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Author: Jean-Claude Muller, 穆卓Executive Editor at BtoBioInnovation  jcm9144@gmail.com

SPECIAL REPORT #44

Sanofi Capital Markets Day

Precisely one hundred days after taking office, Paul Hudson, Sanofi’s new CEO has disclosed, at a Capital Markets Day meeting held in Cambridge, (MA, USA), on December 10, details of the strategy he will implement for the French Biopharmaceutical company over the next three to five years  To drive innovation and future growth the strategic framework presented is articulated around four key priorities including a strong alignment of the business to support it.

Focus the portfolio in prioritizing key growth drivers around Dupixent, vaccines and six potentially transforming therapies. Additional core drivers include medicines for oncology, haematology, rare diseases, neurology and a strong presence in China. Dupixent was presented as the major growth driver, with the ambition of achieving more than $10 billion in peak sales, in view of its exceptional balance between efficacy and safety allowing it to expand across several indications and age populations in particular in paediatric settings.

Leading with science in accelerating the R&D focus on six potentially changing therapies in areas of high unmet medical and patients need. John Reed, the Executive R&D Vice-President made a comprehensive update on the value and the potential of the selected future medicines.

• Fitusiran, an RNA interference drug, targeting antithrombin, for the treatment of haemophilia A and B
• BIV V001, (partnered with SOBI), a factor VIII replacement therapy, to extend protection from bleeds for people with haemophilia A.
• Venglustat, an oral inhibitor of glucosylceramide synthase, as a therapy for the treatment of several rare diseases in the category of lysosomal storage disorders with the potential for other diseases such as polycystic kidney disease or some rare sub-types of Parkinson’s disease.
• SERD (‘859), a selective oestrogen receptor degrader, as the new standard of care for patients with hormone-receptor-positive breast cancer and with an excellent safety profile.
• Niversimab (partnered with AstraZeneca) a new vaccine, as a preventive treatment against respiratory syncytial virus, with an initial focus on paediatric indications.
• BTKi (‘168) (partnered with Principia), an original Bruton kinase inhibitor, as an oral medicine and potential first in class disease-modifying therapy for multiple sclerosis. 

Improve operating efficiency to fund growth and expand business operating income (BOI) margin to 30% in 2022 with the ambition to exceed 32% by 2025 and progressively reach peer average performance. “I would go as far to say that people in the company were better than performance. We have enough resources but they are not always at the right place” Hudson said in his opening remarks. On the basis of the €14.8 billion spend in 2018, efficiency savings of €2 billion are expected to result from smart spending obtained from procurement and right-sized specifications (1 billion), from limiting spending on de-prioritised activities (0.5 billion) and from increase operational excellence (0.5 billion) across the company.  “We have to stop cash bleeding outside of the company” Jean-Baptiste de Chatillon, Sanofi’s CFO said during his presentation.  Sanofi announced its intention to increase its annual Free Cash Flow by approximately 50% by 2022, compared with an adjusted base of €4.1bn in 2018, and deploy focused capital allocation with the following order of preference: organic investment, business development and M&A activities, growing the annual dividend and anti-dilutive share buybacks. Management confirmed the discontinuation of research in diabetes and cardiovascular (DCV) activities. It also announced the termination of the launch of efpeglenatide and the active search of a partner to take over and commercialise the drug. The company will now optimize its current commercial model for DVC and rheumatoid arthritis. On the same day Sanofi and Regeneron announced a restructuring of their deal whereby Sanofi will take the worldwide rights to Kevzara and sole ex-US rights for Praluent. Sanofi made clear its intention to sell off some of the 21.6% stake it acquired in Regeneron, over almost twenty years: an asset worth around $8.5 billion.

Align to support the strategy with three core businesses and a standalone consumer healthcare unit.

In order to become as performant as peers, the company is committed, as a team, on clear objectives on strong prioritisation implementation which are difficult to achieve with a mix of vertical and horizontal organisations. The announced organisation is structured around three Business Units and a standalone busines.

• Specialty Care (former Sanofi Genzyme), comprising immunology, rare diseases, rare blood disorders, neurology and oncology with current sales of around €10 billion.
• Vaccines with sales of close to €5 billion.
• General Medicines (former Primary Care), with diabetes, cardiovascular and established products, generating €16 billion in sales.
• Consumer Healthcare (CHC), with current €5 billion sales, now becoming a fully standalone unit with integrated R&D and manufacturing functions. Additional plans to accelerate the over-the-counter (OTC) switches for Cialis and Tamiflu will clearly position the CHC business as spinoff unit at the most appropriate time.

In the Q&A session, Sanofi made a brief update of its R&D pipeline which now contains 84 projects in clinical development, with 37 new molecular entities (twenty in phase 1, eight in phase 3, seven in phase 3 and two in the registration process) and 35 projects in phase 3 or submitted to regulatory authorities for approval. The company presented a timeline table with 26 expected submissions between December 2019 and the end of 2022 and reminded its long-term objectives of more than 80% of new drugs being first or best in class, 70% biologics and around 70% generated by internal discovery.  “We are already on a journey to improve R&D productivity” said Reed.  He briefly commented on the recently acquired Synthorx asset where he mentioned strong synergies with Sanofi R&D platforms. He concluded with some of recent accomplishments from the late-stage pipeline: Sarclisa, a differentiated CD-38 in relapsed refractory multiple myeloma with a pending US FDA decision, Sutimlimab, as a treatment of cold agglutin disease with positive phase 3 results and Olipudase Alfa, an enzyme replacement therapy for acid sphingomyelinase deficiency,  with top-line results  released in January 2020. The company plans to hold an R&D Day in June of 2020, provide a detailed review of its entire R&D portfolio of early and late-stage candidates and more on its current strategy and productivity goals.

Over the last ten years Sanofi’s R&D transformation has not delivered the level of innovation expected from the French Biopharmaceutical powerhouse. On Tuesday, Paul Hudson was clearly on a mission to convince his audience that, with the commitment of his team, he will deliver the new transformative medicines.

“Sanofi gained leadership and changed the practice of medicine in diabetes and cardiovascular diseases. We are now preparing for our next cycle, with a new round of innovative solutions for patients. I am confident we will achieve long-term growth and value for shareholders while turning innovation into transformative medicines for patients “said Hudson.

Following the various announcements Sanofi stock raised 6%.

December 11, 2019