Q1 2024 Sanofi SA Earnings Call
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Speaker Change: I'd like to remind you that the information presented in this call contains forward looking statements.
Speaker Change: Which is subject to substantial risks and uncertainties may cause actual results to differ materially.
Speaker Change: Cause you to read the disclaimer in our presentation.
Speaker Change: In addition, I would say Ito form 20-F on file with the SEC.
Speaker Change: The document coverage.
Speaker Change: So for a description of these risk factors.
Speaker Change: I'm pleased to welcome our new CFO Francois for the presentation and Francois will be followed by human our head of R&D on the pipeline.
Speaker Change: For Q&A, Brian Olivier Thomas Judy to kept the global business units and ROIC.
Speaker Change: Yes.
Speaker Change: For the Q&A you have two options to participate in zoom raise your hand to submit your questions in Q&A.
Speaker Change: As we explained it up on slide.
Francois: Let's turn to the business. We are an excellent start in 2020 full with 7% sales growth in line with our past meeting portfolio transformation, where growth was driven by launches, including new and existing indications could you pick some underperformance for the independents are 2024 EPS guidance at CER.
<unk> continued to increase penetration in all approved indications and we saw performance diversified further across all geographies plus of course, the usual use reinsurance block.
Francois: Pharma launches led by Nick <unk> with more details to come a little later.
Francois: Launches also beat to the performance in vaccines with paperboard is making further progress including in countries in the southern hemisphere.
Francois: And consumer growth of 9% reflected the consolidation of the Qunar acquisition as well of course is organic growth.
Francois: And our plan to separate this business as discussed in the past.
Francois: Overall, we're pleased with the ongoing portfolio transformation, which is becoming more visible also.
Francois: Cost lines with more resources going into the pipeline and less into SG&A.
Francois: This is exactly the development, we set out last year, when we announced the next chapter of our strategy.
Speaker Change: Before moving on I'd like to extend my thanks to all of the Sanofi colleagues for their dedicated work and their commitment to patients Jason medical designs to improve People's lives.
Speaker Change: <unk> continues to perform as strong demand driven growth.
Speaker Change: Sales of more than $2 8 billion euros in the first quarter.
Speaker Change: Of this unique medicine increased by 25% globally fueled by the accelerated growth from indication expansions in the ex U S markets, where sales grew as much as 51%.
Speaker Change: With now more than 850000 patients worldwide the <unk>.
Speaker Change: Contribution from countries like Japan, China, Germany highlights the tremendous growth potential for <unk> across all indications and geographies.
Speaker Change: In the U S sales exceeded 2 billion hours in the quarter up 17% and as we can see every year U S growth reflects the impact from the customer dynamics of the annual reset of insurance plans almost eight years into its initial U S launch in atopic dermatitis disinfect underscores the large size from rapid growth to depict sympathy.
Speaker Change: Readership positions and new prescriptions across all five approved indications.
Speaker Change: As we look ahead to Q2, we remain very excited about the outlook for depictions outstanding commercial success across all geographies supported by regulatory progress towards launching multiple new indications of major markets and with our strong Q1 performance we are extremely confident.
Speaker Change: In delivering our previously communicated objective of around $13 billion in sales for the full year.
Speaker Change: As one of the leading medicines in immunology respiratory is a core disease area picks up well ahead of any of the competing pilots of any other competing biologic medicine depiction is established and maintained the distinct leadership position in new prescriptions, among pulmonologists across asthma and chronic rhinosinusitis with nasal polyps in the U S.
Speaker Change: We believe in the growing importance of Pulmonologists and adopt and biologics to treat respiratory diseases. While also confident the growing familiarity with <unk> and in type two inflammation will play a key role in the adoption of <unk> as a potentially first advanced therapy in COPD in more than a decade if approved.
Speaker Change: We also continued to build a growing body of scientific evidence around new pixel and addressing airway inflammation and divesting study, which was recently presented at the quadruple AI Congress depicts and demonstrated reduced airway inflammation amicus plugging in functional with specialty imaging Ines.
Speaker Change: We have an ambitious we have an ambition to potentially introduce a new standard of care with duplex in COPD for patients with type two inflammation as.
Speaker Change: As you May recall significant regulatory progress has been achieved with depictions potentially to be across key markets. We are preparing for a potential launch in the U S. As early as late June if approved by the FDA and plan for additional potential approvals in Europe, and China by the end of the year.
Speaker Change: We're excited about the outlook for <unk> potential to become a breakthrough medicine to TBD, a leading cause of death worldwide depiction is well positioned to potentially address the high unmet need in CPD with its strong clinical profile across two large phase III studies in more than seven years of real world evidence of real world evidence data on safety across five approved into.
Speaker Change: Case.
Speaker Change: Two picks and addresses unmet medical need of a well defined population of roughly 300000 patients in the U S alone.
Speaker Change: These are driven by type two inflammation and uncontrolled despite standard of care therapies.
Speaker Change: COPD is a historically difficult disease area and a heterogeneous disease with multiple development failures in the last decade.
Speaker Change: Time, many patients become resigned to their medical condition Lennox.
Speaker Change: With an experienced team that has a track record of development and commercial excellence in respiratory we plan a targeted approach to drive the awareness and identification of COPD with type two inflammation among patients and pulmonologists.
Speaker Change: As we have seen with our launches across the major indications adoption pick some as the first and only biologic in the COPD indication will require some time initially on the inflection of sales growth.
Speaker Change: <unk> to come.
Speaker Change: In 2025 after the U S launch we are confident that if approved COPD will become the next major growth pillar <unk> and.
Speaker Change: And together with our second potential blockbuster developer CBD, it's a pack them up we continue to expect peak sales of more than 5 billion Euro is for both products combined.
Speaker Change: Let's now move to the new launches as Q1 further demonstrates our ability to execute successful launches and bring new medicines to patients this quarter, all our new launches and drilling before estimate up culture of $1 billion in sales.
Speaker Change: Or 9% of our total Biopharma business.
Speaker Change: <unk> continued its global rollout in the quarter was the launch in the southern Hemisphere countries of all interim protection programs and some Australian states and today.
Speaker Change: RSV is seasonal for us will have a sales pattern like what many of you know from flu vaccines and <unk>.
Speaker Change: <unk> grew strongly from new patients as well as patients converting from older medicines in the pump franchise, we're pleased with the overall growth in franchise sustainability.
Speaker Change: I will tell you there soon annualized influence has been it has seen continued strong uptake with most of the growth coming from other factor medicine has done a lot to take on.
Speaker Change: And even some uptake from patients not on factor XI.
Speaker Change: It is how innovation can help to revitalize hemophilia and growth synergies total shop.
Speaker Change: Although launch medicines also did well in growth in absolute terms, including so please prove to multiple myeloma.
Speaker Change: Taking a closer look at pay for us, but we're really focused on and proud of is the impact of an improving public health and benefits of thousands of families.
Speaker Change: We've now real World results from last year's implementation of broad immunization program in the U S, France, and Spain with pay for us.
Speaker Change: Also strikingly impressive you can see the dramatic reduction of hospitalizations by the numbers on this slide.
Unknown Executive: Investors page I'd like to remind you that the information presented in this call contains forward-looking statements, which are subject to substantial risk and uncertainties and may cause actual results to differ materially. I encourage you to read the disclaimer in our presentation. In addition, I refer you to our Form 20-F on file with the FCC and our Document d'enregistrement universel for a description of these risk factors.
Speaker Change: These real world results other are either consistent or even better than those from the clinical trials.
Speaker Change: CDC recently published our effectiveness data for pay for us at 90%.
Speaker Change: And in Europe, we've seen similar results possible ization reduction across France, and Spain.
Speaker Change: Overall following the first season in the three launched countries, where both photos disease for all in from protection. This means that nearly 40000 hospitalizations have already been avoided for families.
Unknown Executive: I'm pleased to welcome our new CFO, Francois, to the presentation, and he will be followed by Houman, our head of R&D on the pipeline. For Q&A, we have Brian, Olivier, Thomas, and Julie to cover the Global Business Units and Roy, our RGC, to cover the Q&A. For the Q&A, you have two options to participate in Zoom. Raise your hand to submit your question using
Speaker Change: This is the impact that matters most.
Speaker Change: This also provides a prospect to full pay for this global health benefit as we plan to launch in additional countries in H two.
Speaker Change: Together with a Z, we're working with the regulatory authorities and extending our manufacturing network to make before there's more available for the upcoming season as we are glad to see such enthusiastic demand <unk>.
Unknown Executive: This will be explained later on a slide. Now, let's turn to the business. We are next and will start in 2024 with 7% sales growth in line with our fast moving portfolio transformation. Growth was driven by launches, including new and existing indications for Dupixent, and this performance fully underpins our 2024 EPS guidance as CEO. DuPixent continued to increase penetration in all approved indications, and we saw performance diversified further across all geographies plus, of course, the usual U.S. reset of insurance. Former launchers were led by Nix Weizheim and Altuvia, with more details to come a little later.
Speaker Change: We're confident that we will meet anticipated customer demand and look forward to extending all interim protection program and the upcoming northern Hemisphere RSV season.
Speaker Change: On my final slide I wanted to highlight some progress in our ESG ambition exemplified by the work of our global Health unit.
Speaker Change: Since its launch in 2021, the essential medicines from our <unk> portfolio of supported close to 550000 patients.
Speaker Change: Suffering from Noncommunicable diseases in 31 countries with the objective to reach $2 million and CD patients by 2030.
Unknown Executive: The launches also boosted the performance in vaccines, with Befordis making further progress, including in countries in the Southern Hemisphere and Consumer Health. Growth of 9% reflected the consolidation of the QNL acquisition, as well, of course, as organically. We are progressing the plan to separate this business, as discussed. Overall, we're pleased with the ongoing portfolio transformation, which is becoming more visible. Also, in our cost lines, with more resources going into the pipeline and less into SG&A.
Speaker Change: An additional differentiator is the meaningful work done by our teams to help building sustainable health care system through partnerships with the ministries of health trains of health care professionals, and our impact investment fund focused on supporting exclusive startups of businesses.
Speaker Change: I know, it's a great pleasure and have it to Francois.
Speaker Change: <unk> CFO. Thank.
Francois: Thank you Paul I'm pleased to have joined the team here at <unk> and then looking forward to interacting with all of you in the future.
Unknown Executive: This is exactly the development we set out last year when we announced the next chapter for Australia. Before moving on, I'd like to extend my thanks to all the Sanofi colleagues for their dedicated work and their commitment to patience, chasing the miracles of science to improve people's lives. Dupixent continues to perform strongly with strong demand-driven growth. It had sales of more than 2.8 billion euros in the first quarter.
Francois: Sales were up 7% in the quarter as for mentioned growth was driven by our ongoing portfolio transformation towards Biopharma medicines, with duplex and sounds by 25% and the new launches, including <unk> by 150%, excluding the impact of <unk> loss of exclusivity.
Unknown Executive: Sales of this unique medicine increased by 25% globally, fueled by the accelerated growth from indication expansions in the ex-US markets, where sales grew as much as 50%. With now more than 850,000 patients worldwide, the strong contribution from countries like Japan, China, and Germany highlights the tremendous growth potential for Duprexin across all indications and genres. In the U.S., sales exceeded 2 billion euros in the quarter, up 17%.
Francois: And COVID-19 growth was towards the funds decent nics does not aimed at removing or headwinds that simply illustrates what <unk> may look like in the future.
Francois: On gross margin at 73, 5% went down by two six percentage points, mainly due to <unk> and due to the absence of COVID-19 vaccine sales that ECL.
Francois: In addition, the quarter was impacted by one off inventory adjustment to reflect declining standup costs.
Unknown Executive: And as we can see, every year, U.S. growth reflects the impact of the customary dynamics of the annual resale of insurance. Almost eight years into its initial US launch in atopic dermatitis, this effect underscores the large size and rapid growth that positions them with leadership positions in new prescriptions across all five approved indications. As we look ahead to Q2, we remain very excited about the outlook for Dupixent's outstanding commercial success across all geographies, supported by regulatory progress towards launching multiple new indications in major markets, and with our strong Q1 performance, we're extremely confident in delivering our previously communicated objective of around 13 billion euros in sales for the full year. As one of the leading medicines in immunology, respiratory is a core disease area for Duprexin, well ahead of any other competing biologic medicines.
Francois: R&D expenses increased by 12% at constant exchange rates in line with our ambition to invest more in our pipeline.
Francois: Resources are being deployed to advanced late stage immunology and neurology projects.
Francois: SG&A increased by less than 3% below half of central rules you'd be striking a strategic reallocation of resources.
Francois: Our business operating margin decreased to 27, 2%, mainly due to the gross margin decline the step up in R&D expenses, and an increasing the profit sharing with rich in euro.
Francois: As expected EPS went down seven 4% in Q1.
Francois: So partly impacted by a higher tax rate.
Francois: Just one word on cash flow it will be impacted in 2024 by are nowhere business operating income and by the phasing of rebate payments in the U S related to prior year sales.
Unknown Executive: Dupixent has established and maintained a distinct leadership position in new prescriptions amongst pulmonologists for asthma and chronic rhinosinusitis with nasal polyps in the US. We believe in the growing importance of pulmonologists in adopting biologics to treat respiratory diseases. We're also confident that the growing familiarity with Dupixent in type 2 inflammation will play a key role in the adoption of Dupixent as the first advanced therapy in COPD in more than a decade.
Speaker Change: Let me now give you some additional information on the coming quarter.
Speaker Change: Q2, 2024, we expect <unk> and the new pharma launches to grow while we continue to see the impact of the <unk> loss of exclusivity in Europe.
Speaker Change: Of note, we don't expect to <unk> 47 in Q2 due to early delivery in Q1, and some sounds artemisia countries, while shipment in northern hemisphere countries almost expected before the second half of 2024.
Unknown Executive: We also continue to build a growing body of scientific evidence around Dupixent in addressing airway inflammation. In the Vestige study, which was recently presented at the Quadruple AI Congress, Dupixent demonstrated reduced airway inflammation and mucus plugging in functional respiratory imaging in airways.
Speaker Change: For the full year 2024 sales outlook, we expect <unk> to reach around 13 billion euros and the vaccine franchise to grow mid single digits with base of $2 anticipated to reach blockbuster status.
Unknown Executive: We have an ambition to potentially introduce a new standard of care with Dupixent in COPD for patients with type 2 inflammation. As you may recall, significant regulatory progress has been achieved for Dupixent's potential in COPD across key markets. We are preparing for a potential launch in the U.S. as early as late June if approved by the FDA, and plan for additional potential approvals in Europe and China by the end. We're excited about the outlook for Dupixent's potential to become a breakthrough medicine for COPD, a leading cause of death worldwide.
Speaker Change: The <unk> loss of exclusivity will continue to impact the top line mainly in each one.
Speaker Change: Finally planned divestments with lower wholesales by around 300 million euros of the year.
Speaker Change: For the full year P&L, we expect our gross margin to decrease slightly due to <unk> on the absence of COVID-19 on revenues ECL.
