SANOFI (SNY) Earnings Report: Q1 2016 Conference Call ... · Welcome to the Sanofi Q1 2016 results conference call and live webcast. (Operator instructions.) The conference must not

CompanyName:Sanof iSAADRCompanyTicker:SNYSector:HealthCareIndustry:Drugs

EventDescription:Q12016EarningsCallMarketCapasofEventDate:111.90BPriceasofEventDate:41.1

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SANOFI(SNY)EarningsReport:Q12016ConferenceCallTranscriptThefollowingSANOFIconferencecalltookplaceonApril29,2016,08:30AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

SebastienMartel;Sanofi;InvestorRelationsOlivierBrandicourt;Sanofi;CEOJeromeContamine;Sanofi;CFOPascaleWitz;Sanofi;EVP,Diabetes&CardiovascularCarstenHellmann;Sanofi;EVP,MerialPeterGuenter;Sanofi;EVP,GeneralMedicine&EmergingMarketsEliasZerhouni;Sanofi;PresidentGlobalR&DOlivierCharmeil;Sanofi;EVP,VaccinesDavidMeeker;Sanofi;CEO,SanofiGenzymeKarenLinehan;Sanofi;EVP,LegalAffairs&GeneralCounsel

OtherPart icipants

FlorentCespedes;SocieteGenerale;AnalystJoWalton;CreditSuisse;AnalystTimRice;DeutscheBank;AnalystMichaelLeuchten;Barclays;AnalystPhilippeLanone;Natixis;AnalystSteveScala;Cowen&Co.;AnalystPeterVerdult;Citigroup;AnalystVincentMeunier;MorganStanley;AnalystGrahamParry;BofAMerrillLynch;AnalystSeamusFernandez;LeerinkPartners;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

WelcometotheSanofiQ12016resultsconferencecallandlivewebcast.

(Operatorinstructions.)

Theconferencemustnotberecordedforpublicationorbroadcast.

IwouldnowliketoturntheconferenceovertoMr.SebastienMartel,VicePresident,HeadofInvestorRelationsatSanofi.Pleasegoahead,sir.

SebastienMartel(InvestorRelations):

Thankyou,operator.Goodmorning,andgoodafternoontoeveryoneonthecall.ThankyouforjoiningustoreviewSanofi'sfirstquarter2016results.Asalways,theslidestothiscallhavebeenpostedontheInvestorspageofourwebsiteatsanofi.com.




AsyoucanseeonSlide2,I'dliketoremindyouthatinformationpresentedinthiscallcontainsforward-lookingstatementsthatinvolveknownandunknownrisks,uncertaintiesandotherfactorsthatmaycauseactualresultstodiffermaterially.IreferyoutoourForm20-FdocumentonfilewiththeSECandalsoourdocumentreferenceforadescriptionoftheseriskfactors.

Withthat,pleaseadvancetoSlide3andletmeintroduceourspeakersonthecalltoday.

WithmeareOlivierBrandicourt,ourChiefExecutiveOfficer;andJeromeContamine,ourChiefFinancialOfficer.AlsojoiningustodayfortheQ&Aaretheheadofour5globalbusinessunits,O livierCharmeil,PeterGuenter,CarstenHellmann,DavidMeekerandPascaleWitz.WealsohaveEliasZerhouni,President,GlobalR&D;aswellasKarenLinehan,ourGeneralCounsel,todayonthecall.

Nowbeforewebegin,letmetellyouthat,asusual,O livierwilldiscussthekeyhighlightsonthefirstquarterof2016andthenJérômewillreviewSanofi'sfinancialresults.Afterthat,we'llopenthecalltoQ&A.

Beforewestart,I'dliketohighlightsomeimportantaccountingitemsaffectingthefirstquarter,andthereare3ofthem:First,I'dliketoremindyouthatasaresultoftheannouncementofexclusivenegotiationwithBoehringerIngelheimonthepotentialassetswap,certainchangesinthewaywereportandpresentourresultsarerequired.UndercurrentIFRSaccountingstandards,weneedtoreportAnimalHealthseparatelyasadiscontinuedoperation.However,tohelpwithyouryear-over-yearcomparisons,wewillusethetermaggregate,whichsimplymeansthatourAnimalHealthbusinessisincludedinourfinancialresultsline,asbefore.

Second,pleasenotethataportionoftherevenuesfromVaxServe,whichisSanofi'svaccinedistributionandserviceproviderintheU.S.,hasbeenreclassifiedfromsalestootherrevenuesfromJanuary1,2016.ThisreclassificationrelatesonlytothoserevenuesfromVaxServewhicharegeneratedbythedistributionofthird-partyvaccinesandproducts.InordertoensurethecomparabilityofVaxServe'ssalesofnon-groupproductsandservicesyear-over-year,priorperiods'comparativenetsaleshavebeenreclassifiedtothelineotherrevenues,accordingly.WebelievethatthisreclassificationprovidesyouwithabetterunderstandingofthekeydriversofourVaccinesbusiness.Andlastly,giventhatthere'sbeennoindicationofimprovementintheeconomicsituationinVenezuela,SanofihasdecidedtochangetheFXrateusedfortheVenezuelanbolivar.SanofinowusestheDICOMexchangerateofVEF273perU.S.dollar.ThisnewexchangeratereplacestheofficialCENCOEXrateofVEF6.3perU.S.dollar,whichwasusedinthefirstquarteroflastyear.

WiththatI'dliketoturnthecallovertoOlivier.

OlivierBrandicourt (CEO):

Thankyou,Sebastien.Goodmorning,goodafternoontoeveryone,andwelcometoourfirstquarter2016earningsconferencecall.

StartingwithSlidenumber5,I'mpleasedwithourperformanceinthefirstquarterandtheprogresswehavemadeonour2020roadmap.First,asyouhaveseen,wereportedsolidfinancialresultswithAggregatesalesofEUR8.5billionandEPSgrowthof5.3%atconstantexchangeratetoEUR1.34.

Second,wecontinuetomoveforwardwithareshapingofourportfolio.Asyousawfromournewsreleaseyesterday,werecentlymadeanonbindingproposaltoacquireMedivation.WebelievecombiningSanofiandMedivationwillbolsterourOncologyfranchiseandgeneratevalueforshareholdersofbothcompanies.WealreadyhaveapresenceinprostatecancerwithJevtana,andthistransactionwouldbroadenourportfoliointhisimportantindicationandpotentiallyadd2Oncologyassetsinclinicaldevelopment.Thisproposedcombinationhasanattractivefinancialrationaleandwillbeimmediately




accretivetoearnings.Wewill,ofcourse,continuetobefinanciallydisciplinedduringthisprocess.

WedecidedtogopublicyesterdaybecauseMedivationmanagementwasunfortunatelyunwillingtoengage,andwefeltthatshareholdersofbothcompaniesshouldbeinformedaboutourproposal.Beyondthisstatement,itwouldbeprematuretomakefurthercommentstoday.AndIwillthereforeaskparticipantsonthecalltorespectthesensitivityofthesituationandtokeepquestionslimitedtothosepertainingtothefirstquarter.

Movingtootherourbusinessreshapingactivities,asyouknow,wearecurrentlyinexclusivediscussionswithBoehringerIngelheim,andI'mpleasedtoreportthatthedealisexpectedtobesignedmid-yearandtoclosebyyear-end.InVaccines,wedecidedtoendourjointvaccineoperationswithMerckinEuropebyyear-end.Withthisdecision,wewillbeabletopursueourowngrowthstrategyforvaccinesinthisimportantgeography.

Third,weremainfocusedonourkeylaunches.InDiabetes,ToujeocontinuestocapturemarketshareintheU.S.andinEurope.ForPraluent,wecontinuetoseealimiteduptakeinthemarketswhereithasbeenlaunched.WeareworkingwithpayersandphysiciansonwaystomakeiteasierforpatientstohaveaccesstoPraluentintheU.S.andEuropeandtobenefitfromthisinnovativemedicine.

Dengvaxia,thefirstdenguevaccine,hasnowbeenapprovedin4countries,includingBrazilandMexico.Importantly,thefirstpublicdengueimmunizationprogramhasstartedinthePhilippinesinApril.AndI'mencouragedbytherecentrecommendationbytheStrategicAdvisoryGroupofExpertsonImmunizationtotheWorldHealthOrganizationtouseDengvaxiainendemiccountries.Thisimportantrecommendationrecognizesthestrongpublichealthbenefitofourdenguevaccineandshouldhelpussecurefurtherendemiccountries'approvalsduring2016.

Lastly,wecontinuetodriveinnovation.ThefirstquarterhasbeenbusywithR&Dnewsflow.Notably,withtheimportantannouncementofpositivetoplineresultsfrom2PhaseIIItrialswithdupilumabinatopicdermatitis.Andforsarilumab,wereportedtoplineresultsofthePhaseIIImonotherapystudydemonstratingsuperiorityversusHumirainrheumatoidarthritis.InDiabetes,wesubmittedLixiLan,aonce-dailycombinationofinsulinglargineandlixisenatidetotheEuropeanregulatoryagencyforreview.

