Sanofi - Earnings Call - Q2 2020
July 29, 2020
Transcript
Speaker 0
Ladies and gentlemen, thank you for standing by. Welcome to Sanofi's Investor Call on the Q2 twenty twenty Earnings. I would now like to turn the call over to Eva Sheffer Janssen from Sanofi Investor Relations. Please go ahead, madam.
Speaker 1
Thank you. Good morning and good afternoon and good evening to those joining us from Asia to review Sanofi's second quarter results. As usual, you can find the slides to this call on the Investors page of our website at sanofi.com. Next slide, please. I would like to remind you that information presented in this call contain forward looking statements that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially.
I refer you to our Form 20 F document on file with the SEC and also our Document d'Or Registrement Universelle for a description of these risk factors. If we could please move to Slide three. Our speakers on the call today are Paul Hudson, Chief Executive Officer and Jean Baptiste De Jatinon, Executive Vice President and Chief Financial Officer. Paul will review the second quarter business performance, after which Jean Baptiste will review the financials. After concluding remarks, we will close with a Q and A session, during which we will be joined by members of the Executive Committee.
With that, I'd like to turn over the call to Paul.
Speaker 2
Well, good morning, good afternoon to everybody. Thank you to Eiffel. Very happy to have you on the team, a leading IR. So welcome formally to Sanofi. Let me start by saying that I'm delighted with our performance in Q2.
Our organization has worked incredibly hard to keep the business running in what are challenging times for everybody and ensuring that the supply of medicines to patients continues. I'm especially proud of the organization focusing and keeping up our momentum on the transformation journey that we're undergoing here at Sanofi. Looking at our financial performance, I've seen some of the notes this morning. I understand people's balanced view and recognition of the Regeneron one off. And whilst it is technically important, we can talk about it a little bit later.
I do think it's important for everybody to realize that there's been an incredible amount of work going in to making sure that our transformation continued in one of the most challenging times for any company. So I am proud, but I'm also very pleased with how we're executing and what that's going to mean for the future of this company. So due to the COVID related trading patterns this year, the performance of Sanofi during 2Q needs to be seen in light of the half year. So I'm presenting here the first half figures that in our view are the best way of describing our performance to date. Our first half sales increased by 2%, driven by Dupixent, which delivered truly outstanding results, growing at double digit rate over prior quarter.
We'll go into more detail later, which is absolutely remarkable and perhaps unparalleled in the context of the pandemic. Our entire specialty business has been very resilient and continues to grow. Clearly, did experience significant headwinds from COVID as seen elsewhere with slower new patient adds, deferral of procedures and some vaccinations and lower in pharmacy traffic, compounded in Q2 by the reversal of the COVID related stocking we saw in Q1. We finished June stronger than we started in April. And to be blunt, our early indicators in July confirmed that June was not a one off, so we're in reasonable shape.
We delivered nine percent business EPS growth in the first half or 5.4% if we strip out the gain from the revaluation of the Regeneron shares that we retained, a onetime effect. We made continued strong progress on our cost savings target, and Jean Baptiste will tell you more about this a little bit later. Looking out to the remainder of 2020, we remain confident to deliver our full year guidance. Again, that is not something everybody is able to say in Q2, and hence raise our projected business EPS growth to target for 2020 to 6% to 7%, including the effect of the Regeneron share reevaluation. So the financial metrics capture much of the achievements, of course, but not all.
Let me highlight also the significant progress in the transformation of our company for new appointments to the Executive Committee, and it means the Executive Committee is now complete and I believe ready and able to deliver and accelerate the transformation that we're on. We divested our Regeneron stake, nearly $12,000,000,000 to be redeployed. And we're pleased with how that was executed. I should remind everybody again that we had little additional rights beyond the stake in terms of control. It was simply a financial play.
And as such, we think the revenue can work harder for us elsewhere in the scientific agenda. We made substantial new investments in our vaccine facilities and some commitments for how we'll transform that. And as Jean Baptiste will address, we're delivering sustainable efficiencies. We also showcased the potential of our pipeline through a series of virtual R and D Day events. Just another moment, a, to sort of celebrate some of the hidden gems, which are becoming more than just gems and b, to demonstrate our ability and agility to be able to execute even during a pandemic, even completely virtually.
We keep delivering on those R and D milestones and we have the Phase three start for our brain penetrant BTKi. We've got exciting new clinical data on Dupixent, including eosinophilic esophagitis and COPD and Sarclisa in relapsed multiple myeloma. And of course, we entered the clinic for our first in class cry specific two fifty seven in hemonc. And we continue to strengthen our leadership in select therapeutic areas with several transactions this quarter, and we'll touch on those a little bit later. So I want to focus now Dupixent, which delivered a remarkable performance during the second quarter, well on track to deliver our $10,000,000,000 plus sales ambition.
Second quarter was strong quarter across all three main indications with 70% growth globally, and we added more than $80,000,000 sales versus the prior quarter and sales annualizing at close to €3,500,000,000 already. I'll maybe touch on the profile in the next slide in a moment. But when I look across what I'm seeing from all of the new innovations across the industry in Q2, I may be right in saying that it is the single biggest grower right across the entire industry in Q2. Some of you will try and prove me wrong, but the intent is important for you to know that this medicine and its profile continues to be absolutely outstanding. Does this mean we're not affected by the lockdown?
Well, of course, we were. But our team have worked incredibly hard, not only in working with digital and e detailing and measures to try and make sure we get those new patients in, but also making sure we support the patients and the physicians equally. I know you're eagle eyed and will have spotted a slowdown in sequential growth outside The U. S, but just to be really specific, two factors accounted for this. In Europe, we experienced an inventory drawdown, whereas in Japan, of course, we had to absorb a 20 price cut as of April.
So let me emphasize, we also added new patients during the second quarter in Europe and Japan. So our underlying growth will become more visible in coming quarters. And we also expect to get an additional boost from our country launch program with our 89 planned launches in 2020 on track. And in fact, we're about 35 in with 54 to go and feeling very confident about our ability to deploy those. Our U.
S. Launch in pediatric atopic dermatitis is off to a strong start with already over 500 unique prescribers for Dupixent. We achieved an important regulatory milestone in the quarter, both for our Sanofi China strategy and for the Dupixent franchise with the approval in adult AD in China. Now it's what, five working days, I think, since the approval, and we've had close to 200 patients. Now while that for me at least, to my understanding is a record, we accept that some patients will have been prepped and ready and waiting, but still a very strong leading indicator.
The quarter also marked by several important development milestones, which we expect to support the future growth of Dupixent. As highlighted on Dupixent R and D event, we're building out the range of potential indications. In the near term, we have an important readout with the results of our pediatric asthma study during Q4. So I mentioned earlier, there is something incredible about Dupixent and its profile. The detail around The U.
