Sanofi

This meeting is being recorded.

Hello, everyone. This is Thomas Gussleisen from the Zenobia IRT. Welcome to the Q3 2025 Conference Call for Investors and Analysts. As usual, you can find the slides on zenobia.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 that are subject to substantial risk and uncertainty 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 French Universal Registration document for description of these risk factors. As usual, we'll be making comments on our performance using constant exchange rates and other non-IFRS measures. Numbers used are usually in millions of euros, and for Q3 2025, unless we state otherwise. Please turn to slide number four. First, we have the presentation, and then we take your questions. As usual, we aim at keeping it all to one hour, including questions. For Q&A, we have Olivier, Brian, and Thomas to cover our global businesses, as well as Roy, our general counsel, and Brendan, head of manufacturing and supply. And for the Q&A, you have two options in two. Raise your hand, submit your question using the Q&A function. With this, I hand you over to Paul and my guest, I'm sorry.

Thomas. Thank you, everyone, for joining us today. Our growth momentum continued in Q3 with €12.4 billion in sales, up 7% over last year's high base of comparison. Sales growth was primarily driven by our new launches and the performance of DuPixent, which reached €4 billion in quarterly sales for the first time. After the third quarter performance, we're confident in the business outlook for the remainder of the year. and reiterate our full year 2025 sales guidance. This positive outlook includes our expectations for the business in the U.S., our largest market by sales. We continue to work with the administration and policymakers in the U.S. and around the world on policies that improve access to treatments, lower prices for patients, and improve health systems and protect science. Our recent announcement on the expansion of our patient affordability program Offering improved access to all our insulins is a great example of this work, which I'll discuss in a little more detail later in the presentation. Now, let me highlight the contribution of our new launches, which have been a significant driver of this quarter's strong performance. Our launches delivered 1.8 billion euros this quarter, through more than 40%, and now represent 15% of our total sales. To put this in perspective, our launches represent almost half of Dupixent's sales this quarter. demonstrating their significant contribution to our growth. We've strengthened our commercial portfolio with three new additions. Avakit, our medicine for both advanced and indolent systemic mastocytosis. The first, Sanobi cells of Nivaxavit, offering an important protein-based and non-mRNA alternative for COVID-19 vaccination. And Wayrills, our new BTK inhibitor designed as a multi-immune modulator. This innovative medicine provides a new option for patients with immune thrombocytopenia that extends beyond their platelet count needs to addressing quality-of-life burdens. We're seeing good attack across our portfolio of new medicines and vaccines. Bay Fortis, which achieved blockbuster status last year in its first full year of sales, continues its expansion into new geographies. Altuvio is on track to reach blockbuster status this year, and Abacate, to become our next blockbuster in 2026. Tupixent has reached a new milestone this quarter, exceeding €4 billion in quarterly sales for the first time. More than eight years after its initial launch in atopic dermatitis, we saw an increase of over 30% in the number of patients during the last 12 months. In the US, we've surpassed the €3 billion quarterly sales mark, maintaining leadership in both new and total prescriptions across established syndications, Our launches in the recently approved indications, COPD, CSU and BP, are progressing as planned. Outside the US, sales grew 21%, exceeding a billion euros in the course. We continue our efforts to make Dupixent available to more patients, helped by the positive CHMP recommendation for CSU in the EU and regulatory submission for CSU in children in the US and EU. Turning to our vaccine business, Q3 sales were 3.4 billion euros. This performance compares to a high base in the previous year and reflects the competitive price pressure as well as the lower flu immunization rate in the U.S. A new highlight among our respiratory vaccines is the early start of Novavaxibid, the only non-mRNA COVID-19 vaccine available in the U.S. and from our collaboration with Novavax. The shipments of Novavaxibid were delivered in the U.S. in September. In RSV, Bay Fortis continues its impressive expansion of 20% this quarter, and now available in 40 countries. As you may have seen in our press release this morning, we decided to discontinue our RSV toddler program. While the safety profile was acceptable, the predetermined criteria for efficacy was not met in the planned futility analysis. The PPH and booster franchise remains an important contributor to our vaccine business, with the performance in Q3 reflecting phasing in the first half of the year. Sanepi has a proud legacy in flu vaccines, and we remain committed on bringing innovation to strengthen our leadership in flu and to provide better protection for patients. Our Flu in a DHD study published in The Lancet last week demonstrated that our high-dose flu vaccines at Fluelda, known as Fluzone high-dose in North America, provided superior protection versus standardized vaccines on the sometimes devastating consequences of flu. Data showed an 8.8% reduction in pneumonia or flu hospitalizations, and an important 32% reduction in laboratory-confirmed flu hospitalizations versus standard-dose vaccines. And we're expanding access to this beneficial protection with positive Phase III data that support a label update extending the age down to 50 years for a flu elder whose own high dose. Looking ahead, we're advancing our flu pandemic preparedness with two programs, while improving vaccination convenience with positive data on flu-COVID combination vaccines. These achievements underscore our commitment to delivering enhanced protection against respiratory viruses to more people worldwide. In addition to our unwavering commitment to innovation in respiratory viruses, we're also steadfast in our commitment to improve patients' access to healthcare. Our global health unit has reached a remarkable milestone, a million patients treated for non-communicable diseases across more than 40 low- and middle-income countries since 2021, putting us on track to reach 2 million patients by 2030. We trained over 27,000 healthcare workers and reached 4 million people through our partnership programs during this same period. And we're not stopping there. In the U.S., we're expanding our Insulins Value Savings Program, to ensure every American has access to our insulin at just $35 per month. This initiative builds on S&OP's long-standing efforts to provide patients access to a reliable and affordable supply of critical medicines. Thank you, and I will now hand over to Francois, our CFO, for more details on the financials.