MovingontoSlidenumber6.Groupsales,whichincludeAnimalHealth,grewslightlyinthefirstquarterandreachedEUR8.543billion.ChangesinVaccinesalesreportingandVenezuelacurrencyimpactmaskthegoodunderlyingperformance.Atfirstglance,itmayappearthatreportedsaleswereabitbelowconsensusforecast.Infact,approximatelyhalfofthisgapisduetoareportingchangeinVaccines,switchingEUR83millionofVaxServesalestootherrevenues.TheremainderisduetoVenezuela,andalthoughweflaggeditpriortotheresults,itwaslikelynotfullyforecastbyanalysts.ExcludingVenezuelaandVaxServe,groupsalesareup3%atconstantexchangerate,reflectingagainstthestrengthoftheunderlyingbusiness.Onthebottomline,BusinessEPSgrew5.3%atCERtoEUR1.34.Onareportedbasis,BusinessEPSwasup1.5%,reflectinganegativecurrencyimpactof$0.05.

NowonSlide7.Asyouknow,wehaverestructuredthegroupinto5globalbusinessunitswitheffectfromJanuary1ofthisyear.ThisinternalreportingstructuresimplifiesSanofi,deepensspecializationandallowsclearfocusongrowthdrivers.YoucanseefromthisslidethatthekeydriversofsalesgrowthinQ1wereourSanofiGenzyme,SanofiPasteurandMerialGBUs.Iwillcommentontheperformanceofeachofourkeyfranchisesinjustaminute,butIwouldparticularlyliketohighlightheretheroughly20%growthachievedbySanofiGenzyme.

Onthenextslide,Slide8,wepresentsalesbyglobalfranchise.Asyousawfromthepreviousslide,thisisnothowwemanagethebusinesses.Indeed,allEmergingMarketspharmaceuticalsalesarenowincludedintheGeneralMedicines&EmergingMarketsGBU.However,atthisstage,wethinkthatshowing




youtheperformancebyfranchiseprovidesabridgetoourpreviousreportingmethodologyandallowsstraightforwardpeercomparisons.Again,thisslideemphasizestheimportanceofourSpecialtyCare,VaccineandAnimalHealthfranchisetoourgrowthinthequarter.WeareespeciallypleasedthatourSpecialtyCarebusinesscontinuestodeliverstrongdouble-digitgrowthandthatourVaccinebusinessgrewby8%despitethePentacelsupplyconstraintintheU.S.,whichimpactedourdevelopedmarketperformance.

YoucanseeontheslidethatVenezuelaimpactedouroverallperformance.ThisisparticularlynoticeableforConsumerHealthcare,whichwasdown9.9%atCERinEmergingMarkets,butactuallygrew3.8%ifweexcludeVenezuela.AsthereisasimilarstoryforEstablishedProductsinEmergingMarkets,whichweredown2.1%inthequarterbutincreased8.8%excludingVenezuela.

Asafinalwordonthisslide,theEstablishedProductsindevelopedmarketswereheavilyimpactedbyPlavixgenericsinJapan,theimpactofwhichwestarttoannualizeinsecondhalf.

TurningtoSlide9andtakingacloserlookatthegrowthdriversintheindividualfranchises,youcanseethatthesuccessstoryofourrarediseasebusinesshascontinuedinthefirstquarter.SalesoftheglobalfranchisewereEUR646million,up8.5%.NewpatientaccrualscontinuetobethemaincontributortothegrowthofourbrandsinGaucher,FabryandPompediseases.SpecificallyinGaucher,thefirstquartermarkedthemilestonewithnowmorethan500patientsreceivingCerdelga,ofwhich38%arefromnon-Cerezymepatientsegments.NewpatientaccrualsalsotranslatedintogrowthforFabrazymeinthequarter,growing6.4%inthefirst3monthsfollowingtheparticularlystrongfourthquarterlastyear.

OnSlide10,ourMultipleSclerosisfranchisedeliveredverystronggrowthinthefirstquarter.Salesofour2brandsgrewsignificantlycomparedtothefirstquarteroflastyear.Aubagioremainsthefastest-growingoraldisease-modifyingtherapyintheMSmarket,andannualizedsalesnowexceedEUR1billion.I'mparticularlypleasedtoseethesuccessofLemtrada,supportedbynewclinicalevidencethatcontinuestodemonstratehowthishighlyeffectivedrugcanserveasatransformativetreatmentforappropriatepatients.

MovingonSlide11,ourglobalVaccinesbusinessunitconsidered--continuestodeliver.Vaccinesshowedgoodgrowthof8.2%despitelowersalesofPentacelduetosupplyconstraintintheU.S.thatwehighlightedlastquarter.Salesinthequarterweredrivenbythepolio,pertussisandHibvaccinesfranchiseinEmergingMarketsandbyMenactraintheU.S.asaresultoffavorableorderphasingbytheCDC.

Inaddition,Dengvaxiacontributedtogrowth,too,inEmergingMarketswithaninitialEUR19millionrecordedfromsalesinthePhilippines.Ofnote,werecentlysubmittedthedossierforapprovalofDengvaxiatotheregulatoryagencyinEurope.

NowonSlide12.LetmeturntoourDiabetesfranchiseandhaveacloserlookattheperformanceofour2insulinglargineproducts:ToujeoandLantus.MymainmessagehereisthatourglobalDiabetesfranchisecontinuestoperforminlinewithourrevisedguidancefromlastOctober.Inthefirstquarter,worldwidesalesofDiabeteswereEUR1.7billion,down4.5%,whichisactuallybetterthanthe12.6%declinewesawinthepreviousquarter.Asexpected,firstquartersalesintheU.S.continuedtobenegativelyimpactedbyloweraveragenetprice.Indeed,thisresultedinasalesdecreaseof11.1%.However,fromavolumeperspective,IwillalsoliketopointoutthatourcombinedglarginefranchiseofLantusandToujeomaintainedarelativelystableshareofthebasalinsulinmarketintheU.S.

InEurope,Diabetesgrew4%despitebiosimilarcompetition.AndinEmergingMarkets,salesincreasedby12%,excludingVenezuela,withstrongcontributioncomingfromourleadingpositioninthefast-growingdiabetesmarketinChina.Overall,Diabetesperformedinlinewithourguidanceofglobalsalestobe




downbyminus4%tominus8%annuallyovertheperiodof2015to2018.

MovingtoSlide13.LetmetakeafewminutestoupdateyouonthelaunchofPraluentandaddsomeperspective.SalesinthefirstquarterwereEUR12million,reflectingthesignificantpayerrestrictionslimitingtheuptakeofthisinnovativemedicine.AsweknowfromourmarketsresearchconductedintheU.S.andGermany,physiciansawarenessofthePCSK9classandtheirwillingnesstousethisnewtreatmentoptionhavereachedalreadyveryhighlevels.However,despitetheobservedstrongintenttoprescribePCSK9toappropriatepatients,bothphysiciansandpatientsareconfrontedwithsignificantadministrativehurdleswhichareimposedbypayersbeforeprovidingaccesstothisimportantnewtherapy,andprescriptionvolumesremainsubduedinkeymarkets,andtreatmentwiththisinnovativemedicineoftenremainsreservedtoveryseverepatients.

Inthismarketenvironment,webelieveourODYSSEYcardiovascularOUTCOMESstudywillbeakeydriverinshapingthefuturesuccessofPraluent.Atotalof18,000patientshavebeenenrolledgloballyinthePhaseIIItrial.WearepleasedtoreportthattheDataMonitoringCommitteeoftheODYSSEYOUTCOMESstudyrecentlycompletedthefirstinterimanalysis.Inadditiontothereviewofthesafetydata,theDMCperformedafutilityassessmentandrecommendedthestudytocontinuewithnochallenges.PleasenotethatSanofiremainsblindedtothedatafromthistrial.Thesecondinterimdataanalysisforfutilityandoverwhelmingefficacymaypotentiallybeavailableinthesecondhalfofthisyear,when75%ofthetargetednumberofprimaryeventshasoccurred.

WhilewebelievethattheOUTCOMESstudyresultsandtheirincorporationintoclinicalpracticeguidelineswillsupportbroaderuseofPraluent,weseealimiteduptakeinthemarketplaceforthetimebeing.AsImentionedearlier,wearealsoworkingwithpayersandphysiciansonwaystomakeiteasierforappropriatepatientstohaveaccesstoPraluentandbenefitfromthisinnovativemedicine.Letmesaythatweareconcernedthateligiblepatientsarenotgettingtimelyaccesstothisinnovativedrug,andthisconcernissupportedbyfeedbackwereceiveeverydayfromGPsandcardiologistsaswellasfromourownmarketresearch,whichwecandiscussintheQ&A.

