George Grofik - Sanofi Olivier Brandicourt - Sanofi Bill Sibold - Sanofi Elias E. Zerhouni - Sanofi Jérôme Contamine - Sanofi Peter Guenter - Sanofi David Loew - Sanofi Alan J. Main - Sanofi Olivier Charmeil - Sanofi.

Florent Cespedes - Société Générale SA (France) Graham Parry - Bank of America Merrill Lynch Vincent Meunier - Morgan Stanley & Co. International Plc Luisa Hector - Exane BNP Paribas Richard Vosser - JPMorgan Chase & Co. Jo Walton - Credit Suisse Securities (Europe) Ltd. Philippe Lanone - Natixis SA Peter Verdult - Citigroup Global Markets Ltd.

Keyur Parekh - Goldman Sachs International Jack Scannell - UBS Ltd..

Ladies and gentlemen, good afternoon. Welcome to the Sanofi Q2 2017 Earnings Results Conference Call and Live Webcast. I'm Emma, the Chorus Call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. After the presentation, there will be Q&A session.

The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. George Grofik, Vice President, Head of Investor Relations at Sanofi. Please go ahead, sir..

Good morning and good afternoon to everyone on the call. Thank you for joining us to review Sanofi's second quarter results. As usual, you can find the slides of this call on the Investor's page of our website at sanofi.com.

Moving to slide 2, I would like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially.

I refer you to our Form 20-F document on file with the SEC and also our document de référence for a description of these risk factors. With that, please advance to slide 3, and let me introduce our speakers today.

With me are Olivier Brandicourt, Chief Executive Officer; Jérôme Contamine, Executive Vice President and Chief Financial Officer; Bill Sibold, Executive Vice President, Sanofi Genzyme; and Elias Zerhouni, President, Global R&D.

Also joining us for the Q&A session are Olivier Charmeil, Executive Vice President, General Medicines and Emerging Markets; Peter Guenter, Executive Vice President, Diabetes & Cardiovascular; Karen Linehan, Executive Vice President, Legal Affairs and General Counsel; David Loew, Executive Vice President, Sanofi Pasteur; and Alan Main, Executive Vice President, Consumer Healthcare.

First, Olivier will discuss the key highlights of the second quarter, then Bill will provide an update on our immunology franchise. After that, Elias will discuss recent advances in our specialty care pipeline. And finally, Jérôme will review Sanofi's financial results before we open the call to Q&A.

Before we start, I would like to remind you that as of the start of 2017, Sanofi's financial statements include the impact of the acquisition of the Boehringer Ingelheim Consumer Healthcare business, the divestment of our Animal Health business and the termination of the Sanofi Pasteur European Vaccines JV.

In order to help you compare sales growth rates on a like-for-like basis, we refer to growth at both constant exchange rates and constant structure. This is denoted in the slides as CER/CS. With that, I'd like to turn the call over to Olivier..

Thank you, George. Good morning and good afternoon to everyone, and welcome to our second quarter earnings conference call. So, as in the first quarter, changes in structure had a distorting effect on our sales growth. Slide 5 provides a bridge to demonstrate like-for-like sales growth.

If we add back the €394 million of sales that would have been generated in second quarter 2016, if we had owned the BI brands and European vaccines, then our second quarter sales growth in CER and at constant structure was 0.6%.

In other words, we managed to deliver stable sales or even slight underlying growth despite the accelerated decline in our diabetes franchise that we had previously signaled. For the half year and on the same basis, our sales grew by 2% and speaks to the strength of our diversified business model.

On slide 6, I'm pleased to report financial results in the second quarter, which were ahead of expectations. With the benefit of the structural changes I just mentioned, our second quarter sales grew by 5.5% plus CER to reach €8.7 billion and our business EPS increased by 1.5% to €1.35.

As in the first quarter, we were particularly encouraged by our business EPS performance, given the absence of contribution from our divested Animal Health business. When we look at the results for the half year, (04:46) CER sales growth of (04:48) and business EPS of €2.77, up 2.7%.

As a result, we are raising our EPS guidance to reflect the year-to-date performance as well as our disciplined expense management. Here on slide 7, you can see the sales picture across our five global business units.

In the second quarter, we again delivered strong double-digit growth in Sanofi Genzyme and Vaccines, which offsets the anticipated further decline in our Diabetes and Cardiovascular unit. Unlike the first quarter, we only achieved stable sales in Consumer Healthcare.

This mainly reflects seasonal factors in Europe, which I will discuss later, and which means the half-year performance provides a better reference for the underlying performance of the business. Turning to slide 8, we are now looking at sales by franchise and geography in the second quarter.

The overall picture is reassuring as five of our franchises grew in the emerging markets, which once again contributed strongly to growth in the quarter.

You can also see here that the main offsets to our second quarter performance were the pressures on our Diabetes and Established product franchises in developed markets and seasonality impacting the performance of Consumer Healthcare in Europe. Turning to our Specialty Care franchise on slide 9, sales grew by 13.5% in the quarter.

The primary driver remained are Multiple Sclerosis franchise, which continues to gain share despite an increasingly competitive marketplace. Within the category, sales of our overall therapy, Aubagio, increased by over 30% while our high efficacy product, Lemtrada, also recorded double-digit growth.

Taken together, sales of our MS franchise grew by 28% and exceeded €0.5 billion for the first time in a quarter. In Rare Diseases, the picture is similar to the first quarter with double-digit momentum in Fabry and Pompe mainly based on new patient accruals and stable cells in Gaucher. As a result, overall sales in Rare Diseases grew by around 6%.

Of course, the most exciting story in the quarter was the realization of our new Immunology franchise. I'm delighted to report that Dupixent had a good reception in the U.S. with sales reaching €26 million in the quarter. For Kevzara, it's early days as we only launched in June, but we are already getting good feedback from the rheumatology community.

And Bill Sibold, our new Head of Sanofi Genzyme, will provide you with some more detail on our immunology franchise in few minutes. Looking at Vaccines on slide 10, we are very pleased to show second quarter sales growth of 19% at CER and constant structure. This followed a strong first quarter and takes our first half growth in Vaccine to 17%.

Now, you should not extrapolate this growth for the full year given the high basis on comparison in our flu business in the second half. However, focusing on the second quarter, the two key drivers were our pediatric combination vaccines franchise and our meningitis vaccine, Menactra.

