Sanofi (NASDAQ:SNY) Q4 2023 Earnings Call Transcript

Sanofi (NASDAQ:SNY) Q4 2023 Earnings Call Transcript February 1, 2024

Sanofi misses on earnings expectations. Reported EPS is $0.89 EPS, expectations were $0.94. Sanofi isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Eva Schaefer-Jansen: Good morning, good afternoon and good evening to everyone. Thank you for joining us to review Sanofi’s Fourth Quarter and Full Year 2023 Results, followed by a Q&A session. As usual, you can find the slides to this call on the Investors page of our website at sanofi.com. Moving to Slide 3, I would like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. I refer you to our Form 20-F document on file with the SEC and also our Document d’Enregistrement Universel for a description of these risk factors. With that, please advance to Slide 4. Our speakers on the call today are Paul Hudson, Chief Executive Officer; Houman Ashrafian, Global Head of R&D; Jean-Baptiste de Chatillon, Chief Financial Officer; and the Global Business Unit Heads, Brian Ford, Thomas Triomphe, Olivier Charmeil, and Julie van Ongevalle.

For the Q&A, you have two options to participate. Option one, click the Raise Hand icon at the bottom of your screen or option two, submit your question by clicking the Q&A icon at the bottom of the screen. And with that, I’d like to turn the call over to Paul.

Paul Hudson: Well, thank you, Eva. And thanks, everyone, for joining our call today. Before we discuss the Q4 highlights, I’m going to start by updating you on another announcement we made this morning. Francois-Xavier Roger will join Sanofi taking over the role of CFO effective April the 1st, 2024. I’m very pleased to welcome him at Sanofi. He is an accomplished and widely recognized finance executive with a proven track record in accelerated value creation. In fact, some of you may have met him already before either in his role at Nestle or in the past at Takeda. He’ll take over a finance organization that has been significantly modernized under JB’s leadership over the past five years. JB has been instrumental for the successful execution of the first chapter of our Play-to-Win strategy and creating the growth opportunities ahead of us.

With JB at the helm of our finance team, we have consistently delivered healthy top-line growth over the last few years, a significant BOI margin improvement and EUR2.7 billion of cost efficiencies that were all reinvested behind our growth drivers and pipeline. He also worked closely with Olivier and Julie on the simplification of GenMed and the standalone of our consumer health business, two critical projects that have delivered significant value for the company and shareholders. Many of you may not be aware about JB’s long-standing personal commitment to charity work. He decided to devote the next stage of his career by leading a renowned French-based foundation and I’m 100% certain of the positive impact JB will continue to have on people’s lives.

I would like to take the opportunity here to warmly thank him for his dedication and leadership. He’s been a great partner to me and dare I say it, a friend, and to the rest of the executive committee. Thank you, JB. 2023 marked a pivotal year for Sanofi as we became a development driven, tech powered biopharma company. Our core growth drivers in specialty care and vaccines continue to deliver. The main driver remains Dupixent, which continued to deliver stellar performance in all approved indications and across geographies. Dupixent added EUR2.4 billion to the top line or EUR2.8 billion at constant exchange rate. 2023 also marks a very successful year for our Vaccine business with the launch of Beyfortus, a real moment for our strategy and execution.

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Q&A Session

In General Medicines, our core assets kept growing, GBU sales were lower overall due to net price erosion and we continue to actively manage our portfolio and divest non-strategic products. Moving to Consumer Healthcare, the business delivered more than 6% growth driven by priority brands and the recently acquired Qunol, which is an excellent strategic fit for our business. As you know, last quarter we announced our intention to separate our CHC business following our earlier decision to create a standalone unit to fully unlock its value. This will also allow us to better focus time and resources as a pure-play biopharma company. We’re in the process of reviewing potential separation scenarios and still believe that the path most likely to maximize shareholder value would be through a capital markets transaction to create a public listed company headquartered here in Paris.