S. Performance, for example, is really supports the fact that it continues to make incredible progress. In The U. S, we have continued to add new patients to treatment. Our field force and our prescribers rapidly adapted to eDetail and like I mentioned in the period of lockdown and more than half the dermatologists indicated that they will be comfortable to prescribe to new patients via telemedicine.
Now that lockdown is easing, we're seeing a return to the in office patient visits. Dermatologist visits are still only sixty percent of pre COVID levels, though prescribers are adapting to the new situation. And in light of our Q2 performance, we're confident that we'll be able to continue to add new patients in the coming months. And I think, kudos to the entire U. S.
Team and Brian Ford and Bill Civil, because we've managed to continue to make progress in the physician's office, whereas I think some of our competition has struggled. The rebound in NBRx we've seen in June is a leading indicator that supports our thinking. For the four weeks ending July 10, NBRx is still somewhat below the Q1 average, but NBRx trends from early July further support our confidence that the new patient starts will normalize as the crisis situation begins to ease. If I turn to TRx, TRx grew by 15% over the first quarter with no meaningful impact from the inventory change. The resilience of TRx shows we've been successful at retaining patients on treatment, expected and reflects Dupixent's convenient at home administration, lack of immunosuppression and lack of requirement of lab monitoring.
I would also remind you of what we discussed in the last quarter. When we surveyed dermatologists, they assessed the risk benefit profile of Dupixent favorably compared to Type one agents or JAK inhibitors during the COVID crisis. With the high levels of treatment satisfaction and dermatologists willing to prescribe Viatale medicine, we expect this resilient trend in TRx to continue even in a second wave of confinement. I'll return now to the launch of Dupixent in China, which is step actually for Sanofi's pivot to specialty care in China. Let me start by recognizing the incredible work of our team who have broken a number of regulatory and commercial records with an approval time of just six months from submission and importantly, a launch just twenty five days from approval.
This unreliably informed is half the previous record of fifty days for a biologic called Cosentyx. With our first prescription written on July 22, we are already generating revenue. So let me try and dimensionalize the Dupixent opportunity in China as the first biologic for adult AD. In the first instance, we will target about 50,000 patients who don't need to rely on a public reimbursement scheme. To unleash the full potential, this will require us to seek NRDL listing, and we think at the earliest in 2022.
We estimate the accessible population will grow to around 150,000 adults. However, with increasing coverage and affordability, we could reach multiples of the 150,000. And as the market develops, we will have a better idea of the true full potential. To put that into context, I think we have approximately 150,000 patients worldwide on Dupixent right now. So you get a sense of the scale of what the opportunity could be for DUPIXENT.
How will we execute? Well, we are ready to launch in a large number of major hospitals. We'll be leveraging sophisticated digital models to reach prescribers. As we move through the process of NRDL listing over the next couple of years, we will open up the bigger opportunity. And of course, we'll be looking to expand into younger age groups and additional indications for Dupixent in China with as many as six additional launches anticipated by 2025.
So this is just the start of a new journey for Dupixent and one of the key reasons why we're very excited about our prospects in China over the coming years. Let's dig a little more into our resilient Specialty Care performance, where we delivered 17% sales growth in the quarter. Dupixent was, of course, the core driver, and we are nearly at the point where quarterly sales are reaching blockbuster level. Oncology also contributed solid growth due to Libtayo and our legacy portfolio. The SOCLIZA launch, which was one week before the lockdown, was a virtual launch and the qualitative feedback from prescribers, however, is very strong.
CMS announced a unique J code for Sarclisa that will be effective from 10/01/2020, an important development for patient access. We are now preparing to roll this out in Europe later this year following an approval we hope in May. Everywhere, we saw a return to growth in rare blood disorder despite continuing competitive elsewhere, we saw a return to growth in rare blood disorders despite continuing competitive pressures on Eloctate. Aubagio benefited from a combination of things, but not least some favorable pricing, a little bit of higher demand and some patient stocking, while LEMTRADA sales continued to decline, both due to competition, but also likely due to COVID-nineteen given its route of administration, but also mode of action. Rare disease was broadly stable and sales were driven by new patient starts, offset by missed doses in particular due to the confinements in Europe as well as order phasing in rest of world.
On vaccines, the story is really all about readiness for a record flu season. Second quarter sales declined as we had anticipated as our U. S. Franchise was heavily affected by COVID, especially adult boosters and Menactra and of course, our travel vaccines. I think though looking across the industry, I'm pleased with how the team in vaccines has delivered despite the challenges.
And I think comparatively, which is what we have to make in difficult times, I think they've done a really excellent job. These impacts more than outweighed positive drivers, which included double digit growth in our PPH franchise, driven by a 72% uplift in Pentaxim in China following the reopening of vaccine centers in February and a 40% growth in flu deliveries in the Southern Hemisphere. Looking ahead, we are planning for a new record flu vaccine sales in the Northern Hemisphere. Demand is up very strongly, and we've already shipped our first doses in The U. S.
With the expectation we will deliver around 80,000,000 doses based on the strength of preseason orders. This is the first time actually that we have been first to launch in flu in a season for the last three years. And whilst that is important, it is perhaps a very good leading indicator for our ability to execute and to manufacture even very challenging times. In Europe, our teams have been able to accelerate the launch of EFLUEDA in several markets, our high dose quadrivalent vaccine targeted at the elderly. Overall, despite some continuing COVID impacts, we're expecting a strong vaccines performance in the second half driven by an expected high flu demand and catch up on pediatric vaccinations.
On the other hand, catch up on meningitis and booster vaccinations may really depend on COVID-nineteen confinements in the second half. To General Medicine, this is where we face the biggest impact from the ongoing pandemic, with a sales decline of 12.7% in the quarter and since we had some positive stocking effects in Q1, a decline of 8.2% in H1. Performance in China reflected the impact of the VBP on Plavix and Apravel. The good news though is that volumes continue to be strong and are up more than 60% consistent with the first quarter. This is encouraging as we look into 2021 and price impacts begin to wash out.
In diabetes, the single digit decline in Glargine moderated due to solid overall growth in the rest of the world. Established products declined by 16% as the inventory build of the first quarter reversed and as the effect of the confinement delays sorry, delayed elective procedures. For instance, we lost €100,000,000 sales year on year of LOVENOX and CYNDISC as both hospital based products were affected by delayed procedures. We do expect those procedures to take place at some point. Consumer Healthcare sales were negatively impacted by lower in person pharmacy traffic.
Q2 sales performance reflected several moving parts in addition to the pandemic, with sales down 8% in the quarter and just under 2% for the half year. Now if we strip out the impact of the voluntary recall of Zantac, first half sales would have been growing about 1.6%, a bit more reflective of the effort being made in our consumer business. Q2 sales benefited from a strong U. S. Spring allergy season, but the overall picture reflected the reversal of the pantry loading, which boosted sales in the first quarter as well as the impact of reduced consumer foot traffic in pharmacies.