Thank you, Paul, and hello to everyone. In Q3, our net sales grew by 7% at constant exchange rates, This growth was primarily driven by pharma, and more specifically by immunology and recent launches. Our new launch is demonstrating a strong momentum with 41% sales growth, while Bupixent sales grew by 26% this quarter. Vaccine sales were down, primarily due to few flu as expected. This decrease resulted from a combination of competitive price pressure, mainly in Germany, and lower vaccination rates. At published rates, net group sales increased by 2%, impacted by a negative foreign exchange effect. These solid results highlight our ability to drive growth against headwind. Our business growth margin increased by 2.3 percentage points this quarter, with a continued improvement in product mix, enhanced by productivity gains. We now capture the full benefit of DuPixent's improved manufacturing process, as well as a contribution from EVA kits since the blueprint closing in mid-July. As we moved into 2026, the gross margin profile will return to its fundamental growth as the step up from Dupixent C3 manufacturing transition is now complete. Operating expenses grew by 6%. Excluding the impact of the blueprint acquisition, operating expenses grew by low single digit, highlighting our cost discipline. R&D expenses increased by 5%, broadly reflecting the underlying activity level. We continue to invest in sales and marketing to support our launches. And G&A costs were slightly down, in line with our objective to keep them broadly stable going forward. Other operating income and expenses are moving up, primarily due to the increased share of profits paid to Regeneron as Dupixent continues its strong growth trajectory. Business EPS reached 2.91 euros, a robust growth of 19 cents and 13% compared to Q3 2024. This form reflects our compelling sales growth and increasing gross margin combined with cost discipline. Looking at our year-to-date progress, we are maintaining strong earnings momentum with 9% sales growth and business EPS growing faster at 12%. It fully supports our guidance for the full year and demonstrates our ability to deliver profitable growth consistently. Based on our year-to-date performance, we reiterate our full year guidance of five single-digit sales growth and low double-digit business EPS growth at constant exchange rates. We have now completed the acquisitions of Dren's BIOS DR0201, Vigil Neuroscience, and Blueprint, and their associated costs are fully factored in our guidance. While we typically provide full year guidance at the beginning of each year, we can share a few business trends for next year, which you may find useful for modeling purposes. R&D next year is expected to increase moderately. We will continue investing in sales and marketing to support our product launches, as well as our strong sales momentum. At the same time, we will remain disciplined on G&A costs, with the objective to keep them broadly stable. We expect to achieve around half a billion euros of capital gains from divestment, similar to what we anticipate for 2025. Regarding AMVUTRA royalties, based on the latest Evaluate Pharma self-consensus, The implied royalties are now expected around 700 million euros for next year. You will find a slide with the updated Ambutra royalty considerations reflecting current external consensus in the appendices of this presentation. Another indicator for 2026 is a reduction of approximately 300 million euro reimbursement from Regeneron for the R&D balance. Both ITER, Ambutra gains, and reduced or regenerated R&D reimbursement will offset each other next year. We continue to execute our capital allocation policy and we remain disciplined and balanced across four priorities. Investing in organic growth drivers, pursuing selective Bolton acquisitions, maintaining our policy of progressive dividends, and executing opportunistic share buybacks. Based on our projected trajectory for 2026 and beyond, we remain confident in our ability to sustain our profitable growth momentum for the next few years. I now hand over to Ouman to provide an update on the progress of our innovative pipeline. Thank you, Francois.

