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.

Thank you, Francois. Slide 15. We've achieved several milestones this quarter, showing our continuous pipeline progress. Dupixent for the treatment of COPD was approved last month in the EU, and this is the first time Dupixent has been approved in the EU ahead of the US. Further, it is the only biologic medicine approved to treat COPD anywhere. Now, Altivio is also approved in the EU under the name Altivox. We've received several accepted regulatory submissions, including priority reviews of bupixent and CRS with MP and adolescent and sarcleza in newly diagnosed transplant ineligible multiple myeloma with US PDUFA's date in H2. Additionally, fituteran, our RNA interference antithrombin for patients suffering from hemophilia A and B, has been submitted in the US with a likely regulatory decision early next year. In support of our drive to become a tech-powered biopharma company, we formed a recent collaboration with Four Nation Bio and OpenAI to accelerate drug development, also supported by the collaboration with Belhara to advance the discovery and drugging of immunology targets, fitting perfectly with our NeuroX research program, STAT6, a key target in immunology. Completing our focus on rare diseases, we've recently announced a development and commercialization agreement outside the U.S. with Fulcrum, for losmapimod, a MAP kinase inhibitor in facial scapsular humeral muscular dystrophy, a genetic neuromuscular disease characterized by progressive muscle weakness. This medicine is in phase three with an expected data readout by the partner at the end of the year. Moving forward with neurology, we have two recently announced. We have also recently announced our exclusive license right with a vigil. one small molecule in phase one, focusing on an area of huge unmet medical need, Alzheimer's disease. These recent activities are helping us to replenish our early stage projects to ensure the sustainability of our life. Next slide, please. At the ATS meeting in May, we presented high-dose phase two data from the proof of concept withdrawal design study of rilzabrutinib, our advanced oral targeting, both type 2 and non-type 2 inflammation in moderate to severe acidity. And week 12, treatment with high-dose rilzabrutinib resulted in a 36% relative risk reduction in the loss of asthma control events compared to placebo. This extended a 25% reduction observed in the low-dose cohort. Additionally, we observed a rapid, nominally significant, and clinically meaningful improvement in asthma symptoms and quality of life with a well-tolerated safety profile. These positive results demonstrate the potential of rilzabrutinib as an add-on for uncontrolled asthma patients, and are part of a broader set of studies to build on the positive phase 3 data in ITP for the regulatory submission that's expected later this year. Slide 17. Turning to oncology, in the recent ASCO meeting, we presented our important phase 3 data from the MRI study in the newly diagnosed multiple myeloma transplant ineligible patients. The primary endpoint is met with a statistically significant reduction of 40% in disease progression or death for patients treated with sarcolysa, VRD versus VRD-ALED. Estimated 63.2% of patients had no PFS event in 60 months versus 45.2% for patients treated with VRD-ALED. This frontline use and transplant in eligible patients will form potentially the third indication of sarcolysa with expected regulatory decision by September 27th in the U.S. Several additional studies are currently ongoing to further extend indications for Sarklesa, including the subcutaneous formulation. Slide 18. On my last slide, I would like to highlight the exciting upcoming news flow for the next 18 months in support of increased R&D productivity. We plan 12 A3 readouts, 13 submissions, nine regulatory decisions, and we look forward to keeping you updated on the progress. Before handing back to Paul, I'd like to extend my sincere thanks to every colleague in the R&D team for the work they do for patients. We've undergone changes over the past month. We're well on track for the pipeline of new opportunities as we chase the miracles of science to improve people's lives. With this, I hand back over to Paul for Q&A.

Well, thank you, Newman and Francois. We'll now have the culture questions. As a reminder, we would like you to limit your questions to one or two each. Excuse me, remember we're seeing many of you again early next week. You'll be notified when your line is open. You can ask the 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. The question will be ready and read by our panelists. Now we'll take the first question. Thomas.

So your first question will come from the line of Grant Barry, Bank of America.

