Sanofi Reports Q3 Profit Down, Net Sales Up - Drug Discovery and Development

Sanofi on Thursday reported that the strong launch of Dupixent in the U.S., the continued double-digit growth of the company’s multiple sclerosis franchise, and the performance of its pediatric vaccines were significant drivers in third quarter results.

“These positive dynamics, accompanied by robust growth in emerging markets and disciplined expense management, offset the decline of our diabetes franchise,” Olivier Brandicourt, Sanofi chief executive officer, commented. “We are pleased by the progress in R&D demonstrated by the positive phase 3 topline results in asthma for Dupixent and the recent advances of cemiplimab, our anti PD-1, in oncology.”

	Q3 2017	*Change*	Change at CER	Change at CER/CS(3)	9M 2017	*Change*	Change at CER	Change at CER/CS(3)
IFRS net sales reported	€9,053m	+0.3%	+4.7%	-0.2%	€26,364m	+5.7%	+6.2%	+1.2%
IFRS net income reported	€1,567m	-6.4%	–	–	€8,305m	+111.9%	–	–
IFRS EPS reported	€1.25	-3.8%	–	–	€6.60	+117.1%	–	–

Q3 2017 sales performance supported by Sanofi Genzyme, Sanofi Pasteur and Emerging Markets

Net sales were €9,053 million, up 0.3% on a reported basis and 4.7%² at CER reflecting the change in scope of the CHC and Vaccines Global Business Units (GBUs). At CER and CS³, net sales were stable (-0.2%).
Sanofi Genzyme grew 13.9% at CER due to the strong U.S. launch of Dupixent and good growth in multiple sclerosis.
Sanofi Pasteur grew 7.2% at CER and CS largely driven by pediatric combinations and booster vaccines.
CHC sales were up 1.0% at CER and CS impacted by increased competition in developed markets.
Diabetes and Cardiovascular sales declined 14.8% at CER. Given increased visibility on sales performance, Sanofi refines its global Diabetes franchise outlook to -6% to -8% CAGR over 2015-2018 at CER.
Emerging Markets⁵ sales increased 7.3% at CER and CS driven by strong contributions from China and Russia.

Q3 2017 business EPS consistent with the full-year guidance

Q3 2017 business operating income of €2,911 million, up 5.1% at CER and +1.7% at CS.
Q3 2017 business EPS¹ grew 1.1% at CER to €1.71 and decreased 4.5% on a reported basis.
Sanofi continues to expect 2017 business EPS¹ to be broadly stable⁶ at CER, barring unforeseen major adverse events.
Currency impact on 2017 business EPS is estimated to be -1% to -2% at the average September 2017 exchange rates.

Sustaining Innovation in R&D

Dupixent approved in the EU in moderate to severe atopic dermatitis.
Positive topline results of the Phase 3 QUEST and VENTURE studies confirmed the safety and efficacy profile of dupilumab in asthma; U.S. filing in persistent uncontrolled asthma expected to take place in Q4.
In immuno-oncology, FDA granted Breakthrough Therapy designation status to cemiplimab⁷ (anti PD-1).

Regulatory Update

Regulatory updates since the publication of second-quarter results on July 31, 2017 include the following:

In September, the European Commission granted marketing authorization for Dupixent (dupilumab), for use in adults with moderate-to-severe atopic dermatitis who are candidates for systemic therapy.
In September, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy designation status to cemiplimab (REGN2810/SAR439684) for the treatment of adults with metastatic cutaneous squamous cell carcinoma (CSCC) and adults with locally advanced and unresectable CSCC. Cemiplimab is an investigational human, monoclonal antibody targeting PD-1, being jointly developed by Sanofi and Regeneron.
In September, the FDA granted tentative approval for Admelog (insulin lispro) 100 Units/mL, a rapid-acting human insulin analog. Sanofi filed a paragraph IV certification and Eli Lilly did not file a suit against Sanofi within the 45 days period under Hatch-Waxman Act. Sanofi is currently working closely with the FDA in order to receive full approval for Admelog in order to launch in the U.S.

At the end of October 2017, the R&D pipeline contained 44 pharmaceutical new molecular entities (excluding Life Cycle Management) and vaccine candidates in clinical development of which 13 are in Phase 3 or have been submitted to the regulatory authorities for approval.

Third-quarter and first nine months 2017 accounts reflect the acquisition of the former Boehringer Ingelheim Consumer Healthcare (CHC) business and the disposal of the Animal Health business (completed on January 1, 2017⁴). In accordance with IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations), Animal Health results in 2016 and gain on disposal in 2017 are reported separately. Third-quarter and first nine months 2017 income statements also reflect the consolidation of European operations related to Sanofi vaccine portfolio, following the termination of the Sanofi Pasteur MSD joint venture (SPMSD JV) with Merck at the end of 2016.
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References:

¹ In order to facilitate an understanding of operational performance, Sanofi comments on the business net income statement. Business net income is a non-GAAP financial measure

² changes in net sales are expressed at constant exchange rates (CER) unless otherwise indicated

³ CS: constant structure: adjusted for BI CHC business, termination of SPMSD and others

⁴ The closing of the disposal of Merial in Mexico is expected in 2017

⁵ Definition on page 8 of entire report

⁶ 2016 Business EPS was €5.68

⁷ Collaboration with Regeneron

(Source: Sanofi)