Sanofi SA (SNY) 2005 Q2 法說會逐字稿

Good afternoon and good morning, ladies and gentlemen, to our colleagues in the U.K. and in the United States. And we are pleased to report on this August 31, on the first half and second quarter and first half result, and also to have a status report on our R&D portfolio.

I will begin directly by the financials, and let's go directly to the slide. I will -- okay. I will obviously begin by the P&L, and give you a few highlights on the performance of the Group during both second quarter and first half. To begin with, at the sales level, you know very well -- no, something is going wrong. Okay. Thank you. You know very well the performance which has been made on a comparable basis, which is 10.1% on Q2 and 11% on H1.

Now on the P&L we are starting from another figure, taking into account the impact of exchange rate, obviously, and also of the changes in Group structure. So that we are showing 6.5% on Q2 and 7.4% growth in H1. So starting from that, we'll go down to the line and beginning, obviously, by the gross margin, which is an important factor in the performance of the Group.

As you can see, I'm sure you've seen in the P&L we are in a situation where we've seen in the Q2 an important improvement of the gross margin rate. And when we take that gross margin rate, as compared to the sales, we've seen an improvement by 2.2 percentage points, which is quite impressive and which translates also in 1.6 at the end of the first half.

Now what are we talking about? We are talking about, I would say, two factors, which are behind and above the product mix, which is the volume, the activity of the Group, and that good level of activity. And when I'm saying that, I'm comparing with the market, is the most important reason of that improvement.

In addition to that, we've made -- we've decided and we've put in place rationalization of purchasing policy since the end of 2004. This is paying back. It has been paying back to begin with in Q1, a little more in Q2. I'll be back a little bit later on the synergy subject but be sure that already, in that gross margin rate, there is the result of a lot of synergies.

Now, that being said, let's go to the various expenses and namely R&D and general and selling expenses. To begin with, R&D. It might be a little bit strange to see -1% in Q2, -0.4% in full half. It's a little bit -- it might be a little bit down but, as compared to what we've said all year, we said that R&D would be increasing. Now we say also that the increase in the financing of the programs, of the clinical trials, would be more visible in the second half of the year.

In addition to that, the rationalization in the portfolio and stopping a lot of external collaboration was done by Gerard Le Fur and his team at the end of 2004. So we have all the benefit of that. In addition to that, to finish with, there were also this restructuring, which were decided before the operation, and this has an impact in R&D. So we have the, I'd say the downside of it for the time being.

And we finish up at the first half with a rate which is 14.5% in R&D, as compared to the sales. Might be low; I'm not sure that this is proper to say that it's lower nowadays. Is it better to be between the -- in the 15s or the in the 16s? I'm not so sure that the 16s is the proper answer.

Let's move now to the next important component of the P&L, which is the selling and general expenses. Again, something which is rather flat, both in Q2 and in H1. An important comment is to be made in that area. We have to split between the selling, the promotion behind the products, and the general expenses. When it comes to the sellings, the thing that we can say is that during Q2 the increase in these expenses was faster, greater than the one of the sales.

I'm just saying that it was more than 6.5% in Q2, which wasn't the case during Q1. And in turn it means that, at the end of the first half, the pace of these expenses behind the product are exactly the same as the volume of the sales. So we are saying here that we are putting as many efforts as necessary behind the products, to the contrary.

When it comes to general expenses, we see the result of rationalization, of closing down 70 headquarters around the world, and taking care of expenses, general expenses all around the world. There were -- there was a decrease in Q1. There is an even greater decrease in Q2 in these expenses, and that's only by adding up these two different items that we show something which is rather flat.

So that, when it comes to the level of the operating income current, we are talking of something which is rather impressive. I mean 24.4% increase in Q2 and a 26.1% increase at the end of the first half. It's 5 percentage points increase on sales as compared to last year, and I was saying 1.6 as far as the gross margin concerns. So you see the difference of the impact of the various expenses which are in between.

I guess that here we are showing the -- in a way, the level of the synergies which have been put in place during that first half. You've maybe noticed that we've given some indication about the level of synergies. Obviously not reporting with figures on the first half but maybe globalizing our -- the merger is going on, on a synergy-wise.

What we can say today is that when we announced the operation, we said that by the end of 2005, on a cumulative basis, we were ready to reach 60% of €1.6b. Here I accumulate the positive and the cost cutting synergies. Today we can say that at the end of 2005 we are going to be able to make at least 75% of the same amount. So we are no more talking, again, on a cumulative basis of €960m before tax. We're talking of above €1.2b.

There is a direct relationship between the improvement in the operating income current and the achievement, as far as the synergies are concerned. I have to add up to information that we are not revising the level of the global synergies to be reached by the end of the program. We said €1.6b. We don't change that just because our Group is moving, is growing. And so we need the people behind the product. We need the people in the plants to have the Company moving faster, and to globally in R&D, obviously, to develop the Company.

So we are not changing the target. We're just saying that we are moving quicker than we thought we would be moving. In addition to that, and there is a direct relationship in what I'm going to say, just on the restructuring cost, we've accumulated the €611m during the first half.

I remind you that we were at €557m by the end of 2004. So I can say today that, on a cumulative basis, the restructuring costs are around €1.2b before tax, obviously. And when I remember that we said that we would be encountering around €2b of restructuring cost, I can say today that we will have -- we will be able to achieve our program with a lower amount. Probably more in the range of €1.5b, €1.6b of restructuring costs.

