Sanofi
Q1 2021 Earnings Call Transcript

Published: 29 Apr 2021

[Operator:]

Sanofi's First Quarter 2021 Earnings Call. I would now like to turn the call over to Eva Schaefer-Jansen, Head of Sanofi Investor Relations. Please go ahead, Eva.

[Eva Schaefer-Jansen:]

Good morning and good afternoon to everyone. Thank you for joining us to review Sanofi's 2021 first quarter results, followed by a Q&A session. As usual, you can find the slides to this earnings call on the Investors homepage on our website at sanofi.com. Next slide. Moving to slide 2, I would like to remind you that information presented in this call contain forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. I refer you to our Form 20-F document on file with the SEC and also our document d'Enregistrement universel for a description of these risk factors. With that, on slide 3, I would like to introduce our speakers for today. So, we have Paul Hudson, Chief Executive Officer; the Global Business Unit leads, Bill Sibold, Thomas Triomphe, Olivier Charmeil, and Julie Van Ongevalle; and Jean-Baptiste de Chatillon, Chief Financial Officer. Paul will make some introductory remarks, followed by our GBU heads, who will review the first quarter performance of their respective businesses. Jean-Baptiste will provide an overview on the key financials and we will then open for Q&A where we will be joined by John Reed, Global Head of R&D. For the Q&A, you have two options to participate. Option one, click the raise hand icon at the bottom of your screen. You will be notified when your line is open to ask your questions; at that time, please make sure you unmute your microphone. Or option two, submit your questions by clicking the Q&A icon at the bottom of the screen. And with that, I'd like to turn the call over to Paul.

[Paul Hudson:]

Well, thank you, Eva. And thanks to everyone for joining our call. Our performance in the first quarter is a strong proof point for how we're continuing to deliver on our Play to Win strategy. Sales and EPS grew by 2.4% and 15% respectively in constant currency. As you may recall, this strong performance is even more remarkable when you compare it with the first quarter of last year, when about half of the sales and profit growth was driven by pantry loading in the COVID environment as patients stocked up on chronic disease meds and consumer healthcare brands. Driving the top-line performance in the first three months of the year was another outstanding 46% increase in Dupixent sales, growing both in the US, and notably, ex-U.S. Business momentum continued as well in vaccines, with strong growth across core franchises, including 15% growth in PPH.

[Bill Sibold:]

Thank you, Paul. Starting with Dupixent on slide 10, sales surpassed the €1 billion blockbuster mark for the quarter. This new record in sales is the result of continuous strong US demand, absorbing the usual net price adjustments at the beginning of the year, including co-pay assistance program. Ex-US sales were extremely strong, reaching 24% of global sales in the quarter and crossing the €250 million mark, now annualizing on their own at €1 billion. This was all done against the backdrop of additional COVID-19 lockdowns, mainly in Europe. In the US, patient visits continued to be around 80% of pre-COVID levels. As we progress into 2021, we are planning to unlock additional growth opportunities for Dupixent expansion as we seek regulatory approvals for expansion into younger populations due to its demonstrated favorable safety profile.

[Thomas Triomphe:]

