Sanofi

Hello everyone, this is Thomas Kudsk Larsen from the Sanofi IR team. Welcome to the third quarter 2026 results and strategy update for investors and analysts. Facts can be found on sanofi.com. Please turn to slide number two. Here are the 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 the presentation. We also refer you to our Form 20F on file with the USHCC and our French Universal Registration Document. We'll make comments on our performance using constant exchange rates and other non-IFRS measures. Numbers used are in millions of euros and for the third quarter of 2026, unless stated otherwise. Turning to our agenda on slide number three. Our CEO, Belen, will provide an update on third quarter progress and strategy followed by the business results. Our CFO, François, will review our financials for the quarter, followed by our new head of R&D, Paolo, who will share his first reflections and thoughts over the past two months and also cover the pipeline. For the Q&A, we have the support of Manuela and two times Thomas to cover our global businesses, as well as Jamie, our new general counsel. You can participate in the Q&A in two ways, either raise your hand in Zoom or submit your question using the Q&A feature. Now I hand you over to Belen.

Thank you, Thomas. Hello, everyone, and thank you so much for joining us today. First of all, a very warm welcome to Paolo Contura, our new head of R&D, who is eager to share initial reflections and priorities later on this call. I'm now on slide number five to start with the progress of our strategy and to signal the progress on execution during the quarter. When we last connected in July, we set out a number of priorities. Today, I can confirm we have made meaningful progress with the support of our board. After completing a rigorous diagnosis of our starting point, we are progressing well towards defining our roadmap for the future. We have confirmed our commitment to three focus areas. Immunology, Rare Diseases and Vaccines. Where we are highly competitive, we see robust growth opportunities as well as the potential for differentiation. The new leadership team, including R&D, is driving sharper decision-making, including through new governance. Together, we made already our first Both are bold choices regarding pipeline optimization, deciding to discontinue AMLI-Telemap and Itepecimab. In parallel, we continue to execute on our simplification agenda. The partnership with the Teplafarm that we announced last month allows us to exit a growth dilutive business while ensuring these mature medicines will continue to reach patients. Planning for Dupixent's loss of exclusivity is our top priority and we have taken the first step in this direction. We expanded our alliance with Regeneron and hence gain access to four new immunology compounds. This is simply a start and we will also turn to BD and M&A to secure growth. More to come on this later. While we continue to advance our transformation agenda, we stay very focused on maximizing our performance, as illustrated by the strong quarter where we deliver both robust commercial and financial results. Moving forward, our journey will be catalyzed by a culture of greater accountability, increasing discipline, and rigorous execution, as I already mentioned during our Q2 call. On slide number six now, as previously said, our top priority is to secure growth through and beyond Looping Sense LOE. We will build on our strengths, notably commercial execution, create value through BD and M&A, leveraging our strong balance sheet and financial resources. And François will share more details on these points later on. Between now and 2030, We expect Dupixent's sustained leadership, the momentum of our recently launched medicines and our resilient vaccine business to continue to expand our revenue base. While we reset R&D, external innovation will in parallel play a very significant role. We intend to leverage business development and M&A, including late stage and commercial medicines, with a center and shared focus on our three therapeutic areas. Discipline Bolton acquisitions will continue to further support the development of our early stage pipeline. And additionally, we plan to source innovation globally, including from China, which, as you know, is a thriving hub for scientific advancement. Beyond 2030, we expect a stronger and more productive R&D engine to become a larger source of innovation than today, and this will complement external opportunities and help propel our growth trajectory. On slide number seven, I share with you in Q2 that our alliance with Regeneron was a strategic priority for me and the leadership team. Since then, we have delivered on our objective to define the next chapter of this partnership in a matter of a few weeks. This relationship has already been recognized as one of the strongest collaboration and success stories in the pharma industry with Dupitzen. And that is the foundation from which we are building for the future. Benefits from Sanofi, as you see on the slide, stand well beyond the next three years. This is, no doubt, a win-win where both companies are equally incentivized to succeed with focused investment and payouts linked to milestones driving disciplined value creation. The long-acting anti-IL-13 in atopic dermatitis strengthens our leadership in the large and growing AD market Capitalizing on physician and patient preference for sustained efficacy