Banco Santander, S.A. Price & Performance (SAN)

Hello, everyone. This is Thomas Gustlarten from the Sanofi IR team. Welcome to the Q1 twenty twenty five conference call for investors and analysts. As usual, you can find the slides on sanofi.com. Please turn to Slide number three, please. Here, we have the usual forward looking statements. We'd like to remind you that information presented in this call contains forward looking statements, which are subject to substantial risks 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 to our new Form 20 F on file with the U. S. SEC and our France registration document for a description of these risk factors. As last quarter, financials reported are on the new reporting scope that excludes the Opelo Consumer Health business. 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 Q1 twenty twenty five, unless stated otherwise. Now please turn to Slide number four. First, we have a presentation, then we'll take your questions. We have kept the presentation as short as in the past, as other companies report today and we aim at keeping the call to maximum one hour.

For Q and A, we have Brian, Olivier, Thomas, to cover our global businesses as well as Roy, our General Counsel and Brendan Head of Manufacturing and Supply. For the Q and A, you have two options in Zoom. Raise your hand or submit your question using the q and a function. With this, I'll hand you over to Paul. Well, thank you, Thomas. Nice to you done. And hello, everyone, on the call. We had a strong start to 2025 with an 8.7% sales growth. In the first quarter. Our strategic focus on innovation continues to deliver, driven by pharma launches, Dupixent, and Vifordis in our vaccines portfolio. Let me highlight our performance of new launches on Slide six. In Q1, our launches generated €1,100,000,000 in sales contributing 11% of the total.

This performance was driven by an element of Vifordis phasing and expansion in Europe and rest of world. Altuvio benefited from continued patient switches and has the potential to become our next blockbuster this year.

Of note, on March, we obtained FDA approval for QFYTIA in hemophilia. One of three potential launches this year. With initial prescriptions already recorded in early Q2. Moving to Slide seven, Dupixent, Dupixent delivered strong growth of 20% in Q1, driven by broad based demand and reached €3,500,000,000 of sales. In The U. S, sales were €2,500,000,000 in the quarter, up 18% Dupixent now also leads total prescription share across all approved indications. As usual in the first quarter, U. S. Sales reflected the impact from the annual reset of insurance deductibles driving higher utilization of co pay assistance. Outside The US, Dupixent sales exceeded €1,000,000,000 for the first time. Supported by the contribution from Japan. China, and Germany. Looking at the remainder of the year, we will continue to drive Dupixent's growth across our markets and in all approved indications. As a reminder, biopenetration still remains quite low, We are excited about The US approval for CSU last week, and the upcoming regulatory decision in The US for blasphemphigoid. These additional indications continue to expand our leadership across type two inflammatory diseases. On Slide eight, me briefly remind you of the high unmet need among people with uncontrolled COPD, many of whom resign themselves to their condition.

Dupixent is the first met biologic medicine approved in this disease. We have already launched COPD in eight countries, including The US, Germany, China, and Japan. Dupixent's value is being recognized by payers in key countries, ensuring access for all patients. To improve adoption, we focus on two main objectives. First, we continue to educate pulmonologists about Dupixent's benefits, the role of type two inflammation, and the urgency to treat patients. Second, to drive patient awareness In April, we just launched our DTC Campaign In The US. Moving to Slide nine. Vaccine business delivered double digit growth in q one, This performance was driven by favorable Vaporvis phasing and new country launches. In The US, we are focused on improving the immunization rate to ensure infants born in late season are also immunized and protected. Turning to flu. Our manufacturing is progressing as planned, following the WHO and FDA strain selection. As the world leader in flu vaccines, we continue to focus on improving the vaccination rate by increasing awareness of the benefits of our differentiated flu vaccines. On our vaccines pipeline, continue to push the boundaries of innovation pioneering the development of a vaccine candidate for the prevention of chlamydia.

In March, the US FDA granted fast track designation and recognition of our commitment to improving public health and addressing high unmet medical needs. On slide 10, I'd like to introduce introduce you to our updated sustainability strategy. Focused on aligning health outcomes with environmental and social responsibility. Environmental challenges and human health an estimated three point six people three point six billion are living in climate sensitive areas, with six million deaths reported annually from air pollution alone. That makes it clear people's health and environment are deeply linked. The new AI strategy focus our focuses our efforts on three strategic imperatives, access to health care, environmental impact, and the resilience of health care systems. With over 7070% of our portfolio, more 75% of our pipeline involved in climate related diseases, Sanofi has a key role to play. And through AIR, we are furthering Sanofi's commitment to global health by working to break the cycle of environmental decline and declining public health. Thank you. I'll now hand over to Francois, our CFO, for more details on the financials.

Thank you, Paul, and hello to everyone. As highlighted by Paul earlier, on net selling by 9.7% at constant exchange rates. To €9,900,000,000. This growth was primarily driven by our by Dupixent by our new product launches, and by favorable phasing in vaccines. Gross margin improved significantly to 78%, up 2.3 percentage point, from the previous year, driven primarily by an improved product mix and by efficiencies. Our q one effective tax rate was 22.3% linked to a one off item this quarter. We maintain our full year indication of a broadly stable effective tax rate versus 2024, means around 20% for this current year. Business EPS was €1.79 up 15.7% reflecting our strong sales performance, our improved gross margin and our operating leverage. This Q1 growth confirms our expected strong EPS rebound in 2025. Moving to Opela. We expect to close the transaction in the coming day in the coming days. Sanofi will receive about €10,000,000,000 while retaining a significant stake in Opela to support the company in its journey to independence, and to participate in its future value creation. The expected proceeds from this end will be reallocated in accordance with our capital allocation policy, presented on the right hand side of this slide.

