On February 7, 2019 Sanofi reported that it delivers 2018 business EPS growth of 5.1% at CER (Press release, Sanofi, FEB 7, 2019, View Source [SID1234533168]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Fourth-quarter sales(3) growth driven by Specialty Care and Vaccines

Net sales were €8,997 million, an increase of 3.5% on a reported basis, 3.9%(3) at CER and 2.6% at CER/CS (4).
Sanofi Genzyme sales were up 37.4% (16.1% at CER/CS(4)), led by Immunology and Rare Blood Disorder franchises.
Vaccines sales increased 9.7%, driven by successful influenza differentiation strategy and Menactra.
CHC sales increased 1.9%, supported by Emerging Markets.
DCV(5) GBU sales were down 11.3%; Global Diabetes franchise sales declined 10.5% in line with 2015-2018 guidance.
Emerging Markets sales(6) were up 6.0%, reflecting strong performance in Asia.
Full-Year 2018 sales growth from new products and Emerging markets more than offset impact of U.S. LoEs

Net sales in 2018 were €34,463 million, down 1.7% on a reported basis and grew 2.5% at CER (up 0.6% at CER/CS(4)).
Sanofi Genzyme grew 30.8% (+14.2% at CER/CS(4)) to €7,226 million.
Vaccines sales increased 2.4% to €5,118 million while CHC sales were up 3.0% to €4,660 million.
DCV(5) GBU sales declined 13.8% to €4,511 million.
Emerging Markets sales were up 7.5%, supported by strong performance in China (up 12.7%).
Sanofi delivers 2018 business EPS at the high end of its guidance range

Q4 2018 business EPS(1) up 4.7% at CER to €1.10.
Full-Year 2018 business EPS of €5.47 up 5.1% at CER and IFRS EPS of €3.45 (down 48.5%(2)).
Board proposes dividend of €3.07, the 25th consecutive increase in dividend.
Key achievements in sustaining innovation in R&D

Isatuximab met primary endpoint of ICARIA phase 3 study in Relapsed/Refractory Multiple Myeloma.
BIVV001 demonstrated sustained high factor levels at once-weekly dosing with data presented at ASH (Free ASH Whitepaper).
FDA Priority Review granted for Dupixent in adolescents with moderate-to-severe atopic dermatitis.
R&D strategy evolves towards prioritization of Specialty Care and Vaccines, leveraging technology platforms and data science.
2019 financial outlook
Sanofi expects 2019 business EPS(1) to grow between 3% and 5%(7) at CER, barring unforeseen major adverse events. Applying average January 2019 exchange rates, the positive currency impact on 2019 business EPS is estimated to be between 1% to 2%.

Sanofi Chief Executive Officer, Olivier Brandicourt, commented:
"In the fourth quarter, we continued the momentum of the previous quarter and we delivered 5% full-year business EPS growth, at the high end of our guidance. In 2018, we executed on important launches including Dupixent, Libtayo and Cablivi, as the headwinds from our U.S. LoEs began to moderate. Additionally, the acquisitions of Bioverativ and Ablynx provided the foundation to build a leading Rare Blood Disorder franchise and to enhance our biologic discovery capabilities. As we enter 2019, our focus remains on delivering our business priorities and transforming Sanofi to address the evolving business dynamics facing our industry."
(1) In order to facilitate an understanding of operational performance, Sanofi comments on the business net income statement. Business net income is a non-GAAP financial measure (see Appendix 10 for definitions). The consolidated income statement for Q4 2018 is provided in Appendix 3 and a reconciliation of reported IFRS net income to business net income is set forth in Appendix 4; (2) Excluding Animal Health gain on disposal, full-year IFRS net income was up 14.5% and full-year IFRS EPS was up 15.3%; (3) Changes in net sales are expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 10); (4) Constant Structure: Adjusted for Bioverativ acquisition and divestment of European Generics business; (5) DCV: Diabetes and Cardiovascular; (6) See definition page 8; (7) 2018 business EPS was €5.47.

Investor Relations: (+) 33 1 53 77 45 45 – E-mail: [email protected] – Media Relations: (+) 33 1 53 77 46 46 – E-mail: [email protected]
Website: www.sanofi.com Mobile app: SANOFI IR available on the App Store and Google Play
2018 fourth-quarter and full-year Sanofi sales

Unless otherwise indicated, all percentage changes in sales in this press release are stated at CER(8).
In the fourth quarter of 2018, Company sales were €8,997 million, up 3.5% on a reported basis. Exchange rate movements had a negative effect of 0.4 percentage points mainly driven by the movement of the Turkish Lira, Brazilian Real and Argentine Peso. At CER, Company sales increased 3.9%.

Full-year Company sales reached €34,463 million, down 1.7% on a reported basis. Exchange rate movements had an unfavorable effect of 4.2 percentage points. At CER, Company sales were up 2.5%.

