Sanofi 2020: New challenges

Sanofi’s new CEO, Paul Hudson, was not only faced with the task of keeping the company on a growth track, he had to account for the impact of COVID-19.

 

Sanofi

54, Rue La Boetie
75008 Paris, France
Telephone: +33 (0)1 53 77 40 00
Website: sanofi.com

 

FINANCIAL PERFORMANCE

(All figures except EPS are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2019: €1.1194)

2019

Revenue $40,439  

Net income $3,141  

Diluted EPS $2.50  

R&D expense $6,737  

1H 2020

Revenue $19,231  

Net income $10,389  

Diluted EPS $8.29  

R&D expense $3,013 

 

BEST-SELLING Rx PRODUCTS

(All sales are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2019: €1.1194)

2019

Lantus $3,372 

Dupixent $2,322 

Aubagio $2,103 

Lovenox $1,521 

Plavix $1,493

Myozyme, Lumizyme $1,028 

Toujeo $988 

Fabrazyme $910 

Cerezyme $793 

Eloctate $766 

Avapro/Aprovel, CoAprovel $754                

Jevtana $542 

Depakine $533  

1H 2020

Dupixent $1,829 

Lantus $1,586  

Aubagio $1,196  

Lovenox  $705  

Plavix $570  

Toujeo $555  

Myozyme, Lumizyme $528  

Fabrazyme $462  

Cerezyme $412 

Eloctate $369 

Avapro/Aprovel, CoAprovel  $343                

Jevtana $303 

 

Outcomes Creativity Index Score: 38
Manny Awards – N/A
Cannes Lions – N/A
LIA: Health & Wellness – 6
Clio Health – 5
One Show: HW&P – N/A
MM&M Awards – 13
Global Awards – 2
Creative Floor Awards – 12

 

For Sanofi and many other major pharma companies, while 2019 was a good year, the COVID-19 pandemic in 2020 presented a series of scientific and financial challenges. But company leaders say Sanofi is well-positioned to prevail.

At the end of 2019, Sanofi presented a new strategic framework with four key priorities to drive innovation and growth. “Our new strategy positions Sanofi to achieve breakthroughs with our most promising medicines, addressing significant patient needs. We will anchor our efforts in leading-edge science with clearer priorities and a focus on delivering results,” says CEO Paul Hudson. “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’m confident we will achieve long-term growth and value for shareholders while turning innovation into transformative medicines for patients.”

The five-point plan comprises focusing on growth; leading with innovation; accelerating efficiency; reinventing how the company works; and focused capital allocation.

In the area of growth, Sanofi expects to deliver strong growth for Dupixent with the ambition of achieving more than €10 billion ($11.19 billion) in peak sales driven by the medicine’s unique mechanism of action targeting the type 2 inflammation pathway. Vaccines are expected to deliver a mid-to-high single-digit net sales CAGR from 2018 to 2025, through differentiated products, market expansion and new launches. Also, the company has identified and prioritized six potentially transformative therapies. Additional core drivers include treatments for oncology, hematology, rare diseases, neurology, and Sanofi’s strong presence in China.

In the area of innovation, company executives say Sanofi has six potentially practice changing therapies in areas of high unmet patient need. These investigational therapies include:

• itusiran, an RNAi therapeutic in development for the treatment of hemophilia A and B with or without inhibitors with the potential to provide once-monthly dosing convenience

• BIVV0013, a factor VIII therapy designed to extend protection from bleeds with prophylaxis dosing of once weekly for people with hemophilia A that seek to enjoy a normalized lifestyle

• venglustat, an oral therapy in development for several rare diseases in the category of lysosomal storage disorders (Gaucher type 3, Fabry, Tay-Sachs disease, etc.), and also showing promise for more common disorders including autosomal dominant polycystic kidney disease and some sub-types of Parkinson’s disease

• SERD (‘859), a selective estrogen receptor degrader which aims to be the new standard of care in hormone-receptor-positive breast cancer

• Nirsevimab, a potentially cost-effective prevention against respiratory syncytial virus, with initial focus on protecting infants

• BTKi (‘168) is an oral medicine for multiple sclerosis with potential to be the first disease-modifying therapy to address inflammation and disability drivers in the brain. 