I'm pleased to share our Q3 pipeline achievements with progress in many programs. We received regulatory approvals for waywheels in the United States, in ITP, and T-Yield in China. Further, we received regulatory submission acceptances in children in the U.S. and in the EU. The FDA nominated for the new commissioner's national priority voucher program to speed up the review. ATP was submitted in Japan, and was accepted globally in my . Our phase three programs have delivered successful readouts with meeting the primary endpoint in the phase 3 study in atopic dermatitis, phase 1, and flu zone high dose in people 50 years and above. We also commenced dosing first patients in new phase 3 studies, one of the two studies for linsecomig and COPD, and Weyrild in sickle cell disease and warm autoimmune hemolytic anemia. Finally, Weyrild is emerging as a multiimmune modulation platform in rare diseases with an approval in the U.S. and a positive recommendation in the EU for ITP, multiple designations across new indications, further strengthening our rare disease portfolio. Please turn to the next slide. Moving to dermatology, amiletilumab met all primary and secondary key endpoints in the first phase three study in AD. The data demonstrated clinically meaningful improvement in several measures of skin clearance. As an example, looking at the DIGA measure, the efficacy progressively increased and showed no plateau at 24 weeks. Further, amitilamide was patient-friendly, quarterly dosing. There were no new safety concerns identified in this study. Oceana AD is a comprehensive program, including five phase three studies in adult and adolescent, biologic-experienced patients, and across different geographies. We anticipate full data to report out throughout 2026. Brevecumig, our TNF-alpha, and OX40 ligand nanobody achieved its primary objective in a Phase IIa study in HS. We observed clinically meaningful improvements in both primary and secondary endpoints in biologically naive patients at week 16. Brevecumig was well-tolerated. Data were presented at EADV in Paris in September, where I also had the pleasure to meet many of you at our IR roundtable. Our Phase IIb study is now starting its recruitment. Please turn to the next slide. Moving to respiratory, amyotilumab has shown intriguing efficacy in its Phase II study in asthma, particularly in a difficult-to-treat subgroup. While the primary endpoint in annualized asthma exacerbation rate reduction at week 48 did not reach the significant of the highest dose, notable improvements were observed in T-section. The heterogeneous inflammation subgroup of patients with high-glabiazumab cells rated in 300 cells per microliter and elevated neutrophil at greater than 4,000 cells per microliter, showed the greatest benefit. Treatment was well-tolerated with no new safety concerns. We still have a lot of study data, including biomarkers. Next steps will be subject to prioritization within our overall respiratory portfolio. We're pleased by the recent ethoropren alpha data, which showed superiority to the standard of care in the phase 2 study, the alpha-1 antitrypsin deficiency emphysema. The recombinant protein has a longer half-life, and can provide higher AAT serum levels with less frequent dosing of either once every three or four weeks. The phase two open label study is currently ongoing, which will add to the safety data. We will now engage in discussions with regulatory agencies to see if we can move ahead based on data we have supported by the upcoming safety studies. Please turn to the next slide. Lead-212-dotamate, our radioligands, showed intriguing overall response rates in patients with somatostatin receptor-pollinative gastroentropancreatic neuroendocrine tumors, otherwise known as GEPMETs, a group of difficult-to-treat rare endocrinological cancers. In PEPPAD receptor radio UPI therapy naive patients, the overall response rate was 57.1%, and in PRRT-exposed patients, the overall response was 19.2%. Both measures were based on blinded independent central review. We observed a manageable safety profile that was similar across both components. In immunology, the oral TNF down in TANFib didn't meet the predefined primary endpoint of ACR20, but showed clinically meaningful efficacy in a Phase II study in uncontrolled advanced treatment-naive rheumatoid arthritis patients on background methotrexate across endpoints requiring a deeper disease control including ACR50 and ACR70. The oral, this oral treatment has the potential to be used as a combination backbone therapy with internal and external oral medicines for the next step . Finally, we're close to initiate two replicant phase three studies, the DUBATICUD and both Crohn's disease and ulcerative colitis. The treatment offers patient-friendly subcutaneous dosing with a potential competitive safety and efficacy by selectively targeting the DCR This follows the positive phase two data that ran out last year and were presented at an ECHO meeting this year. Next slide, please. As a conclusion, let me share a status of our key mid- and late-stage development project. Our immunology pipeline includes medicines with available data, such as phase three program in AD with further potential life cycle management, in phase two, in different asthma, patient subgroup, and potential LCM, such as CAPD, as well as Brevetamig in HS and others in mid-stage development, some of which I covered earlier, like Alimutanser and Duvaticum. On the TPECA map, I can share that a decision to move forward in CAPD will be made subject to regulatory discussion and in collaboration with our valued partner, Regeneron. In rare diseases, Wayrild is now approved by IPP in the U.S. with potential for multiple new indications. Vengalistam, that's currently in phase 3 for Fabry disease and Gaucher disease type 3. And lastly, F-doloprin alpha, successful in phase 2 for alpha-1 antitrypsin deficiency, but encouraging update just the other day. Sarclisa is well underway in the subject damage formulation, already approved across different lines and combination regimens in multiple regions, and led 212-Dotamate in GAPNATS with data this week at ESME. In neurology, Tolibrutinib is in review for SPMS. with a revised PDUFA date of December 28th, and then phase three for primary progressive multiple sclerosis with a readout before the end of the year. Frexelamab is in phase three for relapsing remitting multiple sclerosis, and SBMS2. And lastly, Riliprubar in two phase three studies for chronic inflammatory myelinating polyneuropathy. Finally, in vaccines, we have multiple phase three programs underway, such as RADI, the 21, yellow fever vaccine, and broad opportunities in flu. Flu-COVID combination and pandemic flu right behind, as Paul covered earlier in his. Next slide, please. On my last slide, I plan to cover my usual news flow of, news flow slide for the remaining three months of the year and all of 2026. The last significant items of 25, the U.S. decisions on parvabrutinib and SDMS, the phase three readouts PPMS, and multiple regulatory decisions. Next year, we expect a remaining phase three readout for hamletilumab and AD. In rare diseases, we also expect bengalistat phase three readout from two indications. In all cases, if positive, regulatory submissions will follow later in the year. In addition, we anticipate multiple regulatory submissions based on data we have already received this year as well as regulatory decisions for medicines and vaccines under review. Before I close, my sincere thanks to all colleagues in Sanofi R&D who share my commitment to improve science in Sanofi and help advance our pipeline further from the new initiatives in research all the way to regulatory approval. With this, I hand back to Paul.

Okay. Thank you, Human. We'll now open the call to questions. As a reminder, we would ask you to limit your questions to one or two each. You'll be notified when your line is open to ask your question. At that time, please make sure you unmute your microphone. For option two, submit your question by clicking the Q&A icon at the bottom of the screen. Your question will be read by our panelists. Now, we'll take the first question. Please go ahead.

Yes, first question from Sachin Jain from Bofa.

Hi there. Thanks for my questions. So first one, I wonder if you just updated on the poly-SMS regulation debate at a conference resolving any questions the FDA has had with that delay to do so. And the second one, just to make sure there's no confusion in the market given the debates at 2Q, can we assume that your wording of profitable growth for 26 means EBIT and EPS ahead of sales?

Thank you. Okay. Thank you. Do you want to provide some parity on? Yeah, thanks for the question.

Pretty straightforward. As we reported earlier in the year, the FDA requested an extension. We've submitted datasets with the FDA, continue conversations, and look forward to the December 28th.

Thank you. And Francois? Yes, on profitable growth, I confirmed that the idea is to have, as we go down through the P&L, all items growing faster than the upper end of the P&L, which means basically gross margin growing faster than sales growth, BOI growing faster than gross margin, and EPS growing faster than BOI. We have achieved that each and every single quarter this year. We'll do it in 2025. We expect to get there in 2026, and we are working to deliver the same objective for the following years as well. That's very clear. Thank you, Francois. Next question.

