Okay, perfect. Good afternoon, everyone. Thank you for joining this session of the Sanofi Fireside Chat. For those of you who do not know me, I am Sarita, European pharma analyst at Morgan Stanley, and I am very pleased to have Manuela with us today, Head of Specialty Care at Sanofi. Thank you so much for joining us. Thank you very much for having me. Thank you. Before we get started, just some housekeeping. Please note that this presentation is for Morgan Stanley institutional clients and employees. For all important disclosures, please see the Morgan Stanley disclosure website. Okay, with that, perhaps we can start off more high level. You stepped into the role before the change in the CEO. There has been lots of things in terms of pipeline review, strategy changes. What are the major changes you have observed now in your time in the seat, and perhaps, what is it in the Specialty Care business that you have changed your mind on? Where have been the key areas of strength, things that are perhaps not as good as you wanted them to be moving forward? No, thank you, Sarita, and very happy to be here. I think overall, when I think about Sanofi in general, we have two objectives. On the one hand, we want to make sure that we continue the great performance that we currently have on the business going forward for the remainder of the decade, and a big part of that is driven by Specialty Care. So strong commercial performance. We are one of the fastest-growing companies in the industry at the moment, and continuing that growth both on Dupixent as well as on the rest of our portfolio is really, really important. The second priority is to think about how do we sustain the momentum into the next decade, especially with the Dupixent LOE and making sure that we can continue that growth trajectory in the future as well. Those are the two things that we are working on. I think, in general, when I think about addressing those, we have talked a lot about in the individual meetings here about BD and M&A, that is a big part of our focus at the moment. We are also looking at how do we increase our R&D productivity after some of the setbacks that we have had. We have a new R&D head that just came in, Paulo Fontoura, who is very excited about working together with us, and I am very excited to collaborate with him on these opportunities going forward. Those are the key things that we are working on. We are going through a strategic review with the executive committee to really look at the strategic areas that we want to focus on. We have already made decisions to say immunology continues to be a core area of focus. Rare diseases will be a core area of focus as well as vaccines. We are also doing an enterprise strategy review to say do we stick with those three? Do we expand into a fourth? What would that fourth look like? That is ongoing work. We want to be very disciplined and intentional about those choices, and we will make that decision in the coming months. Perfect. You touched on BD M&A focus. Previously, perhaps the focus was more towards phase I, phase II assets. Now, emphasis has shifted more towards a late-stage commercial deal. Perhaps you can outline the priorities for BD M&A moving forward. Are we looking to fill 2028 to 2031 revenues, post-2031 revenues when Dupixent goes LOE? Yeah. I think our priorities from a BD and M&A perspective, first of all, the criteria that we use have not changed. I would say we are still looking at early-stage assets, but we are now combining them with a focus on later-stage deals, also commercial deals. The criteria we are using is always to say, is it great science? Is it a strategic fit for us? I just mentioned the three core therapeutic areas that we are focused on. Within those areas, looking at opportunities for bringing new science into the fold. Is it differentiated? Is it addressing an unmet need? Then does it make financial sense for us? Yes, we have pivoted slightly more towards commercial and late-stage deals, but as I said, if there is exciting early-stage science that we are interested in, we will also go after that. Perfect. I think previously Sanofi spoke to EUR 15 billion for early-stage deals, EUR 20 billion to EUR 25 billion for later-stage deals. Is that still the right framework, or is there potential to go above that? These numbers were based on maintaining our current credit rating. I am not going to reiterate the numbers because we are having discussions. We have a very strong balance sheet at the moment. We are also generating more cash flow as we speak. I said earlier that we are one of the fastest-growing companies from a performance perspective as we speak, and that of course helps us to generate more cash to potentially do bigger deals, whether that is one deal or multiple smaller to medium-sized deals. All of that is possible. We are not specifically looking at a particular size or a particular opportunity, but we are looking broadly at these things, yes. Sure. Just to follow up on that, shall we think about it as a string of pearls, or is one transformative deal on the table? I think both of it is possible. We are looking at larger deals. We are looking at more small to medium-sized deals and a combination of those. Again, based on the same criteria as I mentioned earlier, is it part of an area that we are strategically interested in? Does it make financial sense? Especially when you think about the Dupixent LOE in the earlier part of the next decade. Does it help us address that part of the equation. Then, does it make financial sense? We want to be disciplined around those things. You touched on the discipline. The financial backdrop for BD is tougher. There are lots of large cap pharma companies looking for assets. How are you weighing the competition for