First, our primary focus is to invest in our business, drive organic growth, which means investing in r and d, sales and marketing, industrial assets, AI, and talents, just to name a few. Second, we continue to explore external growth through bolt on acquisitions. In March, for example, we accrue we agreed to acquire d r zero two zero one for [indiscernible] [indiscernible] Third, we maintained our progressive dividend policy 2025 will mark our thirtieth consecutive year of dividend increase. Fourth, regarding value enhancing share repurchases, we are executing our €5,000,000,000 share buyback program in 2025, with 76% already completed as of yesterday. We have repurchased 37,700,000.0 shares an average price of €101.5 all for the purpose of consolidation. This underscores our commitment to delivering long term shareholder value and partially mitigates mitigating the dilution from the Opela transaction. Looking ahead to the balance of 2025, I would like to remind you of some anticipated key business dynamics which may be helpful for modeling purposes. For Q2, please note that Lantus US sales started to increase materially in Q2 twenty twenty four, due to the unavailability of a competitor's product representing a higher base of comparison for the next few quarters.

Despite this higher baseline, we expect stable sales for Lantus in 2025 as we continue to capitalize on favorable market dynamics and competitive opportunities. In R and D, we remind you that we received in Q2 twenty twenty four a one off payment from Sobe of about €200,000,000 for the development of Altuvert at the time of approval in Europe. For the full year 2025, foreign exchange impact is moving against us, and it is now estimated to be around minus 1.5% on sales, and around minus 2% on EPS. All other business dynamics remain unchanged compared to what we communicated at the beginning of the year. I now hand over to Uman to provide an update on the progress of our innovative pipeline.

Thank you, Francois. During the first quarter, we obtained six approvals including Cafitlir, the first antithrombin lowering prophylactic therapy for patients with hemophilia A or B regardless of inhibitors. And additional approvals for Dupixent in COPD in Japan and CSU in The US and across different lines in several countries. Moreover, as Paul is already alluded to, Dupixent was granted priority review in June. This was followed by regulatory acceptance of toloprutinib which is now set for a PDUFA date of September 28 complemented by two recent New England Journal paper publications. As Francois said, last month, we announced the acquisition of d r zero two zero one from Drembio, a potential first in class c d 20 directed bispecific antibody targeting and engaging myeloid cells with a potentially favorable and superior safety profile compared to T cell engagers which may carry a risk of cytokine release syndrome and other immunological risk.

D r two zero one has the potential to induce deep B cell depletion via phagocytosis enabling sustained treatment free remission autoimmune diseases such as lupus and where significant unmet medical need remains.

Next slide, please.

Last week, we shared advances from our mid and late stage respiratory pipeline amlutilimab, lunsecamig, and itapekumab across several indications. The clinical evidence supporting the OX40 ligand inhibition across three major diseases, namely asthma, HS, and AD, is compelling. Furthermore, the efficacy of our medicines targeting this pathway with different modalities is supported by the following data. Preliminary efficacy results show that the treatment with amlutilimab led to clinically meaningful and durable efficacy on exacerbations, lung function, symptoms in patients with moderate to severe asthma, including in, but not limited to those with heterogeneous inflammation. This limited phase two forearm dose finding study did not reach statistical significance. The primary endpoint of reductions in exacerbations at the highest dose level in the ITT population. As a result, all the endpoints are highly biologically possible but exploratory. In certain groups, including the subgroup of patients with high eosinophils, and elevated neutrophils, amlutilimab showed a robust reduction of more than seventy percent in the annualized rate of severe exacerbations of asthma. Hamletelimab was generally well tolerated with no new safety concerns, We and members of some of the KOL community feel that they are very excited by this result. With the relevant statistical caveats that I've already mentioned amlutilimab appears to have a differentiated efficacy profile in selected asthma patients potentially representing a breakthrough for this underserved population If this result is confirmed in future phase three studies, we are in, which we are in the midst of designing.

As our early r and d pipeline continues to develop pleasingly, I'd like to take us opportunity to shine a light on our versatile nanobody platform. Only has this produced the potentially best in class in asthma drug lunsecamig, but now it's continued to deliver with brevekamig, our anti tenor anti ox forty bispecific. In HS. Brevecamig achieved its primary objective, clinically meaningful improvements of both high score 50, the primary endpoint, and other endpoints in patients with moderate to severe HS that are naive to biologics. I'm delighted to observe that the treatment benefit a competitive efficacy profile when compared to currently approved and emerging medicines in HS with a safety profile in line with expectations and no new safety concerns either. These results show the potential to increase efficacy by targeting OX40 ligand on top of the conventional anti TNF treatment in HS through this dual targeting mechanism is effect.

We have therefore decided to prioritize prevacamix for further development in HS. Finally, amlutilumab recruitment is progressing ahead of plans in atopic dermatitis for the phase three studies. The Oceana program is anticipated to read out in its entirety in twenty twenty six and will provide the foundation for future regulatory submissions, As a result of the accelerated recruitment, the initial results in coast one and SHORE studies might emerge earlier than anticipated. Tell turning to balanatunafib, Preliminary results safety results showed that the treatment were generally well tolerated across multiple doses with no new safety concerns being identified. Most significantly, the study confirmed its differentiated safety profile. While the primary endpoint of PASI seventy five compared to placebo amongst the highest treatment dose evaluated in patients with naive to biologics. Moderate to severe plaque psoriasis did not meet the statistical significance due to the nature of this limited phase two study, Lower doses across naive and experienced patients showed clinically relevant s c 75 responses. Which are comparable to other medicines previously assessed in psoriasis. Our additional phase two in RA's anticipated readout later in the latter part of this year. If successful, we will combine our oral TNF r one signaling inhibitor and innovative standard of care therapies with a view to increasing the efficacy ceiling.

As we've always considered one potential application of this molecule in combinations, including fixed dose combination, we are assessing combination options with internal assets In addition, we're at various stages of discussion with major pharma and biotech partners to generate novel combinations for multiple immune mediated diseases. For example, with Eli Lilly and company, we're exploring the potential to combine incretins with Sanofi immunology pipeline pipeline medicines [indiscernible] The updates on the progress of our pipeline today support our ongoing commitment commitment to bringing innovative medicines to all patients. It is acknowledged that the study design and previous strategy were not optimized in all cases. However, the incorporation of this knowledge to enhance productivity is underway. Furthermore, the progress of new studies exploring lensekumab potentially broader use in high risk asthma, COPD, and atopic dermatitis enetopecumab, in CRS with and without nasal polyps continue to reinforce our pipeline.