Global Business Units

The table below presents sales by Global Business Unit (GBU). Please note that Emerging Markets sales for Specialty Care and Diabetes and Cardiovascular are included in the General Medicines and Emerging Markets GBU.

a) Does not include Emerging Markets sales – see definition page 8; (b) Includes Emerging Markets sales for Diabetes & Cardiovascular and Specialty Care; (c)+16.1% at CS; (d)+14.2% at CS; (e) -1.8% at CS; (f)-1.6% at CS

Global Franchises

The tables below present fourth-quarter and 2018 sales by global franchise, including Emerging Markets sales, to facilitate comparisons. Appendix 1 provides a reconciliation of sales by GBU and franchise.

Pharmaceuticals

Fourth-quarter Pharmaceutical sales were up 3.0% to €6,276 million mainly driven by the Immunology and Rare Blood Disorder franchises which were partially offset by Diabetes, Established Rx Products and the disposal of the European generics business. Full-year sales for Pharmaceuticals increased 2.4% to €24,685 million.

In the fourth quarter, Rare Disease delivered a solid performance with sales up 10.9% to €794 million, driven by Gaucher, Pompe and Fabry therapies. In the U.S. and Europe, fourth-quarter Rare Disease sales grew 8.5% (to €292 million) and 3.1% (to €262 million), respectively, while Emerging Markets sales were up 32.6% to €150 million. Full-year Rare Disease sales increased 8.3% to €2,958 million.

Fourth-quarter Gaucher (Cerezyme and Cerdelga) sales were up 13.0% to €234 million, supported by the increasing penetration of Cerdelga in Europe and the sustained growth of Cerezyme in Emerging Markets. Fourth-quarter Cerdelga sales increased 33.3% to €44 million. Full-year Gaucher sales were €870 million, up 10.0%.

Fourth-quarter Pompe (Myozyme/Lumizyme) sales grew 10.7% to €226 million, supported by positive trends in naïve patient accruals. Fourth-quarter Myozyme/Lumizyme sales increased 18.8% to €79 million in the U.S. and 1.1% to €96 million in Europe, respectively. Full-year Myozyme/Lumizyme sales increased 10.8% to €840 million.

Fourth-quarter Fabry (Fabrazyme) sales grew 14.4% to €206 million. Fourth-quarter sales in the U.S. and Europe increased 9.9% (to €104 million) and 4.8% (to €45 million), respectively. Full-year Fabrazyme sales were up 9.8% to €755 million.

Fourth-quarter Multiple Sclerosis (MS) sales were up 6.6% to €542 million, as double-digit Aubagio sales growth was partially offset by the decline in Lemtrada sales. Full-year MS sales increased 4.4% to €2,049 million.

Fourth-quarter Aubagio sales increased 12.6% to €446 million, driven by the U.S. (up 13.5% to €311 million) and Europe (up 12.5% to €108 million). Full-year Aubagio sales increased 9.3% to €1,647 million.

In the fourth quarter, Lemtrada sales decreased 14.3% to €96 million due to lower U.S. sales (down 19.6% to €45 million) and European sales (down 11.9% to €37 million), reflecting increased competition. Full-year Lemtrada sales decreased 11.6% to €402 million.

Dupixent (collaboration with Regeneron) for the treatment of moderate-to-severe atopic dermatitis in adults and moderate-to-severe adolescent and adult asthma generated sales of €280 million in the fourth quarter compared to €118 million in the fourth quarter of 2017. In the U.S., Dupixent sales reached €225 million in the fourth quarter (up 87.9%). Demand for the product remains strong and total prescriptions (source: IQVIA weekly TRx data) increased 25% sequentially in the fourth quarter, bolstered by the branded DTC campaign and the recent U.S. launch in asthma. Fourth-quarter sales in Europe were €29 million. Full-year Dupixent sales were €788 million compared to €219 million in the same period of 2017. By the end of 2018, Dupixent had been launched in 17 countries.

Kevzara (collaboration with Regeneron) for rheumatoid arthritis generated sales of €31 million in the fourth quarter, of which €23 million was in the U.S. reflecting improved commercial coverage. Kevzara was launched in 14 countries in Europe in 2018 (included France in the fourth quarter). Full-year Kevzara sales were €83 million.

Bioverativ was consolidated in Sanofi’s Financial Statements from March 9, 2018. Fourth-quarter sales of the Rare Blood Disorder franchise were €294 million (up 5.7% on a pro forma basis(9)), including non-U.S. sales of €58 million with Japan as the primary contributor. Full-year consolidated sales of the Rare Blood Disorder franchise were €897 million, up 12.5% on a pro forma basis(9).

Eloctate, a recombinant antihemophilic Factor VIII, indicated for the treatment of hemophilia A, generated sales of
€196 million in the fourth quarter, up 4.3% on a pro forma basis(10). The performance in the U.S., Japan and Australia was partially offset by a decline in sales in Canada following the previously announced tender loss. The competitive dynamics in the U.S. resulted in a deceleration in growth compared with the previous quarter. Full-year consolidated Eloctate sales were €608 million, up 15.0% on a pro forma basis(10).

Alprolix, a recombinant coagulation Factor IX, indicated for the treatment of hemophilia B, generated sales of €95 million in the fourth quarter, up 5.3% on a pro forma basis(10). Full-year consolidated Alprolix sales were €285 million, up 6.6% on a pro forma basis(10).