Speaker Change: <unk> is expected to grow with about 700 million euros step up in R&D, while SG&A expenses are expected to remain stable.
Unknown Executive: Dupixent is well-positioned to potentially address the high event need in COPD with a strong clinical profile across two large phase 3 studies and more than seven years of real-world evidence data on safety across five approved indications. It depicts and addresses the unmet medical need of a well-defined population of roughly 300,000 patients in the U.S. alone whose disease is driven by type 2 inflammation and uncontrolled despite standard of care. COPD is a historically difficult disease area and a heterogeneous disease with multiple development failures in the last decade. Over time, many patients become resigned to their medical conditions.
Speaker Change: Finally, our tax rate will increase to around 21% due to the implementation of the OECD pillar II.
Speaker Change: We confirm our full year 2020 for expectation of a low single digit decline of our business EPS at constant exchange rates.
Speaker Change: Excluding the impact of the higher tax rate the full year 2020 for business EPS is expected to be roughly stable.
Speaker Change: On foreign exchange, we see a negative currency impact to EPS of around 6% based on April 2024 average exchange rates.
Unknown Executive: With an experienced team that has a track record of development and commercial excellence in respiratory, we plan a targeted approach to drive the awareness and identification of COPD with type 2 inflammation among patients and pulmonologists. As we have seen with our launches across other major indications, the adoption of Dupixen as the first and only biologic in the COPD indication will require some time initially, and the inflection of cell growth is most likely to come in 2025 after the U.S. We are confident that, if approved, COPD will become the next major growth pillar to do PICS.
Speaker Change: As a reminder, we continue to anticipate strong business EPS rebounded in 2025 and as we have mentioned earlier in 2024, we are transforming the company for long term value creation with that.
Speaker Change: Over $2 million.
Speaker Change: Thank you Francois.
Speaker Change: We've seen substantial phase.
Speaker Change: We've seen substantial positive pipeline progress already in Q1, while we continue to deliver a consistent news flyer a clinically important.
Speaker Change: Data and scientific publications and Congress Fracs telematics encouraging phase two data in multiple sclerosis.
Unknown Executive: And together with our second potential blockbuster developed for COPD, It's a Peck-a-Mub, we continue to expect peak sales of more than €5 billion for both products combined. Now, we move to the new launches, as Q1 further demonstrates our ability to execute successful launches and bring new medicines to patients. This quarter, all our new launches, including Bayforest, made up close to a billion in sales, or 9% of our total biopharma business. Bay Forte continued its global rollout this quarter with the launch in the Southern Hemisphere countries of all infrared protection programs in some Australian states and Chile.
Speaker Change: It was recently published in the New England Journal.
Speaker Change: Data with data from the 48 week open label extension, which were presented last week at the <unk>.
Speaker Change: Yeah.
Speaker Change: And conference supporting our commitment to MSP and.
Speaker Change: In atopic dermatitis, we have the potential to be to.
Speaker Change: To further establish our leadership, but im going to tell a map, where we presented the phase <unk> data.
Speaker Change: <unk>.
Speaker Change: Whereas largely sustained effective amatil map and I topic dermatitis symptoms, which demonstrated after 52 weeks a day.
Unknown Executive: As RSV is seasonal, Mayfortis will have a sales pattern like what many of you know from flu vaccines. And as Pfizer and grew strongly from new patients, as well as patients converting from older medicines in the Pompe franchise, we're pleased with the overall growth and franchise sustainability. Altevia is soon annualizing its launch.
Speaker Change: Later I will first talk about the data presented from these two pipeline projects on.
Speaker Change: On the regulatory side, we've reached an impressive pace of approval with <unk> in multiple indications within different countries.
Speaker Change: Discussions regarding depicts since SDI law and CFPB around ongoing.
Unknown Executive: It has seen continued strong uptake with most of the growth coming from other factor medicines than a lot, and even some uptake from patients not on Factor Med. It showed us how innovation can help to revitalize haemophilia and grow Sanofi's overall business. Other launch medicines also did well in growth in absolute terms, including Sarkleza approved in multiple vials. Taking a closer look at pay forwarders, what we're really focused on and proud of is the impact on improving public health and benefits for thousands of families.
Speaker Change: Priority review process as Paul has mentioned.
Speaker Change: As usual, it's always possible with the FDA could require additional information to complete the priority review of our submission to finalize labeling as a reminder, there is currently no biologic treatment of pregnant CPD underlining our commitment to make the picks are available to as many patients as possible as quickly as possible and supporting the ambitions depicting the pool has already outlined.
Speaker Change: I'm going to tell them that are non <unk> ox 40, like a monoclonal antibody has shown potential best in class efficacy with a durable clinical response rate after 52 weeks from the stream <unk>.
Unknown Executive: We now have real-world results from last year's implementation of broad immunization programs in the U.S., France, and Spain with Bayforders. The results are strikingly impressive. You can see the dramatic reduction in hospitalizations by the numbers on this slide.
Speaker Change: TD study.
Speaker Change: To respond the percentages reflected in the Iga CRA strike, one and the <unk> 75 scores, which are both surrogate endpoints.
Unknown Executive: These real-world results are either consistent or even better than those from the clinical trial. The U.S. CDC recently published its effectiveness data for Bayforest at 90%, and in Europe, we've seen similar results for hospitalization reduction across France. Overall, following the first season in the three launch countries where Fortis is used for all-in front protection, this means that nearly 40,000 hospitalizations have already been avoided. This is the impact that matters most.
Speaker Change: Well maintained and still significant in fact following the withdrawal.
Speaker Change: From the drug at week 24.
Speaker Change: As you can see from the potshots at week 52 results on and off net and assembler, we shaped the persistence of response, suggesting the potential normalization of inflammatory T cell activity and potential effect on type two and non type two biomarkers.
Speaker Change: These important data support the viability of the 12 week extended dosing interval, which will improve the patient's treatment paradigm and potentially expand therapy presence in Haiti.
Unknown Executive: This also provides a perspective for Bayford as a global health benefit as we plan to launch in additional countries in Asia. Together with AZ, we're working with the regulatory authorities and extending the manufacturing network to make B4DUS more available for the upcoming season, as we're glad to see such enthusiastic demand. We're confident that we will meet anticipated customer demand and look forward to extending all infant protection programs in the upcoming Northern Hemisphere RSVC.
Speaker Change: And beyond has been interpreted by some tend to potential disease modifying activity.
Speaker Change: The opportunity in treating patients by treating this core central pathway with consistently can safety and based parts of the study syncing with AMETEK <unk> has the potential to reach much beyond <unk> and.
Speaker Change: And become pipeline in a truck.
Speaker Change: The cleanest AE profile and this cost may reflect the importance of non depleting mechanism differentiating.
Francois: On my final slide, I wanted to highlight some progress on our ESG ambition, exemplified by the work of our global health unit. Since its launch in 2021, the essential medicines from our GHU portfolio have supported close to 550,000 patients suffering from non-cumulative diseases in 31 countries with the objective to reach 2 million NCD patients by 2050. An additional differentiator is the meaningful work done by our teams to help build sustainable healthcare systems through partnerships with the Ministries of Health, Trains of Healthcare Professionals, and our Impact Investment Fund focused on supporting exclusive start-ups. I now have the great pleasure to hand over to Francois.
Speaker Change: Hello, Matt.
Speaker Change: Roland.
Matt: All four studies.
Matt: The study is on track for the first regulated regulatory submission.
Matt: Expected in 2020.
Speaker Change: Now switching to <unk>, our CD 40 ligand antibody <unk>.
Speaker Change: High efficacy non lymphocyte to place the potential MS. Treatment also has a pipeline in a product potential in multiple indications under development.
Speaker Change: Most importantly, <unk> remitting Ms. A 48 week data from our phase two open label extension study has shown a sustained reduction in disease activity monitored by mean number of gadolinium positive Taiwan lesions are carrying appearing at each MRI.
Speaker Change: As you can see on the bar charts patients, who switched from placebo arms Fracs Allomap.
Francois: Thank you, Paul. I'm pleased to have joined the team here at Sanofi earlier in April, and I'm looking forward to interacting with all of you in the future. Sales were up 7% in the quarter.
Speaker Change: With IV and sub con have shown an impressive decrease would be it's.
Speaker Change: It is important to mention that nearly every patient on frac sand map IV had no new lesions presented at a near to zero annualized relapse rate at 48 weeks, 87% of participants completed the extension and for its Allomap. Once again proved to be well tolerated with an acceptable safety profile.
Francois: As Paul mentioned, growth was driven by our ongoing portfolio transformation towards biopharma medicines, with Dupixent sales up by 25%, and new launches, including Befortus, up by 150%. Excluding the impact of Obagio's loss of exclusivity and COVID-19, growth was 12%. This analysis does not aim at removing all headwinds but simply illustrates what the new Sanofi may look like in the future. The gross margin, at 73.5%, was down by 2.6% mainly due to Obagio and due to the absence of COVID-19 vaccine sales this year.
Speaker Change: Phase III studies in relapsing remitting, Ms and our SMS have initiated in the first regulatory submission is expected in 2027, Fracs Allomap has the potential to provide additional benefits to patients and extend therapy presence in multiple sclerosis.
Speaker Change: Switching gears now turning to <unk>, our oral <unk> one of our.
Speaker Change: Well priority medicine as you can see we are developing this medicine in multiple indications such as in ATP and ran a hematological diseases, but also in our main key therapeutic area immunology, including asthma and chronic spontaneous urticaria.
Francois: In addition, the quarter was impacted by a one-off inventory adjustment to reflect declining standards. R&D expenses increased by 12% at constant exchange rates in line with our ambition to invest more in our pipeline. Resources are being deployed to advance late-stage immunology and neurology projects. SG&A increased by less than 3% below half of sales growth, illustrating our strategic reallocation of resources.
Speaker Change: We are pleased to announce earlier in the week a positive readout of the Luna <unk> III phase.
Speaker Change: Phase III study and ICP, a rare autoimmune bleeding disorder characterized by abnormally low levels painless persistent and disabling fatigue and increased hemorrhage.
Speaker Change: These results confirm confirmed the positive phase II data with additional details to be presented at forthcoming medical meetings on a regulatory submission.
Francois: Our business operating margin decreased to 27.2% mainly due to the gross margin decline, the step up in R&D expenses, and an increase in profit sharing with Regeneron. As expected, EPS was down 7.4% in Q1, also partly impacted by a higher tax rate. Just one word on cash flow. It will be impacted in 2024 by our lower business operating income and by the phasing of rebate payments in the US related to prior year sales.
Speaker Change: This year.
Speaker Change: Alongside this positive news, we always have received more phase II data in asthma. This time at the high dose confirming the previous positive trends.
Speaker Change: Very excited by the opportunity to present the data at the Ats Conference next month.
Speaker Change: Can't wait to see that.
Speaker Change: Positive data in a third indication CSC were presented in February at the <unk>.
Francois: Let me now give you some additional information on our coming quarter. In Q2 2024, we expect DuPixent and the new pharma launches to grow further while we continue to see the impact of the Obagio loss of exclusivity in Europe. Of note, we don't expect any B-43s in Q2 due to early delivery in Q1 in some Southern Hemisphere countries, while shipment in Northern Hemisphere countries is not expected before the second half of 2024.
Speaker Change: Our annual meeting we have phase III starting later this year. These.
Speaker Change: These data are important stepping stones of our R&D transformation journey, emphasizing our commitment to adhesives and unlocking important potential PTK inhibitors, and also highlighting the value that our experienced and immunology can bring to the develop development of the medicine. They started its life in another company.
Speaker Change: Having recently reshaped our overall oncology strategy strategy, we want to cover this in a little greater detail.
Francois: For the full year 2024 sales outlook, we expect Dupixent to reach around 13 billion euros and the vaccine franchise to grow mid-single digits, with Befortus anticipated to reach blockbuster status. The Obagio loss of exclusivity will continue to impact the top line, mainly in H1. Finally, planned divestments will lower our sales by around 300 million euros over the year.
Speaker Change: Our strategy is one of selectively investing in areas, where we believe we have a chance to make a meaningful difference based on our expertise in immunology.
Speaker Change: Our aim is to focus on critical unmet medical needs of patients benefiting from immune mechanism and related mechanism of actions such as our NK cell engages and using our technologies and platforms with the ADC or the amount of volume.
Speaker Change: I would like to end this slide on the positive news for the cancer community. While we are pleased by the recent positive U S developments supporting the use of minimal residual disease or MRV has clinical endpoint in myeloma.
Francois: For the full year P&L, we expect our gross margin to decrease slightly due to Obagio and the absence of COVID-19 sales and revenues this year. OPEC is expected to grow, with about 700 million euros of steps up in R&D, while SG&A expenses are expected to remain stable. Finally, our tax rate will increase to around 21% due to the implementation of the OECD Pillar 2.
Speaker Change: Recognized by the FDA this can potentially bring new effective treatments to patients earlier.
Speaker Change: We currently have stock Lisa our CD 38, with a best in class potential approvals in more than 50 countries as an option in the relapsed myeloma.
Speaker Change: Last December the readout of the FCS study Mark the fifth positive phase III study and second posted in transplant eligible newly diagnosed multiple myeloma patients where 77% of patients received reached <unk> negativity versus 67% in the comparator arm.
Francois: We confirm our full-year 2024 expectation of a low single-digit decline in our business EPS at constant exchange rates. Excluding the impact of the higher tax rate, the full-year 2024 business EPS is expected to be roughly stable. On foreign exchange, we see a negative currency impact on EPS of around 6% based on April 2024 average exchange rates. As a reminder, we continue to anticipate strong business EPS rebounds in 2025. And as we have mentioned earlier, in 2024, we are transforming the company for long-term value creation. With that, I now hand over to Houman.
Speaker Change: While collegiate group had a 60% high chance of achieving this statement.
Speaker Change: Additionally, we have the MRO phase III study, which was positive and we look forward to sharing the latter an upcoming medical Congress anticipated wed anticipate submission in April.
Speaker Change: And my part of the presentation on a positive note showing a hunger.
Speaker Change: Our commitment.
Speaker Change: Commitment to deliver clinical data center service to patients I would like to highlight the upcoming phase III and phase II readout as well as regulatory submissions occurring in 'twenty four and 25.
Houman: Thank you, Francois. We've seen a substantial phase two. We've seen substantial positive pipeline progress already in Q1, where we continue to deliver a consistent news flow of clinically important data for Excella Maps, encouraging type 2 data and multiple sclerosis, was recently published in the New England Journal, but updated with data from the 48-week open label extension, which was presented last week at the AAM conference, supporting our commitment to MS patients. In a topic to have a tie to, We have the potential to further establish our leadership with Amla Tillamand, where we presented the Phase IIb data for AAD, where a largely sustained effect of amylotylamab on atopic dermatitis symptoms was demonstrated after 52 weeks.
Speaker Change: As you can see.
Speaker Change: News flow will increase and become busier as we move into 'twenty five supported by the step up in R&D investments to Francois just mentioned.