Obviously, these factors were not unique to Sanofi as market research data suggests the OTC market contracted by around 8% to 10% in April and May. Looking ahead, as mentioned, the Zantac effect will annualize at the end of Q3. And importantly, we continue to progress on establishing CAC as a stand alone business. I'm also excited about the new leadership coming on board, come back to this in a moment. If I turn next to the pipeline, the quarter was marked by positive proof points for our priority and other late stage pipeline assets, which we highlighted in our four plus one to come tomorrow virtual R and D events.
I know many of you have closely followed our progress, but I would like opportunity to iterate some of the messages that underpin our confidence in those assets. On SERD-eight 59, we believe we have at least a year ahead of the competition. Both the AZ and the Roche compounds have shown profiles with their own individual challenges that could mean that the tolerability of these compounds may not be suitable for this hormone receptor positive breast cancer population. Let me remind you that we have initiated our first pivotal study in September that's expected to read out in the 2021. We will initiate our second pivotal study in first line in the coming months.
On the BTK168, we are confident in our expectations of the efficacy of this compound and its potential to be competitive in the market. MRI data has found to be predictive of reductions in relapse and in remitting multiple sclerosis and is widely recognized as an excellent surrogate marker. And this is well, of course, supported by the literature. We believe the Phase III efficacy outcome of the BTK168 is substantially more derisked than is widely appreciated. On fitusiran and BIVV001, we're committed to substantially improving the current standard of care and anticipate offering greater protection and allowing a more active life for hemophilia patients at a substantially reduced treatment burden.
I also remind you that we have the fifth and final R and D event tomorrow that will focus on nasevimab, our high potential anti RSV monoclonal antibody, where our ambition is to provide RSV prophylaxis for all infants with one injection. At our R and D Day, we set out a new strategic framework based around unique platforms, pathways, patient insights and capabilities. We also indicated that we will continue to externally add to our pipeline if we can find transformative medicines in areas for us to focus in specialty care and vaccines, which meets these four key areas of differentiation. In fact, we've been amongst the most active in the whole industry in terms of BD in 2020. In the past month alone, we struck two early stage deals to bolster our oncology and immunoinflammation portfolios with Keyartis and Chimera, and we've expanded our mRNA vaccine collaboration with Translate Bio.
The novel targets and platforms with these collaborations bring to Sanofi should give you a sense of how we are being guided first by groundbreaking science as well as huge unmet patient need and we build on our innovation capacity. They also hopefully give you an exciting glimpse into the future of medicine. So then my final slide, I would like to provide an early glimpse at 2021, which is shaping up to be very important and a productive year for our pipeline in terms of readouts. To paraphrase John Reeder, R and D Day, this sort of slide simply wouldn't have been possible a few years ago. I will leave you to read the details and in the interest of time, we'll just point you to a couple of highlights.
In terms of pivotal results, I'm really looking forward to the readout of seven pivotal studies, including our SERD-eight fifty nine in second and third line metastatic breast, the Phase three results of our two key hemophilia assets, fitusiran and BIVV001 for Dupixent, chronic spontaneous urticaria and prurigo nodularis. For Sarclisa, we're expecting the first of three pivotal studies in newly diagnosed multiple myeloma. And for Libtayo, we'll see the second study in first line non small cell lung looking at the outcome of population. We should provide access to a much larger opportunity than based on the initial study in patients with a high PD L1 expression seen this year. In addition to seven pivotal studies, we will have multiple proof of concept data.
I particularly point to venglustat, our oral brain penetrant GCS inhibitor, where we expect a key readout in GBA Parkinson's. It will also be a busy year for our innovative oncology portfolio. And with that, I hand over to Jean Baptiste.
Speaker 3
Thank you, Paul. Good morning, good afternoon. On Slide 18, well, sales were down 3.4 in the second quarter, in line with our guidance for a low single digit decline. On the other hand, BOI grew by 5.3% and our BOI margin increased by 200 basis points. Looking through the lines of the P and L, you will identify that while the gross profit was down, the increase in BOI was driven by lower OpEx as well as lower other current operating income and expenses.
Let me explain this FX using the following slide. On Slide 19, looking first at our gross margin, we saw a 160 basis point reduction in the second quarter to 70.4% and for our first half of the year, our gross margin was 71.3%. So let me go into some details on the evolution of our gross margin in Q2. Benefits from Specialty Care growth and productivity gains of around CHF30 million in the quarter were more than offset by the impact of price reductions in China on Plavix on approval as a result of VBP and also by geographic mix considerations, including the expected U. S.
Diabetes pricing pressure and lower vaccine sales in The U. S. When we look forward, the VDP impact will start to annualize in the fourth quarter as the implementation of this program began in December 2019. Meanwhile, the tailwinds from Specialty Care growth and efficiency gains should continue. However, keep in mind that our gross margin is typically lower in the second half than in the first half due to product mix and with a higher proportion of vaccine sales with the flu season and this will be even more so this year with what we expect to be a record flu season.
So when we look on Slide 20 at our OpEx, combined SG and A and R and D improved by 10.2% in the second quarter and by 6.7% for the first six months. The reduction in expense was mainly driven by R and D prioritization on efficiency. You should note that while R and D expense benefited from our decision in 2019 to deprioritize diabetes on cardiovascular, the underlying spend on our ongoing pipeline programs continues to increase. Consequently, we still expect our annual R and D budget to trend towards the EUR6 billion figure we have previously highlighted. On the second half, R and D spending should be around the level of H2 twenty nineteen spending.
In SG and A, the improvement was driven by our smart spending initiatives and by lower expenses associated with COVID, notably travel. I will give you more detail in a minute. Slide 21 takes a closer look at the evolution of our BOI margin improvement in the first half. When you read this chart from the left to the right, the removal of equity accounting for Regeneron had a 90 basis point adverse impact on our BOI margins. Against this restated base of 25.3%, cost savings added 100 basis points, taking our BOI margin to 26.3%, this underlying increase was further enhanced by the revaluation gain of the retained Regeneron share, so that we landed at 27.3 percent.
So we are glad we delivered an underlying margin improvement in the face of headwinds from COVID on VBP. It speaks to the change in mindset we are driving across the business, but most importantly, we know it's not enough. So on Slide 22, looking forward, it is important to note that the exclusion of equity accounting for Regeneron does not deter us from our previously communicated BOI margin ambition of 30% by 2022. And you remember, Capital Markets Day 30% by 2022, but that was relying on around 100 bps coming from the equity participation in Regeneron. So we keep the 30%, even though we have now sold this participation.
We also remain committed to delivering our BOI margin target of greater than 32% by 2025. With this in mind, let me give you an update on our progress to accelerate efficiencies. On Slide 23, as you know, we plan to deliver CHF2 billion in cost savings by 2022. Of this total, we expect around CHF500 million to come from reduced spend in deprioritized businesses, around €1,000,000,000 from a range of smart spending initiatives and a further €500,000,000 from operational excellence. In the 2020 alone, we have achieved around €990,000,000 of savings, almost 50% of our 2022 target.