IntheU.S.,oureffortsalsofocusondrivingproductawarenessandadoptionusing[ph]materialwhichsimplycommunicatethebenefitsofourdosingflexibility,educateonourefficacy,safetyandadministrationdata,andprovideinformationregardingourcoverage,patient-assistedprogramsandsupportservices.Toexpandourdosingflexibilityoptions,wealsoexpecttofilethe300-milligrammonthlydosingforPraluentwiththeFDAinthesecondquarterthisyear.Finally,SanofiandRegeneronstronglydisagreewiththerecentU.S.juryverdictinongoingpatentlitigationandwillappeal.WedonotbelievethatAmgen'spatentsarevalidandweareconfidentthatthelawandthefactssupportourinvalidityposition.

TurningtoSlide14.TheConsumerHealthcarefranchisedeliveredasolidperformanceinthefirstquarter,withsalesup4.1%,excludingtheimpactofVenezuelaandadjustingforthedivestmentofseveralsmallproducts.IntheU.S.,saleswereup7.7%,drivenbyourstrongAllegraandNasacortandglobal(sic)[Gold]Bondbrands.InEurope,salesweredown7.3%toEUR242millioninthequarter,impactedbyDolipranepricecutsinFrancein2015andamildwinterseasoncomparedwiththefirstquarterlastyear.InEmergingMarkets,salesweredown9.9%toEUR311million,primarilyduetoVenezuela.However,excludingVenezuela,CHCsalesinEmergingMarketswereup3.8%.AsImentionedearlier,ourexclusivediscussionwithBoehringerIngelheimontheintendedassetswapofourAnimalHealthbusinesswithBoehringerIngelheim'sCHCbusinessareprogressingwell,andweexpecttosignthetransactionaroundmid-yearandtoclosethedealbyyear-end.

OnSlide15,takingacloserlookatthebreakdownofsalesbygeographies.Youcanseethatwearewelldiversifiedandthatthegrowthcontributionfromemergingmarketsremainsstrong.ExcludingVenezuela,ourEmergingMarketsgrowthreached13.1%,whichwebelievetobewellaheadofourpeers.Despite




economicslowdownandvolatilityinsomecountries,salesinourstrongestregion,Asia,grew15.6%.SalesinAsiawereparticularlyboostedby17.6%growthinChina,whereSanofioutpacesmarketgrowth.InChina,wecontinuetobenefitfromawell-suitedportfolioofqualitybrandsinchronicdiseasesandvaccines.Wearealsocapturingmarketshareforourkeybrandsinthefast-growingcountymarketoutsidethekeycities.

MovingontoSlidenumber16.Iwanttohighlightthekeypipelinenewsanddatapointswhichweexpectthisyear.Asyoucansee,2016willcontinuetoberichinR&Dnewsflow.Asmentionedearlier,weforeseeadditionalregulatoryapprovalsforDengvaxiathroughouttheyear.InDiabetes,weexpectU.S.regulatorydecisionsonlixisenatideandLixiLaninJulyandAugust2016,respectively,withanFDAadvisorycommitteemeetingscheduledforthese2productsonMay25.Forsarilumab,theFDAacceptedforreviewourBLAforrheumatoidarthritisandthePDUFAdateissetforOctober30.WearealsoexpectingtosubmitregulatoryfilingforsarilumabinEuropeinQ32016.

Followingtherecentpositivetoplineresultsfrom2PhaseIIIdupilumabstudiesinatopicdermatitis,we'relookingforwardtotheexpectedU.S.regulatorysubmissionforthisbreakthroughinnovationinQ3thisyear.AndasImentionedearlier,weexpectthesecondinterimanalysisofODYSSEYOUTCOMESduringthesecondhalfoftheyear.

Lastlyonthisslide,Iwouldparticularlyliketohighlightthatwehave7registrationalstudiesexpectedtostartthisyear,includingthePD-1fromtheRegeneronI/Ocollaboration.CutaneoussquamouscellcarcinomawillbenovelIItypethatisnotaddressedbyotherPD-1inhibitors.Asweannouncedlastmarch,Yong-JunLiuhasjoinedSanofiasHeadofResearch,GlobalR&D.HewillreporttoEliasZerhouni,President,GlobalR&D.Dr.Liuisoneoftheworld'smostprolificresearchersinimmunology.He'sattherootofthedevelopmentofseveralkeydrugtargetsintheareaofallergy,immunologyandoncology.IhavegreatconfidencethatYong-JunwillpositionSanofiontheleadingedgeofscientificbreakthroughsanddrugdiscoveryintheyearstocome.

Thenext2slidesfocusonsarilumabanddupilumab.EachhasbeendevelopedinpartnershipwithRegeneron,andweexpectthesetobecomethecornerstonesofanimportantnewfranchiseinimmunology.

OnSlide17,sarilumabisthefirsthumanIL-6receptorantibodytobespecificallydevelopedinaconvenientsubcutaneousformulation.WeexpectthedrugtoenterthelargebuthighlycompetitiveRAmarket.Theimportantpointtonotehereisthatthisisanindicationwheretheunmetneedsremainsurprisinglyhigh.Manypatientscyclethroughmultipletherapiesaseachdrugtendstostopworkingwithinafewyears.

Pivotaldataforsarilumab,incombinationwithmethotrexate,supportsitsuseinTNF-inadequaterespondersandmethotrexate-inadequateresponders,aswellasitsusedasapotentialmonotherapy.Importantly,x-raydatademonstrating90%inhibitionofstructuraldamagewithour200-milligramdoseevery2weekscouldbeakeydifferentiatingpoint.WealsorecentlyannouncedtoplineresultsfortheSARIL-RA-MONARCHmonotherapystudy,demonstratingthesuperiorityofsarilumabefficacyversusHumirainpatientswithactiveRA.Safetyprofileofsarilumabalsofeaturespotentialdosingflexibilitywith2doses,150milligramsand200milligramsevery2weeks,whichhavebeenevaluated.

TheU.S.regulatorydecisionforsarilumabisexpectedinearlyQ42016,andtheregulatorysubmissionintheEUisplannedforthethirdquarter.

TurningtoSlide18.Dupilumabhasapotentialtobeatrulytransformativetherapyforallrangeofallergicdiseases,drivenbyanover-reactiveTh2pathway.ItistheonlymonoclonalantibodyindevelopmentwithdualinhibitionofIL-4andIL-13receptors.Dupilumabisexpectedtobethefirstina




newclassofimmunotherapiesformoderatetosevereatopicdermatitis,aseriouschronicinflammatoryskindiseasemarkedbyawidespreadrash,itchingandtheassociatedpsychosocialco-morbidity.Dupilumabisthefirstsystematictherapytoshowpositivetoplineresultsfrom2identicallydesignedPhaseIIItrialsinpatientwithmoderatetosevereatopicdermatitis,demonstratingcompellingefficacywithoutevidenceofimmune-suppressingsideeffects.Inthe2studies,whichwecallSOLO1andSOLO2,dupilumab'sexcellentefficacywasshownacrossarangeofendpoints,includingthe5-pointInvestigator'sGlobalAssessmentscale,aswellastheEczemaAreaandSeverityIndexandothermeasures.MoredetailedresultsfromSOLO1andSOLO2willbesubmittedforpresentationatafuturemedicalcongress.

WearelookingforwardtotheplannedU.S.regulatorysubmissionforthisbreakthroughinnovationinQ3thisyear.TherollingBLAsubmissionwillalsoincludedatafromtheplannedsecondquarter2016interimanalysisoftheLIBERTYCHRONOSstudyofdupilumabincombinationwithtopicalcorticosteroids.FinalresultsfortheLIBERTYCHRONOSstudyareexpectedinthethirdquarterthisyear.

Lastly,wealsoinitiatedaEuropeandupilumabpivotalstudyinQ12016toassessefficacyinadultpatientswithatopicdermatitiswhorespondinadequatelytosystemiccyclosporineAorarenotsuitableforcyclosporineAtreatment.

Andwiththat,IwillnowturnthecallovertoJérômetodiscussthedetailsofourfinancialresults.

JeromeContamine (CFO):

Thankyouverymuch,O livier,andgoodmorning,goodafternoontoeveryone.SoI'llstartwithSlide20.SoasOlivermentionedearlier,weexperiencedamodestForExheadwindinthefirstquarterof2016,whichcontrastswithastrongFXtailwindinallquartersof2015.TheFXheadwindinthefirstquarterdecreasedsalesbyEUR228million,representinganegative2.6%impact.ItwasmainlydrivenbytheadverseevolutionofseveralEmergingMarketcurrencies,whichmorethanoffsetthemodestpositiveeffectfromtheU.S.dollaragainsttheeuro.TheFXheadwindimpactontheEPSofEUR0.05pershareor3.8percentagepointswasmodestlyhigherthantheimpactongroupsales.However,allthisdoesnotincludealltheVenezuelaeffectforthisyear,asalreadyalludedtointheintroductionofthiscall.