Speaker Change: I'm enthusiastic and patient at the same time as the news flat keeps on getting richer and better. Thanks to the clinical study we are constantly stopped with this I hand back to Paul.
Paul: For sure enthusiastic and inpatient I can confirm that we will now open the told two questions. As a reminder, we would ask you to limit your questions to one or two.
Paul: As you can see absorptions for Q&A pit the raise hand icon you'll be notified when your line is open to do remember to mute. Alternatively submit your question through Q&A function and all questions will be read out.
Paul: Every year.
Houman: Later, I will further talk about the data presented from these two pipeline projects. On the regulatory side, we've reached an impressive pace of approval, with two of them for depiction and multiple indications in different countries. FDA discussions regarding Dupixent's SDLA in COPD are ongoing under the priority review process, as Paul has mentioned. As usual, it's always possible that the FDA could require additional information to complete the priority review of our submission for finalized labeling.
Paul: The first question will be the from Peter Welford from Jefferies Pizza.
Peter James Welford: Hi, hopefully you can hear me.
Peter James Welford: So much for the question. So can we just start off with the <unk>.
Peter James Welford: And then just thinking about the the Bonanza Creek.
Peter James Welford: Great.
Peter James Welford: The more important new indication COPD.
Peter James Welford: I guess I just wanted to sneak into the square up some of the very positive commentary I guess, we had on the on the potential for this indication obviously significant unmet medical need.
Houman: As a reminder, there is currently no biologic treatment approved for COPD, underlining our commitment to make Dupixent available to as many patients as possible, as quickly as possible, and supporting the ambitions for Dupixent that Paul has already outlined.
Peter James Welford: Also some uplift of caution does not get too ahead of ourselves.
Peter James Welford: Certainly we've done a lot of doctors.
Peter James Welford: COPD patients they already know whether they have type two in many cases not only if you can talk about from your point of view what the challenges are.
Houman: Pamela Tillamap, our non-depleting OX40 ligand monoclonal antibody, has shown potential best-in-class efficacy with a durable clinical response rate after 52 weeks in the STREAM-AD Phase 2b study. The responder percentages reflected in the IGA 0-1 and the EG75 scores, which are both surrogate endpoints for AD, were maintained and still significant, in fact, As you can see from the bar chart, that's week 52; results on and off medicine are similar, which shows the persistence of response, suggesting the potential normalization of inflammatory T cell activity and potential effect on type 2 and non-type 2 biomarkers.
Peter James Welford: And why we shouldn't expect at least initially a potential bolus of patients given they currently have no other option debatable.
Speaker Change: The challenges I guess, what would you think about that and then if I could just.
Speaker Change: Second question just quickly to Prime plus you mentioned on the gross margin just because of a one time adjustment I would leave you just go into that a little bit more detail.
Speaker Change: And is that one time for first quarter, and then perhaps you could possibly quantify that would help thank you.
Speaker Change: All right Peter Thank you Bryan two Pixar COPD, yes. Thank you so much for the question I really as.
Peter: As we get ready for the launch and COPD first and foremost it all starts with the patient. So I think what we've seen with this brand is going into diseases that are driven by underlying type two inflammation, we've really opened up new treatment opportunities for these patients and really transform a lot of pay side. So I think as Paul mentioned over and over 850000 patients already on therapy. Many of those actually happened to be asthma sufferers.
Houman: These important data support the viability of the 12-week extended dosing interval, which will improve the patient's treatment paradigm and potentially expand Sanofi's presence in AD and beyond. These data have been interpreted by some to hint at potential disease-modifying activities. The opportunity to treat patients by treating this core central pathway with consistently good safety in both parts of the study signals that amyotelomab has the potential to reach much beyond AD and become a pipeline drug. The cleanest AE profile in this class may reflect the importance of non-depleting mechanisms differentiating amylotilamide.
Peter: And our treat about the Pulmonologist community. So as you can imagine as we've spoken with Pulmonologists theyre extremely excited about having potentially a new option to treat these patients that quite frankly are on the highest dose of therapy and that's why I think to contextualize them. These patients are on the highest doses of therapy and still exacerbating. So we have to contextualize that the right way and then you saw our.
Peter: And both the <unk> and the notice trials, how effective they were actually adding reduction in exacerbation rates of 30%, 34%. So we're very positive about this I think the challenge with this particular patient population, it's probably less about the patient population and more about the fact whenever you bring a new therapy like this in more than 10 years.
Houman: The enrollment in all four studies, and phase 3 studies are on track for the first regulatory submission, expected in 2020. Now switching to Frexelimab, our CD40 ligand antibody. High-efficacy, non-lymphocyte-depleting potential MS treatment also has a pipeline and product potential with multiple indications under development. Most importantly, in relapsing remitting MS, the 48-week data from the FAQ Open Label Extension Study have shown a sustained reduction of disease activity monitored by the mean number of gadolinium positive type 1 lesions occurring, appearing at each MRI.
Peter: Biologic ramp will take just a little bit of time, even though there's a burden of disease. There for the patients they will take a bit of time to get these physicians used to using biologics that said the pulmonologist community does use biologics today. So we feel like we're in a good spot and preparing the marketplace really quite well, but excited about bringing it.
Speaker Change: Whenever it comes tomorrow. Thank you, Brian human anything to add yes, Hi, Peter you asked a very specific question about.
Brian: The patient diagnosis and patient population I just wanted to be clear about how we develop this molecule both in barring some notice.
Houman: As you can see on the bar charts, patients who have switched from the placebo arms to the Fraxelimab arms, both IV and subcut, have shown an impressive decrease in. It's important to mention that nearly every patient on Frexelomab IV had no new lesions presented at a near-to-zero annualized relapse rate at 48 days.
Brian: There are specific about.
Brian: Stratification strategy, we thought very deeply about the <unk>.
Peter: Yeah.
Speaker Change: Our concentration in the blood and specifically the phenol, we stuck to our knitting very specifically on what we saw in the phase II and that reflected in our outstanding reduction in exacerbations, a phase III study I think it's really important to recognize is that I think is forward that our development strategy.
Houman: 87% of participants completed the extension, and Frexelimab once again proved to be well tolerated with an acceptable safety profile. As a result, three studies on relapsing remitting MS and NR-SPMS have been initiated, and the first regulatory submission is expected in 2020. ExcellaMAP has the potential to provide additional benefits to patients and extend Sanofi's presence in multiple, Switching gears now, turning to Rilsa As you can see, we're developing this medicine in multiple indications, such as IPP, in rare hematological diseases, but also in our main key therapeutic area, immunology, including asthma and chronic spontaneous urticaria.
Peter: Laser focus to enable launch and the highest unmet medical need population and that's what we've done so thats why we have confidence in the way. This population launch will expand.
Speaker Change: Let me just add I think Brian.
Speaker Change: On it too but.
Speaker Change: I remember.
Speaker Change: I'll have to give you a general some credit for really.
Peter: Pioneering and a D with us back at the beginning but it was strong on them, we have to really build out the education around these things when you enter new areas yes.
Peter: You have to.
Peter: Do the proper amount of education of work make sure the right patients identified and get supported and that's why I think we've said, we expect to inflection point in the business evolution more likely to be in 2025, because we have got work to do Francois.
Houman: We were pleased to announce earlier in the week the positive readout of the Lunar 3 phase 3 study in ITP, a rare autoimmune bleeding disorder characterized by abnormally low levels of platelets, persistent and disabling fatigue, and increased hemorrhage.
Francois: Good morning, Good afternoon, Peter So the question on the inventory I just wanted to wonder if essentially for Q1, what happened is that our standup cost are moving down which is actually a good news for the medium term, but we have to revalue as a consequence of that our existing inventory through the year nowhere on somewhat constant.
Houman: These results confirm the positive phase 2 data, with additional details to be presented at forthcoming medical meetings and a regulatory submission later this year. Alongside this positive news, we also received more phase 2 data in asthma, this time at high doses, confirming the previous positive trend. We are very excited by the opportunity to present the data at the ATS conference next month. We can't wait to see you.
Francois: One of the adjust.
Francois: Adjustment that we booked in Q1, we don't expect to get much of it in Q2, and Q3 and for the balance of the year on the 12th relatively sizeable because it was close to half of the gross margin decline in Q1, so which means that we can expect that our gross margin should not see the assembly of the deviation versus last year as we progress further into the year.
Francois: Thank you next question next question is from Luisa Hector from behind that Lisa.
Houman: Posted data from the third indication CSU were presented in February at the AAIAI annual meeting, with phase three starting later. These data sets are important stepping stones of our R&D transformation journey, emphasizing our commitment to rare diseases and to unlocking the important potential for BTK inhibitors, and also highlighting the value that our experience in immunology can bring to the development of a medicine that started its life in another country. Having recently reshaped our overall oncology strategy, we want to cover this in a little greater detail.
Luisa Caroline Hector: Thanks for taking my question.
Luisa Caroline Hector: I Wonder if I could just.
Luisa Caroline Hector: Hey, Matt.
Luisa Caroline Hector: That will depend on your exit strategy and the timing and heightened comes as an exit rate for maximizing shareholder value.
Luisa Caroline Hector: Dan I wanted to ask on wells that reached net.
Luisa Caroline Hector: Good day to an ITT, just how you think about that sales opportunity.
Luisa Caroline Hector: As Matt said, the phase G kit for the high dose I think in asthma any more color around the safety profile and how you can proceed.
Houman: Our strategy is one of selectively investing in areas where we believe we have a chance to make a meaningful difference based on our expertise in immunology. Our aim is to focus on critical unmet medical needs for patients benefiting from immune mechanisms and related mechanisms of action, such as our NK-Cell Engagers, and using our technologies and platforms, with the ADCs of the NANABAR.
Luisa Caroline Hector: Now I think the next step with Mr. <unk> any more color on the endpoint trial design in that setting.
Speaker Change: Thank you okay. Good.
Zafar: Zafar speaking.
Speaker Change: Question on consumer as of now we want to keep all options open so which means basically you can consider that we can consider a potential spinoff in IPO, probably partnering as well with private equity. So we keep our options open with one single idea, which is to maximize value creation for shareholders. So I don't want to comment on the pros and cons of.
Houman: I would like to end this slide on positive news for the cancer community, where we are pleased by the recent positive U.S. development supporting the use of minimal residual disease, or MRD, as a clinical endpoint in my life. Recognized by the FDA, this can potentially bring new effective treatments to patients. We currently have Sarcleza, our CD38, with best-in-class potential and approvals in more than 50 countries as an option for relapsed myeloma.
Zafar: Each of these option for the time being given that we are working on with a very open view for the time being but we'll keep you posted as we progress further into the year, but don't be worried this is about creating value for shareholders.
Speaker Change: Hey, gentlemen, quick comment about where we're at in terms of technically ready Sir I mean first I can confirm that we're excited that we're on track and to give maybe a little bit more color on the tactical side.
Houman: Last December, the readout of the ICSIA study marked the fifth positive phase 3 study and the second positive in transplant-eligible newly diagnosed multiple myeloma patients, where 77% of patients treated reached MRD negativity versus 67% in the comparison.
Speaker Change: Our system planning activities.
Speaker Change: That had to happen successfully happened actually just last week and Moreover, we're well advanced in that remaining the scope of all the transition service agreements.
Houman: The Sarklesia Group had a 60% higher chance of achieving, Additionally, we have the EMEROS Phase 3 study, which was positive, and we look forward to sharing the latter at the upcoming Medical Congress with anticipated submission in H1. To end my part of the presentation on a positive note, showing our ongoing commitment to deliver clinical data in the service of patients, I would like to highlight the upcoming Phase 3 and Phase 2 readouts, as well as regulatory submissions occurring in 2024 and 2025.
Zafar: And as well in the meantime, we continue to focus on our three strategic priorities as we execute our overarching mission to make healthcare as simple as it should be well underway.
Zafar: Both.
Zafar: Good questions on Rosa Nip.
Speaker Change: Human I don't know, Brian you want to comment on potential value and ICP for human kind of other human to want to start off with let me actually Brian and I will tag team. This rock Luisa. Thank you for the question so let's.
Brian: Two parts of your question there is I think a.
Houman: As you can see... News flow will increase and become busier as we move into 25, supported by the Step-Up in R&D investment. DeFrancois Jusment, I'm enthusiastic and impatient at the same time as the news flow keeps on getting richer and better thanks to the clinical studies that we're constantly doing. With this, I hand back to you. For sure, I'm enthusiastic and impatient, I can confirm that. We'll now open the poll to your questions.
Brian: Tolerability. So I'll just hit this very directly I think that there still is a major unmet medical need in <unk>.
Brian: As you know 50% of patients.
Brian: Remain under covered <unk>, particularly intensive lack of stability of platelet count. They also suffer very substantially from fatigue.
Brian: That relative Britain it is.
Brian: Something a great choice for me personally having treated these patients the beauty of this treatment has a number of elements what is it obviously, perhaps production of <unk> <unk>.
Unknown Executive: As a reminder, we would ask you to limit your questions to one or two. As you can see, you have two options for Q&A. Hit the raise hand icon.
Brian: Tyrosine kinase inhibition, but also prevents phagocytosis of.
Brian: Those platelets and reducing their platelet counts, so mechanistically interesting compared to standard of care today, which under 50% of patients but also in some cases requires relatively extreme dietary modification rails or offers real opportunity 0.1 0.2.
Unknown Executive: You'll be notified when your line is open, so do remember to unmute or alternatively submit your question through the Q&A function. And our question will be read out by us. Over to you. The first question will be from Peter Welford from Jeffries. Peter, hi, hopefully you can hear me.
Peter James Welford: Thanks very much for the question. Can we just start off with PIXEN and think about the momentum we've seen, but equally important, the more important new indication, COPD? I guess I do want to see if we can sort of square up some of the very positive commentary I guess we heard on the potential for this indication, obviously significant on that medical need, but also some perhaps word of caution to not get too ahead of ourselves. I guess, certainly, the child checks we've done, a lot of doctors seem to think that COPD patients already know whether they have type 2 inflammation in many cases or not.
Brian: You asked about Tolerability to date, what we've seen has been gratifying and tonnages railed tolerability in every aspect.
Brian: So that's pretty exciting and then your question about asthma is super clear.
Brian: We presented our latest asthma data last year as you know we are excited by that data the opportunity for <unk> to become the first oral advanced ceramic treatment is remarkable but it has the potential to change the paradigm of how we treat asthma compared to what we have today all I can say is.
Unknown Executive: So if you could talk about, you know, from your point of view, what the challenges are here and why, you know, we shouldn't expect at least initially a potential bolus for patients, given they currently have, you know, no other options available and potential challenges, I guess, when you think about that. All right, Peter, thank you. Brian, do you pick up COPD?
Brian: Debt.
Brian: It is with very substantial pleasure.
Brian: I will invite everyone on this call to come to the Ats meeting to have outcomes of our relatives study, which we could not be more thrilled lead sharing.
Brian: With that to Dimensionalize, the market I'm going to hand over to my twin Brian.
