[Starts Abruptly] Sanofi's First Quarter 2021 Earnings Call. I would now like to turn the call over to Eva Schaefer-Jansen, Head of Sanofi Investor Relations. Please go ahead, Eva..

Good morning and good afternoon to everyone. Thank you for joining us to review Sanofi's 2021 first quarter results, followed by a Q&A session. As usual, you can find the slides to this earnings call on the Investors homepage on our website at sanofi.com. Next slide.

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

I refer you to our Form 20-F document on file with the SEC and also our document d'Enregistrement universel for a description of these risk factors. With that, on slide 3, I would like to introduce our speakers for today.

So, we have Paul Hudson, Chief Executive Officer; the Global Business Unit leads, Bill Sibold, Thomas Triomphe, Olivier Charmeil, and Julie Van Ongevalle; and Jean-Baptiste de Chatillon, Chief Financial Officer.

Paul will make some introductory remarks, followed by our GBU heads, who will review the first quarter performance of their respective businesses. Jean-Baptiste will provide an overview on the key financials and we will then open for Q&A where we will be joined by John Reed, Global Head of R&D. For the Q&A, you have two options to participate.

Option one, click the raise hand icon at the bottom of your screen. You will be notified when your line is open to ask your questions; at that time, please make sure you unmute your microphone. Or option two, submit your questions by clicking the Q&A icon at the bottom of the screen. And with that, I'd like to turn the call over to Paul..

Well, thank you, Eva. And thanks to everyone for joining our call. Our performance in the first quarter is a strong proof point for how we're continuing to deliver on our Play to Win strategy. Sales and EPS grew by 2.4% and 15% respectively in constant currency.

As you may recall, this strong performance is even more remarkable when you compare it with the first quarter of last year, when about half of the sales and profit growth was driven by pantry loading in the COVID environment as patients stocked up on chronic disease meds and consumer healthcare brands.

Driving the top-line performance in the first three months of the year was another outstanding 46% increase in Dupixent sales, growing both in the US, and notably, ex-U.S. Business momentum continued as well in vaccines, with strong growth across core franchises, including 15% growth in PPH.

So, really a tremendous quarter, which reiterates our confidence in our growth drivers and we are consequently affirming our full-year guidance of high-single-digit business EPS growth at CER, and Jean-Baptiste will provide details shortly. Before we move on to the update in our businesses, let me take a moment to reflect.

It is now more than a year since the COVID pandemic started. I continue to be impressed by the relentless hard work from each and every one at Sanofi, with people stretching beyond themselves to bring transformative therapies to patients and change the practice of medicine.

Over the past year, I've had the opportunity to see in real time the strength of Sanofi, as a purpose-driven organization, striving to do the right thing. While our priority remains to advance our own two COVID-19 vaccine programs, we recognize there are opportunities to increase supply and expand access to COVID-19 vaccines.

And as such, without compromising other essential medicines and our own vaccine programs, we've stepped forward to show solidarity in the industry and to continue to do our part in the fight against COVID-19. Turning to slide 5.

The pandemic has forced us to think and act for the short term, but we did not lose track of our long-term goal and ambition of simply changing the practice of medicine. Consequently, last year, we reflected on three core questions.

How can we have the greatest impact, where are we uniquely positioned to make a difference that can be scaled and sustained over time, and how can we embed our commitments into our long-term business strategy. In response to these questions, we reviewed and rethought our corporate social responsibility strategy as we presented it to you last October.

Importantly, our ambition for this new approach is fully aligned to, and embedded in, our Play to Win strategy. On this slide, with the improved ranking in the Access to Medicine Index, we've taken a first step in the right direction, but we know we can do much more for society.

Just earlier this month, we announced our newly formed non-profit unit within the company, Sanofi Global Health, which we believe is the first truly global initiative to expand affordable access to those in most in need with a broad portfolio of medicines in many countries and across multiple therapeutic areas, while funding local support programs.

On slide 6, transitioning to our pipeline, RSV is a major public health issue for all infants and the leading cause of hospitalization of infants in the US and in many other countries around the world. RSV results in 16 times more hospitalizations of infants than influenza during the first year of life.

This week's joint news release with our RSV development partner, AstraZeneca, marks an important step forward in the fight against this pathogen. Nirsevimab has the potential to be a truly transformational medicine for young children, designed to provide all infant protection for all those entering their first RSV season.

As you can see from the chart, Nirsevimab is uniquely addressing the entire population of infants, no matter in what month they're born, and protects them during their entire first RSV season.

We believe that this is a distinct advantage over maternal immunization candidates, as half of the infants hospitalized are simply born before the start of the first RSV season. We are looking forward to the full data publication for the MELODY trial and the readout of the MEDLEY Phase II/III trial in the coming months.

We are planning regulatory submissions to start in 2022, which is one year faster than planned, and I'm proud of the organization and our collaboration to make this possible. On slide 7, and staying on the pipeline, but focusing on oncology, we saw a busy quarter of positive news flow, supporting our progress to rebuild our oncology franchise.