Grant? Great. Great. Thanks for taking my questions. So firstly, on Bay Fortis, could you just confirm current guidance still only assumes the existing capacity and a billion euros of sales with approval of expanded supply being upside to that? And then can you clarify the scale of the expanded capacity? So I think you've talked about two lines adding to one. So can we just assume that's a tripling? And can we read that you're phasing comment on Bay 4 to say more in fourth quarter and third quarter to mean that you might not have the manufacturing approved by the beginning of the season in September? And then secondly, on Appella, just wondered if you could update us to the timelines in which you expect to be able to clarify to the market the route of separation, so sale versus spin, and perhaps just help us understand the factors that go into the decision between the two at this stage. Thank you.

Thank you. I think there's five questions there. Graeme, thanks. I don't know what I need to do. But anyway, Thomas, over to you.

Thanks for the question, Graeme. So a few elements to answer to your questions. First of all, we're confident Bay Fortis will be a blockbuster in 2024. That's the guidance that we have provided, and we're fully aligned with that. You remember the different messages we have provided previously, the fact that in order to increase supply, We need, as you pointed out, to have two filling lines. We wanted to make sure that we were doing production at risk with our partner AstraZeneca, and that we were submitting, of course, the regulatory application for the regulatory bodies to approve those lines in due time. So we are exactly on track with this plan, i.e., we have done production at risk as expected. We have done PPQ batches and surveyization batches, and we have submitted to the different regulatory bodies all the different regulatory applications for those lines. Now, it's in the hands of the regulatory bodies for the exact timing of the approval, which will enable the overall shipment of the disease. But we believe that there's all the reasons to be confident about the accelerating review process of those lines and about the fact that we'll be able to move forward for the supply for the 2024 RISD season. The indication we've provided on the split in quarters between Q3 and Q4, we have pointed out to the fact that we expect, again, within what we know today, to have Q4 cells above Q3 cells. That's because here, while it's a seasonal product, there are some differences with flu, for example, where you have in flu vaccinations very early on in the season, and that's it. Here, for RSD, there's all the in-season born babies that are born in the month of October, November, December, January, February, and March, and that also accounts for a significant part of the human. Therefore, with the information we have today, we believe it's reasonable to expect Q4 cells to be above Q3 cells. Overall, confidently moving towards the coming RSD season, and again, confirming the guidance that it will be at least blockbuster status in 2024.

Thank you. Francois Appelot?

Yes, Graham, on Opella, as far as the timing is concerned, we confirm what we had said before, which means we expect that transaction to take place at the earliest in the fourth quarter of 2024, could be potentially in the first quarter of 2025, but it would make a big difference. I do confirm as well that we are still in a very competitive process with basically three options. Two of them are public, either an IPO or a spin, and one of them is more a sale to a private party. So the game is still totally open as we speak, with one objective, which is value creation for shareholders. Maybe to help you a little bit, the two main items that we are looking at is clearly the valuation, the value as of today, or whatever we could extract as value in the future as well, under different configurations, but it's very essentially different. value story. We are taking into consideration, obviously, the execution risk, certainty of transaction versus uncertainty. That's part of what we are looking at. The good news I can share with you as well is that the process is anyway between the different options very competitive, which means that usually when you have a competitive process, you're in a better position to extract value. So we are very positive for what is a quality asset.

Okay, thank you. Next question.

The next question comes from the line of Shirley Cheng from Barclays.

Shirley?

Yeah, we got you.

Thank you. Shirley Cheng from Barclays asking questions for MSU. We have one question for flu vaccine. Can you please share with us the timeline for the COVID-19 and flu vaccine on the collaboration with Novavax? In addition, how would you comment on the perspective of flu vaccine over, you know, solo flu vaccine? Also notice you have a mRNA flu vaccine in phase one. How would this candidate provide potential synergy or other impacts on your current product launch plan? Thank you.