SpecificallyonVenezuela,thereare2impacts.First,wenowuseanewFXratetotranslateourVenezuelansalesintoouraccounts,whichledtoadeclineinsalesofEUR197million.Onthistotal,EUR52millionwereCHC,andthebulkoftherestwasotherpharmaproducts.Lookingtotherestoftheyear,wewillexperienceanotherdifficultsalescomparisoninQ2,butaneasiercomparisoninthesecondhalf.Specificallylastyear,werecordedEUR199millionofsalesinQ2inVenezuela,EUR24millioninQ3andEUR32millioninQ4.I'llalsoremindyouthatwebookedFXlossesrelatedtoVenezuelainQ3andQ4lastyear,whichclearlyarenotgoingtooccurthisyear.Asamatteroffact,wealsobookedinthisquarterof'16,firstquarter,EUR102millionFXlossinotheroperatingincometoreflectourremainingexposuretoVenezuela,inlinewithwhatwementionedduringourfullyearresultscall.

Overall,thisexceptionalnegativeimpactofVenezuelaonBusinessEPSinthequarterwasEUR0.09.Asalways,foradditionalinformationonforeignexchangesensitivitytokeycurrencies,pleaserefertothefirstslideoffinanceappendicesofthisslidedeck.

Nowlet'shaveacloserlookatthefirstquarterP&LonSlide21.LetmeremindyouonceagainthatmycommentsarebasedonAggregateGroupsales,whichstillincludeAnimalHealth,whileunderIFRSrule,MerialistreatedasdiscontinuedoperationsasofJanuary1,2015.

AsOliviermentionedearlier,AggregateGroupsalesinthequarterwerearoundEUR8.5billion,aslightincreaseof0.7%atconstantexchangerate.Asareminder,otherrevenuesnowincludeVaxServe'ssales




ofvaccinesfromthird-partymanufacturers.Toclarify,theserelatedamountswereEUR100millioninQ12015,asyoucanseeintheslide,andEUR83millionthisquarter.

GrossprofitwasEUR6billionintheperiod,up0.6%atconstantexchangerate.IwillcomebacktothedetailsofthegrossmarginandOpExonthefollowingslides,butletmehighlightherethelower-than-anticipatedincreaseinSG&A,up1.3%,reflectingtightG&Acostcontrolsintheperiodandreallocationofresourcesbehindkeyproductlaunches,includingPraluent,Dengvaxia,Toujeo,sarilumabandtheMSfranchise.

OthercurrentoperatingincomewaspositiveEUR79millioninthequartercomparedtonegativeEUR67millionduringthesameperiodoflastyear.Inthefirstquarter2016,thislineincludedanindemnityamountofEUR192millionbeforetax,pursuanttoafinalarbitrationwhichwasgrantedtoSanofiinFebruaryasconsequenceofacontractualdispute.Partiallyoffsettingthisgainwasaforeignexchangeloss,mainlyrelatedtoVenezuela,whicharedescribedalready.

Movingontothenextitem,theshareofprofitsfromassociateswasEUR23millioninthefirstquartercomparedtoEUR31millioninthesameperiodin2015.ThislineincludesSanofi'sprofitsharefromourequitystakeof22%inRegeneronandtheVaccinejointventureofSanofiPasteurwithMerckinEurope,whichasyouknow,istargetedtobedissolvedbytheendof2016.Also,theinitialcostsofourDiabetescollaborationwithVerily,formerlyknownasGoogleLifeSciences,wasrecordedinthislineinthefirstquarterof2016.BusinessoperatingincomeofEUR2.4billionwasup3%atconstantexchangerates.

ImovenowtoSlide22,reviewingtheitemsbelowtheBOI.Netfinancialexpensesweremodestlyhigherascomparedtothesameperiodoflastyear,whichincludessmallcapitalgainslinkedtothesaleofsomefinancialinvestments,again,inQ12015.Theeffectivetaxrate,includingAnimalHealthinthefirstquarter,was24%.Forthefullyear2016,wecontinuetoexpectthetaxratetobebetween24%and25%.Businessnetincomeinthefirstquarterof2016wasEUR1.7billion,up3.5%atconstantexchangerates.ExcludingtheindemnityamountonVenezuelanforeignexchangeloss,theBusinessnetincomewouldhaveincreasedby1.5%atCER.Asmentionedearlier,BusinessearningpershareofEUR1.34inthefirstquarterwasup5.3%and1.5%onaconstantexchangerateonareportedbasis,respectively.

Asaresultofsharebuyback,theaveragenumberofsharesoutstandingdecreasedinthefirstquarterof2016byapproximately20millionversuslastyear.

TurningtoSlide23,let'slookattheevolutionofourgrossmargin.AdjustingthehistoricalvalueforthereclassificationofVaxServe,wesawaveryslightupliftinthegrossmarginratiointhefirstquarterof2016to70.3%,representinganincreaseof0.2%versusthefirstquarteroflastyear.Theoutcomereflectedanumberofmovingpartswhichlargelycounterbalanced.Onthepositiveside,wehavehighersalesofSanofiGenzymeonVaccines,somepositivecostefficiencymeasures,aswellasasmallforeignexchangeratebenefit.Onthenegativeside,wehavetheimpactofloweraveragenetpriceforLantusintheU.S.,increasedinvestmentsinmonoclonalantibodyproduction,genericerosionofPlavixsalesinJapanandtherecallofAuvi-Q.

Onthefullyearbasis,consideringtherecentreclassificationofVaxServesalesfromnetsalestootherrevenues,andinlightofourgoodQ1performance,wenowexpectour2016grossmarginratiotobeabove69%,butsomewhatbelow70%atconstantexchangerate.

TurningnowtotheevolutionofoperatingexpensesonSlide24.OpExwasEUR3.7billion,up3%atconstantexchangerateinthefirstquarter.FirstquarterR&DexpensesofEUR1.3billionwereup6.5%atconstantexchangerate,reflectingournewcollaborationsinimmuno-oncologyanddiabetes,dupilumabPhaseIIIprogramandPraluentODYSSEYcardiovascularOUTCOMESstudy,aswellaspost-marketingstudieswithnewlylaunchedproducts.ThisresultedinahigherR&DtoGroupsalesratio




of15%inthefirstquarterof2016comparedtothesameperiodlastyear.SG&AexpenseswereEUR2.4billion,reflectinganincreaseof1.3%atCER.AsIhighlightedalready,thismodestincreasereflectstightG&Acostcontrolsintheperiodandreallocationofresourcesbehindkeyproductlaunches.

Inthefirstquarterof2016,theratioofSG&AtoGroupsalesincreased0.3percentagepointsto28.3%comparedwiththepreviousyear.Fortheremainderof2016,weshouldcontinuetoseesavingsonSG&Aresultingfromprioritizationandthegradualimpactfromtheimplementationofourneworganization,partiallyoffsettingkeyproductlaunches--launchexpenses.Asawhole,wecontinuetoexpectOpExin2016altogethertogrowatasimilarrateversus(inaudible).

MovingontoSlide25.YoucanseethatournetdebthasincreasedtoalmostEUR8.4billioninthefirstquarterof2016.Thisincreaseinpartreflectedsignificantlyhighersharebuybackactivity,whichIwillmentioninamoment.FreecashflowwasEUR878millionfortheperiod,withcapitalexpendituresofEUR325millionversus355millioninthesameperiodlastyear.TheoperatingfreecashflowofEUR2billionwasslightlyabovetheleveloflastyear.NowourworkingcapitalrequirementsincreasedoverQ12015asaresultoftradeworkingcapitalseasonality,mostlyrelatedtoVaccinesandAnimalHealthbusinessesandhighernon-tradeworkingcapitalrelatedtopaymentsoftaxesand[rebase]whichoccurredinQ12016.Thishastobelookedinconjunctionwithaveryfavorableworkingcapitalachievedduringthelastquarterof2015.

Givengeneral[pharmaceutical]marketweaknessinthebeginningof2016,weintensifiedourbuybackactivityandrepurchasedoverEUR1.4billionofourownshares.Asaresult,theaveragenumberofsharesoutstandingdeclinedby20millionoraround1.5%inthefirstquarterof2016comparedtothesameperiodlastyear.

Lastly,wealsorecordedEUR569millionofacquisitions,licensing,netofdisposals,mainlyrelatedto[different]paymentsinconnectionwiththelicensingagreementwithHanmiPharmaceuticalsinDiabetes.

Movingtomylastslide,Slide26,letmeconcludebyreiteratingouroutlookfor2016.2016BusinessEPSisexpectedtobebroadlystableversus2015atconstantaverageexchangerates,barringmajorunforeseenevents.Whenapplyingannounced[ph]2016averageexchangeratestoremainingquartersoftheyearforthisfullyear2016guidance,theimpactforForExonbusinessEPSisexpectedtobeslightlynegative,aroundminus3%.