Cablivi (caplacizumab) for the treatment of adults with acquired thrombotic thrombocytopenic purpura (aTTP), received EU approval in September and was launched in its first market, Germany, in October. Sales in the fourth quarter were €3 million

(9) Growth comparing fourth-quarter 2018 sales versus fourth-quarter 2017 sales, and full 2018 sales versus full 2017 sales at CER. Excluding the Sobi contract manufacturing sales and including Cablivi sales in 2018. Unaudited data. (10) Growth comparing fourth-quarter 2018 sales versus fourth-quarter 2017 sales, and full 2018 sales versus full 2017 sales at CER. Excluding the Sobi contract manufacturing sales. Unaudited data.

Fourth-quarter Oncology sales increased 8.1% to €387 million. Consistent with the Company’s portfolio prioritization efforts, Sanofi sold Leukine on January 31, 2018. Excluding Leukine, Oncology fourth-quarter sales were up 10.2%. Full-year Oncology sales were up 2.1% to €1,494 million and up 6.3% excluding Leukine.

Jevtana sales were up 14.1% to €114 million in the fourth quarter supported by the performance in the U.S. (up 20.0% to €50 million). Full-year Jevtana sales increased 13.0% to €422 million. In the fourth quarter and full year, Thymoglobulin sales increased 9.9% (to €78 million) and 7.2% (to €297 million), respectively.

In September, Libtayo (cemiplimab-rwlc, collaboration with Regeneron) was approved in the U.S. for the treatment of patients with metastatic cutaneous squamous cell carcinoma (CSCC) or locally advanced CSCC who are not candidates for curative surgery or curative radiation. Libtayo is the only treatment for advanced CSCC approved by the FDA. U.S. Libtayo sales were $15 million and were consolidated by Regeneron.

In the fourth quarter, global Diabetes sales decreased 10.5% to €1,375 million, due to lower glargine (Lantus and Toujeo) sales in the U.S. Fourth-quarter U.S. Diabetes sales were down 26.3% to €555 million, reflecting the previously announced changes in coverage of the Part D business and a continued decline in average U.S. glargine net prices. Fourth-quarter sales in Emerging Markets increased 7.7% to €376 million. Fourth-quarter sales in Europe decreased 0.6% to €320 million, supported by Toujeo growth. Full-year global Diabetes sales decreased 10.4% to €5,472 million. This in turn resulted in a CAGR sales decline for the global Diabetes franchise over 2015-2018 of 7.4% at CER, in line with the guidance.

Fourth-quarter glargine (Lantus and Toujeo) sales decreased 16.8% to €1,077 million. U.S. glargine sales were down 35.7% to €460 million, reflecting the aforementioned changes in coverage in Part D and a continued decline in average U.S. glargine net prices. In Europe, glargine sales were stable ato €245 million reflecting strong Toujeo performance. Full-year glargine sales decreased 15.1% to €4,405 million. In 2019, Sanofi expects a further net pricing decline for its glargine products in the U.S. as a result of higher rebates needed to maintain broad payer coverage and the increased Part D coverage gap impact.

In the fourth quarter, Lantus sales were €866 million, down 19.7%. In the U.S., Lantus sales decreased 37.0% to €379 million, mainly reflecting lower average net price and changes in coverage in Part D. In Europe, fourth-quarter Lantus sales were €168 million, down 8.2% due to biosimilar glargine competition and patients switching to Toujeo. In Emerging Markets, fourth-quarter Lantus sales were up 7.7% to €242 million. Full-year Lantus sales decreased 19.0% to €3,565 million.

Fourth-quarter Toujeo sales were €211 million, down 2.3%. In the U.S., fourth-quarter Toujeo sales were €81 million, down 29.1%. In Europe and Emerging Markets, fourth-quarter Toujeo sales were €77 million (up 23.8%) and €31 million (up 32.0%), respectively. Full-year Toujeo sales increased 7.2% to €840 million.

Fourth-quarter Apidra sales decreased 6.2% to €89 million. Lower sales in the U.S. (down 36.0% to €17 million) offset growth in Emerging Markets (up 10.7% to €29 million). Full-year Apidra sales increased 0.3% to €357 million.

Amaryl sales were €77 million, down 1.3% in the fourth quarter, of which €66 million were generated in Emerging Markets (up 1.5%). Full-year Amaryl sales were up 4.8% at €335 million.

Admelog (insulin lispro injection) 100 Units/mL, which was launched in the U.S. in April, generated sales of €57 million in the fourth quarter mainly due to access in Managed Medicaid. Full-year Admelog sales were €93 million.

Fourth-quarter and full-year Soliqua 100/33 (insulin glargine 100 Units/mL & lixisenatide 33 mcg/mL injection) and Suliqua(TM) sales were €27 million and €73 million, respectively.