Thank you. Thomas? Thank you very much, Shelley. A few elements in your question. First point, I understood you were questioning on the partnership with Novavax and more specifically about the combination vaccine, where we have, you understood very well, we really want to make sure that there is no compromise, neither on safety or efficacy. And we believe that a combination is only worth if you're at least as good or better than the best standalone products separately. That's exactly what we want to do with the combination vaccine. It's a bit too early to talk to you about specific timelines. That's why we have not shared anything about this. But it's probably not crazy to think that following this partnership, we want to go fast and we intend to start clinical operations this year in 2024 on this combination vaccine. That's for the combination vaccine. Now, I pointed to a couple of elements which are very important. First of all, you had a question on mRNA flu project. And you had a question about is it synergistic or not. So a few good points there. On mRNA flu, you've seen in the pipeline appendix that we are moving our phase one mRNA flu from one product to another product. Very simply, fully in line with what we discussed at the investors event last year, where basically we were showing that the first generation of mRNA flu are not moving the needle. Basically, first generation mRNA flu are generating flu titers, flu antibodies, but their efficacy is not known, and the level of safety is definitely not at the level of safety and tolerability of the current standard of care in flu. So that's why we claimed at that time that we want to go to the next generation of mRNA, and that's exactly why we are doing this new construct. We wanted to go to the next stage of mRNA flu, because if you're not improving standard of care, there's no point doing further in developing. And that's why we believe our approach to mRNA flu and our approach on cognition vaccine is the right one. Of course, you've seen the difference with some others, but there is a big compromise on tolerability and maybe on efficacy. We don't think it's a winning recipe. Last but not least, you understand that putting all this together, we see a synergistic effect and not a cannibalization effect. We are leaders in food today. We will be again leaders in food tomorrow. Thank you, Thomas. Next question.

So your next question comes from the line of Thanks very much for the question.

So I wanted to just drill into expectations for the COPD launch, hoping you could just provide us with a little bit of color on the trajectory of growth. We saw very strong growth from Dupixent in, you know, so many other launch categories, but this is a uniquely large one. And just wanted to get some color there. And then just as a separate question, can you give us your thoughts on the, where you think the CD40 ligand asset has the most appropriate opportunity outside of multiple sclerosis? Thanks so much.

Okay, Brian, CAPD.

Well, thank you so much for the question, Samus. We are really excited about the COPD launch. Obviously, we just remind everybody that we just received approval in Europe, first ever advanced therapy to be approved in COPD, third leading cause of death worldwide. Really important moment for us in the company and certainly for patients. As it relates to the uptake, you know, the good news is we're already in this particular physician population on a day-to-day basis with asthma. The good news is also this disease state, as we've highlighted, is driven by underlying type 2 inflammation, and that is also very similar to asthma. So the storyline is still very strong. The opportunity will be for us to find these patients and make sure that we get them into the treatment centers and make sure that we are able to get them introduced to therapy soon. But as we said, we think that most of the growth will hit us in 2025, will begin to launch this year, and most of our growth will be in 2025.

Thank you.

Hooman, CD40-Liga. Yeah, thank you for the question. Outside the multiple forms of multiple sclerosis where this may be relevant, confidence around the use of this node, both in type 1 diabetes and in transplants, a stroke transplant rejection is the most obvious place where the biology directs it. Thank you. Next question.

The next question comes from the line of Joe Walton with UBS.

Thank you. If I can return briefly to Bay Fortis, I think we can work out for ourselves the level of demand in the U.S., and assuming that you have capacity, how you might deal with that. But can you give us a sense of where demand is building outside of the US? Will there be significant new countries that you can supply this year? Or will other major markets really come in next year? So it's really trying to get a sense of the US-ex-US split. And on fitoceran, which is now a filed asset, could you remind us where you think that's going to fit in the haemophilia space, please?

Now to hear you loud and clear, Thomas, over to you on Bay Portals.

Yes, on the geography, thanks for the question, Joe. You remember that last year we were really focusing on three large countries, namely the U.S., Spain, and France. So those, of course, will remain in balance and will be moving forward. In addition to these, we will be opening this year a few countries. I'm not going to name them also, so... I hope nobody will be pissed off if I forget a couple of them. But to tell you the key ones, we expect a few provinces in Italy to launch all-in-one programs. We expect Germany, you've seen the particular recommendation, to move forward on vaccination. We expect other European countries, such as Ireland, Belgium, and Portugal, which have also provided some recommendations. So that gives you a bit of an example of how we will expand this year on you.

And maybe I'll just add that Bay Fortis is not the reason for the upgrade in guidance today. So that's a positive overall. I apologize for anybody offended by Thomas's language. Hooman, over to you on Fiduceram.