Aswediscussedinour2015fullyearresultscallinFebruary,wecontinuetoexpectseveralheadwindsfortheremainingquarters,whileafewtailwindswillhaveapositiveimpactduringthesecondhalfoftheyear.Intheinterestoftime,Iwillnotgointomoredetail,butyoucanfindmoredetailsintheappendixofthispresentation.

IwillnowturnthecallovertoOlivierforhisconclusions.


Thankyou,Jerome.SotoconcludeonSlide28,youcanseethatwedeliveredsolidfinancialresultsinthefirstquarter,whichI'mpleasedaboutgiventheheadwindswefaced.Atthesametime,wearediligentlyworkingonourstrategicprioritiesaroundreshapingtheportfolio,executingourkeyproductlaunchesanddrivinginnovationforfuturegrowth.Overall,thisfirstquartergivesusfurtherconfidencethatweareprogressingwellonourroadmap.

NowbeforeweopenthecalltoQ&A,I'dliketoannouncethatafter30quartersasHeadofourGlobalIRFunctionandamemberoftheSeniorManagementteam,SebastienMartelhasdecidedtotakeonanotherexcitingopportunitywithinSanofiGenzymeintheU.S.SebastienwillberesponsibleforstrategyforourSpecialtyCareGBU.GeorgeGrofik,whohasledourU.S.IRoperationsforthelast5years




andwhommanyofyoualreadyknow,isrelocatingtoFranceandwillleadtheGlobalIRteam.IwouldliketothankSebastienforhiscontributionoverthelast7yearsduringwhichSanofihaswonmanyIRawardsandwishhimallthebestinhisnewleadershiprole.IwouldalsoliketowelcomeGeorgetohisnewfunction.

Sowiththat,Sebastien,IthinkweneedtomovetoQ&A.


Thankyou,O livier.Yes,we'rereadynowtoopenthecalltoyourquestions.Asareminder,we'dliketoaskyoutolimityourquestionstomaximumof2each.AndalsoasOliviersaidearlier,torespectthesensitivityaroundtheMedivationproposal,we'dlikeasktheparticipantsonthecalltokeepquestionslimitedtothosepertainingtofirstquarterresults.

Andwiththat,Operator,we'rereadytogo.

QUESTIONS&ANSWERS

Operator :

(Operatorinstructions).

FlorentCespedes,SocieteGenerale.

FlorentCespedes (Analyst-SocieteGenerale):

Goodafternoon,gentlemen.Thankyouverymuchfortakingmyquestions.Twoquickquestions.Twoquickquestions.First,ontheconsumerdecision,couldyoutellusifyoucouldfurtherreinforcethesedivisionsthroughanotherlargeacquisition?Andmysecondquestionisoninsulinlispro.CouldyouremindusourstrategywiththisproductintheU.S.andpotentiallyoutsidetheU.S.aswell?Thankyouverymuch.


Thankyou,Florent.Soweneversayno,right?Soonthefirstquestion,butwe'reverybusyalreadydoingthisswapandincreasingourfranchisebyaverysignificantlevel.Sofornowthat'swhatwearefocusedandconcentratedon,andwereallywanttobesuccessfulinestablishingandthengrowingthisneworstrengthenedfranchise.Butaswesaidduringthelastyearorso,wewould--becauseitisaveryfragmentedsectorandindustry,wewouldlookforopportunitiesaroundspecificassetsoncetheypresent.

Forthesecondquestion,I'mgoingtoaskPascaletogiveyoutheanswer.

PascaleWitz (EVP,Diabetes&Cardiovascular):

Thankyou,O livier.SoFlorent,regardingthestrategiesforlispro,justbeawarethatactuallytheessentialstrategyforSanofi'stodevelopanintegratedportfolioofproductsthatcanaddressthedifferentneedsofpatients,thedifferentstagesintheirtreatmentjourney.Sowewantto--ortobeabletoofferawiderangeofproducts,andsobybringingtomarketSanofi'sowninsulinlisprowouldfurtherreinforceourcommitmentstoextendingtheaccesstomedicationfordiabetespatients.Sowewillcommercializethisproductingeographieswherewecanachievethisobjective,anditwillbeabittooprematuretogointomoredetailsatthisstage.





Okay,thankyou.Thankyou,Pascale.

FlorentCespedes (Analyst-SocieteGenerale):

Thankyou.


Nextquestion,please?

Operator :

JoWalton,CreditSuisse.

JoWalton (Analyst-CreditSuisse):

Hello,JoWalton.Firstly,canwethankSebastienMartelforhisuniqueinputtoallofourworkoverthepast30quarters.AndforsomeofuswhoknewhiminhisroleatSeronoaswell,he'sbeeninIR,quiteafixtureinoursettingforalongtime.Wewishyouwellinanoperationalrole.Andontomyquestions.

IfIcouldpleaseaskaboutanyimpacton--inJapanfrombiosimilarsforLantus.ThatwassomethingthatwascalledoutbyNovointheircall.YourAnimalHealthbusinessisdoingextremelywell.IguessthattheBIconsumerbusinessmaynotbedoingquiteaswell.IsthereanyopportunitytoadjustthepricetoreflecttheextremestrengthinyourAnimalHealthbusiness?

Canyoualsogiveusalittlebitmoreinputin--onChina?You'vedoneextremelywellhere.Othercompaniesaretellingusthatthebiddingprocessthat'sgoingtomaterializeinChinamayhurttheirresultsmoretowardsthesecondhalfoftheyear.Sojustthequestionofwhetheryouthinkthatthestrengththatwe'reseeinginyourChinasalesissustainable.

Andafinalone,onyourviewonLixiLanandXultophy,therelativepositioningofthose,giventhatwe'vehadsuchstrongdatafromLEADER,whetherthat'smadeadifferencebecauseVictozaseemstobenowmuchstrongercomparedtoLyxumia.AndIapologize,Iamgoingtotrywithonefinalthing.Well,I'msureotherpeoplewillaskthisaswell.WithPraluent,you'vetalkedaboutyourmarketpositioningandyourmarketshare--yourmarketresearch.Iwonderifyoucouldtellusalittlebitmoreaboutthat.


Well,Jo,we'reacceptingallofthosequestionsbecauseyouweresonice,right?Westandachance.Sothankyouverymuchforyourcomment.Butallright,PascalewillgiveyoutheansweronJapanLantusfirst.Youwanttostart?


Yes,sure.SoJo,youcertainlyknowinJapanthebiosimilarlaunchedbeforeactually,waybeforeournewinsulinglargine,LantusXR.Soitlaunchedatasignificantdiscountandwithoutthe2weeksprescription.NowyoualsorememberthattheJapanmarketisthesmallestofour3maturemarketsthatwehave.Soatthisstage,wehavelaunchedlastSeptemberourLantusXR,whichisgraduallypenetratingthemarket,butitisstillunderthe2-weekslimitationatthisstage.DoyouwantmetotakeLixiLan?


Youcancomebackagain,that'sfine.Carsten,onthecall,please,questionontheperformanceforthequarterofAnimalHealth.

CarstenHellmann (EVP,Merial):




Yes,wearedoingwell.WehadachangeofthestructureofdistributionintheU.S.Sothereissomefront-loadintheQ1result.Butwearehavingagoodstrongmomentum,andwewillmanagethedouble-digitgrowthfor2016.Aboutthequestionofthepriceadjustment,Iwillgivethattoyou,JeromeContamine.


Idon'tthinkthereisanycommentwecanmakeonthat.Ithinkatthisstage,weareinanexclusivenegotiation,asyouknow,withBoehringer.Idon'tthinkit'stimetocommentmore.


Yes.No,Iagreewiththat.Jo,weareplanningtosignbymidyear,endofJuneorbeginningofJuly.Andatthispoint,wewon'tbeabletogiveyouanansweronthatspecificquestion.

Chinasustainability,Peter?

PeterGuenter (EVP,GeneralMedicine&EmergingMarkets):

Yes.Soofcourse,ingeneralterms,weareveryhappywithourfirstquarterinEmergingMarkets,13.1%andactuallyveryhomogenous.IfyoutakeoutVenezuela,expect[ph]LatinAmerica,11%;Asia,15.6%;Africa,MiddleEastandSouthAsia,11.8%;andEurasia,10%.

NowspecificallyonChina,soyes,we'rehavingaverygoodperformanceagaininthatfirstquarter.Wehavealreadydiscussed,lastcall,onthereasonsforthatgoodperformance.Itisamixtureactuallyoftherightportfolio,therightstructure,averyperformingteamalsointhecounties.

Nowwhatthefuturewillbringisprobablynoteveryquarterwilllooklikethat,andit'struethatwearegoingthroughthoseprovincialtenders,thattherewillbefurtherhospitalsecondbids.Andso--butit'salittlebitdifficulttopredictnow.TheonlythingIcansayisthatifyoulookalittlebitfurtherdowntheroad,thatIMSprojectsgrowth--aCAGRofbetweennowandtheendofthedecadeof7%.Sothatismoreorlessinlinewiththelastcoupleofquarters.Soifwestickwiththatforecast,itwouldmeanthatwewouldprobablybeinsomekindofasteadystateforwhatthemarketconcernsforChina.


