Sanofi (SNY) Presents at Cowen 41st Annual Healthcare Conference (Transcript)

Sanofi (NASDAQ:SNY) Cowen 41st Annual Healthcare Conference Call March 2, 2021 1:30 PM ET

Company Participants

Bill Sibold - EVP and Head of Sanofi Genzyme

Frank Nestle - Head of Research and CSO

Conference Call Participants

Steve Scala - Cowen & Co

Steve Scala

Good afternoon and welcome back. We’re very pleased to have with us once again this year Sanofi. Representing the Company is Bill Sibold, who’s Executive Vice President and Head of Sanofi Genzyme; and Frank Nestle, who’s Head of Research and Chief Scientific Officer.

There are many, many positive developments underway at Sanofi, and we’re eager to dive into each and learn more about all of them.

So, without further ado, let me start out with the obligatory big picture question. I guess, I’ll put it to Bill. When you peer in your crystal ball over the next four years, what do you think could emerge from the Biden administration relative to pricing, and what impact would it have on Sanofi?

Bill Sibold

Well, first of all, Steve, thanks for having us here today. It’s a real pleasure, as always a great conference to look forward to. So, it’s nice that despite the challenges with COVID that we still have a chance to get together. And thanks for the question.

So, look, it’s still really early in the administration to know what they will and won’t do. I mean, their focus rightly so now is on COVID-19. And we’re still waiting, I would say, at the moment.

Now, our view is that what the administration really should be focused on is this whole notion of improved affordability for patients. And we know that there’s a lot of work that needs to be done with the system to really improve access and affordability. And we look forward to working with the administration on that. The couple of the previous administration efforts, such as rebate reform, we know has been delayed till January 2023. And MSN has been blocked by the courts at the moment. I think, what’s important is either -- regardless of what happens, we feel that we’re actually quite well positioned in the U.S. If you look at it, both from how our portfolio is emerging to a much more innovative portfolio, which I think regardless of any kind of changes that take place, in the U.S. or around the world, if you have innovative products, that is the place you want to be because you can still command value for them.

And then, the second bit just is our exposure as a company overall to the U.S. market is about 37%. So, we feel like we’re -- we feel like we’re in a pretty strong position. But, we’ll wait and see. We’re ready to jump into dialogue with the Biden administration.

Question-and-Answer Session

Q - Steve Scala

So, let’s move to your most important product, that being Dupixent. I’m curious, this product has been such a huge success. What has surprised you most about that success since the day of launch?

Bill Sibold

I have to say, it is surprising to know how many patients are being impacted by it. We always knew there would be an impact, based on the clinical trials. But, when you get the real life stories that come back, and as we see -- we’re learning that our hope and our data that showed that this is so fundamental to type two, we are seeing that in each of the type two diseases, just a really strong impact. But, overall, the stories that we’re hearing far exceeded what I had expected. I’ve been in specialty for a long time, and a lot of diseases like MS and so forth. And I just didn’t know what to expect in the primary indications of atopic dermatitis and asthma, but the life changing stories, I would say are as impressive as anything I’ve ever worked on.

Steve Scala

There are -- in addition to the label now, there are a number of new indications on the way. And some of them I can’t pronounce, there’s five or six or seven of them. Can you identify for us what the two or three among them that has the greatest potential?

Bill Sibold

Yes. I mean, look, the way we think about each of the new indications is, it’s really a build on that Type 2 story. And many of them are adjacencies, or they help to build on our larger indications, or they’re strong indications on their own. So, a couple that I would highlight would be COPD that have patients with Type 2. We think that there is a U.S. biologics eligible population of about 300,000 people. It’s a huge unmet need. There really hasn’t been anything to show an impact there. So, we’re really excited about that indication. Also CSU, about the same side -- same size population of about over 300,000. And we think that’s another exciting dermatology indication for us. So, just on pure patient sizes, those are exciting. But, I think what you’re going to see from Dupixent, is this continued expansion of indications in Type 2 that are also supporting and helping to accelerate the growth in the primary indications. And then, obviously, we have the age decreasing. And we also have the expansion geographically. So, lots of room to grow.

Steve Scala

Let’s dig a little bit deeper into some of the new opportunities. So, many companies are pursuing nasal polyps. This is a market that analysts in past years and decades haven’t really spent a lot of time on. Why is this an attractive market? And why is Dupixent best positioned to treat it?

