Sanofi SA

PAR:SAN

Earnings Call Transcript 2019-Q4

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the Sanofi Fourth Quarter and Full Year 2019 Earnings Conference Call. I would now like to turn the call over to Felix Lauscher, Investor Relations at Sanofi. Please go ahead, sir.

[Felix Lauscher, Head of IR North America & Asia]

Good morning, and good afternoon to everyone on the call. Thank you for joining us to review Sanofi's fourth quarter and full year results. As usually, you can find the slides of this call on the Investors page of our website at sanofi.com. Moving to Slide 2. 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 de Référence for a description of these risk factors. With that, please advance to Slide 3, and let me introduce our speakers today. With me are Paul Hudson, Chief Executive Officer; John Reed, Executive Vice President, Global Head of R&D; and Jean-Baptiste de Chatillon, Executive Vice President and Chief Financial Officer. Paul will update you on business performance. After which, John will provide an update on R&D. Jean-Baptiste will then review the financials. After concluding remarks, we will close with a Q&A session, during which we will be joined by members of the Executive Committee. With that, I'd like to turn the call over to Paul.

[Paul Hudson, CEO & Director]

Well, thank you, Felix. Beautifully done. Welcome to the call, Q4 and full year. We've got quite a bit to get through. I think news flow is particularly good, and we want to go into a bit of detail. I am, as Felix said, joined by wider members of the Executive Committee. So Olivier Charmeil, which we -- if we need to focus on China, we have Bill Sibold for Dupixent immunology and the specialty business; Alan Main in consumer health; David Loew in Vaccine. So I think -- and Dieter Weinand for Primary Care and Diabetes. So we're well represented. We look forward to getting to a good conversation. So let's hit the key achievements. 3% on the top line, 7% on EPS. I think strong performance. A lot of good discipline from the organization to deliver those numbers. Our pipeline innovation continues at some pace. So there's a little bit of interest in the BTKi. John will go into some detail in his session. But I think as you'll appreciate, we want to save the full data set for the presentation at an up-and-coming congress. On accelerating efficiency, we were almost a point -- a full point down on operating expense. And that is the discipline that I referred to, and it's going to be essential that we continue with this level of reallocation of resources and discipline to deliver on our short-, medium- and long-term objective. That long-term objective in terms of BOI margin, we're up 120 basis points for the year, I think 25.8% to 27%. And you know that we're tracking to our overall goal of 30% in 2022. As for the Executive Committee, I think it's worth sharing with you on the next slide a little bit of an update. We went through the strategy and prioritization exercise as an Ex Comm throughout the back end of last year. I will just say simply, thank you to the Ex Comm for thinking enterprise. As we outlined, the strategy was quite clear that we wanted to allocate more of our central expertise into our business units and increase the accountability. With that, the impact was that we became a reduction rather from 14 to 10 Executive Committee positions. It was -- of course, there's some personal impact that is structural. I want to thank those on the Ex Comm that will leave the organization but contributed in a very energetic way to making sure that we have a strong legacy from their work, and we can get done what needs to be done over the future. One additional role perhaps in there is the Chief Digital Officer piece, which was a hybrid role with medical. What we've done is single it out, and we've done that because I think we're a little bit behind on our agenda on the digital understanding and language capability internally. So in the short to medium term, that role will have a bias towards helping us improve our user experience and data science management internally. We could skip on to the next slide. Thank you. Overall, some very strong underlying performances. Specialty up, close to 23%, and it hides in there 11% in onco and 7% in rare diseases. A very strong performance indeed. General Medicines, whilst declining, I'll talk about how it's stabilizing a little bit later. We are beginning to see the impact, of course, of the VBP in China, and the continued decline in diabetes although moderating, and I'll touch on that. Vaccines overall performance continues to stay within the boundaries of our mid- to high single digit, a strong Q4. Of course, there is a phasing and some other bits and pieces that we can get to, but fundamentals are very strong in Vaccines. And of course, consumer. I think recognizing that it's a little bit overdue making it stand-alone and given its agility and speed and optionality. And we took a hit on the Zantac recall amongst other things. Overall, this is our new shape. We will report figures, I think, at Q1 in this shape. And we will give you figures per quarter for 2019 so that you can make a more accurate comparison. And we'll do that ahead of Q1. Moving to the next slide. And Dupixent, in particular, 152% growth, which is an incredible performance. A truly incredible medicine. We'll spend a few slides on that going a little bit deeper. Script trend up -- TRx up over 100% already as we enter 2020. So the underlying demand is really where it needs to be. We feel that we're well on our way to delivering on that overall ambition that we have. We're annualizing at EUR 2.7 billion. And we're not even fully launched yet. I think it gets forgotten, and we'll cover it, that really we're principally only atopic dermatitis ex U.S. and with asthma and other indications coming on board. So a good setup. Vaccines, we talked about, it was a very strong Q4, but the underlying is good. And then on the pipeline. So let's mention the BTKi for a moment. I think depending on what you read for the future value of the market in multiple sclerosis or, indeed, the B cell depletion part of that, I think general consensus will be around about a EUR 20 billion marketplace in the near-term future for multiple sclerosis. I think also within that, depending on OCREVUS and other B cell depleters, there is a chance that ultimately, about half that market, maybe even close to EUR 10 billion, will be in B cell depletion. The POC readout is quite an important moment for us. We had flagged it at our Capital Markets Day back in December. We hoped that it would get to a good place. And as you've seen, it's met its primary endpoint and a safety profile within our expectations. So with that said, we'll be the oral that crosses the blood-brain barrier in MS. We have a shot at doing something incredible with the microglia, for example. So we think we're setting ourselves up very, very well indeed to do something outstanding for patients and something, I would say, transformational, in fact, for the company if this comes through Phase III in the right way. At Dupi, just at the annual, we -- and John will touch on this. We have 3 studies that have been kicked off. So we feel that the news flow will just get stronger and stronger and stronger. So we mentioned the rollout of Dupixent. And the last few quarters have been averaging an incremental euro gain of over EUR 100 million per quarter. The expectations are -- and I think it's also worth mentioning our TRx are strong. There is a little bit of patient assistance reset in January, maybe even early February. So whilst we expect to see a little bit on the dollar side there, we are very bullish about what 2020 looks like. And we know we'll gather momentum, and we know underlying demand is very, very strong. So we launched in 34 countries, still only predominantly adult atopic dermatitis. We've got 89 more launches, I think, or something like that to go. We're delighted the FDA has accepted Dupixent for priority review in the pediatric indication, not least for the children that will benefit. But actually, this is just another reminder of how important safety is in this disease area and why it's important that physicians can have confidence