We made good progress across all potential sources of savings. Our biggest opportunity for savings is in smart spending in which business finance and procurement colleagues work as a team to sustainably reduce our cost base. This is a game changer. And here we delivered approximately €370,000,000 of savings in the first half, including COVID related savings. Digging deeper into our smart spending initiatives, we achieved double digit reduction across a range of expense categories, which are highlighted in the lower part of the slide, including travel, fleet, promotional materials.
You can also see that we have cut our tertiary sites by a third, well, a lot of them being reps' offices, but I mean it's interesting to see the breadth of the change. The number of our suppliers have been reduced by 14%. So these initiatives cuts across the entire organization, which again supports the change of mindsets we have introduced as part of our Play to Win strategy. I would also add also some of the figures were lower due to COVID, for example, expenses. All of these expenses on supplier dimensions were on track for substantial reduction in 2020 even before the pandemic.
In fact, of the total CHF990 million of savings, we calculate that only CHF110 million was associated with COVID. On top of our savings on Slide '24, we have also made inroads with our objective to streamline the established product sales, which we announced at our Capital Markets Day December. Since 2018, we have cut the number of our product families by close to a third to around two twenty and our target is to reduce these to around 100 by 2025. This major simplification of the business will enable greater focus on our growing products. In terms of tail divestments, we have previously announced the sale of Seprafilm, our other smaller products.
As of H1 twenty twenty, we have received approximately €680,000,000 in cash proceeds. On Slide '25, we delivered a strong increase in free cash flow in the 2020, mainly driven by our solid business performance on smart spending initiatives. Free cash flow more than doubled against the same period in 2018. To provide further context to our cash flow evolution, I want to highlight we benefited from around million of onetime benefits, including the tail divestments I previously mentioned on the timing of receivables on tax payments. Excluding these benefits, we still delivered a strong underlying performance and I remain fully confident we will meet our target to improve free cash flow by 50% by 2022.
On Slide 26, I want to give you a sense of the likely business dynamics in the third quarter. When we look at the level of our different businesses, while in Pharmaceutical, we expect to see a recovery in new patient starts on elective procedures, but not yet to pre COVID levels, and we expect a strong momentum of Dupixent to continue. In vaccines, we expect strong flu demand in North America on a partial recovery in overall vaccines, but travel vaccines will clearly continue to be impacted. We will watch closely any decisions to not to reopen schools and universities after the summer that could impact our vaccine sales beyond travel. In Consumer Healthcare, we expect to see increased consumer traffic in pharmacies in most of The U.
S. And Europe, but emerging market activity is likely to remain subdued. As far as OpEx is concerned, we will continue to deliver on efficiencies, but of course, we would expect reinvestment spend in sales and marketing to pick up in Specialty Care and Vaccines. Overall R and D spend in the second half is likely to be similar to the 2019, reflecting increased investment in our priority assets on platforms. That's why we think OpEx will be slightly down in H2 versus 2019 or flat.
While this is our current expectation, we want to acknowledge the continuing uncertainty associated with COVID, especially with the continued rise in the number of infections in The U. S. And the second wave spikes on lockdowns we are seeing in some parts of Europe. Our guidance assumes a backdrop of some local lockdowns, but we should we would expect to see a more pronounced impact on our results if countrywide lockdowns will be imposed again. On my last slide, as Paul mentioned before, we are feeling increasingly confident about delivering on our performance objective in 2020.
Consequently, we are adjusting our full year guidance for 2020 business EPS to grow by around 6% to 7% at CER. The impact of foreign exchange is expected to be negative by minus 3% to 4% based on the July average exchange rate and this compares with the estimated currency impact we communicated with our first quarter results of between minus 1% and minus 2%. As you see, we walk the talk and we commit to deliver on our plan. With that, I would like to turn back the call to Paul.
Speaker 2
Thank you, Jean Baptiste, walking the talk as normal. Thank you for a very clear explanation of why we're on track and why we're likely to exceed our initial guidance to deliver and also deliver our mid to long term financial ambition. I think it's worth just remembering again, a lot of companies have tried to work through the crisis. I think what's unique about this company, at least, at least feels for me is that we launched an ambitious plan to transform the company last December. And we've continued that transformation.
I hope those that have been following us closely, certainly through R and D, operational excellence and shaping up our team to go forth and deliver on this. I think you can start to see it happen. So it would have been perhaps easy for the organization to sit back and just trying to keep going. This is not what's happened here. It gives me even more confidence in how we're emerging from the transformation with a common and single-minded purpose.
And we really will deliver on it. I think it's been a difficult time, but I think it's been very inspiring for me and for everybody that's been part of it. So I think there's one or two things that are worth mentioning. Not only are we transforming, not only were we delivering in line and with a better full year outlook, we've also been working right at the front line on vaccines in particular. And you may have seen in the news this morning, we announced the deal with the UK government for 60,000,000 doses in partnership with GSK.
We're in very late stage conversations with the European Union and of course with The U. S. And we would hope if those things go according to plan, there'll be announcements not that far away. But what it does tell me, having been involved in a lot of this as well myself, is that the appreciation for the role we're likely to play with our recumbent baculovirus platform is becoming more and more important for many. So whilst speed was considered the thing right at the beginning, we have accelerated.
Not only that, we have even more confidence that perhaps our durability or even our efficacy will give something that is pretty unique in this space. So we're going to play a part, which is why we're now in the phase of starting to be able to communicate the deals that were striking because in the end, we'll be one of the few companies that can deliver the number of doses and try and get to places globally that others can't because of their cold chain challenges and other things. So let me just switch to two last things. One that's very important to me, but we've deferred at previous calls. I mentioned previously, we're diligently integrating our ESG into our play to win strategy.
And my own personal journey on this has been, everybody's rushed to put markers down on some of the key obvious indicators. I think what's more interesting about how we're going to try and do it at Sanofi is how we embed the things that we consider important and unique to a health care company into the everyday work of what people do. It won't be good enough just to make progress on CO2. Of course, we are making progress and we commit less than the Paris Agreement. However, it is very important for us to leverage our role in health care.
We're seeing it in COVID to make sure that we can deliver things that you can't do in just simply any other industry. We will address the main points, access, affordability, supply continuity, which has never been more important, diversity, integrity and inclusion. And whilst for many, these have been words on slides, it's not going to be the case for us. We've had good and strong conversations with our Board, not least our new Board member, Elise Kingo, who joins us as the former CEO of the UN Global Compact, the world's largest, what we think are unique things to us as a health care company later in Q3. My last slide, it has been great to complete the team.
We have a lot to do and we had to be very aware of the skills and capabilities we needed to complete team. We've I'm delighted that we were able to promote from within Thomas Triomphe to lead our vaccines business. I think he is already demonstrating at perhaps the most challenging time what it's like to lead in that business and doing incredibly well. Delighted to have him on the team. Briefly, Arnaud River, our new Head of Digital is a systemic data guy and understands what it's going to take to reinvent healthcare.