Hi, Joe. Thank you for the comment on Fiduceram. Based on the mechanism of action, we believe that Fiduceram is applicable to all patients with hemophilia and will likely be used broadly. I'll come back to it in a nanosecond. The real issue is the major unmet medical need today, hemophilia B, especially with inhibitors. And I suspect that the immediate use of this medication will be in that group, but will certainly extend more broadly. It's important to remind everybody that this is a highly differentiated therapy with very clear data. The factors that make this an important part of the landscape of the hemophilia treatment is that it's a low-volume treatment with really tolerable profiles of injection six to 12 times a year compared to the manifold number of treatments for other treatment categories. And importantly, there's no cold chain. Unlike antibodies, this is very easy to provide worldwide. So in many ways, this is a highly differentiated therapy and we are optimistic about its outcome.

Yeah, thank you. It does have a great profile, except that there'll be some tailoring, titrating, not uncommon. with this patient population, but it has a really great and compelling profile. Next question.

The next question comes from Tim with .

Thank you. Just on tolibrutinib, just update on timing and then really what, you know, what the most likely base case expectations should be. I guess if I could distill it down to a single question, do you think tolobrutinib will be approvable in some form or another based on the upcoming readouts, or could it be a total zero? Thank you.

Sam, thanks for the question. No update on the timings. Timings as we discussed late August, early September this year consistent with what we've said. I'm mindful, of course, of our reporting obligations, and we will be deeply conscious of how we provide the data flow at the top of mind just in terms of speculating on the outcomes of the trials of course I can't do that but I have to say we're optimistic about the path for those drugs and I would really point out simply that currently in multiple sclerosis there's a huge unmet medical need and secondary progressive disease and at phase two we had really interesting results so I going forward, we'll see the results very soon.

Yeah, and I think we know that mechanistically, the fact that we crossed the blood-brain barrier in a technically meaningful way, we'll find out when we get the results whether that is applicable to the readouts in the studies, and we'll see whether that differentiation holds. So we stay on the original timelines. Next question.

The next question comes from the line of Louisa Hector. Bear and bear.

Hi there. Thanks for taking my question. So it's on Dupixent and expansion into more indications. So first of all, with CSU and doctors we speak to firstly absolutely love Dupixent, but they're also confident there is an effect in CSU. So I'm just wondering how we should think about study C. Will it be sufficient for approval? What's the profile you're aiming for and how you put that in the context of the broader pipeline, real zebrutinib, et cetera. And then perhaps just a comment on the UC phase two, when should you have the induction data in-house.

Okay. Thank you, Louisa. Brian, Dupuy, indication of expansion still to see?

Okay. I think Uman's going to talk a little bit about the profile potentially, but just as you said, and I love what you said, when you talk to patients how much they love Dupixent and physicians how much they love Dupixent, you're absolutely right. Dermatologists are excited about the potential expansion into CSU. We need the trial to read out positively, and then we'll file for this. We, by the way, just to let you know, our first launch in CSU was actually in Japan a little bit earlier this year, and it's gone exceptionally well, still early days. But again, I think it further reinforces the profile that we bring to the dermatologist community who are treating multiple of these disease states that we have today. So, again, we look forward to the data readout and bringing this to patients all around the world.

Yeah, I mean, Louisa, nice of you voicing. Thank you for calling. Study C, Monica, Study A, we have high hopes for efficacy in patients with CSC. Okay, good. Thanks. TLYA. Oh, TLYA. So TLYA, thanks for the question for that. As you will have seen, as an example of the potency of the collaboration and what we bring to the table in collaborations when sanity comes to the table in immunology, we have accelerated the study by three months. We finished early. We overperformed. We're optimistic about both this disease class and the differentiation of this TLYA, particularly based on its raw horsepower and potency, but also its ability to distinguish between DR3 and the decoy 3 receptor, which makes this a highly unique version of the TL1A molecule. We anticipate results, I think, has been described in Q4 of this year. And we're using this trial to both guide dosing, but also indication. Just to call it out, we've enjoyed the relationship with our partners Teva, and from this point on, at the end of this result, we'll pick up the baton on the Phase III. Thank you. Next question.

This question comes from the line of Florence Espédès, Bernstein, Petite Générale.

Good afternoon. Florence Espédès from Bernstein. Two quick questions. First, a follow-up on B42s. If you have the approval of the two manufacturing lines later this year, Could you tell us how do you see the capacity for 2025? It will be twice the current level you have today. So some color on this front would be great. Second question for Oman. Which are, in your view, the most important phase two projects that will read out until the end of next year in your portfolio? It would be great to have this comment as well. Thanks.