Fourth-quarter Praluent (collaboration with Regeneron) sales increased 50.9% to €82 million. U.S. sales of €52 million (up 45.7%) benefited from ESI coverage exclusivity which began in the third quarter. In Europe, sales were €23 million (up 53.3%). Full-year Praluent sales increased 56.1% to €261 million. In 2019, Sanofi expects higher U.S. rebates to impact Praluent sales.

Fourth-quarter and full-year Multaq sales were up 20.8% (to €95 million) and 7.1% (to €350 million), respectively.

Established Rx Products

In the fourth quarter, Established Rx Products sales decreased 6.8% to €2,126 million, reflecting lower U.S. sales of Renvela/Renagel (sevelamer) due to generic competition, together with lower sales of Lovenox in Europe and Plavix in Japan. Full-year Established Rx Products sales decreased 6.1% to €8,843 million.

Fourth quarter Lovenox sales decreased 9.0% to €346 million, reflecting biosimilar competition in the UK, Poland, Germany, Italy and France. Sales in Europe were down 13.9% to €199 million impacted mainly by price erosion in France and Germany triggered by biosimilar launches. In Emerging Markets, Lovenox sales grew 3.3% to €117 million. Full-year Lovenox sales were down 3.0% to €1,465 million

In the fourth quarter, Plavix sales were down 4.9% to €328 million. The decline was mainly driven by generic penetration in Japan (sales down 31.5% to €38 million) and procurement timing in the Middle East. Plavix sales continued to grow in China. Sales of the product decreased in the rest of Emerging Markets and increased 2.9% in Europe. Full-year Plavix sales were up 1.2% to €1,440 million.

Fourth-quarter Aprovel/Avapro sales decreased 2.5% to €151 million due to loss of exclusivity in Japan in December 2017. In Emerging Markets, performance continued to be strong with sales up 8.6% to €112 million. Full-year Aprovel/Avapro sales decreased 1.7% to €652 million.

Fourth-quarter Renvela/Renagel (sevelamer) sales decreased 39.4% to €96 million due to generic competition in the U.S. (down 53.0% to €57 million). Full-year Renvela/Renagel sales decreased 46.7% to €411 million.

Generics

In the fourth quarter, Generics sales decreased 33.8% to €270 million, reflecting the divestment of the European generics business Zentiva at the end of the third quarter. This divestiture was consistent with Sanofi’s strategy to simplify and reshape the company. At CS, fourth quarter Generic sales increased 6.7%. Emerging Markets Generics sales increased 3.8% to €173 million. Full-year Generics sales decreased 9.8% to €1,490 million and decreased 0.6% at CS.

In the fourth quarter, Consumer Healthcare (CHC) sales increased 1.9% to €1,194 million, driven by Emerging Markets and the U.S. Full-year CHC sales increased 3.0% to €4,660 million.

In Europe, fourth-quarter CHC sales were down 3.6% to €368 million. Lower sales in the Allergy Cough & Cold category (down 13.3%) resulted from a weak season coupled with a strong base for comparison in the fourth quarter of 2017, which featured an unusual spike in demand. Full-year CHC sales in Europe decreased 0.2% to €1,403 million.

In the U.S., fourth-quarter CHC sales increased 6.0% to €274 million, supported by the Digestive category (up 10.9%) and Gold Bond performance. Full-year U.S. CHC sales decreased 1.1% to €1,066 million.

In Emerging Markets, fourth-quarter CHC sales increased 6.4% to €405 million, mainly driven by a solid demand in Brazil (mainly Pain category). Full-year Emerging Markets CHC sales increased 8.9% to €1,588 million.

Fourth-quarter Vaccines sales were up 9.7% driven by the performance in the U.S. (up 10.4%) and Europe (up 21.9%). In Emerging Markets, fourth-quarter Vaccines sales increased 2.5%. Fourth-quarter performance was consistent with Sanofi’s expectation that sales of the Vaccines GBU would grow mid to high-single digits in the second half of 2018. Full-year Vaccines sales increased 2.4% to €5,118 million.

Fourth-quarter Influenza vaccines sales were up 17.1% to €596 million, reflecting slightly greater weighting of shipments in the fourth quarter versus the prior year as well as Sanofi Pasteur’s influenza differentiation strategy which included the successful launch of Flubok in the U.S. and the strong performance of Vaxigrip QIV in Europe. Full-year Influenza vaccines sales increased 7.2% to €1,708 million.

In the fourth quarter, Polio/Pertussis/Hib (PPH) vaccines sales were up 3.0% to €504 million, driven by higher Hexaxim sales in Emerging Markets. In China, Pentaxim supply returned to normal. In the U.S., PPH vaccines sales decreased 9.2% to €102 million reflecting lower sales of Polio and Hib vaccines. Full-year Polio/Pertussis/Hib vaccines sales were down 0.7% to €1,749 million.

Fourth-quarter Menactra sales increased 63.3% to €130 million, driven by sales in the U.S. and Middle-East. In the U.S., fourth-quarter Menactra sales were €80 million (up 45.3%) reflecting timing differences in CDC and wholesaler buying patterns. Full-year Menactra sales were up 4.5% to €608 million.

