Sanofi Q4 FY2024 earnings call

Strategic Progress

• Moved towards being a focused science-driven biopharma company, sold a controlling stake in Opella and prioritized R&D.

Business Achievements

• Double-digit sales growth with strong contribution from launches, including Beyfortus as a blockbuster in its first full year.
• Dupixent exceeded €13 billion in sales, with strong growth in Q4 across geographies.
• Vaccines business had a record year, crossing €8 billion, driven by Beyfortus and a resilient flu franchise.

R&D Highlights

• Positive Phase 3 results for fitusiran, rilzabrutinib, tolebrutinib; duvakitug Phase 2 ready for Phase 3.
• R&D expenses increased by 14.6% at constant exchange rates in 2024, in line with pipeline investment.

Financials

• Net sales growth, gross margin details, R&D and SG&A expenses, free cash flow impacted by one-offs, net debt position, share buyback and dividend plans.

The vaccines business had sales exceeding €8 billion in 2024, a 13.5% increase, driven by Beyfortus and a resilient flu franchise. Dupixent exceeded €13 billion in sales for the year, with strong growth in Q4. Beyfortus achieved blockbuster status in its first full year. ALTUVIIIO in hemophilia had sales near €0.25 billion in Q4, expected to be a blockbuster in 2025. In Q4, net sales increased by 10.3% at constant exchange rates to €10.6 billion, marking the third consecutive quarter of double-digits growth. Full year net sales were €41.1 billion, up 11.3% at constant exchange rates.

2025 Guidance

• Sales growth mid to high single-digits at constant exchange rates, excluding hyperinflation impact.
• EPS growth low double-digits at constant exchange rates.
• Plan to execute a €5 billion share buyback, propose dividend of €3.92 per share.
• Expect gross margin to increase, R&D expenses slightly up, SG&A slightly increase, capital gains from portfolio simplifications around €500 million.
• Positive foreign exchange impact on sales of approx. +2% to 3%, positive business EPS impact from currency approx. +2% to 3%.

• Uncertainties in clinical trial outcomes and regulatory approvals for pipeline candidates.
• Potential impact of trade tariffs, though difficult to quantify currently.
• Risks associated with market competition and evolving healthcare policies.

Q: On the buyback, rationale for €5 billion size, timing, proceeds, and M&A plans?

A: Rationale is to mitigate Opella dilution, start buyback mid-2025. Proceeds used for investing in business, R&D, manufacturing, etc., and exploring external growth opportunities with discipline.

Q: On PCV-21 vaccine, competitive landscape?

A: Sanofi's PCV-21 Phase 3 program is progressing, first pediatric vaccine with over 20 valencies, well-positioned to enter national immunization schedules and competitive in the marketplace.

Q: On Dupixent gross to net adjustment in Q4 and 2025 outlook?

A: Q4 net sales affected by one-off items in U.S., but volume growth strong; 2025 outlook remains positive with strong TRX growth across indications and geographies.

Q: On Beyfortus 2025 guidance and competitive set?

A: Expect growth in 2025 with more geographic penetration, competitive profile with real-world evidence and safety, despite potential competition.

Q: On tolebrutinib indication for non-relapsing SPMS?

A: Excited about tolebrutinib for progressive MS, with readout later in 2025, demonstrating Sanofi's commitment to MS patients.

Q: On catalysts in 2025?

A: Excited about launch of Dupi in COPD, itepekimab, amlitelimab in asthma, and ongoing activity in lucitanib; also Phase 2 programs and later-stage pipeline catalysts.

Q: On Beyfortus U.S. growth and doses shipped?

A: Expect penetration increase in U.S. over time, with RSV protection for a significant percentage of the birth cohort, but exact figures early; doses shipped to cover 2024 and early 2025 needs.

Q: On lunsekimig?

A: Confident in lunsekimig for moderate-to-severe and high-risk asthma, with robust data and potential to increase efficacy ceiling and durability.

Q: On vaccines penetration in U.S. and adolescent immunizations?

A: Penetration in U.S. for RSV vaccines early but expected to increase over time; adolescent immunizations not expected to be majorly impacted by mandatory status changes.

Q: On amlitelimab asthma data and itepekimab in COPD?

A: Confident amlitelimab will not have detrimental efficacy drop at 12 weeks based on pharmacodynamics; itepekimab has significant opportunity in former smokers with COPD, combination expected to reach peak sales over €5 billion.

Q: On R&D budget management and RSV toddler vaccine?

A: R&D budget to have slight increase in 2025, with focus on materiality and embargo requirements; RSV toddler vaccine Phase 3 readout in 2026, complementing Beyfortus for complete protection.

Q: On Nuvaxovid sales in 2025 and Phase 2 trial press releases?

A: Nuvaxovid sales in 2025 part of learning phase, with focus on safety and combination; Phase 2 data releases will be thoughtful, adhering to materiality and embargo requirements.

Q: On TL1A biomarker, Phase 3 timing, and beyond IBD?

A: Working on biomarker design for TL1A Phase 3, excited about potential in IBD and beyond, with data at ECA meeting; Phase 3 start planned, considering life cycle management.

Q: On Dupixent profitability dynamics and operating margin outlook?

A: Gross margin expected to increase in 2025, driven by multiple factors including Dupixent and other launches; operating margin outlook directionally positive with growth and margin improvement, but specific mid-term guidance not provided.

Q: On TL1A Phase 2 data and Belinotanfib combination potential?

A: Pleased with TL1A Phase 2 data, excited about combination potential in immunology; Belinotanfib Phase 1 data positive, on track for combination Phase 3.

Q: On RSV ordering patterns, Beyfortus pricing, and vaccine hesitancy?

A: RSV not seasonal, Beyfortus has first-mover advantage with real-world evidence, price expected to hold; vaccine hesitancy a concern, but vaccines important for disease prevention.

Q: On Sarclisa ambition and ALTUVIIIO as blockbuster?

A: Sarclisa has potential in CD-38 marketplace with strong data and sub-q formulation, expected to be a multi-blockbuster; ALTUVIIIO expected to be a blockbuster in 2025.

Q: On tariffs impact?

A: Difficult to quantify impact currently, but Sanofi has significant industrial base in U.S.