as can parents and children in having the right safety profile. And we think we're very definitely unique. We submitted in atopic in China. And whilst we sort of transform our business in China towards a specialty one, that will play a significant part. Moving on. Biologic leadership for Dupixent across all specialties is a very real thing. We are already #2 in the market in derms, and you think how long HUMIRA has been around. I think we have the realistic expectation to be the leading biologic in the dermatologist's office. Likewise, in allergists, we're already the leading player in NBRx, and it reflects very well on the overall profile of this medicine. And then finally, in asthma and in pulmonology, time aligned, we're outperforming the IL-5s in this class. So I think what you have here is a really unique medicine. You have it at an incredible time with a rich news flow to come. And you have what is market leadership or physician or specialty leadership positions that you really don't get to unless you have a winning profile. Just to go another slide further into Dupixent, the last slide on Dupixent. But I think it's worth spending a few moments on. We're really starting to put together the real evidence of matters to patients and to prescribers. There's been a little bit of misinformation floating around about -- from our competition. Dupixent has an effect after the first dose. After the first dose, and that's across a number of important endpoints. And in that, we could include lesions, itch, quality of life. This medicine works very, very quickly, another reason why it's becoming the leader in each of the physician populations. But after the first dose -- and you could see that it's separated from placebo, and I think it was CHRONOS, our pivotal study. I just wanted to be in no doubt about how fast it works and the impact that it has on patients. There's also a durability point, which I think the longer and more mature these markets become in biologics, you can see that this is a response that is maintained and over a long period of time. You have, I think, 148 weeks that you can see there. And we've just added -- I think it was Maui Derm where we presented the 3-year data on continuous incredible efficacy. So the foundation stones are very, very strong for what we're doing in Dupixent across multiple geographies, multiple indications and multiple specialty groups. Moving on to Vaccines. As I get to know Vaccines better, I'm delighted, in some ways privileged, to be involved in this part of the business. We are growing high single digit and beyond across every single area we play with vaccines. Two of our areas, PPH and influenza, we are close to the equivalent of mega blockbuster status. We're close to EUR 2 billion. And I think that says a lot about how the business is performing in its run. We're very happy to see this broad growth. We may get to it in the Q&A, but you should also know that the team has offered up this expertise in coronavirus, coordinating with Sebi, with other government institutions to make sure that anything and everything we can possibly do, we'll do. And we hope on one particularly strong and we hope meaningful initiative to be able to announce something in the next several weeks. In flu, we have a very successful differentiation strategy. Improved vaccination rates are part of it. And it's very important that I think people understand that there's still some way to go, actually, in some markets to make sure those that really need to be vaccinated get there. Another opportunity for us. And then on the value upgrades piece, we are expecting these to be a significant growth driver in the coming years. And Fluzone High-Dose QIV launch in the U.S., Flublok and HD expansion into Europe, where we're fully differentiated and haven't been available so far, is going to be an essential part of that story, too. Moving on to Diabetes. We've been a double-digit decline and not because of a lack of excellent work. Our volumes have continued to be impressive. But the price pressure, particularly in the U.S., has had -- has taken its toll. Now whilst minus 8% is still significant, it is moderating. And I think that's an important piece to understand of our underlying business to know that the drags on the business start to slow down. So where we're moving on the top line, it is real growth that is not being weighed down, and I look forward to getting to that point. A bit to point out, the impact on the VBP on Amaryl in China chose not to tender, didn't need to. And any impact of that is already in our assumptions for 2020. The full year impact of the WAC reduction for Admelog from July '19, and we may catch up in the Q&A on the risks of biosimilar competition across the glargine franchise. All of it already contained within our thinking. As for China, I touched on it with Amaryl, but I think it's worth mentioning, just to take you back for a second. If you go back and look at what we said at Q3, we were quite explicit that there would be a Q4 impact on price that would be taken just because the prices have changed and the inventory was already in play. And that's okay. We're right where we expected to be. There were no surprises there. Now the -- we guided to a 50% decline of Plavix and Avapro family. And we're, again, right pretty much where we expected to be. I think it's worth saying -- and this is going to be a little bit more complicated because, of course, of this difficult and complicated challenge for China and beyond the borders with coronavirus. As problematic as that is, we are trying to make sure that we can still support and provide medicines for patients across China. It is a priority. We're pulling out all the stops like I'm sure all companies are. But a little bit of context. We started the year on the demand side -- just to share some of the -- a couple of comments that we've picked up strongly from the VBP brand. So while we're not declaring any type of victory, we did say at Q3 we hope to grow volumes throughout the year. That will come and just gather pace. We hope that, that will help us offset some of the loss just from the straightforward price cut. It's a little bit complicated because we'd like to show more as we go through quarter 1 into Q2. We'll see how easy that is to tease out based on what else happens given the coronavirus and the impact. But we like to think that we started quite well. I mentioned Dupixent has already been submitted. But I should probably add, Praluent and Fabrazyme were approved. And that's again part of our move towards specialty over the long term in China. As for consumer health, maybe I'll just finish here to say the Zantac impact is real and accounts for more than half of the 5% decline in Q4 '19. There is -- we are a multi-local business, and it's one of our global brands. And we took a hit, and we will work hard to get back to where we need to this year. That's for sure. But with some sort of healthy pruning and some, how should I put it, some increased regulatory requirements, we'll just use some time to make sure we get the business fit for purpose for the long term. Making no excuses. We can do more. Our desire is to get back on or above the industry growth rate, and we want to gather momentum as we go further along. A last comment, not on the slide, but I'm also very cognizant, new into this role. I've spent quite a bit of time understanding what our environmental effort is in the company. In some ways, renewable energy, wastewater management, we're doing an incredible job at Sanofi. And not a story well told, but it's the reality. We thought about sharing something on climate. Well, CO2 emissions at this. We'll actually defer it to Q2. No other reason than we would rather put out here some very real objectives that we think we can deliver. It's quite clear looking across our peers and further and more wide, there's a lot of aspiration and hope in where people are by 2025 and beyond. I think where we're asking the team to spend some time to properly calibrate what is actually going to be achieved on what timeline, and we'll share that with you at Q2, if not before that. With that, I think I'll hand to John Reed. And I look forward to bringing it back around after John and Jean-Baptiste. John?