Fourth-quarter and full-year Adult Booster vaccines sales decreased 2.9% (to €135 million) and increased 1.3% (to €470 million), respectively.

Fourth-quarter Travel and other endemic vaccines sales were €130 million, down 18.8% reflecting lower Rabies and Typhoid vaccines sales. Full-year Travel and other endemic vaccines sales were up 1.8% to €488 million.

Fourth-quarter sales in the U.S. were up 8.7% to €3,195 million. This mainly reflected the strong performances of Dupixent and Aubagio, together with the consolidation of Eloctate and Alprolix sales, which were partly offset by lower sales of the Diabetes franchise (down 26.3%) and of sevelamer. In the U.S., full-year sales increased 0.7% to €11,540 million.

Fourth-quarter sales in Emerging Markets increased 6.0% to €2,591 million, mainly driven by Rare Diseases (up 32.6%), Diabetes (up 7.7%) and CHC (up 6.4%). In Asia, sales were up 8.4% to €941 million in the fourth quarter, sustained by the performance in China (up 8.3% to €566 million). In Latin America, fourth-quarter sales increased 2.6% to €710 million. Fourth-quarter sales in Brazil were up 10.0% to €254 million. In Africa and the Middle East region, fourth-quarter sales were €601 million, up 5.2%. Fourth-quarter sales in the Eurasia region increased 3.3% to €288 million, driven by the growth in Turkey which was partially offset by lower sales in Russia (€153 million, down 4.0%). Full-year sales in Emerging Markets increased 7.5% to €10,112 million. In 2018, sales in China, Brazil and Russia were €2,464 million (up 12.7%), €1,023 million (up 7.0%) and €605 million (up 4.6%), respectively.

Fourth-quarter sales in Europe were €2,342 million, down 4.8% due to the divestment of the European Generics business. At CS, fourth-quarter sales were up 2.0% driven by Vaccines (up 21.9%) and the roll-out of Dupixent which offset lower sales in Established Rx Products (down 6.8%). In Europe, full-year sales decreased 0.6% to €9,434 million and increased 1.1% at CS.

Sales in Japan decreased 1.4% to €423 million in the fourth quarter. The consolidation of Rare Blood Disorder sales was more than offset by the impact of Plavix and Aprovel generic competition and lower Vaccines sales. In Japan, full-year sales decreased 2.0% to €1,710 million.

R&D update

Consult Appendix 6 for full overview of Sanofi’s R&D pipeline
R&D strategy

Sanofi is today providing an update on the evolution of its R&D strategy. Consistent with its ambition to be an industry innovation leader, Sanofi has increased its R&D focus on Specialty Care therapy areas (Oncology, Immunology, Rare Disease and Rare Blood Disorder) while maintaining its commitment to Vaccines. Since 2017, the number of R&D programs in these areas has increased significantly, and they now represent over 90% of Sanofi’s clinical portfolio. This change reflects advances in the Company’s R&D capabilities and understanding of human biology.

In support of this strategy, Sanofi recently carried out a rigorous pipeline prioritization review to accelerate investment behind its most promising programs and to discontinue those with a less attractive expected return profile. As a result, the Company is accelerating the development of 17 programs, including 8 in Oncology. Thirteen development projects and 25 research projects are being discontinued to enhance the company’s focus on delivering first and best in class medicines. Overall, Sanofi could potentially submit 9 new medicines and 25 additional indications to regulatory authorities over 2019 to 2022.

Through the development of its own expertise and the establishment of partnerships with industry pioneers, Sanofi has access to a broad range of therapeutic modalities that enable a more customized, science-driven approach to targeting disease. This includes development of next-generation biologics, such as multi-specific antibodies and Nanobodies, which provide new opportunities relative to traditional monoclonal antibodies in areas such as oncology and immunology, as well as gene therapies. The Company is also employing data science and machine learning across the R&D organization to generate higher quality data, accelerate development and regulatory submissions, and reduce costs. Sanofi expects to maintain an annual R&D budget of approximately €6 billion through 2021.

Regulatory update

Regulatory updates since October 31, 2018 include the following:

In February, the European Medicine Agency’s Committee for Medicinal Products for Human Use (CHMP) has recommended approval of Praluent (collaboration with Regeneron) in European Union to reduce cardiovascular risk in people with established atherosclerotic cardiovascular disease.
In December, the FDA approved the hexavalent vaccine, Vaxelis(TM), for use in children from 6 weeks through 4 years of age. Vaxelis(TM) was developed as part of a joint partnership between Sanofi and Merck in the U.S. and Canada. Commercial supply will not be available in the U.S. prior to 2020.
In December, Dupixent ( collaboration with Regeneron) was submitted to the FDA for the treatment of adults with inadequately-controlled chronic rhinosinusitis with nasal polyps (CRSwNP).
In December, the European Commission granted marketing authorization for Dengvaxia to prevent dengue disease in individuals 9-45 years of age with a documented prior dengue infection and who are living in endemic areas.
In November, the CHMP recommended approval in European Union of fexinidazole the first all-oral treatment for sleeping sickness.
In November, the FDA accepted for Priority Review the supplemental Biologics License Application (sBLA) for Dupixent in adolescent patients 12 to 17 years of age with moderate-to-severe atopic dermatitis, whose disease is inadequately controlled with topical therapies or for whom topical treatment is medically inadvisable. The target action data for the FDA decision is March 11, 2019.
At the beginning of February 2019, the R&D pipeline contained 81 projects including 33 new molecular entities in clinical development. 35 projects are in phase 3 or have been submitted to the regulatory authorities for approval.