Next question is from from . Lisa.

Thank you. Perhaps I could ask the obligatory U.S. policy question. Do you have any update on your conversations with the U.S. administration? Is it more complex for you with shared assets like ? And then should we be concerned about, a degree of silence right now? Or is it simply that there is more of a bottleneck in terms of a long queue to speak for the administration? Maybe Trump's busy agenda, just any color on that sort of ability to communicate. I'll stop there. Thank you.

Thank you. I think our answer is pretty straightforward, which is we've had ongoing dialogue with the U.S. government and indeed multiple governments since before we received the letter. Back at the end of July, I think it was, you know, we focus on making sure that people understand the value we can bring. And those conversations have continued throughout this whole process. So probably comment on bottlenecks or other implications. But, you know, I think that's probably as much as we can say at this point. Okay. Thank you, Lisa. Next question, please.

Yes. Next question, Shirley Shen from Barclays. Shirley?

Hi. Can you guys hear me?

Yeah.

Hi. Thank you so much for taking my question. So I have a question on base filters. So as you guys said, those Q3 orders have been impacted by inventory carryover from last season. Could you please give us a sense of how Q4 ordering trends are tracking so far? And are we still expecting a 3Q, 4Q equal split? And also, given the competition that is ongoing, like how do we see the class roadmap competition is going to impact the 4Q number given we know that Merck actually entered the market late-ish in 3Q? And also, we saw very strong growth in ex-US market. And what do you see the opportunities there? And also, what is your overall perspective for Bay Fortis in 2026? Thank you.

Okay, so the four questions, Tom, are for you.

Rich question. Thank you very much, Julie. Maybe a couple of points to address these different elements. Thanks for giving an eye to the Bay Fortis performance in Q3. As you will see, a few points of highlight. First of all, overall for Bay Fortis, you saw that we increased our performance versus last year, and we have done that notably by extending the penetration to about 40 countries. Now, in your question, there were some geographic elements to it. On the U.S. part, yes, absolutely, you're correct on what's going on in the U.S. And yes, we do confirm the guidance that we have provided last quarter at Q4. We expect it to be roughly in the same order of May-June by Q3 for Bay Fortress overall, for global Bay Fortress performance. The second point, I think you wanted to mention a couple of points on the environment and the competition without talking about the competition specifically because we don't do that. Maybe I can say a few words on the fact that actually if you look at, Last year, 2024, first year of full supply and was a blockbuster. You remember that if you look at the U.S. performance, the total, I would say, coverage rate of all babies in the U.S. was around 55% for all RSD solutions available. Roughly 55% of babies were getting some form of RSD protection. We really focused in 2025, and I think we will be focusing in 2026, to increasing the vaccination coverage rate. We expect 2025 to land around 70% vaccination COVID rate in the U.S., and that's, therefore, we're welcoming all efforts from everywhere to make sure that we increase the importance of awareness. What we are seeing in the signals in the U.S. is that, by far, is the favorite product, the favorite prescription from U.S. prescribers. simply due to the fact that it's highly differentiated with an extended half-life of 71 days. It makes it by far the longest-acting molecule antibody for the prevention of RSV, and it has an incredible real-world evidence behind it. Okay.

Thank you. Next question, please.

Next question, Matthew Weston from EBS. Matthew?

Thank you. Two questions, please. Francois, I'm going to buck the trend. Most people ask 2026 guidance questions. I'm going to ask a 2027 guidance question. Slide 29 flags the Regeneron R&D reimbursement stepping down. It's something that's been familiar, I think, for many people for a while, but maybe not fully reflected in consensus. the step down is actually much greater in 27 than in 26. And your slide implies about a half a billion EBIT gap in 27. I'm just trying to understand, are there any additional levers within manufacturing, gross margin, or the business that could help mitigate that, or that's something that we've just got to get prepared for, even though it's a year and a half away? And then one for Hooman, you set out your enthusiasm for amlutelimab. Lily has just reported the findings from the Phase 3 adjoined extension study for edGlyphs, which looked at Q8 week dosing and showed very limited erosion in efficacy. I'd be very interested if you think that limits the differentiation for amlitalimab, where you were aiming for your 12 weeks to be differentiated. Thank you.

Okay. Thank you, William Francois. You want to catch that? And then maybe Brian and Huma, depending.

yes matthew i think that this is a good question for 2027 indeed and which is what i presented in the last call at the end of july the fact that in 2026 we will have we will lose about 300 million of r d reimbursement from regidon and as i said a few minutes ago it will be entirely offset by the additional royalties that we will receive from avutra in 2027 indeed we will have a much more significant amount of in terms of deep freeze because we will lose 800 million from one year to the other. And this will not be fully offset in 2027 by the additional which will be around 300 million, which is one of my in this presentation as well. So we have a gap indeed of about half a billion. Will we be able to cover it with other exceptional items or let's say non-recurring items? The answer is no. That being said, I mean, we will continue growing at a reasonable pace as well. So, and I said it last time that if there was one year where we were not sure about increasing our profitability and deliver this profitable growth, it would be 2027 for that same reason. That being said, and I repeat what I said last quarter, which is we expect our BOI to increase in absolute value in 27 in spite of this impact. So we will be able in absolute value to cover the gap, the 500 million gap. And most probably, I believe that we may be in a position, still early to say, to even increase our profitability in terms of BY in 27 as well. I say we may be, still very early. We have not even completed our 2026 budget, so I want to be careful, but directionally, there is probably a possibility, largely as a consequence of the gross leverage that we will get from superior growth.

Okay, thank you. So maybe Brian first, and then Hubert.

