PARIS, July 29, 2020 /PRNewswire/ -- Sanofi (NASDAQ:
SNY; EURONEXT: SAN)
Experience the interactive Multichannel News Release here:
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Q2 2020 sales results reflect the strong performance of
Dupixent® more than offset by COVID-19 related negative
effects on Vaccines, General Medicines and CHC
- Net sales were €8,207million, down 4.9% on a reported basis and
a decline of 3.4%(2) at CER.
- Specialty Care sales grew 17.4% driven by strong performance of
Dupixent® (+70% to €858 million).
- Vaccines sales (-6.8%) were affected by global confinements
while in Southern Hemisphere demand for flu vaccines was
strong.
- General Medicines sales down 12.7% partly due to confinement
related deferrals of elective procedures and channel
destocking.
- CHC sales declined 8.0% reflected unwinding of consumer
stocking and lower pharmacy traffic as well as Zantac®
voluntary recall.
Q2 2020 business EPS(1) benefits from share
revaluation gain and effective cost management
- Q2 2020 business net income increased 3.6% to €1,601 million
and 5.6% at CER.
- Q2 2020 business EPS(1) was €1.28, up 4.8% at CER
(€1.18 excluding revaluation on retained Regeneron shares).
- During the first half of 2020, cost savings of €990
million(3) were realized.
- Q2 2020 IFRS EPS was €6.07, reflecting capital gain from sales
of Regeneron shares.
R&D transformation, milestones and regulatory
achievements
- Dupixent® approved as the first biologic in
China for moderate-to-severe
atopic dermatitis in adults - first prescription on July 22.
- Dupixent® approved for moderate-to-severe atopic
dermatitis in children (6 to 11 years) in U.S. and positive CHMP
opinion in EU.
- Sarclisa® approved in EU for certain adults with
relapsed and refractory multiple myeloma.
- Pivotal IKEMA study evaluating Sarclisa® in relapsed
multiple myeloma met primary endpoint at first planned interim
analysis.
- Libtayo® demonstrated clinically meaningful and
durable responses in advanced basal cell carcinoma.
- FDA granted priority review to sutimlimab in cold agglutinin
disease.
- Collaboration agreements with Translate Bio, Kiadis Pharma and
Kymera Therapeutics.
Full-year 2020 business EPS(1) guidance revised
upward
- Sanofi now expects 2020 business EPS(1) to grow
between 6% and 7%(4) at CER, barring unforeseen major
adverse events. Applying average July
2020 exchange rates, the currency impact on 2020 business
EPS is estimated to be between -3% to -4%.
Sanofi Chief Executive Officer, Paul
Hudson, commented:
"I'm proud of what the team delivered in the second quarter.
Even with some headwinds from the COVID-19 pandemic, we achieved
business EPS growth supported by continued outstanding sales from
Dupixent®, a focus on efficiency and smart spending, and
the commitment of our people to patients and our strategic
priorities. We also met important regulatory milestones, forged new
R&D alliances, and accelerated our efforts to develop potential
COVID-19 vaccines. With four new appointments, the management team
at Sanofi is now complete and together we are focused on delivering
our full-year 2020 guidance."