The FDA's recent approval of Kafilias as a prophylaxis for patients with hemophilia A and B irrespective of inhibitors. Underpins a significant milestone for this community of patients with a unique mechanism of action. Gefitinib is a small interfering ribonucleic acid therapy that targets antithrombin, requiring only six small volume subcutaneous injections per This approval is expected to contribute to a redefinition of the standard of care with a reduced treatment burden resulting from optimized dosing, complementing by complemented by AT levels monitored by Siemens' companion diagnostic. Available at no cost with Sanofi LabCorp support program. A regulatory decision in China is anticipated by the end of the year with submissions in the EU and Japan expected next year once pediatric data are available. I'd like to conclude with my usual news flow slides for 2025 and for next year. We plan 11 phase three readouts, 15 regulatory submissions, and 14 regulatory decisions in multiple jurisdictions increasingly capturing the improving value of our pipeline. I would mostly highlight two upcoming phase three results for this year that will be significant. Tolobrutinib in PPMS and itapicimab in COPD. But there's some the aim of launching next year depending on the data.

Next year, I'm looking forward to seeing the results of the phase three data for Ilimprovart, a subcutaneous c one, pathway inhibitor. Our objective is to improve the journey of CIDP patients. With really approved bot as a potential treatment option for those who are inadequately responding or a failed standard of care therapies.

We very much look forward to updating you on this progress. As I frequently emphasize, we adopt a humble stance in the face of disease, acknowledging that not all of our efforts will be successful. It is nevertheless anticipated the synergy of skilled science focused teams in conjunction with our augmented exposure to cutting edge digital technologies will facilitate the advancement of this unique pipeline pipeline within our core therapeutic areas with the objective of benefiting patients. I would like to thank all of my brilliant r and d, team members and colleagues across the company for the positive progress made this year We're chasing the miracles of science to improve people's lives. With this, I hand back to Paul for q and a.

Okay. Thank you. We'll now open the call to questions. As a reminder, we would ask You'll be notified when your line is open to ask questions. At that time, please make sure you or option two, submit your question by clicking the q and a icon at the bottom of the screen. Question will be read by our panelists. Now we'll take the first question. Please go ahead.

Yes. First question is from Emily Field from Barclays. Emilee? [indiscernible] Okay. Should we take the next question? Try and come back to Emily if she if we can.

Okay. So next question is from Richard Vosser from JPMorgan.

This is gonna be a quick afternoon.

It certainly is. I'll be very quick as well. I think I've got it to work, hopefully. So a couple of questions, please. Firstly, maybe one just on the amlutelimab asthma data. Obviously, efficacy in these type two type two low patients. Just thinking more deeply, how you think that efficacy compares to to Dupi and and really how you think that will reap to the efficacy in AD relative to to Dupixent from from what you can see. And then a second question just on this novel combination, which I think I heard was with incretins and your oral anti TNF. Just thinking through that combination, are we should we be thinking about that in HS Obviously, there's a disease overlap with obesity there. Struggling to think beyond that in terms of the the the the the combinability. So just just thoughts on what how we should think about that. That combination that you're thinking there. Thanks very much. [indiscernible] Thanks, Richard. Three little sneaky questions, dropped in there, and I'll address all three very quickly. Firstly, on Amelie and Asma, let me start by saying that as we said at the top of this call, we remain hugely committed to Dupixent with our partner Regeneron, and we will continue driving that in pulmonology both in asthma in CRS with MP, etcetera.

And, of course, in COPD So I I, you know, I I I absolutely would not take a comparison between Amelie and tupilumab. Let me answer your question, though, promptly. We're very excited by the results we've seen with Amlion asthma. We've been very clear and cautious that it missed its primary endpoint. I have to say from where I'm sitting and when you see the data, I feel that in multiple subgroups, we have really very compelling data, which has driven our commitment to going straight to phase three, in subgroups with substantial unmet medical need. You talked about the hyacinophil group and indeed the heterogeneous inflammation group. And in those populations, amlutilimab has a distinct place for the treatment of patients both because of the efficacy in those groups, but also its q twelve dosing. So I I hope that answers your first question. The the the second question was related to valentinofib and combination therapies. As I said very clearly, Actually, we said this early on. There would be a small number of indications in which we would go with monotherapy. We always plan to combine this in combination. Indeed, even in rheumatoid arthritis today, anti TNF is combined with methotrexate, which is that synthetic demarc.

So our strategy is indeed to go into combination therapies, including fixed dose combinations. We are in discussions with multiple big pharma and, biotech companies for the appropriate rational conversations and, of course, with our internal pipeline. And your direct con question about incretins actually, there is a substantial body of literature across multiple inflammatory disorders. And we could list them, but I won't do that here. Where metabolic contributions to disease are extremely substantial, you'll appreciate that for the sake of disclosures, we won't go into the disorders now, but you'll you'll you'll also appreciate we're explore exploring multiple opportunities Thank you. Thank you, Hooman. Thank you, Richard. Okay. Next question, please.

Yes. Next question is from Luisa Hector. From Berenberg. Luisa?

Thank you. Sorry.

Had to find my unmute button. Thanks for the call. My question is still on amlutelimab and asthma, but maybe to go a little bit more broadly you have other assets in development for asthma. So how do you see it as sort of more broadly a respiratory franchise? Developing within your pipeline lunsecinib, etcetera. And then perhaps I could just check on on Dupixent, again, respiratory. So a little bit more color on that COPD launch reimbursement status of COPD and how you we should think about that phasing through 2025. Thank you.

Thanks, Louise.

I'll so I'll take the first part just to sign up and then hand to the second part, which was you know, we've said all along that we wanted from multiple different mechanisms addressing different parts of the patient journey. It's clear that biology penetration, even after all these years, is still in the high teens in in asthma, of course, we'll get to COPD.

And so we need to have different offerings. You didn't mention in a second, Meg. I think you showed data back in '23 at ATS. On the FeNO drop.