Yeah, great question. Thank you very much. I think as you look at the marketplace, we've always said this is a marketplace that's going to continue to grow. The biopenetration rate is extremely low, just over 14%. So more assets coming into the marketplace will only help the marketplace grow. As you can see from our growth today in DuPixent, a product that's already on the marketplace, it's benefiting from other therapies coming to the marketplace. That said, one thing that we've said consistently for a very long time, These IL-13s are incomplete therapies, and we've seen them on the market now. Actually, if you look at Leverie, it's been on the market for nearly a year now as single-digit share. So, we're seeing while it's helping grow the marketplace, it's really not taking very much share from Dupixent. Dupixent, we believe, still has a very strong profile. And each of these still have these dosing ranges that are either two weeks or, at best, four weeks is what we're seeing right now. So, we think that there's a lot of room for a much more durable dose in the marketplace, assuming we finish the regulatory trials and get it to the marketplace for NEMA, or for, excuse me, for NEMA.

No? Just a question, as well as the biotin comment, which is important. This is a totally novel mechanism, an apical node in the immune response with not only durability, but multiple differentiating factors. We remain, based on the data, actually, in the case study, encouraged by the potential for Hamlet.

Great. Thank you. Next question.

Yes. Next question from Simus Fernandez from Guggenheim. Simus.

Thanks very much. So, just a couple of quick questions. Can you just update us on and just kind of timing dynamics around that? It's unclear if that's still on track for second half 2026 readout in CIDP. So, just wanted to clarify that. And then, you know, more broadly, just hoping to get a better understanding of when we're going to learn more about the programs that have had kind of unfortunate outcomes and where A number of programs are under review, including the Oral TNF, including itopecumab. It just seems like there's a lot of secondary analysis exploration going on and holding on to assets as part of the pipeline, and I'm just trying to get a better understanding of when we're going to know the advancement or elimination of some of those assets that haven't quite lived up to at least investor expectations. Thanks.

Okay. Thanks. I'll try and be succinct on this one. On really , we've updated the timelines at this Q3, and reality is that the outcomes in the two phase three studies for CIDP are just creeping over the year. This is purely a patient recruitment phenomenon. And we look forward to seeing the results of those studies. You'll remember the phase two studies were extremely encouraging. And then on your second point about when you will see the data and when we make decisions, obviously those data sets will all be presented at the relevant scientific congresses. I've already announced today that we will go forward subject to regulatory approval with our partners in . So there's no tardiness there. Obviously, we have to take a regulatory opinion before we move forward into replication phase three. And then for the other studies, I've already alluded to the fact that we will take a portfolio view on asthma with a number of our assets and figure out what we take forward in asthma. And on balance of , we've just had access to the results. I've outlined the importance of ACR 50 and 70 and the fact that they're clinically meaningful. And we'll figure out, as we've always said, we've been consistent in our view, that we'll figure out exactly the role of balaner in mono and combination therapy, both with our own molecules and partners.

Thank you. Thank you, Jim. It's a great question. You know, I think we've seen it with many of our competitors having hits and misses in immunology over the last months that these extra levels of thinking actually are worth doing and standing in good stead. because you really do pick the right patient population. So, taking time, I think, is wise for us. Next question.

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

Thank you for taking the questions. Two, please. Firstly, on , you said that the gross margin benefit from manufacturing improvements is now fully being captured. I just wanted you to give us some idea of the magnitude of the gross margin improvement this which is down to Depixent manufacturing. And then a question on indication opportunities. Henley, you mentioned rilzabrutinib in Graves disease. That's potentially not a particularly rare condition. So I just want to get your thoughts on on the potential you see there. And also the other one in light of Moderna's failure this week is CMV vaccination. I know you've been in this space in the 90s. I just wonder what your level of appetite was for it now. Thanks so much.

All right. Thank you, Simon. Francois? Yes, Simon, the gross margin contribution from the C3 manufacturing was actually very limited in Q3 itself. I mean, we just took the opportunity to mention that we have completed the full implementation of this new technique, which has spread over a couple of years, actually, but it did not have a significant impact in Q3 per se. I take the opportunity to mention that our gross margin increased globally for the company by 2.5 percentage points in Q3 and by 1.8 percentage points in H1. Most of the factors contributing to it are still relevant for the future to a certain extent. One of them is volume growth. Our volume grew by 12% since the beginning of the year. We expect to continue at a high level. We are obviously benefiting from a positive product mix, including this quarter, Evakit. Actually, Evakit is much more significant than the new manufacturing technique for Dupixent. We are also obviously benefiting from the industrial restructuring that we did over the last couple of years, plus there were some one loss this quarter, last year and this year, which did create a little bit of positive impact as well. If we look at it underlying, because we were at a high range, once again, 2.5 percentage points of increase in Q3. If we exclude the one-offs and some of the items that will not necessarily replicate each and every single quarter, like EVA kit, for example, you can consider that the underlying gross margin increase that we have experienced since the beginning of the year is around one percentage point. It is obviously before any impact if you want to use that for the future. That does not include any potential impact coming from tariffs.

Okay, Hooman Graves and then Thomas.

Okay, sorry, thanks for that insightful question. You'll know Graves is a well-established autoantibody related disorder. The classic long-acting thyroid stimulating antibodies, the TSHR antibodies are important. So number one, it's a canonical autoimmune disorder. Number two, we know from investigative initiated studies that B cell suppression is a successful therapy, particularly for the ophthalmopathy. And thirdly, with our unique covalent reversible molecule in riltabrutinib that has already shown significant promise in multiple disorders, including Weyher IgG4 disease and ITP, I think that Graves is the promising opportunity. We look forward to taking the molecule forward. You are completely correct that it's not a rare disorder of that sort per se. It's not super rare. And therefore, I think it's a potential opportunity, particularly the ophthalmology. Thank you. Thomas?