Brian: I think it's a really good question I think as you saw on R&D day, when we really started to talk about the 12 assets. This was one of those assets we talked about so the slide I think it was presented earlier it was really impressive to show that in three potential indications CSU ATP and then in asthma.
Brian: This can be really differentiated versus the competition in each of those therapeutic areas specifically as it relates to <unk> and maybe I'll go a little bit broader and just say in rare blood space. We actually think that this could be potentially a blockbuster across both <unk> and <unk> combined but contextually speaking I mean, if you think about the two of them, obviously ICP will be a little bit bigger than what we see in weihai just based on the side I think.
Brian: Yeah, thank you so much for the question. Really, you know, as we get ready for the launch of COPD, first and foremost, it all starts with the patients. And I think what we've seen with this brand is that by going into diseases that are driven by underlying type 2 inflammation, we've really opened up new treatment opportunities for these patients and really transformed a lot of patients' lives. I think, as Paul mentioned, over 850,000 patients are already on therapy. Many of those actually happen to be asthma sufferers and are treated by the pulmonologist community.
Brian: There's about 50000 patients we see as being eligible for ITT. So really excited about this differentiated profile and bringing it to patients as soon as possible.
Brian: So, as you can imagine, as we've spoken with pulmonologists, they're extremely excited about having potentially a new option to treat these patients that, quite frankly, are on the highest doses of therapy. And that's why I think to contextualize them, these patients are on the highest doses of therapy and are still exacerbating. So, you have to contextualize that the right way.
Speaker Change: Thank you, albeit in San Diego at Aes for the weekend between other meetings. So I'm looking forward to seeing the data presented to next.
Speaker Change: Next question next question from company from Boxer Graham.
Graham Glyn Charles Parry: Great. Thanks for taking my questions and say, let's just I'll tell you the brutal but just thinking about scenario. So the readout of the data that just given the low.
Brian: And then you saw our reductions in both the BORUS and the NOTICE trials, how effective they were at actually adding a reduction in exacerbation rates of 30 and 34 percent. So, you know, we're very positive about this. I think the challenge with this particular patient population is probably less about the patient population and more about the fact that whenever you bring a new therapy like this in for more than 10 years, Biologic Ramp will take just a little bit of time, even though there's a burden of disease there for the patients. It will take a bit of time to get these physicians used to using Biologics.
Graham Glyn Charles Parry: Likely annualized relapse rates and that you're going to see in the control arm. If you assume it's going to be similar to EBIT breaching it.
Graham Glyn Charles Parry: Do you see that there is a.
Graham Glyn Charles Parry: Coal prices here that perhaps actually progression would be the best at primary end point and is there a possibility has change the statistical analysis plan today's relapsing studies to disease progression.
Graham Glyn Charles Parry: Tentatively in the event that you didn't see the met the primary endpoint on the Gemini studies and that <unk> hits endpoints and the progressive trials and do you think that this could be something that should be priced higher than the market. So that's a smaller April MF patient population, but just as a progressive Ms drugs.
Brian: That said, the pulmonologist community does use Biologics today, so we feel like we're in a good spot in preparing the marketplace really quite well but excited about bringing it whenever it comes to the market. Thank you, Brian. Houman, anything to add?
Houman: Yeah, so, Peter. You asked a very specific question about the patient burden of disease and patient population. I just want to be clear about how we developed this molecule, both in Boris and Nodus.
Graham Glyn Charles Parry: On celebrating yet cycled faithful to supply and you said you can do it.
Houman: We were very specific about our stratification strategy. We thought very deeply about the EO's concentration in the blood, and specifically the phenotype. We stuck to our knitting very specifically on what we saw in Phase 2, and that reflected in an outstanding reduction in exacerbations in our Phase 3 studies. I think it's really important to recognize, as Sanofi goes forward, that our development strategy is laser-focused to enable launch in the highest unmet medical need population, and that's what we did.
Graham Glyn Charles Parry: It's a blockbuster this year.
Graham Glyn Charles Parry: My understanding was that that sort of based on what you know you definitely have the supply that you're working on the increased supply.
Graham Glyn Charles Parry: Perhaps could you dimensionalize or quantify the upside here from bringing more supply on through the course of the year.
Graham Glyn Charles Parry: I think if you just assume that you're able to satisfy the U S cable to learn how to be a billion and a half euros will say and you did talk about launching in additional markets say, perhaps that helped us to dream a little about pay fortis revenue for the year. Thanks.
Houman: So that's why we have confidence in the way this population launch will expand. Let me just add, I think Brian touched on it too, but, you know, remember... And I have to give Regeneron some credit for, you know, really pioneering AD with us back at the beginning. But they were strong on that. We had to really build out education around these things, really into new areas. You have to do the proper amount of education and work.
Speaker Change: Okay, well hope you dream, a little in a moment Prem but first.
Speaker Change: Well maybe that too.
Speaker Change: <unk> said before <unk>.
Speaker Change: Just celebrate and thanks for the question Graham deeply thoughtful as always so first part of the question was on scenario.
Speaker Change: As you know, there's a bunch of scenarios we have two.
Speaker Change: Two relapsing remitting trials running Kevin I want to tell you, we've got Hercules I and purchase.
Unknown Executive: Make sure the right patients are identified and get supported. And that's why I think we've shared that we expect an inflection point in business evolution more likely to be in 2025. Francois, good afternoon Peter.
Speaker Change: I think getting into all the presentations I scenario.
Speaker Change: Challenging, but let me just be let me, let me just dimensionalize the crustacean indications firstly in sensor relapsing remitting, you make an excellent point about.
Francois: So the question on the inventory adjustment, it's a one-off essentially for Q1. What happened is that our standard costs are moving down, which is actually good news for the medium term, but we had to revalue, as a consequence of that, our existing inventory at the lower standard cost.
Unknown Executive: Previous failure, particularly in comparison to other high share.
Speaker Change: Let me just remind everybody very briefly on this call that in terms of penetration across the CFS biophysical property and actually some of the biological properties. We've seen with celebrating these are out cost in some cases by two logo orders any of the other molecules in this space even Britain. Its primary biological capability is very substantial.
Francois: Second point and I'll remind you when we talk about mechanism as compared to some of our competitors is that the patients who come off standard of cat.
Francois: And this is a one-off adjustment that we booked in Q1. We don't expect to get much of it in Q2 and Q3 and for the balance of the year. And it was relatively sizable because it was close to half of the gross market line in Q1.
Francois: And go on to tell Ibrutinib have a continuing reduction and newer filament light. These two parameters make us optimistic about the.
Francois: So this means that we can expect that our gross margin should not see the same negative deviation versus last year as we progress further into the year. Thank you. Next question. Yes. The next question is from Luisa Hector from Berenberg. Luisa?
Luisa Caroline Hector: Can get cautious and.
Luisa Caroline Hector: Hello, thanks for taking my questions. I wonder if we could just get an update on consumer factors that will determine your exit strategy and the timing and pros and cons of the different exit routes for maximizing shareholder value. And then I want to ask about Brutonib for real.
Luisa Caroline Hector: And the rollout of calibrating relapsing and Progressive 0.1 0.2.
Luisa Caroline Hector: In terms of.
Luisa Caroline Hector: Your specific question, which you asked about endpoints of course, you're right that in 2020 for <unk> currently.
Luisa Caroline Hector: Endpoint of choice. However, most of the community. The physicians are looking out for these patients. We're pointing you to the fact that actually our composite confirmed disability progression is much more important to the patients.
Luisa Caroline Hector: So good data and ITP, just how you think about that sales opportunity and also asthma, so that the phase two positive for the high dose, I think in asthma, and any more color around the safety profile and how you can proceed in asthma. I think the next step was with phase two B, but any more color on the endpoints trial design and that stepping stone to phase three. Thank you. Okay, good. Alfonso, say it.
Speaker Change: Indeed, many of the endpoints are currently being used used a relaxed independent progression rate. So the short answer to this question as well.
Alfonso: We'll see where we can with Kevin I wanted to but I would strongly suggest that the regulator and the patients' care deeply about disease progression.
Alfonso: Yes, Louis Alfonso speaking. So I'll take the question on consumers. As of now, we want to keep all options open. So basically, you can consider that we could consider a potential spinoff, an IPO, probably partnering as well with private equity. So we keep our options open with one single idea, which is to maximize value creation for shareholders.
Alfonso: Well talent.
Alfonso: To address that question on the progressive disease.
Alfonso: Very substantially hopeful because of data we've discussed before and of course, there is nowhere badger comparator.
Alfonso: In that population.
Alfonso: I think I think that provides you with a nice ramp up of celebrating if I'm going to hand over to Brian on that yeah.
Alfonso: So I don't want to comment on the pros and the cons of each of the options for the time being, given that we are working on them with a very open mind for the time being, but we'll keep you posted as we progress further into the year. But don't be worried; this is about creating value for shareholders. Did you want to make a quick comment about where we're at in terms of technically being ready? Sure.
Alfonso: Yes, I think the question on price is really the question on value I think more than anything else that it starts with this there.
Speaker Change: There is no more differentiated program I think in EMS for sure than the celebrated program. So we'll see what the scenarios are it's hard to guess today, what the final scenarios will likely be and will determine the value based upon that we'll comment on price probably at that particular point, but not now thank you Brian.
Unknown Executive: I mean, first, I can confirm that we're excited and that we're on track. And to give maybe a little bit more color on the practical side, all our system cloning activities that had to happen successfully happened actually just last week. And moreover, we're all well advanced in determining the scope of all the transition service agreements, which are very important as well.
Unknown Executive: Tomo before the supply.
Unknown Executive: Exciting to peak, so where are we on behalf to his first of all you've seen the strong performance EQM I stopped.
Unknown Executive: The remaining at that point with.
Unknown Executive: With a significant amount of center under the ATM.
Unknown Executive: <unk> just in Q1, I'm mentioning that way that the fact that it covers not only.
Unknown Executive: And in the meantime, we continue to focus on our three strategic priorities as we execute our overarching mission to make self-care as simple as it should be. So we're well underway. Thank you both.
Unknown Executive: And H 'twenty three 'twenty four less shipments on nothing but also the first shipment of assessing them is filled with two south EMEA countries, where we have started it up so thats. The first as you have seen also we.
Houman: Good questions on Rilsa Brutnib. Houman, I don't know whether Brian, you want to comment on potential value in ITP, or Houman can either. But Houman, do you want to start off with?
Speaker Change: Mentioned through <unk>, we will not expect sales of BSL just in Q2 has nothing to do with supply.
Houman: Two the fact that we were able to actually ship.
Houman: Let me start. Actually, Brian and I will tag team this one. Luisa, thanks for the question. So, with regard to your question, there was ITP and asthma tolerability. So I'll just hit those very directly. I think that there still is a major medical need for Point two; you asked about tolerability. To date, what we've seen has been gratifying in terms of Rilsa's tolerability in every aspect.
Houman: Supply in Q1, and Q2 and of course, the rest of the central this year will come in Q.
Speaker Change: In Q4 now as per the heart of your question on supply with repeat both Astrazeneca and us working on extending.
Houman: Network as we have mentioned beef up together.
Speaker Change: Adding nut, we've already added of course packaging lines, we are adding filling lines as we have discussed all together and as we speak today. We have every single day, feeling new beef ought to see reduced for the coming season, we're going full speed as we discussed also of course, while we can.
Houman: Currently manufacturing and feeling Dizzy each will then depend.
Houman: It is of this product.
Houman: The speed of approval of these two filling lines.
Houman: Notably U S FDA in EMEA, especially so we believe that we have all the elements we are putting together with our partner will be.
Houman: We're disciplined in Utah for the coming at US enemies, Huston, which is why we are very confident on our ability to reach a <unk> best estimate to be more specific beyond that will be what we will discuss together Q2 earnings call. When we will have more news on our <unk>.
Houman: So that's pretty exciting. And then your question about asthma is super clear. We presented our low-dose asthma data last year, and as you know, we were excited by that data. The opportunity for Rilsa to become the first oral advanced asthma treatment is remarkable.
Speaker Change: Given Disney's <unk>, yes, and thanks, Tom and I think everybody Astrazeneca ourselves everybody is doing the very best.
Houman: The demand is so significant.
Houman: Q2 is a much better moment to give you much more.
Speaker Change: More facts as we hope and frankly next question next question from Tim Anderson from voice.
Houman: But it has the potential to change the paradigm of how we treat asthma compared to what we have today. All I can say is that it is with very substantial pleasure that I will invite everyone on this call to the ATS meeting to hear the outcomes of our Rilsa study, which we could not be more thrilled about sharing. With that, to dimensionalize the market, I'm going to hand it over to my twin, Brian. So I think, you know, it's a really good question.
Houman: Kim.
Houman: Hi, This is Brian on for Tim just two quick ones from us.
Brian: After the EPS reset in 'twenty 'twenty four you talked about a strong rebound in 2025.
Brian: Consensus has growth being around 15% in 2025.
Brian: Any comment even if only directionally on that figure I know you might not say anything right now but.
Brian: Anything you might want to call out such as uncertain variables.
Brian: I think, as you saw on R&D Day, when we really started to talk about the 12 assets, this was one of those assets we talked about. So the slide, I think, that was presented earlier was really impressive to show that in three potential indications, CSU, ITP, and then asthma, this could be really differentiated versus the competition in each of those therapeutic areas. Now, specifically as it relates to ITP, and maybe I'll go a little bit broader and just say in the rare blood space, we actually think that this could be potentially a blockbuster across both ITP and WEHA combined. But contextually speaking, I mean, if you think about the two of them, obviously, ITP will be a little bit bigger than what we see in WEHA just based on its size.
Brian: That might jump out.
Brian: And then second question on Ox 40.
Brian: You've said previously that this might be your most important pipeline drug.
Brian: Similar to <unk>, but you capture full economics just wanted to.
Brian: Ask how Derisked do you think just as this asset is at this point.
Brian: In terms of how phase III trials might readout and.
Brian: Whether you can confirm that.
Brian: There might potentially be the earlier read out potentially in 'twenty 'twenty five.
Brian: I think there are about 50,000 patients we see as being eligible for ITP. So I'm really excited about this differentiated profile and bringing it to patients as soon as possible. Thank you.
Brian: Okay.
Speaker Change: Thanks, Brian asking for a friend.
Speaker Change: I would say Francois any comment I mean to be clear I don't want to put you on the spot, but we've just had strong rebound. So is there any color you can give no Brian what I can tell you I don't want to quantify the EPS rebound, but we're very confident about it I think we have the building blocks starting with the growth profile that we have today and if.
Unknown Executive: I'll be in San Diego at ADS for the weekend between other meetings, so I'm looking forward to seeing the data presented. Next question. Yes. Next question from Graham Parry from Beaufort.
Graham Glyn Charles Parry: Great, thanks for taking my questions. So the first one is just on tolibrutinib and just thinking about scenarios for the readout for the data there. Just given the low likely annualized relapse rate that you're going to see in the control arm, if you assume it's going to be similar to ivabrutinib, do you see that there's a thought process here that perhaps disease progression would be the better primary endpoint? And is there a possibility here to change the statistical analysis plan for those relapsing studies to disease progression?
