Prepared remarks
Hello everyone. This is Thomas Kudsk Larsen from the Sanofi IR team. Welcome to the Q3 2025 conference call for investors and analysts. You can find the slides on sanofi.com. Please turn to Slide #3. Here, we have the usual forward-looking statements. We would like to remind you that the information presented in this call contains forward-looking statements that are subject to substantial risks and uncertainties that may cause actual results to differ materially. We encourage you to read the disclaimer in our slide presentation. In addition, we refer you to our Form 20-F on file with the U.S. SEC and our French Universal Registration Document for a description of these risk factors. As usual, we'll be making comments on our performance using constant exchange rates and other non-IFRS measures. Numbers used are usually in millions of euros for Q3 2025, only as we state otherwise. Please turn to Slide #4. First, we have the presentation, and then we will take your questions. We aim to keep it all to one hour, including questions. For Q&A, we have Olivier, Brian, and Thomas to cover our global businesses, as well as Roy, our General Counsel, and Brendan, Head of Manufacturing and Supply. With this, I'll hand you over to Paul on my left-hand side.
Thank you, Thomas. Thank you, everyone for joining us today. Our growth momentum continued in Q3 with EUR 12.4 billion in sales, up 7% over last year's high base of comparison. Sales growth was primarily driven by our new launches and the performance of Dupixent, which reached EUR 4 billion in quarterly sales for the first time. After the third quarter performance, we are confident in the business outlook for the remainder of the year and reiterate our full year 2025 sales guidance. This positive outlook includes our expectations for the business in the U.S., our largest market by sales. We continue to work with the administration and policymakers in the U.S. and around the world on policies that improve access to treatments, lower prices for patients, and improve health systems and protect science. Our recent announcement on the expansion of our patient affordability program, offering improved access to all our insulins is a great example of this work, which I'll discuss in a little more detail later in the presentation.
Now let me highlight the contribution of our new launches, which have been a significant driver of this quarter's strong performance. Our launches delivered EUR 1.8 billion this quarter, grew more than 40% and now represent 15% of our total sales. To put this in perspective, our launches represent almost half of Dupixent sales this quarter, demonstrating their significant contribution to our growth. We've strengthened our commercial portfolio with 3 new additions, Ayvakit, our medicine for both advanced and indolent systemic mastocytosis, the first Sanofi sales of Nuvaxovid offering an important protein-based and non-mRNA alternative for COVID-19 vaccination. And Wayrilz, our new BTK inhibitor designed as a multi-immune modulator. This innovative medicine provides a new option for patients with immune thrombocytopenia that extends beyond their platelet count needs to addressing quality of life burdens.
We're seeing good uptake across our portfolio of new medicines and vaccines. Beyfortus, which achieved blockbuster status last year in its first full year of sales, continues its expansion into new geographies. ALTUVIIIO is on track to reach blockbuster status this year and Ayvakit to become our next blockbuster in 2026. Dupixent has reached a new milestone this quarter, exceeding EUR 4 billion in quarterly sales for the first time, more than 8 years after its initial launch in atopic dermatitis, we saw an increase of over 30% in the number of patients during the last 12 months. In the U.S., we've surpassed the EUR 3 billion quarterly sales mark, maintaining leadership in both new and total prescriptions across established indications. Our launches in the recently approved indications, COPD, CSU and BP are progressing as planned. Outside the U.S., sales grew 21%, exceeding EUR 1 billion in the quarter.
We continue our efforts to make Dupixent available to more patients, helped by the positive CHMP recommendation for CSU in the EU and regulatory submission for CSU in children in the U.S. and EU. Turning to our vaccine business. Q3 sales were EUR 3.4 billion. This performance compares to a high base in the previous year and reflects the competitive price pressure as well as the lower flu immunization rate in the U.S. A new highlight among our respiratory vaccines is the early start of Nuvaxovid, the only non-mRNA COVID-19 vaccine available in the U.S. and from our collaboration with Novavax. First shipments of Nuvaxovid were delivered to in the U.S. in September. In RSV, Beyfortus continues its impressive expansion, up 20% this quarter and now available in 40 countries. As you may have seen in our press release this morning, we decided to discontinue our RSV toddler program. While the safety profile was acceptable, the predetermined criteria for efficacy was not met in the planned futility analysis.