and safety with less frequent dosing. Importantly, we aim to launch this medicine ahead of dupixent biosimilars. The ability to leverage our commercial infrastructure grounded on specialty-rich, differentiated payer access and world-class patient services is expected to drive faster uptake. The expanded alliance shows our ability to execute swiftly on our priorities driven by transparent discussions and building trust as shown by the settlement of previous litigations. In summary, this transaction is an important first step to replenishing our early stage pipeline. But beyond this alliance with Regeneron, we will continue to build on our immunology leadership, both through external and internal innovation to secure sustainable growth well into the next decade. And this includes other important partnership, for example, the one with Teva for Duba Kituka. Let me now summarize how we are preparing for the next decade on slide number eight. Between 2026 and 2013, our strategy will be focused on disease areas within immunology, rare diseases, and vaccines. We will continue to drive profitable growth through strong commercial execution and cost discipline. alongside robust cash flow generation to fund business development and M&A transactions in particular with a focus on late stage and or commercial opportunities. In parallel, our R&D transformation is already underway with the aim of enhancing our pipeline and our R&D productivity. Beyond 2030, we aim to further capitalize on internal pipeline contributions to diversify our sources of growth. We expect total revenue at group level to be impacted only moderately by Dupixent's LOE, with our focus being on preserving earnings and cash flow. This is achieved, we will focus on accelerating earnings growth. As our progress since Q2 shows, we are fully committed to executing on our plan and moving with the necessary sense of urgency. We intend to keep moving at the same pace and look forward to providing greater granularity on our priorities and meet to long-term roadmap during a strategic update before The year end. Now turning to the Q3 business performance on slide number 10. Q3 was another quarter of a strong growth. Our total sales reached 14.4 billion euros, up 14.3% versus last year. Our pharma launches grew over 31%, driven mainly by Altuvio, iVaKit and Resuro. Vaccine sales were impacted by respiratory vaccines facing this quarter. The increase in other medicines was driven by the diabetes portfolio, partially offset by divestments and legacy medicines. Dupixen again delivered a strong performance, surpassing 5 billion euros for the second consecutive quarter with the growth coming primarily from increasing demand. Overall, this quarter reflected the strength of our core growth drivers. Moving on to slide number 11, the momentum of our portfolio of newly launched medicines and vaccines is providing a meaningful contribution already to our top nine. In Q3, we welcomed a new medicine into this portfolio, Anxu, Grovodytsinib, the first rock-jack dual-acting inhibitor for patients with myelofibrosis in China. Sales of new launches reached approximately 2.2 billion euros in Q3, a growth of 19.2%. And this portfolio now accounts for roughly 15% of total company sales, showing the ongoing diversification of our business growth. Turning to immunology on slide number 12, Dupixent sales reached 5.7 billion euros in the quarter, and more than 1.5 million patients are currently under treatment globally. US growth was driven by a strong demand, as I already mentioned, and by an extended benefit from operational improvement, which resulted in favorable gross-to-net price adjustments. In the US, 2% remains the number one prescribed biologic among key prescriber groups. Outside the US, strong growth was driven primarily by demand from market expansion across major indications in Germany, France, in Japan, Canada, and China. On slide number 13, we see rare diseases. And our rare disease portfolio reached 1.9 billion euro in sales, up by 12.6%. Must sell and other performance was driven by IVA kits with increasing number of patients starting therapy. This category also includes three new medicines. Micorso, Anshu, and Redemplo, now available to Chinese patients. Rare blood performance was supported by Altuveer's continued growth momentum, complemented by recently launched medicine Wild Ritz, Tabibli, and Q-Fitlia. Lastly, sales from medicines for lysosomal storage disorders remained resilient despite short-term supply constraints for some of our pumping medicines. Overall, rare diseases deliver another strong quarter of growth. Moving to vaccines on slide number 14, remember that at Q2, we have indicated the potential for a low to mid teens Sales declined in Q3, reflecting the fashion of our respiratory vaccines. While flu was down as expected, the franchise declined by 7% versus Q3 of last year, which is better than indicated in Q2, thanks to more favorable buying patterns than anticipated for before-truths late in the quarter. On PPH, Eplipsa B grew by 60% on a pro forma basis to 125 million euros, well ahead of our initial acquisition plans. Overall, the franchise of vaccines demonstrated strong resilience in a dynamic market environment for the full year, We expect vaccine sales to be down by a low single digit percentage. And with this, I'm now going to hand it over to François, our CFO, who will take you through our financials in more detail.