Thomas, go for it.

On BEFARTUS law, we didn't give any specific number on capacity. But if we have the filling lines approved, which we will, I think we will be in a situation in 2025 to respond to the demand. So I don't see any supply issue there. Of course, I understand the short-term focus on supply from everyone very clearly. But of course, you understand also that we need to build the demand over time. Registration is to be followed after by a recommendation body. So in every country, new recommending bodies will look at the file one after another. And I think we'll see a ramp up from there on. But capacity, we should be good.

Thank you. And Hooman, the question about which is your favorite child?

Thank you. Thank you for the question. I won't pick out my favorite child. I'll try and be brief and thoughtful about this answer, which is firstly, we've got a number of vaccine trials reading out. I don't want, as we go through this, to forget those excellent vaccine trials that read out towards the end of the next year. In terms of classes, you'll know that we've got an excellent accompaniment to our ITP franchise with Weha, warm autoimmune hemolytic anemia with rilzabrutinib. That's an extremely exciting result. Louise kindly referred to our TL1A product. I think that is going to be exciting for us both now and with Teva. And then going into next year, the IRAC4 that we've got in partnership, the oral small molecule PNFR1 signaling inhibitor, which could be transformative. We await with great interest both safety and efficacy. And finally, and not least, not forgetting our rare disease franchise, our alpha-1 antitrypsin fusion protein is going to be, it's going to have an important milestone next year. I haven't missed any out on purpose. I just want to call out that all of our franchises, immunology, neuro, rare, and vaccine are firing on full thrusters. Thank you. Next question.

The next question comes from .

Yes. Thanks very much. Congrats on the strong second quarter execution. So I have two questions, please. First, assuming itopecumab generates compelling results in phase three next year, could you please characterize the magnitude or multiple of its sales potential in COPD relative to DUPI in COPD? And second, could you also comment, Paul, on China's interest in Bay Fortis and whether there's a potential path to launch in China late decade? Thank you.

Okay. Brian?

Okay. So first and foremost, thank you so much for the question. In reference to COPD, as we have framed COPD before, there's about 2 million patients across the G7 really that suffer as we talk about this. kind of that high-end met need, goal D, if you will. This particular patient population, we're going to be bringing two therapies, at least to this particular patient population. Dupixen, as we said, which is very soon. Atepecumab is next. Atepecumab, as we shared with you before, is largely non-type 2. It will play in type 2 as well, but all previous smokers. So these two drugs are really going to nicely sit together, and I think as we've contextualized this before, roughly around 5 billion in peak sales across the two assets.

Thank you very much. Tom, China, pay for this.

China, pay for this. Indeed, very interesting. in China for B42s. But let me maybe provide some light on this. As many MNC vaccines, here in this specific case of an immunization, we expect B42s will be private, out-of-pocket market. That's very important to have in mind, which means progressive ramp-up. We're starting from a base in China where the disease awareness is close to zero. We'll need the next couple of years to build that up. As you know very well, Bay Fortis has been registered in China. So now we are in the phase of actually engaging with medical professionals, defining the pathway, moving forward with this awareness, and then activating parents for out-of-pocket marketing.

Thank you. And we were in China recently, and we sat with senior officials. You could see the interest there. building significantly, so we look forward to opening that opportunity when it presents itself. Our next question.

The next question comes from Gary Stevenson with BNP Paribas XM. Gary?

Hi, can you hear me now?

Yeah, we got you.

Perfect. Thank you. First question is just on vaccines. You're reiterating the mid-single digit growth target and also the Fortis blockbuster ambition, but there is a more refined low single digit decline for flu, which is probably a bit weaker. So the question is on kind of where the other moving parts in vaccines are, which still support the mid-single digit outlook. Is that purely just greater confidence in passing the Fortis blockbuster target or setting flu, or is there something else in the wider portfolio to think about? And then secondly, just on Depixent, could you just talk to how the performance of the approved indications is trending and that relative contribution to the unchanged 13 billion target for this year, and just whether there's any particular pockets of strength or weakness by any indication relative to your expectations in that Depixent number? Thank you.