The PPH and booster franchise remains an important contributor to our vaccine business with the performance in Q3 reflecting phasing in the first half of the year. Sanofi has a proud legacy in flu vaccines, and we remain committed to bringing innovation to strengthen our leadership in flu and to provide better protection for patients. Our FLUNITY-HD study published in The Lancet last week demonstrated that our high-dose flu vaccine, Efluelda, known as Fluzone High-Dose in North America, provided superior protection versus standard dose vaccine on the sometimes devastating consequences of flu. Data showed an 8.8% reduction in pneumonia or flu hospitalizations and an important 32% reduction in laboratory confirmed flu hospitalizations versus standard dose vaccines. And we're expanding access to this beneficial protection with positive Phase III data that support a label update extending the age down to 50 years for Efluelda/Fluzone High-Dose.
Looking ahead, we're advancing our flu pandemic preparedness with 2 programs while improving vaccination convenience with positive data on flu, COVID combination vaccines. These achievements underscore our commitment to delivering enhanced protection against respiratory viruses to more people worldwide. In addition to our unwavering commitment to innovation in respiratory viruses, we are also steadfast in our commitment to improve patients' access to health care. Our global health unit has reached a remarkable milestone, 1 million patients treated for noncommunicable diseases across more than 40 low and middle-income countries since 2021, putting us on track to reach 2 million patients by 2030. We trained over 27,000 health care workers and reached 4 million people through our partnership programs during the same period. And we're not stopping there. In the U.S., we're expanding our Insulins Valyou Savings Program to ensure every American has access to our insulins at just $35 per month.
This initiative builds on Sanofi's long-standing efforts to provide patients access to a reliable and affordable supply of critical medicines. Thank you. And I will now hand over to Francois, our CFO, for more details on the financials.
Thank you, Paul, and hello to everyone. In Q3, our net sales grew by 7% at constant exchange rates. This growth was primarily driven by pharma and more specifically by immunology and recent launches. Our new launch is demonstrating a strong momentum with 41% sales growth, while Dupixent sales grew by 26% this quarter. Vaccine sales were down primarily due to flu as expected. This decrease resulted from a combination of competitive price pressure, mainly in Germany and lower vaccination rates. At published rates, net group sales increased by 2%, impacted by a negative foreign exchange effect. These solid results highlight our ability to drive growth against headwinds. Our business gross margin increased by 2.3 percentage points this quarter with a continued improvement in product mix, enhanced by productivity gains. We now capture the full benefit of Dupixent improved manufacturing process as well as the contribution from Ayvakit since the Blueprint closing in mid-July.
As we move into 2026, the gross margin profile will return to its fundamental growth as the step-up from Dupixent C3 manufacturing transition is now complete. Operating expenses grew by 6%. Excluding the impact of the Blueprint acquisition, operating expenses grew by low single digits, highlighting our cost discipline. R&D expenses increased by 5%, broadly reflecting the underlying activity level. We continue to invest in sales and marketing to support our launches, and G&A costs were slightly down, in line with our objective to keep them broadly stable going forward. Other operating income and expenses are moving up, primarily due to the increased share of profits paid to Regeneron as Dupixent continues its strong growth trajectory. Business EPS reached EUR 2.91, a robust growth of EUR 0.19 and 13% compared to Q3 2024. This strong performance reflects our compelling sales growth and increasing gross margin combined with cost discipline.
Looking at our year-to-date progress, we are maintaining strong earnings momentum with 9% sales growth and business EPS growing faster at 12%. It fully supports our guidance for the full year and demonstrates our ability to deliver profitable growth consistently. Based on our year-to-date performance, we reiterate our full year guidance of high single-digit sales growth and low double-digit business EPS growth at constant exchange rates. We have now completed the acquisitions of Dren Bio's DR-0201, Vigil Neuroscience, and Blueprint and their associated costs are fully factored in our guidance. While we typically provide full year guidance at the beginning of each year, we can share a few business trends for next year, which you may find useful for modeling purposes. R&D next year is expecting to increase moderately. We will continue investing in sales and marketing to support our product launches as well as our strong sales momentum.