Bill Sibold

Yes. I think two things. First of all, I think the unmet need is incredibly high. What we’re learning more and more is just how difficult it is for patients that have a loss of smell and taste. They -- many of them are in constant pain, and there really hasn’t been anything for it previously. And with the chronic rhinosinusitis, with nasal polyps where we indicated that is very much a Type 2 inflammation disease. And when you have the product like we do that can focus on Type 2 with IL-4 and IL-13, we really think that it’s very well suited for this space. So, high unmet need, lack of previous therapy, but I think, like with other indications that we have now been in, and we’ve shown an impact, any other company that feels that it has a mechanism that may be potentially useful there is going to do a study and look for to see if they have an effect. But we really believe that we are the leader in the space and will stay that way.

Steve Scala

Similar question on eosinophilic esophagitis. Why is this attractive? And why is Dupixent best positioned in this market?

Bill Sibold

Yes. Some of these answers, I hate to say, sound the same, but it starts with the biology still fundamental to the biology. A lot of people think of eosinophilic esophagitis as atopic dermatitis of the esophagus. And there’s no FDA approved treatments. And there’s really three main strategies that are used today. It’s just diet modification. There’s some off label drugs and then, worst case endoscopic dilation, where you actually try to dilate the endoscope -- pardon me the esophagus, which is certainly not a pleasant. So, we believe that it’s fundamental to the biology and has over 48,000 patients in the U.S. So, same answer as some of the others, Steve.

Steve Scala

Okay, great. Let’s move to the competitive landscape, because there is no shortage of companies trying to duplicate Dupixent’s success. And maybe we’ll start out with the closest competitor, and that is lebrikizumab. What Lilly argues is that lebrikizumab offers similar efficacy but with better safety, and that’s due in part to Dupixent’s more narrow selectivity. So, maybe you can talk about that as a potential competitor.

Bill Sibold

Look, it’s -- we think that IL-13 is only part of the story. That’s why with our IL-4 and IL-13, we think both are key central drivers to Type 2 inflammation, and I think that’s starting to prove itself out. So, IL-13 as an MOA, we consider incomplete. We haven’t been overwhelmed by what we’ve seen from an efficacy perspective. There’s a little bit slower onset and the lower magnitude of effect. So, the other piece is, it’s not fundamental to Type 2. As you’ve seen, the IL-13s have failed other Type 2 diseases. So, maybe, Frank, you might want to comment from an MOA perspective on IL-13 in comparison to Dupixent.

Frank Nestle

I think, we should really focus on what we’ve seen so far, and I think we’ve seen that mainly with lebrikizumab [ph] and clearly they’re -- the efficacy is not where you want to be completely competitive. And in terms of mechanisms, IL-4 brings in such an important element, we know, for example IL-4 receptors expressed on neurons and the sensory neurons are absolutely critical for intestines. [Ph] And so, that’s basically where the IL-4 comes in. But IL-4 is also fundamentally important for Type 2 polarization. So, the whole Type 2 cascade is actually born by IL-4 being produced in the B cell, then producing IgE and a T cell becoming a Th2 cell.

So IL-4 is fundamental origin of a Type 2 response. And I think that’s the reason why, for example, IL-13 has failed and why Dupixent. I mean, for me, coming in as someone who has seen the anti-TNFs emerging and defining a new class or the anti-IL-17s, emerging. Opening, a Type 2 receptor is another dimension, I mean, just asthma, chronic rhinosinusitis with nasal polyps and all the other Type 2 disease where we follow the science, in the skin, in bullous pemphigoid chronics in a spontaneous urticaria, the cold induced urticarias, and then also in the respiratory space. So, it’s just that space is amazing. And you need both, IL-4 and IL-13, we strongly believe to meet it.

Steve Scala

Another competitor that looks even a little bit, perhaps more challenging is, of course, the JAK inhibitors where the data, looks very, very good. Of course, the issue here is safety. What all the JAK companies argue is that just because Xeljanz has an issue doesn’t mean the other JAKs have an issue, that they’re all different. And I’m just wondering, from the scientific standpoint -- maybe I’ll put this question to Frank. From the scientific standpoint, why is that a flawed view that these aren’t the same, these are all similar when it comes to safety?