Thank you, Bill. Our vaccine business was an important performance driver for Sanofi in the quarter, with growth observed in all three core segments. First, our world leading pediatric combination vaccine franchise delivered more than €0.5 billion sales in the quarter, with 15% growth globally and particularly strong US Pentacel performance, driven by the timing of a shipment to the US CDC. Second, strong demand for flu vaccines in the southern hemisphere drove 24% growth for this franchise. We believe this performance serves as a strong indicator for continuously growing flu vaccination coverage rates. Based on the preorders to date in the northern hemisphere campaign, we are confident in delivering another year of strong flu vaccine sales. Third, our meningitis franchise is off to a good start, with plus 4% growth, supported by the launch of MenQuadfi in the US. I remind you that MenQuadfi is the only FDA approved quadrivalent meningococcal vaccine indicated for all persons above two years of age. Finally, I'd like to share with you a few important milestones that are coming very soon. The first one is another US launch. While Vaxelis sales from our more joint venture with Merck will not be reported within our sales line, we are very excited to bring the first hexavalent pediatric combination vaccines in the US market. This is expected to come in the second quarter of this year. With this product, newborns in the US will finally have access to the convenience of a six in one vaccine, reducing the number of shots given to newborns. The second milestone is another important pipeline update. With the expected start of our first mRNA flu vaccine trial, Phase I trial, which we're on track to initiate in the middle of this year. These milestones do come on top of the exciting news regarding nirsevimab that we just heard Paul talk about. Nirsevimab is designed to provide protection for all infants entering the first allergy season. With a positive readout of the MELODY Phase III trial now already in house, we will submit the data for this potentially breakthrough product one year earlier than anticipated. This potentially provides us with a two season lead ahead of the competition, a real game changer here. Let's move on to slide 16. Here I want to provide you an update on the progress of our COVID-19 vaccine development programs. As you know, in February, we initiated our new Phase II for adjuvant recombinant vaccine candidate developed in collaboration with GSK. This trial rapidly reached full enrollment and we now expect the Phase II results in the very coming weeks. If the results are positive, we are planning for a prompt start of the Phase III trial with vaccine expected to be available in quarter four this year. In March, we initiated the Phase I/II trial for mRNA candidate vaccine done in collaboration with Translate Bio. We are now expecting to share the results with you in Q3. At the same time, we are obviously progressing our preclinical work on the so-called variants in order to make sure that we can address the need for a sustained response to the global COVID-19 pandemic on an ongoing basis. With this, I hand over to Olivier.

[Olivier Charmeil:]

Thank you, Thomas. In General Medicine, we are very pleased with the performance of our core brands in Q1. As you remember, at our Capital Market Days on February 5, we identified a number of core brands, which together delivered 4% growth during the period. If you exclude Praluent sales in the US, which are now sold solely by Regeneron, our core brands portfolio grew more than 6%. When you strip out the approximately 4 percentage point negative impact related to portfolio streamlining and a temporary supply constraint related to Aprovel, the non-core portfolio declined by only 6% during the period. Growth of the core brands was mainly driven by Lovenox, which continues to benefit from inclusion in WHO guidelines for the treatment of hospitalized severe COVID patients. Toujeo sales reached over €250 million for the quarter and is on a trajectory to reach blockbuster status in 2021 for the first time. In China, Plavix grew in both volume and sales and we continue to see growth in demand more than one year after its inclusion in the VBP. We are excited about the early launch performance of Praluent and Toujeo in China. And as Paul mentioned earlier, we believe that our launches and agile go-to-market model will enable us to drive growth in General Medicine in China into 2021 despite the potential impact from the expected next VBP wave. Taxotere and Eloxatin, which were combined of approximately €200 million euros in sales for the full year 2020, are included in the list of 60 drugs which was decided by the Chinese authority earlier this month and we expect the implementation of the next VBP wave in early Q3. Biologics, including insulins, were not included in the new VBP list at this time, but we anticipate the insulin class may be reviewed by the Chinese authorities as well. To preempt your potential questions on our insulin business in China, Lantus sales were around €450 million for the full year 2020. Toujeo as a well differentiated label and is supported by medical guidelines related to the usage of basal insulin. I'm happy to highlight that, as we speak, we are already working on new patient starts with Toujeo and switching patient uncontrolled on insulin to Toujeo. With that, I hand the call over to Julie.