[John C. Reed]

Thank you, Paul. Well, good morning, good afternoon, everyone. I'm pleased to update you on several important pipeline advances at Sanofi. What's particularly striking is that these have all occurred since we met at Capital Markets Day, which, I'll remind you, was less than 2 months ago. It speaks to an R&D organization that is gaining real momentum as we deliver with pace on our new strategic framework at Sanofi R&D. The updates I wish to share concern our brain-penetrant BTK inhibitor, '168, for MS; Dupixent, our best-in-disease antibody for type 2 inflammatory diseases; and our recently acquired engineered interleukin-2 molecule, THOR-707, for immuno-oncology. I'll start with BTK. As the saying goes, I don't like to choose a favorite among my children, where, in this case, the molecules of the Sanofi portfolio are my children. But if I had to pick one item to highlight, it would be the positive proof-of-concept with our brain-penetrant BTK inhibitor '168, which is really tremendous news for us. We spent some time at the Capital Markets Day explaining why we believe the profile of this oral small molecule could position it to be the best-in-disease treatment option for patients across the multiple sclerosis spectrum. Well, the new data we have in hand absolutely support our huge excitement. Let me remind you of the concept here. So what is it that makes our BTK inhibitor different? First, when you look at BTK, we know from human genetics that BTK is required for B cells to function. Second, we know from clinical studies that B cells are an important target for treating MS. With an oral drug like '168, we can shut off but not kill the B cells. We think that modulating B cells is preferable. So we do not kill the B cells, we just put them to sleep for a while. This contrasts with the potent B cell depleting agents such as OCREVUS, rituximab, ofatumumab. This point of differentiation could potentially be highly important in clinical practice if a patient develops an infection while on treatment, and you need their antibody response to bounce back quickly. So you may say to me, "Well, John, there are other BTK inhibitors in development, and some are already in Phase III." However, I would remind you that '168 has an advantage among more advanced BTK inhibitors because it crosses the blood-brain barrier. Remember that we established the CNS exposure in Phase I with receptor occupancy in CNS pharmacology studies. And that brings me then to the second key mechanism for BTK. In addition to its expression in B cells, BTK is also expressed in resident inflammatory cells in the brain called microglia. Growing evidence suggests that these microglia cells are responsible for the persistent implementation in the brains of MS patients, particularly in progressive forms of disease. By inhibiting BTK, we can quiet the microglia as a second point of intervention in addition to silencing B cells in both the periphery and in the CNS. Hence, we expect to improve upon the efficacy of other BTK inhibitors that are not brain-penetrant. The final point of differentiation and this is also hugely important, is that '168 appears to be an exceptionally selective BTK inhibitor. And as a consequence, we did not see in Phase I the off-target safety issues experienced by some competitor molecules. So the wonderful news today is that our hypothesis is supported by the results of the Phase II POC data in relapsing MS. I'm limited in what I can disclose today, but suffice it to say, we will -- we did meet the primary endpoint, which was a reduction in the number of new gadolinium-enhancing hypersensitive lesions at 12 weeks as detected by MRI. Additionally, secondary brain imaging studies also show promising results. The caveat, of course, is that these imaging endpoints are surrogate markers, but the results give us the confidence to go forward. And we have pulled the trigger on the initiation now of our Phase III trial program, which we expect to start around midyear. In addition to meeting the primary endpoint, the safety profile was consistent with what we saw in Phase I, suggesting a very well-tolerated medicine. Importantly, no patients discontinued treatment due to adverse events. And also currently, 95% of those patients eligible have rolled into an open-line extension phase and remain on study drug today. We look forward to presenting the full results in an upcoming conference. As an aside, we achieved POC with this molecule just 1 year after we submitted our IND, and we anticipate starting the Phase III program less than 2 years from IND. So this demonstrates our renewed commitment at Sanofi R&D to delivering with urgency. Where we see the potential to transform the practice of medicine, we will move fast and we will invest to deliver with a pace that reflects the urgency that patients feel. The magnitude of the medical need is illustrated in Slide 20. More than 1.2 million MS patients in the U.S.A. and EU5 alone, of which roughly 1/4 have progressive forms of disease, where therapeutic options are few or none. With the dual mechanism of our brain-penetrant BTK inhibitor, with actions not only on B cells but also on microglia, and coupled with this potentially well-tolerated safety profile, we think we have the opportunity to deliver the best-in-disease molecule across the entire spectrum of MS, including relapsing MS, primary progressive and secondary progressive. We will now move swiftly with our comprehensive Phase III program. The data of the proof-of-concept study have defined our precise dose for the Phase III studies. And as soon as the pills are packaged at that dose and then shipped to the sites, we'll be ready to start. You'll also note from the slide that we'll be using Aubagio, our own medicine, as a comparator in the relapsing MS study, which you can take as a clear signal of our confidence in this molecule. In terms of timelines, we are targeting regulatory submissions in the 2024 to 2025 time frame, beginning with relapsing-remitting disease. As you know, Sanofi has a proud tradition in MS, but what you may now not know is that Sanofi has the #2 patient share globally. So we have the tradition and the expertise to make this potentially transformative drug a major commercial success if we deliver the game-changing profile to which we aspire. Let's move now to the star of the Sanofi portfolio, Dupixent, on Slide 21. We talked in December at the Capital Markets Day about the potential for patient benefit and additional type 2 mediated inflammatory diseases beyond atopic dermatitis, asthma and nasal polyposis, where Dupixent is already approved. We have systematically explored potential opportunities for Dupixent using machine learning and AI, mining public data and leveraging our proprietary real-world evidence database that we call DARWIN, where we have access to around 450 million live medical records. In dermatology, we identified 3 additional indications where we see a strong biologic rationale for testing Dupixent and where we have obtained anecdotal evidence of striking benefits from investigator studies. These indications are prurigo nodularis, chronic spontaneous urticaria and bullous pemphigoid. Each of these is an allergic skin disorder that severely impacts the quality of life for patients. In total, we estimate there are over 400,000 patients with these conditions in the U.S.A. alone who would be eligible to receive a biologic. So the news today is that we have started registrational studies in each of these 3 indications. The timelines of the studies are relatively rapid. And if positive, we'd be in a position to submit each for regulatory approval over the 2021 to 2022 period. And beyond dermatology, we're also starting a new study in bronchopulmonary aspergillosis and continuing our ongoing programs in COPD and in eosinophilic esophagitis with estimated submissions in '22, '24 time frame. In fact, this year, we will obtain data from Part A of our pivotal study in eosinophilic esophagitis. And we also plan to start a pivotal trial in eosinophilic esophagitis in pediatric patients. To close here, we really are just at the beginning of our journey with Dupixent, with the potential for this medicine to become the standard of care across multiple diseases, where type 2 inflammation plays a role. Moving to Slide 22. I'm delighted to welcome Synthorx into the Sanofi R&D organization and to move their lead asset, THOR-707, into our Phase I portfolio. Our acquisition of the company closed on January 23. For those less familiar, THOR-707 is an elegant solution to the conundrum of IL-2, a lymphokine that has beneficial effects in the immuno-oncology setting, but which, unfortunately, also results in unacceptable toxicity. What Synthorx achieved with THOR-707 was to conjugate irreversibly a single PEG chain to a specific site in IL-2 such that the molecule retains the ability to bind to the beta and gamma chains of the IL-2 receptor but not the unwanted alpha chain. As a consequence, THOR-707 selectively stimulates proliferation of tumor-fighting effector T cells and natural killer cells. What it avoids, unlike some competitor approaches, is the alpha chain mediated stimulation of immunosuppressive regulatory T cells as well as the ILC-2 cells that stimulate eosinophils, thus avoiding the vascular leakage side effects associated with native IL-2. Access to THOR-707 provides Sanofi with the basis for multiple IO-IO combinations, including essentially every IO we have in our pipeline as well as those of other companies. We see THOR-707 as an amplifier of the cancer-fighting immune engine with broad potential for combination with other IO molecules. To give specific examples, first, we can potentially use this approach to enhance the activity of checkpoint inhibitors in patients with solid tumors. To use the familiar automobile analogy, when you take the brakes off the tumor-binding T cells with a checkpoint inhibitor, such as our Libtayo, unfortunately, for many patients, nothing happens as they do not have sufficient numbers of T cells in their tumors. Essentially, they have no gas in the tank of the immune engine. With THOR-707, the concept is to expand selectively CD8-positive killer T cells and thereby, fuel the immune engine so the checkpoint inhibitors have a better chance of working. We expect to begin the Phase Ib portion of the ongoing clinical studies of THOR-707 very soon, where this non-alpha IL-2 will be combined with PD-1 inhibitors. A second example, about which I'm even more excited, is combining 707 with our emerging pipeline line of T cell engagers. These are multi-specific antibodies that bring the tumor and T cell together, activating the T cell and killing the tumor. Adding THOR-707 should keep the T cells proliferating and help them to survive longer in order to get the job done. And then a third and final example arises from the fact that THOR-707 stimulates impressive increases in NK cells in patients. So a clear near-term opportunity is for us to combine this non-alpha IL-2 with our anti-CD38 antibody, isatuximab, which works in part by recruiting NK cells to kill myeloma cells. Together, this combination could potentially bring better efficacy to patients with myeloma. On top of that, we have an emerging pipeline of bispecific and multi-specific NK cell engagers, which help bring NK cells into the tumor. Again, we expect THOR-707 to amplify the activity of our NK cell engagers for both solid and hematologic malignancies. In the interest of time, I better move on now, but I hope it's abundantly clear that we're enormously excited about the multiple opportunities this molecule brings and the wider Synthorx platform for our IO portfolio. I'm going to close now on Slide 23, which shows the rich clinical and regulatory news flow we expect in the next 12 months. Of particular note, with respect to first-time new drug approvals, we expect to register 2 NMEs this year: isatuximab, our anti-CD38 antibody for myeloma; and sutimlimab, a complement pathway inhibitor for hemolytic anemia. You can see we have a lot to talk about over the period as we build the momentum in our Sanofi R&D organization. And for this reason, I am delighted we'll be able to bring you much more information in an R&D Day that we're organizing in June, for which Paul will provide more details later. So with that, I hand it over to Jean-Baptiste.

