Sanofi: Q2 highlights and key takeaways

Sanofi revealed its 2017 second-quarter earnings on July 31, beating the Street’s estimates on earnings-per-share thanks in large part to disciplined spending and a strong performance from its vaccines unit, but the French drugmaker is faced with niggling questions on several of its higher profile franchises.

Dupixent part deux

Revenues for Dupixent (dupilumab) were one of the highlights of Sanofi’s 1Q17 earnings – and same went for partner Regeneron – but a repeat performance by the recently introduced atopic dermatitis drug was not in the cards, suggesting that access barriers put in place by payers and formulary managers are taking a toll. (See Physician Views Poll Results: Despite its strong start, significant proportion of patients facing restrictive access to Dupixent.)

Sanofi reported that over 5100 physicians have written prescriptions for Dupixent to a total of 13 000 patients as of last week, up from 1800 scripts for 3500 patients at the end of March. However, the drug posted $26 million euros ($30.1 million) in second quarter sales, which Credit Suisse analysts said fell short of the consensus estimate of 33 million euros ($39 million).

“We are progressing well with over 30 percent of commercial lives under contract, and we are expecting to have broad contracted market access by the end of the year, again, with appropriate utilization management criteria,” remarked Bill Sibold, executive vice president and head of Sanofi Genzyme. “It is still early days, and this figure will fluctuate, but we are currently seeing prior authorisation approval rates of 73 percent across all plans. And within the plans where we have contracts in place, it is encouraging to see that the prior authorisation approval rates are around 83 percent,” he added.

In addition to loosening restrictions on access to Dupixent, all eyes will be on the expected release of top-line Phase III results for mAb against IL-4 and IL-13 to treat asthma in the fourth quarter.

Diabetes difficulties

Overall, the company’s diabetes portfolio experienced an “accelerated decline,” according to CEO Olivier Brandicourt, including a 19-percent decrease in global sales of fast-fading flagship Lantus (insulin glargine) that was driven by a 28-percent drop off in the US.

While this performance was essentially in line with what analysts had been projecting, it was too much for growing products like Soliqua – a combination of insulin glargine and GLP-1 agonist lixisenatide – to overcome, and resulted in 15-percent less in sales compared to 2Q16.

Peter Guenter, executive vice president of Sanofi’s diabetes and cardiovascular unit, noted that several recent coverage decisions from major pharmacy benefit managers (PBMs) in the US have “only kicked in in the last couple of weeks,” and will be one of the bright spots for the franchise in the short-term.

Guenter acknowledged that Sanofi has responded to competitive pressures by deciding to play ball with formulary managers and offer steeper discounts in order to increase – or even simply maintain – volumes. “So you have seen there's no insulin inclusion on Express Scripts’ national formulary, which also shows our commitment to keep our access to patients as large as possible,” he said. (See ViewPoints: Express Scripts’ light touch on 2018 exclusions suggests the strategy is working.)

Sanofi pledged to provide a “comprehensive” update on negotiations with formulary managers, along with new guidance, for its diabetes franchise in parallel with its third quarter earnings.

ODYSSEY on the mind

Similar to the situation with Amgen’s Repatha (evolocumab), sales for Sanofi and Regeneron’s Praluent (alirocumab) continue to be lacklustre as the dyslipidaemia drug posted $42 million, albeit largely in line with consensus estimate.

Brandicourt suggested on the call that all options for accelerating the growth of the franchise remain on the table, including the possibility of raising rebates or lowering the price to expand access, though he stressed that Praluent’s performance in the ongoing Phase III ODYSSEY Outcomes trial is the company’s big hope for bending the curve. (See ViewPoints: Well ACC-tually – a ray of hope for anti-PCSK9 mAbs?)

“We are relying a lot on the ODYSSEY results, a large study we are awaiting the results from during the first quarter. We think the ODYSSEY outcome data will provide a more complete understanding of the effect of PCSK9 inhibition on cardiovascular event in general,” he noted.

Push into PD-1

Elias Zerhouni, Sanofi’s president of global R&D, highlighted the initiation of a pivotal Phase II trial for REGN2810 in metastatic cutaneous squamous cell carcinoma (CSCC), which the company and Regeneron have pegged as their beachhead indication for the anti-PD-1 mAb.

“We are ahead in this indication, and it represents our fast-to-market strategy in the PD-1 space,” Zerhouni noted. “At ASCO, we presented positive clinical data from a Phase I study, which showed that in patients with advanced CSCC, our PD-1 was associated with a 46-percent overall response rate, a 69-percent disease control rate, and was generally well-tolerated. So, we look forward to the results of our registration study and are planning to submit to the FDA in metastatic CSCC in 1Q18,” he added.

The partners have also begun a Phase III trial comparing REGN2810 to chemotherapy in the highly competitive first-line non-small-cell lung cancer setting, as well as a Phase II trial in metastatic, locally advanced basal cell carcinoma.

Sanofi and Regeneron see combinations as the key to making serious in-roads in tumour types being targeted by more established anti-PD-(L)1 competitors, noted Zerhouni, who noted that mAbs against other I/O targets like LAG3 and TGF-beta have moved into human testing. (See Spotlight On Interview: Regeneron, Sanofi outline plan of attack for REGN2810.)

PARP dreams-less

PARP appears to be the target du jour at the moment, with Bristol-Myers Squibb and Merck & Co. announcing significant partnerships to combine their individual I/O assets with PARP inhibitors from AstraZeneca and Clovis Oncology, respectively. What’s more, Celgene was outspoken last week about its interest in finding a way into the space. 

Sanofi thus may be unique as far as its seeming lack of interest in getting its hands on a product in the PARP class, at least that was the distinct impression Zerhouni gave when asked about it directly on the quarterly call.

“We do not have a PARP ourselves. We are very focused on our immuno-oncology PD-1 and other both Sanofi assets and Regeneron assets,” he said. “The mechanism in itself, I think, is a valid one at least in a subcategory of patients, so that I think more data will come and we'll see with the announced partnerships that you know whether or not it will have a synergistic role with checkpoint inhibitors. But at this point, we are not players in that space,” Zerhouni added.

M&A on table

Sanofi noted that it has repurchased roughly 15 million shares this year as part of a previously announced 3.5 billion euro buyback plan that began in late 2016, though chief financial officer Jérôme Contamine suggested the French drugmaker will have adequate dry powder available if it stumbled upon a suitable acquisition target.

“We'll not exclude some opportunistic buyback as we said earlier. Clearly, of course, this would not prevent us from eventually looking after financing some M&A if and when this would appear as meeting our criteria,” he remarked.

At the same time, Brandicourt nixed the notion that Sanofi might be interested in a bi-money “transformational deal” anytime soon, instead suggesting that smaller targets in “very strategic areas” will be on the table.

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