Sanofi

Welcome to the Q4 and full year 2024 conference call for investors and analysts. As usual, you can find the slides on Zenobia.com. Please turn to slide number 3. Here we have the usual forward-looking statements. We would like to remind you that information presented in this call contains forward-looking statements which are subject to substantial risk and uncertainties that may cause actual results to differ materially. We encourage you to read the disclaimer in our slide presentation. In addition, we refer you to our Form 20F on file with the US SEC and our France Registration Document for description of these risk factors. Finances reported are under the new reporting scope that excludes OPELA . As usual, we will be making comments on our performance using constant exchange rates and other non-IFRS measures. Numbers used are millions of euros, and for Q4 2024, unless stated otherwise. The extension is item 4. First, we have a presentation, then we will take your questions. Because this is full year results, we have a few more slides. We still have time for lots of questions as we added 15 minutes to the call time, on top of the usual one hour. For Q&A, we have Brian, William, Thomas, to cover our global businesses, as well as Roy, our General Counsel, and Brendan, Head of Manufacturing and Supply. For the Q&A, you have two options in Zoom. Raise your hand or submit your question using the Q&A function. With this, I'll hand you over to Paul.

Thank you, Thomas. Hello, everyone on the call. We made significant progress in 2024 towards becoming a focused science-driven biopharma company. Our strategic progress was emphasized by the decision to sell a controlling stake in Appella and further prioritize R&D. On the business, we achieved double-digit sales growth with strong contribution from launches. This included Wakefordus that achieved blockbuster status in its first full year of sales. In R&D, we're pleased with the positive phase three results of the Tootharan, Wills of Brutnib, and Solid Brutnib. They've provided the foundation for potential launches this year, underpinning our sustainable growth. We are thrilled by the Phase 2 of Duvacatab that is ready to move to Phase 3, pending regulatory feedback. Human will share more pipeline details later. Looking at Q4, on slide 6, we reported double-digit sales growth for a third consecutive quarter, supported by our key drivers, vaccines, Dupix, and pharma launches. Taking a closer look at the launches on slide 7, in Q4, base order sales were as high as those in the first nine months of the year combined. we now have expanded RSV protection to more than 6 million babies around the world. In hemophilia, an increasing number of patients switched to Altuvio from both factor and non-factor therapies. We're seeing strong patient benefits and sales reached almost a quarter of a billion euros in Q4. We are confident in our expectations that Altuvio will become a blockbuster this year. Moving to slide 8, Dupixin exceeded the target of 13 billion euros in sales driven by the demand for more than 1 million patients globally. In Q4, depiction grew by 16% from strong prescription trends in all geographies. In the U.S., depiction continued its leadership in unibrand prescriptions across all indications, in line with the first nine months of the year. U.S. sales growth in the quarter reflected fewer business days compared to prior quarters and the normal year end close to net adjustments. In countries outside the US, Dupixent delivered more than 3.5 billion euros on a full year basis. In COPD, we are in the early stages of the launch and we're seeing positive feedback from patients and prescribers. We expect the infection point to be this year and COPD to become an important growth driver due to the large unmet medical needs. As we expand the benefits of Dupixent to more patients, we're pleased with the continued work on new indications. including EOE for children in the EU, CSU outside Japan, and BP globally. New uses, increased penetration and approved indications, and further geographic expansion are all important future drivers for Duprix. Moving to slide 9, 2024 marked a sales record for our vaccines business, crossing the €8 billion milestone up by 13.5%. This performance was driven by Bay Fortis, offering a marked reduction in hospitalization across more than 20 countries with all infant programs. We are the only RSV map with real-world data showing greater than 80% effectiveness in more than 100,000 babies. Our flu franchise was resilient, keeping its status as the world leader. 2024 sales exceeded initial expectations, driven by our differentiated flu zone high dose and flu block. In Q4, We also made significant progress with our vaccines pipeline with the start of six new vaccine studies, including the phase three studies for a pneumo vaccine, CV21 in children. Our R&D efforts in vaccines continue to be recognized by health authorities with the FDA granting fast track designation to our three new phase one, two flu programs. I'm pleased to share with you Sanofi's remarkable achievement in the 2024 Access to Medicine Index, We have improved our ranking and moving from eighth to third place, underscoring our commitment to global health. Important factors for this result are governance of access, R&D, and product delivery. The Sanofi Global Health Unit plays an important role by delivering crucial medicines from the impact round portfolio to 30 low- and middle-income countries. Ending on such a positive note, I would like to take this opportunity to thank all Sanofians for their continued commitment to improve the lives of millions of patients. Thank you. I'll now hand over to Francois, our CFO, for more details on the financials.