[Jean-Baptiste Chasseloup de Chatillon]

Thank you very much, John. On Slide 25, we delivered excellent P&L leverage in the fourth quarter, helped by the accelerated sales performance Paul described on the -- by our efficiency initiatives. As a consequence, the 4.7% increase in sales translated to BOI growth in excess of 20%. You should note, this leverage was achieved despite downward pressure on our gross margin from pricing and mix effects, including the VBP impact in China. Our efficiency is clear in both the G&A on the R&D line, which declined by 1.4% and 0.7%, respectively, in the quarter, while these reductions were achieved with increased investments in our key growth drivers and in our late-stage pipeline. The other line I would like to draw to your attention is other operating income and expense. There are a couple of elements which I should mention here. In the fourth quarter of 2019, we recognized a onetime noncash income related to a change in French supplementary pension regulation. But we also recorded one-off provisions in our cost of sales in Vaccine, along with a higher rate of product return in the U.S. that you can spot in our segment publication. That's why overall on the quarter, our BOI was not affected by onetime effect. This is a very solid and qualitative BOI delivery, which makes us confident that we should pursue our margin expansion in 2020. Secondly, the OI line reflects our accounting for the Regeneron monoclonal antibody Alliance. Here, the outflow in the quarter increased to EUR 241 million versus EUR 65 million in Q4 2018 as the collaboration moved strongly into profitability. I'll remind you that this net figure includes 3 components: Regeneron's share of the profit and loss of the Alliance, reimbursement by Sanofi of commercialization expenses incurred by Regeneron and reimbursement by Regeneron of Sanofi's development cost. The breakdown of this component for the full year is set out in a new disclosure in our financial statements, and we will provide this on an annual basis going forward. So moving back to the P&L and shifting below BOI. With a tax rate on share count broadly unchanged, our business EPS grew by close to 22% in the quarter. Looking to 2020, we expect our effective tax rate to be maintained at around 22%. On an IFRS basis, fourth quarter EPS was slightly negative, reflecting additional impairment charges related to Eloctate and Zantac for EUR 1.2 billion and EUR 169 million, respectively. The second impairment on Eloctate reflects the continued falling sales trajectory compared with our expectations and takes the total impairment in the year to EUR 2.8 billion. Slide 26 shows that our smart spending initiatives helped our BOI margin to improve by 120 basis points in 2019 to 27%. But we have plenty of opportunity to drive further efficiencies across the organization, and we plan to deliver an additional EUR 2 billion of savings by 2022 to fund both margin expansion and net sales growth. Consequently, we are confident that we are on track to deliver our target of BOI margin of 30% by 2022. On Slide 27, we proposed an EUR 0.08 uplift in the dividend to EUR 3.15, which represents the 26th annual increase. The growing dividend is part of our commitment, as you well know since our last Capital Market Day. On Slide 28, I'm turning to our free cash flow KPI, as defined during the same Capital Market Day in December. Well, then I outlined our ambition to increase this important metric to around EUR 6 billion by 2022, an increase of around 50% versus 2018. Well, looking at this slide, you could conclude that we have met our objectives 3 years early, but this is not exactly right really. I'm certainly thrilled to see the excellent response of our teams to our focus on cash generation because it's already a good success. And I mean it makes me very confident on the progress we can achieve. But this achievement, however, in 2019 includes roughly EUR 500 million of onetime benefits that really partially belong to 2020, especially earlier-than-expected flu vaccine collection from customers in the U.S. and later supplier payments in the U.S. due to a system issue. So please take it into consideration in your modeling. So if we adjust for these factors, our free cash flow would have been approximately EUR 5.5 billion on a normalized basis, which is a good performance compared with the prior year and clearly puts us well on track to meet our 2022 free cash flow target. On Slide 29, Sanofi met or exceeded each of its financial performance objective in 2019. OpEx efficiency and the overdelivery of business EPS, I think, speak to the new culture developing across the organization. On Slide 30, we have set out full year guidance for 2020 business EPS to grow by around 5% at constant exchange rate. You should note that this compares with a slightly restated base of EUR 5.97 in 2019 as the adoption of IFRS 16 this year will reduce our historic business EPS by EUR 0.02. With respect to ForEx, around 1% positive based on January average exchange rate. When looking at your models, you should keep in mind that our growth profile during the year will be impacted by several important pushes and pulls. On the downside, we will have a full year impact from VBP in China. This will mainly impact year-on-year comparisons in the first 9 months. In addition, our CHC business faces roughly EUR 120 million sales headwind in the first half as a result of the Zantac recall. On the upside, we expect strong growth from Dupixent on vaccines and growing efficiency benefits consistent with the objectives we highlighted at our CMD. So taken together, these factors suggest that our growth will be weighted to the second half. In addition, you should note that we face a high base for comparison in the first quarter of 2020 as a result of the strong 22% growth we reported in China in Q1 2019. With that, I would like to turn the call back to Paul.