It's not a signature tie up press release type of role. It is a real root and branch, improve productivity efficiency and deliver better healthcare outcomes role. We're delighted to have that now on the team dedicated. Julie Van Ongard joins us from Estee Lauder, where she's a digital first global marketeer. And I think it's time for consumer health to take a more assertive stance in the online sector and that we hope will help with volume growth as well.
And of course, Natalie Bickford joins us as Chief People Officer, where she was recently in the last business, a low margin business, but was awarded Diversity and Inclusive People Leader in Europe. So we found ourselves in a situation really adding to the exciting capabilities we already have. While it wouldn't normally be important for you, I guess, in your models, for me and for what we're trying to do in our transformation, it's incredibly important that the new talent raises our game and allows us to continue to deliver on our patient first agenda and our desire to change the practice of medicine. So with that, I think I'll hand over to Q and A.
Speaker 1
Correct. So we will now open up the call to your questions, so get ready.
Speaker 0
We will now begin the question and answer session. The first question comes from the line of Richard Vosser with JPMorgan. Please go ahead.
Speaker 4
Hi, thanks for taking my questions. First question on consumer. And I wonder whether you could give us an update on the OTC switches. And with the change of leader for that business, does that signal a change of emphasis for the business and the carve out compared to the Capital Markets Day? And then second question, just thinking about the savings that have been made both from COVID and underlying, that's obviously very impressive.
So just of the savings of COVID, how many of those or how much of those do you think will be sustainable going forward? What learnings can you get to drive more savings? And you seem to be running pretty ahead of plan. So how should we think about that in terms of the plans and driving towards your margin target? Thanks very much.
Speaker 2
Okay, Richard. Thank you. I'll toss the second part to Jean Baptiste in a moment. But upfront, the change in leader is unrelated to the strategy. Alan Main's decision to explore other opportunities just gave us a moment to reflect on what we needed and what we could look like going forward.
The regulatory conversations pretty much with the FDA uniquely continue to progress positively. We are gaining confidence. There's still a bit of a way to go, but we're gaining confidence. And we're quite bullish about what it could look like in the launch, particularly Tamiflu and Cialis combined in the sort of late twenty twenty four, twenty twenty five horizon, we think could really be a significant, you know that and change the trajectory, perhaps even have us as the fastest growing consumer in that timeframe. Perhaps the difference will be with Julie joining us is that a deeper customer insight and a digital first mindset may, if you put yourself forward a couple of years, will probably be the minimum expectation to take advantage of Rx to OTC switches.
So I think we've got stronger in that context, so feeling quite confident about that. Jean Baptiste, the savings, first of all, congratulations from Richard on how you did that. And then what will it mean next?
Speaker 3
Well, thanks, Richard. But as you know, don't like to be behind schedule. So it's normal that we fast on that aspect. And we still have much more to do. So the savings related to COVID, I guess they will rebound because they are linked to our sales force going back on the field, and I want them back on the field like everyone.
But it's nothing to do with our global journey. Without COVID related savings, we want to hit the 2,000,000,000 target. And we are marching in that direction with a lot of determination. As you know, we have done some of the things, but we have entered on this public now into discussion with our unions on how to right size further our company and those discussions are going on in France, in Germany, in many other countries. And they will help really hitting our targets of €2,000,000,000 on the quicker the better.
Speaker 2
Okay, good. Thank you. Next The
Speaker 0
next question comes from the line of Peter Verdult with Citi. Please go ahead.
Speaker 5
Thanks. Peter Verdult, Citi. One for Jean Baptiste, please. Just more simply, just on the savings you've achieved so far, would you give us a ballpark percentage as to how much has been plowed or reinvested back in the business? Secondly, for Paul or Thomas, we know seasonal flu vaccines in Europe are around five ten years a shot.
We've got recent industry COVID contracts signed in The U. S. For around $20 a shot. Now I totally understand that you're not going to go into the specifics of the contract you signed with the UK government today. But just in terms of bookmarking or bookending the likely COVID vaccine price, are those two price points good bookends for us to use?
And then if I may, very cheekily because it only requires a one word answer, what is the price point you've gone into with Dupixent in China? Thank you.
Speaker 2
Okay. So maybe JB, if you want to take another go.
Speaker 3
Yes, Peter. On the same, what do we reinvest? What you can imagine with the growth we deliver on Dupixent, with what we are looking at behind vaccines, we have started this reinvestment quite significantly. As you know, we are not limiting ourselves in terms of reinvestment because we are piloting the global performance with an anchor point, which is to deliver our BOI margin target in 2022. So second half of the year, you will see, as I mentioned, some other investments, especially in R and D.
We have already the Syntherex cost, which is in our OpEx in Q2. Have the DTC campaigns. We have the increase in the sales force activity behind Dupixent. So all of this makes the bulk of the reinvestment and we can pilot what we want to see trickling down to the bottom line depending on the strength of what it triggers in terms of growth. So we will go on like this.
And we have room of maneuver to do that.
Speaker 2
Thank you, Jean Matisse. Thomas, price?
Speaker 6
So COVID-nineteen price if I understood correctly the question. So as you know very well, we are not disclosing further details for The UK deal than the ones that are in the press release. What I can still say in terms of COVID-nineteen pricing is that, as you know, we've committed to do a pricing that is affordable and that enables access to the larger population. That's very important for us. However, I want also to tell you that it's very important for us to think about the sustainability of our operations.
And therefore, we want to make sure that the way we will do it will be in a sustainable way moving forward and that's the way we will price the product. Of course, there will be a bit more information as we come closer to the development of the next steps of these vaccines.
Speaker 2
As for the question on the price of Dupixent in China, well, it's around €22,000 annual treatment cost. That price may be a little bit lower due to the patient access programs. And of course, we a couple of things to remember. One is we have the NRDL a year or two away. So that will be another opportunity to discuss price, I'm sure.
And we really do believe we have incredible potential in China. So exciting times actually for Dupixent. Okay. Next question. The
Speaker 0
next question comes from the line of Graham Parry with Bank of America. Please go ahead.
Speaker 7
So first one is on flu vaccine. So you talked about potential to ship up to or sell up to 80,000,000 doses in The U. S. I think that's up about twenty percent on last year, if you can confirm that's right. And because of the increased demand that there is, are you anticipating better pricing on top of that as well?
And if you could help us understand the mix benefit here as well that you could get on price from going to the more innovative high dose vaccines? And then secondly, on your surge, you just hinted that you're talking about starting first line studies in coming months. Does that mean you have the CDK4six combination data in house now? And if not, when do you expect it? And what forum might we see that externally?
Thank you.
Speaker 2
Okay. Thank you, Graham. So maybe, Thomas, to you. I think we the question about volume and also importantly, a question on potential mix in flu.
Speaker 6
Thank you very much for the question, Graham. So indeed, we've alluded to the eighty million doses target for The U. S. Market alone, which is a significant increase. You mentioned, if I recall correctly, the equivalent of 20% additional volumes.