Graham Glyn Charles Parry: You put aside already you can see in the first quarter of 2020 for some of the exceptional items of negative ones like or by June the comparison base for Covid.
Graham Glyn Charles Parry: COVID-19 for example, we are already on a very strong platform in terms of growth today, and which gives you a fair.
Graham Glyn Charles Parry: Illustration of where we can be in 2025, but I think it's too early to quantify to them I wouldn't apply to give the guidance for 2025 at this point in time in Q.
Graham Glyn Charles Parry: And alternatively, in the event that you didn't meet the primary endpoint in the Gemini studies and you do hit endpoints in the progressive trials, do you think that this could be something which would be priced higher in the market for that smaller overall MS patient population, but just as a progressive MS drug? So that's first on tolibrutinib. Second one, Bayfortis supply.
Lager: It's fully lager, yes, let me let me respond very briefly presented the data earlier Super excited by the data <unk> three points. Rather this is a biologic which has been a large number of patients.
Graham Glyn Charles Parry: Plus there's likely to be extremely safe at particularly compared to anything else that's out there.
Graham Glyn Charles Parry: You said you could make this a blockbuster this year. I think my understanding was that that's sort of based on what you know you definitely have for supply, but you're working on increasing supply. So perhaps could you sort of dimension or quantify the upside here from bringing more supply on through the course of the year? I think if you just assumed you were able to satisfy the US birth cohort alone, that would be a billion and a half euros or so.
Graham Glyn Charles Parry: <unk> highly well tolerated the dosing interval extremely interesting and importantly off drug.
Graham Glyn Charles Parry: Does this depression that's important so.
Graham Glyn Charles Parry: There are only three comments to make on this one as you said how optimistic are we very optimistic but we're optimistic because it may also have the opportunity and this is.
Graham Glyn Charles Parry: Back out by external commentators to.
Graham Glyn Charles Parry: Have the potential to reduce atopic March and the progression of efficacy, particularly index with earlier topics. One. So number one we are bullish for that reason number two is mechanistically, it's kind of interesting right because it addresses base case too as well as take 17 takes.
Graham Glyn Charles Parry: And you did talk about launching an additional market. So perhaps help us to dream a little about Bayfortis revenue for the year. Thanks. Okay, we'll help you dream a little in a moment, Graham, but first that, well, maybe there too, Tolly Bruton.
Speaker Change: <unk>, two pathway, which impact on a broad.
Houman: Before Paul breaks out into song, I'm going to, just Tolly Bruton, thanks for the question, Graham, deeply thoughtful as always. So, the first part of the question was about scenarios. As you know, there are a bunch of scenarios. We have two relapsing, remitting, trials running, Gemini 1 and 2. We've got Hercules and Perseus.
Speaker Change: Ethnic center populations, so not materially de risked from that perspective and number three is clearly we're taking it forward in a multiplicity of indications some of which we'll readout this year.
Speaker Change: The quick answer to your question is we're driving to studies as hard as we can we go for phase III in flight.
Houman: Will drive them to completion.
Houman: In an orderly manner as possible and we bearing in mind, it's a biologic feel optimistic that we've.
Houman: We've been able to quantify the risks and benefits great. Thank you next question next question from EDC is from Barclays.
Houman: I think going into all the permutations of those scenarios is challenging, but let me just dimensionize this across those indications. Firstly, in terms of relapsing and remitting, you make an excellent point about previous failures, particularly in comparison to Abagio. Let me just remind everybody very briefly on this call that in terms of penetration across the CFF, biophysical properties, and actually some of the biological properties we've seen with Tolly Bruton, these are outclassed, in some cases by two log orders, by any of the other molecules in space.
Houman: Okay.
Speaker Change: Hi, Thanks for taking my question. The first is just piggybacking off of the earlier.
Houman: Launched in COPD and Sir.
Houman: Contracting.
Houman: At the biologic ramp is going to take some time, but that pulmonologists are very familiar with your picks and obviously as you know.
Houman: Even Bruton, its primary biological capability is very substantial. Second point I'll remind you when we talk about mechanism is compared to some of our competitors out there, patients who come off standard of care and go on to Tolly Bruton have a continuing reduction in their neurofilament light. These two parameters make us optimistic about the yet cautious role of Tolly Bruton, but it's a relapsing Point one.
Houman: Thinking about the sponsors that's one that is going to require a great deal of incremental promotional spend.
Houman: And then on <unk>.
Houman: You mentioned taking share from.
Houman: The therapies other than a Lockheed.
Houman: Are you seeing more share take from hem Libra that is that the decline in U S. In the quarter and then.
Houman: Focus on their call yesterday with on the potential competitive threat from many.
Houman: Are you seeing that at all.
Houman: Threat to <unk> or do you see that more as closing at that two bispecific. Thank you.
Houman: Point two. In terms of your specific question, which you asked about endpoints, of course, you're right that in 2024, ARR is currently the endpoint of choice. However, most of the community and most of the physicians that are looking after these patients will point you to the fact that actually, a composite confirmed disability progression is much more important to the patients. And indeed, many of the endpoints that are currently being used use a relapse-independent progression rate.
Houman: Okay.
Houman: Brian the DSC MPD ramp and the challenges Pulmonologists know depicts already why should it takes longer than what would be the cost of doing.
Houman: Yes, I think Theres a couple of things in there and so I think just as we said before as you bring in a new therapy like this any patient population you have got to educate the patient population you've got to educate the physicians. There is a lot to be done there to where it's not just to come in and take share game, it's going to be one of those things, where it's bio penetration. We've seen this very well in atopic dermatitis as you see.
Houman: So the short answer to this question is... We'll see where we get with Gemini 1 and 2, but I would strongly suggest that the regulator and the patients care deeply about disease progression, and we are well-powered to address that question. On progressive disease, we're very substantially hopeful because of the data we've discussed before, and, of course, there is no Abagio Comparator arm in that population. I think that provides you with a nice wrap-up of total Britain, but I'm going to hand over to Brian.
Houman: Here, we are we're nearly eight years in and the bio penetration rates, 11%. So it takes time it takes effort. The good news about cost and I think the expenses. If you think about it we're very efficiently set up because we're already set up across the alliance actually deeply in the pulmonologist offices across all countries. So from an opex standpoint, there'll be a lot of efficiencies there because this will be our sector.
Brian: <unk> indication in the same offices. So we will of course will spend to support this launch it's absolutely a critical launch to reach as many patients as possible, but we certainly see some efficiency there in the way in which we're setup. Thank you <unk>.
Houman: Yeah, I think the question of price is really the question of value, I think, more than anything else. It starts with, you know, there's this, there's no more differentiated program, I think, in MS, for sure, than this total brutal program.
Houman: Sure.
Brian: Business coming from non fact.
Brian: Yes couple of things there I think it always goes back to the patient and the unmet medical need. So if you think about this patient population. It's all about efficacy at the end of the day and previously where you speak about <unk> that was more of a convenience play than anything else. While effective it was more of a convenience play the first subcutaneous product. So I'll break it into two pieces, our two guys doing exceptionally well, we couldnt be more pleased with.
Brian: So we'll see what the scenarios are. It's hard to guess today what the final scenarios will likely be, and we'll determine the value based upon that. We'll comment on price probably at that particular point, but not now. Thank you, Brian. Thomas, Bayford has supply.
Thomas: Exciting topic. So where we are on Bayford is, first of all, you've seen the strong performance in Q1, I start by reminding you of that point, with a significant amount of sales, above 180 million euros just in Q1. I'm mentioning that to highlight the fact that it covers not only NH23 and NH24, the last shipment for the Northern Hemisphere, but also the first shipment for the Southern Hemisphere, with two Southern Hemisphere countries where we have started the launch.
Thomas: The launch progress because again, the physician and the patient population really understood that for a single dose you can actually have near normal factor levels for an entire week and thats really changing the game in the opposite now where we primarily taking business from where we said we primarily take it from factors because we believed all patients that are on factors should be moved to <unk> and the factor marketplace.
Thomas: About 60% of the marketplace still today, 60% to 65% of the marketplace. So that is primarily where we're taking business two thirds of our switches are coming from competitive one third is coming from a lock date again, a factor that should be switched now as it specifically relates to him Libra and then we'll talk about the competitive that's coming and everything came labor should be more nervous about the competitor than us for sure, but we're taking.
Thomas: So that's the first part. As you have seen, also, we mentioned through Francois that we would not expect sales of Bayford in Q2. It has nothing to do with supply, simply related to the fact that we were able to actually ship the Southern Hemisphere supply in Q1 and not in Q2.
Thomas: About 10% about 10% of our business is actually coming from him Libre wasn't what we anticipate necessarily but again I think it goes back to the efficacy side of things. So again, we couldnt be more pleased with the progress so far a lot of our physicians more than 80% percent of that physicians have prescribed and we will reiterate that they continue to increase their prescribing moving forward. So again, we're off to again, a really good start as we hit <unk>.
Thomas: And of course, the rest of the sales for this year will come from the Northern Hemisphere in Q3. Now, as for the heart of your question on supply, we are full speed. Both AstraZeneca and us are working on extending our industrial network, as we have mentioned before, together. We are not adding, not we've already added, of course, packaging lines. We are adding filling lines, as we have discussed together.
Thomas: The first year Mark for Octavio.
Thomas: And as we speak today, we are filling new BFR2 syringes every single day for the coming season. We're going full speed, as we discussed also. Of course, while we are currently manufacturing and filling doses, the release of this product will depend as to the speed of approval of these two filling lines by the regulators, notably USFDA and EMA, especially. So we believe that with all the elements we're putting together with our partner, we'll be able to have this supply released in due time for the coming North American season, which is why we are very confident in our ability to reach To be more specific, beyond that, we will discuss together at the Q2 earnings poll, when we'll have more news from our supply perspective and decisions with the regulators. Yeah, and thanks, Thomas.
Speaker Change: Brian and of course, as we've watched the market evolve.
Speaker Change: Right I think we took more patients from I believe but don't expect to them, probably because they're trying to chase efficacy down to the once a week.
Thomas: Once week convenience was roughly the same.
Speaker Change: I think what can lead to set the borrowing was trying to find some new convenient.
Thomas: Whether it's monthly or perhaps even eight weekly.
Speaker Change: So and I think that could be a needle.
Thomas: The level two so the market's clearly growing convenience versus efficacy in the trade. So I think we're going to be well positioned next question next question from Emmanuel E.
Speaker Change: This bank.
Speaker Change: Thank you for taking the questions maybe.
Speaker Change: Question on cash flow first of all please first of all you mentioned some caution on them for this year and you mentioned some one time.
Speaker Change: Adjustments are you re basing perhaps you could give us a bit of color maybe in absolute cash flow last year was around 11 billion free cash flow was about so what should we be thinking of for this year and you did have some other outside.
Unknown Executive: I think everybody, AstraZeneca, everybody's doing their very best because the demand is so significant, and Q2 is a much better moment to give you much more facts as we have them, frankly. Next question. Next question from Tim Anderson from VOLF. Tim?
Unknown Executive: <unk> costs in Q1 of 700 billions of West Midlands full year.
Unknown Executive: Portion of that is cash.
Speaker Change: And a lot of capital.
Brian: Hi, this is Brian on for Tim. Just two quick ones from us. After the EPS reset in 2024, you talked about a strong rebound in 2025. Consensus has growth being around 15% in 2025. Any comment, even if only directionally, on that figure?
Unknown Executive: Working capital outflow in Q1.
Brian: Negative.
Brian: Cash from operations, which is also why don't you. So comments around those would be very helpful. And then a quick one on <unk> again Z code and road still confident pasta.
Brian: Potential risks I won't get us there what are the timelines. Thank you.
Brian: So Francois you did on them, maybe Olivier when you come in on T cells.
Brian: I know you might not say anything right now, but anything you might want to call out, such as uncertain variables that might jump out? And then there's a second question on OX40. You've said previously that this might be your most important pipeline drug, similar to Dupixent, but you capture full economics. Just want to ask how de-risked you think this asset is at this point in terms of how phase three trials might read out and whether you can confirm that there might potentially be an earlier readout, potentially in 2025. Thanks, Brian, asking for a friend. What would I say, Francois? Any comment?
Speaker Change: Let me start good afternoon amendment on the cash flow so essentially.
Brian: <unk> is already in Q1 is essentially coming from the.
Brian: Lower gross to net and Lantus as you know we are looking at all of them.
Brian: But we have to.
Speaker Change: From a cash flow point of view to rebates on Ohio base at least in Q1, we will have a little bit of an impact as well in Q2 and Q3. This has impacted our cash flow significantly in Q1, and there will be a little bit of it on the next two quarters. Obviously this will remain for the full year. So I just wanted to flag. The fact that this is kind of a one off.
Francois: I mean, to be clear, I don't want to put you on the spot, but we just had strong rebounds. So is there any other color you can give? No, Brian, what I can tell you is that I don't want to quantify the EPS rebound, but we are very confident about it. I think we have the building block starting with the growth profile that we have today. And if we put aside already, even you can see it in the first quarter of 2024, some of the exceptional items and negative ones like Obagio and the comparison base for COVID-19 sales, for example, we are already on a very strong platform in terms of growth today, which gives you a fair illustration of where we could be in 2025. But I think it's too early to quantify it today.
Brian: Fact of cash flow for the full year.
Francois: I don't want to quantify it because there are other moving parts.
Francois: This is a fairly significant one off impact on the restructuring cost, it's introducing too many of the projects that we have already announced.
Francois: The bulk of it is actually obviously eating fronts as you know was it.
Francois: In the public domain as well.
Francois: Necessarily a cash item that will be significant in 2024 and it was spread over the next two year sparkly, but some of it could potentially impact the end of 2024 and Q Olivier comments on <unk> <unk>. So we see a positive evolution in the slight acceleration growth in terms of screening and in terms of infusion rates.
Francois: Q1 versus Q4.
Francois: Where we have either infusion.
Francois: And I would not like to give guidance for 2025 at this point in time. Yeah, let me respond to this very briefly. I presented the data earlier. Super excited by the data. Three points. Remember, this is a biologic that has been in a large number of patients. Bless you.
Francois: Q1, where we are.
Francois: Our infusion in pediatric patients, which is for us a good signal and which means that we are progressing infusion of accelerated.
Francois: Even by multiples.
Francois: <unk> execution.
Francois: Better coordination along the patient journey.
Francois: <unk> <unk> coverage.
Francois: Is good it's not a barrier to utilization.
Francois: <unk> said from the beginning that it would be a slow burn.
Francois: We are shaping a market that didn't exist.
Francois: Screening because there was no treatment, we know that it will take some time, but we're seeing that it's worth the effort, it's about creating the awareness and making sure that both awareness at the patient level at the assembly level.
Francois: So with HCP.
Francois: <unk> has developed.
Francois: Very encouraged by the consensus guidelines that are being developed the white paper from <unk> developed and lots of activity.
Francois: TVT.