Thank you, Gary. I think we've sort of touched on the relative moving parts on flu and bay portis and et cetera, but Tom, any additional color to add?

Yeah, so Gary, I don't think there's any magic recipe in there. So blockbuster status for B42s, low single digit decline on flu, not driven to our own performance, which we expect will be strong, but more driven by the overall, I would say, market performance in terms of flu vaccination rate. We are at the end, getting soon at the end of the pre-booking season in North America, and we see a bit in line with last year that the The vaccination rate is probably on the soft side of things, which is why we've made that perspective. On the other parts of vaccines, it's well aligned with what we said before. Some slight growth in our, I would say, classical endemic products or boosters. And on the other end, on the PSA range, you know very well that while on the BOI perspective we're doing well, vaccine in the U.S. is not booked in our sales performance. So when the product is doing well in the U.S., it does not come in the sales line, but more comes in the income line. So I would say expected for the other parts of the business.

Thank you. And you said yourself that we will likely gain share in the food market, even if the vaccine coverage rate is low. So operationally, we're in good shape. Brian, performance of Dupix in currently approved indications?

Yeah, thank you so much for the question, Gary. First and foremost, I'd say it's heavily demand-driven right now from a patient standpoint. We're in a great position where we're seeing expansion not only in our core indications that we've been launched in, but also in those core indications across geographies everywhere as we've launched into those new indications around the world. So I'd say we're really benefiting, again, as Paul outlined on the very first slide, that it is TRX demand. It is all about new patients on therapy or patients staying on therapy across all of our indications and across all the geographies. And that puts us really in a good position, again, to reconfirm, as Paul said earlier, our guidance on Dupixent of around 13 billion for this year, and which sets us up nicely for the guidance that we've given of double-digit CAGR, low double-digit CAGR rate through 2030. Thank you. Next question, please.

The next question comes from Simon Baker with Redburn.

Hello. This is Shelley speaking on behalf of Simon Baker. Just two questions for myself. One was about your appetite for Radio Pharma. And if you had any changes in your approach, that would explain the better performance in the older, broader portfolio. Thank you.

Okay. I missed the second question.

Oh, sorry. If you had any, have there been any changes in your approach that would explain the better performance in your slightly older portfolio?

Okay. Thank you. Um, on radio ligand therapy, uh, human, if you want to make a quick comment.

Thank you for the question. Uh, the reason this of course is radio ligand therapy is, uh, had a recrudescence of interest. We, uh, remain watchful in this space and, uh, thoughtful about making, uh, moves into truly differentiated therapies, but there, there is nothing that we currently have going on in our portal yet. Thank you very much.

You know, and, uh, Just to add to that, that we remain very committed to the core therapeutic areas. We've made trade-offs to stay very focused. So a broad answer to a very specific question, we would have to feel there was something compelling to make us want to go outside of what we do because we are really focused on the areas that we want to win and play. I think, Olivier, I don't know what prompts the question, but I do know that you've been in a radical modernization of the GenMed business and have seen the

the benefits from that maybe you want to share a bit of your secret sauce yeah so so we are happy with the performance of the old portfolio even uh if during the quarter we took we had some positive momentum on lotus which is a windfall which reflects the fact that we had a very low base in 2023, and of course also to the unavailability of one of our competitors. But stepping back, I think we pay, you know, we benefit from the effort that we have been doing in bringing more focus, and you know that The focus, we have brought it in terms of simplification of our portfolio. Back four years ago, we had close to 400 product families. Now we are on 100. We are benefiting also from the fact that we are simplifying our geographic footprint and deciding to go to a distributor model. And the last point is really about resource allocation, where we have redirected our resources and some resources on the portfolio that can drive growth. So strong, strong momentum. We move more and more in digital in order to make sure that we continue to take out some resources and to maximize the value of this business. So overall, very good trend, very specific situation in the U.S., but we are overall very happy with the performance.

Yeah, I've got to compliment Olivier and the team on this because this reinvention and this modernization, the radical transformation is pretty extraordinary. And we did hold a capital market a few years ago and talked about our ambition. And we declared that we wanted to try and bottom the business out and start returning to growth in a more efficient way. We're not declaring victory. Far from it. There's lots of puts and takes. But I would say the indications, the early indications are great. So thank you for the question. OK, next question.