Bill will tell you a little more about the Q1 launch performances of Sarclisa and Libtayo. I want to take a moment to discuss with you the encouraging interim Phase I data we showcased as the late-breaker at AACR this month for SAR245, formerly known as THOR-707.

These data demonstrate that we can dose this medicine even higher than we ever thought possible and further validates why we believe we have the best-in-class non-alpha IL-2. We're delighted to host you at our much anticipated ASCO event on June 4.

While we are unable to provide the detailed agenda of the event today due to the ASCO regulations, oncology is a long-term commitment with Sanofi and I'm confident we can deliver outstanding patient benefit and compete successfully in this space.

Turning to slide 8, and with 2025 and beyond in mind, we continue to deploy capital to drive our R&D transformation across our pipeline as highlighted here with three recent acquisitions and three recent business development deals focused on our priority areas of immunology and oncology, allowing us to bolster our capabilities in areas where we continue to strengthen our competitiveness.

With applications in both oncology and immunology, the acquisition of Tidal Therapeutics fits particularly well within our R&D strategy. The Tidal mRNA platform provides a novel approach to reprogram immune cells inside the body to genetically modify the patient's own immune cells to attack their cancer.

On slide 9, before we enter into the Q1 GBU updates, I wanted to highlight Sanofi's favorable position in the US and China, where drug pricing is a focus of the government's healthcare priorities.

While we may learn more about the details of the healthcare agenda of the new US administration soon, we also acknowledge the anticipated new round of volume-based procurement in China, which we expect to be implemented during the remainder of the year.

Specifically, in the US, our portfolio is not only growing fast, but shifting increasingly towards specialty care, with approximately 60% of this business through the commercial channels. At the same time, we continue to see the exposure to US insulin pricing pressure gradually diminishing.

We believe Sanofi is well-positioned to actively participate in the ongoing policy discussions in the US, with the goal of making the healthcare system work better for patients, by lowering out-of-pocket costs for the medicines they need, while maintaining an innovation-driven market-based environment.

Now, turning to China where sales grew 8% in the quarter. Bill would tell you more about the accelerated launch of Dupixent, while I would like to remind you of the commercial potential of the launches of Toujeo and Praluent due to their differentiated profiles.

We will maximize the value of these brands, leveraged by our digital customer engagement tools in this large Chinese market. We continue to expect Sanofi to grow sales in China in 2021, driven by launches helped by our agile business model and despite the potential impact from the expected VBP later this year.

With that, I'm now turning it over to the GBU heads to provide more details on their respective businesses that start first with Dupixent. And Bill, over to you..

Thank you, Paul. Starting with Dupixent on slide 10, sales surpassed the €1 billion blockbuster mark for the quarter. This new record in sales is the result of continuous strong US demand, absorbing the usual net price adjustments at the beginning of the year, including co-pay assistance program.

Ex-US sales were extremely strong, reaching 24% of global sales in the quarter and crossing the €250 million mark, now annualizing on their own at €1 billion. This was all done against the backdrop of additional COVID-19 lockdowns, mainly in Europe. In the US, patient visits continued to be around 80% of pre-COVID levels.

As we progress into 2021, we are planning to unlock additional growth opportunities for Dupixent expansion as we seek regulatory approvals for expansion into younger populations due to its demonstrated favorable safety profile.

Our ambition to drive penetration in the younger populations will be accelerated by the anticipated FDA and EMA decisions for 6 to 11-year olds in their respective asthma indications and the pivotal data in 6 month to less than 6-year-olds with atopic dermatitis now expected in the second half of 2021, several months earlier than originally planned as enrollment completed much faster.

In addition, we are looking forward to the readouts in prurigo nodularis and chronic spontaneous urticaria in 2021, two additional dermatology Type 2 inflammatory diseases with high unmet need. As you can see, we are building a worldwide mega brand with Dupixent and we remain well on track to achieve our greater-than-€10 billion peak ambition.

On slide 11, let me provide you with a snapshot of the continuing execution of Dupixent in non-US markets where we saw particularly strong growth in the first quarter as mentioned a moment ago. To be successful with Dupixent, we were always confident that we would win worldwide and we are seeing great momentum emerging across the globe.

In Europe, adult AD is reimbursed throughout the EU5 with continued expansion into respiratory indications as well as younger populations underway. In Germany, Dupixent holds the number 1 new patient market share position in asthma. Moving to other attractive markets in the rest of the world.

In Japan, over the past 12 months, Dupixent has become the number 3 pharmaceutical product in volume growth, and similar to Germany, now holds the number 1 new patient market share position in asthma. Moving to China, the Dupixent adult atopic dermatitis launch has accelerated following its inclusion on the NRDL as of March 1.

The initial uptick following the NRDL inclusion has been strong with greater than 1,000 new patients starting treatment in March, exceeding our own expectation. Our teams in China are driving hospital listings in key cities and improving awareness across patient and physician communities.

Next key milestones on our journey to unlock Dupixent's blockbuster potential in China include the expected decision for Dupixent in adolescents with AD in mid-2021. Wrapping up on Dupixent on slide 12, I would like to draw your attention to the success of Dupixent, specifically in the respiratory indications of asthma and nasal polyps.