[Julie Van Ongevalle:]

Thank you, Olivier. I'm happy to share that we remain fully on track with the implementation of our strategic priorities and to focus on our growth brands as shared at the Capital Market Day in February. As you may have heard from our peers already, the beginning of the year was marked by a low incidence of cough, cold and flu driven by social distancing measures across markets. Actually, the impact of the overall COVID environment on CHC market has led third-party market intelligence providers to reduce the retail market growth outlook for 2021 to around 2%. On top of that, the first quarter of last year set a high basis for comparison across many of Sanofi's CHC brands, particularly again in cough and cold category, as well as pain and energy due to consumer stocking up last year. Consequently, sales in Q1 this year were affected by lower demand in these categories, more than offsetting strong demand for brands in wellness categories and through e-commerce, favored by consumers during the pandemic and which have been our key focus since the beginning of the year as part of our strategic priorities. Importantly, we saw continued growth in the large US markets where allergy sales increased, driven by Xyzal, which was further supplemented by strong growth in digestive wellness. We now have almost seven consecutive months of growth share gain in the US and also see great momentum in other parts of the world such as Central and Eastern Europe, for example. We're also excited to announce the US launch of Zantac 360° with famotidine. Zantac 360° is an all in one heartburn solution that both prevents and relieves symptoms and will be available nationwide with full distribution in June this year. With that, I hand it over to our CFO, Jean-Baptiste.

[Jean-Baptiste Chasseloup de Chatillon:]

Thank you. Thank you very much, Julie. On slide 19, turning to our financial performance. Company sales increased 2.4% in the first quarter, which helped to drive double-digit EPS growth in the period. We delivered another quarter of P&L leverage, supported by gross margin improvement resulting from our favorable portfolio shift to specialty care products and the beginning of growing efficiencies within industrial affairs. While R&D spend increases in key asset development cost, in fact, it was offset by operational efficiencies on lower expenses on mature projects. But you can expect to see R&D spend increasing meaningfully in the remainder of the year. At the same time, our efforts to realize further efficiencies through small spending initiatives have led to an incremental decline of approximately 1% in SG&A in the quarter with, in fact, an increase in selling costs to support Dupixent expansion on a strong decrease in G&A. As we had highlighted to you already in March, we benefited from a one-time payment of $119 million received from Daiichi Sankyo related to a former vaccine collaboration in Japan. Excluding this one-time payment, business operating income grew 8.4%, resulting in a BOI margin of 29.3%, 100 basis points higher than the prior year. In addition, our EPS growth was supported by the anticipated lower effective tax rate of 21%, which we guided to in February as part of the full-year financial guidance. Overall business EPS of €1.51 reflects our leverage P&L and provide us with great confidence to achieve our financial outlook on a full year basis. Now, on slide 20, we believe that our strong performance in the first quarter puts us on the right path towards meeting our communicated midterm financial target with BOI margin of 30% in 2022. On our trajectory into 2022, we are confident in our ability to drive performance with continued momentum from Dupixent on leveraging our P&L through further efficiencies, specifically benefiting from improvements in industrial affairs. As for 2021, business EPS growth of 9.8% in the first quarter, excluding the one-time payment received from Daiichi, it's a strong start to the year. We have been able to consistently grow EPS in 2019, in 2020 and now in Q1 2021. Well, this is really reflecting the deep transformation we are going through to deliver sustainable growth. Notably, higher R&D spend is expected during the remainder of the year to fund our growth drivers and advance our broad development programs for our late stage pipeline to create future value. Uncertainties remain for our business environment mainly related to the pandemic and pricing policies in key markets. But it seems that, as Sanofi, we are getting better and better to navigate this pandemic. On slide 21, in summary, based on our strong Q1 performance, we are increasingly confident in the financial outlook for the remainder of the year. And we maintain our expectation for high-single-digit business EPS growth at CER. When we turn to foreign exchange, the impact is expected to be negative by minus 4% to minus 5% based on April average exchange rate. This compares with the estimated currency impact we communicated with a full year outlook in February of between minus 4.5% and minus 5.5%. So, let's open the call now to Q&A. With that, I hand back to Eva.

[A - Eva Schaefer-Jansen:]

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[Operator:]

And the first question will be from Pete at Citi.

