Sanofi SA at Goldman Sachs Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: James Quigley - Goldman Sachs Group Inc - Analyst : To kick off, again, you're still relatively new in the role, so two months or so, or two, three months. So it's still, again, early. But in your assessment of the business, what have you identified as your key priorities?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay. Perfect. And in terms of your experience and your background, you joined from Nestle but started in pharma. So you've come full circle in that respect. And -- but what can you take from your broad experience across non-pharma businesses as well that can drive operational improvements within the biopharma business? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 12:00PM, SASY.PA - Sanofi SA at Goldman Sachs Global Healthcare Conference

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And one fairly recent news item has been an update on the Zantac litigation with the Delaware Daubert hearings. I think it's around 25,000 cases of the 75,000 cases where Sanofi is named as a defendant. So what are the next steps here? I know there's an appeal that -- what are the next steps? And where are Sanofi potentially exposed?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And two more quick questions on Zantac. So do you have any sense of timing in terms of the appeal, number one? And then number two, how much of your time is -- and management time is Zantac taking up currently?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. Good stuff. We'll move on some of the product questions and maybe a bit more of a positive light. So Beyfortus, how is the manufacturing ramp-up progressing? And should we -- at what point should we expect sort of a fully de-bottlenecked supply chain?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Got it.

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, awesome. Then thinking about the impact in 2024, is there a scenario where it could be upside to that number? I mean, if you think about your manufacturing plants now, yes, you need to have approval, but is it a case of once you get the tick in a box, you then go all out to produce as much as you can? So is there an upside scenario to the EUR1 billion that you --

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And then when you think about the ex-US opportunity for Beyfortus and launching out there, how would you characterize the challenges versus the US market? And overall, what do you see as the commercial opportunity? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 12:00PM, SASY.PA - Sanofi SA at Goldman Sachs Global Healthcare Conference

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. So moving on to tolebrutinib pipeline asset, the BTK inhibitor in multiple sclerosis. One of the internal expectations for this drug, the data in the second half of the year, if you look at competitors, Merck in evobrutinib, they had a disappointing result there. So how are you thinking about the risk of the trial and then the commercial opportunity that's going to drive off the back of a successful trial?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Got it. And in terms of investing for the launch, have you already started to invest behind manufacturing and some of the sales? Or are you waiting for the trial? When do you pull the trigger on tolebrutinib?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay. And then in the negative scenario, what does that mean for cost allocation? If you look at your portfolio, you have frexalimab, which is down the line in multiple sclerosis as well. Is there a risk of some stranded costs within the MS field force until the data in 2027? Or how easy is it to dismantle and reallocate the sales force? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 12:00PM, SASY.PA - Sanofi SA at Goldman Sachs Global Healthcare Conference

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. So moving on to Dupixent. So had a bit of a disappointment with COPD and the FDA extending the PDUFA date. So can you talk us through the reasons that the FDA gave you for the extension?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. When you think about Dupixent from a high-level perspective as well, obviously it has been a hugely successful drug. It has gone into many different areas associated with type 2 inflammation, but then success draws in competition as well. So what's management views on the high-level competitive environment across the indications for Dupixent?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And when we were -- when you were in London last and you had a sell-side breakfast, Paul mentioned that you're working hard on the Dupixent loss of exclusivity and looking for ways to extend that. So how are you thinking about extending the life of Dupi post 2031? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 12:00PM, SASY.PA - Sanofi SA at Goldman Sachs Global Healthcare Conference

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Yeah. Okay. Perfect.

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Got it. And when you think about your 12 pipeline assets and how that could potentially offset Dupixent, you've got a massive thing in your favor in that you own 100% of it or more than 50% of the economics for most of those assets that are in development. So when you think about the replacing Dupi, is management's view to replace the top line? Or is management's view to replace the profit that you did have with Dupi? Or is it --

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Exactly. That makes sense. And then another launch product, Altuviiio, showed strong data, but the market is becoming more and more competitive. We had -- Novo was sat in the chair, Roche was sat in the chair this morning. So the fact that the hemophilia market is becoming more and more competitive. But how are you seeing the Altuviiio launch, where do you think the peak potential could be? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 12:00PM, SASY.PA - Sanofi SA at Goldman Sachs Global Healthcare Conference

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. So moving on to some of the P&L items. So from an R&D expense evolution standpoint, so you've already flagged a step-up in R&D this year, with the several assets entering Phase III. But can you talk about the pushes and pulls for R&D as you move beyond 2024? What studies are moving on beyond -- or into approval versus entering into Phase III? So what's the balance there in terms of that EUR7.7 billion, which is where you're heading? Where does that go? And what are the key considerations you have around that number?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And I think historically, the view has been that Sanofi's R&D productivity has been towards the lower end of the industry. Again, from a CFO's perspective, how can you influence that? How can you sort of help the R&D organization with reallocation and bringing the R&D productivity? Again, it depends on the asset, it depends on picking the right assets, et cetera. But to what extent can the CFO have influence on that?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Got it, perfect. And then one line that I think seems to have bamboozled consensus of -- seems to bamboozle everybody is the other operating income and expense and the Dupixent's profit share. So you said that the Regeneron reimbursement of the development costs end in 2026, which could be a meaningful impact to operating profit, again, sort of heading towards EUR1 billion in terms of the repayment and the offset of the profit share. Are there any levers you can pull to mitigate that headwind in 2026 or beyond?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And 2025, and you haven't quantified the EPS rebound, but you've said that it should be -- it could be a significant rebound. So what are the key sort of factors we should be thinking about when working with models in 2025?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect.

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And with the sort of the announcement of increasing R&D, I appreciate, back in the last year and you hadn't started the job yet, there was EUR2 billion of cost savings that were earmarked. Now that you have been in the job for a couple of months, how do you view that? Is there upside? Is it realistic? Is it challenging in terms of hitting that EUR2 billion?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay. And then we pretty much ask everyone from management team in terms of the inflation reduction impact on Sanofi. It feels fairly limited. But in terms of moving into COPD for Dupixent, is that a risk that you're thinking about in terms of the pace of rollout for some of your assets? And how has IRA impacted your planning and investment decisions?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Perfect.

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay. And then on to capital allocation. So it sounds you have a healthy balance sheet. So how are you thinking about M&A optionality? Are there any sort of therapeutic areas? And then think about size of potential deals as well.

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. So Sanofi did -- before your time, but Sanofi did approach Horizon, as we've seen in the SEC filings. But what would a -- and then you said you're not chasing big deals, but what would an opportunistic larger deal have to look like for you to become interested?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And then so from a high level (inaudible) return to shareholders via dividend buybacks. And where does that fit in terms of your capital allocation hierarchy?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay, perfect. And we've got about two minutes left, so two sort of final questions. So you've come at the story with fresh eyes. So what do you see are the key parts of the Sanofi equity story that are misunderstood or underappreciated by the market?

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Okay. And just to round off, so what are the key events, catalysts or news flow items that investors should be focused on over the next sort of 6 to 12 months? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 12:00PM, SASY.PA - Sanofi SA at Goldman Sachs Global Healthcare Conference

Question: James Quigley - Goldman Sachs Group Inc - Analyst : Excellent. Francois, thank you for joining us, and I hope you enjoy the rest of the conference, and thank you, everyone, for your interest and for joining.