good assets? Also, do you think that your BD process is fast enough, particularly given we have just had the new head of R&D joining the seat. Are you ready to move quickly? Yeah. I think there is definitely. First of all, with the new executive committee being a smaller team, more focused, more nimble. Belén has the ambition to really create this one team dynamic where we work together in a collective fashion on things. We have been looking at opportunities. Paulo has hit the ground running, literally speaking. He knows some of the spaces that we are playing in really well. We are not going to lose time because of that, for sure. The other thing that I would say is that the connection with the board, which is an important part of us being able to move fast, is also something that we are investing in, and we are focused on. I think if the moment is right, the space has always been competitive, right? That has not changed. It continues to be competitive, but if the moment is right, and if the right opportunity comes around, we will be able to move fast enough. Perfect. Again, I will just add something. Diligence matters, right? We are not going to compromise on diligence. We want to move fast, but at the same time, we want to make sure that we do it in the right way. Perfect. Thank you. How should we think about China as a source of innovation? I think Sanofi have previously spoken to in-licensing from China. Will this be within your key therapeutic areas that you touched on, or would you look to China for selective oncology assets, for example? Yeah. The way we look at China is in two ways. China is a large commercial market, where we have both launched global assets. Dupixent is launched in China. SARCLISA has been launched in China very successfully. Both of those brands are growing. We've recently launched Qfitlia in China as well. But we've also looked and gone after local opportunities that are truly a local opportunity for the China market, and sometimes outside of our global core areas of strategic focus, cardiology, for example. So if the opportunity is right and, given the size of the population, there is enough local market opportunity, we will play with a local asset. So that's the commercial opportunity in China. The one thing that I would always look at from a China perspective is the value of the innovation recognized? Because, yes, there's a lot of volume in the Chinese market, but sometimes prices can be really tough. So that is always something that we weigh whenever we make decisions for China plays. The other thing is China innovation for global. Yeah. We have an R&D team in China, and the opportunity to really accelerate global innovation, thanks to the China footprint. Potentially also looking at partnerships is definitely something that we're interested in. Yes. Perfect. I suppose when you mentioned you're evaluating what the fourth therapeutic area could be, Sanofi, of course, operates in neurology, ophthalmology, oncology. Paulo's background is perhaps more neurology-weighted. How should we think about what the front runner is for the fourth opportunity? Yeah. I'll go back to what I mentioned earlier. We're doing a, we call it enterprise strategy assessment at the moment, where we're really taking a very intentional look at all of those opportunity areas, both the ones that we currently are playing in or have pipeline assets in, but also white space opportunities that may go beyond that. The intentional focus on is there enough science in those spaces? Do we have the right capabilities and better capabilities than other players do in the spaces? Or can we build them in time with the right investment focus? If we go there, what are we going to have to give up somewhere else in order to play from a capital allocation and portfolio perspective, the discipline and investing, where we can actually win? I'm not going to say it's going to be this area versus another. Too early to tell, but we are going to make that decision in the next couple of months. Okay, great. Looking forward to it. Perhaps we can switch to the Regeneron collaboration, which I'm sure you've been asked about multiple times today. Yes. Belen said that you're focused on rebuilding trust with Regeneron. The litigation is still ongoing, and I appreciate we can't get into the specifics of the case, but perhaps you can give us an update as to where we are with the litigation. Is this a precondition, resolving it for the relationship to move forward, or can we work around, or you work around the litigation? When I think about the litigation, that's a very narrow area that this is focused on, and it's in early stages. To your point, I can't comment much on it. But I've been working with Regeneron for the last six years. First in my regional role in Europe, very closely at the local level, and then as the region head. Then the last three years, I was responsible for Dupixent globally and for the alliance globally. And I've worked with Regeneron on all kinds of topics, and I can tell you that the operational ways of working between both companies are really strong. We've always worked strongly together, and the litigation part of it, we keep that completely separate, right? Because both companies have one goal, to maximize the opportunity behind Dupixent and to try and be successful collectively as a team. I really look at those things differently. Yes, there is discussions going on, both at the CEO level as well as at the team level to say, Is there potential to expand the alliance, and how would that look like? And I think there's a willingness on both sides to look at that. We are still in active conversation, so I don't have more to share with you at this point in time. But I think there's an interest in both companies to