The chart on the right demonstrates how well the brand resonates with US allergists and pulmonologists. Over the past two years, Dupixent has become the leading respiratory biologic in the US in new-to-brand prescriptions in its approved indication.

Now, why such a success in respiratory? Clearly, it is because of Dupixent's consistent safety and efficacy profile and we are resourced to win. Type 2 inflammation drives greater than 80% of uncontrolled persistent asthma and Dupixent's unique mechanism of action inhibits IL-4 and IL-13, targeting underlying Type 2 inflammation.

Asthma patients on Dupixent have shown rapid and sustained lung function improvement, as well as progressively declining exacerbation rates.

In addition, certain patients with chronic rhinosinusitis with nasal polyps on Dupixent experienced significant reduction in nasal polyp size, nasal congestion severity, and the need for systemic corticosteroids and/or surgery.

All of this, we believe, is driving Dupixent's NBRx growth within respiratory as it reaches pre-COVID levels, and we are looking forward to expanding into potential additional respiratory indication.

Advancing to slide 13 and turning to the specialty care franchises beyond Dupixent, the rare disease franchise continued to deliver growth in the first quarter with higher sales in all reported regions. We are the global leader in Pompe disease and we believe that avalglucosidase alfa will establish a new standard of care for the disease.

The FDA has notified us that the PDUFA has been extended for three months to August 18. We will be ready to launch this important medicine and expect broad market access globally, which underlines our 20-year dedication to this patient community.

Within our neurology and rheumatology franchise, Aubagio confirmed its resilience with sales in the first quarter broadly stable, absorbing a high base for comparison and the entry of competition. Separately, Lemtrada sales were €24 million in the first quarter, consistent with the prior three quarters.

Strategically, both Lemtrada and Kevzara have been deprioritized with respect to commercial support. Rare blood disorder growth in the first quarter was marked by the anticipated lower sales to our collaboration partner, Sobi, and we expect the lower sales to Sobi to dampen our performance throughout the remainder of the year.

Excluding the sales to Sobi, the franchise grew as much as 5%, supported by increased sales of Alprolix and Cablivi. As Paul alluded to earlier in his comments, we are encouraged by our oncology launches Sarclisa and Libtayo.

Oncology sales grew strongly the first quarter, up 26%, more than offsetting the Jevtana decline, following entry of generic competition in Europe, which began at the end of March. My final slide, slide 14, provides a snapshot of the progress we are making in bringing innovation to patients with rare blood disorders.

As you know, we have a number of molecules that have the potential to transform patients' lives, including sutimlimab, which is developed for people suffering from cold agglutinin disease, a rare disease with no approved therapies indicated to treat this disease.

Following the complete response letter we received from the FDA in mid-November 2020, we have been working collaboratively with both the FDA and our CMO partner to resolve the agency's concerns, and we are now planning to resubmit the sutimlimab BLA with the FDA in the second half of this year.

Turning to our hemophilia programs, I am pleased to highlight that we are continuing to make steady progress in bringing fitusiran to all hemophilia patients as a potential treatment option. As of today, all health authorities relevant to the program have approved redosing of fitusiran and the majority of patients have resumed dosing.

We intend to share data from our initial pivotal trials at medical conferences in the coming quarters. Following our interactions with the FDA, we are planning for a US submission in the second half of 2022 once data from the revised dose regimen are available.

Among the other advances, let me just point you to the initiation of Phase III pediatric study for Efa, formerly known as BIVV001, which underlines its favorable target profile and well understood mechanism of action in Hemophilia A. With that, I hand over to Thomas to update you on the vaccines business..

Thank you, Bill. Our vaccine business was an important performance driver for Sanofi in the quarter, with growth observed in all three core segments.

First, our world leading pediatric combination vaccine franchise delivered more than €0.5 billion sales in the quarter, with 15% growth globally and particularly strong US Pentacel performance, driven by the timing of a shipment to the US CDC. Second, strong demand for flu vaccines in the southern hemisphere drove 24% growth for this franchise.

We believe this performance serves as a strong indicator for continuously growing flu vaccination coverage rates. Based on the preorders to date in the northern hemisphere campaign, we are confident in delivering another year of strong flu vaccine sales.

Third, our meningitis franchise is off to a good start, with plus 4% growth, supported by the launch of MenQuadfi in the US. I remind you that MenQuadfi is the only FDA approved quadrivalent meningococcal vaccine indicated for all persons above two years of age. Finally, I'd like to share with you a few important milestones that are coming very soon.

The first one is another US launch. While Vaxelis sales from our more joint venture with Merck will not be reported within our sales line, we are very excited to bring the first hexavalent pediatric combination vaccines in the US market. This is expected to come in the second quarter of this year.

With this product, newborns in the US will finally have access to the convenience of a six in one vaccine, reducing the number of shots given to newborns. The second milestone is another important pipeline update. With the expected start of our first mRNA flu vaccine trial, Phase I trial, which we're on track to initiate in the middle of this year.

These milestones do come on top of the exciting news regarding nirsevimab that we just heard Paul talk about. Nirsevimab is designed to provide protection for all infants entering the first allergy season.