Which was radically different. And you can see us starting to shape up how the market could look with high efficacy approaches for those that needed more. Longer interval those that want less needle burden, And then, of course, safety and other elements of efficacy. I think we're very well positioned given the low penetration and the very different offerings for each patient. It's quite a novel approach we've taken. We've done this in multiple diseases. I think it's gonna play out quite successfully for us Hume, anything to add on the second part of the question?

Yeah.

And I'm gonna hand over to Brian for the launch piece. Just to just very clearly, I went with what Paul said. Remember, in LuncekaMig, we have multiple respiratory populations. Including high risk asthma.

Patients with severe asthma. And we really, really Louise, as you know, with the combination of credentialed targets, 13, shooting for breaking the efficacy ceiling. Straightforward. The the TPP for that is really very straightforward. I won't repeat the other things that Paul said because think we our commitment from the very beginning was to take franchise areas, to take whole areas, and to provide patients in those areas with the very best treatment we could do and and to to really begin to tease out substrata, and that's what we've done. [indiscernible] Thank you so much for the question. I love that we keep getting asked the on COPD. This is a really important disease state that's very heterogeneous like, like asthma is, as a matter of fact. We're just articulating, and we've got a couple of shots on goal I think you're from a COPD standpoint, but let me first start off with, Dupixent. You know, we anticipated always that it would continue to gain momentum. We launched the end of last year. We saw really good progress at the end of last year. It's gaining momentum even as we started into this year when we still see the inflection point will be in 2025.

Actually, we've seen early data suggest that we have a record setting pace so far as it relates to Medicare and Medicaid coverage. Or Medicare and commercial coverage. About 90% of Medicare coverage at the fifth point, 88% commercial lives are covered. So that's really record setting for the indications that we've had. Additionally, as you look at indicate or initiations, we're seeing it's our most rapid respiratory initiation launch so far. Again, but these are initiations. They need to turn into NBRx. They need to turn into TRx and that's what we're out there doing now. So feel that this is continuing to strengthen our position. The pulmonologist office is having it's having a nice play as well asthma.

But, again, as we said before, Luis, we expect 2025 to be the inflection year for COPD. And for it to continue to be a part of many indications now. Our seventh indication recently approved in CSU, a part of the overall growth that we anticipate will drive double digit CAGR growth from 23 to 30, generating roughly $2,022,000,000,000 or so by 02/1930 time frame.

Okay. Thank you. Next question.

Yes. Let's try, again Emilie Field, please.

Hi. Thanks, and sorry for the mix up before. Anyways oh, okay. So I'm I was just wondering if you could help us kind of understand the or quantify the phasing impact. You know, was there any incentivizing for stocking ahead of a potential competitor launch? And then in the slides, you also mentioned that you're focusing on increasing the next season immunization rate. You'll particularly in The US, what was the penetration of Bay Fortress over last season, and how far do you see yourselves being able to take that up this year? And then a question on bribekamib. Just wondering if you could give us a little more color on the synergistic component of the MOA given that you know, we know the TNFs alone look inferior to the IL-seventeen and then the ox 40 ligand urone monotherapy didn't succeed. So I was just sort of curious why you think that the combination there will look better than each on its own. You.

Okay. Thomas?

Yes. Thank you, Emily. Happy to to provide a bit of color there.

So just to get started, I want to reassure you or anybody that, no, there is no incentive. There was no incentives during the season to to stock up [indiscernible] Absolutely not.

Now the the the color is more specifically indeed as you as you pointed out on The US market. I'll give you a couple of numbers, I think, that that can help. If you look at the overall RSV, prevention, vaccination coverage rate, during the 2024, twenty twenty five season. So let's say the month of October to February, March.

Roughly in The US, a vaccination coverage rate, which is around fifty five to sixty percent. All product included. Of course, the lion's share of that was before this, which is great. And therefore, it means that we have more to go. Because above sixty percent, you know, that we expect big VCR to be close to the traditional vaccination coverage rate for infants. So there's room to go, and that's why we're we're saying that we have job to do. We need to work on increasing the immunization rate in '25 and '26 to go and needs to be because all babies need to be potentially against against RSV. And to give you a bit of color exactly on what we're gonna do, I think the qualitative part is important. We look at the immunization over the past winter, what we saw is that the October, November, where the right interventions were in place. But it got a little bit fading out when you look at the month of January February, and month. And I think that shows that people have not yet fully understood that it's a full season protection, but babies are at risk when they are born in January, March, and February February and March.

That's the job we're gonna do this season and the next season. So that's why we're focusing on this. Room to grow there, As for for the full year, we've told you last year that our intention is to grow 2025 sales of before two versus 2024. We're still on that trajectory, and we're focusing on protecting as many b babies as possible moving forward.

Okay. Thank you. Hooman, do you wanna make a comment on Yeah.

Yeah.

Emily, thank you for the question on. I'll structure the answer briefly in three parts. One is this is a demonstration of our con continuing commitment to internal research at Sanofi. I'm reflective of the comments people have historically made by research and development at Sanofi. And it's a source of particular pride for me. To bring in innovation from the outside, but especially do work internally And these bispecifics are beginning to demonstrate the muscle we have research as well as development in Sanofi. Point two is you have to question why would there be a combination value in those two targets. Remember, of course, the OX 40 ligand is a member of the TNF superfamily as is TNF. Then the we specifically designed the exploratory studies to be able to see whether oxford ligand alone or in combination with TNF would make a difference. Posing the question that you asked exactly the same way. I'm I'm really delighted to be able to provide, you know, albeit early all the caveats to go with early studies and patients, particularly biologic naive patients. That that combination works. Reason it probably works is that TNF itself induces [indiscernible] on cells. Ox 40 ligand licenses multiple cells, particularly T cells by by dendritic cells.

So I really do feel that with the double punch has a precedented biology for synergy. Mean, I I've gotta say it the the fact that it really is competitive with best in class molecules out there for HS. Give me, great aspiration as we move forward with these studies.

And may maybe I could add. I mean, I think Hooman touched on it in terms of this cool work we're doing with bispecifics and things. Let's not forget I mentioned ATS earlier, from '23. IL-thirteen and TSLP phenodrop was in excess the individual mono components. Let's also remember, I think, and Brian, you correct me if I'm IL-thirteen didn't work in ASPR on its So it's a red herring to think that because get good on mixed data on one, you don't get a synergistic effect. And there is very definitely something in targeting two pathways that one plus one equals three. It's the next sort of expiry back exploratory battleground for us. I think we're excited about. What we've seen.