Not much to say. The news is very recent, as you know very well, Simon. So I will not come out to see the full data set. The only thing I can refer to is indeed, you know, that quite a while ago, a few decades ago, we had worked on this antigen. It's a difficult target. We've reached some, I would say, interim efficacy. Our assumption at that time was that it would not be sufficient to reach a protection level, and that's why we had interrupted this program quite a while ago. Sadly, overall, because the field of CMV vaccination is an important field, and we would welcome a vaccine against this devastating disease.

Okay. Thank you. Next question, please.

Next question from Richard from JPMorgan. Richard.

Hi, thanks for taking my question. Question on Depix and then just giving us a little bit more on the development around COPD and also the growth to net, how that develops in the quarter and how we should think about that in 26, but also how the COPD launch is going. It seems to be developing a little bit better this quarter. And then second question just on in the Hibbricks data, just you're To file, I think you need some of the more long-term safety data that you called out from the open label extension. Just wondering what, if anything, is being looked at in terms of that safety data from the regulators. Is there anything of interest that they want to see or rule out? Thanks very much. Okay. Brian, do you think?

Yeah, Richard, thank you so much for the question. And first and foremost, I think the really strong overall growth that you've seen is really coming from all different sources of growth, if you think about it. First, our foundational indications, we continue to grow biopenetration in things like asthma, atopic dermatitis, EOE, nasal polyps. But also, we've moved into about a year ago, we launched in COPD, and we've really seen a strong success, actually, in COPD, one of our fastest, actually, it's our fastest respiratory indication as far as growth rate goes. So, that plus CSU plus BP, you can see now eight indications deep into the U.S. Our sources of growth are coming from everywhere and, of course, launching around the world. It also has actually created this really strong momentum. We've seen a 26% growth this quarter and reaching over $4 billion in sales. As it relates to gross net, obviously that's captured in there, our sales growth. This is something that we've monitored for a long time. Actually, we see that as we go into additional sources, if you will, or different payer groups, we obviously will provide discounts to get into different access for different patient populations. But, again, this is something we've known for a long time, and it's captured in our long-term guidance for Devixen.

Yeah, I'm excited to have done this acquisition, an example of our disciplined capital allocation policy, and it's exciting that the preliminary data has proved so promising, both at Q3 and Q4, to some of the standards of CAAT. You're correct that we're interested in the long term. which is open label for the safety data, there is no specific. Remember, this is a fusion protein like an antibody. There's no specific side effects we are looking for, but you'll have noted from the press release that the safety and tolerability were in line with that which was expected. Okay. Thank you. Next question, please.

Next question from Michael Lushton from Jefferies. Michael.

Thank you very much. Two questions for Francois, please. One, I just wondered if I could put you a little bit more on the seasonality comment on gross margin. You said the PICS process is now tucked in and you return to normal patterns. Just wondered what you meant by that. And then if most of the driver of the gross margin increase in Q3 still hold, just wondering why you opted not to offer an increase to guidance for this year. Thank you.

Okay, thank you. Francois? So, as I said, the 2.5 percentage point of increase that we had in our gross margin in Q3 is probably not necessarily good proxy for 2026. So, we believe that we have some factors that will stay there, like our volume growth, like, for example, even the product mix. These issues are structural, but we won't get another increase next year of 2.5 percentage points in gross margin. So it will be probably closer maybe to what I said underlying maybe 1 percentage points benefiting from volume and product mix. The other thing in terms of guidance, I'm glad you asked the question. So we do confirm our full year guidance, which is five single digit gross sales growth. Today, after nine months, we are at 8.8% year-to-date. So do expect some increase from where we are. at the end of September. Business EPS growth is low double-digit, even excluding the benefit of share buyback. We are excluding share buyback at 9.9%, so do expect there as well for the full year that we will go up from where we are as at the end of September. So just to clarify as well, our full year guidance assumes basically that Q4 will be the best quarter in sales ui and eps growth this year we will do better than we have done in any of the quarter two two three was anyway a bit softer because of the comps as we said earlier there is just one thing i want to take the opportunity to mention one thing maybe what the street does not always estimate is a profit sharing with regeneron that includes by the way both dupixent and kevzar because there is probably an understanding that it grows in line with sales of DuPixent. It doesn't. Let me just give you some color. For example, if we look at DuPixent sales in H1, they grew by 21%, and the Regeneron profit sharing grew by 32%, so 11 percentage points faster. If I do the same analysis for Q3, Dupixent sales grew by 26%, which is remarkable, and Regeneron profit, the profit sharing with Regeneron grew by 37%. So another 11 points higher than sales. So once again, it is a profit sharing. It's not linked necessarily fully to sales. There is about 10 to 11 points of growth in terms of difference between the two concepts. Thank you. Next question, please.

Yes. Next question from . Good afternoon.

Yeah, good afternoon. Can you hear me? Yeah. Yeah. Thank you very much for taking my question. from Bernstein. Two quick questions, please. First, on M&A, with the massive success of Dupixent and with the mixed use flow, I find maybe to be more aggressive in terms of products acquisitions and maybe kind of like blueprint-like transactions is something that we should see in the future. And maybe a second quick question for Thomas on vaccines. Can you share with us how do you see the trend that have been through with the vaccine fatigue that we observe across the world? So some color on this would be great.

Thank you. quite catch perfectly the first question, but it was regarding M&A and should we be doing more and more blueprint like is what I think I heard. François, do you want to comment?