The company also announced plans to acquire Synthorx Inc., which will bolster its immuno-oncology (IO) pipeline with both a proprietary IO platform synergistic with Sanofi’s existing therapeutics platforms, and a lead IO candidate (THOR-707) being explored across multiple solid tumor types both alone and in combination with immune checkpoint inhibitors and other future IO combinations. That acquisition was completed in January 2020 for $68 a share.

In the area of efficiency, Sanofi expects to expand the company’s business operating income (BOI) margin to 30 percent by 2022, with an ambition for BOI margin to exceed 32 percent by 2025. The company is announcing efficiency initiatives that are expected to generate €2 billion ($2.24 billion) savings by 2022. These savings will fund investment in key growth drivers and accelerate priority pipeline projects as well as support the expansion of the BOI margin. The efficiency savings are expected to result primarily from limiting spend on de-prioritized businesses, from smart spending (procurement) initiatives, and from operational excellence in manufacturing and organizational productivity. Sanofi discontinued research in diabetes and cardiovascular (DCV) and will not pursue plans to launch efpeglenatide. The company is optimizing the commercial model for DCV and rheumatoid arthritis, including right-sizing the resources deployed behind Praluent (alirocumab) and Kevzara (sarilumab).

Sanofi reinvented itself through a restructuring. The company now has three core global business units to support the company’s strategy – Specialty Care (immunology, rare diseases, rare blood disorders, neurology, and oncology), Vaccines, and General Medicines (diabetes, cardiovascular, and established products). Consumer Healthcare will be a standalone business unit with integrated R&D and manufacturing functions.

“Our objective for the Consumer Healthcare business is to unlock value and entrepreneurial energy by growing faster than the market over the mid term,” Hudson says. “We believe the new standalone structure, coupled with plans to accelerate the over-the-counter switches for Cialis and Tamiflu, will position the business well to accomplish this ambition.”

In its plan for focused capital allocation, Sanofi expects to increase annual free cash flow by 50 percent by 2022 compared with an adjusted base of €4.1 billion ($4.59 billion) in 2018. Management says Sanofi continues its focused and disciplined capital allocation policy, and expects to deploy cash generated from the three core GBUs as well as the standalone CHC business through organic investment; business development and M&A activities, focusing on bolt-on, value-enhancing opportunities to drive scientific and commercial leadership in core therapeutic areas); growing the annual dividend; anti-dilutive share buybacks.

Sanofi has the potential to raise capital through asset disposals, including streamlining “tail” brands in its Established Products business, and by monetizing the company’s stake after the expiration of the lock-up under the amended and restated investor agreement with Regeneron Pharmaceuticals Inc.

Sanofi’s Role In The COVID-19 Fight 

In February, Sanofi announced that the company would leverage previous development work for a vaccine against severe acute respiratory syndrome (SARS) to attempt to unlock a fast path forward for developing a COVID-19 vaccine. Sanofi is collaborating with BARDA (the US Biomedical Advanced Research and Development Authority), part of the Office of the Assistant Secretary for Preparedness and Response within the U.S. Department of Health and Human Services, expanding the company’s long-standing partnership with BARDA.

Sanofi and Translate Bio, a clinical-stage messenger RNA (mRNA) therapeutics company, in March announced a collaboration to develop a novel mRNA vaccine for COVID-19. This collaboration leverages an existing agreement from 2018 between the companies to develop mRNA vaccines for infectious diseases. Translate Bio began to produce multiple mRNA constructs and is using its mRNA platform to discover, design, and manufacture SARS-CoV-2 vaccine candidates. Sanofi is providing deep vaccine expertise and support from external research networks to advance identified vaccine candidates for potential further development.