Growth in our pediatric vaccines of 31% at CER and constant structure reflects strong in-market performance in Europe and China, especially from our AcXim family of pediatrics combination products. The 41% growth of Menactra on the other hand was boosted by CDC stocking.

On a geographic basis, it was especially pleasing to see the 32% growth at CER and constant structure of our European vaccine business, where we have really seized the opportunity to manage the business more effectively since the termination of our joint venture. I would like to briefly comment on Dengvaxia.

After the first state program in Paraná, we are now in discussions on an expanded vaccination program in Brazil. While it is too early to provide further details on the timing and scope, we are certainly encouraged by these discussions. Turning to slide 11. Sales on our global diabetes franchise declined 12% in the second quarter.

This compares with the 6% decline we reported in the first quarter and was primarily driven by 23% decline in the U.S., which more than offset high-single-digit growth in emerging markets. As a reminder, we cushioned on our first quarter call that we expected the U.S. diabetes decline to accelerate over the remainder of the year. This remains the case.

This reflects the phased impact of formulary exclusion at CVS and United Health as well as a high basis of comparison in last year's fourth quarter. Consequently, it remains our expectation that Diabetes performance in 2017 is highly likely to come in below our minus 4% to minus 8% multi-year guidance on a compounded basis.

Within this tough overall picture, we do expect to report further progress for our two newly launched products. Toujeo continues to gain share in important markets and has now reached 13% share in Europe and as high as 18% in early launch markets such as Germany.

In Japan, market share reached more than 15% and the first launches of Toujeo in EM, emerging market, are also very encouraging. Also for Soliqua, our basal insulin GLP-1 combo, our U.S. market access is improving and we have secured access for 62% of commercial lives as of July.

Finally, it is too early to comment on the contracting discussions underway for 2018. Although individual payer decision are likely to emerge in the coming days and weeks, we will provide a comprehensive U.S. payer coverage update with our third quarter results in line with our usual practice.

Turning to slide 12, I mentioned earlier that our Consumer Healthcare business was affected by seasonal factors in the second quarter resulting in stable sales. The main adverse factor was a strong and early cough and cold season in Europe, which boosted first quarter sales at the expense of the second quarter.

Reflecting this, second quarter European CHC sales were down 7.8% at CER and constant structure, 7.8%. On the other hand, we were pleased to see a continued sequential recovery in our CHC business in emerging markets, where sales grew by 4.6% at CER and constant structure as compared with 1.3% in the first quarter.

This highlight was returned to growth in Russia after several tough quarters. In the first half of 2017 growth for the CHC business at CER and constant structure was 2.4%. We believe this is more representative of the underlying performance in the business than the performance in either Q1 or Q2.

Let me close on this slide by reconfirming that the integration of BI is progressing according to plan and that we continue to move towards full recognition of sales. We expect to recognize more than 95% of BI CHC sales by the end of the year. Finally, turning to sales by region on slide 13.

You can see that our emerging markets performance demonstrated steady growth in the quarter with sales up 6.6% at CER and constant structure. Second quarter sales in China, 17% as the vaccine recovery we had expected continues to materialize. And with that, I would like now to hand over to Bill Sibold.

Bill?.

Thank you, Olivier. It's a pleasure to be here and to have the opportunity to update you on our Immunology franchise. Beginning with Dupixent, we are very pleased with the way the launch is tracking across a number of important metrics.

First, if we look at TRx performance, prescriptions are trending ahead of other recent biological launches in dermatology, including COSENTYX, and the trajectory remained strong. Second, we have talked about targeting 7,000 U.S.

physician, and I'm pleased to say that we are really getting the message across with over 5,100 physicians having prescribed this drug as of last week. Third, we also talked about an estimated patient population of 300,000 U.S. adult patients.

So far, over 13,000 patients have been prescribed Dupixent, which, given we are only a few months into the launch, is the figure we think is very encouraging. Fourth, looking at U.S.

market access, you have heard us described how two of the largest PBMs, Express Scripts and CVS, provided immediate coverage from launch and with utilization management criteria consistent with the label.

We are progressing well with over 30% of commercial lives under contract, and we are expecting to have broad contracted market access by the end of the year, again, with appropriate utilization management criteria.

Of course, it is still early days and this figure will fluctuate, but we are currently seeing prior authorization approval rates of 73% across all plans. And within the plans where we have contracts in place, it is encouraging to see that the prior authorization approval rates are around 83%.

Given this early market access, we were able to generate €26 million in sales in the quarter, which largely reflects end user demand and negligible contribution from inventory build.

Finally on Dupixent, of course, it's not just about the U.S., and we were delighted to have received a positive CHMP recommendation on July 21, which was earlier than we had expected and puts us on track to launch in Germany, our first European market around year-end.

In addition, our Phase 3 program in severe asthma is close to delivering top line results and we plan to file an sBLA in this indication in the fourth quarter. I want to turn next to Kevzara, which we launched in the U.S. in June and which was recently approved in Europe. Here, we only have a few weeks launch experience, so it's very early days indeed.

What we can say is we believe we are launching into the large, but competitive rheumatoid arthritis market with a strong label which highlights Kevzara's consistent efficacy across key patient groups, including an adequate responders to methotrexate and to anti-TNFs.

We have strong radiological evidence in the label, which clearly shows the benefit of Kevzara on both joint erosion and joint space narrowing as well as a convenient every-other-week subcutaneous dosing with the choice of two doses.

We are already receiving good physician feedback on our message in a marketplace where the trends are towards less cycling of anti-TNFs and increasing use of monotherapy. Of course, Kevzara is launching into a much more competitive category than Dupixent.

It will take time to build broad market access although we do expect the majority of our target population and commercial plans to have access by the end of the year. So to close, we are launching two very attractive, differentiated immunology assets at Sanofi Genzyme, and are encouraged by the early trends thus far.

With that, I would like to hand it over to Elias..

Well, thank you, Bill, and it's my pleasure to speak to you today. I'm going to focus on two important advances in our Specialty Care pipeline namely the PD-1 inhibitor and fitusiran for hemophilia. Beginning on slide 18 with the PD-1, we're very excited to be moving it forward in the registrational Phase 2 study in cutaneous squamous cell carcinoma.

Cutaneous squamous cell carcinoma is the second most common skin cancer and is responsible for several thousand deaths annually in the U.S. We're ahead in this indication, and this represents our fast-to-market strategy in the PD-1 space.