Thank you Belen and hello everyone. Starting with slide 16, net sales grew strongly again in Q3, up by 14% to 14.4 billion euros. UPIXAN continued to see strong growth, driven by demand and by favourable growth to net adjustments. We have also made operational improvements last quarter that have had a positive impact on pricing, for example, controlling the inappropriate use of 340B rebates in the US and enhancing our gross to net provision management with data-driven tools. Our pharma launches maintained solid momentum and vaccines were impacted by an unfavorable sales phasing in Q3 versus last year. If you exclude the items that are more one-offs in nature, the underlying group sales growth during the quarter is estimated at around 12% in Q3. Gross margin improved by 2.1 percentage points. This was driven by a favorable product mix as well as by the pricing impact highlighted earlier. Operating expenses were basically stable as OPEX of acquired businesses were almost fully factored into our cost base last year. And more importantly, as we execute very strongly our cost discipline programs, including R&D prioritization. BOI increased by 19.7% in Q3. BOI margin expanded by 1.9 percentage points, driven by operating leverage. This was partly offset by higher profit sharing with Regeneron, reflecting Dupixent's strong growth. And our Q3 BOI was also impacted by the end of the Regeneron development cost reimbursement that took place at the end of Q2. Overall, business EPS grew by 19.6%, delivering profitable growth once again this quarter. Turning to business dynamics on slide 17. As Belen highlighted, we expect vaccine sales growth to decrease by a low single digit in 2026. We also expect other operating income and expenses to increase in Q4 versus the prior year, driven by the net impact of two opposite factors. On the one hand, regional profit sharing has steadily increased, reflecting Dupix and Strong Growth and in addition the reimbursement of the Regeneron Development Balance ended in Q2 resulting in a BOI headwind of about 500 million euros in H2 2026 evenly distributed between Q3 and Q4. On the other hand, capital gains for the full year 2026 are now expected to be lower this year at around 250 million euros, with most of it already booked to date. The end of the R&D reimbursement by Regenerand will be fully offset by the increase of Amvutra royalties for the full year 2026. We are upgrading our 2026 guidance to reflect the strong business momentum to date. We now expect sales to grow at a low teens percentage, which usually means a range of 13% to 15%, and we expect business EPS to grow at a mid-teen percentage, which usually means between 15% and 17%. Now a quick word on 2027. While I do not intend to provide the formal guidance today, it's too early, I would like to flag a few items for early consideration. In previous years, our sales growth has been driven by demand with a slightly negative price component. This year, sales growth is also driven mainly by demand, but as I highlighted before, we also experienced several positive price effects. Some of these are creating a new price base, while others are one-offs. While we expect our growth to be driven by demand again next year, we also expect pricing to return to its historical pattern in 2027 which means a slightly negative pricing contribution to our global sales growth. As announced earlier this year, we are continuing to actively manage our legacy portfolio, as evidenced by some business contribution and asset contribution to Chez Plafarm, and as evidenced by the sale of Medley, our generic business, in Brazil. Both transactions will reduce our sales next year by around 1.3 billion euros, but they allow us to focus on science and to exit margin-dilutive businesses. Turning to slide 18, which echoes the strategic priorities Belen outlined earlier, we have a very strong cash flow generation, which enables us for disciplined capital allocation, including BD and M&A. We expect industry-leading growth until 2030, driven by continued momentum for Dupixent, new launches on vaccines, alongside our resilient base business. We are accelerating profitable growth with steady growth margin expansion as well as continued operational excellence and strict cost discipline. Lastly, our strong balance sheet and low leverage allow us to access external financing for BDNM&E while retaining a strong investment-grade credit rating. We confirm our commitment to our dividend policy as reflected with 31 consecutive years of dividend increases in absolute value in euro. I now hand over to Paolo, our new head of R&D, who will share the latest development of our pipeline.