At the same time, we will remain disciplined on G&A cost with the objective to keep them broadly stable. We expect to achieve around EUR 0.5 billion of capital gains from divestments, similar to what we anticipate for 2025. Regarding Amvuttra royalties, based on the latest Evaluate Pharma sales consensus, the implied royalties are now expected around EUR 700 million for next year. You will find a slide with the updated Amvuttra royalty considerations, reflecting current external consensus in the appendices of this presentation. Another indicator for 2026 is a reduction of approximately EUR 300 million reimbursement from Regeneron for the R&D balance. Both items, Amvuttra gains and reduced Regeneron R&D reimbursement will offset each other next year. We continue to execute our capital allocation policy, and we remain disciplined and balanced across 4 priorities: investing in organic growth drivers, pursuing selective bolt-on acquisitions, maintaining our policy of progressive dividends, and executing opportunistic share buybacks.
Based on our projected trajectory for 2026 and beyond, we remain confident in our ability to sustain our profitable growth momentum for the next few years. I now hand over to Houman to provide an update on the progress of our innovative pipeline.
Thank you, Francois. I'm happy to outline our achievements in the Q3 pipeline, highlighting progress across numerous programs. We obtained regulatory approvals for Wayrilz in the U.S. for ITP and Tzield in China. Additionally, we secured acceptance for regulatory submissions for Dupixent CSU for children in both the U.S. and the EU. The FDA has nominated Tzield for the new Commissioner's National Priority Voucher program to expedite its review. We submitted Wayrilz for ITP in Japan and globally accepted Sarclisa subcutaneous for myeloma. Our Phase III programs have yielded successful results, with amlitelimab achieving its primary endpoint in the Phase III trial for atopic dermatitis and Fluzone High-Dose demonstrating efficacy in individuals aged 50 and older. We also commenced dosing the first patient in new Phase III studies, including two studies for lunsekimig for COPD and Wayrilz for sickle cell disease and warm autoimmune hemolytic anemia.
Wayrilz is becoming a multi-immune modulation platform in rare diseases, with recent approvals in the U.S. and a positive recommendation in the EU for ITP, alongside multiple designations for new indications, which enhances our rare disease portfolio. Shifting to dermatology, amlitelimab successfully met all primary and secondary key endpoints in the initial Phase III study for atopic dermatitis, indicating significant improvements in skin clearance measures. For instance, the vIGA measure showed increasing efficacy without plateauing at 24 weeks, and amlitelimab offers convenient quarterly dosing with no new safety concerns reported. The OCEANA AD program comprises five Phase III studies across diverse patient demographics. We expect to present full data throughout 2026. In regard to brivekimig, our TNF-alpha and OX40 ligand nanobody achieved its primary objective in a Phase IIa study for HS, demonstrating meaningful improvements in both primary and secondary endpoints among biologically naive patients at week 16 and was well tolerated.
Data was shared at EADV in Paris in September, where I enjoyed meeting many of you at our IR roundtable. Recruitment for our Phase IIb study is now in progress. Turning to respiratory developments, amlitelimab has shown encouraging results in the Phase II study for asthma, especially in a difficult-to-treat subgroup. Although the primary endpoint of annualized asthma exacerbation rate reduction at week 48 did not reach statistical significance at the highest dose, key secondary endpoints showed notable improvements. The subgroup with high blood eosinophils and elevated neutrophil counts exhibited the most substantial benefits, and treatment was well tolerated with no new safety concerns. We continue to analyze the study data, including biomarker assessments, with decisions on the next steps contingent on prioritization within our respiratory portfolio. We are encouraged by recent data on efdoralprin alfa, which demonstrated superiority over standard care in the Phase II study for alpha-1 antitrypsin deficiency emphysema.
The recombinant protein has a longer half-life, allowing for higher AAT serum levels with less frequent dosing options. An ongoing Phase II open-label study will contribute to the safety data. We plan to engage with regulatory agencies to discuss potential progress based on our current findings, supported by upcoming safety studies. Lead-212 DOTAMTATE, our radioligand, has shown promising overall response rates in patients with somatostatin receptor-positive gastroenteropancreatic neuroendocrine tumors (GEP-NETs), a challenging group of rare cancers. In naive patients, the overall response rate was 57.1%, and in patients previously exposed to PRRT, it was 19.2%. Both figures are based on independent central review, and we noted a manageable safety profile across both cohorts. In immunology, our oral TNF balinatunfib did not meet the primary endpoint of ACR20 but demonstrated meaningful efficacy in a Phase II study among uncontrolled, advanced treatment-naive rheumatoid arthritis patients on methotrexate, especially on endpoints requiring deeper disease control like ACR50 and ACR70.