At ASCO, we presented positive clinical data from a Phase 1 study, which showed that in patients with advanced CSCC, our PD-1 was associated with a 46% overall response rate, a 69% disease control rate, and was generally well tolerated.

So, we look forward to the results of our registration study and are planning to submit to the FDA in metastatic cutaneous squamous cell carcinoma in Q1 2018.

We also started several studies of our PD-1 in other indications this past quarter, and these include a Phase 3 in first line non-small cell lung cancer and a Phase 2 in metastatic and locally advanced basal cell carcinoma.

We're also excited about our proprietary anti-CD38 antibody, isatuximab, which we have entered into a Phase 1/2 study in multiple myeloma in combination with our PD-1. Of course, isatuximab is an important part of our immuno-oncology efforts and continues to advance in Phase 3 as per plan.

These programs, together with innovation platforms, were advancing based from mRNA and antibody drug conjugates form the key elements of our strategy to rebuild a competitive position in Oncology. If we move now to slide 19, I'd like to speak about fitusiran.

We and our partner, Alnylam, recently reported the results of the Phase 2 open-label extension study in patients with hemophilia A and B, and we're very encouraged by the efficacy findings, which showed a significant drop in the annualized bleed rate or ABR in an exploratory post-op analysis across all patients.

Fitusiran was associated with an ABR of 1 compared with a pre-study mean of 20. And for those with inhibitors, the corresponding figures were 0 and 38. So, among fitusiran-treated patients, we noticed that nearly half were bleed-free over the observation period, which extended as far as 20 months, and two-thirds reported no spontaneous bleeding.

When we look at safety, a third of patients showed liver enzyme elevations with most resolved with continuous dosing. And we think it's likely that this was related to preexisting hep C infection. Consequently, we do not consider this a causal concern, although we will be closely monitoring this.

And, additionally, we will screen our patients with active HCV disease from our Phase 3 program. So, this brings me to the ATLAS Phase 3 program, which we initiated this month and which will include preclinical trials in around 250 patients across the spectrum of hemophilia.

This program will be broad including patients with hemophilia A and B, with and without inhibitors with prophylactic as well as on-demand treatment. And so we expect top-line results in mid to late 2019. Again, the rest of the portfolio is progressing as per plan. And with that, I would like to hand over to Jérôme..

Thank you, Elias, and good morning, good afternoon to everyone. Before discussing the details of the P&L, I would like to highlight that the foreign exchange contributed positively into our reported second quarter figures, although the impact was diminished when compared with the first quarter given the recent appreciation of the euro.

In total, currency movements added 0.9% or €76 million to reported sales on 1.6% or €0.02 per share to reported business EPS. For the full year, we now estimate the positive impact of business EPS to be up approximately 1% based on June 2017 average rates, which you will note is below our previous estimate of 3% to 4%.

For more detail, I invite you to consider as usual the slide provided in the appendix, which I'll remind you are on a full-year basis. I'll now move to slide 22. Looking at the P&L on a reported basis, sales were €8.7 billion, representing 5.5% CER growth.

You can see on this slide that, as for the first quarter, we faced a significant impact of the divestment of Animal Health, which contributed €128 million in net income in Q2 last year. This impact reflected in our business net income showing a slight CER decline to €1.7 billion.

Against this, as promised, we offset this headwind by share repurchases, and so our business EPS grew by 1.5% to €1.35. For the year, we continue to expect a tax rate of 24% to 25%. Slide 23, to give you a clearer picture of the ongoing business, we provide you with our P&L at CER and constant structure.

In this quarter, the increase in gross profit nearly matched sales growth as the benefit of efficiency saving of Specialty Care growth almost offset the impact of the accelerated decline in U.S. Diabetes. The key message, however, is that we again delivered operating leverage with our BOI up 4.1% on sales that were up 0.6%.

This represents a 90-basis-point improvement in BOI margin, which we delivered through a combination of carefully controlled expenses and simplification savings. Slide 24, examines our cost ratios in more details. Our gross margin declined by 10 basis points as discussed on the previous slide.

For the full year, we expect now the gross margin to be between 70% and 71% at CER, which is below the level reported in H1 and mainly reflect the impact of increasing diabetes pricing pressure which is expected to be largely offset by mix and productivity benefits.

Turning to OpEx at CER and constant structure, expenses in the second quarter were up a little, a small 0.5% versus the prior year. R&D expenses were up 3.1%, reflecting investment in new Phase 3 programs, while SG&A expenses were down 0.9% as savings more than offset launch costs in Immunology.

For the full year of 2017, we expect R&D spending to continue to accelerate as a result of the pipeline investments that Elias highlighted. For SG&A, we will continue to step up investment behind our immunology launches, but this impact will be largely absorbed by savings in other areas including the impact of CHC integration.

Overall, we've maintained our expectations that OpEx in 2017 will grow in CER at a similar rate as last year of the constant structure base of approximately €15.4 billion in 2016. On slide 25, I'd like to highlight a few elements in our net debt evolution. We ended June with net debt of €7.5 billion as compared with €8.2 billion at the end of 2016.

There were a number of large items as you see in H1 including more than €5 billion combined of outflows to shareholders related to our annual dividend payment on share repurchases, now partly offsetting this with €4.3 billion of net cash received from the BI asset swap.

Importantly, our free cash flow remained strong at €2.3 billion in the first half. Turning to our €3.5 billion share buyback program, we bought 4.8 million shares during the second quarter. This bring our total repurchase activity since Q3 2016 to €3.2 billion.

To close on slide 26, we are pleased with our performance in the first half of the year, which was ahead of expectations. For the full year, we continue to expect growing headwinds from our U.S. Diabetes business and from increased launch on pipeline investments, offset by solid progress across rest of the company on our cost saving programs.

Overall, based on our solid first half performance, we are pleased to raise our full year guidance for business EPS which we now expect to be broadly stable at CER. As I mentioned earlier, the FX benefit on business EPS is expected to be about 1%. With that, I would like to turn the call back to Olivier for closing remarks..

Thank you, Jérôme. So, to summarize with the benefit of our diversified business model and, again, disciplined expense management, we delivered a first half financial performance ahead of expectations which enabled us to lift our guidance. We achieved this against a backdrop of a tough U.S.

payer environment in Diabetes, for which we were fully prepared. Meanwhile, we have continued to build for the future with the successful launch of Dupixent in the U.S. and the advance of key pipeline assets and platforms. And with that, I would like to hand over to George to start the Q&A..