The next question comes from Ben Jackson with Jefferies.

Hi, thanks for the question. So firstly, on contracting for 2025, are you able to give us any color on how the discussions with PEG have been going, considering the Part D redesign, but also the potential COPD indications by then? And then does the September approval versus the prior June expectation have any implications for inclusion in formulas for next year? And then secondly, if I may, we've obviously seen a qualitative readout for a competitor to Bay Fortis in the recent days. What gives you retained confidence in the differentiation of the asset and its commercial opportunity beyond perhaps just the compelling real world data that we've already seen? Thank you. Okay, great.

Thanks, Ben. Doopey, Brian. Yeah, Ben, thank you so much for the question. So, yes, obviously we don't comment too much on how the negotiations are going with the payers, but we always kind of remind everybody that we've been in this position for quite some time. We've worked very closely with the external stakeholders to share our ambitions to take this into a whole host of diseases driven by underlying type 2 inflammation. And you can see, obviously, from the results, we've generated a very strong track record of the year. So, we find ourselves in a very good position, I think, as we continue the negotiations for next year, and we do it each year. The second part to your question is, I think the best answer to that is, again, we reconfirmed our strong commitment to around $13 billion for the year. So, again, we are committed to have a strong COPD launch whenever it does come. But agnostic of that, we are committed to $13 billion for this year.

And you may choose not to answer, but the pay negotiations around COPD for 2025 based on a PDUFA in September rather than June?

Yeah, it doesn't really necessarily affect it. As long as it's approved within this year, you're already negotiating for these indications within the next year. Thank you. Thomas, RSV?

Yes, Ben, indeed. There has been some recent communication from competitive monoclonal antibodies against RSV. A couple of points I'd like to say about this. First of all, as you noted out, there was absolutely no data share, neither safety nor efficacy. So there's not much to say in detail. What I can tell you, though, is I can talk about our product and what it's doing very well. You've seen that we have a very strong, pristine safety profile. And you've seen that we've demonstrated efficacy, not in one trial, not in two trials, but trial after trial, in clinical studies and in real-world evidence studies. And I invite you to go back to the last SEIP publication in June, where they were showing that actually the two effectiveness points against hospitalization were 91% and 98% as measured by the CDC network. So I think that the overall data set that we will have is very significant. Now, of course, moving forward with if and when we're going to see some data coming down the road from competitors, I think it's going to be interesting to look at what is the exact safety profile, because we're talking about the most fragile population of the universe. Maybe also very interesting to see what is the exact efficacy data, especially when it comes to hospitalization, And of course, we want to look at the duration of protection. On these terms, duration of protection, we're very confident about the B4-2 profile. Why? Because we have seen from the previous studies from our competitors that the half-life of B4-2 is significantly higher and longer than the half-life of the coming competitor. So delighted to have some competition if it helps to bring more and more awareness about the importance of all infant protection. However, I think that there will be some difference between the products, and I do believe that the fact that we have done a formulation and the design of a product that gives the exact amount of quantity or the exact kit to get the best protection is paramount to the success of B4FIS.

Thank you. Next question? Maybe the last question. Two more. Okay.

The next question comes from Eric Leberigo with TIFOL.

Yes, thank you. Two short questions. First, on the other revenue line into the P&L. We've seen less dynamic this quarter, but don't want to read too much into a quarter. Is there any chance you can guide us towards how we should see other revenues moving towards the end of the year and maybe for the following years? And then second question on Soclisa, as you're moving closer to the launch of a very significant indication. So far, the drug is only half a billion in sales if we analyze where it is, but the INROS indication is probably at least a couple of billion in potential. Could you maybe share the kind of cost and resources you're putting behind the upcoming launch and how you see competition versus DARA that should have CPUs data coming later? SubQ may be ready, but you have in one year a launch ahead of competition, and so how big could be that opportunity for the drive? Thank you.

Thank you, Eric, for two little questions. We'll start with François.

Thank you, Eric. Thanks for asking the question on other revenues. Indeed, you're absolutely right, difficult to read it by the quarter, and we had a weak revenue amount in the second quarter, but it doesn't mean much at the end. I can confirm that we expect for the full year 2024 to be around the same level as what we have experienced, at least as far as disposal is concerned, than we had in the previous year, which is about half a billion of euro of profit as a consequence of disposal. So some expectations this year in 2024 than what we have seen in the past.