|
Q2
2020
|
Change
|
Change
at CER
|
H1
2020
|
Change
|
Change
at CER
|
IFRS net sales
reported
|
€8,207m
|
(4.9%)
|
(3.4%)
|
€17,180m
|
+0.9%
|
+1.6%
|
IFRS net income
reported
|
€7,598m
|
—
|
—
|
€9,281m
|
nm
|
—
|
IFRS EPS
reported
|
€6.07
|
—
|
—
|
€7.41
|
nm
|
—
|
Free cash
flow(5)
|
€2,010m
|
+56.5%
|
—
|
€3,568m
|
+69.6%
|
—
|
Business operating
income
|
€2,146m
|
+3.3%
|
+5.3%
|
€4,683m
|
+8.8%
|
+9.8%
|
Business net
income(1)
|
€1,601m
|
+3.6%
|
+5.6%
|
€3,521m
|
+8.7%
|
+9.8%
|
Business
EPS(1)
|
€1.28
|
+3.2%
|
+4.8%
|
€2.81
|
+8.1%
|
+9.2%
|
(1) In order to
facilitate an understanding of operational performance, Sanofi
comments on the business net income statement. Business net income
is a non-GAAP financial measure (definition in Appendix10). The
consolidated income statement for Q2 2020 is provided in Appendix 3
and a reconciliation of reported IFRS net income to business net
income is set forth in Appendix 4; (2) Changes in net sales are
expressed at constant exchange rates (CER) unless otherwise
indicated (definition in Appendix 10); (3) Including around €110M
related to COVID-19; (4) 2019 restated business EPS was €5.64,
reflecting the discontinuation of equity method accounting for
Regeneron investment; (5) Free cash flow is a non-GAAP financial
measure (definition in Appendix 10).
|
R&D update(7)
Consult Appendix 7 for full overview of Sanofi's R&D
pipeline
Regulatory update
Regulatory updates since April 24,
2020 include the following:
- In June, the National Medical Products Administration (NMPA) in
China approved
Dupixent® (dupilumab) for the treatment of
moderate-to-severe atopic dermatitis in adults whose disease is not
adequately controlled with topical prescription therapies or when
those therapies are not advisable. The NMPA identified
Dupixent® as an overseas medicine considered urgently
needed in clinical practice, leading to an expedited review and
approval process. Launch in China
took place on July 22.
- In June, the European Commission (EC) approved
Sarclisa® (isatuximab) in combination with
pomalidomide and dexamethasone (pom-dex) for the treatment of adult
patients with relapsed and refractory multiple myeloma who
have received at least two prior therapies including lenalidomide
and a proteasome inhibitor and have demonstrated disease
progression on the last therapy.
- The pediatric hexavalent vaccine, Shan 6, was submitted
in India in June.
- In May, the U.S. Food and Drug Administration (FDA) approved
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 only
biologic medicine approved for this patient population.
- In May, the FDA granted priority review of the Biologics
License Application (BLA) for sutimlimab for the treatment
of hemolysis in adult patients with cold agglutinin disease
(CAD).
- At the end of July 2020, the
R&D pipeline contained 83 projects, including 33 new
molecular entities in clinical development (or that have been
submitted to the regulatory authorities). 34 projects are in phase
3 or have been submitted to the regulatory authorities for
approval.
Portfolio update
Phase 3:
- Results from the phase 3 trial evaluating the investigational
enzyme replacement therapy, avalglucosidase alfa, were
presented in June at a Sanofi-hosted scientific session.
Avalglucosidase alfa met the primary endpoint demonstrating
non-inferiority in improving respiratory function compared to
avalglucosidase alfa (standard of care) in patients with late-onset
Pompe disease (LOPD). These data will form the basis for global
regulatory submissions anticipated in the second half of this year.
The FDA has granted Breakthrough Therapy and Fast Track
designations to avalglucosidase alfa for the treatment of patients
with Pompe disease.
- Part A of the pivotal phase 3 trial evaluating
Dupixent® in patients 12 years and older with
eosinophilic esophagitis (EoE) met both of its co-primary
endpoints, as well as all key secondary endpoints. An ongoing Part
B portion of the Phase 3 trial evaluates an additional
Dupixent® dosing regimen.
- Topline data for a pivotal, single-arm, open-label trial
evaluating Libtayo® (cemiplimab-rwlc), a PD-1
inhibitor, in patients with advanced basal cell carcinoma who had
progressed on or were intolerant to prior hedgehog pathway
inhibitor therapy were announced in May. Objective responses were
seen in 29% of patients with locally advanced basal cell carcinoma
(BCC) and in a preliminary analysis, objective responses were seen
in 21% of patients with metastatic BCC. Approximately 85% of
patients who responded to Libtayo® maintained their
response for at least one year. Sanofi and Regeneron plan
regulatory submissions in 2020.