[Peter Verdult:]

Few quick ones on the pipeline, please. Nirsevimab, great to see the trial readout early. I realize you can't talk to the data per se before publication. But you did host a rather detailed RSV R&D day last year. And you gave a target clinical profile of at least a 70% relative risk reduction in RSV hospitalization. So, just interested to feel how the data plays to that target profile. And secondly, on AMEERA-3 amcenestrant against physician's choice, lots of focus, obviously, in the market. Can you perhaps help us handicap the study in terms of giving us a sense of the ESR1 mutation status of the enrolled patients or the mix of prior treatments that they received in the earlier line setting? Any color there appreciated. And then lastly, for John, just the CAR NK platform that you recently acquired, looks really interesting. Just could you discuss why you think CAR NK could be more exciting than CAR-T and when we might next see data points from that platform. Thank you.

[Paul Hudson:]

Thomas, what are you prepared to share?

[Thomas Triomphe:]

Thank you for the question, Pete, on nirsevimab. You were mentioning a target product profile. Clearly, we are very excited by the latest news. And therefore, we believe we have a clear product for registration and for clear impact on disease, which is why we are very happy to announce that we are going to submit this product a year in advance in 2022 instead of 2023. It means that it gives us at least two years versus the competition, which I come back to it is maternal immunization, and I'll come back to why I don't believe its competition. But we're very excited by the profile moving forward because it's going to be the first product and I believe the only product in the coming decade that's going to be a product that will prevent RSV in all infants. Again, I think it's very important that I highlight the importance of this. RSV is the number one cause of hospitalization in North America or in Europe for all infants. And as you've seen before, 50% of those infants that are going to hospital because of RSV are not born in season. So, we really need to find a way to make sure that all those kids are protected and it needs to be an all infant protection solution. Maternal immunization has been referred by some of your colleagues. As you know very well, it could work potentially for kids that are born in season. But if you are born in the spring or in the summer, the probability that you get maternal antibodies transferred to a kid and sustained protection for the whole RSV season is very low. So, we're super excited and we're looking forward to share more on that with you very soon.

[Paul Hudson:]

We do think it's game changing quite clearly. And it's for all infants, no matter when they're born. I think that's very clear from Thomas. We're excited about the data reading out and the two year the two seasons of allergy we have. John, AMEERA-3 mutation status if you can and then maybe a comment – I think it was on Kiadis, but I didn't hear clearly.

[John Reed:]

AMEERA-3, it's an ongoing clinical trial. So, we won't be able to say much about that until a data readout, et cetera. Of course, we're collecting data on ESR mutations and the prior rounds of therapy will be reflective of what the eligibility criteria allowed for. So, I'm afraid I really can't give you much color on that and you'll have to wait for data. On the Kiadis platform, the NK cell platform, indeed, the reason that we think the NK cell platform has ability to surpass the CAR-T is really a couple fold. One is the ease with which one can come up with allogeneic solutions, so universal, one-size-fits-all solution with NK cells requires no genomic engineering. In our case, it's a matter of selecting donors with a certain type of characteristic, then expanding those cells at industrial scale. And the first product opportunity actually is unmodified NK cells where the Kiadis colleagues hat already generated some very promising clinical data in the context of relapsed and refractory AML, acute myelogenous leukemia, and showed very impressive data with patients who were brought to complete remissions of some durability. And that was with the completely unmodified cells. Indeed, going forward, we envision doing various types of genetic modifications, including CAR expression. The second reason why we think the NK cell platform is attractive is because NK cells don't make some of the nasty cytokines that T cells make, we believe they'll be a better therapeutic index. IL-6, for example, is not produced in appreciable levels by NK cells. So, we believe we'll have a safer therapy as well.

[Paul Hudson:]

Great to have three pipeline questions, by the way, to kick off. Hopefully, we'll deserve even more of that focus over the coming months and years.

[Operator:]

The next question is from Simon at Exane.

