Sanofi Q2 FY2025 earnings call

Management Statement and Operational Highlights:

• Strategic focus on innovation drives top-line growth with double-digit sales growth.
• New launches: 9 launches contributed close to EUR 1 billion in Q2, including ALTUVIIIO, Beyfortus, Qfitlia, etc., now representing 10% of total sales.
• Dupixent sales at EUR 3.8 billion, up 21% in Q2, driven by strong demand across geographies and new indications.
• Vaccine business saw solid growth, with Beyfortus expansion and acquisition of Vicebio.
• Acquisition of Blueprint Medicines strengthens position in rare immunology diseases, with Ayvakit sales at USD 175 million in Q2.
• Ranked 10th most sustainable company, with eco-design initiatives to reduce environmental footprint of medicines and vaccines.

Segment Performance:

• Immunology: Dupixent sales reached EUR 3.8 billion in Q2, up 21%, driven by strong demand across geographies. Dupixent has 8 indications, with sales in the U.S. at EUR 2.8 billion, up 22.7%, and outside the U.S. exceeding EUR 1 billion. Launches contributed close to EUR 1 billion in Q2, now represent 10% of total sales.
• Vaccine: Sales increased by 10.3% in Q2, driven by Beyfortus expansion. The vaccine business was further strengthened with acquisitions like Vicebio, adding innovative technology for combination vaccines.

Guidance:

• Refined 2025 sales guidance to high single-digit percentage growth at constant exchange rates.
• Full year 2025 sales growth expected in high single digits, upper range of previous guidance.
• EPS guidance for low double-digit percentage growth at constant exchange rates.
• Beyfortus expected modest growth in 2025, flu sales to decrease mid-teens due to competitive forces.
• Operating expenses may increase slightly due to acquisitions, ForEx impact estimated at minus 4% on sales and minus 6% on EPS.

Risks:

• Potential U.S. tariffs on EU exports, impact on sales and EPS not factored into 2025 guidance.
• Competitive pricing pressure in the flu market, leading to mid-teens sales decline in 2025.

Q: Touch on R&D transformation and Phase III trials?

A: Houman Ashrafian discussed R&D transformation, commitment to innovation, and progress on trials, noting ongoing work on Phase III studies and pipeline advancements.

Q: Development spend and margin guidance?

A: François-Xavier Roger talked about R&D and SG&A spend, stating R&D expenses increased by 17.7% but underlying R&D expenses (excluding one-time reimbursement) up ~7%, with expectations of slight increases in R&D and SG&A, but growth leverage expected to drive BOI growth.

Q: Dupixent in China and COPD ramp-up?

A: Brian Foard discussed Dupixent's performance in China, noting over 30% volume growth, and COPD launch progress, with strong adoption in pulmonologists' offices.

Q: Flu pricing and mitigation?

A: Thomas Triomphe and François-Xavier Roger discussed flu sales decline due to competitive pricing, with one-off impact in Germany, and plans to mitigate through flu-COVID-19 combination vaccines.

Q: AMLitelimab and OX40 mechanism?

A: Houman Ashrafian talked about AMLitelimab's potential, emphasizing the importance of longer dosing intervals and the OX40 mechanism's application in various disease states, with focus on ongoing trials and data readouts.