[Paul Hudson, CEO & Director]

Okay. Thank you, Jean-Baptiste. Thank you to John Reed. And maybe just the last couple of comments. 2019 has been a year of, I think, decisive actions across the portfolio. We are gathering momentum on the growth drivers. We're seeing some momentum in the pipeline. It's a pleasure to spend a disproportionate amount of time on the science. And we hope that going forward, as confidence builds and you see us continue to deliver on our financials, that we can spend even more time on the science with the news flow because that's, in the end, what it's all about. We've simplified the GBU structure, and we hope that, that will turn into an enabler for increasing our momentum further in terms of operational delivery. We will push up in terms of the efficiencies and productivity gains. We have laid out what we think. We think we'll get 30% in 2022. And that is what we're aiming for, and we will take the measures necessary to get there. Last but not least, and John mentioned it, I think the R&D Day in June, I think it's June 23 in London. Hopefully, that makes sense given the other events that are going on around the time, and hopefully, that's appreciated. We really look forward to spending time with people at that day. John will be there with his team. You can see the bench strength. You can also get a sense of some of the magic that's going on beyond into rare diseases and other key therapeutic areas. I think that will be a really fascinating session well worth attending. So I think with that, thanks to the presenters. We have the team here, and we're happy to get into a Q&A.

[Felix Lauscher, Head of IR North America & Asia]

We will now open the call to your questions. [Operator Instructions]

[Operator]

[Operator Instructions] The first question comes from the line of Peter Verdult of Citi.

[Peter Verdult, Director]

Peter Verdult, Citi. Two questions, please. One for John and one for Jean-Baptiste. John, can you just, on '168, tell us where you want to present the data if all things go well? And when it comes to some of the side effects that have afflicted your competitor BTKs, namely elevated liver enzymes, can you just confirm that, that has not been a feature of the data that you've produced so far? I realize you can't go into the data in too much detail today, but just on that point, any comments you can make? And then secondly, Jean-Baptiste, on cash generation. Thanks for the explanation on the EUR 6 billion and the one-offs. But even taking those one-offs away, free cash is still pretty impressive at EUR 5.5 billion. So can you just remind us where the biggest buckets of opportunity are and where your team is focused on improving cash generation at the coming quarters and years at Sanofi?

[Paul Hudson, CEO & Director]

So Peter, thank you for your question. I'll hand the BTKi question to John. But we are -- the most important thing for us now is to make sure that we preserve the integrity of the data through its presentation. So starting off on a journey of showing bits and pieces is, I don't think, really helpful to anybody, but I understand why you ask. I think John has tried to give as much color as possible. John, do you want to add anything else?

[John C. Reed]

I think the main thing, just to emphasize again, there were no terminations -- or discontinuations rather in the study. All patients completed the full course. And of those that are eligible to move on, 95% have chosen to move on into the open-line extension and are continuing on study drug. So we've been delighted with what we've seen so far. I can't comment on the particulars of the AE assessment. That will have to wait for the -- for a conference. And in terms of conferences, we'd like to present at the first opportunity. There are a few conferences coming up, but that's all subject to the organizers and whether we can sneak into a breakthrough presentation or something like that on short notice.

[Paul Hudson, CEO & Director]

Jean-Baptiste?

[Jean-Baptiste Chasseloup de Chatillon]

Yes, Peter. Yes, effectively, it's a very good response. And I apply things that I've done in the past at leading with the team and also with our -- my comments, colleagues, regular free cash flow meeting to really track where our cash is going. It creates a real mobilization. Everybody understands about cash, it's very concrete. And initiatives are flourishing all over Sanofi in subsidiaries and headquarters everywhere. So members, of course, it's the improvement in BOI. Smart spending sometimes leads to improvement also in payment terms. It goes from -- to Capex. We are improving significantly our CapEx spend. It can be small things like improving when our suppliers are delivering the good to us. DSO, it's really the traditional old tracking of the cash, which is starting. It's just the beginning of the journey. It's very important to us because without the growth, we are planning to accelerate like in Vaccines, like in biologics, which are products with a longer transformation time in the plant with a WIP inventory which grows, it's very important that we become very skillful in containing our inventories. We are not good looking to peers. So we have margin for improvement, and we are going to deliver this improvement in the next 2 years.

[Operator]

The next question comes from the line of Jo Walton from Crédit Suisse.

[Jo Walton, Managing Director]

I have one on the multiple sclerosis franchise and one on Dupixent. On the multiple sclerosis franchise, I noticed that you've chosen Aubagio with your competitor for your BTK. I wonder if you can tell us how you're thinking about this franchise in that your BTK won't come to the market until after Aubagio has gone off-patent. And then you've also chosen a very tough competitor in the sense that you may have chosen against what will be a cheap generic at the time that you have that launch. So if you could just tell us how you're thinking about the multiple sclerosis franchise really between now and the BTK and how you would manage that transition. And my second question is just to get a bit of a feel for what you found with your initial DTC in Dupixent. I believe you started it towards the end of last year. Has it lived up to expectations? What should we be thinking of in terms of that sort of cost going forward?