With a positive readout of the MELODY Phase III trial now already in house, we will submit the data for this potentially breakthrough product one year earlier than anticipated. This potentially provides us with a two season lead ahead of the competition, a real game changer here. Let's move on to slide 16.

Here I want to provide you an update on the progress of our COVID-19 vaccine development programs. As you know, in February, we initiated our new Phase II for adjuvant recombinant vaccine candidate developed in collaboration with GSK. This trial rapidly reached full enrollment and we now expect the Phase II results in the very coming weeks.

If the results are positive, we are planning for a prompt start of the Phase III trial with vaccine expected to be available in quarter four this year. In March, we initiated the Phase I/II trial for mRNA candidate vaccine done in collaboration with Translate Bio. We are now expecting to share the results with you in Q3.

At the same time, we are obviously progressing our preclinical work on the so-called variants in order to make sure that we can address the need for a sustained response to the global COVID-19 pandemic on an ongoing basis. With this, I hand over to Olivier..

Thank you, Thomas. In General Medicine, we are very pleased with the performance of our core brands in Q1. As you remember, at our Capital Market Days on February 5, we identified a number of core brands, which together delivered 4% growth during the period.

If you exclude Praluent sales in the US, which are now sold solely by Regeneron, our core brands portfolio grew more than 6%. When you strip out the approximately 4 percentage point negative impact related to portfolio streamlining and a temporary supply constraint related to Aprovel, the non-core portfolio declined by only 6% during the period.

Growth of the core brands was mainly driven by Lovenox, which continues to benefit from inclusion in WHO guidelines for the treatment of hospitalized severe COVID patients. Toujeo sales reached over €250 million for the quarter and is on a trajectory to reach blockbuster status in 2021 for the first time.

In China, Plavix grew in both volume and sales and we continue to see growth in demand more than one year after its inclusion in the VBP. We are excited about the early launch performance of Praluent and Toujeo in China.

And as Paul mentioned earlier, we believe that our launches and agile go-to-market model will enable us to drive growth in General Medicine in China into 2021 despite the potential impact from the expected next VBP wave.

Taxotere and Eloxatin, which were combined of approximately €200 million euros in sales for the full year 2020, are included in the list of 60 drugs which was decided by the Chinese authority earlier this month and we expect the implementation of the next VBP wave in early Q3.

Biologics, including insulins, were not included in the new VBP list at this time, but we anticipate the insulin class may be reviewed by the Chinese authorities as well. To preempt your potential questions on our insulin business in China, Lantus sales were around €450 million for the full year 2020.

Toujeo as a well differentiated label and is supported by medical guidelines related to the usage of basal insulin. I'm happy to highlight that, as we speak, we are already working on new patient starts with Toujeo and switching patient uncontrolled on insulin to Toujeo. With that, I hand the call over to Julie..

Thank you, Olivier. I'm happy to share that we remain fully on track with the implementation of our strategic priorities and to focus on our growth brands as shared at the Capital Market Day in February.

As you may have heard from our peers already, the beginning of the year was marked by a low incidence of cough, cold and flu driven by social distancing measures across markets.

Actually, the impact of the overall COVID environment on CHC market has led third-party market intelligence providers to reduce the retail market growth outlook for 2021 to around 2%.

On top of that, the first quarter of last year set a high basis for comparison across many of Sanofi's CHC brands, particularly again in cough and cold category, as well as pain and energy due to consumer stocking up last year.

Consequently, sales in Q1 this year were affected by lower demand in these categories, more than offsetting strong demand for brands in wellness categories and through e-commerce, favored by consumers during the pandemic and which have been our key focus since the beginning of the year as part of our strategic priorities.

Importantly, we saw continued growth in the large US markets where allergy sales increased, driven by Xyzal, which was further supplemented by strong growth in digestive wellness.

We now have almost seven consecutive months of growth share gain in the US and also see great momentum in other parts of the world such as Central and Eastern Europe, for example. We're also excited to announce the US launch of Zantac 360° with famotidine.

Zantac 360° is an all in one heartburn solution that both prevents and relieves symptoms and will be available nationwide with full distribution in June this year. With that, I hand it over to our CFO, Jean-Baptiste..

Thank you. Thank you very much, Julie. On slide 19, turning to our financial performance. Company sales increased 2.4% in the first quarter, which helped to drive double-digit EPS growth in the period.

We delivered another quarter of P&L leverage, supported by gross margin improvement resulting from our favorable portfolio shift to specialty care products and the beginning of growing efficiencies within industrial affairs.

While R&D spend increases in key asset development cost, in fact, it was offset by operational efficiencies on lower expenses on mature projects. But you can expect to see R&D spend increasing meaningfully in the remainder of the year.

At the same time, our efforts to realize further efficiencies through small spending initiatives have led to an incremental decline of approximately 1% in SG&A in the quarter with, in fact, an increase in selling costs to support Dupixent expansion on a strong decrease in G&A.

As we had highlighted to you already in March, we benefited from a one-time payment of $119 million received from Daiichi Sankyo related to a former vaccine collaboration in Japan. Excluding this one-time payment, business operating income grew 8.4%, resulting in a BOI margin of 29.3%, 100 basis points higher than the prior year.