Next question, please.

Yes. Next question is from from Guggenheim. Chimus, Okay. So, yes, she must This is Colleen on for Seamus. Thanks for taking our question. Is there anything you can share to help us get a sense of your level of tariff exposure, to transfer pricing and on Dupixent? And any strategy and steps you're considering that may limit this exposure? Thanks.

Okay. Thank you very much. Francois, over the year. Yes. At this stage, we have no specifics to share regarding US tariffs. That said, we have run through all scenarios, and we will communicate any development if need be when the time is right. I would really like to help you, but it's difficult to comment on the occurrence of possible future events that are still unknown or speculative at this stage. So there is no certainty beyond what has been announced. And has been announced so far has been fully included in our confirmed guidance for the full year 2025. But not to go beyond that, would be a little bit complicated because we don't know which country would they apply to, which products would would be impacted, which rate would be applied, when would it start, So it's extremely difficult for us to comment on the number of scenarios, but just be aware of the fact that we are ready and we have fully if anything else happen, and we are fully factored whatever has been officially confirmed and announced so far.

Thank you very much. Next question, please.

Yes. Next question is from Ben Jackson from Jefferies. Ben, Hi. Yeah.

Thank you.

Just two quick ones for me today.

First, just a little bit more on the oxfordial t and f approach. With the results that you've seen in HS, does this bridge any kind of confidence that there are additional indications that this combination could be useful for? And does that change the relative positioning that you're thinking about regards to the broader portfolio? Obviously, we've just mentioned the the OX40L standalone there and potentially seeing a synergistic effect. But does has this changed how you view any of the assets in your portfolio? And then secondly, just on the TFR one as well, with regards to the psoriasis readouts, has the data that you've seen changed any expectations for the rheumatoid arthritis readout coming up?

And then with regards to the combo strategy, I appreciate that you've quant well, said that the monotherapy was only a small part of the opportunity that you were seeing in the first place, but perhaps could you provide a little bit more color around that and what you see the biggest potential there is for thank you.

Okay. Thanks, Ben. Hooman?

Let me start with Brevekneik. You're entirely right that the the combination of [indiscernible] What I won't talk about today is the the molecular data we got out of those studies that the molecular data from those studies give us a number of increased leads in what we do. I think it's an unspoken part of being an emerging immunology powerhouse. That we have enough internal network strength that we observe from experiment human experiments that we do and it guides us as to where we can drive these molecules through life cycle management. Short answer to your question is yes. Asymmetric contrarian insights emerge from our own data allow us to develop further as a immunology powerhouse. And then to your two direct questions on TNF molecule, TNF small molecule signaling inhibitor. The answer to your question is, we always knew this psoriasis was a pathfinder indication. What I mean by that is it allowed us to identify the differentiated safety profile tech. It allowed us to, establish dosing very straightforwardly. Pick, and it and it allowed us to really understand where we would go with in combination therapy. There are a number of disorders. You'll appreciate stories like RA and ankylosing spondylitis that are very TNF responsive, and we may well end up there in monotherapy.

And then there are a variety of conditions that naturally lend themselves to combination therapy I won't disclose those now, but the biology of those is well well precedent.

Yeah. Thanks, Simon. I mean, it's it's exciting actually, in terms of the opportunities. White space for us, it really was HS So I think we're very interested to see what the the one plus one equals three is. I personally haven't been involved with TNF for most of my career. The safety piece in the psoriasis study was the piece we were looking out for first. Followed by efficacy. And as soon as we that was never our target. But the combinations with TNF as backbone, you know, the it's interesting the number of conversations conversations we're having externally. There's a great level of interest in raising the efficacy of other adjacent ores to make sure that we can break new efficacy standards for different diseases. Not that was sort of always the goal. And that's now playing out a little bit like that. So of course, lots of work to do. To get there, but think we're feeling pretty positive.

Okay. Next question, please.

Yes. Next one is from Peter Vedult. From BNP Peter?

Hello?

Hello?

Hi, Pete. Hello.

Hi there. How are you doing? It's Pete here from BNPX. Just two questions. I'm surprised this one hasn't been asked yet already. Paul, the letter you and Vaz penned in the Feet does make valid and fair points, but we know governments have big commitments to the defense spending increases and not an unlimited budget So the simple question for me is, have you had any recent interactions with European politicians that give you hope, or should we remain cynical? About their appetite to better reward innovation in Europe? And then, Hooman, sorry, just to sort of label the point. I know you can't talk about the data, but HS is a big focus for everyone. You know why? When you are you are expressing excitement for for prevEKAMAG, when we finally see that phase two data, we're all gonna do cross trial comparisons to the IL 17. So wanna be clear. Are you saying that you feel the data is competitive the datasets we've seen from the IL 17 a's and a and f's? Thank you.

Well, let you go first, and then I'll mention the letter to the Feet. Yeah.

So so the you you may know I was at a cameo role, maybe a bit more of it than a cameo role in the early days of when I was at UCB. And have an intimate knowledge of that molecule in multiple indications. Suffice it to say that Rebecca Mig, in my mind, albeit early with all the caveats that you make about small early exploratory studies, is certainly competitive in relation to MEMS ALEX.

And I'm excited to see how it goes forward in phase phase two b and three in due course.

Okay. Thank you. And as to the letter, Pete, you know, we've been I think, very poised you know, given, China, US, Europe, and the state of things in terms of expectations. I I think for a long time, even before the conversations, over the last weeks with the change administration in The US, there's been a long time campaign to really help Europe understand the value of medicines and investing in them and the quality of jobs and the impact. Very few people fully appreciate that the number one exporter from the EU is in fact pharmaceuticals that 300,000,000,000 plus. They've been public about that. That's been well documented. And I think we have had conversations with the presidency of the EU over the last the last weeks just to try and remind everybody of the role that Europe can play in the global pharmaceutical industry and the this is a good moment to express some commitments so of course, these things have to be said. They don't always materialize in changes. In stances, but I think it has to be no regret from us to try and make sure people understand what we bring to patients why we do it, what it means for countries and for Europe in particular.