[Simon Baker:]

Sorry for not pipeline questions, but two broader questions. Firstly, obviously, an extremely strong start to the year even if you strip out the Daiichi payment and your high comps from last year. Just wondering maybe if you could talk to the reasoning for lack of a guidance upgrade at this early juncture. Appreciate it's early. So, maybe I think that we need to be aware of during 2021 that refrains you from increasing guidance at this point in time. So, maybe just talk on pushes and pulls from Jean-Baptiste would be helpful. And then the second question is on vaccines, specifically COVID-19. Maybe you can help us further understand the opportunity you potentially see now with your COVID-19 recombinant vaccine, given the safety issues that we've seen from J&J and AstraZeneca. Appreciate they're small. It is something you previously flagged 12 months ago using that methodology that there are risks. So, maybe you can help us understand where you see your opportunity going forward and whether or not the BARDA funding arrangement potentially still would impact some profitability in 2022. And then, just on messenger RNA, Moderna two weeks ago, extremely bullish on that platform, talking about opportunities in other areas. Could you maybe just talk to your level of confidence with respect to Translate's technology platform. It has been 12 months since you announced the collaboration. And we do know, from looking at Moderna's data from their RSV attempt that it's not a straightforward process. So, maybe if you could talk to your expectations around Translate Bio, that would be perfect?

[Paul Hudson:]

Simon, you made up for it with a good list of questions. So thank you for that. Definitely, a strong start to the year and early, like you said. I think what people are trying to figure out is if there's anything unsaid, and it's really just about managing the business. So, I'll hand it to JB to give you some context on that.

[Jean-Baptiste Chasseloup de Chatillon:]

Well, I think it's an opportunity to give a more precise message maybe on my side. We want to create value for the long term. So, investing as we do in our early pipeline on broadening our first three studies spectrum is where we want to be. So, you will see some increase of our R&D spend because, as we said in Capital Market Day in 2019, that's where we want to spend the money, on assets which are worth it. And that's the point we are getting to. So, don't overread in our early quarter one good results. They are a long-term trend. And we want to accelerate our value creation and really be able to deliver growth for the second phase of the plan.

[Paul Hudson:]

There's a lot of vaccine questions. We keep it quite short because we want to get more questions in. But over to you on what role, I guess, will we have? Any broad comments on safety? And maybe where we're at with TBIO and mRNA?

[Thomas Triomphe:]

So, on COVID-19, first, Simon, it's a pandemic. And let's be clear, we have to be modest, we are learning every day. So, that's true for all the different vaccines types that are in there and we're going to keep learning every week. But it shows that as long as the problem is not solved, it's not solved. And therefore, that's why we are full-in. We are full-in with our three partnerships for three different partners and we are mostly full-in with our development of our two own programs. Phase II coming very soon. We'll see the results. Of course, we'll come back to you very quickly with that. We have a very strong collaboration with HHS and the US government to go to Phase III ASAP as soon as we have the Phase II results. And we believe it could be a very useful program with volumes coming in Q4. And we believe that there will be 2022 booster doses that will be required and we'll be there. And then, on mRNA, I think you appreciated the Moderna vaccine today. I did too. I think it's showing the potential of this platform to actually create novel vaccines. Very exciting platforms to be able to go into vaccines development territories that we couldn't go before because of technology. Very excited about our partnership with Translate Bio. As you know very well, we are in Phase II right now on our COVID-19 product. We'll get the readout in Q3. We are moving forward as fast as possible also through mRNA. Very confident in this partnership. We believe it's a new frontier that has been crossed over and will make us have a lot of new vaccines down the road.

[Paul Hudson:]

Yeah. And as you said, I think we're very excited and very confident. Pandemic, of course, all these emerging side effects and different things are part and parcel because of the speed. In a regular season, say flu, for example, the bar is even higher when the standards of care are already approved and that have to be beaten. So, we're optimistic. I think you heard it from Thomas where we are with mRNA, but how we will compete and how things will shake out. So, maybe next question.