[Paul Hudson, CEO & Director]

Thanks, Jo. Maybe a couple of comments, and I'll hand to Bill who built Aubagio, I think, so you'll have a deeper insight. I think ultimately, the transition is less complex than I think people would imagine. If we get to market with the right timeline, with the right product profile, I think we'll bring something that is fundamentally game-changing in this space, and that's a fact. Now the bridge depending on when you have LOE and where to go, we think, is manageable and retaining the expertise. And can you imagine the people, both in the medical and commercial areas, want to be involved early? If you look like you're in the right place on the BTK, then we see no issue with bridging. We always knew Aubagio would have generic competition in that time frame. And you know this, we've built that into our understanding of the 2025 BOI objective. So we just think it's more of an opportunity than less. Bill, you might want to add to that. And do you want to talk about the DTC spend for Dupixent? And although it's early days in terms of what it takes over a period of time we invested in DTC in the U.S., give some quick highlights on that.

[William J. Sibold, Executive Vice President of Genzyme]

Yes. Sure. Thank you, Paul, and thank you, Jo. So as Paul said, we have -- we spent the last 8 years building an MS franchise. And as John showed on his slide, globally, we're #2 in market share with the franchise. It has -- that's taken a lot of work. As Paul said, the bridging isn't such a big deal from our perspective as we've got an excited team. We've got a lot of activity going on in the specialty part of the business as well. So there's plenty to keep people busy. To go to the question of using Aubagio as the comparator for the BTK, we've seen it in recent MS studies that Aubagio has been used. And I think people have compared against Aubagio because it is really, in many ways, the standard of care in the oral space. It has the only product that's demonstrated an effect on disability in 2 trials. And for that very reason, we are comparing the BTK to that. We have set the bar high, but that shows the confidence that we have in the brain-penetrant BTK of ours. So it makes perfect sense. Aubagio is a well-tolerated effective product. We believe that the BTK is going to be -- really become the standard of care in multiple sclerosis. So we think it's a good comparator there. Regarding Dupixent DTC, I think you're referring to perhaps some of the asthma that started more in earnest last year. We've been conducting DTC, specifically television in AD as well. That has been, we believe, very effective. It's something that we have and will continue to invest in going forward. I think you've seen in the U.S., this is an important lever. And this is building to be a mega brand and will have that presence in both the indications in a continued and expanding fashion.

[Operator]

The next question comes from the line of Florent Cespedes of Societe Generale.

[Florent Cespedes, Senior Equity Analyst]

Florent Cespedes from Societe Generale. Two quick ones, one for Olivier and one for John. First, Olivier, on China. Could you elaborate a bit on when you believe that you should see the contribution from higher volumes there? Why Plavix seems to be more impacted than Avapro? And if you could give us an idea of how do you see the impact on Amaryl. Should it be the same vein as for the 2 other products? And the last question on China. Maybe if you could tell us if you see any potential disruption on this territory given the coronavirus crisis. And then a quick one for John on the IL-33. This year, you will have the proof-of-concept trial readout in atopic dermatitis. As Dupixent profile is quite attractive, what do you need to see in terms of efficacy or side effect profile tolerance to really move forward with this product instead of Dupixent or how we will position it?

[Paul Hudson, CEO & Director]

Thank you, Florent. Coming to Olivier in a moment. Just on the disruption, I tried to touch on it upfront because the -- we started the year well, and we're making -- we're putting patients first in what we do. It is difficult to predict what will happen over the next few weeks. And I think it would be a bit naive of us to say no disruption or try and put a percentage around it. We feel well placed. We don't see business risk. But of course, as it evolves, we're just going to have to recalibrate that. I don't think any company has a choice on that. So we'll update as we go along. I think, Olivier, maybe you want to comment on Plavix particularly or Amaryl.

[Olivier Charmeil, Head of China & Emerging Markets]

So on Plavix, as Paul mentioned a little bit earlier, we have clearly early signals, although they're very, of course, premature. At the beginning of 2020, I think, showing very strong shipments. Of course, it's very premature. So I think we will need a couple of months before we understand what is exactly the trend in volume to respond precisely to your question. I would say that it's probably in the course of Q2 that we will get a feel of how we are able to increase significantly the volume. And we always build our plan on a gradual increase. So this will come in Q2, Q3, Q4. We are happy in a way we have implemented our new go-to-market model. We have been able to execute in November and December. So for us, it's less of a sales force model. It's making sure that we have the volume pull-through at the provincial and at the hospital level, especially in the bidding offices. Regarding your question on Amaryl, we -- it's a EUR 130 million product basically. We have decided not to participate to the tender for one reason that is very obvious. There are 6 generic GQCE. So we thought that there wouldn't be any business case and that the prices are going to be very much done. It's difficult to assess exactly what's going to be the impact due to the fact that we don't know exactly when it's going to be implemented. And so probably in the course of H1, but we don't know precisely. In terms of trend, given that the prices are going to go significantly down, we are anticipating that the impact could be significant.

[Paul Hudson, CEO & Director]

Okay. Thank you, Olivier. John, a comment on the IL-33?

[John C. Reed]

Yes. I guess the takeout message really is we're still investigating the molecule and gathering data in 3 different indications. We did asthma, and we did describe some of those data. We've done a very exploratory study in COPD just to get some baseline information there. And the atopic dermatitis study will read out middle of this year. And those all -- those are all exploratory Phase II studies to really kind of establish the profile. In some of the studies, we've done head-to-head with Dupixent, and others not. And we're looking for what might be a differentiator or place where the IL-33 molecule could play that Dupixent doesn't. I'll remind you that, for example, with Dupixent, we have separately a COPD study with a Phase II that will read out this year. And so that will also be an important piece of data that helps us to compare the 2 molecules and think about where we go from here. So all I can basically say is we're still gathering data and really developing our thinking about IL-33 as we collect those data and compare it to what we're seeing with Dupixent.

[Operator]

Your next question comes from the line of Graham Parry from Bank of America.

[Graham Glyn Charles Parry]

So firstly, on the BTKi. Just thinking about your Phase III trial design at what you're powering that for, is the target profile to have efficacy benefit overall similar to what we've been seeing with anti-CD20? And then ultimately, to replace these in the market, which would be consistent with Paul's comments on the news wires about taking half the MS market or the category taking off the MS market? And to that end, do you, therefore, need to run CD20 head-to-head further down the line, especially in PPMS? And then secondly, if you could just help quantify the one-off pension expense in the other expenses line and the extent to which there were any other one-offs that offset that on the other side. So how good a base for forecasting is that other expense line?