And be very composed with where Europe sits between The US and China. You know, it's delicate as you would imagine, Sanofi.

Okay. Next question.

Yes. Next question from Joe Walton from UBS. I've got one, I guess, slightly philosophical question about r and d and then one about situation in The US. So, the the philosophical one is, we've seen a couple of what looked like failed results or at least not particularly good results, which have been blamed on very small sizes of of studies. So, we can't get to increase our probabilities of success until perhaps the studies are are bigger. Are there any other of your phase two studies that are coming out that we may also find just perhaps a little bit too small to give us the answer that we want. And I'm thinking, you know, the ox 40 ligand, the data wasn't statistically significant, Right? You're very you're very convinced it's gonna be competitive with Bimzalex, for example, in HS. But we can't see that data yet. And the oral TNF, that also seems to be too small a study to be really very clear about it. Could you perhaps, tell us whether you stink think there is still a decent chance of an oral only indication for something like RA or whether this is really going to always now be perceived as a combination product.

And my second question, is just in The US. And and, Paul, I'm asking asking you this as your role in pharma more than from a Sanofi perspective. But if you do get the opportunity to renegotiate the IRA and go from nine to thirteen years for everything, which everybody thinks is appears to be what Trump is encouraging Congress to do. Think there will be a significant pay away that you will have to give in exchange for that? Because clearly, the CBO would say, well, that's gonna cost us much more money. So should we see that still as a net benefit for the industry? Many thanks.

Okay. Thanks, Joe. One of the fastest to connect. Thanks, Joe.

Hooman? Yeah. So, Joe, thank you for the philosophical question. Let me be very direct. I've been very reflective about the comments we've received after disclosure of our results. In an effort to demonstrate abundance of caution, in an effort to be extremely statistically rigorous, I think we may have not conveyed the clarity of the message about the value and success of these trials. And I'm just gonna say these very directly. And you will see the data. But with the AMELI asthma data, we've been very clear we missed the primary endpoint. But I've been abundantly clear that there is no equivocation in my mind that this is a drug It will go through phase three. And with a reasonable wind behind us, as with all phase threes, I have significant confidence that it'll be successful. Yeah. So this isn't a function of a small trial. It there there are always in new exploratory dose finding studies a bit of statistical wobble, But my confidence in Amelie Asma unequivocal. Secondly, in brevekamig, the study did not miss its primary endpoint, We've I we went to some pains to craft the language about not missing its primary endpoint. Just to be super clear, the studies statistical approach was a Bayesian approach, which we didn't invent actually.

It's a Bayesian approach that is very similar to the first inhuman for Bimzellix published by Sophie Glat the first author and my old friend Steve Shaw. The final author. I was there when that study was delivered. It's a very straightforward, and I won't explain it here, Bayesian study. The credibility intervals on that molecule did not pass the null point. I I won't talk about the exact numbers, but the level of confidence by which we know this is better than placebo, albeit in a super early is not just compelling. It's not highly compelling. It's exquisitely highly compelling. Right? So we didn't miss the primary endpoint, but we've been really very diligent about not making claims that we might be criticized for later. Then the final question was on this small molecule TNF r one signaling inhibitor. We have to be humble in the face of disease. We tried this molecule in a disease that isn't exquisitely anti TNF responsive. Did it because you can judge plazes on the skin very quickly. We needed to make sure the molecule was safe. Needed to make sure, as Paula said, had a differentiated safety profile. We also needed to make sure that we could, judge the dose appropriately.

And skin's a very good way to assess dose response. I I think the disorder like rheumatoid arthritis that is more exquisitely TNF responsive may show a greater relative efficacy profile we said from the very beginning, that as well as treatment in rheumatoid arthritis and other TNF responsive disorders, we would go into combination therapy. And I feel that the conversations with multiple large pharma partners who have significant provenance in this space [indiscernible] unequivocal, in my mind, validation of the value of this a combination therapy for those kind of sort of So philosophically, I think when Guchet Yeah. Thanks, You know, it's it's a it's a good question because you mentioned, you know, could we've had a bigger populations? I think you touched on it. I don't know [indiscernible] or repeat what you said too much, but it was about safety at least and showing some efficacy in psoriasis. Before we go and put RA. Think back to the monotherapy question, it would be great to deliver a primary input in RA later in the year. But we'll wait and see. Because the safety meant that were combinable, and that was always the subtext. I thought we'd been quite explicit, but but we will see.

There was efficacy. You know, we've been I've been in psoriasis for a long time. The efficacy bar has already been set. There there was really no way to have achieved that, but our alternative was to do really start with the RA study. That would have taken too long. So so I think perhaps we took some risk in terms of not delivering, you know, the primary endpoint in psoriasis. But I think sort of understood that. To be clear, we're much at the end of the phase twos now. Immunology. So in answer to the first part of your question, are we really what else might we see or even miss on? I don't really think that's a a question. At this point. As for the the pharma piece, you know, and I think Francois it very eloquently. You know, we've there's really scant detail in terms of the numbers to be able to make any type of predictions. However, the executive order from last week was reasonably explicit in its intensity. It stepped back a little bit from most favored nation, step forward a little bit into what it means for patients and it could mean for out of pocket, and importantly, brought in three forty b and PBMs into that narrative.

So I would imagine there'll be a pay for because, you know, clearly, if you're moving nine to 13, there would be. And we'd be delighted as an industry because I think some small molecule innovation was lost. In that mistake first time around. I think it looks to me, at least, from the executive order and subsequent conversations, that it it may be a shared responsibility. In how we get there to do that. And I would hope that's the case. Again, with the administration, we take nothing for granted. Read the executive order. We'll reflect on it, and we'll see what it means in practical application. Next question?

Yes. Next question from from.

Hi.

Hey. Can you hear me?

Yep. Yeah.