[Operator:]

And the next question is from Geoff at Leerink.

[Geoffrey Porges:]

Just maybe a couple on Vaccines and one on Dupi. Thomas, on vaccines, congratulations on Vaxelis. It's only been about 25 years. Is there an opportunity for you to substantially increase your pediatric vaccine revenue because you have that hexavalent? And then, secondly, on nirsevimab, you've said in the past we should expect pricing in the range of pediatric – sorry, of innovative vaccines. But could you just give us a sense, is that the full schedule of innovative vaccines or single doses because, obviously, quite different? And then, lastly, perhaps you could comment on where you are in the pentavalent mening program. It does seem that mening is doing well for you, but you seem to be behind the competitors in the pentavalent. I'm just wondering if that revenue for you is at risk long term as we think about models?

[Paul Hudson:]

I thought there may be a Dupixent question as well.

[Geoffrey Porges:]

My Dupixent question, maybe for you, Paul, is a lot of good things have happened with Dupixent. You've talked about COPD. There's a whole allergy program , it's been added. And obviously, there is some clouds over the competitors in that category. And you're halfway toward €10 billion already. Why isn't the €10 billion way too low, given all those developments?

[Paul Hudson:]

Well, maybe I'll take that one first before I pass to Thomas. So, it's not that long that everybody thought it was too high. So, as we push on – we take nothing for granted. Every day is game day with Dupixent because we know the next few years. We know the IL-13s are half the answer literally, missing the IL-4 component. We know the emerging real-world data and clinical data on the JAKs. So, we know there's challenges. We take nothing for granted. We have a lot of work to do. We have an incredible clinical development program. We're incredibly disciplined commercially. Just heard from Bill, what's happening in China. So, we've guided to €10 billion-plus and maybe it's the plus that you're talking about. And over time, maybe we'll give you a bit more detail on that. Maybe I'll get back to Bill if he wants to add anything. Thomas, some quite detailed questions, but I think important questions on the Vaxelis, on the pentavalent mening. But I also think you should get to the pricing on the one-and-done in RSV.

[Thomas Triomphe:]

So, on RSV pricing, very clearly, we are talking about the premium innovative vaccines, full schedule. It's a one-dose treatment, one dose as a preventive measure with nirsevimab, but it's comparable to a full schedule because you want to make sure that we have the same impact on disease. So, that's very key here. On Vaxelis, thank you for the congratulations. As you were mentioning, it took a while. But I think it's very important to mention that this is very important because we are going to be able to bring six-in-one in the US. You know that some have tried before and were not successful to do it. It's going be the first six-in-one with very exciting antigen. Of course, price premium plays a role in there. You probably remember that it's a JV with Merck and, therefore, we are not booking into the sales line. But I think it's important to mention that it has a very important positive impact, of course, on the Vaccines' BOI margin ratio. And that the BOI in total value, in absolute value, is expected to remain stable when you look at the play Pentacel versus Vaxelis. And, of course, I insist on the fact that our full-year guidance on our growth for Vaccines completely includes the launch of Vaxelis in the US. Why we are very excited? Because what we've seen in the past is that six-in-one versus five-in-one have been able to gain market share significantly. Those have been launched two decades ago in Europe. Very exciting that we can provide those in US, and I think it's going to be . And finally, on MenPenta, you probably have seen that we are entering our Men B program into Phase I/II right now, which gives you a hint on the fact that we're going to launch MenPenta right after. So, we are definitely following that one. I don't think the two MenPentas are being developed after significant concern when we're looking at the mid-term sales. Why? Because with MenQuadfi that we are launching now in the US, we believe we have the best four-in-one meningococcal vaccine, ACWY, and that's going to be a backbone that will be very important moving forward. We now want to add the best Men B to the best MenPenta.

[Operator:]

We will take Jo from Credit Suisse.