- The Phase 3 IKEMA trial evaluating Sarclisa®
(isatuximab) added to carfilzomib and dexamethasone met the primary
endpoint at its first planned interim analysis. These results were
presented as late-breaking at the EHA25 Virtual Congress in
June 2020. Sarclisa® added
to carfilzomib and dexamethasone reduced the risk of disease
progression or death by 47% compared to standard of care
carfilzomib and dexamethasone in patients with relapsed multiple
myeloma. These interim results will form the basis for global
regulatory submissions later this year.
- A Phase 3 trial comparing Libtayo® in
monotherapy for first-line locally advanced or metastatic non-small
cell lung cancer was stopped early due to highly significant
improvement in overall survival. Libtayo decreased the risk of
death by 32.4%, compared to platinum doublet chemotherapy, in
patients that tested positive for PD-L1 in ≥50% of tumor cells. The
data will form the basis of regulatory submissions in the U.S. and
EU in 2020.
- The brain penetrant BTK inhibitor, SAR442168, (collaboration with Principia) entered
into phase 3 in multiple sclerosis.
- Enrollment of the phase 3 evaluating sarilumab
(Kevzara®) in giant cell arteritis and polymyalgia
rheumatica have been terminated.
(7) updates since April
24
- It has been decided not to pursue the collaboration with
Daiichi Sankyo on a pediatric pentavalent vaccine in Japan.
Phase 2
- New, longer-term data for Libtayo® (PD-1
inhibitor) from a pivotal phase 2 trial in advanced cutaneous
squamous cell carcinoma (CSCC), the deadliest non-melanoma skin
cancer, were presented during the virtual 2020 American Society of
Clinical Oncology (ASCO) Annual Meeting. These results showed
durable responses that deepen over time. Across all groups
combined, complete responses (CR) are now 16%; in the metastatic
group with the longest follow-up CRs are 20%.
- Long term interim data from the phase 2 open label extension
study exploring the efficacy and safety of fitusiran, an
investigational once-monthly, subcutaneously administered RNA
interference (RNAi) therapy for the treatment of hemophilia A and
B, with or without inhibitors, were shared in June in a
late-breaking presentation at the World Federation of Hemophilia
Virtual Summit. These data reinforce fitusiran's potential to
restore hemostatic balance and to lower annualized bleed rates
(ABRs) over a period up to 57 months.
- A phase 2 trial in non-small cell lung cancer with
anti-CEACAM5 (SAR408701)
and ramucirumab started.
- A next generation pneumococcal conjugate vaccine
(collaboration with SK) entered into phase 2.
- Fluzone® HD pediatric entered into phase
2.
- It has been decided not to pursue the combination of isatixumab
and cemiplimab in relapsed refractory multiple myeloma due to
insufficient additional efficacy over isatuximab monotherapy.
Phase 1
- The anti-CD38xCD28xCD3 trispecific monoclonal antibody,
SAR442257, entered into phase
1 in multiple myeloma and Non-Hodgkin lymphoma
- BIVV001, a potential new class of factor VIII therapy
for patient with hemophilia A, demonstrated positive Phase 1 repeat
dose study results as reported at the World Federation of
Hemophilia Virtual Summit earlier this month. The Phase 3 study in
previously treated hemophilia A patients started last year.
- SAR442720 (a
SHP2 inhibitor, collaboration with
Revolution Medicines) in combination with pembrolizumab entered
into phase 1 for solid tumors.
- SAR443122, a RIPK1
inhibitor (collaboration with Denali) dosed its first patient in a
Phase 1b trial to evaluate the safety
and pharmacodynamic effects of SAR443122 in patients with severe COVID-19.
- Sanofi has discontinued further development of SAR443060, a RIPK1 inhibitor (collaboration
with Denali) in amyotrophic lateral sclerosis and multiple
sclerosis and alternatively will advance development of
SAR443820(8).