Let's say that it's in the ballpark of what we are targeting at. That's very important. It's for this year. You also know in parallel that we keep increasing our capacity in The U. S.
With the new facility coming available next year, but also beyond The U. S. So it's very important that we are there at the Rue De Neuveau, if you wish, for this flu vaccination coverage rate increase that we are planning for the coming few years. And our industrial network is proving reliable here. Now in terms of margin and the evolution of the product mix, obviously, it's not important to have more flu vaccine.
It's important to have more flu differentiated vaccines because that's what the larger part of the world is actually looking for. And you know that it's important to have prospective randomized clinical trials, differentiated vaccine against standard dose vaccines. And Flublok and Fluzanidose are two such products that have demonstrated their differentiation in prospective RCTs. We are going to further increase the supply of these two differentiated products at a higher rate than the overall flu volumes growth in terms of volume. So you can imagine that it will have a beneficial impact in terms of margin.
Speaker 2
Okay. Thanks, Thomas. John, maybe you'd like to take the third question. Can you hear us, John?
Speaker 8
Yes, I can. Can you repeat the question,
Speaker 2
please? Question was
Speaker 7
So it was just I think you're talking about starting the third first line studies in coming months. I just wondered if you have the CDK4six combo data in house that was, I think, is the hurdle to start that study? And if not, when do you expect it? And what forum might we see that data externally?
Speaker 8
Yes. Yes. We have data. We wanted to have a bit more, but recruitment has been slower in the COVID situation. Actually, right now, at the point of doing the internal analysis, have a meeting, in fact, after this to review.
So we think eminently we'll be able to make a decision on that. The in terms of an external presentation, I don't have a specific date for you on that.
Speaker 2
Okay. Thank you, John. Thank you, Graham. Next question please.
Speaker 0
The next question comes from the line of Jo Walton with Credit Suisse. Please go ahead.
Speaker 9
Thank you. Just a follow-up a quick follow-up on the flu question that we just had. I'm assuming that there's so much demand that we'll see much more of your flu delivery in the third quarter than the fourth quarter. So just checking that this is likely to be a really amazing third quarter because of that. And the second question is the elephant in the room about U.
S. Health care reform. I know that the price differential of Dupixent is less than some other dermatology products between The U. S. And The EU.
But I wonder if you could just tell us what you think might happen to you and maybe news a bit about potential U. S. Health care reforms with particular reference to international reference pricing, please?
Speaker 2
Thomas, do you want to take the
Speaker 3
Yes. Follow-up
Speaker 6
the first section, so regarding flu, Joe, what's important to have in mind is that last year, you remember that the strain selection was done a little bit later stage by WHO. That is not the case this year. Strain selection has been on time. And as mentioned before, we have been the first one to starting delivering doses in The U. S.
About a week ago. So indeed, compared to last year, we expect a stronger trend towards Q3 versus Q4 food deliveries.
Speaker 2
Joe, to the question on the I think you're referring to the Executive Order discussion from last Friday, I think it was. There's a few things jump to mind. One, as a company, you could take it both ways, but we are a little less exposed in The U. S. Compared to some of the other big players.
I think secondly, our quick read and there is not a great load of detail as you'll imagine, but our quick read is that it may be more towards Part B, where the challenges may be. And I think, again, we're even less exposed versus our peer group and the rest of the industry. I think on IPI, it's too convenient a headline. I mean it's a bit of a blunt instrument. People want to compare direct prices, and you know this, I don't need to explain this to you and others, but that comparing a price to a country where the price may be lower and there's zero access and the society is struggling to get its innovation is not really a truthful comparison nor the lack of understanding of rebates in The United States to what the actual net prices are.
So I find that there's a lot of talk. I think the first thing I would say is not expecting any impact from these conversations this year. Of course, we're pre election, so it's a very convenient subject matter. We do believe in reforms that help the out of pocket, particularly the elderly in the pharmacy and not moving money around between different actors in the chain. If we thought we'd be open, we personally rebate reform, for example, and making sure that those that need it get it in their own pocket is much more important to us, and we support those.
So I'm open minded to what will happen. We just need more detail. And as always, if there's some stimulus, maybe something good also can come But we're less exposed that it's not a factor to alarmers at the moment. Next question, please.
Speaker 0
The next question comes from the line of Thibault Buterin with Morgan Stanley. Please go ahead.
Speaker 10
Thank you for taking my question. Maybe to come back on flu vaccines, you quantified the increased volume in The U. S. Could you comment on the rest of the North Hemisphere and then particularly in Europe? Do you have enough volume to address an increase in demand in Europe?
And do you anticipate any shortage overall of flu vaccines this season? And maybe a second quick one on guidance. It seems that the upgrade of the full year 2020 guidance corresponds roughly to the positive one offs you had on the revaluation of the share. So is there a fundamental improvement in the business that you would highlight that underpin this guidance upgrade?
Speaker 2
Okay. Thank you. Thomas, a few questions.
Speaker 6
Hello, Thibault. Flu ex U. S. Is a good question. And indeed, it's important to look at it because we see increasing flu vaccination coverage, not just in The U.
S, but all over the world, especially in Europe. You've seen probably that over the past two to three years, I would say that more and more European Ministers of Health have understood the importance of increasing flu VCR. And obviously, with COVID-nineteen pandemic and the fact that the most at risk for flu are the ones that are also the most at risk for COVID-nineteen, there is an extreme importance to make sure that everybody is protected against the presentable disease in order to make sure that hospitals are not overwhelmed by flu specialization. So we are to come back to numbers in your question, we are therefore expecting a significant double digit increase in every part of the world, definitely in Europe. And indeed, from a supply perspective, we are expecting to deliver a significant increase, not just in U.
S, but also ex U. S. In order to be able to meet the demand. Now the second part of your question, if I understood correctly, was about will there be a shortage? That will be a little bit crystal ball looking from my part to be able to see that.
What I can say is that Sanofi Pasteur level, at least, we have significantly upscaled our industrial capabilities in order to make sure that to tackle the demand that we have received. We will make sure that we are there and we are delivering on time. It's difficult for me to comment for the other suppliers, but I do expect a very, very strong North Terminix for 2022 season.
Speaker 2
Jean Baptiste, the question comes back to the one off and the guidance. I think it probably underappreciates the good work that's going on to try and make sure that we're in line, particularly when I look across the industry at such a challenging time. But maybe you'd like to add a comment.
Speaker 3
Yes, because I think you're perfectly right. It's more important to consider our 2022 underlying upgrades and the one of this year. On what it means, yes, because staying on 30%, I've seen some modeling that impacted when to 29% and we are maintaining the 30%. And what it means, it is and you're asking which part of the business, where the part of the business is the human part, which is the most important. And it is showing the confidence on the quality of the team, which is being built around the the Paul leadership.