Yes, a few words, maybe Paul you can complete it. But it's not really about being aggressive. It's about finding the relevant acquisitions. We have space in our balance sheet. We said that we want to retain our AA rating. In order to get there, we could afford, once again, this is not necessarily what we want to do, but we could afford investing in BBNM&A currently, something like 14, 15 billion euros, and still retain our double rating. Anyway, what we are looking for is to meet three criteria, basically. Strategic fit, which is around our four therapeutic areas and possibly white spaces as well. Second, scientific differentiation. and relevance and the first thing that best in class and third, financial return as well without any certainty. So it's less a matter of amount or aggressiveness. It's more about finding the right targets at the right time at the right price.

Yeah, I think that's great. We've been really disciplined. You know, Francois, when he came in, actually went back and looked at all of our acquisitions and agreements to decide whether we allocated capital to his standard. And I was somewhat relieved to find out that there is a huge amount of discipline. There is a huge amount of discipline. And I think, you know, you've just heard, you know, how Avocates done in Q3. So we're really very good at it, but we have to be a little bit choosy about what we do. I think that's very reasonable. Okay, Tom, vaccines.

Thanks, Laurent, for the question on flu. A couple of points. First of all, it's early. We're still in October, but indeed, as you had in mind with your question, I think it's fair with the first two weeks that we observe a little bit vaccination rate on the soft side when it comes to flu vaccination, particularly in the U.S., so we see a soft this year today. A couple of points, though, I'd like to highlight when it comes to the 2025 performance that you see in this quarter. First of all, I just want to be clear. It's linked to two elements. In Germany, there is a price effect where there is a significant price exit due to change of recommendation. And in the U.S., it's more what you're mentioning, i.e., the soft VCR. But in both cases, in this 2025 environment, we are keeping a very strong market share performance. It's overall for Sanofi flu vaccines, but in particular, even for differentiated flu vaccines. And beyond the performance in terms of market share, what I'd like to highlight also this quarter in terms of flu is the progress we're also making on an R&D perspective. You see that we have a positive phase three inclusion, high-dose SULDA, 50th extension. So with the great performance you've seen with the flu trial and the fantastic 32% improvement compared to standard those on flu specialization. If we can extend that to people above 50 years of age, that would be fantastic. to be associated also with the progress we've made on pandemic flu with, I think, with our best-in-class H5 seroprotection results and the moves and progress we're making on flu-covid-19 combination. So flu remains important for us. We're moving forward through steam commercially and R&D-wise. Okay. Thank you. Next question, please.

Yes. Next question from David Riefinger from Learing. David?

Yes. Thanks very much. So congratulations on the positive in Hembrick's elevate results this week. Could you provide some more color on how you would characterize for AATD both the normal range and the trough levels? And then regarding net price prospects for U.S. to PIXEN in 2026, since your contracting is likely largely complete at this time of the year, how would you characterize the expected net change in pricing in 2026 versus the net change in pricing in 2025? Thanks very much.

Okay, thank you.

Any other AATD? Yeah, without running into any market issues, you'll remember that the definition of alpha-1 antitrypsin levels is related to the wrong crystal nomogram. I'll speak in broad terms. Standard of care, by and large, doesn't get into the normal range for alpha-1 antitrypsin levels. Our Q3 and Q4 molecules provide very commendable very commendable alpha-90 trypsin nomogram levels both for troth and lindus.

Thank you. And Brian, I think a clever question from David trying to get at the slightly for 26 over 25.

I'll let you answer. Yeah, I think it's a great question, David. Thank you so much for asking it. As you know, we don't typically give guidance on the net price year over year, but one thing I will say, as you can see, we've been incredibly disciplined over the years. We're now eight years into the launch of this asset, and it's been captured in our long-term guidance how we believe the net price will develop over time.

Thank you. Next question, please.

Yes, next question from Sarita Kapila from Morgan Stanley.

Hi. Thanks for taking my question. Just on amlitilumab, how should we think about the upcoming readout? Is there potential for the placebo arm in the COAST-2 trial to behave more normally, or should we think about it as a pure sister trial to COAST-1? And then just on estuary, beyond the no plateau in efficacy that we saw in COAST-1, what's underpinning the confidence that the long-term efficacy can improve with time? Thanks.

Great questions. Okay, so I'll take them one at a time. Thank you for the question. But firstly, on case two, it's a precise replica system study. There are some subtle differences in regional recruitment and execution, but essentially it's a replica study, and we anticipate and hope that we will get a replica of case one. As you'll remember also, you said correctly on estuary, it's a slightly more nuanced study than has perhaps been observed, as well as being able to tell us about durability ultimately in a randomized way. It will also give us a sense of dose variation that we will do. You remember there are multiple day switching arms. So, punchline on SU, which we'll get throughout next year, is not only going to tell you about durability, but it'll tell you about the relationship between dose and durability. And those are going to be critical. in terms of our understanding of the positioning of Hamilton.

Thanks. Okay. Thank you very much, Eamonn. Yeah, we'll see. We'll get the data. We'll see how competitive we are. I think from a commercial perspective, we're very enthusiastic, but we'll let the data read out. Okay. Next question, please.

Next question from from .

Thank you so much. Two questions. Yesterday, Roche said they were taking patients back from Altuveo. What is the nature of the patient that is being taken back? And what does this mean for Otovio's long-term growth outlook? And the second question is, based on the subgroup data presented at ECTRIMS and the language in today's press release, it seems that any tolibrutinib SPMS approval will be in subgroups. What subgroups are likely to be in the final label? and what portion of the overall SPMS market will this represent? Thank you.

Well, I think we might deal with that last question, because we better clarify that as soon as possible.

Yeah, so just to be clear, I'm going to give you two facts. The SPMS population is about 170,000, and the EPMS population 120,000. At no point have we entertained the notion of doing subgroups. Regulatory discussions are ongoing, and we don't participate in any further insight during this regulatory discussion.