Frank Nestle

Maybe I’ll start with the Wall Street point-of-view, which is, have you heard that term this time it’s different, how many times have you heard that, and how many times were we wrong? So, I mean, especially if I’m a from a purely mechanistic basis, these are ATP competitive antagonists. And there’s only one group in these kinases where ATP sits, which is essentially where kinase has kept their phosphates from. And that grew as a very defined space. And you can be as clever as you might be in making small molecules, it’s always that same group. And that’s why, especially at the higher doses, and that’s where some of the competitiveness of some of the drugs comes in. You need the higher dose spectrum. And that’s where you essentially see things, which includes severe infections, malignancies, and from embolic complications, and the very recent real world data record on TOFA [ph] which is the ATP competitive antagonist in that field tells you it’s out there in the real world, it’s not just a trial situation, it’s everywhere.

And MACE events, which essentially linked to the thrombo-embolic context, have been flagged. So, it is clearly going to be a very, very tough question a dermatologist will ask in an office where you want to have a chronic treatment approach, which has to be safe. I’ve been there, when we had cyclosporine A. Cyclosporine A is actually quite effective. But over a year, you get renal problems, you get your blood pressure rises, the safety is not there, and that’s why cyclosporine A is a small molecule quite effective, why is it not -- why practice -- it’s because of the safety and therapeutic benefit, which has to be balanced with the risk to expose patients towards it.

Bill Sibold

And I just think, on that Steve, just from a more of a market perspective, in many ways, it’s quite undifferentiated as the -- only the highest doses are showing the competitive efficacy. And even in the, that efficacy doesn’t seem to be sustained. So, when you look at it over 24 weeks, and after all, this is a chronic disease, you don’t see that difference with Dupixent. Frank talked about some of the safety as well. And then, let’s not minimize the complexity either. People think of it as perhaps a pill. However, when you put in patient screening and lab monitoring, et cetera, it’s not just a pill. And let’s not have anyone believe that that’s the case. So, we think overall, the most important thing is the profile that Dupixent has, the over 230,000 patients worldwide that it’s been in, the increasing expansion of safety and efficacy data going to younger populations. We consider ourselves the leader, and we aren’t going to give up that ground.

Steve Scala

And just touching once again, on the mechanistic aspect. And I’m not -- Frank, I don’t want to put words in your mouth, but I’m trying to summarize what you said, because it was a very interesting point. Given the fact that all JAKs act through this ATP kinase pathway that with time and higher doses, it’s highly likely other JAKs will also have cardiovascular rescue. If I --that statement is attributed to me, but would you argue with that statement?

Frank Nestle

Well, I didn’t make that statement, because I can’t predict the future and I can just give you the sort of the mechanistic perspective, which actually tells me that there’s a lot more similarities, and to make it different this time is going to be a very, very high bar. We’re all data driven. So, let’s wait until we see data. But, from a purely scientific and mechanistic aspect, there is only one pocket, and you can only speed into so many molecules. And they by definition have to look very similar and have similar safety potential.

Steve Scala

One more question on Dupixent, then we’ll move on to some other topics. All the way back at the December 2019 Capital Markets Day, the Company had said at that point that tezepelumab could pose a threat to Dupixent in asthma, but it’s dependent on the data. Now, we have the data, data looks pretty good. What is your view of that threat potential of tezepelumab now?

Bill Sibold

Yes. I mean, so I think the starting point is, there’s still a huge unmet need in moderate to severe asthma, specifically Type 2 driven, which we think is about 80% of those asthmatics. And so,, as the product that is so fundamental to Type 2, we really believe that we have the best profile across. Now, we think there -- they had their failure in the SOURCE study for OCS-dependent severe asthma, and really see that the unmet need that teze is going to really satisfy is a smaller subset of patients, maybe less than 20% of patients in this non-Type 2 asthma. So, I think, we’ll see as they -- as more data becomes available, et cetera. But, we don’t see it as displacing what Dupixent has to offer. And it certainly doesn’t seem to be as fundamental to the Type 2 biology, which is the majority of the patients in asthma.

Frank Nestle

Just to add to that, we’re obviously studying asthma and we’re going out in the real world and we’re doing studies where we include Type 2 and non-Type 2. And the Type 2 is really where we see all the severe asthma and the unmet need. And it was interesting that I was struggling in a certain study, I don’t want to name to even get non-Type 2 patients. It’s actually a -- it’s a pretty mixed bag of patients, obesity plays into it, there is a variety of mechanisms hiding, and that’s -- but it’s clearly, at least when you go out there and try to recruit for it in that particular study, you have to look for the patients. That’s one point.