In addition, our EPS growth was supported by the anticipated lower effective tax rate of 21%, which we guided to in February as part of the full-year financial guidance. Overall business EPS of €1.51 reflects our leverage P&L and provide us with great confidence to achieve our financial outlook on a full year basis.

Now, on slide 20, we believe that our strong performance in the first quarter puts us on the right path towards meeting our communicated midterm financial target with BOI margin of 30% in 2022.

On our trajectory into 2022, we are confident in our ability to drive performance with continued momentum from Dupixent on leveraging our P&L through further efficiencies, specifically benefiting from improvements in industrial affairs.

As for 2021, business EPS growth of 9.8% in the first quarter, excluding the one-time payment received from Daiichi, it's a strong start to the year. We have been able to consistently grow EPS in 2019, in 2020 and now in Q1 2021. Well, this is really reflecting the deep transformation we are going through to deliver sustainable growth.

Notably, higher R&D spend is expected during the remainder of the year to fund our growth drivers and advance our broad development programs for our late stage pipeline to create future value. Uncertainties remain for our business environment mainly related to the pandemic and pricing policies in key markets.

But it seems that, as Sanofi, we are getting better and better to navigate this pandemic. On slide 21, in summary, based on our strong Q1 performance, we are increasingly confident in the financial outlook for the remainder of the year. And we maintain our expectation for high-single-digit business EPS growth at CER.

When we turn to foreign exchange, the impact is expected to be negative by minus 4% to minus 5% based on April average exchange rate. This compares with the estimated currency impact we communicated with a full year outlook in February of between minus 4.5% and minus 5.5%. So, let's open the call now to Q&A. With that, I hand back to Eva..

[Operator Instructions]. .

And the first question will be from Pete at Citi..

Few quick ones on the pipeline, please. Nirsevimab, great to see the trial readout early. I realize you can't talk to the data per se before publication. But you did host a rather detailed RSV R&D day last year. And you gave a target clinical profile of at least a 70% relative risk reduction in RSV hospitalization.

So, just interested to feel how the data plays to that target profile. And secondly, on AMEERA-3 amcenestrant against physician's choice, lots of focus, obviously, in the market.

Can you perhaps help us handicap the study in terms of giving us a sense of the ESR1 mutation status of the enrolled patients or the mix of prior treatments that they received in the earlier line setting? Any color there appreciated. And then lastly, for John, just the CAR NK platform that you recently acquired, looks really interesting.

Just could you discuss why you think CAR NK could be more exciting than CAR-T and when we might next see data points from that platform. Thank you..

Thomas, what are you prepared to share?.

Thank you for the question, Pete, on nirsevimab. You were mentioning a target product profile. Clearly, we are very excited by the latest news.

And therefore, we believe we have a clear product for registration and for clear impact on disease, which is why we are very happy to announce that we are going to submit this product a year in advance in 2022 instead of 2023.

It means that it gives us at least two years versus the competition, which I come back to it is maternal immunization, and I'll come back to why I don't believe its competition.

But we're very excited by the profile moving forward because it's going to be the first product and I believe the only product in the coming decade that's going to be a product that will prevent RSV in all infants. Again, I think it's very important that I highlight the importance of this.

RSV is the number one cause of hospitalization in North America or in Europe for all infants. And as you've seen before, 50% of those infants that are going to hospital because of RSV are not born in season. So, we really need to find a way to make sure that all those kids are protected and it needs to be an all infant protection solution.

Maternal immunization has been referred by some of your colleagues. As you know very well, it could work potentially for kids that are born in season. But if you are born in the spring or in the summer, the probability that you get maternal antibodies transferred to a kid and sustained protection for the whole RSV season is very low.

So, we're super excited and we're looking forward to share more on that with you very soon..

We do think it's game changing quite clearly. And it's for all infants, no matter when they're born. I think that's very clear from Thomas. We're excited about the data reading out and the two year the two seasons of allergy we have.

John, AMEERA-3 mutation status if you can and then maybe a comment – I think it was on Kiadis, but I didn't hear clearly..

AMEERA-3, it's an ongoing clinical trial. So, we won't be able to say much about that until a data readout, et cetera. Of course, we're collecting data on ESR mutations and the prior rounds of therapy will be reflective of what the eligibility criteria allowed for.

So, I'm afraid I really can't give you much color on that and you'll have to wait for data. On the Kiadis platform, the NK cell platform, indeed, the reason that we think the NK cell platform has ability to surpass the CAR-T is really a couple fold.

One is the ease with which one can come up with allogeneic solutions, so universal, one-size-fits-all solution with NK cells requires no genomic engineering. In our case, it's a matter of selecting donors with a certain type of characteristic, then expanding those cells at industrial scale.

And the first product opportunity actually is unmodified NK cells where the Kiadis colleagues hat already generated some very promising clinical data in the context of relapsed and refractory AML, acute myelogenous leukemia, and showed very impressive data with patients who were brought to complete remissions of some durability.