Thank you. Brian.

Thanks, Steve, so much for the question. So, a couple things. I'll give you another really strong quarter. It's becoming very clear to us this is the number one switched asset, so it's being switched to, We are the number one asset that's being switched to in the hemophilia marketplace and hemophilia A. We're still seeing, as we have shared before in the past, we've seen about two-thirds of our switches coming from competitors. Of that, still 10% is coming from Hemlibra. So I can't really comment on what Rose shared, but what we are still seeing is 10% is coming directly from Hemlibra, and we are the number one asset that is being switched to. Now, about a third of our business is still coming from a lock state, but you can see our overall, that's starting to stabilize, and our overall HEMA business is actually growing quite significantly. So, again, we're very pleased with the performance and remain committed to delivering our next blockbuster this year with Alcubio.

Great. Thank you. And next question, please.

Question, sorry, from James Kigley from Goldman Sachs. James?

Hello, thank you for taking my question. I've got a follow-up question for Francois on the Dupixent or on the antibody payaway. So I think backing out how the BOI margin seems to have been developing for Dupixent. So it looks like last year it was in the region of sort of 62%. This year, third quarter, it looks like it reached 72%. Again, working backwards, maybe there's like a 92%, 93% gross margin. So first of all, we're at the right ballpark in terms of what we should be thinking about when calculating the POA. As you mentioned, it seems not necessarily to be fully reflected in consensus. And going from a 72% operating margin going forward, how should we think about operating leverage, obviously going from last year to this year? It looks like there was a big step up. You mentioned the increase in percentage point growth for the POA relative to duplicates. where could the margin go and how should we think about that going forward or maybe more so at what point could the margin peak? And secondly, maybe one for Brian as well, a follow-up on our 2VO. You mentioned about taking share from other factor VIII therapies. Where are you now in terms of the factor VIII market from a market penetration, market share perspective? Where do you think you're going to end up? And if that's below 100%, given the data, why would that be the case?

Okay, with some highly specific questions, James, thank you. I think both are yours, given broad.

James, I would like to help you, but we don't disclose the margin by products, and so we don't do it for DuPixent or for any of our products. So, unfortunately, I cannot provide you any information on that. Obviously, the margin has been improving for DuPixent over time, given that we are benefiting, obviously, from scale efficiency, as I said earlier, so our margin has continued to increase.

Okay, thank you. And Brian, maybe similarly, I don't know how specific you want to be on that.

Yeah, Jake will get incredibly specific on that. I mean, what you see in the HEMA marketplace is that you've got the factor marketplace, which is, again, as we said, where we continue to take the most business from is the factor marketplace. Again, this is a factor therapy that obviously comes with increased efficacy. We are taking some from the non-factors, as I mentioned before, 10% coming from Hem Libre, but we don't know. We haven't shared exactly where that might end at the end of the day, but again, as we said, we're the number one asset that is being switched to, so the progress continues, and we'll continue to keep you updated as it develops.

Okay, thank you. And then the last question, I think.

Yes, last question from Peter Verdun from BNP. Peter?

Yeah, hi there. Peter from BNP. On the last on the call again, I'm going to have a few quick pipeline questions. Just on is it simply a case of the go-forward strategy that you repeat the RFI trial or will you solely be looking at the former smokers only? And on ESCO, data looks great. You need to gather face data. But just on the regulated pathway, if I recall a few years ago, FDA was making some noise about wanting to see respiratory tests functional endpoints as well as the biomarker analysis. Is there any of that going to be required for FTO? And then lastly on Tolley, SPMS opportunity is huge, but how concerned or not should we be about Tolley getting an onerous labor or requiring weekly liver monitoring? How much of an issue would that be in your mind commercially?

Thank you. Okay, great. Thank you. Last but not least, okay, Hooman.

We look forward to seeing you next week, firstly, to start. Second, let's get into it. I'll say three. Broadly speaking, we anticipate that we will have to do some form of replicatory trial. The details of exactly what we do have been guided by both internal and external data sets. We've looked broadly, trying to understand where if one and two differed, and the exact construction of those trials will be dependent on both discussions with our beloved partner Regeneron, but also with the regulator. So look forward to more on that soon. On EFTO, or as we call it internally, DORA, just to be clear, you're right that the FDA, first FDA may have different perspectives. You'll remember that current standard of care dates to a target of 11 micromolar which is about 50% below a limit of normal of the range. And then many patients drop way below that three to five days. The first point I would make is we will disclose the data in a conference, but the Q3 and Q4 W dosing that we have are substantially better than that. So we will have a conversation with the regulator as to A, their intrigue related to but also what other additional endpoints we'll need pursuant to both natural history data and our open-label extension safety data. And on your third point, on TOLI SPMS, we're in late-stage discussions, as I said, to produce on the 8th of December, and while we anticipate that we'll need some sort of REMS with TOLI, they can go further. disclosable comment on the intensity of blood draws.

I think maybe on that last point, it's fair to say that we learned a lot actually between RFI 1 and RFI 2. I think you touched on that. So if you're even better informed. And on Polly, that first 90 days, what we did in the potential child program and what we're doing in real life,

seems to be very practical and responsible. And so I think we're confident we have the right approach. Of course, it's the regulator that will decide what that looks like.

Well, okay. Thank you, Peter. Thank you all. Our growth momentum continued in Q3. After three quarters of sales and earnings progress, we reiterated our 2025 guidance. Our pipeline delivered important milestones in this quarter, as outlined earlier. And finally, as we're looking forward to 2026, we are confident in our ability to pursue our current trajectory of profitable growth. I wish everyone a good autumn, and we'll now close the call. Thank you.