Great. So just wanted to go back to the question on tariffs. And just sort of push, Francois Xavier a little bit on on that. So yeah, based on the administration comments, the, you know, they have talked about 25% pharma tariffs. So this is going to section two three two. And there's a lot of discussion around whether that goes on to transfer prices into The US. So perhaps you could just help us by if that's the most likely scenario, what sort of impact could that have on Sanofi at 25% tariff on transfer prices into The U. S? How easily could you mitigate that either with prices at one end or with just lowering transfer prices? And and would that is there a material impact on Sanofi tax rate? And and also perhaps on Dupixent, just help us understand where The US supply is coming from. Is it all Regeneron, Ireland and US plants? Or is there a Sanofi impact from Sanofi's European plants as well? And then just following upon the Rebecca Mig question around being competitive competitive. When you say competitive with existing assets, mean it's sort of same ballpark? Or are you looking for something here that is better than what's there already?

Thank you.

Okay. Thank you. I mean, Francois, show what you are able to?

No. No. No. I I wish I could help you, Ram, but again, I mean, I don't want to stop discussing about various scenarios because it's very speculative by nature. Once again, we have we are aware of some of the tariffs that are impacting, for example, trade between The US and and China, for example, which we have factored in fully in our confirmed guidance for for the full year 2025. After that, I don't want to enter into scenario. You are talking about 25% because we could run scenarios at 5%, 10 it is, on which product does it apply to which country, from which country. Very, very difficult to comment on what is once again relatively speculative as of now. Let me just help you a bit though, on our industrial footprint in The US. So regarding our presence on production footprint in The US, Sanofi has been even prior to these discussions about tariff, increasing each share of manufacturing in The US and specifically biologics drug substance. So we continue to assess our future capacity requirements, and we are considering additional measures potentially including investment in The US aligning our industrial footprint to the needs of our pipeline and to our expectations future growth.

So just as we did, for example, our Modulus investment in Europe and in Asia, as we do as well the modernization of our Frankfurt in Sullinsight, we are always opportunities to expand our industrial footprint including in The US to meet both our production needs and the needs of our patients.

Thank you, Hooman.

Thanks for the question, Graham. I said I just let let's just very briefly start with the caveat, which is I've as I said to Joe, we exercise an abundance of caution. We don't over interpret our small studies. We convey the messages very clearly to the outside world. Because I believe we've we've attained a level of credibility in r and b that we need to enviously protect.

With that said, and the caveat that we used, precedented statistical approach that, in fact, bimekizumab used. I think that this molecule has a chance to fall somewhere between the two bookends that you provided. And we will find out when we run it in broader group of patients. I still think, by the way, that, a, it's competitive. And the unmet medical need as we found with psoriasis with this extremely severe skin disorder continue to progress and emerge, and that's what we're hearing from all the conferences of the.

Okay. Thank you. Next question, please.

Next question is from Florent Cespedes from Bernstein.

Florent?

Okay.

We should perhaps move on.

Go ahead.

No.

Okay. Next question is from James Quigley from Goldman Sachs.

Okay. We seem to have some tapping data lag.

May have got me.

James, we got you.

Thanks for taking my questions. I've two two, please. So first on Amlodetinib and asthma, apologies if I may have missed that, but you filed out your confidence in moving to Phase three given the potential benefits demonstrated. But would you be able to share if you're planning to move into Phase three with the broad population? Or a selected population or multiple Phase III across different populations? It would be good to get your thoughts there. And how quickly do you expect to move here? And what could be the next steps since we're starting the Phase three?

And secondly, on the gross margin, the impact was pretty strong this quarter with COGS declining slightly year on year. The increase in revenue. So could you give us a little bit more color over the drivers of the gross margin To what extent is this partly driven by some of the benefits from the new Dupixent manufacturing process? And how would you expect the gross margin to progress through the rest of 2025 and into 2026? Thank you. [indiscernible] So thanks for the question, James. The the the first point is that we you know, it it's important we've just got this data. We've recently received the data. Aaron deep consultations with significant KOLs in this space. Who, by the way, thus far seem excited by the data. We'll continue that work to define the face three protocol fully. We need to make sure the community is with us. But the short answer to your question is, that we have unequivocally identified in our phase two population with high unmet medical need and we will ensure that that population is overrepresented in any phase three study we do.

Maybe I'll add a little bit to that because course, we have the benefit of seeing the data. We would never wanna risk any publications or anything like that. But the population, think humans are alluding to, is a significant percentage of the biologic eligibles, just to be clear. So that's very, very important for us. And I think people need to realize that you know, when we originally went to take on the OX40 ligand, it was targeted at AD. Originally. Was the original acquisition. Our base case in AD, not that anybody's asked, is that we meet the primary input. That is where we would like to be. And that's our base case. Of course, the science will tell us whether we are right or not. Asthma, the daily asthma, is actually very encouraging. In terms of safety and efficacy. So we'll wait and see. You know, these things you turn these cards over but I think we feel very positive. Our gross margin, Yes.

Gross margin, James. If we look at it five years ago, we were significantly behind our peers in terms of gross margin, almost five percentage points. Today, we are almost at at par with our peers in terms of average gross margin. You saw a significant increase in q one, two percentage points last year. About a third of it is linked to inventory revaluation that happens traditionally up or down, but in that case, it's up in q one. But being that you have two third of it is linked to essentially product mix. And efficiencies. As you know, we have significantly worked in order to improve the efficiency of our industrial footprint over the last couple of years. And we are starting to get the benefits now. And the product mix is across the board. It's not only Dupixent you were mentioning, the new Dupixent process. It is one factor among others. By the way, this one has been spread over a few years, so it's not specific to q one. And it started already two years ago, and it's not completed yet. So it's over it's a relative long period. Going forward, do expect to see some further increase in gross margin.

Not necessarily significant for the remainder of 2025, but the next couple of years, we will continue to see our gross margin.

Okay. Thank you. Next question.

Okay. Let's try again with Florent Cespedes from Bernstein.

Good afternoon. Florent Cespedes from Bernstein. Can you hear me?

Yes. We got you. Good. Thank you very much. I apologize for that. So two quick questions please. First, I would like to come back on amlitelimab.