We will now open up the call to your question. And as a reminder, we'd like to ask you to limit your questions to two each..

We will now begin the question-and-answer session. First question comes from the line of Florent Cespedes of Société Générale. Please go ahead..

Good afternoon, gentlemen. Thank you very much for taking my questions. Two quick ones. First, for Peter on Diabetes, on Soliqua.

Could we have more color on the perception from doctors on this product and what could boost the sales because the access is quite good already because it's around 60% according to what you provided on the slide? My second question is for Elias on immuno-oncology.

What is your strategy in lung cancer as you have already multiple players on this field with different strategies? And could we have more color on the design of your new Phase 3 in first-line (30:10)? Thank you..

All right. Thank you very much, Florent. Soliqua, Peter, U.S..

Yeah. So, Florent, thanks for the question. So, actually, there are two elements which we are confronted with today. Number one is what you could qualify as clinical inertia. So, remember that doctors have been used to titrate with basal insulins and actually now you have a better option which is called Soliqua.

But, of course, you have to really work a lot on medical education, peer-to-peer interactions, et cetera. And, actually, we have kind of changed a little bit our mix to indeed boost more this kind of interaction because we have to change a treatment paradigm that doctors have been used to for the last 10 years. So, that is number one.

Number two, your question on market access, it's true that we have good number of 62% commercial access, but that is actually a very recent number. So, actually, those positive decisions by big PBMs actually only kicked in in the last couple of weeks. So, it is too early to see the effect of that.

So, expect a gradual increase of Soliqua, which is actually coupled to progressively changing that medical paradigm or treatment paradigm and also taking more and more profit of an improved access..

Thank you, Peter. Florent, on Oncology, it was for the last 18 months to two year, and we mentioned that in our road map, Oncology was a key strategic imperative, right, to step up our investment in that field. So, I think – and we expanded, you remember our research effort by the expansion of our partnership with Regeneron.

And we are seeing already a few months later the output of that expansion. And you heard Elias that PD-1 is up for potential submission during the first quarter 2018. So, nothing that we have not – my point is nothing that we have not indicated during the last few quarter.

And I think we're going relatively fast in – not leapfrogging, but advancing on that journey.

So, with that Elias, do you want to give details?.

Sure. Sure. Specifically, on the lung cancer strategy, we've made a decision with our partner, Regeneron, over two years ago that we would focus on the PD-1 mechanism, not the PD-L1. Second, we have also studies that internally tell us about biomarkers that we can use to better select the population. So, our strategy is very straightforward.

We're going to go for first-line lung cancer strategy in the selected population based on the combination of biomarkers that we have developed. And hopefully show and be the second company to prove that the PD-1 antibody can be effective in first-line lung cancer.

We have other work based on biomarker analyses that we've done that show that CD38 could be a major checkpoint inhibitor as well, and we have isatuximab. And we have in Phase 1 other targets like LAG3 and TGF-β that we intend to strategically combine. Some are our internal assets, some are the Regeneron PD-1 and LAG3 assets.

So, our strategy is to really catch up first in the first line in lung cancer. We found an entry indication in CSCC followed by basal cell carcinoma that will allow us to get the earlier approval than planned and then follow up with entry into the lung cancer area..

Thank you very much..

Thank you, Florent..

Next question comes from the line of Graham Parry of Merrill Lynch. Please go ahead..

Hi. Thanks for taking my questions. So, first one on Dupixent.

Just do you have any sense of the mix of prescriptions you're getting, and specifically, within the initial prescriptions, what proportion of these are for pack of two syringes, so just the initial loading dose of two syringes and how many for the loading dose plus the second pack for the months following? Just the other question's angled because the number came in slightly below consensus, so we might be using the wrong mix of the two pack or the one-pack prescriptions.

And do you have any sense of who the prescribing physicians are at the moment? Is it mostly allergists or dermatologists and any kind of feel for the severity of patients? Second question is on PARP inhibitors. Both Merck and Bristol have now signed deals to partner in PARPs for their IO portfolios.

You've got knowledge of that space obviously from your Medivation due diligence.

So, to what extent do you think that class is important to be a major player in oncology adjunct to IO in the future? And then, thirdly, could you just quantify the minor divestment gains in other operating income expense and the contribution in that line from the Boehringer Ingelheim Consumer Health portfolio? Thanks..

Thank you, Graham. So, the old Dupixent, the mix of prescription and defining the profile of the prescribing physicians..

So, overall with the prescriptions that we have coming in, their overwhelming majority is through dermatologists at this point, and that's what we expected. And the profile of the patients coming in, early in the launch, they tend to be a little bit more the severe patients.

Physicians are prioritizing the patients that they're putting forward, so again, as expected. Regarding the loading dose in that, so let me just provide a little background. So, we recommend writing the prescription to include the loading and the maintenance dose, okay? And for each box of Dupixent, there are two prefilled syringes in it.

Some physicians, however, are writing two prescriptions. One for the loading dose, so two prefilled syringes, and one for the maintenance, which is another box. And we think that the overwhelming majority are following the recommendation of writing the script to include the loading and the maintenance dose.

We do note in some of the prescription data as we, early in the launch to-date, did a comparison of NRx to NBRx, that there was probably about 20% that would be double-counted where they wrote a individual prescription for the loading dose and for maintenance. So, that's the best direction that we can give at this point..

Oh, I thank you very much, Bill. Elias....

Sure..

...on the PARP inhibitors?.

Well, I think the first statement is that PARPs already have a place in oncology therapies. I think we do not have a PARP ourselves. We're very focused on our immuno-oncology PD-1 and other both Sanofi assets and Regeneron assets. So, I really can't comment about the competitive nature of this field. There are several players.

The mechanism in itself, I think, is a valid one at least in a subcategory of patients, so that I think more data will come and we'll see with the announced partnerships that you know whether or not it will have a synergistic role with checkpoint inhibitors. But at this point, we are not players in that space..

Thank you, Elias. Jérôme, details on the divestments..

Yes. Graham, good morning and good afternoon. Actually, we have disposed of some minor CHC assets as you mentioned. These are not really linked to Boehringer. They are linked to refocusing our portfolio. And as a matter of fact, these were more from Sanofi assets in some emerging markets.

And also, we have, as a result of the decision from the EU, we decided to – we have to dispose of some minor assets which we're supposed to give some, as you may remember, also coming on the Sanofi portfolio. So, all together, this contributed to a minor profit of €25 million, which is reported in the other operating line or operating top line.