Collaboration
- On July 9, Kymera Therapeutics
Inc. entered into a multi-program strategic collaboration with
Sanofi to develop and commercialize first-in-class protein degrader
therapies targeting IRAK4 in patients with immune-inflammatory
diseases.
- On July 8, the exclusive license
of Kiadis' previously undisclosed K-NK004 program to Sanofi
was announced. The agreement covers Kiadis' proprietary CD38 knock
out (CD38KO) K-NK therapeutic for combination with anti-CD38
monoclonal antibodies, including Sarclisa®.
Additionally, Sanofi has obtained exclusive rights to use Kiadis'
K-NK platform for two undisclosed pre-clinical programs.
- On June 23, Sanofi Pasteur and
Translate Bio, a clinical-stage messenger RNA (mRNA)
therapeutics company, agreed to expand their existing 2018
collaboration and license agreement to develop mRNA vaccines for
infectious diseases.
(8) DNL 788
2020 second-quarter and first-half financial
results(9)
Business Net Income(9)
In the second quarter of 2020, Sanofi generated net sales
of €8,207 million, a decrease of 4.9% and 3.4% at CER. First-half
Sanofi sales were €17,180 million, an increase of 0.9% and 1.6% at
CER.
Second-quarter other revenues decreased 34.4% (down 35.5%
at CER) to €231 million, reflecting lower VaxServe sales of
non-Sanofi products (€185 million, down 39.4% at CER). First-half
other revenues decreased 14.8% (down 16.9% at CER) to €574
million, including lower VaxServe sales of non-Sanofi products
(€471 million, down 15.3% at CER).
Second-quarter Gross Profit decreased 7.0% to €5,778
million (down 6.0% at CER). The gross margin ratio decreased 1.6
percentage points to 70.4% (70.0% at CER) versus the prior year.
The negative impact from net price adjustments of
Plavix® and the Aprovel® family in
China, U.S. Diabetes net price
evolution and Vaccines more than offset the favorable effect from
Specialty Care growth and industrial productivity. In the first
half, the gross margin ratio decreased 1.0 percentage point to
71.3% (71.0% at CER) versus the prior year.
Research and Development (R&D) expenses
decreased 14.8% to €1,352 million in the second quarter. At CER,
R&D expenses decreased 15.1% reflecting a decline in Diabetes
R&D expenses. In the second quarter, the ratio of R&D to
sales decreased 1.9 percentage points to 16.5% compared to the
prior year. First-half R&D expenses decreased 9.4% to €2,692
million (down 10.1% at CER). In the first half, the ratio of
R&D to sales decreased 1.8 percentage points to 15.7% compared
to the prior year.
Second-quarter selling general and administrative
expenses (SG&A) decreased 7.9% to €2,265 million. At CER,
SG&A expenses were down 7.1%, reflecting smart spending
initiatives and the impact of the COVID-19 pandemic. In the second
quarter, the ratio of SG&A to sales decreased 0.9 percentage
point to 27.6% compared to the prior year. First-half SG&A
expenses decreased 4.7% to €4,607 million (down 4.6% at CER). In
the first half of 2020, the ratio of SG&A to sales was 1.6
percentage points lower at 26.8% compared to the prior year.
Second-quarter operating expenses were €3,617 million, a
decrease of 10.6% and 10.2% at CER. First-half operating expenses
were €7,299 million, a decrease of 6.5% and 6.7% at CER.
Second-quarter other current operating income net of
expenses was -€8 million versus -€91 million in the prior year.
In 2020, this line included an expense of €239 million (versus a
€159 million expense in the second quarter of 2019) corresponding
to the share of profit to Regeneron of the monoclonal antibodies
Alliance, reimbursement of development costs by Regeneron and the
reimbursement of commercialization-related expenses incurred by
Regeneron. Other current operating income net of expenses included
a gain of €157 million related to a revaluation of retained
Regeneron shares in support of the ongoing collaboration with
Regeneron. First-half other current operating income net of
expenses was -€255 million versus -€193 million in the first half
of 2019.
The share of profit from associates was €2 million in the
second quarter versus €7 million in the second quarter of 2019.