And then, the other one is really the totality of an asthma patient experience. One is obviously extra exacerbation, which is absolutely clear. The other one is your lung function, like you breathe every day. And the other one is the medications you need, like oral corticosteroids. And if you look at the lung function elements, there’s differentiation of Dupixent versus tezepelumab with, kind of a good difference. And then, also the opposite of steroid usage, which is again, pointing to the very severe populations. And first time I met Bill, he said, we’re in year two, we solve the severe disease problems, we’re going to be a specialty care leader in I&I. And that’s where we are with Dupixent. We’re in the severe patient population and making a difference.

Steve Scala

Let’s move to another very important drug in the future of Sanofi, and tolebrutinib. Looks great in Phase 2 trials. What do you see as the risks to successful development? What are MS experts tell us is that MS is kind of unique that what you see in Phase 2, usually get in Phase 3. So, it wouldn’t seem to be a lot of risk relative to that aspect. But, what do you worry about relative to tolebrutinib?

Bill Sibold

For me, it’s really the -- like you do in any program that you need that Phase 3 trials and you don’t know until you know. And we feel pretty confident though for a couple reasons, as you said, Steve, the Phase 2 and the carryover that can have to the Phase 3 or later. And secondly, we just think it’s a great profile, I have to say. And I’ve been, as you know in MS a long time, probably more of my career than I hadn’t been in MS. And there’s still, despite the number of disease modifying therapies out there. Now, there’s still a high unmet need, there’s only one approved agent for PPMS and that’s not so great. And there’s nothing for SPMS without relapses.

So, we think part of this, again, going back to the biology is, because we are targeting with our brain-penetrant BTKi adaptive and innate immunity that this gives hope for a, I think, a really meaningful therapy in the space. And we’ve had questions about, well, you’ve got already a competitive market there. How much room is there for more therapies? And we expect by the 2024 time range to be about $24 billion market, and about 40% of that or $10 billion would be in the CD20 space, products such as a Ocrevus. And we think that that’s going to be the place where we can be highly competitive.

And just to be clear, we identified BTKi as the next pathway. And we didn’t jump into another oral fumarate or another S1P. We said, what’s really do we think going to make a difference, and when. And it’s not only what pathway, what did the qualities of the product have to have. And we helped bring penetrants was just absolutely critical. And we looked across the landscape and this one was Principia, tolebrutinib. We really liked it the best, and that’s the one that we ultimately have.

So, we’re excited, again, excited to get this product through development and launch it. I think it’s going to be a real game changer in the MS space. And I think patients are waiting for this. This is kind of the product that has all the elements that they’ve been waiting for.

Frank Nestle

Yes. Maybe just to echo Bill and drive a mechanistic message home, which I think is very important. Obviously, the CD20, the B cell space is important. So, here we have an oral, which actually is going into that space. So, that already would be fantastic, if you would have an oral which goes into the CD20 B cell space. But via that brain- penetrants and actually an activation of macrophages and activity of macrophages and microglia in the brain, you’re going actually to the source where a lot of the progressive elements of multiple sclerosis. And while we are very good at finding medicines for relapsing or remitting bodies for progressive elements, primary progressive, secondary progressive, where patients are really on that journey, they can’t stop to basically get into the wheelchair. And recent science, not only from us, but from others has really shown it’s these microglia in the brain, where there’s a lot of activity. And you could even argue in other neuro diseases, beyond the MS where that generation, neurodegeneration plays a role. So it’s going to be a very interesting journey and we started with MS in its various forms, but it could be a really a very interesting drug in neurology overall.

Steve Scala

Let’s move to another new drug within Sanofi, and that’s Libtayo. So, recently improved in non-small cell lung cancer. We did have a lung cancer panel yesterday and the KOLs expressed the view that the new entries with Libtayos and so forth can ultimately get about a third of the market. Now, some of this is based on price, some of this is based on other elements. But, can you create for us in expectation on how Libtayo will penetrate the market? And what’s your strategy to do so?

Bill Sibold

Well, look, so we’re excited with the data. First of all, that’s where it all starts. And we consider it on par with KEYTRUDA data 43% reduced risk of death in patients that’s with PD-L1 greater than 50%. So, we think very strong data. And we think that there are some opportunities that remained. And by the way, we’ve launched already. Right? So, we have been very quick to mobilize the teams, and we were out there and under 48 hours out in the field. And we’ve identified segments of clinicians where we think we can target and drive the adoption at launch. We’re looking to maximize the synergies with our skin indications in the community. I think what an advantage we have, Steve is that this isn’t unfamiliar to people, based upon what we’ve been doing in cutaneous squamous cell carcinoma.