Portfolio update

Phase 3:

In February, Sanofi announced that Isatuximab phase 3 trial (ICARIA study) met primary endpoint of prolonging progression free survival in patients with relapsed/refractory multiple myeloma
In January, the New England Journal of Medicine (NEJM) published positive results of the Phase 3 trial of Cablivi (caplacizumab) in adults with acquired thrombotic thrombocytopenic purpura (aTTP).
In November, new analyses on mortality from the ODYSSEY OUTCOMES trial evaluating Praluent were presented at the American Heart Association (AHA) Scientific Sessions. In November, the New England Journal of Medicine (NEJM) also published detailed results of this trial.
Shan 6, a pediatric hexavalent vaccine, entered phase 3.
Phase 2:

A phase 2 study evaluating the combination of isatuximab (anti-CD38 mAb) and cemiplimab (collaboration with Regeneron) in lymphoma was intitiated.
A phase 2 study evaluating the combination of isatuximab and atezolizumab (PD-L1 inhibitor mAb) in solid tumors was initiated.
A phase 2 study evaluating SAR440340 (an anti-IL33 mAb, collaboration with Regeneron) in atopic dermatitis was initiated.
Positive primary analysis of the Phase 2b trial demonstrated the safety and efficacy of SP0232/MEDI8897 (anti RSV mAb – Respiratory Syncytial Virus, collaboration with Medimmune).
Several projects in phase 2 were stopped:
GZ389988, a TRKA antagonist, in osteo arthritis;
ALX0171, an anti RSV nanobody (from Ablynx) for Respiratory Syncitial Virus;
SAR425899, a GLP-1 / GCGR agonist, in obesity in type 2 diabetes patients;
SAR407899, a rho kinase inhibitor, for microvascular angina;
Phase 1:

SAR408701, an anti-CEACAM5, achieved positive proof of concept in a subgroup of lung cancer patients. A broad development program is expected to start by the end of 2019.
BIVV001, a recombinant Factor VIII for Hemophilia A, achieved positive proof of concept with demonstration of sustained high factor levels at once-weekly dosing.
SAR441000, a cytokine mRNA (collaboration withBioNTech AG) entered phase 1 in the treatment of melanoma.
SAR443060/DNL747 (collaboration with Denali), an oral brain-penetrant small molecule (RIPK1 inhibitor), entered phase 1 clinical study in Amyotrophic Lateral Sclerosis (ALS) and Alzheimer’s disease.
BIVV003, a Zinc Finger Nuclease (ZFN) gene editing technology issued from Bioverativ entered phase 1 in the treatment of sickle cell disease.
SAR441344, an anti-CD40L mAb (license from ImmuNext), entered phase 1 in the treatment of multiple sclerosis.
A next generation Pneumococcal Conjugate Vaccine (PCV) entered phase 1.
Several projects in phase 1 were stopped:
SAR439794, a TLR4 agonist immunomodulatory evaluated in peanut allergy;
SAR247799, a S1P1 agonist evaluated in cardiovascular area;
SAR438335, a GLP-1/GIP agonist in Type 2 diabetes;
SAR228810, an anti protofibrillar AB mAb for Alzheimer disease;
UshStat, a myosin 7A gene therapy for Usher Syndrome 1B, will be discontinued contigent upon identification of out-licensing partner.
Collaborations

In January 2019, Sanofi and Regeneron announced a restructuring of their global Immuno-Oncology Discovery and Development Agreement for new IO cancer treatments. The 2015 agreement was scheduled to end in approximately mid-2020. This revision provides for ongoing collaborative development of two clinical-stage bispecific antibody programs (BCMAxCD3 and MUC16xCD3 bispecific). It also provides Sanofi with increased flexibility to advance its early-stage IO pipeline independently while Regeneron retains all rights to its other IO discovery and development programs.

In January 2019, BioNTech announced that it has extended its research collaboration with Sanofi initiated in late 2015 in the field of mRNA cancer immunotherapy.

In January 2019, MyoKardia, Inc. announced that it regained worldwide rights to all programs covered under its license and collaboration agreement with Sanofi. The collaboration has not been extended beyond the initial research term, which ended on December 31, 2018. As a result, MyoKardia now has regained global rights to all programs in its portfolio, including mavacamten (a Myosin inhibitor evaluated in obstructive and non-obstructive hypertrophic cardiomyopathy) and MYK-491 (a Myosin activator evaluated in dilated cardiomyopathy) and the license and collaboration will conclude in its entirety effective April 1, 2019.