Allright,thankyouverymuch,Peter.Lyxumiapositioning,Pascale?


Yes,okay.SoJo,comingbackfirsttothecommentImadeearlier,whichisourstrategytohavea--todevelopanintegratedportfolioproductthatcanaddressthedifferentneedsofthepatientsthroughouttheirjourney.Sowithinthisstrategy,LixiLanisreallywellpositionedbecauseitcanofferanditcanbepositionedasthefirstinjectablethatprovidesgreaterHbA1ccontrolforpatientsinitiatingabasaltherapy,butalsoinbasalintensification.

Andactually,itisimportanttokeepinmindthatactuallyLixiLanwillofferthe2componentsoftheglycemic,the--addressingthe2typesofglycemicdefectsuchasthefastingplasmaglucoseandpostprandialglucose.Andbydoingso,Imeanthisis--thisoffersmorechoicesforthephysicians(inaudible).

Nowregardingyourquestionsonthestudiesthathavebeenconducted,Imeanwecannotreallycommentonthestudy,theLEADERstudy,becausethefullresultshavenotyetbeenpresented.However,IwouldhighlightthatthestudyhasbeenconductedinastudypopulationthatwasdifferentfromthepopulationstudiedwithELIXA.AndIalsowouldliketoremindyouthatwithLixiLan,wealsoarevery




confidentinthequalityofthedatasubmittedsinceweevaluatedthesafetyandefficacyofLixiLan.AndyourememberthatitincludedtheoutcomesoftheELIXAcardiovascularoutcometrials,whichensurethecardiovascularsafety.AndtheothersideoftheequationisLantuswiththeORIGINstudy,whichhaslong-lastingandverylargepatientpopulationthatdemonstratedthecardiovascularsafety.


Okay,Jo,onPraluentandthemarketresearchwe'vedone,we'vedonethatwith100specialistsand100primarycarephysiciansintheU.S.and--tojustsurveytheirattitudetowardsPCSK9ingeneral.AndImustsaythesurveyiscompletelyaligned,theresultsarecompletelyalignedwithourownconcernsthateligiblepatientsarenotgettingaccesstothedrugornotenough.

Andthe3primaryissuestheyraised,around80%ofcardiologistsandPCPsfeltthatpayerrequirementscreatedaveryheavyburdenforthemandtheirofficestaff.About2/3ofthosephysiciansfeltthattheycan'tputeverypatientwithmedicalneedsunderPCSK9inatimelymanner.

Soit'saquestionoftimingduetothepayerrequirements.Andtheyconcludedthatfor2/3ofthem,thattheyfelttheywerefacingahigherlevelofhurdleandtherefore,frustrationwiththepayerrestrictioncomparedtoothercardiovasculartreatmentandmedicines.Sowedidthatlastweek,andwefelt,again,thatwasgoodillustrationforwhatIwassayingearlier.Sonextquestion,please?

Operator :

TimRice,DeutscheBank.

T imRice (Analyst-DeutscheBank):

Hithere,guys.I'llonlyasktwoquestions.Soifwelookattheguidancethatyousetinthefullyear,weretheVenezueladeclineinsalesortheindemnityamountthatyoumentioned,weretheseresultsincludedinyourguidancewhenyousetyouroutlookforthefullyear?Andthensecondly,justlookingatthebasalinsulinmarket,predominantlyintheU.S.,wenowhavetoseethelaunchonthiswithToujeoaswell.We'reseeinginterestingtrendswith[Tresiba]intermsofthedosingthat'sactuallygettingtakenup.CanyoujusttalkaboutwhichpatientsToujeoiscapturingwhichpatientsTresiba'siscapturingandifyouseeadifferencethat'sgoingtolastinthelongerterm?Thankyou.


Allright.Thankyou,Tim.Jerome,Ithink--


Tim,ontheguidance,asyouknow,Imean,thelevelofalargecompanyhavealwaysanumberofheadwinds,anumberoftailwindsandfoodfromthepool[ph].Nowourhighguidanceincludesallwhatyoureferto.i.e.,thenegativeimpactofVenezuelaaswellasthecontributionfromthispositiveoutcomefromthisarbitration,Imean,knowingthatwearestillinendofApril.SoImean,lotsofthingscanhappenonbothsides,butnotontheseonesbutontheotherthings.

Sotomakemyanswershort,ourguidanceisconfirmedtakingthese2elementsintoaccount.


Okay,Tresiba--





AndonToujeo,Tim,onyourquestiononthebasalinsulinintheU.S.Imean,Toujeois,forus,thebestproducttoserveawiderangeofpatients,anditsbenefitsarenotlimitedtoanytypeofpatients,notthehigher-volumepatientsorothertypeofpatients.Remindyouthatit'saprofilewithaflatPK/PDcurveandprolongedeffectactuallyservesalltypeofpatients.AndIwouldaddtothat,thatactuallywecontinueseeingtheramp-upofToujeowithamarketshareof4.4%intheU.S.inthefirstquarter,whichis1.3pointsoverthefourthquarteroflastyear.AndIwouldalsohighlightthatactuallywecontinuetoseeaveryniceincreaseoftheprescriptionofToujeointhefirstquarterintheU.S.


Thankyou.Nextquestion,please?

Operator :

MichaelLeuchten,Barclays.

MichaelLeuchten (Analyst-Barclays):

Thankyou.Twoquestionsaswell,please.OneonPraluent,probablyforElias.Theinterimthatwasjustperformedwasonthebackprobably50%ofrequiredevents,andyou'reexpectingthesecondinteriminthesecondhalfofthisyear.Justmathematically,isit--doyou--canyouactuallygetto75%ofyourrequiredeventsifyoujusthave50%giventhepatientflow.

AndthenthesecondquestionaroundtheDiabetesfranchise.IfIlookattheLantusU.S.revenuesQ1sequentiallyoverQ4,thedeclineseemstobelessseverethanmaybecouldhavebeencomingoutofQ4.Soisitactuallyrecoveringormoderatingquicker?OrisitjustashiftbetweenquartersandIshouldn'treadtoomuchintothat?Thankyou.


Allright,verygood.Elias?

EliasZerhouni(PresidentGlobalR&D):

Soforthefirstquestion,it'sprettystraightforward,asyouknowwhereweget50%events,youhavetoadjudicatethem,andittakesawhilebetween--yougetthe50%--betweenthetimeyougeteffective50%andthetimeyouanalyzeitforfutility.Andtherefore,wejustdidtheanalysis,butwe'rewaybeyond50%now.AndsoI'mconfidentwecanrecruitwhatweneedbythesecondhalforwecancompletetheeventratesthatwe'reexpectingbythesecondhalfofthisyear.


Allright.Onthesecondquestion,yes,wehaveaminus4.5%salesdeclineinQ1,whichisactuallyminus3.6%ifyoutakeVenezuelaout.Andtoyourpoint,it'ssignificantlylessthanthe12.6%negativewe'veseeninQ4.But,inQ4,andyoumayremember,itwasmainlydrivenbyhighercommercialrebates,alsoanunfavorablechannelmixtowardsgovernmentchannels.WealsofaceddelayedmedicalbillsforLantus,andwehadabasiswhichwasunfavorableforcomparisonbecausewehadtheLantuspriceincreaseduringthelastquarterof2014,andexactlyinNovember.

So,forallthosereasons,it'smuchmorefavorableinQ1,whichreflect,ofcourse,anexpected--whatwehadexpected,aloweraveragenetpriceversuslastyear,whichisbasicallydueanddrivenby--two-thirdbyunfavorablechannelmix,andone-thirdbycopayassistance,andadditionalrebates.But,wearereassuredbyourQ1diabetesperformance,becauseitisrightinourguidance.

MichaelLeuchten (Analyst-Barclays):




Thankyou.



Operator :

PhilippeLanone,Natixis.

PhilippeLanone (Analyst-Natixis):

So,gentlemen,twoquestionsalso.First,onPraluent,Amgenmentionedthat77%ofscriptswererejectedatpharmacy,butapparentlynotabandoned.So,itisjustatimingissue,andinnextquarterswe'llhavesalesgettingup,ordowehavetowaitforthe(inaudible)studytoreallyseetheproductpickup,inyourview?

AndsecondquestionisonvaccineyouaresplittingwithMerck.Youindicatedyouwanttochangestrategy.Couldyouelaboratewhatkindofstrategicchangesyouexpecttoimplementthereandwhatkindofpositiveeffectyouawaitfromthat?


Okay,verygood.Thankyou.Pascale,Praluent?


Yes.[First]withPraluent,Philippe,wedocontinuetoseealimiteduptake,andIthinkOliviermentionedalreadythatweseeunprecedentedpayerrestrictions.O livierexplainedsomeofthesurveythatwearegettingwiththefeedback,whichreallyarealignedwithourownconcernsthattheeligiblepatientsarenotgettingaccesstothisveryinnovativedrug.