Following the sale of its Regeneron stake at the end of
May 2020, Sanofi restated its
previously reported non-GAAP indicator (Business Net Income) and
excluded the effect of equity method of accounting for Regeneron
investment in 2019 and Q1 2020. The Q2 2020 business P&L does
not include any effect of the equity method of accounting for
Regeneron investment in this line. In the first half, the share of
profits from associates was €11 million versus €10 million for the
same period of 2019.
In the second quarter and the first half of 2020,
non-controlling interests were -€9 million and -€21
million versus -€5 million and -€15 million for the same period of
2019, respectively.
Second-quarter business operating income (BOI) increased
3.3% to €2,146 million. At CER, BOI increased 5.3%. The ratio of
BOI to net sales increased 2 percentage points to 26.1% versus the
second quarter of 2019. Over the period, the BOI ratio of segments
were 37.4% for Pharmaceuticals (up 6.4 percentage points), 19.0%
for Vaccines (down 7.6 percentage points) and 29.8% for CHC (down
10.6 percentage points). First-half business operating income was
€4,683 million, up 8.8% (up 9.8% at CER) and included €990 million
of saving initiatives (including around €110 million of savings
related to COVID-19). In the first half, operational excellence and
deprioritized businesses generated savings of €320 million and €300
million, respectively while smart spending initiatives realized
€370 million. In the first half of 2020, the ratio of business
operating income to net sales increased 2 percentage points
to 27.3%.
Net financial expenses were -€92 million in the
second quarter versus -€96 million in the same period of 2019.
First-half net financial expenses were -€167 million versus -€150
million in the first half of 2019.
Second-quarter and first-half effective tax rate was
stable at 22.0% versus the prior period. Sanofi continues to expect
its effective tax rate to be around 22% in 2020.
Second-quarter business net income(9)
increased 3.6% to €1,601 million and increased 5.6% at CER. The
ratio of business net income to net sales increased 1.6 percentage
points to 19.5% versus the second quarter of 2019. First-half 2020
business net income(9) increased 8.7% to €3,521
million and increased 9.8% at CER. The ratio of business net income
to net sales increased 1.5 percentage points to 20.5% versus the
first half of 2019.
(9) See Appendix 3 for 2020 second-quarter consolidated
income statement; see Appendix 10 for definitions of financial
indicators, and Appendix 4 for reconciliation of IFRS net income
reported to business net income.
In the second quarter of 2020, business earnings per
share(9) (EPS) increased 3.2% to €1.28 on a
reported basis and 4.8% at CER. Excluding the gain on the
revaluation of the retained Regeneron shares, business EPS was
€1.18, down 2.4% at CER. The average number of shares outstanding
was 1,252.2 million versus 1,248.5 million in the second quarter of
2019.
In the first half of 2020, business earnings per
share(9) was €2.81, up 8.1% on a reported basis and up
9.2% at CER. The average number of shares outstanding was 1,251.7
million in the first half of 2020 versus 1,247.2 million in the
first half 2019.
Reconciliation of IFRS net income reported to business net
income (see Appendix 4)
In the first half of 2020, the IFRS net income was €9,281
million. The main items excluded from the business net income
were:
- An amortization charge of €883 million related to fair value
remeasurement on intangible assets of acquired companies (primarily
Genzyme: €295 million, Bioverativ: €170 million, Boehringer
Ingelheim CHC business: €101 million, Aventis: €68 million) and to
acquired intangible assets (licenses/products: €44 million). These
items have no cash impact on the Company.
- An impairment of intangible assets of €323 million related to
several projects including Diabetes.
- Restructuring costs and similar items of €758 million related
to streamlining initiatives in Europe.
- A pre-tax gain of €129 million arising from the divestment of
Seprafilm to Baxter.
- A gain of €7,225 million related to the sales of the majority
of Sanofi's Regeneron shares completed on May 29.