And there is another piece here which is more resulting from the streamlining of our organization, which is a result of the disposal of some building and some property in different countries, which was another contributor by €18 million (39:12). So, this all together, makes some €43 million which is before tax.

So, I mean, basically, very normal, very much in line with our overall strategy to focus on the most value-added assets. And I would say something which, after taxes, seems to be pretty minor..

If I can say quickly on the BI elements. I think at the beginning of the year, you said that some of the profits of BI and CHC, why you're transferring assets will be booked through the other operating income expense line. Just can you clarify there's none in the quarter then..

There was a little in Q2, which I think appears in the same line item of €10 million..

Okay..

So, it's pretty minor. More or less, (40:00) normal, let's say, P&L..

Great. Thank you..

All right. Good. Thank you, Graham.

Next question, please?.

Your next question comes from the line of Vincent Meunier of Morgan Stanley. Please go ahead..

Hello and thank you for taking my questions. The first one is a follow-up on Dupixent. So, we've seen a stabilization of NRx over the few past weeks.

I mean, you talked about the dynamics, but can you please tell us what's happening in terms of gross to net and what we should expect in the coming quarters in terms of gross to net? The second question is on Diabetes and the guidance. So, we understand that you will make a comprehensive update on the PBM negotiations at Q3 results.

You have decided to upgrade your guidance now. So, should we understand that you do not anticipate a too harsh outcome or at least not harsher than the previous comments you've reiterated? Thank you..

All right. Good question, Vincent.

Dupixent, the perceived NRx stabilization, Bill?.

Yeah. I mean, look, we've seen some volatility in prescriptions. However, we feel that the underlying demand remains very strong. We haven't seen anything which concerns us. I think that there's been good, steady demand. And I think just one of the things to keep in mind here is that this is a market that we're still in the process of developing.

It's the first biologic in atopic dermatitis and it's only been available for four months. When you compare that to psoriasis biologics, they've been on the market for 14 years. So the physicians and practices are gaining experience with both the product and how they're processing patients through their practice.

So, we see that it remains strong demand and remain optimistic. As far as the question on the gross to net, on the – at launch, I think you heard, we talked about the net price in the low 30s. That's the only guidance that we've given or will give..

Okay. Thank you, Vincent. So, PBM negotiation, yeah, we said we would give you the full picture at the time of the third quarter. We are still in negotiation with some large – others are going to publish their decision very quickly or very soon rather, as you know.

All that put together, yes, we are confident that we can deliver the guidance we just expressed. So, assumptions regarding PBM negotiation and gross to net are part of that guidance..

Thank you very much..

Okay?.

Thank you..

Thank you very much..

Operator, next question please?.

Your next question comes from the line of Luisa Hector of Exane. Please go ahead..

Good afternoon. Thank you for taking my questions. On Vaccines, you had a strong quarter. So, I just wondered if you could highlight some of the positives and how sustainable they are? I'm seeing strength in the pediatric, in Europe as a region, maybe China pediatric.

And then, perhaps you could outline the contribution you expect from Protein Sciences in the flu segment there in terms of sales opportunity. And then, on Dupixent, just a quick question on your target number of prescribers.

You talk about the 5,100 you have prescribed, but did you have a target for this year? And then, finally, in terms of use of cash, could you update us on any plans around the buyback now that you're close to completion of the cash from the BI asset swap? Thank you..

All right.

Vaccine, David? Are you on?.

Thanks. Yeah. Thanks, Luisa. So, on the Vaccines, we have seen good growth based on our pediatric franchise on flu, also somewhat on meninge. We have also launched Quadracel in pediatric. There were some phasing effects that Olivier mentioned on Menactra by CDC and on IPV by UNICEF in this quarter, which was earlier than what you usually see.

This adds up to about €60 million. If you normalize for this, it brings the growth to about 11% which we anticipate to continue to see. In looking forward, how sustainable it is, our two key growth drivers, pediatric and flu, are anticipated to continue to grow strongly. The flu in the U.S.

albeit is becoming somewhat more competitive, but we have a very strong leadership position with very high market shares and our differentiated Fluzone High-Dose. We have also seen early shipments despite offsetting the largest volumes of the market.

In terms of regions, we will continue to see good growth in Europe, also in China with Pentaxim growing very strongly now after the Xiangdong (45:22) resolution, and emerging markets in general..

Okay. And then....

On Protein Science....

Yeah. Protein Science, David, do you want to pursue or....

Yeah. On Protein Science, we have to be careful. There is still the process of going through FTC so we can't really comment more about this at this moment, but we will come back to you once we get the green light..

All right, Thank you, David. Dupixent target prescription..

Yeah, no, the initial targeted physicians is about 7,000. We're going the number of physicians prescribing every day. So, we expect that the 5,100 number that we reported as of last week will continue to grow..

Okay.

And, Jérôme, use of cash?.

Yes, Luisa. So, as you know, I mean, up to end of Q2, we have executed our program of €3.5 billion that we announced back in Q3 last year, up to €3.2 billion. So, we purchased all together around 15 million shares since the beginning of the year. Part of this program was already executed in Q4 last year.

So clearly, we'll continue to stick to what we said and base our strong net cash flow position, I mean, we'll not exclude some opportunistic buyback as we said earlier. Clearly, of course, this would not prevent us from eventually looking after financing some M&A if and when this would appear as meeting our criteria..

Thank you..

All right. Thank you, Jérôme. Thank you very much, Luisa. Next question, please..

The next question comes from the line of Richard Vosser of JPMorgan. Please go ahead..

Hi. Thanks for taking my questions. Just on Consumer, you highlighted, going forward, around 2% growth, which I think is weaker than most people would expect, but we have seen weakness across this space.

So, perhaps could you give us some color maybe on the underlying market dynamics, whether you see a continuing market slowdown that seems to be pointed to by other players, and what really is the causes of this market slowdown? And then second question, just on Multiple Sclerosis, you obviously had continued good growth of that franchise for both products, but how do you see the competitive situation? Obviously, very strong uptake from a recently launched competitor.

Are you seeing any impact on Lemtrada or Aubagio or should we see that going forward? Thanks very much..

Hi. Thanks, Richard.

CHC?.

Okay. Hi, Richard. It's Alan here..

Alan..