And Hooman, maybe you could keep up on Sarklis and Brian finish.

Yeah, thanks for the question. We remain bullish on Sarklis. Obviously, it's a provenance case in transplant ineligible patients, but we're looking forward to seeing in the very short term the outcome in transplant eligible patients. This will give Sarkalesa the broadest possible indication profile. The second point I'd like to talk about is the fact that the subcutaneous formulation study will come next year, which will provide much more opportunity and potential sales for Sarkalesa in multiple combination indications going forward. Thank you. Brian, do you want to add to the results?

Yeah, I think, well, first I'll start with the performance. So as you saw in the quarter, we saw really strong performance again. And again, this is really important. It sets ourselves up nicely as we expand our indication. It sets ourselves up nicely because you talked about DARA there, but actually the class of CD38 is really the strongest class there. And that class continues to grow, and that's great. You know, we talk about the pie growing bigger. But then what we've seen is our strong growth is because we continue to do very well and continue to take share of in the areas where we've been approved. So as we look to this next expansion to first-line therapy very soon, you know, we're really excited about that, and we're resourcing it appropriately to be able to take share and to be able to continue to grow this great asset for these patients with multiple myeloma. So we're excited. All right, great. Thank you.

The last question comes from the line of Pete Verdot with the city.

Pete?

Sorry, jumping from one conference call to the other.

Can you hear me? Yes.

Good stuff. One for Huw and one for Paul, please, just to end the call. Just to follow up on Tolibrutinib, just given the absence of randomized phase two data in SPMS, can you remind us why you are optimistic in this setting or is it just that it crosses the blood brain barrier very well and is against placebo and then paul for you maybe i can take you to at least swing the bat a little um consensus has about 865 of earnings in for next year points to a very nice double digit rebounding growth for a stock trading on just 11 times now i realize this is not a forum or a guidance call for 25 but hopefully i can tempt you where you can't resist saying something or giving us a sense level of comfort where consensus sits. I know there are big swing factors, CFPDB, Big Fortis, GenMed, but just wanted to kick the tide with you on where expectations sit for next year and the journey of growth for the remainder of the decade. Thank you.

Okay. Well, I don't want to disappoint you as you jump between calls thinking you could get me to reveal something about 25. So, Francois, do you want to start there?

Yeah, I can, Pete. As you said, it's not the time to talk about 2025. Let's learn 2024 to start with. But as you can see, we are very positive about it. But now I'm in a position to fully confirm the fact that we have a very positive, the same positive outlook for 2025 that we had before. And even, I mean, it gives us the good performance that we had in H1, gives us further comfort on our expectation for 2025. What you can see as well is 2024 is actually the evidence that the rebound is happening earlier than we thought. So the And just to help you a bit as well in terms of building blocks for 2025, we do expect to have a solid top-line growth again. We will have some positive development in terms of gross margin as a consequence of a positive mix. We do expect to be around flat in terms of R&D spend and with a tight control of SG&E. So all of it is really giving us comfort on the outlook that we had provided before for 2025. Thank you, François Houman.

We'll leave it to you to bring us home on tolerable levels.

Yeah, thanks for the question. The answer is pretty straightforward. I'd be a little more nuanced insofar as the pathophysiology of secondary progressive disease is clearly immunological in origin. Existing therapies, albeit not well used, are very focused on the immune response. And remember, we believe tolerableness differentiated not only through blood-brain barrier permeability, but its effect on the profile of kinases it hits, and importantly, the potency on those kinases. So bottom line is we believe it's a great drug working on target in an appropriate indication. Okay. Well, we'll get the data soon enough, and we'll find out.

Okay. Well, thanks for that. Last question, Pete. Our strong business momentum continued in the second quarter. We deliver double-digit sales growth at CR. We continue to execute on our former launches. We kept advancing our pipeline of new medicines. We've graded our 2024 EPS guidance. Thank you for connecting. We know it's a busy day for you. We've tried to keep it short out of respect. We look forward to connecting with many of you on Monday and Tuesday of next week. Okay, thank you.