Francois: The Congress of ADT.
Francois: Did you.
Francois: GRS, making and aligning.
Houman: It's likely to be extremely safe, particularly compared to anything else that's out there. It's highly well-tolerated. The dosing interval is extremely interesting. And importantly, off-drug disease suppression is important. So the quick answer to your question is we're driving the studies as hard as we can. We've got four phase threes in flight.
Francois: A lot of.
Francois: Medical Society guidelines.
Speaker Change: <unk> so so overall.
Houman: It's going to be a slow burn, but we are confident that in the future. It will continue to progress we think that it's worth continuing to invest and this is reinforced by IHS with kols.
Olivier: We'll drive them to completion in an orderly manner as possible. And we, bearing in mind it's a biological, feel optimistic that we've been able to quantify risks and benefits. Yes. Next question from Emily Fuchs from Barclays. Emily?
Houman: And clinicians that so really gives us confidence that we still feel that we have the first and only disease modifying therapy in type one diabetes, maybe I can add as well.
Olivier: Sure.
Emily Field: Instead, we knew full well when we made the transaction. There is a reason why some of these small companies sell a great medicine is.
Emily Field: Just can't do this type of work over this many years.
Emily Field: If I could add anything.
Emily Field: The quarterly transitions.
Emily Field: Less of less interest at the moment the screening numbers of where we're heading and we will in 'twenty six 'twenty 748. This medicine is going to be a big deal contributing to the company will do the hard yards not sure you mentioned limited, but there was no competition for a decade.
Emily Field: As that did decline in the U.S. in the quarter. And then, you know, a big focus of their call yesterday was on the potential competitive threat from Mimate. You know, are you seeing that as a potential threat to Altuvio, or do you see that more as posing a threat to the five specifics? Thank you. Okay, Brian, over to you, COPD ramp. And I think the challenge is, if pulmonologists know how to treat it already, why should it take so long? And what will be the cost?
Emily Field: So we don't need to rush. This we can do this properly but we're.
Emily Field: The next competitor with the CD 40 lager.
Emily Field: And time invested in building proper screening.
Emily Field: Infusion capacity where necessary during these things we've all been on this journey before Hep C was on Remicade you just do the.
Brian: Yeah, I think there are a couple things in there. And so I think just as we said before, as you bring in a new therapy like this to any patient population, you've got to educate the patient population, you've got to educate the physicians, you know, there's a lot to be done there so that it's not just to come in and take the share of the game; it's going to be one of those things where it's biopenetration. We've seen this very well in atopic dermatitis, as you see, in AD. Here we are, we're, you know, nearly eight years in, and it and the biopenetration rates are 11%. So it takes time; it takes effort.
Emily Field: Look properly.
Brian: And we'll get the benefits a few years from now because theres nothing to displace us that course will set us up in the community for the CD 40 ligand. So so.
Brian: So we're actually really pleased with how guidelines and other things are falling quickly into my next question next question from Seamus Fernandez from Guggenheim.
Brian: Great. Thanks, so much for the question. So I just wanted to clarify the Tolerability comments around Rover Britain.
Brian: The good news about cost and I think the expense is, if you think about it, we're very efficiently set up because we're already set up across the Alliance, actually, deeply in the pulmonologist offices across all countries. So from an OPEC standpoint, there'll be a lot of efficiency there, because this will be our second indication in the same offices. So we will, of course, spend to support this launch; it's absolutely a critical launch to reach as many patients as possible, but we certainly see some efficiency there in the way in which we're set up. Thank you. I'll share any coming from non factor and a comment on me.
Brian: Just to confirm it says safety consistent with prior results on the slide.
Speaker Change: Wanted to confirm that that.
Brian: It's consistent with the.
Brian: The lack of <unk>.
Speaker Change: To your liver signal.
Brian: As previously.
David: David as.
Brian: As well as maybe confirmation to some degree that.
Brian: The MF population.
Brian: Yeah, a couple things there. I think it always goes back to the patient and the unmet medical needs. So if you think about this patient population, it's all about efficacy at the end of the day. And previously, where you speak about hematoma, that was more of a convenience play than anything else. While effective, it was more of a convenience play.
Brian: The PTK signal MF population may actually be populations specific and just a quick second question.
Brian: Paul.
Speaker Change: Wanted to get a sense for how you're thinking about business development from here.
Brian: The first subcutaneous product. So I'll break it into two pieces. Altuvio is doing exceptionally well. We couldn't be more pleased with the launch progress because, again, the position and the patient population really understood that for a single dose, you can actually have near normal factor levels for an entire week. And that's really changing the game in the offices.
Speaker Change: Got that.
Brian: With the incremental investment in R&D.
Brian: And the robust pipeline dynamics heading forward wanted to get a better sense of how youre thinking about business development going forward in terms of.
Brian: Now, where are we primarily taking business from? Well, we said we would primarily take it from factors because we believe all patients that are on factors should be moved to Altuvio. And the factor marketplace is about 60% of the marketplace still today, 60 to 65% of the marketplace. So that is primarily where we're taking business. Two thirds of our switches are coming from competitive inhibitors, and one third is coming from a lactate, again, a factor that should be switched off.
Brian: Sure.
Brian: The perhaps areas that you're most focused on building out.
Brian: Or if there is kind of a profitability or stage of development later stage, that's more interesting versus early stage. Thanks.
Speaker Change: Thank you Seamus.
Brian: Women Tolerability Rosa and some also comments about EMS.
Brian: Now, as it specifically relates to Hemlibra, and then we'll talk about the competitor that's coming. I definitely think Hemlibra should be more nervous about the competitor than we are, for sure. But we're taking about 10% of our business actually coming from Hemlibra. It wasn't what we anticipated necessarily, but again, I think it goes back to the efficacy side of things. So again, we couldn't be more pleased with the progress so far. A lot of our physicians, more than 80% of the physicians have prescribed this, and we'll reiterate that they will continue to increase their prescribing moving forward. So again, we're off to another really good start as we hit almost the first year mark for Altuvio. Thank you, Brian.
Brian: The populations.
Speaker Change: Different responses, yes, so seamus thanks for the question.
Brian: Thoughtful.
Speaker Change: The first one brief and to the point I can confirm that we're pleased with <unk>.
Brian: Tolerability profile relative rate net thus far.
Brian: Comfort of taking it forward as you said <unk> two on celebrate nib.
Brian: You very thoughtfully I have called out the fact that multiple sclerosis appears to be.
Unknown Executive: And of course, you know, as we've watched the market evolve, you're right, I think we took more patience from Hemlibra than expected, and probably because they're trying to chase efficacy down to once a week. What Himalaya had set the bar on was trying to find some new convenience standards. I think the market is clearly going convenience versus efficacy in the trade. I think we're going to be well-suited
Brian: <unk> indication for <unk> with the <unk> that may be.
Unknown Executive: Ah.
Unknown Executive: Interaction between the <unk> and the underlying policy LMS, which precisely people to let me signal I think thats as you were referring to.
Unknown Executive: Reasonable hypothesis with data supporting it.
Speaker Change: And reflects clinical experience I think both of those points are well made thank you.
Unknown Executive: On the BD I guess stroke M&A point, we guided to the sort of $2 billion to $5 billion range and bolt ons, the sort of standard I think.
Unknown Executive: Next question. Next question from Emmanuel Papadopoulos from Le Chabon. Thank you for taking the questions. Maybe.
Emmanuel Papadopoulos: We did commit up to Q3 last year that we would.
Emmanuel Douglas Papadakis: Question on cash flow first of all please, Francois you mentioned some caution on the outlook for this year, I think you mentioned some one-time, adjustments for prior year rebating perhaps you could give us a bit of color maybe in absolute sense cash flow last year was around 11 billion free cash flow is above eight so what should we be thinking of for this year and you did have some rather outsized restructuring costs in q1 over 700 million so where's that likely to land for the full year what portion of that is cash and the Lord Capitol Working Capital Outflow in Q1 which drove a negative, Cash from Operations, which was also rather unusual. So comments around those would be very helpful. And then a quick one on T-Zield.
Emmanuel Papadopoulos: Hold R&D through 'twenty, four 'twenty five brand above seven 7 billion.
Francois: So we don't want to wriggle away from that I don't think thats appropriate.
Emmanuel Douglas Papadakis: Of course, we will get some failures in the which will free up some capacity or some delayed installs so different things.
Emmanuel Douglas Papadakis: Which will mean that capacity will open up for us perhaps into 'twenty five 'twenty six.
Emmanuel Douglas Papadakis: And then of course most of the Big study start to graduate pipeline comes along that gives us.
Emmanuel Douglas Papadakis: The sort of automatic bandwidth.
Francois: Flat again, two quarters in a row, but still confident in its blockbuster potential. So what gets us there? What are the timelines? Thank you. So Francois, you do that, and then maybe Oliver Olivier will want to comment on TZL? Let me start. Good afternoon, Emmanuel.
Emmanuel Douglas Papadakis: I think to maintain that you might see more of our effort and energy on the volatile other and the Earth.
Francois: Early phases, where the biggest spend comes later and we can absorb that without missing a commitment.
Francois: Indeed in the late stages.
Francois: On cash flow, so it is essentially the fact that the decrease already in Q1 is essentially coming from the lower growth to net in Nantes. As you know, we are booking lower, but we have to pay from a cash flow point of view to rebate on a higher base, at least in Q1. We will have a little bit of an impact as well in Q2 and Q3. This has impacted our cash flow significantly in Q1, and there will be a little bit of it in the next two quarters.
Francois: The R&D commitment ongoing is minimal and we.
Francois: We can hold the line on what we've said and perhaps bring in a latest stage asset we have a good balance sheet, we have the leverage that but I think the discipline around working within the envelope on R&D budget has to be maintained.
Francois: Should I throw the normal.
Francois: Disclaimer, and we remain opportunistic and everything else.
Francois: Obviously, this will remain for the full year. So I just wanted to flag the fact that this is kind of a one-off and will impact our cash flow for the full year. I don't want to quantify it because there are other moving parts, but this is a fairly significant one-off impact. As for the restructuring cost, it's essentially linked to many of the projects that we have already announced. Part of it is obviously hitting France, as you know, but it's in the public domain as well.
Francois: But.
Francois: We've given guidance to you we'd like to order it for us and for you and make sure we get it done and if we find.
Francois: Some.
Francois: Some opportunities to reallocate that perhaps our biggest thing.
Francois: We will take it but.
Francois: But demonstrating the discipline post Q3 last year is the number one priority because don't forget we have enough assets in house to we believe to grow EPS. It cost them to do what we need to do and to go all the way through the low.
Olivier: It's not necessarily a cash item that will be significant in 2024, as it will spread over the next two years, partly, but some of it could potentially impact the end of 2020. Here, Olivier comments on Teasel. Mention Teasel, so we see a positive evolution and a slight acceleration, both in terms of screening and in terms of infusion rates, Q1 versus Q4. Where we have a higher infusion in Q1, we have higher infusion in pediatric patients, which is, for us, a good signal that means that we are progressing. Infusions have accelerated, driven by more field force execution and better coordination along the patient journey. Payers' coverage is good.
Olivier: To pick some whenever that comes.
Olivier: But the discipline is what will be judged I think over the next couple of years at least.
Speaker Change: That's as much as I can share with you.
Speaker Change: Next question.
Olivier: From Jo Walton from UBS.
Olivier: No.
Olivier: Yes.
Olivier: Yes.
Olivier: Excellent.
Speaker Change: Two quick questions then please.
Olivier: <unk> I wonder is there any evidence of it.
Olivier: Walter it's patient Robbins severe patients beginning to try prophylaxis given that.
Olivier: This is now on <unk>.
Olivier: To get to a normal level of factor closing on.
Olivier: On by Fortis could you give us an idea of what the next countries would be so you've obviously got potentially more demand than supply what's the sort of order of countries that we should be thinking of as you rollout because you said you'd be rolling out some more this year. If I can just finally say is there any read across from the failure.
Olivier: It's not a barrier to utilization. We said from the beginning that it would be a slow burn. We are shaping a market that didn't exist before. There was no screening because there was no treatment.
Olivier: We know that it will take some time, but we think that it's worth the effort. It's about creating awareness and making sure that both awareness at the patient level, at the family level, but also with HEP is developed. We are very encouraged by the consensus guidelines that are being developed, the white paper from ADA that was recently developed. And there are a lot of activities; there's been a lot of activity at the Congress of ADTD with the GRF making and aligning a lot of medical societies towards guidelines.
Olivier: In fact sell them up <unk> to any of the other indications or should we see that is completely isolated.
Speaker Change: Okay. Good good questions.
Olivier: Brian ill.
Olivier: Use moving into MADRA, yes, I think I mean, the way we think about the marketplace is actually again all of these patients are on are on therapies.
Olivier: When we talk about the switches again. These patients are identified really early in their life and then they are on some type of therapy. So.
Olivier: From a moderate standpoint think about it that way actually we think about it what type of therapy or Jan and what types of FC efficacy levels or are you looking for convenience levels or are you looking for and that's why again, we're really bullish because of what we've seen from a switch standpoint. The marketplace is really responding to the profile that we're bringing which has better efficacy near normal factor levels over a week period with a one dose.
Olivier: So overall, it's going to be a slow burn, but we are confident that in the future, it will continue to progress. We think that it's worth continuing to invest in. And this is reinforced by our exchange with KOL and clinicians, which really gives us confidence that with TZILDA, we have the first and only disease-modifying therapy in type 1 diabetes. Maybe I cut out as well, Olivier, did you?
Olivier: Type of therapy. So we're seeing switches of all patient types no matter of the types of therapies that are in queue.
Olivier: Do you think <unk> is going to surprise everybody I have to say all of the feedback has been in the conferences.
Olivier: I think I think that near normal thing Jim mentioned it is.
Unknown Executive: We knew full well when we made the transaction. There is a reason why some of these small companies sell at great prices, and it is because they just can't do this type of work over this many years. If I could add anything, the quarterly transitions are of less interest at the moment, the screening numbers are where we're heading, and we will, in 26, 27, 28, medicine will be a big deal, contributing to the company, we'll do the hard yards, and I'm not sure you mentioned Olivier, but there was no competition for a decade, so we don't need to rush this.
Olivier: Thomas I'm not sure whether you're prepared to share.
Unknown Executive: Countries and more orders, but maybe you could give some regional input.
Unknown Executive: And I can tell you a bit of flavor of how we're doing in the way we are not seeing so much more so so rightfully.
Unknown Executive: <unk> as you said do of course.
Unknown Executive: We are going to make sure that we have ample supply for the three geographies, where we had significant uptake last year.
Unknown Executive: <unk> spend in the U S France.
Unknown Executive: Moving forward, we are already doing so suddenly Mr ongoing season in Chile, and our company.
Unknown Executive: We can do this properly. In fact, we're the next competitor with the CD40 ligand. So, the time invested in building proper screening, infusion capacity where necessary, doing these things, we've all been on this journey before, I was on it with Hep C, I was on it with Remicade, you just do the work properly, and we'll get the benefits a few years from now because there's nothing to displace us, and that, of course, will set us up in the community for the CD40 ligand, so So I just wanted to clarify the tolerability comments around Rosa Brutonib. Just to confirm, it says safety consistent with prior results on the slide.