And that means that we hold the wheel firmly of Sanofi and that we will not get derailed easily and that's the main message really. What make us confident is that the team really understand and sees what we want to achieve, better science, early science to really trigger innovative medicines.
Speaker 2
Well said, Baptiste. We are well aware of the commitments we've made externally for 2022 and 2025. So we were whilst we were going through the transformation, whilst handling the pandemic, at least what's in our control effectively, we are still sticking firm to what we've committed for 2022 and 2025. And we have to see our journey to that. So whilst the points were made on 2020, I think our longer term commitments, as JB said, are the become the most interesting.
Okay. Next question, please.
Speaker 0
The next question comes from the line of Naresh Chuhan with Interim Health. Please go ahead.
Speaker 11
Hi, there. Thanks for taking my questions. A couple on Dupixent, please, particularly on the level of investment behind Dupixent. So in Q2, the Regeneron antibody alliance profit was a bit lower than we had forecasted. So has there been any material investments behind Dupixent in Q2, for example, the China launch?
And more importantly, when should we be thinking about the investment phase starting to plateau? I suspect it's probably a while away, but at that point, we should presumably expect Dupixent profitability to really take off. So a bit of color around timing on that would be helpful. And then on Flu, as you mentioned earlier, it's the first time in a few years where you've been first. And being first generally leaves a better price.
So is it fair to assume that of the 9% price rises you've taken on the differentiated vaccines that the majority of that is likely to stick? Thanks.
Speaker 2
Okay. Some good questions in there. Before I come to actually, let's do Fluke first, and then maybe I'll throw to Phil on the investment levels going forward on Dupixent.
Speaker 6
So maybe on the flu pricing first, as you know, in this North America 2020 season, if you look at the Fluids and I dose products in The U. S, we are 100% switching from Fluids and I dose trivalent to Fluids and I dose quadrivalent, which I think what you have in mind with a nine percent increase. So I will say roughly, yes, based on the fact that we have a solid alignment of supply coming down the road and that we are starting to deliver well. We expect some price increase versus last year. The final extent of which will be depending on how the final deliveries will happen, but there will be some pricing element into it.
But overall, again, the vast majority will from volume also.
Speaker 2
Okay. So I made as tosses the bill if he's connected, Jean Matisse, any comment on the investment level through Q2 in Dupixent? Well, yes, as
Speaker 3
I said, we are investing behind Dupixent and in Q2, there were significant post personnel costs on OpEx increase. You're right to say that it's not the end of it. We're going to go unpacking this growth because we are just at the beginning of it. What I like is when I see the profile of the drug and I'm looking at when do we get it accretive to our BOI margin on it's quite exciting to see at which speed we see the improvements. So that's the right balance right now.
Maybe Bill, you give it more color. Yes.
Speaker 12
Thanks for the question. And look, as Paul had said, we are growing a product here that is truly transformational. And we have launches that are going on all throughout the year, 89 launches in 2020 alone. And as Paul said, we're 35 launches in and we have 54 to go. So when you're building a global brand, we are absolutely investing for launch success all over the world.
And we've continued in The U. S. With investments in DTC, etcetera. We feel as though these are all important investments to drive what this brand can become.
Speaker 3
We'll Yes. Thanks, Biren. The sad thing would be not to be able to afford it. And we are that's why we are so determined the strong determination we show in our selling plan is really to make that happen.
Speaker 2
Yes. Well, I'm going to add to that too. Jean Martin said it, he never misses an opportunity to remind me he'd like us to be accretive as fast as possible. The truth is we are building for the long term. But just an important caveat, I think Bill touched on it, too.
When you're adding specialty capability, the marginal cost is much lower. It's not like we're adding primary care field forces. You look at the data that's coming out. If you look to the eosinophilic esophagitis data, if you look this is a best in class, first in class data and we have to rise to meet that. We have to be efficient and we have to make choices elsewhere in the portfolio to do it because we to remind you, we've already committed to what our business shape needs to look like.
And you know that, it's well retold from Capital Markets Day. But these additional investments are modest by comparison. They will come, but they will become because we'll be first in best in class in adding new patient population. Okay. Next question.
Speaker 0
The next question comes from the line of Wimal Kapadia with Bernstein. Please go ahead.
Speaker 2
Great. Thank you very much for taking my questions. Wimal Kapadia from Bernstein. Just another one for Thomas. The U.
S. PPH franchise saw a reasonably strong decline in 2Q, while rest of world bounced back quite nicely. So should we assume a similar outcome in The U. S. In Q3?
And if you could just talk a little bit about what you've seen in The U. S. Market in July for the BPH franchise, that would be really helpful. And then my second question is just on the BTK and some of the rumors on the potential Principia acquisition. I know you can't comment specifically on that rumor.
But given the level of confidence in the asset internally, how does Sanofi think about the economics of the product today? And would an opt in from Principia change your thinking about allocating capital to ensure that you maximize the value of that product? Thank you. So maybe I'll deal with the last one first. Absolutely nothing to say about any rumors that you read about anything.
I will repeat, we're very excited about the BTK. We think it's going to be a major part of our future. We touched on it. The data we think is underappreciated actually at the moment, and we look forward to working through the four Phase III and demonstrating that. And we have a great partnership.
So that continues. Thomas, I know it's your first IR call. You're getting plenty of attention. Do you want to I'm sorry to dig in. It's okay.
It's your turn.
Speaker 6
Thanks for the question, Wimal. It's an important point. I actually believe we should all pause for a second and look into it. Your question is about pediatric combinations and the performance that we had in Q2. I think it's not secret to say first that the world of pediatric commission vaccines is not full of 20 different suppliers.
So there's a certain limitation of number of providers. And as you mentioned, yes, we have a negative performance in Q2 year on year in The U. S. To call it Catacad, we're talking about minus 22% of the PPH range on a year to year basis in The U. S.
So it's also quite interesting to look at the very strong increase in terms of performance in Rest of the World and in Europe. I think that Europe was also hit by the COVID-nineteen situation. So a couple of points I'd like to further drag on to this when we look at The U. S. PPH product range performance.
I think first and foremost, it's always related. So it's interesting to look at the performance of this product range in The U. S. Versus maybe the performance of the similar product range from competition. And I think that we have not to be shy at all about our performance.
We've done extremely well in the second quarter of the year. I think also the second point I would allude to is the fact that this is on a quarterly basis. And of course, it's three different months. The hit we have had from the COVID-nineteen pandemic situation differs a lot from a month to month perspective. And without going into extremely, I would say while we started April with a severe impact compared to last year, we've ended the quarter in June with an increase versus last year.
So I think that we are trending well onto the PPH performance, especially of course of the lower than one year of HK. Those new girls need to be vaccinated. And I think that there has been significant number of calls from medical association as well as from the CDC to make sure that the mothers and parents in Europe bring back the new bonds to the pediatric offices to make sure that those are protected before the COVID-nineteen potential.
Speaker 2
Okay. Thank you, Thomas. Next question please.