In April, Sanofi and GSK announced that they had signed a letter of intent to develop an adjuvanted vaccine for COVID‑ 19, using innovative technology from both companies to help address the pandemic. Sanofi is contributing its S‑protein COVID-19 antigen, which is based on recombinant DNA technology. This technology has produced an exact genetic match to proteins found on the surface of the virus, and the DNA sequence encoding this antigen has been combined into the DNA of the baculovirus expression platform, the basis of Sanofi’s licensed recombinant influenza product in the United States. GSK is contributing its pandemic adjuvant technology.

In September, Sanofi and GSK started the Phase I/II clinical trial for their adjuvanted COVID-19 vaccine. The Phase 1/2 clinical trial is a randomized, double blind and placebo-controlled study designed to evaluate the safety, reactogenicity (tolerability) and immunogenicity (immune response) of the COVID-19 vaccine candidate. A total of 440 healthy adults are being enrolled in the trial across 11 investigational sites in the United States.

The companies anticipate first results in early December 2020, which will support the initiation of a Phase III trial in December 2020. If data are sufficient for licensure application, the plan is to request regulatory approval in the first half of 2021. Sanofi and GSK were in advanced discussions in July with the EU to supply up to 300 million doses of the vaccine. They have agreed to supply 100 million doses to the United States as part of “Operation Warp Speed.”

Also in April, Sanofi and Luminostics signed an agreement to evaluate a collaboration on a unique self-testing solution for COVID-19 using Luminostics’ innovative technology. Luminostics is contributing its proprietary consumer-diagnostics technology for COVID-19 testing, while Sanofi is bringing its clinical research testing experience and capabilities. The goal is to provide a smartphone-based solution that eliminates the need for healthcare professional administration or laboratory tests.

In September, Sanofi announced that the global Phase III trial investigating intravenously administered Kevzara (sarilumab) at a dose of 200 mg or 400 mg in severely or critically ill patients hospitalized with COVID-19 did not meet its primary endpoint and key secondary endpoint when Kevzara was compared to placebo added to usual hospital care. The 420-patient randomized trial was conducted outside the United States in Argentina, Brazil, Canada, Chile, France, Germany, Israel, Italy, Japan, Russia and Spain (86 in placebo, 161 in 200 mg, and 173 in 400 mg arms).

“Although this trial did not yield the results we hoped for, we are proud of the work that was achieved by the team to further our understanding of the potential use of Kevzara for the treatment of COVID-19,” says John Reed, M.D., Ph.D., global head of Research and Development, Sanofi. “In times like these, commitment to properly designed, controlled clinical trials, provides the information and understanding the scientific community needs for fact-based decision making. At Sanofi, we are committed to help combat the global COVID-19 pandemic, including developing vaccine candidates that can be manufactured at large-scale.”

Deals During 2020

Management stated in February that Sanofi would create a leading European business dedicated to the production and marketing to third parties of active pharmaceutical ingredients (API). The project involves creating a new standalone company combining Sanofi’s API commercial and development activities with six of its European API production sites: Brindisi, Italy; Frankfurt Chemistry in Germany; Haverhill in the UK; St Aubin les Elbeuf, France; Újpest, Hungary; and Vertolaye, France. The new entity is expected to rank as the world’s second-largest API company, with approximately €1 billion of sales expected by 2022 and 3,100 employees; the business is to have headquarters in France. An initial public offering on Euronext Paris is being evaluated with a decision expected by 2022, subject to market conditions. Sanofi intends to retain a minority stake of 30 percent.

Also in February, Sanofi subsidiary Aventis Inc. acquired from Bristol-Myers Squibb Investco LLC, E.R. Squibb & Sons LLC and Bristol-Myers Squibb Puerto Rico Inc. their respective equity interests in the partnerships that organize the commercialization of Plavix in the United States and Puerto Rico. As a result of those transactions, Sanofi obtained sole control and freedom to market and sell Plavix. in the United States and Puerto Rico. As from March 2020, Sanofi recognizes in the company’s consolidated financial statements the revenues and expenses generated by its own operations in the two territories.