Unknown Executive: The agency in Australia.
Unknown Executive: Moving forward, nothing amiss or $2 24, I expect more European countries.
Unknown Executive: Yep.
Unknown Executive: What happens and that's very important to remember each time, we introduced the new immunization.
Unknown Executive: Unless there is always a very specific national process.
Unknown Executive: Setting up the right recommendation with the recommending body then Tyson.
Unknown Executive: And then we launched into the right nationally musicians view, which is why I cannot give you specific European countries right now because I need to leave it to the zinc amending bodies, who make sure that we add those modes and we proceed with these windfall. In addition to this geography in Europe, you know very well that we just got that legislation.
Seamus Christopher Fernandez: Just wanted to confirm that that is consistent with the lack of an LFT or liver signal as previously stated as well as maybe confirmation to some degree that the MS population that the VTK signal in the MS population may actually be a population. And just a quick second question, you know, Paul; just wanted to get a sense for how you're thinking about business development from here. I guess with the incremental investment in R&D and the robust kind of pipeline dynamics heading forward, I wanted to get a better sense of how you're thinking about business development going forward in terms of, you know, the perhaps areas that you're most focused on building out or if there is kind of a profitability or stage of development later stage that's more interesting.
Seamus Christopher Fernandez: In Japan.
Speaker Change: In Q1, 2024, and you should expect a little bit.
Seamus Christopher Fernandez: Japan, and China sent in the pilot.
Speaker Change: I would say not necessarily musician program for 2024 in order to prepare for larger volumes in the coming year.
Seamus Christopher Fernandez: On the following season.
Seamus Christopher Fernandez: The only thing it shows cone.
Seamus Christopher Fernandez: But some of us.
Paul: Well placed.
Paul: Okay. Thanks, John.
Speaker Change: Great question.
Seamus Christopher Fernandez: Just to be typically we'd always positioned frankly, im app, primarily as and MS. Wendy medic.
Seamus Christopher Fernandez: Medication and.
Seamus Christopher Fernandez: It's clearly demonstrates its chops and IMS in great detail.
Seamus Christopher Fernandez: And it is progressing in tier one day.
Seamus Christopher Fernandez: It is incumbent on us.
Seamus Christopher Fernandez: Patient centric organization.
Speaker Change: For us to be thoughtful about the broadest possible patient benefit we can bring without drugs.
Seamus Christopher Fernandez: Am I on clinical practice, I traded bunch of patients with <unk> and they are definitely an unmet medical need.
Seamus Christopher Fernandez: We initiated some experimental medicine study to see whether we could signal sic and those indications I don't see the share grants readout as anything other than a failure in a signal seeking study and we remain confident about brakes allomap in the lesser.
Seamus Christopher Fernandez: Thanks a lot. Thank you, Seamus. We meant tolerance, Rilsa, and also some comments about MS. So, Shami, thanks for the question, both thoughtful. The first one, brief and to the point, I can confirm that we're pleased with the liver tolerability profile of Rilsabrutinib thus far and confident taking it forward. As you said, point two on Tolerbrutinib, you very thoughtfully have called out the fact that multiple sclerosis appears to be a distinct indication for the BDKIs. There may be interaction between the BDKI and the underlying biology in MS, which predisposes people to liver signaling.
Seamus Christopher Fernandez: Lesser indications.
Speaker Change: Yes, I think.
Seamus Christopher Fernandez: Right.
Seamus Christopher Fernandez: Diabetes.
Seamus Christopher Fernandez: Yes.
Seamus Christopher Fernandez: I think you said it already.
Seamus Christopher Fernandez: The risk of repeating it where we have pipeline in a product.
Seamus Christopher Fernandez: We will go and explore some adjacent areas, where we think there's some pathway or some biological reason why that might be an impact.
Seamus Christopher Fernandez: You should expect more of that from us.
Seamus Christopher Fernandez: Early bulks left them right.
Seamus Christopher Fernandez: Pipeline in a product drugs, because we need to do that.
Seamus Christopher Fernandez: And of course, everybody has tried children.
Seamus Christopher Fernandez: Cracking.
Seamus Christopher Fernandez: <unk>.
Seamus Christopher Fernandez: We cant go any books that we can do something okay next question.
Houman: I think that's, as you were referring to, a reasonable hypothesis with data supporting it and that reflects clinical experience. I think both of those points are well made. Thank you. On the BD, I guess, stroke M&A point, you know, we guided to the sort of two to five billion range in bolt-ons, that sort of standard, I think.
Houman: Next question from David Risinger, eliminating Steven.
Speaker Change: Yes, thanks, very much and thanks for all the updates today.
Speaker Change: So I just have one question.
Speaker Change: And maybe you could comment in some detail. Please so.
Unknown Executive: We did commit after Q3 last year that we would... hold R&D through 24 and 25 for about 7.7 billion. So, you know, we don't want to wriggle away from that. I don't think that's appropriate.
Houman: The company has accelerating ini.
Unknown Executive: Phase two readouts in 2025 could you discuss the key cards that will be turning over for the candidates with the biggest commercial potential thanks very much.
Unknown Executive: Of course, we will get some failures in there, which will free up some capacity or some delayed starts or different things, which will mean that capacity will open up for us, perhaps into 2025. And then, of course, most of the big studies start to graduate, and that comes along, and that gives us this sort of automatic bandwidth. To maintain that, you might see more of our effort and energy on the bolt-ons, either in the early phases, where the biggest bend comes later, and we can absorb that without missing a commitment, or indeed in the late stages, where the R&D commitment ongoing is minimal, and we can hold the line on what we've said and perhaps bring in a later stage asset.
Speaker Change: Okay. David. Thank you, so I think Houma and we'll start with you on.
Unknown Executive: We've already put them into two buckets frankly.
Unknown Executive: So.
Unknown Executive: Don't know how much more we need to add but the readouts that you're excited about for example, human for ini.
Unknown Executive: 2025, specifically is for U S.
Unknown Executive: Yes, specifically.
Unknown Executive: It's like choosing between.
Unknown Executive: One favorite children.
Unknown Executive: That's.
Unknown Executive: I'll Readouts in 2025.
Unknown Executive: But I'll give it a guy so.
Unknown Executive: Firstly it saw a big laterally you asked for the ounces in some detail and I will try and provide them with a suite.
Unknown Executive: Full detail, so I'll phase III reading out as you've seen Dara amulets sort of app in a variety of disorders, particularly hidradenitis Suppurativa alopecia.
Unknown Executive: You know we have a good balance sheet, you know we have to leverage that, but I think the discipline around working within the envelope on our R&D budget should be maintained. Should I throw in the normal CEO disclaimer?
Speaker Change: Number one as I said.
Unknown Executive: With a non depleting ox 40 ligand inhibitor, we hit the type two inflammation, but also take on a bunch of other mechanisms of <unk> 40 is often regarded as a checkpoint immune checkpoint and I am excited about is wrong in alopecia areata.
Unknown Executive: We remain opportunistic and everything else. Of course, but you know, we've given guidance to you. We'd like to honor it for ourselves and for you and make sure we get it done.
Unknown Executive: And if we find some opportunities to reallocate, that's perhaps our biggest thing; we'll take them. But demonstrating the discipline post Q3 last year is the number one priority because don't forget we have enough assets in-house to, we believe, grow EPS, of course, and to do what we need to do and to go all the way through the LOE of Dupixent whenever that comes. But the discipline is what will be judged on, I think, over the next couple of years at least. Next question. Next question from Jo Walton from UVS: Yes, can you hear me?
Unknown Executive: And the hidradenitis, Suppurativa, which are very diverse clinical indications, obviously, we have an old <unk> one with a roll in ulcerative colitis, we think thats interesting topologies, while precedented. So number one I think the amulet <unk> constellation of.
Jo Walton: Therapeutic opportunities is interesting.
Jo Walton: I think the Iraq the greater.
Jo Walton: Super interesting.
Jo Walton: Mechanistically unique.
Jo Walton: Where are we with our partner have client both in atopic dermatitis as an oral therapy, but also in hidradenitis Suppurativa again, and then two others just to call out you asked about our favorites y.
Jo Walton: Oral TNF cycling inhibitor has the potential to be a truly disruptive.
Jo Walton: Excellent. Two quick questions then, please. On Altuvio, I wonder if there is any evidence of moderate patients rather than severe patients beginning to try prophylaxis, given that this is now, you know, an ability to get to a normal level of factor clotting? On Bayfortis, could you give us an idea of what the next countries would be?
Jo Walton: RFP for patients with inflammatory disease as it will capture potentially the value of classical TNF treatment, but with differentiated side effect profile not affecting TANF.
Jo Walton: And the second one I wanted to call out is obviously linked second make.
Jo Walton: So you've obviously got potentially more demand than supply. What's the sort of order of countries that we should be thinking of as you roll out? Because you said you'd be rolling out some more this year? If I can just finally say, is there any read across from the failure in Frexilumab in Sogren's to any of the other indications, or should we see that as completely isolated?
Jo Walton: Very special molecule and asthma. The reason, it's special because it seek.
Jo Walton: <unk> durability, but also raise efficacy healing and the way it does so as to take two modular targeted both of which are precedented mechanisms of asthma put them together. So what we do is learn from the ecosystem and the excellence of our platforms enhance what we know from the ecosystem.
Speaker Change: Before I jump off.
Jo Walton: Okay, good questions. Brian, what Altuvio use do you use when moving into moderate? Yeah, I think, the way we think about the marketplace is actually, again, all these patients are on therapy. So it's, you know, when we talk about the switches, again, these patients are identified really early in their life, and then they're on some type of therapy. So, you know, from a moderate standpoint, we don't think about it that way.
Jo Walton: So I always say one of the tougher cap tomorrow, because it would be remiss of me to talk about.
Jo Walton: Pharma agents and not talk about the RSV products that reading out in phase III next year, we remain as excited about vaccines as we do as I said, our pharma products.
Brian: Actually, we think about it as what type of therapy are you on and what types of efficacy levels are you looking for, or convenience levels are you looking for? And that's why, again, we're really bullish because of what we've seen from a switch standpoint; the marketplace is really responding to the profile that we're bringing, which is better efficacy, near normal factor levels over a weekly period with a one dose type of therapy.
Brian: No.
Brian: It's nice it took you a while.
Brian: David's question.
Brian: And I'll turn that Australia did you mentioned TNF portfolio Lagonda nature.
Brian: I didn't know assignments until when I or some of the other remaining that will be up there too so.
Brian: It's going to be it's going to be busy it's going to be busy but this is what we've been trying to get the company to this point, we don't know if it'll work.
Brian: So we're seeing switches of all patient types, no matter the types of therapy that they're on. Thank you. I do think Altuva is going to surprise everybody, I have to say. All the feedback has been in the comments. I think that near normal thing Joe mentioned is... Thomas, I'm not sure whether you're prepared to share a list of countries in what order, but maybe if you give some regional input.
Brian: But we do know that we would rather have the readouts.
Brian: Hey.
Speaker Change: Next question.
Brian: Next question from Stephen Chin from exam.
Thomas: Alright, Thanks, taking my questions hopefully you can hear me, especially on the outlook given the top line momentum could you frame maybe the level of flexibility you have in the R&D and launch plan and hence the likelihood that any outperformance could drop through to earnings.
Unknown Executive: Yes, and I can give you a little bit of the flavor of how we are doing it and why we're not saying so much more. So rightfully, as you said, Joe, we are going to make sure that we have ample supply for the three geographies where we had significant uptake last year. You know very well about Spain, the U.S., and France.
Unknown Executive: It wasn't that long ago, you outlined the acceleration so I assume that any near term investment opportunities that you wanted to accelerate perhaps have done already.
Unknown Executive: And then secondly, just some steam with the consumer separation, perhaps Francois is it's your first earnings call as CFO.
Unknown Executive: I'll ask your thoughts on what might be on your list in a scenario with Sanofi was to receive a significant cash inflow. So really just your thoughts on appetite for larger volume more larger value of M&A larger buybacks or willingness to operate with net cash for a period of time. Thank you.
Thomas: Moving forward, we've already opened Chile and a couple of regions in Australia during the ongoing Southern Hemisphere ongoing season. Moving forward for the Northern Hemisphere 2024, I expect more European countries to pick up. What happens, and this is very important to remember, each time we introduce a new immunization, there is always a very specific national process for first setting up the right recommendation through the recommending body. Then I will set up, and then we will launch the right national immunization schedule, which is why I cannot give you specific European countries right now because I need to leave it to the recommending bodies to make sure that we have those votes, and we proceed with NH2024.
Thomas: So I was going to take a stab at those.
Thomas: Yeah.
Thomas: The R&D flexibility. This is good news if we can generate additional resources I think thats we.
Thomas: We will need to decide in due time on each on every single case on the merits if we have good Kansas.
Thomas: So good returns on investment on R&D, I think we will not hesitate to do it but that being said there and you should not discount. The fact that we let some of it flow to the bottom line.
Thomas: In addition to this geography in Europe, you know very well that we just got the registration of B. fortis in Japan in Q1 2024, and you should expect a little bit of Japan and China to set up in the private setup, I will say, not the national immunization program for 2024, in order to prepare for larger volumes in the coming year but for the following seasons.
Thomas: It's extremely important that we reward our shareholders.
Thomas: <unk>.
Thomas: In an attractive way, which is the reason why I'm coming back to what I said earlier on as well.
Thomas: Total confidence on the significant rebound in EPS for example in 2025 I think on capital allocation I think we have a very clear policy.
Thomas: First of all we want to invest in our business, both organically and Inorganically as well I think Paul touched on it earlier on we need to be very disciplined on that too, which is which means that we are rather than thinking of a bolt on.
Houman: I think Joe's comment on Frexilamab is well placed; over to you. Thanks Paul, thanks John. Great question.
Speaker Change: Within the $2 billion to $5 billion, clearly with a view to.
Houman: Just to be super clear, we've always positioned Frexilamab primarily as an MS and a T1D medication, and it's clearly demonstrated benefits in MS in great detail and is progressing in T1D. It is incumbent on us as a patient-centric organization for us to be thoughtful about the broadest possible patient benefit we can bring with our drugs. In my own clinical practice, I treated a bunch of patients with Sjogren's, and they are definitely in a medical need.
Speaker Change: Get some return on generating value for shareholders as well Paul said, it's we don't want to discount either.
Houman: Lots of opportunities.
Houman: Themself in Israel attractive obviously.
Houman: In terms of capital allocation, we don't want to discount share buybacks, that's a possibility, especially in the context of the separation of Chd's was he spoke of the option that we keep on reviewing little squirrel further into the year to decide exactly on which route we get them, but two we heard the message that there is an appetite doesn't one function.
Houman: Where does to get some share of the.