And that was with the completely unmodified cells. Indeed, going forward, we envision doing various types of genetic modifications, including CAR expression. The second reason why we think the NK cell platform is attractive is because NK cells don't make some of the nasty cytokines that T cells make, we believe they'll be a better therapeutic index.

IL-6, for example, is not produced in appreciable levels by NK cells. So, we believe we'll have a safer therapy as well..

Great to have three pipeline questions, by the way, to kick off. Hopefully, we'll deserve even more of that focus over the coming months and years. .

The next question is from Simon at Exane. .

Sorry for not pipeline questions, but two broader questions. Firstly, obviously, an extremely strong start to the year even if you strip out the Daiichi payment and your high comps from last year. Just wondering maybe if you could talk to the reasoning for lack of a guidance upgrade at this early juncture. Appreciate it's early.

So, maybe I think that we need to be aware of during 2021 that refrains you from increasing guidance at this point in time. So, maybe just talk on pushes and pulls from Jean-Baptiste would be helpful. And then the second question is on vaccines, specifically COVID-19.

Maybe you can help us further understand the opportunity you potentially see now with your COVID-19 recombinant vaccine, given the safety issues that we've seen from J&J and AstraZeneca. Appreciate they're small. It is something you previously flagged 12 months ago using that methodology that there are risks.

So, maybe you can help us understand where you see your opportunity going forward and whether or not the BARDA funding arrangement potentially still would impact some profitability in 2022. And then, just on messenger RNA, Moderna two weeks ago, extremely bullish on that platform, talking about opportunities in other areas.

Could you maybe just talk to your level of confidence with respect to Translate's technology platform. It has been 12 months since you announced the collaboration. And we do know, from looking at Moderna's data [indiscernible] from their RSV attempt that it's not a straightforward process.

So, maybe if you could talk to your expectations around Translate Bio, that would be perfect?.

Simon, you made up for it with a good list of questions. So thank you for that. Definitely, a strong start to the year and early, like you said. I think what people are trying to figure out is if there's anything unsaid, and it's really just about managing the business. So, I'll hand it to JB to give you some context on that. .

Well, I think it's an opportunity to give a more precise message maybe on my side. We want to create value for the long term. So, investing as we do in our early pipeline on broadening our first three studies spectrum is where we want to be.

So, you will see some increase of our R&D spend because, as we said in Capital Market Day in 2019, that's where we want to spend the money, on assets which are worth it. And that's the point we are getting to. So, don't overread in our early quarter one good results. They are a long-term trend.

And we want to accelerate our value creation and really be able to deliver growth for the second phase of the plan..

There's a lot of vaccine questions. We keep it quite short because we want to get more questions in.

But over to you on what role, I guess, will we have? Any broad comments on safety? And maybe where we're at with TBIO and mRNA?.

So, on COVID-19, first, Simon, it's a pandemic. And let's be clear, we have to be modest, we are learning every day. So, that's true for all the different vaccines types that are in there and we're going to keep learning every week. But it shows that as long as the problem is not solved, it's not solved. And therefore, that's why we are full-in.

We are full-in with our three partnerships [indiscernible] for three different partners and we are mostly full-in with our development of our two own programs. Phase II coming very soon. We'll see the results. Of course, we'll come back to you very quickly with that.

We have a very strong collaboration with HHS and the US government to go to Phase III ASAP as soon as we have the Phase II results. And we believe it could be a very useful program with volumes coming in Q4. And we believe that there will be 2022 booster doses that will be required and we'll be there.

And then, on mRNA, I think you appreciated the Moderna vaccine today. I did too. I think it's showing the potential of this platform to actually create novel vaccines. Very exciting platforms to be able to go into vaccines development territories that we couldn't go before because of technology. Very excited about our partnership with Translate Bio.

As you know very well, we are in Phase II right now on our COVID-19 product. We'll get the readout in Q3. We are moving forward as fast as possible also through mRNA. Very confident in this partnership. We believe it's a new frontier that has been crossed over and will make us have a lot of new vaccines down the road..

Yeah. And as you said, I think we're very excited and very confident. Pandemic, of course, all these emerging side effects and different things are part and parcel because of the speed. In a regular season, say flu, for example, the bar is even higher when the standards of care are already approved and that have to be beaten. So, we're optimistic.

I think you heard it from Thomas where we are with mRNA, but how we will compete and how things will shake out. So, maybe next question..

And the next question is from Geoff at Leerink..

Just maybe a couple on Vaccines and one on Dupi. Thomas, on vaccines, congratulations on Vaxelis. It's only been about 25 years.

Is there an opportunity for you to substantially increase your pediatric vaccine revenue because you have that hexavalent? And then, secondly, on nirsevimab, you've said in the past we should expect pricing in the range of pediatric – sorry, of innovative vaccines.

But could you just give us a sense, is that the full schedule of innovative vaccines or single doses because, obviously, quite different? And then, lastly, perhaps you could comment on where you are in the pentavalent mening program. It does seem that mening is doing well for you, but you seem to be behind the competitors in the pentavalent.

I'm just wondering if that revenue for you is at risk long term as we think about models?.

I thought there may be a Dupixent question as well. .