Yes. As you probably have seen from some of the reported numbers from our competitors, there seems to have been a slowdown versus prior year in the first half of 2017. This has really been driven in quarter two by seasonal factors, predominantly an early but short cough and cold season in Europe, which impacted significantly the numbers.

It obviously benefited Q1 at the expense of Q2. Having said that, we still continue to see underlying positive trends in the CHC market. Both Nicholas Hall and IMS is, as you know, are the forecasters for this sector, both continue to see long-term growth in the 4% to 5% range.

Of course, this does fluctuate from year-to-year depending on the seasonality, mainly driven by cough, cold ,and allergy, but of course the pain market also gets often impacted during low cough, cold seasons. Of course, for Sanofi CHC specifically, we have quite a strong footprint in emerging markets which is one of the faster-growing areas.

So, we believe that overall, based on our geographical footprint and our category focus that we still maintain our long-term interest in this market..

All right. Thank you very much, Alan. Richard, on MS, we are not seeing a negative impact from Aubagio and Lemtrada so far. And at this point, there is no reason to expect a significant negative impact.

Of course, it's very early days, but it looks like Ocrevus, which has reached about 20% of switchers over a relatively short period of time, a period of four weeks has got switchers mainly from Tysabri and I think that's around 40%. So, at this point, the Ocrevus launch is tracking in line with what we have projected, but we have more details.

So, Bill, do you want to give a little bit more color on maybe Lemtrada and Ocrevus....

Yeah, so....

And what's going on there?.

Sure. Thanks, Olivier. So, this is – since we've been in this market, it's been an extremely competitive market. We launched relatively late in the game with a fairly established market. And the franchise has been performing extremely well over that time and continues to this quarter performed very well.

Obviously, Ocrevus new launch seems to be off to a good start.

As Olivier said, it has been our high efficacy segment where we also have Lemtrada, and when you look at Lemtrada, the efficacy of it still offers a very unique profile in that the product is delivered with five infusions per week, nothing for 12 months, and then three infusions 12 months later.

And we've seen when we released our six-year data last year that after five additional years with no therapy, over 50% of patients had not required additional therapy.

So, when you look at comparisons of the efficacy, this is a treatment which affords a very durable effect over many years and we'll be presenting additional data at the upcoming ECTRIMS meeting in Paris later this year. So, it's again what we expect to happen with Ocrevus coming into market is the high efficacy segment to grow.

It's currently at about 10% globally and we think as the high efficacy segment continues to grow that that is good news for Lemtrada for the future..

All right. Thank you very much, Bill..

Great. Thanks so much..

Next – thank you..

Thank you, Richard..

The next question comes from the line of Jo Walton of Credit Suisse. Please go ahead..

Thank you. If I could return to the Consumer business, at the time of the acquisition of the business, you suggested that the combined pro forma Consumer margin would reach 30% by 2018.

Given the deterioration, at least the short-term deterioration in the background for the Consumer business, is that still a realistic target and when might you be able to split out that Consumer P&L as you promised us? And secondly, I wonder if I could ask you a bit more about your view on U.S. pricing going through to next year.

I know that you don't want to give too much detail, but express groups have just published their exclusions, and I see that Renagel has been excluded for 2018.

And I just wonder if you could comment on whether you are feeling with 2018 is just an evolution from 2017, or whether there's going to be a step change of more competition, whether you feel that the payers have got better at enforcing from your adherence, whether you're finding it more difficult to bypass formularies with couponing, et cetera.

Just some sort of general comment as we are thinking clearly about our 2018 numbers..

All right. Thank you, Jo.

Alan, do you want to answer specific question on the margin for next year in your business?.

Yes. Absolutely. Thanks, Jo, for the question. I mean, as you know, the Sanofi stand-alone CHC business had a best-in-class BOI contribution percentage of close to 20%.

(54:25) We still believe that by optimizing the two portfolios and delivering against the cost synergies that we had planned by combining both Sanofi and BI CHC business, we'll still be able to deliver this best-in-class profitability.

So, we don't believe even though there's perhaps a slight slowdown in the first half in the overall top line revenue growth that we have any need to change that commitment in terms of BOI contribution in 2018.

In terms of the actual reporting, out of CHC obviously, it would not be so helpful in 2017 because as you know from previous calls that we are only gradually bringing all of the business across. We still have transitional distribution of sales agreements at BI. We now have about 75% of the business transitioned. We'll have about 95% by the year-end.

So, giving you a view in 2017 would actually be perhaps more confusing than anything else, and we're certainly looking at how we would perhaps report out CHC separately for 2018..

Okay. Good. Thank you, Alan. ESI, Renagel, Olivier here.

I mean, do you have any comment there?.

So, FDA has granted license one generic company for both forms that represent 90% of the market. Those two forms are now on the market as a powder and that has been on the market since this June and the tablets that have been on the market since last week.

Looking more midterm, all depend on the ability of this generic company to be able to manufacture volume; and second, whether other generic companies will get approval by the end of the year, which is currently our assumption..

All right. Thank you very much. In general, Jo, if you look at the U.S., our business structure-wise is a piece we just talked about with Established products and DCV and then Specialty. Specialty, as you know, we're launching two products, we have the price and there is no reason to believe that we would face pricing pressure there.

And the rest of the business where disease and MS we're not planning to see deterioration of our pricing there. So, remains DCV business where as you would expect we are under pressure and – in our gross to net, and I'm going to ask Peter to make a general comment about how you see the future prices in your area..

Yeah. So, Jo, I think it's related to therapeutic areas and even in the field of diabetes, you have still therapeutic areas or still classes which are relatively preserved from gross to net deterioration.

And then others, of course, like insulins have even more pressure and that is also, not only but also, due to the fact that you have now the first follow-on biologic competing in that class. So, you are de facto with some kind of pseudo gentrification confronted.

So, I think it's a little bit difficult to answer to your question in a very monolithic manner but I think you really have to have a granular view looking TA by TA. And within that TA, you have buckets where there is more commoditization; therefore, more price pressure and others with less.

Now, you referred to ESI, so you have seen there's no insulin inclusion on this ESI National Formulary, which also shows our commitment to keep our access to patients as large as possible..

All right. Thank you very much, Peter. Thank you, Jo.

Next question, please?.

Next question comes from the line of Philippe Lanone of Natixis. Please go ahead..

Hi. Good afternoon. A question first on the Dupixent, the 7,000 prescribers target which was mentioned initially was about doctors who already were used to prescribe biologics, especially COSENTYX. So, I wonder what would be the total dermatologist pool that you can aim beyond the 7,000. That's the first question.