Could you maybe give a little bit more color on the percentage of the population with severe asthma that would should respond the most to to the product? You highlighted the eosinophil or neutrophil. What percentage of severe asthma population these people represent? And my second question is on Medicare Part D redesign. Was supposed to impact most likely the more heavily the first quarter and then the impact should ease. During the course of the year. Could you maybe elaborate a bit and give some color on the impact from this measure on your accounts? Thank you.

Thank you, Florian. In the interest of time, I'll just quickly answer the subpopulation question. We're not shared and we're not trying to help calibrate that at the moment. We're getting to the phase three, and we can get into more detail on that. Brian Potti?

Yeah. Medicare Part d. Remember, there's two pieces to this. First piece actually, I'll I'll cover Dupixent a little bit more Just to remind you, most of our business, more than 70% of our business is still on the commercial side. About 30% of it is on the government based side. A percentage of that is actually Medicare quite specifically. And then there's two pieces as it relates to the Medicare [indiscernible] One is obviously the covering the the gap there, and that is we've seen a slight impact of that. Obviously, as we anticipated, and that was part of our plans. Actually, we originally knew this for quite some time. But the other part that actually is interesting to us is the cap of 2,000 out of pocket. And while we haven't seen an inflection of that yet, there are some early signs that actually there might be more patients up for grabs now with the fact that they have no more than 2,000, out of pocket expense. So we'll see how that progresses in in 2025. But so far, we think that there'll be some some positives and some offset of actually for the Medicare Part D redesign.

Okay. Thank you. Next question.

Yes. Next question is from Sarita Kapila from Morgan Stanley.

Hello? Can you hear me?

Yep. We got you.

Hi. Hi. Thank you for taking my questions. Just a quick one on your 3% sales growth for flu this year, should we be thinking about '25 as another year of potentially low single digit declines? And then taking a step back on AD, you have multiple modalities [indiscernible] also bispecifics with luncicamig. Some of your peers, Pfizer and J and J, are pursuing trispecifics, so it'd be interesting to get your thoughts here. Is this something you also plan to do? And any thoughts on try specifics in AD, sorry, would be interesting. Thank you.

Okay. Toma?

Yes. Thank you, Sarita. On US flu, a bit too early to be definitive there because we are still in prebooking period. Right now for flu in in The US. But we wanted to highlight what we observe in this process. You remember that last year during the flu season, we observed in The US soft vaccination coverage rate. Roughly minus five percent for The US population last year. And that turns out to to generate some price competition as we observe it today in The US for the during the pre bookings. A bit too early. Usually, I give more color on the q two earnings, after the prebooking season, so so stay tuned for the next part.

Thank you. Hooman, at TriSpecifics.

Yeah. I'll be we're at place of time, so I'll be super brief. Just to say, obviously, we are well aware of TriSpecifics. Our nanobody platform allows us to generate tri or quadraspecifics, etcetera. It's an area we've looked at. Just a point of caution, it's very hard to calibrate the geometric interaction between each of the heads, and we don't expect repeated incremental addition additional value We're adding additional biology. But the short answer to your question is, yes. Of course, we thought about trispecific. And I should say when you talk about atopic dermatitis, I just wanna remind everybody that it's a massively biologically underpenetrated marketplace, and there is substantial room for new molecules in that space. We remain committed to Dupixent.

And just before I move to the last question, I think this is we said this at the end of I think it was '23 at r and d day. I think it's still not fully appreciated that multiple mechanisms in diseases drive up biology penetration. I think we're still at low double digit or high single digit 14 in AD. So eighty six percent of the patients that are biologic eligible don't get a NAD. So we know that RA is closer to fifty percent at this point. That between then and there, is so much opportunity. And it's new entrants, different approaches, I I think I think this coexisting of different mechanisms is completely underrepresented in forecasting. Still, we see people thinking it's winners and losers. A good example would be the enthusiasm we have, and then whom we said it up top. Amlutetamab and Dupixent to both grow, you know, very well all the way to the end of patent by taking up new patients and coexist with different approaches. And and over time, you know, people's confidence in this approach will play out. But us, having seen a little bit more data than the rest of you, we're very confident in how that's happening.

Manifests.

Okay. Last question.

Yes. Last question from Simon Baker from Redburn.

Thank you for taking my question at the end. Most of them have been picked off, so I can be pretty quick. Firstly, just going back to brevekumab. You gave us the p value human. I just wonder, given this Bayesian study, you could give us the posterior probability, in that study. And then moving back to the oral TNF, and thinking about the internal combination candidates the IRAK4 degrader springs to mind. Are there any others that we should be thinking about that you may well combine? The all 10 f with?

Thanks so much.

Okay. Well, we'll finish on on this. So, Houma, over to you. So, Noah, your second question briefly for me.

The combinations. Other oral combinations, and external. Oh, yeah. Okay. [indiscernible] Yeah. Thank you. Okay. So so, Simon, thank you for asking the excellent, Bayesian question. I can't give you the posterior probability nor did I give you the probability unless I was hallucinating.

Apparently, the probability was in my footnote, which is great.

So so, no, I I can't You are hallucinating. I am hallucinating. I can't give you the posterior probability. But, actually, based on the data in the public domain in HS, you could work it out. That's a little test for you. And the answer for you but but you you'll appreciate that based on the data in the footnote, it's compelling. And then the answer to the combo is there are multiple rational combinations. I it would be unwise of me to disclose and prior art myself in this discussion But I think that the the the natural combinations with a TNF are super clear to people in the in the art and and we will pursue many of Yeah.

Maybe just to to finish on that note, that they're sort of obvious, I guess, based on you're trying to break new efficacy goals. It could be an IBD, could be an RA, could be in different order to treat diseases. You know? Yeah. I think the the open question we asked ourselves some time ago was whereas TNF approved and indicated where was it overtaken on injectables by other more selective approaches. And then if you're going into orals, what does that tell you about the combinations that would be ideal because either are likely to not make it on efficacy on their own, but together, they would, and that's the magic. So get into that over the coming months and hopefully have some things to share, and we'll do that as we go. But, otherwise, thank you all. For the call. Appreciate it, and we'll look forward to catching you in Q2.