Nowweareworkingwiththepayersandwiththephysicianstohelpworkthroughthesebarriers.Weprobablyhavetorecognizethatthisisaneweraofmeasuringproductlaunches.Andthathavinglaunchedbeforethecardiovascularoutcome,defacto,wedidnotgivethephysiciansandthepayersalltheelementsthattheyusuallyneedtodemonstratethebroaderuseandtoincorporatethatintheclinicalpracticeguideline.

Soweshouldseeagradualuptake.Wedoseesomemoreconfidence,somegrowingconfidencefromourphysiciansinmanagingthefillingofthedifferentformssothattheygetthecoveragefrom--fortheirpatients.Buthowever,thisisactuallyadifferentcontextforthecardiologistsandtheprimarycarephysicians.Andtherefore,wethinkthatthisisgoingtobeliftedaswego,andwewillseesomeverygradualuptick.


Okay.Thankyouverymuch.Vaccine?

Unidentif iedCompanyRepresentative :

Withregardtovaccines--thankyouforyourquestions,Philippe.Thedecisiontounwindthejointventureisastrategicdecision.WehaverealizedthatwithMerck,wecompetemoreandmore,forexample,onHepAandHepB.WehaverealizedalsothatwehavedifferentprioritiesintermsofsupportingR&DinVaccine.Sotheobjectivewehaveisreallytounlockvalueincombinationvaccinewherewethinkthereisstillsomepotentialandalsoonflu,whereit'sobviousthatinthelastfew




years,theinvestmentshavebeenrelativelyminimal.

Ifwelookatthe--forthelong-termperspectiveasa--unwindingofthejointventure,we'lllowerthattoleverageourportfolioandmoreprecisely[asif]--thathavenotbeenapprovedbyMerckfordevelopment.Sobasically,weseeanopportunitytobetterresourceandallocateourresourcesbehindourbrandswherewecontinuetoseestrongpotential.


Thankyouverymuch.

PhilippeLanone (Analyst-Natixis):

Thankyou.



Operator :

SteveScala,Cowen.

SteveScala(Analyst-Cowen&Co.):

Thankyou.Ihaveacoupleofquestions.Thefirstisafollow-uptoanearlierquestion.Butinpreviouspresentations,youhavesaidthattheinterimanalysisforODYSSEYOUTCOMESwasexpectedinthesecondhalfofthisyear.Today,youhavesubstitutedthewordpotentiallyinsteadofexpectedinyourslides.SoI'mwonderingwhythelanguageischanged?Doesithavesomethingtodowithwhatwasseenatthefirstinterim?

AndthesecondquestionisRegeneronhassaidthatforthetrialtostopattheinterim,secondaryendpointsmustbehit.I'mnotawarethatSanofihassaidthis.Sowouldyouconfirmtheaccuracyofthatstatement?Andhowmanyinterimswouldneedtobehitforthetrial--howmanysecondaryendpointswouldneedtobehittostopthetrialattheinterim?Thankyou.

EliasZerhouni(PresidentGlobalR&D):

Yes.Thankyou,Steve.Letmebeclear,whenyoutrytotimeananalysisinaeventratetrial,it'salwaysuncertain,becauseadjudicationtakestime,andyoureallyhavetorecalleverypatienttomakesurethatyouhavequalitydata.So,that'salwaysapotential.We'restillhopefulthatwewillbeabletodoitwithinthetimelinewedescribed.AndobviouslyweneedtoprovidetheOversightCommitteecleandata.So,that'stheword"potential,"becauseIdon'tknowifit'sgoingtobeonemonthlate,onemonthearlier.Ihavenoidea.Andnoonecanreallybesureaboutthedatebecausewe'redependentonthefacts.

Thesecondquestionis,it'scorrect.Ithinkthatthereis.Whenyoulookatoverwhelmingefficacy,thewordoverwhelmingcanactuallyincludesecondaryendpointsinthemindsoftheDSMB.SoIthinkgenerally,thepracticeisnottolookatjusttheprimaryendpoint,buttolookatthebalanceofprimaryandsecondaryandevenlookatthecomponentsoftheMACEindexsoin--we'venotsaidthat,wenow--didn'tthinkitwasimportanttoreallybethatspecific,butit'scorrect,youneedtolookatthebalanceoftheevidence,notjustoneindex.


Thankyou,Elias.





Thankyou,Steve.Nextquestion,please?

Operator :

PeterVerdult,Citi.

PeterVerdult (Analyst-Citigroup):

Thankyou.It'sPeteVerdultherefromCiti.Justtwotopics,firstlyDengvaxia,andthenondiabetes.AndIrealizeEUR90million,greatstart,launchedonlyinthePhilippines,rollingoutinemergingmarkets.JustwantedtogetanupdateonyourexpectationsforDengvaxiathisyear.Ithinkpreviouslyyou'vetalkedaboutEUR200million.Itseemsthatthatcouldbe,shallwesay,conservative.So,anythingyoucoulddiscussabouttheoutlookforDengvaxia.

Andthen,justmovingontodiabetes,ononehandthelong-termoutlook'simprovedwiththedealsthatyou'vedonewithLexiconandHanmi,andyou'veputouttheguidancebackinQ4aboutminus4%tominus8%declinesforthediabetesfranchise.But,Iwanttoclarify,Pascale,thateverythingyou'vebeensayingonthecall,despiteNovacomingoutwith[CD]benefitsfortheirGLP-1portfolioandthe[hyper]-benefitforTresibaoverLantus.Areyoubasicallysayingthatthat'snotchangedyouroutlookfordiabetes?Ijustwanttoclarifythat'sthecase.

Therearemytwoquestions.Thankyou.


Thankyouverymuch,Peter.So,O livier,doyouwanttoanswerthefirstone?

OlivierCharmeil(EVP,Vaccines):

SoPeter,Thankyouforyourquestions.Wearehappywiththefirstquarter,thathasgoneexactlyasweareplanning.It'sthefirstpublicimmunizationprogramstartinginthePhilippines.Wearealsoveryhappywiththerecommendationthathascomefromthe[stage]workinggroupthathasrecommendedinendemiccountrieswiththeuseofDengvaxiagiventhepublichealthimpactintermsofrisk,decreasingtheburdenofthedisease.

Weconsiderthat,ofcourse,itwillcontributetotherolloutofimmunizationpubliccampaignintheupcomingmonths.Aswespeak,weknowthatwe--theDengvaxiahasbeensigned[ph]attheendof2015inmorethan20countries.Weareexpectingtobeinapositiontohave5--[35]countriesbytheendoftheyear.Soanincremental15countries.Andwethinkthatwewillmakeprogress,ofcourse,intheupcomingquarters.

Ofcourse,it'sdifficulttobemorepreciseastheimmunization[programatthe]startoftheprecisedate.OneofournextimportantmilestoneisgoingtobeBrazil.Brazilhasmovedveryrapidly,andwegotthelicensurefrom[NVISA]inalmostinarecordmanner.TheprocessismovingaheadandthenextimportantmilestoneforusinBrazilisgoingtobethediscussionon[price].AndwearecurrentlyindiscussionwithC-MET,andweareexpectingtogetsomenewsintheupcomingweeks.


Allright,thankyouverymuch,O livier.Pascale,[year-end]guidance?





Yes.Peter,actually,yes,ourQ1performance,wearesatisfiedwithitbecauseitisconfirmingourpreviouslyissuedguidance,andweconfirmedtheguidancethatwehavesaid--thatwehaveexpressedinOctober,whichwasminus4%tominus8%overtheperiodof'15to'18.


Yes,itisconfirmed.

PeterVerdult (Analyst-Citigroup):

Thankyou.


Thankyouverymuch,Peter.Nextquestion,please?

Operator :

VincentMeunier,MorganStanley.

VincentMeunier (Analyst-MorganStanley):

Hello,thankyoufortakingmyquestions.Thefirstoneisonyourbuybackpolicy.CanyougiveusanupdateonyourintentionsduringtheMedivationprocess?AndsecondquestionisonyourprojectonPompedisease.CanyouelaborateonthetrialdesignforNeoGAAandthesizingofthepopulationifpossible?Andalsoifpossible,thesizingfortheproductintermsofsales.IsitmoreaMyozyme-likeopportunityor(inaudible)opportunity?


Okay,verygood,Vincent.So,doyouwanttotakethesharebuybackquestion,Jerome?


Yes,Icould,O livier.Goodmorning,Vincent.Goodafternoon.Soasyousaw,Imean,Vincent,weboughtbackuptoEUR1.4billioninthefirstquarter,whichclearlyisabovewhatwedidinthepreviousyears.Imean,thepreviousyearswedidbetweenEUR1.7billionandEUR1.8billion,andwearestickingtotheopportunisticbuybackstrategywe'rehaving.SoIwillnotgiveyouapreciseguidanceonwhatwearegoingtodointhecomingquarters.TheonlythingI'dliketohighlightisthat--Imean,Idon'tknowifyousawthatMoody'sjustissuedareleasethatwhateverwedoonMedivation,they'llmaintainourrating.