In April Sanofi revealed that the company had finalized the planned restructuring related to Praluent with Regeneron. Effective April 1, 2020, Sanofi has sole responsibility for Praluent outside the United States, while Regeneron has sole responsibility for Praluent in the United States. According to company executives, the restructuring simplifies the antibody collaboration between the companies, increases efficiency and streamlines operations for Praluent. Related to this move, Sanofi sold 13 million shares of Regeneron common stock and announced the completion of Regeneron’s repurchase of 9.8 million shares or $5 billion in common stock directly from Sanofi. As a result of the offering, Sanofi has sold its entire equity investment in Regeneron (except for 400,000 Regeneron shares retained by Sanofi to support their ongoing collaboration) for total gross proceeds of $11.7 billion. 

Sanofi completed the acquisition of Synthorx in January. Synthorx now operates as an indirect, wholly owned subsidiary.

According to Hudson, “The acquisition of Synthorx perfectly aligns with our R&D strategy, enhancing our position as an emerging leader in the area of oncology and immunology. “We gain access to both great scientists and science with THOR-707, an engineered not-alpha IL-2 for the treatment of solid tumors which induces strong immunological responses in vivo, additional intriguing pre-clinical assets, and a powerful platform that complements our ongoing oncology and immunology research,” according to Hudson.

Sanofi completed another acquisition in September, buying Principia Biopharma Inc. for $100 per share in cash.

“The Principia acquisition further strengthens our core areas of autoimmune and allergic diseases, giving us full control of tolebrutinib (SAR442168), as well as additional BTK inhibitors to further develop,” Hudson says. “The Principia integration into Sanofi augments our small molecule research capabilities as we look to maintain leadership in the discovery and development of oral medicines for serious illnesses.”

Financial & product performances

The company recorded 2019 sales of €36.13 billion ($40.44 billion), 4.8 percent more than in 2018. Net income attributable to equity shareholders of Sanofi was €2.81 billion ($3.14 billion) compared with €4.31 billion ($4.82 billion) in the previous year. Diluted earnings per share were €2.23 ($2.50) compared with €3.43 ($3.84) in 2018.

During the first half of 2020, sales were €17.18 billion ($19.23 billion), up 0.9 percent versus the first half of 2019. Net income attributable to equity shareholders of Sanofi amounted to €9.28 billion ($10.39 billion), compared with €1.05 billion ($1.18 billion) in first-half 2019. Earnings per share reached €7.41 ($8.29), compared with €0.84 (94 cents) in the same period of 2019. The increase in net income and earnings per share reflects the gain on the divestment of Sanofi’s equity investment in Regeneron – €7.38 billion ($8.26 billion) – following the transaction of May 29, 2020.

Thirteen of Sanofi’s products made at least $500 million in 2019. Once more at the top of the annual sales list was the diabetes drug Lantus, which generated €3.01 billion ($3.37 billion), 15.5 percent less than in 2018. In first-half 2020, Lantus generated sales of €1.42 billion ($1.59 billion), 6.8 percent less than in the same period of 2019.

Springing into second place in sales in 2019 (from seventh in 2018) was the allergic diseases drug Dupixent, at €2.07 billion ($2.32 billion) compared with €788 million ($882 million) in 2018. First-half 2020 sales totaled €1.63 billion ($1.83 billion), 93.8 percent more than in the same period of 2019. 

The multiple sclerosis drug Aubagio was pushed down into third place, generating €1.88 billion ($2.1 billion) in 2019, 14.1 percent more than in 2018. Sales in the first half of 2020 were €1.07 billion ($1.2 billion), 16.5 percent more than in the same period of 2019.

The antithrombotic Lovenox was Sanofi’s No. 4 product in 2019, with sales of €1.36 billion ($1.52 billion), 7.2 percent less than in 2018. For the first half of 2020 sales were €630 million ($705 million), 6.1 percent less than in the first half of 2019.

The antithrombotic Plavix ranked as Sanofi’s No. 5 product in 2019 sales, coming in at €1.33 billion ($1.49 billion), 7.4 percent less than in 2018. First-half 2020 sales were €509 million ($570 million), 33.6 percent lower than in first-half 2019.