In December sanofi and Medicines for Malaria Ventures (MMV) agreed to transfer the operational responsibility for the development of Ferroquine/OZ439, to MMV in such a way that MMV would assume leadership while sanofi remains the sponsor of the studies, fulfilling drug supply, regulatory and legal obligations. Ferroquine/OZ439 is a first in class combination for malaria previously developed in collaboration with MMV.

In November, Sanofi announced that it plans to collaborate with Denali Therapeutics Inc. on the development of multiple molecules with the potential to treat a range of neurological and systemic inflammatory diseases.

2018 Fourth-quarter and full-year financial results(11)

Business Net Income(11)

In the fourth quarter of 2018, Sanofi generated net sales of €8,997 million, an increase of 3.5% (up 3.9% at CER). Full-year sales were €34,463 million, down 1.7% on a reported basis (up 2.5% at CER).

Fourth-quarter other revenues increased 13.4% (up 10.3% at CER) to €329 million, reflecting the VaxServe sales contribution of non-Sanofi products (€262 million, up 13.9% at CER) and the royalties received from Swedish Orphan Biovitrum AB. Full-year other revenues increased 5.7% (up 9.3% at CER) to €1,214 million of which €959 million were generated by VaxServe (up 15.6% at CER).

Fourth-quarter Gross Profit increased 5.2% to €6,188 million (up 5.2% at CER). The gross margin ratio was 68.8% (68.6% at CER) versus 67.7% in the fourth quarter of 2017. The positive mix impact of Specialty Care as well as the contribution from Bioverativ and Vaccines (impacted by Dengvaxia in the fourth quarter of 2017) more than offset the negative impacts from U.S. Diabetes net price evolution and sevelamer generic competition. In the fourth quarter of 2018, the gross margin ratio of segments was 72.1% for Pharmaceuticals (down 0.2 percentage points), 66.0% for CHC (up 1.6 percentage points) and 60.4% for Vaccines (up 4.9 percentage points). Full-year Gross Profit decreased 1.7% to €24,356 million (up 2.5% at CER). In 2018, the gross margin ratio increased 0.1 percentage point to 70.7% (70.6% at CER) versus 2017. In 2019, Sanofi expects its gross margin ratio to be around 70% at CER.

Research and Development (R&D) expenses increased 14.6% to €1,678 million in the fourth quarter of 2018. At CER, R&D expenses increased 13.5%, mainly reflecting the acquisitions of Bioverativ and Ablynx together with the investments in the immuno-oncology and diabetes programs. Excluding the impact of acquisitions, R&D expenses would have risen by 6.7% in the fourth quarter of 2018. Full-year R&D expenses increased 7.7% to €5,894 million (up 10.3% at CER).

Fourth-quarter selling general and administrative expenses (SG&A) increased 0.8% to €2,721 million. At CER, SG&A expenses were up 1.1% mainly reflecting consolidation of Bioverativ and Ablynx. Additional marketing investments in new launches were offset by lower Diabetes expenses in the U.S. In the fourth quarter, the ratio of SG&A to sales decreased 0.9 percentage points to 30.2% compared to the fourth quarter of 2017. Full-year SG&A expenses decreased 2.4% to €9,831 million (up 1.6% at CER). In 2018, the ratio of SG&A to sales was 28.5%, 0.2 percentage points lower than in 2017.

Fourth-quarter other current operating income net of expenses was -€148 million versus -€114 million in the fourth quarter of 2017 and included the share of profit/loss to Regeneron of the monoclonal antibodies Alliance net of associated marketing expenses incurred by Regeneron. In the fourth quarter of 2018, this line also included charges related to a legal contingency provision, as well as a capital gain on an associate company and other accruals, which in aggregate represented a net charge of €72 million. In the fourth quarter of 2017, this line included an impairment of tangible assets of €87 million related to Dengvaxia. In 2018, other current operating income net of expenses was -€64 million versus €4 million in 2017.

The share of profits from associates was €121 million in the fourth quarter versus €109 million for the same period of 2017, reflecting the increased contribution of the share of profits in Regeneron. In 2018, the share of profits from associates was €423 million versus €214 million in 2017.

In the fourth quarter, non-controlling interests were -€22 million versus -€30 million in the fourth quarter of 2017. Full-year non-controlling interests were -€106 million versus -€125 million in 2017.

Fourth-quarter business operating income increased 3.3% to €1,740 million. At CER, business operating income increased 4.5%. The ratio of business operating income to net sales decreased 0.1 percentage points to 19.3% versus the fourth quarter of 2017. Over the period, the business operating income ratio of segments was 27.1% for Pharmaceuticals (down 3.9 percentage points), 29.0% for CHC (up 2.2 percentage points) and 36.1% for Vaccines (up 14.2 percentage points). Full-year business operating income was €8,884 million, down 4.7% (or up 0.9% at CER). In 2018, the ratio of business operating income to net sales decreased by 0.8 percentage points to 25.8%.

Net financial expenses were -€60 million in the fourth quarter versus -€73 million in the same period of 2017. In the fourth quarter of 2018, net financial expenses included the cost associated with the Bioverativ and Ablynx acquisitions coupled with an increase of €22 million in the market value of a financial investment. Full-year net financial expenses were -€271 million versus -€273 million in 2017.