[Jo Walton:]

A few questions on your emerging drugs. On Sarclisa, we've seen that that's gone from – it's gone to be bigger ex-US than US very quickly. Is that a bolus of sales into new markets as you launch, is it underlying demand? Actually, if you could just tell us a little bit more about the progression of that product, please? And also, your strategy for Libtayo. It's, at the moment, not really very differentiated. You could be in the lead with the adjuvant CSCC indication, but clearly you started it at around the same time as KEYTRUDA. So, you could be fit to the post there. So, just a little bit about your strategy going forward there, please? Just two quick other ones. Could you just tell us a little bit more about why there was a PDUFA delay for your new Pompe drug. I just want to be sure it wasn't anything to do with any of the data. And for Jean-Baptiste, I wonder if you could tell us about marketing costs going forward? It was probably – as we go through the rest of this year, how realistic is it for you to be able to keep that overall SG&A number at under – at a decline rather than growth? Many thanks.

[Paul Hudson:]

I'll just quickly take the PDUFA one, then Bill, then JB, and we can provide more if needed. But, really, we're going for a broad patient population. There has been requests for more data. It's been a very encouraging and positive conversation. There is a delay, of course. There's a lot of challenges worldwide for how everybody runs their organizations, but we're feeling very confident. I think Bill said upfront, we're excited about what it will bring to patients. Bill, Sarclisa, Libtayo. It's very early to be talking about Sarclisa. But do you want to make any comments ex-US versus US for Sarclisa and then Libtayo?

[Bill Sibold:]

Look, I think it has to do with the ability to launch on a global scale quicker. In the past, you just had to wait a long time to be launching in the various geographies. Ex-US is off to a very strong start as well. I think the important thing to kind of capture Sarclisa is that, now that we've had our second approval within 12 months in both the US and the EU based on the IKEMA study results, so that's in combination with Kd. We see the commercial potential increasing from about 13% of the market, Jo, to 35% of the market. So, I think if you look ahead, this unlocks the markets some. The US launch happened like simultaneous with the lockdowns that took place with the pandemic. And so, we're very optimistic about where the future has to hold with the market, nearly tripling with these new indication approvals. Regarding the Libtayo, we really see it as being the leader in non-melanoma skin cancer. I think the recent expansions that we've had, including BCC, it really is off to, I think, a very strong start for us. So, that's where we expect that we're going to stay and become leaders.

[Paul Hudson:]

JB, marketing costs from end of the year?

[Jean-Baptiste Chasseloup de Chatillon:]

Yeah. I think Jo's question was also beyond maybe the remaining of the year. Because, for this year, it's the same trend. We are really looking to go deep in G&A and going on stimulating our growth engines. But looking beyond this short-term period with normalization of the situation of COVID, we think we will not just keep most of our gains linked to COVID, but we will go on with our saving opportunities that will offset a natural rebound because, yes, we will be back on the ground and there will be some cost kicking in again. But, such will be absorbed by our extra savings because I still identify with the teams' many, many opportunity. So, in the mid-term, we will see some increase of the selling and general expenses, not so much because of post-COVID, but because we will see our top line growing and we will be preparing for launches of new drugs and that's where we want to be. We think we are in a very good spot to contain any rebound from a post-COVID area and going on with extra savings that will more than offset those – this restart that we will see.

[Operator:]

The next question is from Graham from Bank of America Merrill Lynch.

[Graham Parry:]

I've got a couple on amcenestrant and one on your SHP2. So, on amcenestrant, obviously, we're expecting the AMEERA-1 CDK4/6 combo data fairly soon. That's a single-arm study. So, we're just wondering what you think is an appropriate benchmark that investors should be using to look at the response rate? So, for example, CDK4/6 fulvestrant second-line combo trials have shown response rates ranging from the mid-20s to low-40s. So, is that the right sort of range we should be referring or would you point to differences in patient populations in the trials? And then, secondly, your events slide show Phase III start decision on early breast cancer in the first half. What are the gating factors? And then, what's that decision going to be based on? Some interim looks your AMEERA-4 trial results because I think final results, those were delayed till 2022. And then, thirdly on your SHP2. So, you have some monotherapy data presented by your partner Revolution Medicine at the AACR. I just wonder what your thoughts on the data, the profile opportunity in combinations for that and your level of excitement about that project. Thank you.