Speaker 0
The next question comes from the line of Peter Welford with Jefferies. Please go ahead.
Speaker 13
Hi, thanks for taking my questions. Two, firstly, on the baculovirus vaccine, the COVID-nineteen. Thanks for the details on the timing. I wonder if you could confirm, will this be just investigating in Phase III a one dose regimen? Or will you also be investing in a two dose regimen as well?
And can we also see, will there be a cohort that excludes and excludes the adjuvant? Or will all the cohorts include the adjuvant as a matter of course? And then secondly, just on Sarclisa, so that you discontinued the combination with Libtayo in myeloma. I wonder if you could comment whether there's any change in your thinking regarding that combination in solid tumors and also an update perhaps on the use of Sarclisa in some of your other combinations and whether or not there's any data or insights you got from that study at all that have any other indications? Thank you.
Speaker 2
Okay. Thanks, Peter. John, I'll come to you in a moment about Sarclisa and Libtayo. But before that, baculovirus, number of doses taking forward and with or without the adjuvant.
Speaker 6
Thanks for the question. And I use it also, Peter, to add a little bit about the timing also of the candidate vaccine. First of all, back to the actual regimen, I would say, and the need for an adjuvant. Without entering into the details of the Phase one, Phase two study that we tend to start very September, and that's looking good from maintaining that perspective. We expect to actually have a two dose regimen in the end linked to the fact that coronavirus protection, whether coming from natural infection, the disease or from vaccination, we are not too sure at all about how long it will remain.
So everything we've seen, I think, from actually epidemiology or from the earlier results we've seen everywhere seems to indicate that we'll go forward to those regimen and that's what we should count on. And I think that's the same for every single manufacturer. Now for the same reason, we also expect to need an adjuvant. So that's why it's very important to have this partnership with GSK. And that's why it's very important to have all companies bringing our best assets and we believe that the adjuvant will play a key role.
So my bet would be on two doses with adjuvant definitely moving forward. Final point maybe on this vaccine candidate. A month ago, we had the RNA day and we were saying that we will start the Phase three as soon as possible. And I'm happy to confirm today that as soon as possible is not anymore in January 2021, but in December 2020, we are aiming to further accelerate the clinical vaccines and we want to start the Phase three, ideally in the December 2020.
Speaker 2
Great. Thank you. John Reed, maybe you could comment
Speaker 8
on And
Speaker 2
hopefully you heard the question. So please on Libtayo combination.
Speaker 8
Yes. So as you know, there has been a theory that CD38, the target of Sarclisa, might have a broader role to play as an immune checkpoint. And so that was the hypothesis that we were testing in these combination studies and did small signal seeking studies across eight indications. So although all data are not yet in, so far we've not seen compelling evidence that this is going to be an attractive combination for going into a variety of types of either solid or hematologic malignancies. So at this point, it doesn't look like the hypothesis of CD38 having that broad role across a number of malignancy is bearing out.
The caveat, would just say, is that we're still finishing the studies for a couple of the indications. I think more broadly in terms of Sarclisa and the recent data from our Akema trial, we continue to see a differentiated profile for this molecule, which has a different mechanism of action compared to some of the other molecules that also target CD38. And that was borne out in the IKEAMA data with a superior hazard ratio compared to similar studies, similar drug combinations of therapeutics that have been conducted in this second line population. So we remain very bullish, I would say, on the quality and characteristics of Sarclisa, and we look forward to some of the data in the frontline setting in treatment naive patients as they begin to emerge next year.
Speaker 2
Thank you, John. Maybe we get time for one more question, I think.
Speaker 0
The next question comes from the line of Geoffrey Porges with SVB Leerink. Please go ahead.
Speaker 14
Thank you very much. Appreciate you squeezing me in. First a question for you, Paul. You've built out your management team and you're well on the way with restructuring the business. Could you talk about do you view your organization as being operationally, strategically and financially in a position to do a substantial acquisition, not the sort of tuck ins that you're doing, because clearly you have the balance sheet capacity?
And then just a follow-up question on Libtayo. John, if you could perhaps give us an insight into the basal cell carcinoma readout and when you think that you could be in a position to file there. Particularly interested in whether there is benefit in the form of stable disease in the patients who are the nonresponders, and how quickly you're seeing those responses in what's typically a pretty indolent tumor? Thanks.
Speaker 2
Thank you for the question. John, I'll come to you in a moment on BCC. For me, I'll try and break your question into two parts. I think you touched on it, are we do we have the right team? Is it capable?
Is it efficient? Do we have the financial? I think you tried to say, I guess, I'm heading is, I'm very confident in the executive team and indeed increasingly at all levels of the organization. We have new people to come in still, of course, that our discipline and our ability to execute and to execute in line with strategy is growing all the time. So the organization is responding much faster than I would have expected, which allows lots of opportunities for us.
Our first responsibility is to deliver a minimum of what we've committed to externally. As for M and A, and I think you biased it towards sizable or instead of tuck in, I can't remember the exact language. I think upfront, we have a great financial potential as we are. I think we have a great mid stage pipeline that's going to come through the middle of the decade. I do think when you look at our Synthorx deal and our recent collaborations, we are if we have a choice, it will be much more in that scale of the single mid digit billion deals just because we want to go after science that can break new ground, that can set the pace and if possible, also add value to our existing pipeline in combination, example, with oncology.
So we feel we don't have to do anything more different to that to outperform and build something quite special in terms of financially capabilities and scientifically, in reverse order. So I think we're I think that's probably the most I can say right now. John, do you have any comment on basal cell?
Speaker 8
Yes. Thanks for the question. I'm not going be able to answer all your questions. But just to recap, in that study population, the overall response rate was approximately 30%, and the durability was impressive. About 85% of patients who achieved the response remained maintained that response for over a year.
So the activity we felt in this second line population of patients who had already failed hedgehog inhibitors, and so therefore, a very aggressive disease, we felt, was worthy of moving to submission of the supplemental BLA. So that is in the works, and we do plan to do that. In terms of the I think you asked about how rapidly do we see responses. I would have we would have to get back to you on that. We don't have those data handy.
Speaker 14
Thanks very much.
Speaker 2
Thank you. And we'll follow-up on that last point. I think bringing us to a close, as you'll start to just drop off the I'm as I approach a year end, I'm thrilled with the progress we're making, the quality of the work being done, the scientific transformation in the company, the expense discipline and the somewhat obsessive nature in delivery of Dupixent against unmet medical need and what it means to our business. And I think that is the right balance. I think we've covered a lot of ground and most of it we've covered at least 30% or 40% of it during a pandemic.
So we haven't settled on just keeping moving. We have continued to accelerate the underlying fundamentals, many of which you won't see until time passes. But as you do, I think you'll start to see the momentum building. And we're in exactly the right place, perhaps ahead of where I personally thought we'd be at this point. Thank you to the team for everything.
I hope everybody gets a little bit of a break, and thank you to everybody that joined on the call. Thank you.
Speaker 0
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