Thank you, Paul, and hello to everyone. Before I begin, just a reminder that our Q4 and full year results reflect our new reporting scope, excluding Opela. In the quarter, net sales increased by 10.3% at constant exchange rates to 10.6 billion euros, marking our third consecutive quarter of double-digit growth. As mentioned earlier by Paul, growth was driven by new product launches as well as duplexes. Growth margin was 74.3% down slightly from the previous year, primarily due to the absence of COVID revenues in 2024. Excluding this COVID impact, our growth margin increased by 0.8%. The increase in operating expenses was driven by R&D, reflecting a high activity level in the quarter and brought us in line with our commitments for the full year. Business EPS was 1.31 euros, mainly reflecting a lower gross margin, an increase in R&D, and a higher tax rate following the OECD Pillar 2 implementation. Now turning to our full year results, net sales increased by 11.3% at constant exchange rates to 41.1 billion euros, driven by our new product launches, including B4Tools that became a blockbuster, as well as Dupixent that exceeded our ambition of €13 billion in sales. Gross profit grew by 10.3% at constant exchange rate to €31.1 billion, with a gross margin of 75.7%. Our gross margin declined slightly due to the absence of any COVID revenue in 2024 and the remaining impact of the Obagio Eloy. R&D expenses increased by 14.6% at constant exchange rates to €7.4 billion, fully in line with our ambition to step up investments in our pipeline in 2024. SG&E expenses increased by 4.5%, providing an attractive gross leverage benefit. Business EPS increased by 4.1% at constant exchange rates to €7.12, exceeding our full-year guidance. we landed our 2024 business EPS more than 6 percentage points above our initial guidance at the beginning of the year. These results reflect our ability to drive strong growth while investing for the future and while carefully managing our cost base at the same time. Looking ahead to 2025, we would like to provide an overview of anticipated key business dynamics which may be helpful for modeling purposes. As a reminder, at the beginning of the year, we expect to see the usual impact from the annual reset of insurance deductible loans, which leads to higher utilization of our co-pay assistance program for specialty medicines in the U.S. market. We anticipate only modest headwinds from the introduction of changes to Medicare Part B under the IRA. We continue to simplify our portfolio of other medicines and we expect around 250 million euros of sales reduction from disposals. We expect Befortus to grow further with additional penetration and geographic expansion. Our gross margin is expected to increase in 2025. R&D expenses will be slightly up as there was a one-off SOBI item last year. SG&E will also slightly increase in preparation for upcoming launches. and we expect capital gains from portfolio simplifications to be a gain around 500 million euros. Our effective tax rate should remain broadly stable compared to 2024. For our 2025 guidance, we have decided to expand our disclosure by providing sales growth in addition to ETF growth. For 2025, we project sales to grow at a mid- to high-single-digit percentage of constant exchange rates. This guidance now excludes any impact from hyperinflation, which accounted for about 1.8 percentage points of sales growth in 2024. We estimate a positive foreign exchange impact on sales of approximately plus 2 to 3 percent in 2025. Business CPS growth is expected to grow at a low double-digit percentage at constant exchange rates before foreign exchange and before share-by-back impact. we estimate a positive business EPS impact from currency of approximately plus 2% to 3% as well. Shifting to our free cash flow in 2024, which was mainly impacted by three one-offs. First, the impact of price cuts of long-term in the U.S. in H1 for 1.1 billion euros. Second, the entire elimination of all factoring of receivables for 1.4 billion euros. and third, an unfavorable exchange rate impact of €0.8 billion, all of which resulting in a closing free cash flow of €6 billion. We expect our free cash flow ratio to be back to our historical levels steadily over 2025 and 2026. The slight increase of our net debt at the end of 2024 reflects our strategic investments, including the acquisition of Inbrex, as well as our value proposition to shareholders in the form of a growing dividend. Our net debt to EBITDA ratio, which is actually pretty close to our net debt to BOI ratio, was at 0.7 times at the end of 2024. This showcases a low gearing ratio and an optimal balance between strategic capital allocation and financial flexibility. In 2025, Sanofi will receive a cash consideration in the high single digit in billions of euros from the Opela transaction at the earliest in Q2, while retaining a significant stake in the company above 48%. Let me conclude by confirming our existing capital allocation policy. Our primary focus is to invest in our business to drive growth, demonstrated by our increased investment in R&D last year, as well as ongoing investments in manufacturing, in AI, in digitalization, as well as in sales and marketing. We will continue to explore external growth opportunities to strengthen our four existing therapeutic areas and potentially cover wide spaces. In all our external investments, we maintain strict discipline and focus on value creation for our shareholders. Our preference remains for investments in a range of 2 to 5 billion euros each. We are committed to maintaining our AA credit rating in the short to medium term. In line with our commitments to shareholders, Sanofi intends to execute a share buyback program of €5 billion in 2025. These repurchases will be conducted preferably through block trades and in the open market. Shares acquired will be cancelled and will have an accretive effect to Sanofi's earning per share, mitigating part of the Opela dilution. This commitment underscores our confidence in Salofi's future and our commitment to delivering long-term shareholder value. Our proposed dividend of 3.92 euros per share for 2024 marks the 30th consecutive year of dividend increase, further reflecting the emphasis we put on shareholder reward and the dependability of our dividend policy. With the proposed dividend and the share buyback combined, we will reward shareholders with almost 10 billion euros in 2025. It will be a record year in terms of shareholder return for Sanofi. I now hand over to Oumane to provide an update on the progress of our innovation pipeline.