The second one, could you clarify on the guidance again for the second half on Diabetes, saying that it would be worse? Is it worse than the first half or then the second quarter or can we take the second quarter maybe as a proxy for second half in terms of rate of decline? And maybe last question on Lovenox, which in Europe is beginning to decline due to biosimilars, so could you give us some indication of what kind of a pattern decline we should expect and if there will be several biosimilars? Thank you..

Okay. Thank you, Philippe. We're starting with Dupixent again.

7,000 target, how much more dermatologists is there?.

Right. So, when you look in the U.S., there's about 14,000 dermatologists, however, many of these are excluded because they may have a specific focus on cosmetic surgery or something. So, the target number of dermatologists that we're looking at is about 4,600 and we really believe those are the dermatologists that will drive the business.

We also have about 1,200 allergist/immunologists that we're targeting and nurse practitioners and PAs at around 1,200 as well. We think that we've done a good job on the targeting.

However, if there's physicians that demonstrate an interest in using the product or that they're treating atopic dermatitis, we would of course add them, but we don't expect that that's going to be a number that grows significantly..

Okay..

All right. Thank you.

Olivier, do you want to talk about Lovenox biosimilars?.

Yeah. So, for Europe and for Lovenox, we have posted a decrease of 7.3%, which is a combination of price has decreased but also volume. You know that as we speak, we have bought one biosimilar in Poland. We are expecting in the coming months and we hear comments in the market that some other biosimilars are going to be approved in the upcoming months.

The low-molecular-weight heparin market is a very specific market. You know that, first, the treatment per day are relatively low and are more on – comparable to the one of non-biologic product. Low-molecular heparin are, of course, acute and long-acting treatment with target points of dispensation.

We own a very high market share due to our long-term experience. So, overall, we see biosimilar entry at an increase of competition in an already very competitive market.

We are anticipating, of course, some acceleration of the decrease, both in terms of volume and in terms of price in the upcoming months, depending on the numbers of competitors that are going to enter into the market..

Thank you, Olivier. So, Philippe, in the second half, on Diabetes, we expect an accelerated decline of the U.S. Diabetes sales relative to what we have seen during the first half of 2017. And the drivers for that are first, the impact of Lantus exclusion from the UnitedHealthcare formulary.

That was only partially realized during the first half and is now expected to have [Technical Difficulty] (01:02:29) the second half. That's one.

The second is there is a high base for comparison in the fourth quarter 2016, and that was due to various gross to net consideration which included the reduced cost associated with co-pay programs and also coverage gap.

So, without getting into the details, that's the reason why we think we're going to see a tougher second half when it comes to our Diabetes franchise..

Very clear. Thank you..

Thank you. Thank you very much, Philippe. Next question, please..

The next question comes from the line of Peter Verdult of Citi. Please go ahead..

Yes. Good afternoon. Peter Verdult, Citi. Just firstly, could you help frame, in broad terms, the time lines you're working to with respect to the Regeneron collaboration turning profitable. I know of course (01:03:35) you've made or sunk a considerable amount of money and front-end loaded the R&D investment to the tune of €4.5 billion.

So, I just wanted to know whether 2018 is too soon to think you might get some payback on that, or you're thinking more toward the end of the decade or beyond. I realize you're not going to give specifics, but I would like you to help frame the time lines for us.

Secondly on PCSK9, can we just put the Amgen BI to one side and just focus on the commercial outlook for the class. Is there any scenario where you would provide higher rebates or lower the price to drive access? The cost of fee that we get from the U.S.

is cardiologists are frustrated, they can't get their patients on drug, the quarterly sales performance for both you and the competitor continue to be lackluster.

I just wonder whether this is an option on the table or are you just banking on (01:04:24) are coming through and driving increased plan access on the back of label updates and guideline changes. And then lastly, if I may, just to squeeze a quick one in for Elias or Olivier on business development.

When you think how the Medivation story has fallen a little since the Pfizer acquisition, the apparent high profile failures in immuno-oncology first line lung over the past year, do you expect to see valuations for oncology assets to become more realistic going forward or are you still seeing expectations are stretched? Thank you..

All right. Three good broad questions. On the Regeneron, to get the value of our investment weighting in 2018, that is too early forecast. It's more the longer term time lines you have provided. I'm going to ask Jérôme to add some color there..

Yes. Peter, it's a – I mean, it's a broad – it's complex question honestly, and the reason being quite simply that there is one thing which you alluded to which is how we have spent so far in R&D with Regeneron for us with the existing agreement, but this has been expensed in our P&L.

And this relates to the R&D, R + D, that we spent so far on the so-called development balance that Regeneron gives us back over time when the alliance gets profitable. So, this probably will take a bit of time.

And as you may remember, I mean, there is a cap of the reimbursement that Regeneron cannot incur on a yearly basis which is 10% of the overall profitability of the alliance, i.e., combination of us plus Regeneron P&L.

Your second question relates more – and the reason why I say it's maybe a bit complex that there is as a matter of fact today, we have two alliances, basically. You could even say three, but maybe two.

One is a mAb alliance which (01:06:34-01:06:39) And then, there is the IO alliance, which is another one which is slightly less structured as you know but with a higher commitment.

So, I mean, if you think that you just refer to the first alliance, i.e., the mAb alliance which is supposed to end by the end of the year, (01:07:04) in scale as we're getting closer to profit as Olivier said, but it scales well that if you take the overall P&L of this alliance including Dupixent launch cost, Kevzara as well as (01:07:21) P&L with the R&D spending.

I mean, clearly, this tells us that (01:07:26) negative in our P&L to get it to a more positive area by the end of the decade. I think that's maybe the way to put it.

I'll also remind you that we own 22% in Regeneron stock which contributes well the lion's share of profit and loss and which has contributed more positively this year as compared to last year for these reasons.

So, if I put all that together, I mean, it sounds a bit more detailed but I think that's a bit the way you could understand and see it keeping in mind that we have put together (01:08:02-01:08:07) profit, let's say. And on top of that, we have this reimbursement of the development balance on our share of the profit..

Thank you..

All right. Thank you. Peter, on PCSK9, I'd like to start by saying that we are still very, very committed, right, to make Praluent a real success. It is, as you know, a truly innovative product, and – which frankly should over time change cardiovascular medical practice.