This oral option may serve as a combination backbone therapy with both internal and external oral medications, with the next steps under evaluation. Finally, we are preparing to initiate two replicate Phase III studies for duvakitug in Crohn's disease and ulcerative colitis, featuring patient-friendly subcutaneous dosing with potential competitive safety and efficacy by selectively targeting the DC3 receptor. This follows the positive Phase II data readout last year, which will be presented at an upcoming ECCO meeting. In summary, I want to provide an overview of our key mid- and late-stage development projects. Our immunology pipeline encompasses several medicines with available data, including amlitelimab's Phase III program in atopic dermatitis, lunsekimig in Phase II in various asthma patient subgroups, and brivekimig in hidradenitis suppurativa, alongside other mid-stage developments like balinatunfib and duvakitug.
For itepekimab, a decision on advancing in COPD will be determined after discussions with our partner, Regeneron. In the area of rare diseases, Wayrilz is now approved for ITP in the U.S. with the potential for multiple new indications. Venglustat is currently in Phase III for Fabry disease and type 3 Gaucher's disease. Efdoralprin alfa has succeeded in Phase II for alpha-1 antitrypsin deficiency, with a notable update recently. Sarclisa continues to progress with its subcutaneous formulation already approved in multiple regions across various lines and combination regimens. Led-212 DOTAMTATE is under investigation for GEP-NETs, with relevant data shared this week at ESMO. In neurology, tolebrutinib is currently under review for SPMS, with a revised PDUFA date set for December 28, and is in Phase III testing for primary progressive multiple sclerosis, with results expected before year-end.
Frexalimab is in Phase III for relapsing-remitting multiple sclerosis, and riliprubart is engaged in two Phase III studies for chronic inflammatory demyelinating polyneuropathy. In the vaccines segment, we have multiple Phase III programs in progress for rabies, PCV21, yellow fever, and further avenues in flu, including combinations of flu and COVID as well as pandemic flu. On my last slide, I plan to present the anticipated news flow for the remaining three months of this year and all of 2026. Significant items ahead include U.S. decisions regarding tolebrutinib for SPMS and Phase III readouts for PPMS, along with multiple regulatory decisions. In the upcoming year, we expect remaining Phase III readouts for amlitelimab in atopic dermatitis and Phase II readouts for venglustat in two indications. Positive results will lead to regulatory submissions later in the year. We are also preparing several regulatory submissions based on data received this year, in addition to decisions for the medicines and vaccines currently under review.
Before concluding, I want to express my gratitude to all my colleagues in Sanofi R&D who share my dedication to advancing science at Sanofi and propelling our pipeline forward from research initiatives to regulatory approvals. I’ll now hand it back to Paul.
Thank you, Houman. We will now open the call to questions. Now we will take the first question. Please go ahead.
Questions and answers
So first one, I wonder if you could just update us on the tole SPMS regulatory debate and confidence resolving any questions the FDA has had with that delayed PDUFA? And the second one, just to make sure there's no confusion in the market given the debate at 2Q, can we assume that your wording of profitable growth for '26 means EBIT and EPS ahead of sales?
Okay. Thank you. Do you want to provide some clarity on the regulatory piece and the SPMS tolebrutinib?
Yes. Thanks for the question. Pretty straightforward. As we reported earlier in the year, the FDA requested an extension. We've submitted data sets with the FDA, continued conversations and look forward to the PDUFA December 28.
Thank you. And Francois?
Just on profitable growth, I confirm that we aim for each component of the profit and loss statement to grow at a rate faster than those above it. This means gross margin growth should exceed sales growth, BOI growth should surpass gross margin growth, and EPS growth should outpace BOI growth. We have accomplished this every quarter this year. We expect to achieve it in 2025 and are planning to maintain the same goal for the following years as well.
Do you have any updates on your conversations with the U.S. administration? Is it more complex for you with shared assets like Dupixent? Should we be concerned about a degree of silence right now, or is it simply that there is a bottleneck in terms of a long queue to speak with the administration, possibly due to Trump's busy agenda? I would appreciate any insight into your ability to communicate on these matters.
Thank you. Our response is quite straightforward. We've been in ongoing discussions with the U.S. government and multiple governments since before we received the letter at the end of July. Our focus has been on ensuring that people understand the value we can bring. These conversations have continued throughout this entire process. Therefore, I cannot provide comments on bottlenecks or other implications, but that's about all we can say at this moment.