The fourth-quarter effective tax rate was 20.0% compared to 18.7% in the fourth quarter of 2017. In 2018, the effective tax rate was 21.6% compared to 23.5% in 2017. Sanofi expects its effective tax rate to be around 22% in 2019.
(11) See Appendix 3 for 2018 fourth-quarter consolidated income statement; see Appendix 10 for definitions of financial indicators, and Appendix 4 for reconciliation of IFRS net income reported to business net income.

Fourth-quarter business net income(11) increased 2.9% to €1,364 million and 4.3% at CER. The ratio of business net income to net sales was stable at 15.2% versus the fourth quarter of 2017. In 2018, business net income(11) decreased 1.8% to €6,819 million and increased 4.2% at CER. The ratio of business net income to net sales was stable at 19.8%.

In the fourth quarter of 2018, business earnings per share(11) (EPS) increased by 3.8% to €1.10 on a reported basis and by 4.7% at CER. The average number of shares outstanding was 1,245.6 million in the fourth quarter of 2018 versus 1,252.9 million in the fourth quarter of 2017.

In 2018, business earnings per share(11) was €5.47, down 0.9% on a reported basis and up 5.1% at CER. The average number of shares outstanding was 1,247.1 million in 2018 versus 1,256.9 million in 2017.
2019 Guidance

Sanofi expects 2019 Business EPS to grow between 3% and 5% at CER, barring unforeseen major adverse events. Applying average January 2019 exchange rates, the positive currency impact on 2019 Business EPS is estimated to be between 1% to 2%.

Dividend

The Board of Directors convened on February 6, 2019, and proposed a dividend of €3.07 per share.

Financial statements are not audited. The audit procedures by the Statutory Auditors are underway.

Reconciliation of IFRS net income reported to business net income (see Appendix 4)

In 2018, the IFRS net income was €4,306 million. The main items excluded from the business net income were:

An amortization charge of €2,170 million related to fair value remeasurement on intangible assets of acquired companies (primarily Aventis: €256 million, Genzyme: €760 million, Boehringer Ingelheim CHC business:
€242 million, Bioverativ: €430 million) and to acquired intangible assets (licenses/products: €213 million). In the fourth quarter, an amortization charge of €634 million related to fair value remeasurement on intangible assets of acquired companies (primarily Aventis: €56 million, Genzyme: €186 million, Boehringer Ingelheim CHC business: €61 million, Bioverativ: €136 million) and to acquired intangible assets (licenses/products: €114 million) was recorded. These items have no cash impact on the Company.
An impairment of intangible assets of €718 million (of which €426 million in the fourth quarter) mainly related to Lemtrada, intangible assets from the Ablynx acquisition in May 2018 (including the anticipated termination collaboration with Merck & Co), and other Intellectual Property R&D assets of which the rights related to programs in Myokardia portfolio. This item has no cash impact on the Company.

A charge of €114 million arising from the workdown of inventories of acquired companies (related to Bioverativ) remeasured at fair value due to the application of purchase accounting to acquisitions. This item has no cash impact on the Group.

An income of €117 million mainly reflecting a decrease of Bayer contingent considerations linked to Lemtrada (income of €109 million) and a charge related to CVR fair value adjustment.

Restructuring costs and similar items of €1,480 million (of which €765 million in the fourth quarter) which include the termination fee (€283 million) paid to Regeneron related to the research program under the original IO agreement, streamlining initiatives in Europe and Japan, the cost of transfer to Evotec of the early stage infectious diseases R&D portfolio and Research unit for an amount of €252 million and accelerated depreciation of industrial assets in the U.S.

(11) See Appendix 3 for 2018 fourth-quarter consolidated income statement; see Appendix 10 for definitions of financial indicators, and Appendix 4 for reconciliation of IFRS net income reported to business net income.

A €1,125 million tax effect arising from the items listed above, mainly comprising €692 million of deferred taxes generated by amortization and impairments of intangible assets, and €435 million associated with restructuring costs and similar items. The fourth-quarter tax effect was €503 million, including €241 million of deferred taxes on amortization and impairments charged against intangible assets and €220 million associated with restructuring costs and similar items (see Appendix 4).
A €188 million tax effect (of which €56 million in the fourth quarter) arising from the U.S. tax reform.
An income of €76 million net of tax (of which €180 million in the fourth quarter) related to restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures.
Capital Allocation

In 2018, net cash generated by operating activities was €5,061 million after capital expenditures of €1,674 million and an increase in working capital of €1,099 million. In 2018, restructuring costs and similar items were €894 million while expenditure on share repurchases was €1,104 million. Over the period, the dividend paid by Sanofi amounted to €3,773 million and acquisitions and partnerships net of disposals were €11,243 million (including €12,728 million related to the Bioverativ and Ablynx acquisitions and €1,598 million related to the European generics business divestment). As a consequence, net debt increased from €5,161 million at December 31, 2017, to €17,628 million at December 31, 2018 (amount net of €6,925 million in cash and cash equivalents).