So, our teams on both side, Regeneron and Sanofi, are really fully committed to the plan. We're spending and we're investing a lot of time and money behind the launch of the brand, and we're making sure that physician understands the appropriate patient profile. So, we're spending a lot of time on education and educated those physician.

So, because we believe so strongly into the future, midterm and long term of the brand, and of course, we are relying also a lot on the ODYSSEY results, as the large study we are waiting the results from.

As you know, during the first quarter, we think the ODYSSEY outcome data will provide a more complete understanding of the effect of PCSK9 inhibition on cardiovascular event in general. So, to come back to your precise question, we will do everything to maximize the brand, and frankly, all options are on the table.

So, without going more in details, I just wanted to make sure you understand, we will – everything will be considered. Now on the....

Thank you..

...on – Elias, so after Medivation, our experience in Medivation and what's happening in the IO space, do we see oncology assets becoming – being priced more reasonably, I have no real feeling for that. I'm not sure that would be the case, mid- or long-term.

Elias, do you want to add anything?.

No. I think you're right. I think what we've seen, valuations are really hard to justify. I think the only significant change would be a pricing structure change in the oncology, which we do not see given the demand and unmet need, but I think this is an evolution. At this point, clearly, the valuations are still very high..

Okay. Thank you, Elias. Thank you, Peter.

Next question, please?.

Next question comes from the line of Keyur Parekh of Goldman Sachs. Please go ahead..

Good afternoon and thank you for taking my questions. Two broad ones, please. The first one for Olivier.

Olivier, you kind of obviously just following on the previous question, can you lay down your appetite for a transformational deal if kind of the valuation were to work out? Just in your mind, how do you think about disruption kind of from such a transaction versus the benefit of accretion? That's one.

And the second is on the Diabetes franchise, just help us think through kind of you've obviously been kind of trying to keep the volume with some of your promotional schemes and kind of couponing.

Just how successful do you think they have been, and whilst not mentioning specifics, have they actually helped you as you've gone through negotiations for the 2018 formulary access? Thank you..

So, that's a good question on Diabetes, Peter....

Yeah. So....

The couponing impact..

Yeah. So, I think if you look at the results we have, you remember in the first quarter, we commended on the CVS retention rates, which actually now that we have the second quarter in, we have an overall retention of 50% at CVS.

You remember there is a national formulary and then the custom plans and the national formulary retention is 41%, and the custom plans the retention is 70%. And then UnitedHealthcare actually we see very similar retention rates, so end of Q2 for United we have a 56% retention rate. So, it is very consistent I would say.

Of course, this compares better with benchmarks and we do believe that it is in our strategic interest to keep the volumes for further expansion in the years to come.

And it's very difficult to predict what's going to happen in 2018 and beyond, but it's clear that the more patients we have on glargine the more this will build and consolidate our strategic platform in the future..

Thank you very much, Peter. And on your question on transformational deal, it's not on the table. Frankly, nothing has changed since we issued our 2020 road map when it comes to M&A. We're not in a hurry to do M&A; however, if opportunities arise, we want them to be in very strategic areas which we presented at the time.

Either in the bucket we called at the time sustained leadership or the other which was build competitive positions. CHC was one of the example in that bucket, so strategic fit comes really first.

Value creation of course to shareholders and the metrics we are using there which is a return on invested capital exceeding our WACC over a period of three to five years. Of course EPS accretion, but that objective is only secondary to value creation.

And of course pipeline, because Sanofi pipeline has been significantly strengthened under the leadership of Elias in the last five, six years, but we believe our R&D capabilities could be of course further strengthened and enhanced. So, that would be my answer; really no change versus what we have said all along. So, thank you very much, Keyur. Okay.

The last question, please..

Last question comes from the line of Jack Scannell of UBS. Please go ahead..

Hi. Thank you so much. Two questions, one on Multiple Sclerosis, one on Oncology. One thing that struck me, and I'm sure I'm not the only person, is that you and other companies posted pretty good MS numbers. Aubagio in particular seems to be up much more in the U.S.

in terms of revenue and scripts, which at least contradicts some of the payer rhetoric one hears. Can you confirm you have been having some net price increases on Aubagio or is there some sort of stocking issue which is cluttering things? And then, secondly, another IO question. IO to some people looks very, very crowded, to me in fact.

But if one was totally convinced that there's a difference between PD-1 and PD-L1, maybe it would look a little bit less crowded. I noticed that you're going with a PD-1.

Do you think there is a meaningful difference between the two classes of agent?.

Okay. MS question, Bill..

Yeah, so with Aubagio, there hasn't been any price increases this year. I think when you think about the Aubagio business as it's now more of a – is established, the majority of the sales, obviously, overwhelming majority are coming from patients that are on drug versus new patients coming onboard.

However, we continue to see that Aubagio is the fastest-growing oral product and that the clinical profile, the real-world profile that physicians are seeing and patients has led to increased use of the product. So, at the core of it, it's a great product, and I think that's what you're seeing in the numbers..

All right. Thank you very much, Bill. So, on the technical question about financial differences, Elias, on PD-1 and PD-L, (sic) [PD-L1] which is a pretty hard topic..

Sure. Yeah, this is a great question. Everybody is having the same question across the field. So, let me tell you what we think. I mean, when you compare two mechanisms, one being the receptor, one being the ligand, you have three scenarios that can explain the differences. One, that the antibodies are not as effective on one or the other the targets.

And for PD-L1, I'll just remind you that there are two ligands, PD-L1 and PD-L2. So, that's one fact. The second is the mechanism itself, a potent mechanism of checkpoint inhibition or not. And the third point is differences in populations.

Now, we, as I told you, believe that PD-1 is the right selection, the right target based on many data that we have generated ourselves and our partner, Regeneron. We do believe that there is a potential for PD-1 to be superior. We do not know that at this point. I wouldn't venture to say that this is proven at this point.

There are hints that indeed tell us that, and we've made a choice and this the choice we're making here. We're going after PD-1. We do not have a PD-L1 in development..

Okay. Thanks so much..

Thank you, Elias. Thank you very much, Jack. And with that, I'm turning over to Mr. Grofik..

Great. Thank you, all, for dialing in to today's call. This will conclude today's call. The IR team will be around for any additional questions you may have..

Very good. Thank you..

Ladies and gentlemen, the conference is now over. Thanks for choosing Chorus Call and thanks for participating in the conference. You may disconnect your lines. Good-bye..