really say, We've built something really amazing with Dupixent, and it's been a lot of hard work. We have really strong capabilities. We've built strong relationships. We have great teams, especially the customer-facing teams. And an opportunity potentially for follow-on assets in the alliance that could make a lot of sense, and that's what we're currently discussing and working on. Perfect. And you touched on bringing additional assets into the alliance on both sides. Which assets would Sanofi like to bring to the alliance, and which would you like Regeneron to put in? And how are the discussions progressing? Can we expect an update here before the end of the year? I'm not going to comment on either of those two questions, unfortunately. We're looking at different assets to say, do they make sense in the alliance? How do they fit with the Dupixent lifecycle management? The LOE in 2031, which is the earliest timeframe, as I'm sure you all know, and given our strong patent portfolio that we expect potentially the LOE. We are hoping that we will get a few more years, and we feel pretty confident. We're not going to put a timeline to it. It's way too premature because we haven't been challenged on our composition of matter patent as we speak. But there are some assets that we're discussing that could really fit well from a follow-on perspective, where we could leverage the existing infrastructure that we have collectively built. We could leverage some of our capabilities as well as the rebates that we have to accelerate a future asset in the alliance, potentially. Perfect. Yeah. To the extent which you can answer, Regeneron have been perhaps more public with saying, they'd like to rethink the economics of the alliance, maybe in some ex-U.S. geographies. How does Sanofi think about the economics of the current alliance? I think at the end of the day, it has to work for both parties. What is absolutely true is that when the deal was done, the original deal was done, both companies were in a very different space in terms of their ability to contribute capabilities and to work together, and we're taking that into account. But at the same time, we want to make sure that it's a win-win for both sides. That's what we're working on, and we're making progress. Okay. Amazing. Thank you. When you think about immunology, and it is one of your core therapeutic areas as you have outlined, how do you weigh whether an asset fits better in the alliance in terms of buying something together with Regeneron, for example, or going at it alone? For me, the alliance point is never the starting point. The starting point is always, is there a strategic opportunity, and is there exciting science behind an asset, firstly? Then the question is, does that fit best in the alliance, or does it fit best in a non-alliance play? That is the way we are evaluating opportunities, and there are opportunities that we are considering in a non-alliance context. There might be other opportunities, especially in areas where Dupixent already plays, dermatology, respiratory, in some of those spaces where we would say, Yeah, it makes sense in the alliance. But it is never the starting point, and I do not think it should be the starting point. For me, that is a how to play question rather than is it amazing science? Is it an opportunity for us to address an unmet need in a patient population that is currently not being addressed? That is always the starting point. That is very clear. Perhaps we can move on to Dupixent. You recently raised the guidance to EUR 25 billion of sales by 2030. Help us understand kind of where we are on the different indications in terms of what is driving that incremental growth and confidence. Is it a particular disease? Is it geographic expansion? Maybe both. Yeah. Help us frame the building block. Yeah. We are really excited about the continued growth of Dupixent. We are growing for the first half of this year, north of 30%, as you have seen. We have had our first EUR 5 billion quarter for Dupixent, and it is really driven by all of what you just said. Its existing indications. Atopic dermatitis, for example, which is the first indication that we launched in, we have a 20% biopenetration in atopic dermatitis. In spaces like COPD, you have a single-digit biopenetration. The same is true across all of the different indications, very low biopenetration rates. Even asthma, which is a space that was quite mature when we entered it. Even there, you are talking about 30% biopenetration. There is a lot of room for growth and opportunity because a 20% biopen means that out of 10 uncontrolled patients eight that should be on a biologic are not yet on a biologic. There is a lot of opportunity still to grow that space. You think about, because a lot of these biopen numbers that we are referencing are adult population numbers. When you look at pediatric populations, you are talking about much lower biopenetration rates, even though atopic march is real. This is one of the areas that we are looking into from a data generation perspective to say if you treat earlier, can you avoid kids triggering comorbidities basically for children that start with AD, but then potentially develop allergies or potentially develop asthma or other comorbidities. There is a lot of opportunity for growth in younger patient groups. You mentioned geographic expansion as well. Again, depending on the indication, we are in different life cycles. Some of the indications we have just recently launched, others have been around for a while. Competition helps. We have always said with more players coming into fairly immature market spaces, and atopic dermatitis is still a very immature market space. COPD is a very immature market space. It helps create the awareness and