My Dupixent question, maybe for you, Paul, is a lot of good things have happened with Dupixent. You've talked about COPD. There's a whole allergy program [indiscernible], it's been added. And obviously, there is some clouds over the competitors in that category. And you're halfway toward €10 billion already.

Why isn't the €10 billion way too low, given all those developments?.

Well, maybe I'll take that one first before I pass to Thomas. So, it's not that long that everybody thought it was too high. So, as we push on – we take nothing for granted. Every day is game day with Dupixent because we know the next few years. We know the IL-13s are half the answer literally, missing the IL-4 component.

We know the emerging real-world data and clinical data on the JAKs. So, we know there's challenges. We take nothing for granted. We have a lot of work to do. We have an incredible clinical development program. We're incredibly disciplined commercially. Just heard from Bill, what's happening in China.

So, we've guided to €10 billion-plus and maybe it's the plus that you're talking about. And over time, maybe we'll give you a bit more detail on that. Maybe I'll get back to Bill if he wants to add anything. Thomas, some quite detailed questions, but I think important questions on the Vaxelis, on the pentavalent mening.

But I also think you should get to the pricing on the one-and-done in RSV..

So, on RSV pricing, very clearly, we are talking about the premium innovative vaccines, full schedule. It's a one-dose treatment, one dose as a preventive measure with nirsevimab, but it's comparable to a full schedule because you want to make sure that we have the same impact on disease. So, that's very key here.

On Vaxelis, thank you for the congratulations. As you were mentioning, it took a while. But I think it's very important to mention that this is very important because we are going to be able to bring six-in-one in the US. You know that some have tried before and were not successful to do it. It's going be the first six-in-one with very exciting antigen.

Of course, price premium plays a role in there. You probably remember that it's a JV with Merck and, therefore, we are not booking into the sales line. But I think it's important to mention that it has a very important positive impact, of course, on the Vaccines' BOI margin ratio.

And that the BOI in total value, in absolute value, is expected to remain stable when you look at the play Pentacel versus Vaxelis. And, of course, I insist on the fact that our full-year guidance on our growth for Vaccines completely includes the launch of Vaxelis in the US.

Why we are very excited? Because what we've seen in the past is that six-in-one versus five-in-one have been able to gain market share significantly. Those have been launched two decades ago in Europe. Very exciting that we can provide those in US, and I think it's going to be [indiscernible].

And finally, on MenPenta, you probably have seen that we are entering our Men B program into Phase I/II right now, which gives you a hint on the fact that we're going to launch MenPenta right after. So, we are definitely following that one.

I don't think the two MenPentas are being developed after significant concern when we're looking at the mid-term sales. Why? Because with MenQuadfi that we are launching now in the US, we believe we have the best four-in-one meningococcal vaccine, ACWY, and that's going to be a backbone that will be very important moving forward.

We now want to add the best Men B to the best MenPenta..

We will take Jo from Credit Suisse. .

A few questions on your emerging drugs. On Sarclisa, we've seen that that's gone from – it's gone to be bigger ex-US than US very quickly.

Is that a bolus of sales into new markets as you launch, is it underlying demand? Actually, if you could just tell us a little bit more about the progression of that product, please? And also, your strategy for Libtayo. It's, at the moment, not really very differentiated.

You could be in the lead with the adjuvant CSCC indication, but clearly you started it at around the same time as KEYTRUDA. So, you could be fit to the post there. So, just a little bit about your strategy going forward there, please? Just two quick other ones.

Could you just tell us a little bit more about why there was a PDUFA delay for your new Pompe drug. I just want to be sure it wasn't anything to do with any of the data.

And for Jean-Baptiste, I wonder if you could tell us about marketing costs going forward? It was probably – as we go through the rest of this year, how realistic is it for you to be able to keep that overall SG&A number at under – at a decline rather than growth? Many thanks..

I'll just quickly take the PDUFA one, then Bill, then JB, and we can provide more if needed. But, really, we're going for a broad patient population. There has been requests for more data. It's been a very encouraging and positive conversation. There is a delay, of course.

There's a lot of challenges worldwide for how everybody runs their organizations, but we're feeling very confident. I think Bill said upfront, we're excited about what it will bring to patients. Bill, Sarclisa, Libtayo. It's very early to be talking about Sarclisa.

But do you want to make any comments ex-US versus US for Sarclisa and then Libtayo?.

Look, I think it has to do with the ability to launch on a global scale quicker. In the past, you just had to wait a long time to be launching in the various geographies. Ex-US is off to a very strong start as well.

I think the important thing to kind of capture Sarclisa is that, now that we've had our second approval within 12 months in both the US and the EU based on the IKEMA study results, so that's in combination with Kd. We see the commercial potential increasing from about 13% of the market, Jo, to 35% of the market.

So, I think if you look ahead, this unlocks the markets some. The US launch happened like simultaneous with the lockdowns that took place with the pandemic. And so, we're very optimistic about where the future has to hold with the market, nearly tripling with these new indication approvals.

Regarding the Libtayo, we really see it as being the leader in non-melanoma skin cancer. I think the recent expansions that we've had, including BCC, it really is off to, I think, a very strong start for us. So, that's where we expect that we're going to stay and become leaders..