So, we -- what we’re hearing back from the community is, based upon our criteria for the trial design, and so forth, it does really reflect more of the current treatment practice. So, we think that it is going to be able to have a place in that indication. KEYTRUDA is the big beast in the market. And if we didn’t have efficacy that was on par, I think we would be clearly concerned about it. But we think we’re in a place to compete pretty well. We’ll be very-targeted in our approach. And I think that I’m not going to go out and say, confirm a number that you’re putting out there saying, no, it could be a third. Let’s get a little bit down the road and see how we and we’ll be able to report back with a little bit clearer expectations of where this can go.

Steve Scala

Okay. Maybe we can, in our last few minutes, move to Sarclisa. So, how would you characterize its position in the market today? And how do you see this changing over time?

Bill Sibold

Yes. I mean, look, Sarclisa, I think, it’s a developing story. And if you look at the first couple studies to read out, ICARIA and IKEMA, those really serve as the initial building blocks of the program. And as we move earlier into earlier lines of therapy, that’s where we believe that the real opportunity lies. And I think we’re on competitive timelines to generate the first line therapy data, looking at VRd and KRd as backbones. And so, I think, this is a more to come. So far the data shows that it is a -- that the data looks very good. The feedback from the community is that your data looks, in some ways it could be the best in class. And we’ll open that up as we -- know that as we open up more of the envelopes in the coming even months with some of the data. The challenge that we’ve had, to be perfectly honest is, we launched about almost a year ago, it was the week before we went into lockdown, and multiple myeloma and the practices and the treaters, it took -- it was it was a tough environment to launch, and because patients are at such risk for infection, that there was a lot of impact with the pandemic.

But, what we’re starting to see is, we’ve seen a shift towards earlier lines of use for us. We’ve seen that kind of on a month over month basis, we have growth in sales, and we’ve also seen some really promising signs as we look around the world. So, in Japan, where we had reimbursement in August of 2020, our zero base launch curve is tracking pretty much in line with daratumumab. And in Europe, we’re getting going with launches, and we just launched in Germany last month.

So, I think there’s momentum that’s building. But, it’s going to be getting to earlier lines of therapy. And our belief is that the profile is going to emerge as being potentially the best-in-class as we get to those new indications, Steve.

Steve Scala

Maybe we’ll conclude with a financial question. So, at least as we see it, for the Company to meet its margin targets as a group, it appears to us that SG&A spending would actually have to over time decrease in absolute terms. And the question to you, Bill, is how do you do that? How do you spend in SG&A, less each year while you’re defending Dupixent and launching all these great new drugs, or am I wrong that SG&A spending necessarily will not decrease in absolute terms?

Bill Sibold

Well, look, first of all, we’re committed to our BOI margin target, target of 30% in 2022 that JB has talked about. And we’re not we’re not moving off of that. I think a lot of this comes from being very focused where you’ve seen that a lot more prioritization with the organization, so that we’re making sure that we are spending on the right things. We have a lot of efficiency programs underway, where we are trying to squeeze any extra costs that have anything to put it in the right places, which is going to be the pipeline and our launches.

Steve Scala

Great. I think, you’ve given me one more minute. So, let’s use it, since that was a concise answer. Let’s talk about another very exciting product in development. That’s BIVV001. Once approved, how will this agent be positioned in the marketplace?

Bill Sibold

Yes. So, we now are referring to it as alpha. It is, we think, just really a great product. It allows you to have factor levels, which are going to be in the normal range for at least half of the week. And then, finally, still returning down to a level which is greater than what we’ve seen with any other product. And this will be truly weekly. So, if you’ve got a patient that wants to have an active, normal lifestyle, this is the product that is going to be preferred. Still, if you look at the market in the U.S., 70% is factor. We think this is going to be by far the best factor. And while that factor, non-factor share will change over time, as far as factors go, this could be the one that leads the way.

Steve Scala

Great. So, we are out of time. Bill, Frank, I want to thank you for a great rundown on so many topics and lots of exciting stuff to look forward to. So, we appreciate your time and all your insights.

Bill Sibold

Thanks, Steve. We’ll see you next year.