Subject to market conditions, of course, the separation could be achieved at the earliest Q4 2024. In a nutshell, the strong performance of Dupixent and our key launches more than offset the anticipated impact of the loss of exclusivity of Aubagio, our last major LOE for the remainder of the decade. Excluding Aubagio, the underlying sales growth of our business was 8.1% in 2023, a fabulous underlying growth trajectory. Moving now to Slide 7, which perfectly demonstrates our ability to be laser focused when it comes to launch excellence as we turn Sanofi into a launch engine. Beyfortus, ALTUVIIIO and Tzield generated sales of more than EUR700 million in 2023, far exceeding our expectations. Beyfortus faced an unprecedented demand. While we’ve already been able to protect almost 2 million babies, this first season clearly confirm the importance of our all-infant protection strategy.

ALTUVIIIO is capturing more than 50% of all switches in the United States hemophilia A market. And Tzield created great excitement amongst clinicians as the first and only therapy to delay the onset of Type 1 diabetes. These three transformational medicines join aggrading number of Sanofi’s new product launches since 2019. New products generated over EUR2.2 billion in 2023 across different fast growing therapeutic areas. These launches will add to our top line next to Dupixent for many years, and again, keeping in mind that we will not face major LOE for the rest of the decade. As we remember from our R&D Day on December 7th, we believe that we have everything it takes to become the leading immunology company. In addition to the recent pharma launches, we have a record number of medicines in our pipeline with potential blockbuster status, including three with the potential for over EUR5 billion in peak sales.

We expect these launches to exceed EUR10 billion of sales by 2030. At the same time, Dupixent will keep being a once-in-a-career and a life changing medicine, continuing to deliver a low double-digit sales growth CAGR Until 2030. And finally, our growth driver vaccines will continue to power us forward with its leading positions in RSV, flu, pediatric combination vaccines and other franchises, bringing more than EUR10 billion in sales by 2030. Moving to Slide 9, we’re very excited about Dupixent’s potential to become the first biologic to treat COPD. And with our partner, Regeneron, we’re making rapid progress submitting applications for approval in Europe, the US and also China. And let’s certainly not forget itepekimab, our anti IL-33 monoclonal antibody, which holds additional potential for COPD.

Recent Phase 2 results of this asset were highly encouraging, and the two large Phase 3 trials are now nearing completion of enrollment. Pivotal results are expected in 2025. Together, Dupixent and itepekimab have the potential to address a large COPD population with limited overlap. We believe that these two medicines combined to have a peak sales potential of greater than EUR5 billion in COPD. Let me now share with you some of our key priorities for the year. Number one is to keep being laser focused on the best-in-class launches. We’re working closely with our partner AstraZeneca and regulatory authorities to increase the supply of Beyfortus for 2024 and 2025 to meet this tremendous demand. For ALTUVIIIO, we continue to capture patient share in the US hemophilia A market and drive geographic expansion after a very promising start in Japan.

And for Tzield, we will increase our efforts around the patient screening and enrollment in our support programs. And, of course, the launch preparations for Dupixent and COPD are well underway. Number two, we keep moving swiftly on our pipeline priorities. We expect tolebrutinib Phase 3 data for both relapsed remitting and secondary progressive MS around midyear. We will initiate the planned trials for many of our promising immunology, neurology, and vaccine assets. Finally, on cost reallocation, we announced a few months ago a new set of efficiency initiatives across the biopharma business that will free up operational resources to support the accelerated R&D investments and unlock value creation opportunities. We continue to target savings of up to EUR2 billion from ‘24 to the end ‘25 to fund innovation and growth.

To sum it up, 2024 is a year of investment in science, [indiscernible] pipeline and position us for strong EPS revamp in 2025. Let me conclude by highlighting some of our commitments to the fight against climate change. We’re making clear progress on our trajectory to reach carbon neutrality by 2030, exemplified by our leveraging renewable electricity and expanding our eco car fleets. As a reminder, our ambitions in 2030 and 2045 are vetted by the SBTi, the Science Based Targets Initiatives. We attended COP28 in Dubai last December in a push to elevate the need for stronger collaboration across healthcare systems. We are active contributors to the sustainable markets initiative, and have the privilege to lead the Patient Care Pathways working group where we focus our efforts on how to reduce carbon emissions from health systems while improving health outcomes for patients.