[Paul Hudson, CEO & Director]

Okay. Thank you, Graham. John, I don't know whether you want to go into detail. I'm glad, Graham, we're seeing some excitement around the BTKi. Just to remind you and everybody, we think that the market is going to be worth about EUR 20 billion in the time frame in which we'll be entering. We think about half of that will be B cell depletion, and we think we'll have to compete within that half and perhaps broader. A lot will depend on the product profile. And we're excited by that at this stage, but we have to wait and see. In terms of the powering, John, and the anti-CD20 compare, did you have any view?

[John C. Reed]

Well, we're starting off with -- in the case of relapsing, as we said, with -- comparison with Aubagio will be our competitor there. We think that's very appropriate. And then in the progressive forms of MS, we'll do one study in primary and one in secondary. And those are placebo-controlled. And that's really because, as you know, the standard of care, including the B cell-depleting agents in the progressive forms, is really not adding much benefit, unfortunately, for patients. So we feel that that's an appropriate choice. That will give us a good foundation on which to then make cross-comparisons at least, and then we can go from there in terms of whether it's appropriate or necessary to do a head-to-head comparison.

[Paul Hudson, CEO & Director]

Good. Thank you. Jean-Baptiste, the other expenses line?

[Jean-Baptiste Chasseloup de Chatillon]

Yes. As I said, the compensation on the netting is not on the same line. One is gross margin, the other one in other expense with no impact on the BOI overall on the quarter. So to model this line, really, it could be depending on the acceleration of the profitability of the return around Sanofi partnership on Dupixent. We will help you guide on that. It will also depend how quickly we finish our discussion to implement what we presented on both Praluent and Kevzara, but it will be driven really by the Dupixent growth. So that's the best way to look at it. It will be a proportion of the acceleration of this profit generated by Dupixent.

[Operator]

Your next question comes from the line of Thibault Boutherin of Morgan Stanley.

[Thibault Boutherin, Equity Analyst]

First, a couple on Consumer Healthcare. Could you give us an indication in terms of timing for the completion of the carve-out of the business from an operating perspective? And as a follow-up on this, could you give us an update on the regulatory process with the FDA regarding the OTC switches for Tamiflu and Cialis? And then a second question on oral diseases. Could you comment on the slowdown of the franchise in the fourth quarter, in particular the sales phasing of Cerezyme in Emerging Markets? Should we see this as a one-off? Or should we expect the growth from this franchise to moderate in the future compared to the kind of mid- to high single digits that we saw in recent quarters?

[Paul Hudson, CEO & Director]

Okay. Thank you, Thibault. I'll hand over to Alan with Consumer Health. I think we flagged about a 24-month journey to carve out, carve in, whichever way you want to describe it, to becoming stand-alone. We announced that in December. So we're a month or 2 into that process. In terms of the Rx-to-OTC switches, is there anything you're prepared to share on the results of -- that doesn't give a competitive opportunity to somebody else?

[Alan Main, Executive Vice President of Consumer Healthcare]

Right. As you know, Paul, what we did say at the Capital Markets Day is that we would be meeting with the FDA during Q1. So those meetings will take place. And so I think it probably will be more appropriate to do an update on the Q1 call. So that would be an opportunity for us just to update everybody on what we're planning to do from a trial point of view following those discussions. So probably not today, but perhaps at the Q1 call, we can give a bit more color to that.And as you said, on the stand-alone project, we've already set up the project teams. We have a launch planned. Actually, tomorrow, we'll meet with all the working groups. We do see a kind of 18- to 24-month time horizon as there's a number of things that we have to consider, particularly around legal entity setup, IT infrastructure and so on, which can take a little bit of time. But the teams are fully engaged, very motivated and ready to go.

[Paul Hudson, CEO & Director]

Yes. I was going to add that the teams are very engaged and motivated, and it's great to see. I think we'll get some benefits from that. And we'll update on the Rx-to-OTC switches and try and perhaps even at Q1, try and dimensionalize what that could look like so people can get a feel for it. Maybe we'll have some time to do that. Bill, Cerezyme?

[William J. Sibold, Executive Vice President of Genzyme]

Yes. So first of all, Thibault, thanks for the question. I think more representative of the rare growth, in general, is what we did for the year. And there, we had 6.5% growth and actually exceeded EUR 3 billion for the first time. All the franchises are growing well: Gaucher, 7%; Fabry, 5%; Pompe, 8%. I think you've got to look at Q4 growth as a little bit of a one-off. It's on a high Q4 from the previous year where we had grown over 10%. So looking forward, we think that the performance that we had on the annual basis is more representative of the future.

[Operator]

Your next question comes from the line of Seamus Fernandez of Guggenheim.

[Seamus Christopher Fernandez, Senior Analyst of Global Pharmaceuticals]

So just a couple of things. You guys are updating the guidance for Regeneron sometime after the -- or on the first quarter. Just directionally, does the 5% EPS growth, I assume that it contemplates that change. But as we think about the move into 2021 and your guidance for 2022, how do you see that change accelerating the profitability of that franchise? Can you just give us a little bit of tenor around that JV? And then for Paul, as we think about business development going forward, obviously, the move on Synthorx was timely heading into the Capital Markets Day. But can you just give us a little bit of a sense of the types of acquisitions or transactions that you're most focused on going forward? Are there particular areas of the business that you're interested to see building out further?

[Paul Hudson, CEO & Director]

Okay. We may ask you a clarification question on the first one. I'm not sure I heard you correctly.

[Jean-Baptiste Chasseloup de Chatillon]

Some maps restructuring?

[Paul Hudson, CEO & Director]

Maps restructuring? Is that what you said?

[Seamus Christopher Fernandez, Senior Analyst of Global Pharmaceuticals]

It's -- exactly. It's the collaboration restructuring. It's just to get a sense of -- I assume that the 5% contemplates any benefit from that change. But how might that, as you see it, accelerate the profitability of the collaboration and heading towards your 30% guidance in 2020?

[Paul Hudson, CEO & Director]

Okay. Jean-Baptiste?

[Jean-Baptiste Chasseloup de Chatillon]

Yes. I got that one. Well, yes, exactly, it's the same spirit as what Christian Mulliez communicated earlier for both of us, these changes or simplification on reduced governance on some extra costs. So on both sides, it is accretive. Of course, for us, it's less significant. So of course, it is taken into account in this guidance. And since we broadly decided this change in December, as we said in the CMD, so yes, it's a positive. It's embedded into our guidance, but it's not so significant in the overall scheme for Sanofi. But it goes in the right direction.