[Paul Hudson:]

John, a bunch of questions on amcenestrant, including response rates that we're going to share and the gating. Do you want to give a quick answer?

[John Reed:]

On the combination with CDK4/6 inhibitor class, I think as you suggested, fulvestrant plus palbociclib, for example, would be a good benchmark. The thing that's a bit challenging there, though, is that the number of prior lines of therapies and what those therapies were has a big impact on what the outcomes might look like. So, you have to also normalize for that when you look at the data. Regarding AMEERA-4, that's the lead up to the adjuvant study. We did get off to a slow start because of the pandemic, but have decided that we will be able to get the answers really we need with probably about half as many patients as we originally thought, so that we won't delay moving into the adjuvant setting. So, we feel like we are going to catch up essentially by virtue of being able to get to what we need with fewer patients essentially in that study. And then, was your last question about…

[Graham Parry:]

SHP2 combos.

[John Reed:]

SHP2, I'm sorry. The interrogation of the SHP2 molecule, the partnership with Revolution Medicines is very exciting for us. We are doing combination studies right now with Amgen's KRAS inhibitor, which is one of the combos that at least preclinically has been very exciting. We have studies undergoing with other combination partners that make sense, including not only playing the signal transduction side of the equation with things like osimertinib combos and MET combos. But, also looking at the possible immuno-oncology angle by virtue of the fact that SHP2 does get recruited to the cytoplasmic tail of PD1 when PD1 is activated in T-cells. So, there is also a way to think about another side of the coin here, thinking about immuno-oncology and that study is underway as well.

[Operator:]

We will take Richard from J.P. Morgan.

[Richard Vosser:]

First question, just on Dupixent back there. How are you seeing the uptake in AD patients relative to the early stages that you saw in the adult. Is there any sort of acceptance levels that you're seeing that that's greater or something that can help us think of the uptake potential there to boost growth? Second question on tax reform. Paul, you mentioned healthcare reform, but just on the tax reform impacts. Of course, the tax rate is down this year to 21%. But how should we think about the US impacts on Sanofi? And then, finally, just back on nirsevimab. I think, Thomas, you suggested benefit across all types of patients. Can we just have an idea if the benefit is sort of very similar across those patients conserved of what we've seen in the Phase II? Anything you can help with that, would be great. Thanks very much.

[Paul Hudson:]

Just quickly, pre-term and full-term, we know already. But, Thomas, over to you on nirsevmab.

[Thomas Triomphe:]

Clearly, very good impact for all infants, preterm, full term, synergies driven, , we're confident will go up.

[Paul Hudson:]

JB, tax and how well we're going to manage any changes in the US?

[Jean-Baptiste Chasseloup de Chatillon:]

We are looking at what's happening currently. So, discussions are happening. And we think part of it will go through. It's not clear which part. In the meantime, we are clearly benefiting from a very positive trend in our other – in our ex-US tax centers. So, all in all, it's a bit early to tell you where it will land, but I'm quite hopeful that we will go on finding new ideas to improve our effective tax rate.

[Paul Hudson:]

And then, Bill, Dupixent uptake, peds AD?

[Bill Sibold:]

Strong, just like it was in adults. And I think it's just further proof of the really strong safety and efficacy profile of the product.

[Paul Hudson:]

Maybe, we have time for one more.

[Operator:]

The last one will be from Laura at UBS.

[Paul Hudson:]

No?

[Operator:]

No.

[Paul Hudson:]

We tried. Thank you. Thank you to everybody. I will look forward to seeing you again in the next results, if not before.

[Operator:]

Thank you. And have a good day. Bye-bye.