Unknown Executive: We initiated some experimental medicine studies to see whether we could signal-seek in those indications. I don't see the Sjogren's readout as anything other than failure in a signal-seeking study, and we remain confident about Frexilamab in the bigger, lesser indications. Yeah, I think, Right, type 1 diabetes and MS, where I think you said it already, but just to risk repeating it where we have a pipeline in the product, we will go and explore some adjacent areas where we think there's some pathway or some biological reason why there might be an impact. And you should expect more of that from us in early parks, left and right.
Houman: On the accounts that we could generate from that transaction.
Unknown Executive: In Q4.
Unknown Executive: Good time for another question, yes, the last one will be from Peter <unk> from Citi.
Speaker Change: Thank you.
Speaker Change: Thank you people from Citi.
Speaker Change: Two questions I think everyone on the call rather than your comments portray it.
Unknown Executive: Pipeline perception is the missing.
Unknown Executive: A piece of the puzzle to get the chefs flowing in and above 100, so with that in mind.
Unknown Executive: I've got two follow up questions for human please on Rosa.
Unknown Executive: Until ibrutinib.
Speaker Change: Let me get you cant disclose.
Unknown Executive: Too much ahead of data presentation, but human kind of push you as best I can to give us a sense of how competitive.
Unknown Executive: You think that real the dataset and ICP is from an efficacy safety perspective to incumbent molecules, such as Promacta, especially given from actress facing generic risks and upon trying to push as best I can without getting you to disclose data and then on totally ahead of the late summer phase III Readouts, just how youre thinking about the relative opportunity.
Unknown Executive: Financial Product Drugs because we need to do that, and of course, everybody's tried you. Okay, next question. Next question from David Risinger. David.
David Reed Risinger: T across readouts for missing and progressive because.
David Reed Risinger: Relapsed or missing the Kols feedback, we're receiving and the data that's been presented at <unk>.
David Reed Risinger: Yes, thanks very much. And thanks for all the updates today. So I just have one question, and maybe you could comment in some detail please. So the company is accelerating I&I phase two readouts in 2025. Could you discuss the key cards that we'll be turning over for the candidates with the biggest commercial potential? Thanks very much.
David Reed Risinger: Seems to be showing a waning effect, both igo until the over time as it relates to gadolinium lesion reduction. So it is the message we're getting is be wary of.
David Reed Risinger: Our posted results that's for missing Progressive is clearly where the biggest unmet need is.
David Reed Risinger: We don't yet have any randomized phase two data that we can sort of bankable. So is it just the brain penetration Angola NFL data that you spoke about earlier, whom and what.
David Reed Risinger: What gives you confidence in the progressive trials would you bring any other points to the table. Thank you.
Houman: Okay, David, thank you. So, I think Houman will start with you on... We've already put them into two buckets, frankly, so I don't know how much more we need to add, but for the readouts that you're excited about, for example, Houman, for INI, for 2025 specifically, is where you are. Yeah, specifically, it's like choosing between one's favorite children for our readouts in 2020. But I'll give it a go.
Houman: Okay. Thank you so much for those questions as always deeply thoughtful let me just take relative very quickly.
Houman: I think the existing standard of care leave.
Houman: They've been incredibly important that since by the way I don't want any level of people not to appreciate how important they've been to the treatment of ICT.
Houman: But they don't get to the heart of the disorder as I said mechanistically that suppression of the T cells and the reduction of FC Gamma based macrophage platelet destruction has been really important just building up a number of platelets.
Houman: Firstly, it's our big letter, and you asked for the answers in some detail, and I will try and provide them with thoughtful detail. So, phase two is reading out. As you've seen, there is amylotelemab in a variety of disorders, particularly hydradenitis separativa and alopecia. Number one, as I said, with a non-depleting OX40 ligand inhibitor, we hit type two inflammation but also take on a bunch of other mechanisms. OX40 is often regarded as a checkpoint, an immune checkpoint, and I'm excited about its role in alopecia areata and hydradenitis separativa, which have very diverse clinical indications.
Houman: The severity et cetera, So I really do think <unk> is a.
Houman: Deeply important.
Houman: New add to that space and as Brian beautifully sat beyond the ICP its future role potentially in ramp lot is.
Houman: What are your very significant.
Houman: And the Tolerability profile is.
Houman: Stock compensation, but to my mind very pleasing so.
Speaker Change: ICP answer.
Houman: Bullish on Rosa.
Houman: I'm celebrating that.
Houman: From time to time, I find that frustrating that people try and change the calpine.
Houman: And let me be Super clear I think in progressive disease.
Houman: There is almost nothing out there of any significant value in.
Houman: Obviously, we have an oral RITK1 gene with a role in ulcerative colitis. We think that's interesting. The biology is well precedented. So, number one, I think the amylotelemab constellation of therapeutic opportunities is interesting. I think the IRAC degrader is super interesting. It's mechanistically unique, where we, with our partner, have used it both in atopic dermatitis as an oral therapy but also in hydradenitis separativa again. And then two others, just to call out, as you asked what our favorites were.
Houman: Secondary progressive Ms. It's a horrible disorder with ventricular dilatation and substantially unmet medical need today or any of those patients alright.
Houman: Alright, undertreated or labeled as a different condition in order to access therapy right. So it's a progressive progressive disease, I think the risk benefit.
Houman: Should the celebrating that breed out play.
Houman: Play to our favor.
Houman: Is unequivocal and I'm I'm perpetually confident if there's efficacy with a level of safety, we've now seen with monitoring and progressive disease. There is significant value on the table with respect to relapsing remitting. When my frustration comes in to take at this stage and germanize.
Houman: The oral TNFR1 signaling inhibitor has the potential to be a truly disruptive therapy for patients with inflammatory disease, as it will potentially capture the value of classical TNF treatment but with a differentiated side effect profile not affecting TNFR2.
Houman: Development.
Houman: To argue that even if the molecule.
Houman: And in phase III and.
Houman: Passes the Calpine, but we now have another discussion about whether this is going to be sustained I think.
Houman: And the second one I wanted to call out is obviously linsecumic, a very special molecule in asthma. The reason it's special is because it seeks to augment durability but also raise efficacy ceilings. And the way it does so is to take two modular targets, both of which have precedented mechanisms in asthma, and put them together.
Houman: Difficult question to answer my view is in a few months, we will see the results as Jim and I wanted to I think that the regulatory path is really well established both with respect to IRR, but also with respect to disability. This isn't something we've invented.
Houman: And.
Houman: I think the onus will be on us and the regulator to get this through and benefit patients with relapsing disease.
Houman: So what we do is learn from the ecosystem, and with the excellence of our platforms, enhance what we know from the ecosystem. Before I jump off the pedestal, I also want to give Tomas a shout out because it would be remiss of me to talk about our pharma agents and not talk about the RSV products that are reading out in Phase 2 next year. We remain as excited about vaccines as we do about our pharma.
Houman: If we had <unk>.
Houman: And all this ability I think it's simple as that right.
Tomas: Yes. Thank you. Thank you.
Houman: I mean, we.
Speaker Change: With you.
Houman: I think our rules.
Houman: Relative profile irrespective of Promacta and its challenges with diet and everything else I think we.
Houman: I think once we got beyond as well to asthma.
Houman: So, you know, it's nice that it took you a while to answer David's question; there's a lot going on. Did you mention TNF40 ligands in HS? I didn't mention that. Nor did I mention TL1A or some of the other remaining ones.
Houman: As you.
Tomas: Thank you took an advanced all roles in these spaces.
Tomas: And I think the question is the right question about earlier was asked about Tolerability. If you can if you can thread that needle.
Houman: TL1A will be up there too, so it's going to be busy. It's going to be busy, but this is what we've been trying to get the company to this point. Okay, next question. Next question from Gary Stevenson from Exxon. Hi, thanks for the questions. Hopefully, you can hear me. Just firstly, on the outlook, given the top-line momentum, could you maybe outline the level of flexibility you have in the R&D and launch plan and hence the likelihood that any outperformance could drop through to earnings? I mean, it wasn't that long ago you outlined the acceleration.
Houman: We can see William marks a huge patient.
Gary Stevenson: So that's why we put it into two.
Gary Stevenson: And Tony I think <unk> summed it up beautifully.
Gary Stevenson: Let's not forget that in advanced or.
Gary Stevenson: Potentially disease modifying could be the profile.
Houman: No.
Gary Stevenson: Theres a real space for it so.
Gary Stevenson: So, you know, I'd assume that any near-term investment opportunities that you wanted to accelerate, you perhaps have already done. And then, secondly, just on the theme of the consumer separation, perhaps Francois, as it's your first earnings call as CFO, I could ask your thoughts on what might be on your list in a scenario where Sanofi was to receive a significant cash inflow. So really just your thoughts on appetite for larger volumes or larger values of M&A, larger buybacks, or willingness to operate with net cash for a period of time. François, do you want to take a stab at those? Yes, I can.
Gary Stevenson: I think if we if we can get it done the right way and we'll get the studies soon enough to sort of not even worth speculating anymore. I think if we affect progression in any form even if we have to have conversations with regulators about what is sort of understood and what is not very.
Francois: That would be hard to resist something that could do that find out price, let's say out of the data.
Francois: So thanks, everyone for your time today.
Francois: And starting 2020 full sales volumes by 7% growth was driven by launches new indications for <unk>.
Francois: <unk> formation is gathering pace and I felt a little bit today joined the questions weighted towards the future and what we're trying to do if you have any follow up questions feel free to contact the IR team. They never rest and have a great rest of your day. Thank you.
Francois: On R&D flexibility, this is good news if we can generate additional resources. I think that we will need to decide in due time on each and every single case and its merits. If we have good cases for good returns on investment in R&D, I think we will not hesitate to do it. That being said, I mean, we should not discount the fact that we let some of it flow to the bottom line.
Francois: Goodbye.
Francois: And I think that it's extremely important as well that we reward our shareholders in an attractive way, which is the reason why I'm coming back to what I said earlier as well as our total confidence in the significant rebound in EPS, for example, in 2025. On capital allocation, I think that we have a very clear policy. So, first of all, we want to invest in our business, both organically and inorganically as well.
Francois: I think Paul touched on it earlier, and we need to be very disciplined on that, which means that we are rather thinking today of Bolton cases within the $2 to $5 billion range, clearly with a view to getting some return and generating value for shareholders as well. But, as Paul said, we don't want to discount either larger opportunities if they are attractive, obviously. In terms of capital allocation, we don't want to discount share buybacks.
Francois: That's a possibility, especially in the context of the separation of CHC. So this is part of the option that we keep on reviewing. Let us work further into the year to decide exactly on which route we take, but we heard the message that there is an appetite from shareholders to get some share of the cash that we could generate from that transaction. We have time for another question. Yes, the last one will be from Peter Verdult from Citi.
Peter Verdult: Thank you. Thank you, Peter Verdult from Citi. Two questions, please.
Peter Verdult: I think everyone on the call realized, and your comments portray it, that pipeline perception is the missing piece of the puzzle to get the shares flying again and above 100. So with that in mind, I've got two follow-up questions for Houman, please, on Rilsa and Tola Brutonib. I totally get you can't disclose too much ahead of data presentation, but Houman, can I push you as best I can to give us a sense of how competitive you think that rule of the data set in ITP is, from an SQE safety perspective, to incumbent molecules such as Promacta, especially given Promacta is facing generic risks. So I'm going to try and push you as best I can without getting you to disclose the data
Peter Verdult: And then on TOLI, the head of the late summer phase three readouts, just how you're thinking about the relative opportunity across readouts, remitting and progressive, seems to be showing a waning effect, both ego and tolly over time as it relates to gadolinium lesion reduction. So the message we're getting is be wary of a positive result, and that's remitting. Progressive is clearly where the biggest need is, but we don't yet have any randomized phase two data we can sort of bank on. So is it just the brain penetration angle and the NFL data?
Houman: I spoke about earlier, Houman, what gives you confidence in the progressive trials. Would you bring any other points to the table? Thank you. Okay, thank you so much for those questions. As always, deeply thoughtful. Let me just take this very quickly.
Houman: I think the existing standards of care leave too much to be desired. They've been incredibly important medicines, by the way; I don't want any level of people not to appreciate how important they've been to the treatment of ITP. But they don't get to the heart of the disorder. As I said, mechanistically, better suppression of B cells and the reduction of FC gamma based macrophage, platelet destruction has been really important, and just building up a number of platelets doesn't ameliorate the severe fatigue, etc.
Houman: So I really do think RILSA is a deeply important new addition to that space. And as Brian beautifully said, beyond the ITP, its future role, potentially in rare blood, is really very significant. And the tolerability profile is, as you said, I can't exclude, but to my mind, very pleasing. So the ITP answer: bullish on RILSA.
Houman: On tolerbritinib, from time to time, I find it frustrating that people try and change the goalposts. And let me be super clear, I think in progressive disease, there is almost nothing out there of any significant value for secondary progressive MS. It's a horrible disorder with ventricular dilatation and substantially unmet medical need.
Houman: Today, many of those patients are either undertreated or labeled as a different condition in order to access therapy, right? So for progressive disease, I think the risk benefit Should the Tolerant New Breed Out play to our favor, it's unequivocal, and I'm prepared to be confident that if there's efficacy, with the level of safety we've now seen with monitoring, that in progressive disease, there is significant value on the, With respect to relapsing remitting, where my frustration comes in, to take, you know, at this stage in GemIIni's development, to argue that even if the molecule works in phase three and passes the goalposts, that we now have another discussion about whether this is going to be sustained, I think is a difficult question to answer.
Houman: My view is that in a few months, we will see the results of GemIIni 1 and 2. I think that the regulatory path is really well established, both with respect to ARR and also with respect to disability. This isn't something we've invented.
Unknown Executive: And I think the onus will be on us and the regulator to get this through and benefit patients with relapsing disease, if we have ARR and or disability. I think it's simple as that really. Yeah, thank you. Thank you. And thank you. I mean, we are with you. I think rules are the really competitive profile, irrespective of actor and its challenges with diet and everything else.
Unknown Executive: I think we, I think once we get beyond, as well, to asthma and to CSD... I think, you know, you're talking about orals in these spaces, and I think the question is the right question about you know earlier was asked about uh tolerability if you can if you can thread that needle which I believe we can you really unlock a huge And Tolly, I think everyone's summed it up beautifully, you know, let's not forget that an advanced oral, Potential Disease Modifying could be the profile, and, you know, it's, there's a real space.
Unknown Executive: So I think that if we can get it done the right way and we'll get the studies soon enough, so it's sort of not even worth speculating anymore. I think if we affect progression in any form, even if we have to have conversations with regulators about what is sort of understood and what is not, very hard to resist some, Let's find out, all right? We'll see you in a bit. So, thank you everyone for your time today. We had an excellent start in 2024. Sales advanced by 7%. Growth was driven by launches, including new indications for duplexing.
Unknown Executive: A transformation is gathering pace. And I felt that a bit today during the call, the questions weighted towards the future and what we're trying to do. If you have any follow-up questions, feel free to contact the IR team. They never rest. And have a great rest of your day. Thank you. Goodbye.