slide 11. We have delivered robust results in the second quarter with 8% reported growth and even 10% at constant exchange rates. Our growth is broad-based across businesses and geographies, and hyperinflationary countries had only a limited contribution to our growth. We are delivering quality growth, as you can see on the right-hand side. Our continued portfolio transformation is a key growth driver with strong performance from Dupixent and the ramp-up of our newly launched medicines. Other products also had a significant contribution. Please turn to slide 12. Growth profit showed double-digit growth in line with our sales performance. Growth margin was slightly down due to unfavorable currency impact, OBAGIO LOE, and COVID-19 revenue last year. At constant exchange rates, our gross margin has slightly increased, mainly driven by improved product mix. Total operating expenses were up by 5.2% as we invest in marketing and sales to support launches and in R&D. R&D expenses grew double-digit when excluding the one-time 200 million euro reimbursement from SOBI related to L2VO. We are fully on track with the step-up of our R&D spend by approximately 700 million euros this year, along 2024 around 7.4 billion euros. SG&E expenses grew substantially less than sales growth, generating a positive growth leverage impact on margins. Business operating income grew 8.3%, and business EPS growth was up by 4%, driven by higher BOI, partially offset by the higher tax rate of 21%, as well as increased finance costs from higher net debt. Please turn to slide 13. Based on our current performance in the first half of the year and a strong business outlook for the remainder of the year, we upgrade our earnings per share guidance for 2024 to stable at constant exchange rates. Let me now give you a little bit more color on some key considerations for the balance of the year. On Bay Fortress, we anticipate the first shipment in the northern hemisphere to take place in Q3. Regarding phasing, Q4 cells are likely to be higher than Q3 ones based on regulatory approval of the two additional filling lines expected in September. On flu, we anticipate a phasing with approximately 70% of cells in Q3 and 30% in Q4. Total cells for flu are expected to decline low single digits versus last year due to unexpected softer vaccination rates. Other items are similar to what we shared with you last quarter. So overall, we are pleased with our Q2 commercial and financial performance with sales growth of 10%, underlying improvement in gross margin, further cost discipline, and the continued modernization across the company. This positive momentum in Q2 and the positive outlook for the balance of the year leads us to upgrade our guidance. With that, I hand over to Ouman for further positive news on the pipeline.