Okay.Thankyou,Jerome.David,doyouwanttotakethequestiononneoGAA?

DavidMeeker (CEO,SanofiGenzyme):

Yes.Sowithregardstothetrialdesign,Ithinktheendpointsinthisdiseasearerelativelylimitedintermsofwhatyoucanconsistentlymanage.Theyhavetodowithambulation,andtheyhavetodowithabilitytowalkandtheyhavetodowithrespiratoryfunction.Ithink,Iwouldjustdirectyoutotheconceptofforcedvitalcapacity,whichisaverystandardwayofmeasuringyourlungcapacity,andit'sthemeasurethatreallycorrelateswithclinicaloutcomesthereasopposedtosomeoftheotherslikemusclestrength,respiratorymusclestrength,whichhavebeentalkedaboutinotherareas.

Sizeofthetrial,Idon'thaveanumberoffthetopofmyhead,butitwouldbeconsistentwithothertrialsinrarediseases.Andthelastpartofyourquestionwasthepositioningofthisdrug.NeoGAAisan




extensionofthecurrentMyozyme,inotherwords,it'stheMyozymemoleculemoreheavilyphosphorylated.Andbyaddingonmorephosphatetothatmolecule,itincreasesitsuptakeintothecell,andweknowfromanimalstudiesthatit'sabout5xmorepotentinananimalmodelthanthecurrentMyozyme.We'llseehowthattranslatesinahumansettingbecausedemonstratingthatinhumans,ofcourse,ismuchmorechallenging.

Ifwemoveforwardanditisapproved,wewouldexpectthattheNeo-GAAwouldactuallyreplaceMyozyme.SoitwouldnotbeaCerezymeCerdelga,which--whereCerdelgaisanalternativetherapy.Thiswouldreallybejustanimprovedenzymereplacementtherapythatwouldreplaceit.AndMyozymeiscurrentlyona$600millionplusrunrate,andthere'sstilllotsofroomtogrowinthatoverallPomperarediseasespace.

VincentMeunier (Analyst-MorganStanley):

Manythanks.


Allright.Thankyouverymuch.Nextquestion,please?

Operator :

GrahamParry,BofAMerrillLynch.

GrahamParry(Analyst-BofAMerrillLynch):

Great.Thanksfortakingmyquestions.SofirstoneisjustonthePCSK9litigation,ifyoucangiveusyourthoughtsonnextstepsandpotentialtimelinesandintermsofbothyourappeal,requesttoretrial,theinjunctionrulingandanypotentialsettlementdiscussions.

Secondly,ifyoucouldtalkusthroughrecentguidelineupdatesonPraluent,howyouthinktheymaychangeyourabilitytogetpayeraccessandhowtheguidelinesmaychangeagainpostoutcomesdata.

AndthenthirdlyontheBoehringerIngelheimdeal,you'restillinnegotiationshere.Soanyreasontobelievethatanyofthetermscouldlookdifferentfromwhatyou'veannouncedinDecemberoriswhatwasintheoriginalpressreleaseprettymuchasteppingstone.Andifyoucanhelpusunderstandwhyittakesquitesolongtosignthedealandifthere'sanyrisksstillthatitmightnothappen.Thankyou.


Okay.AroundPCSK9'slitigation,Karen?

KarenLinehan (EVP,LegalAffairs&GeneralCounsel):

Sure.Thanks,O livier.Asyouknow,thedecisioninMarch16isonlythefirststepinthislitigationandasOliviersaid,westronglydisagreewiththeoutcomeofthemajorretrial,andwewillappealthatdecisionattheappropriatetime.Rightnow,we'reinwhatisknownastheposttrialbriefingperiod,whichwillgountilMay25.Atwhichpoint,thejudgewillconsiderallthathasbeenputbeforeherandissueadecision.Wedon'tbelievethatitwillcomeveryquickly.Webelieveitwillbeacoupleofmonths.Whileintheory,shecouldruleanytime,wefirmlybelieve,giventhenatureofthistrial,thatitwillafewmonthsbeforesheultimatelyissuessomething,andatwhichpoint,we'llbeinapositiontoappeal.Andagain,wetrulybelievethatthelawandfactssupportourpositionofinvalidity.





Verygood.Thankyou,Karen.Pascale,fortheguidelines?


Yes,Graham,thanksforyourquestion.Asyouknow,atthelastACCcongress,wearenotyetatthestepoftheguidelines,butwehaveaverygoodfirststepsbeforethenewACCguideline,whichisthattheexpertconsensusdecision[pathway]wasrenewedandnowconfiguresthePCSK9inhibitorsinpatientswhoareonmaximaltoleratedstatinorsecondarypreventionasasecondsteptoachievetheirLDLreductioninthecaseofASCVD,andinadditiontoezetimibeorincreaseofezetimibewhentheLDLlevelismorethan190milligrams.

Soactuallythisdecision[pathway]byrecognizingdifferentpatientbenefitgroupsandbyprovidingguidanceandthresholdtoahealthcareprofessionaltowhentobegintreatmentwithourPSCK9inhibitorsandclarifyingthatthereis--therearesomegroupsofpatientsforwhichyoucanconsiderPCSK9asachoice.Asaninitialnon-statintherapy,inadditiontomaximallytoleratedstatins,Ithink,willhelpthehealthcarephysicianstoactuallynavigatetheenvironmentandthechoiceoftherapies.

Sothisis,asIsaidbefore,afirststepbeforenewACCguidelines.AndIalsowouldliketohighlightthatinEurope,we'realsoexpectingnewupdatedESCguidelinesinQ3overthisyear.


Thankyou.Thankyou,Pascale.OntheBIdeal,well,negotiationareprogressingwell.That'swhatIcansaywithBI.Youmayfeelthat'slongerbecausewewentthroughfirstphase[whilein]exclusivity,whichwearestillin.Andthedealhas--we'replanningtosignthedealby,asIsaid,midyear.Sobecauseweareinexclusivediscussion,dataexchangewithBIatthisstageare,ofcourse,strictlyconfidential.Butagain,whatIcansayisweareprogressingwellandweexpecttosignthedealmidyearandtoclosethedealbytheendofthisyear.Sonochangeversuswhatwehavesaidpreviously.Thankyou.Ithinkwearegoingtotakethelastquestion.


Thankyou.Ithinkwearegoingtotakethelastquestion.

Operator :

SeamusFernandez,LeerinkPartners.

SeamusFernandez (Analyst-LeerinkPartners):

Thanksverymuchfortakingthequestion.Sojustacoupleofquickones.First,justintermsofthecommitmentthat'sgoingtobenecessaryduringtheprocesswithMedivation,Iknowyousaidthatyouhaveflexibilityformorebusinessdevelopment.Butcanyoujustgiveusintermsofwillingnessandthedesiretodomorebusinessdevelopmentinpotentiallyothertherapeuticareas?Isitthere?Anddoyouexpecttocontinuetobeactiveinthatspace?

Thesecondquestionisjustpublicstatementsmadeaboutinterestinrarediseasebusinessdealsupto$20billion.Couldyoujustclarifythat?Thatstatement,isthataccurate?Ijustwanttomakesurethat,thatstatementwasaccurateasreported.

Andlastly,theEUR12billiontoEUR14billionpipelinetargetacrossthese6majorproductlaunches.GiventhelaunchtrajectoryofPraluent,isthereanychangeinyourexpectationsforthatnumber?Andareanyoftheproductslaunchingbetterthan,worsethan--orworsethanexpectations?

Thanks.





Allright.Thankyou,Seamus.Allright,(inaudible)andtheguidancearoundcombinedpeaksalesofthe6newlaunches.Wearenotchangingourlong-termviewonthoseandstilltheEUR12billiontoEUR14billioncombinedpeaksales.Sonochangethere.

ComingbacktoourflexibilityinBD,whatwesaidIthinkmayhavebeen--alittlebitofconfusion.Wedidsaythatwewerereadytodobolt-onandmidsizedtransactionuptosomethingsimilartowhatwehadexecutedbackin2011,Ithink,withSanofiGenzyme--orwithGenzyme.Sowehavenotspecificallyhighlighted,Ithink,anyspecific[GA]whenwesaidthat.Exceptthatwesaid,itwouldbestrategicallysound,andtherefore,itwouldbeeitherinoneoftheGAwherewehaveleadershiporin1GAwherewearestarting,butwewouldliketostrengthen.Sothathasfranklynotchanged,andIguessthatclarifyandansweryourquestion.

Okay.Withthat,thankyouverymucheveryone.Thankyouforyourquestions,andwe'recompletingthiscall.Thankyou.

Operator :

Ladiesandgentleman,theconferenceisnowover.ThankyouforchoosingChorusCall,andthankyouforparticipatingintheconference.Youmaynowdisconnectyourlines.Goodbye.

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