JB, marketing costs from end of the year?.

Yeah. I think Jo's question was also beyond maybe the remaining of the year. Because, for this year, it's the same trend. We are really looking to go deep in G&A and going on stimulating our growth engines.

But looking beyond this short-term period with normalization of the situation of COVID, we think we will not just keep most of our gains linked to COVID, but we will go on with our saving opportunities that will offset a natural rebound because, yes, we will be back on the ground and there will be some cost kicking in again.

But, such will be absorbed by our extra savings because I still identify with the teams' many, many opportunity.

So, in the mid-term, we will see some increase of the selling and general expenses, not so much because of post-COVID, but because we will see our top line growing and we will be preparing for launches of new drugs and that's where we want to be.

We think we are in a very good spot to contain any rebound from a post-COVID area and going on with extra savings that will more than offset those – this restart that we will see..

The next question is from Graham from Bank of America Merrill Lynch. .

I've got a couple on amcenestrant and one on your SHP2. So, on amcenestrant, obviously, we're expecting the AMEERA-1 CDK4/6 combo data fairly soon. That's a single-arm study.

So, we're just wondering what you think is an appropriate benchmark that investors should be using to look at the response rate? So, for example, CDK4/6 fulvestrant second-line combo trials have shown response rates ranging from the mid-20s to low-40s.

So, is that the right sort of range we should be referring or would you point to differences in patient populations in the trials? And then, secondly, your events slide show Phase III start decision on early breast cancer in the first half.

What are the gating factors? And then, what's that decision going to be based on? Some interim looks your AMEERA-4 trial results because I think final results, those were delayed till 2022. And then, thirdly on your SHP2. So, you have some monotherapy data presented by your partner Revolution Medicine at the AACR.

I just wonder what your thoughts on the data, the profile opportunity in combinations for that and your level of excitement about that project. Thank you..

John, a bunch of questions on amcenestrant, including response rates that we're going to share and the gating.

Do you want to give a quick answer?.

On the combination with CDK4/6 inhibitor class, I think as you suggested, fulvestrant plus palbociclib, for example, would be a good benchmark. The thing that's a bit challenging there, though, is that the number of prior lines of therapies and what those therapies were has a big impact on what the outcomes might look like.

So, you have to also normalize for that when you look at the data. Regarding AMEERA-4, that's the lead up to the adjuvant study.

We did get off to a slow start because of the pandemic, but have decided that we will be able to get the answers really we need with probably about half as many patients as we originally thought, so that we won't delay moving into the adjuvant setting.

So, we feel like we are going to catch up essentially by virtue of being able to get to what we need with fewer patients essentially in that study. And then, was your last question about….

SHP2 combos..

SHP2, I'm sorry. The interrogation of the SHP2 molecule, the partnership with Revolution Medicines is very exciting for us. We are doing combination studies right now with Amgen's KRAS inhibitor, which is one of the combos that at least preclinically has been very exciting.

We have studies undergoing with other combination partners that make sense, including not only playing the signal transduction side of the equation with things like osimertinib combos and MET combos.

But, also looking at the possible immuno-oncology angle by virtue of the fact that SHP2 does get recruited to the cytoplasmic tail of PD1 when PD1 is activated in T-cells. So, there is also a way to think about another side of the coin here, thinking about immuno-oncology and that study is underway as well..

We will take Richard from J.P. Morgan..

First question, just on Dupixent back there. How are you seeing the uptake in [Technical Difficulty] AD patients relative to the early stages that you saw in the adult.

Is there any sort of acceptance levels that you're seeing that that's greater or something that can help us think of the uptake potential there to boost growth? Second question on tax reform. Paul, you mentioned healthcare reform, but just on the tax reform impacts. Of course, the tax rate is down this year to 21%.

But how should we think about the US impacts on Sanofi? And then, finally, just back on nirsevimab. I think, Thomas, you suggested benefit across all types of patients. Can we just have an idea if the benefit is sort of very similar across those patients conserved of what we've seen in the Phase II? Anything you can help with that, would be great.

Thanks very much..

Just quickly, pre-term and full-term, we know already. But, Thomas, over to you on nirsevmab..

Clearly, very good impact for all infants, preterm, full term, synergies driven, [indiscernible], we're confident will go up..

JB, tax and how well we're going to manage any changes in the US?.

We are looking at what's happening currently. So, discussions are happening. And we think part of it will go through. It's not clear which part. In the meantime, we are clearly benefiting from a very positive trend in our other – in our ex-US tax centers.

So, all in all, it's a bit early to tell you where it will land, but I'm quite hopeful that we will go on finding new ideas to improve our effective tax rate..

And then, Bill, Dupixent uptake, peds AD?.

Strong, just like it was in adults. And I think it's just further proof of the really strong safety and efficacy profile of the product. .

Maybe, we have time for one more..

The last one will be from Laura at UBS..

No?.

No..

We tried. Thank you. Thank you to everybody. I will look forward to seeing you again in the next results, if not before..

Thank you. And have a good day. Bye-bye..