The Pompe disease drugs Myozyme and Lumizyme placed at No. 6 for Sanofi in 2019, generating €918 million ($1.03 billion), an increase of 9.3 percent compared with 2018 sales. First-half 2020 sales totaled €472 million ($528 million), 4.4 percent more than in first-half 2019.

The diabetes drug Toujeo was the seventh best selling drug for the company in 2019, growing 5.1 percent to €883 million ($988 million). Sales in the first half of 2020 were €496 million ($555 million), an increase of 15.3 percent compared with the first half of 2019.

The Fabry disease drug Fabrazyme was No. 8 in 2019 sales with €813 million ($910 million), 7.7 percent more than in 2018. During the first six months of 2020, sales came in at €413 million ($462 million), 3.8 percent more than in first-half 2019.

Cerezyme, for the treatment of Gaucher disease, was No. 9 for Sanofi in 2019, with sales of €708 million ($793 million), 0.4 percent less than the previous year’s amount. Sales during the first half of 2020 amounted to €368 million ($412 million), 5.8 percent more than in the first half of 2019.

N0. 10 in 2019 was the antihemophilic factor Eloctate, with sales of €684 million ($766 million). First-half 2020 sales were reported at €330 million ($369 million), down 7 percent versus the first half of 2019.

The angiotensin-II receptor antagonist Aprovel/Avapro was Sanofi’s 11th best selling product in 2019, generating €674 million ($754 million), 3.4 percent more than in 2018. Sales in the first half of 2020 decreased to €306 million ($343 million), 17.4 percent less than in same-time 2019.

Jevtana represented the 12th best-selling drug for Sanofi in 2019, with sales of €484 million ($542 million), an increase of 14.7 perent. In first-half 2020, sales were €271 million ($303 million), 13.1 percent more than in the first six months of 2019.

At No. 13 was the anti-seizure drug Depakine, generating €476 million ($533 million) in 2019, an increase of 5.3 percent. The company did not report first-half 2020 sales.

Advancing the pipeline

Sanofi executives can point to a lot of activity in the company’s pipeline outside of COVID-19 therapeutics.

FDA granted approval in May to Dupixent for children aged 6 to 11 years with moderate-to-severe atopic dermatitis whose disease is not adequately controlled with topical prescription therapies or when those therapies are not advisable. Dupixent is the first biologic medicine approved for this patient population. 

FDA evaluated the Dupixent application under Priority Review, which is reserved for medicines that represent potentially significant improvements in efficacy or safety in treating serious conditions. FDA had previously granted Breakthrough Therapy designation to Dupixent for the treatment of severe atopic dermatitis in children 6 months to 11 years of age not well controlled on topical prescription medications. 

In September, FDA granted Breakthrough Therapy designation to Dupixent for treating patients 12 years and older with eosinophilic esophagitis (EoE). The designation for this investigational use is based on positive results from Part A of a Phase III trial in patients with EoE.

There are no FDA-approved drugs for EoE, a chronic and progressive type 2 inflammatory disease that damages the esophagus and prevents it from working properly. Over time, excessive type 2 inflammation causes scarring and narrowing of the esophagus, making it difficult to swallow. If left untreated, EoE can affect a patient’s ability to eat and cause food to become stuck after being swallowed (food impaction), which can lead to a medical emergency. In the United States, there are 160,000 patients with EoE being treated with various unapproved therapies or diet modification. Of these patients, 50,000 have failed multiple treatments.

Also in September, the European Medicines Agency (EMA)’s Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for Supemtek (recombinant influenza vaccine) for active immunization for the prevention of influenza in adults. A final decision was expected in the fourth quarter of 2020.

The recommendation is based on clinical data showing safety and efficacy of Supemtek demonstrated in two Phase III randomized controlled trials involving more than 10,000 patients. In comparison with a standard-dose egg-based quadrivalent influenza vaccine, Supemtek reduced the risk of influenza by an additional 30 percent for adults aged 50 years and above.