- A €1 million tax effect arising from the items listed above,
mainly comprising €302 million of deferred taxes generated by
amortization and impairments of intangible assets and €232 million
associated with restructuring costs and similar items and -€475
million of tax related to the sale of Regeneron shares. (see
Appendix 4).
- €313 million corresponding to the share of income related to
equity accounting from Regeneron until May
29, 2020. Sanofi non-GAAP indicator (Business net income)
does not include the share of income related to equity accounting
since it ceased to be an associate on May
29, 2020.
- An income of €30 million net of tax related to restructuring
costs of associates and joint ventures and expenses arising from
the impact of acquisitions on associates and joint ventures.
Capital Allocation
In the first half of 2020, free cash flow(10)
increased by 69.6% to €3,568 million, after net changes in working
capital
(-€306 million), capital expenditures (-€534 million) and other
asset acquisitions1 (-€334 million), disposal
proceeds1 (€682 million), and payments related to
restructuring and similar items (-€458 million). Over the period,
acquisitions2 were €2,245 million (related to Synthorx)
and proceeds from disposals2 net of tax were €10,512
million (related to sales of Regeneron shares). As a consequence,
net debt decreased from €15,107 million at December 31, 2019, to €7,680 million at
June 30, 2020 (amount net of €15,969
million cash and cash equivalents).
1 Not exceeding €500 million per
transaction.
2 Amount of the
transaction above €500 million per transaction.
(10) non-GAAP financial measure (definition in Appendix
10).
To access the full press release of the 2020 Q2 results,
please click here.
Forward-Looking Statements
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995, as
amended. Forward-looking statements are statements that are not
historical facts. These statements include projections and
estimates and their underlying assumptions, statements regarding
plans, objectives, intentions and expectations with respect to
future financial results, events, operations, services, product
development and potential, and statements regarding future
performance. Forward-looking statements are generally identified by
the words "expects", "anticipates", "believes", "intends",
"estimates", "plans" and similar expressions. Although Sanofi's
management believes that the expectations reflected in such
forward-looking statements are reasonable, investors are cautioned
that forward-looking information and statements are subject to
various risks and uncertainties, many of which are difficult to
predict and generally beyond the control of Sanofi, that could
cause actual results and developments to differ materially from
those expressed in, or implied or projected by, the forward-looking
information and statements. These risks and uncertainties include
among other things, the uncertainties inherent in research and
development, future clinical data and analysis, including post
marketing, decisions by regulatory authorities, such as the FDA or
the EMA, regarding whether and when to approve any drug, device or
biological application that may be filed for any such product
candidates as well as their decisions regarding labelling and other
matters that could affect the availability or commercial potential
of such product candidates, the fact that product candidates if
approved may not be commercially successful, the future approval
and commercial success of therapeutic alternatives, Sanofi's
ability to benefit from external growth opportunities, to complete
related transactions and/or obtain regulatory clearances, risks
associated with intellectual property and any related pending or
future litigation and the ultimate outcome of such
litigation, trends in exchange rates and prevailing interest
rates, volatile economic and market conditions, cost containment
initiatives and subsequent changes thereto, and the impact that
COVID-19 will have on us, our customers, suppliers, vendors, and
other business partners, and the financial condition of any one of
them, as well as on our employees and on the global economy as a
whole. Any material effect of COVID-19 on any of the
foregoing could also adversely impact us. This situation is
changing rapidly and additional impacts may arise of which we are
not currently aware and may exacerbate other previously identified
risks. The risks and uncertainties also include the uncertainties
discussed or identified in the public filings with the SEC and the
AMF made by Sanofi, including those listed under "Risk Factors" and
"Cautionary Statement Regarding Forward-Looking Statements" in
Sanofi's annual report on Form 20-F for the year ended December 31, 2019. Other than as required by
applicable law, Sanofi does not undertake any obligation to update
or revise any forward-looking information or statements.
Media Relations:
Ashleigh Koss
908-981-8745
Email: Ashleigh.koss@sanofi.com
Investor Relations:
Felix Lauscher
+33 (0)1 53 77 45 45
Email: IR@sanofi.com
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