the education that advanced treatments are available, and it just helps rise all boats. That is how I think about the opportunity. We feel confident about the EUR 25 billion ambition by 2030. Even though when we think about the next couple of years, some of that growth will slow down. Because you are anniversarying a year where we have also had some GTN upsides. We have talked a little bit about that during the Q2 earnings call. Once you have such a large base that you have created it is harder and harder to show growth rates of 20%-30%. This year we are still able to deliver that, and we are very excited about that. Amazing. You touched on COPD and maybe somewhat preempted where I was going, but it is in the relatively nascent stage in terms of market formation. We do have a competitor— —that just posted very strong data in the eosinophil over 300 where Dupixent plays. How are you viewing competition from IL-33? I think as I already mentioned, I think teplizumab data is strong data. Given the space, the COPD space being so nascent, I really believe it requires more players to help educate both pulmonologists but also patients that there are more treatment options out there for them, and that an add-on therapy to what they are currently using is really important. I would encourage everybody to look at not just exacerbation reduction in that space, but also look at lung function improvement and quality of life data. We have seen that especially in the case of Dupixent, where patients, especially the lung function improvement, that is actually something that they can feel in their everyday life. For example, one of the patients that was treated with Dupixent couldn't actually dress himself anymore. His wife had to dress him because the COPD was so severe. After having been on Dupixent for a few months he was able to dress himself again. These are the small improvements that might not matter for us that do not suffer from that disease, but are really meaningful improvements. You tend to see that more when you have lung function improvement and you have quality of life improvement. But I really hope that with more options available now in the COPD space that we can get more biologics usage overall. Yeah. Amazing. You also touched on Q2 having perhaps a non-recurring gross connect component, but also a recurring— —of which 340B is a component. How should we think about the 340B benefit moving forward to the extent you can quantify that would be useful. Then separately, when thinking about 340B and the legislative changes, how impacted is Sanofi by this? Yeah. I think Q2 and in general for the first half of this year the vast majority of the growth is driven by demand and that we expect that to continue. Then there was, to your point, there was a recurring GTN component that was driven not only by 340B but also by operational efficiencies in general. We always think about how do we improve our go-to-market model and how do we drive efficiencies overall on our business. Part of that was 340B. While we are aligned with the core principles of the 340B program there is quite a bit of abuse going on with that program. We welcome the current discussions. They are still ongoing. It is too premature to say where they will lead. But it has definitely helped us to really say how do we get more control around 340B. We call it 340B scrubbing that we've successfully done. Again, one of the elements that has driven the operational efficiencies. Some of that will be recurring. Some of the GTN benefits that we saw in Q2 in particular was a one-off effect of some accrual releases from prior periods. That of course won't recur. Then just a plug for 2027. As we anniversary some of the GTN benefits from this year, you won't of course see that happening again, because you reach a moment especially from a 340B benefit perspective where you can't do more. I don't expect that to increase significantly over time. Okay, very clear. Sanofi have outlined multiple lifecycle management opportunities for Dupixent, whether it be Q4 weekly, high dose co-formulation. How should we think about the strategy here? Is this to strengthen IP or is it they can be commercially meaningful? If so, are these upside to the EUR 25 billion target? It's all included in the EUR 25 billion target. Even though we definitely look at those as opportunities to help drive better patient satisfaction, there are two elements to it. There is a 600 milligram asthma opportunity that we are pursuing, which is specific for asthma, a Q4W. Then there is the co-formulation with hyaluronidase that we had talked about in our Q1 earnings call, which is also a Q4W dosing opportunity. I'm thinking about it more from a how can we deliver better experiences for patients in general. That was always part of our strategy, to think about how do we provide more convenience in general for Dupixent. IP, we will always strive to protect it with IP, but it's much more of a patient opportunity play than an IP play, at least for me personally. Okay. We're seeing longer acting kind of competitors pursue the AD market, particularly Apathy, AbbVie, for example. How should we think about some of these longer acting players as we move forward? Is your own Q4 weekly enough of a defense? I don't see it as a defense. First of all, I think when you think about longer acting drugs, for me, the first thing that any player needs to or any asset needs to hit is efficacy and safety, right? Because if you don't have a proper efficacy profile that can compete with the standard of care, and that is true in any of the indications, you need to be good at relieving itch and skin clearance in atopic dermatitis. As we talked about in COPD, it's not just about exacerbation reduction, it's about function improvement, and