[Paul Hudson, CEO & Director]

I think there's a great spirit, by the way, between ourselves and Regeneron in trying to simplify things. We recognize that it's better to do these things like this and be more agile in a partnership, and I think we'll only get benefits from that. Some will be financial, of course, both sides ultimately. But often, it will just be speed. It will become important. As for deals, as much as we love you all as an audience, we didn't do a deal just to achieve good news flow for Capital Markets Day. I think this deal had been tracked for a while and for the fundamental belief that it could -- although early, if it works, it could change what happens in oncology, and particularly the IO-IO piece. I think John beautifully described the Synthorx deal with putting gas in the tank. And I think as we get closer to launch in a few years, people will be excited to have a new approach and -- to what could become a definitive play in combination. And I think -- it's hard to say, but I think we're more excited about mechanisms, new mechanisms, complementary mechanisms, things in combination. John mentioned the CD38 and the PD-1 in combination. There are these opportunities where you can really get to amp up your own existing pipeline by pulling forward incredible and unique data. So we're excited about that. Really, it's an interesting time for the company because whilst we go on this BOI journey and we have between vaccines and dupilumab, we have an opportunity to be able to maintain a really positive growth trajectory. So it allows us, I think, from a BD or even M&A perspective, to go after science in a more determined fashion. I think we're all here because we think that's the right thing to do. And where possible, we'd rather do that than look at things that will have a short-term transformational P&L impact. It's not necessary. It doesn't mean we'll never do these things. But I think we're more interested in things like we've just done. And hopefully, you'll see over the months and years that we do more like that. But we will see. So thank you, Seamus. I think we covered everything on your question. If there's -- I think we still have time for a couple more questions if you would like.

[Operator]

Your next question comes from the line of Jean-Jacques Le Fur of Bryan Garnier.

[Jean-Jacques Le Fur]

The first is for probably for Jean-Baptiste on the share buyback. I saw that you initiated some buybacks in -- all along January. So I'm curious to first understand the purpose of this buyback and if it is the start of a new program for the full year. That's my first question. And the second one is on Kevzara. Now you have the global rights. Do you intend to start new commercial initiatives or anything else to accelerate your sales growth of this product? And when could we see a positive impact of potential such initiatives?

[Paul Hudson, CEO & Director]

So maybe, Jean-Baptiste, share buyback?

[Jean-Baptiste Chasseloup de Chatillon]

Yes. Well, very nice that you see we are closely monitored. You're perfectly right. We are executing a share buyback all along January, which is exactly along the lines of our commitment during the Capital Market Day to make sure that we neutralize the dilution of any plans or share plans or stock options, which will be exercised. So that's what we are doing now. It's a good moment because share price is -- was favorable -- is favorable. So we are executing right now. Nothing new, nothing different from what we've said.

[Paul Hudson, CEO & Director]

As for Kevzara, I mean, I think our first objective was simplification and accountability. People are looking at now which way to go next, some ideas on the table. But I think, frankly, we have to decide what is actually possible and what is a sensible investment to make when there are other very attractive opportunities in the pipeline. So I would read that the reframing of the relationship was more about simplicity and efficiency, particularly with Kevzara.

[Operator]

Your last question comes from the line of Wimal Kapadia of Bernstein.

[Wimal Kapadia, Research Analyst]

Wimal Kapadia from Bernstein. So can I ask a little bit about sutimlimab in cold agglutinin disease? So how should we think about pricing for that product? And then what level of penetration should we assume that given some of -- given that the spectrum of patients in CAD is relatively wide and some patients exhibit compensatory mechanisms undergoing hemolysis without the need for therapy in long periods?And my second question is on vaccines. I just want to get a good sense of how Sanofi thinks about differentiation for MenQuad. We've seen some of the competition, some of which is in the Nimenrix now not having a significant uptake. So what really differentiates your asset to give you confidence in this market? And then tied to this, how much of a threat are pentavalent vaccines longer term?

[Paul Hudson, CEO & Director]

Okay, good. I'm glad to get those questions actually, particularly to get David on the hook on vaccines. But Bill, before we do that, do you have any comment on pricing?

[William J. Sibold, Executive Vice President of Genzyme]

Yes. So thanks for the question. Not going to comment directly on pricing, but this is an ultra-rare disease. Just to give you a sense of the scale, we think there's about 5,000 patients in the U.S. and 5,000 in the EU and a couple thousand in Japan. So it certainly qualifies as being ultra-rare. And this is a serious disease, and we've spent a lot of time collecting data, which just demonstrates just the impact that the disease has. And there's a 55% increase in thromboembolic events. That was from work that we did in the U.S. We know that the mortality risk is more than doubled with the disease, and there's an 8.5x rate of arterial thrombosis in some work that we've seen in Japan. So what we're going to be doing is spending a lot of time on the education of the seriousness of the disease. We think that we'll be able to identify the patients, but it's more getting physicians to act with the new medication that will be available. But we're excited about it. It's got very good data, and more to come on that later this year.

[Paul Hudson, CEO & Director]

Thank you. Thanks, Bill. David, on MenQuad and the pentavalent question.

[David Loew, Executive Vice President of Sanofi Pasteur]

So MenQuadfi is going to allow us to really expand beyond the United States, where we are mainly selling today Menactra. We didn't have the full range of the indication on Menactra, which didn't allow us to go in all the countries around the world. So MenQuadfi is going to solve that problem. It's going to have a label, which is very broad. It's fully liquid. And when you look at the Phase III results that we have published, you can also see that immunological responses look very favorably in comparison to all the standard comparators. When it comes to pentavalent, we are developing also a MenB candidate. However, the -- even if a pentavalent comes from a competition, it's not going to take the market because only certain patient populations are going to be eligible at a certain point of time to be vaccinated with a pentavalent. And so the physician, in any case, will have to then think, "Do I rather go for what we believe is a best-in-class quadrivalent and a separate MenB? Or do I want to go for convenience and give it a pentavalent?" So in that niche of where pentavalent can play, that's going to be a key question. But we don't think it's going to significantly change the market.

[Paul Hudson, CEO & Director]

Thank you. Thank you to everybody. Thanks for joining, for dialing in. Just to remind everybody, June 23, London R&D Day. It could be quite exciting, and you can get to see some of the stuff we don't get to talk about always on these calls and also meet some of the incredible teams that support John and our R&D effort. Thanks again for dialing in, and thanks to the team. We look forward to joining you again in end of Q1.

[Operator]

That concludes the conference for today. Thank you for participating. You may all disconnect.