Supemtek is the first influenza vaccine to rely on recombinant manufacturing technology. This method for producing influenza vaccines differs significantly from the two other production platforms in use (egg-based and cell-based). Recombinant technology ensures an exact match of the hemagglutinin protein included in the vaccine to the influenza strains recommended seasonally by the World Health Organization for vaccines, which is an important factor when considering vaccine effectiveness.

Supemtek has been available in the United States since 2017, under the Flublok brand name, with more than 10 million doses distributed since then.

CHMP issued another positive opinion in September for MenQuadfi for active immunization of individuals from the age of 12 months and older against invasive meningococcal disease caused by Neisseria meningitidis serogroups A, C, W, and Y.

The recommendation is supported by seven double-blind, randomized, multicenter Phase II and III studies that assessed safety and immune responses following vaccination, with nearly 6,300 persons from toddlers 12 month and older to older adults. These studies compared MenQuadfi with other licensed combination vaccines, showing a good safety profile and high immune response against all four serogroups (A, C, W and Y).

A final approval decision by the EMA is anticipated by the end of 2020. MenQuadfi is expected to be gradually available in Europe starting in 2021.

The EMA accepted the regulatory submission for avalglucosidase alfa, a potentially new standard of care enzyme replacement therapy for Pompe disease, as announced by Sanofi on Oct. 2, 2020. The company says this is the first important regulatory milestone for the investigational enzyme replacement therapy. Avalglucosidase alfa received Promising Innovative Medicine designation in the UK, adding to U.S. Breakthrough Therapy designation received earlier in 2020. Regulatory approval in Europe is anticipated by Sanofi for second-half 2021.

In a late-breaking presentation at the European Society for Medical Oncology Virtual Congress in September, Sanofi shared positive pivotal trial data for the investigational use of the PD-1 inhibitor Libtayo (cemiplimab) in first-line locally advanced or metastatic non-small cell lung cancer (NSCLC). The trial compared Libtayo monotherapy to platinum-doublet chemotherapy in patients whose tumor cells expressed PD-L1, including those whose cancers had confirmed PD-L1 expression of ≥50 percent.These results form the basis of U.S. and EU regulatory submissions.

The ESMO presentation expands on topline results shared in April. In the overall trial population, the median follow-up was 13 months for Libtayo and chemotherapy. Among these patients, Libtayo showed to chemo: 32 percent reduced risk of death; 22-month median overall survival versus 14 months; and a 41 percent reduced risk of disease progression. The median progression-free survival was 6.2 months versus 5.6 months.

The trial also found a direct correlation between tumor response and PD-L1 expression level in Libtayo-treated patients. The ORR was highest (46 percent; range: 36-56 percent) in tumors with ≥90 percent PD-L1 expression, with target tumors shrinking by more than 40 percent after six months of treatment on average (per last observation carried forward method). This correlation with PD-L1 expression level was not observed with chemotherapy.

The New England Journal of Medicine in September published positive final results from the Phase I/IIa trial evaluating the safety, tolerability and pharmacokinetics of BIVV001 (rFVIIIFc-VWF-XTEN) in adult patients with severe hemophilia A. The investigational factor VIII therapy is designed to provide higher bleed protection in a once-weekly prophylactic treatment regimen. Sanofi and Sobi are collaborating on the development and commercialization.

In July, Sanofi shared detailed results from the positive Phase IIb trial for nirsevimab that showed a significant reduction in medically attended lower respiratory tract infections (LRTI), mainly bronchiolitis and pneumonia, and hospitalizations caused by respiratory syncytial virus (RSV) in healthy preterm infants. Published in the New England Journal of Medicine, the results demonstrate for the first time that a single-dose monoclonal antibody can significantly reduce medically attended RSV LRTI in infants through the full RSV season.

Nirsevimab is an extended half-life RSV monoclonal antibody being developed with AstraZeneca. The drug could provide a new standard of care, by offering an innovative immunization for immediate and sustained protection for all infants during their first RSV season, when they are most at risk for infection or complication.