it is about quality of life. So first of all, you need to hit on efficacy properly. Then safety, and I think that's where Dupixent really has just years of safety data that is unmatched in more than 1.5 million patients on therapy today. Many more patients that we have treated over the years. That matters. It matters especially to dermatologists, but also to many other specialties that we work with. Then to your point, if there's a long-acting opportunity on top of that's great. A lot of these programs are in earlier stages, where we have not seen phase III pivotal data yet. So that will hopefully come. Then I really believe that there is opportunities for more players to play in the current context, given what I said earlier about biopenetration rates, et cetera. So let's see where the data goes and how they read out, and then we'll be able to talk more about those. Very clear. Taking a step back, Sanofi have also outlined a EUR 10 billion sales target for your pharma new launches. What are the one or two assets within this portfolio where you see the biggest upside or you are most excited about versus street expectations? Mm-hmm. I'll mention three, because I feel there's a diverse set of assets that is included there. So on the one hand, AYVAKIT, from the Blueprint acquisition and systemic mastocytosis. It's a really important drug that is addressing a real unmet need in a space that is underserved today. There are many patients who are diagnosed on systemic mastocytosis, but they're not yet on the appropriate therapy. So our ability to put our rare disease capabilities behind AYVAKIT, and working together with our rare disease teams, especially the customer-facing teams. Also the knowledge that we have when it comes to how do you work with advocacy groups, how do you find patients, how do you diagnose them, how do you convert them on therapy, and how do you keep them on therapy? All of these things will really help us continue the growth trajectory and the patient uptake on AYVAKIT that we're currently enjoying, and there's a lot of opportunity there still. The second one is ALTUVIIIO. We have reached blockbuster status with ALTUVIIIO in 2025. We see continued growth for ALTUVIIIO. It's the most switched-to product in the heme space and really something where we see a lot of opportunity for growth still going forward. Then sarclisa, where in the multiple myeloma space, we are getting into earlier lines. We've now launched a sub-Q formulation for sarclisa with an on-body injector, which we believe from a physician experience, but also from a patient experience perspective, can really help differentiate us from DARZALEX. So those are the ones that I'm excited about that hopefully will drive continued growth in the future. Okay, amazing. Belén has spoken a lot about the kind of phase II to phase III gate when we think about R&D and more rigor and being driven by the science. So how early can commercial be involved in the decision-making, let's say it makes sense scientifically, but the commercial hurdle, it doesn't meet it or it may not be attractive in your view. What role is commercial now playing at the phase II to phase III gate? Yeah. So Paulo and I really believe that this is a partnership between commercial and R&D, and that's the way we want to work. We co-own the TPPs, the target product profiles. We're working really on this together because there needs to be great science. But the science needs to really, by the time it launches, address an unmet need, be differentiated, as you said, versus the competitive set that you will likely encounter, and then have sustainability to it over the timeframe that you have when you commercialize it. So that's how we look at things. There is definitely a desire for more rigor and more discipline around how we make those decisions to go from one phase to another. That's what Paulo is very focused on, I'm very focused on, and Belén as well. That's what we're continuing to work in partnership together on. Okay. Perhaps in the last few minutes, or just to finish, we've talked a lot about M&A, Regeneron collaboration. What do you think the market is missing or misunderstanding about the Sanofi equity story from here? Is there one asset or program that you're particularly excited about that you'd like us to focus on? When I think about the story, our story, I think about the fact that we don't have any meaningful LOE in this decade. It's going to happen in the earlier part of the next decade. We have runway. Our story is all about increasing R&D productivity so that we can drive internal innovation, and we will complement that with external innovation. We talked about the desire to go for later stage and commercial deals potentially to help with that. From that perspective, I really believe that we don't get maybe enough credit for our pipeline, because we have 60 programs in the pipeline, but I understand why. I understand that we've had some setbacks and we've also made some decisions on not moving forward with some of our assets. I believe those were the right decisions. I'm very convinced about that, because if you don't bring meaningful innovation to a market, then you shouldn't move forward with it. Now it's up to us to actually let actions speak louder than words. We can talk about intentions, and we're very focused on moving forward with some of the things we talked about. Hopefully next time we meet, we can talk about some of the actions we've been exercising and implementing and that's what we're focused on. Making sure that we can deliver on some of the plans we have, so that you can see that we are literally moving on the things that are key priorities for us. Okay. Amazing. Thank you so much, Manuela. Thank you. This has been great. Thank you. Thank you.