Let's move now to the rest of the P&L. There are a certain number of particular specific items I will be back on, such as the restructuring costs, which are Aventis pre-acquisition program and so on. So I won't spend too much time at this level, and be back on the particular slide to show you the impact of these items.

Let's just say that -- sorry, as you can see here, that there is obviously a big difference in the gains on disposals when you compare 2004 and 2005, just because of the fact that applying the policy that we defined when we launched the operation, we are not selling products anymore. We are just promoting products. Again, I'll be back on these specific items. So again, on the operating income level, a good increase both on the second quarter and on the first half. That's the same on the second half -- on the first half.

So let's go down to net financial expense. Again, I will leave the so-called exceptional items. I'm talking of the effect on provisions from listed securities and financial instruments for a little bit further in the presentation. And let me say that, as for us, the financial costs are a concern.

I can tell you, and it won't be a surprise to you, that because of the generation of cash flow, because of the renegotiation of the acquisition, that better conditions, obviously we do have lower interest rates and lower interest costs in the P&L in 2005 than we had in 2004. And this is true both in the second quarter and on the entire semester.

As far as the tax rate is concerned, as you see on this slide, we are above last year - 30.6% in Q2 versus 28.9% last year, 31.2% in H1 -- in the first half as compared a little bit lower, less than 30% in the first half. I just have to remind you that on the entire full year 2004, the rate was 30.8%. So you see that the tax rate of the second quarter and first half of 2004 were maybe not totally representative of what was going on in 2004.

And just to say that in 2005 we should be closer to that 30.8% for the year. So I don't see much difference in that level -- in that effective tax rate during -- as compared to 2004.

Not many comments on the share of profit/loss of associated minority interests. I just have to -- probably to remember that because of IFRS we changed our way of accounting, as far as the BMS share of profit are concerned. Now, and this is true, obviously, in the comparison with 2004, we have the BMS or I should say the [out] share of the profit generated on the alliance. Mainly in the United States, which is managed by BMS in the share of profit of associates. Our share is that -- is there.

I will go directly to the minority interests because there is the same kind of explanation. Here is also the share of the profit, which is derived from the management of the alliance with BMS, which is managed by Sanofi Aventis, so that a part of the profit is rendered to BMS.

What is interesting, when you see the evolution between 2004 and 2005, is that it's -- as said, the evolution is mainly derived from what is happening within our alliance with BMS. This is shown directly on the slide. I won't talk too much about the other share of profit in associates, like Meriel and so on, which are doing well. But I wanted to mention that the majority of it is derived from what's going on and what is gong well on the Plavix and Aprovel alliance with BMS.

Therefore we can go directly to the -- to adjusted net income and adjusted EPS. And I guess you can consider that it is rather impressive to be able to show up to close to 25% in the second quarter on an EPS basis, as compared to last year. Which translates in 26.1%, at €2.22 on the first half. And more importantly, to remind you that this is an increase by 3.4 percentage points, when compared to the sales. So we are reaching now 22.6%, which is -- which can be compared to the competition.

Let's move quickly now to what I mentioned, the trends in selected components of adjusted net income, like we presented on March 1, to [indiscernible] in the P&L of last year or this year something which doesn't translate very clearly in the lecture of the P&L. We have gathered there restructuring costs, which are Aventis pre-acquisition programs, the gain and loss, as I mentioned earlier, on disposal of assets and defense costs encountered by Aventis last year, as well as the provision for listed securities and financial instruments.

As you can see directly, when you compare second quarter you see a difference between -€38m and -€24m, and we have been before tax of €14m.

Now what has -- we have to compare that with the result before tax of the full Group on the second quarter. We're talking of €2.1b. So €14m we can say is negligible. On the first half, we're talking of €20m as compared to €4.2m. So we can say today that the comparison between 2004 and 2005 is very clear, and in addition to that, 2005 is not burdened or doesn't benefit from any so-called exceptional items. So the lecture of the EPS performance is rather clear. It reflects the economic performance of the Group.

Let's move now to the simplified statement of cash flow. The end of the day -- at the end of the day we're showing an improvement by €1.4b in the free cash flow, which in turn translates by a reduction of the net debt of €1.4m, going from €14.2m to €12.8m.

More interestingly, I should mention, if you see the detail, that when you want to make what I would call a good comparison, I mean by that excluding dividend, just because of the fact that I'm comparing six months to one full year and the dividend burdened the first half of 2005. When I exclude also, on this side, the asset disposals, which were exceptional last year, we already explained the components of them, we can see that on a full year last year, we generated +€4.1b. But on the first half we generated €2.9b.

I guess that, again, it does show everybody that cash generation in 2005, at least in the first half, is a lot weaker than in 2004. So we are comfortable to say that what -- our intention to reimburse the acquisition debt within five years, we are quite on track on this one.

To finish up on this one, the gearing ratio is better. It's also partly due to the conversion rate of euro versus dollar. So it's the first comment and probably one of the -- the only comment I will make on the next one, which is the balance sheet, to finish on the financials. There seems to be a lot of changes between figures, between the end of the -- of last year and this year.

Let's just -- let me remind you that the exchange rate of the euro versus dollar was €1.36 on December 31, 2004. It's €1.21 on the first -- on June 30. We're talking of 11.5% different, and this is the main component of the evolution of the various components of the balance sheet. Shareholders' equity, for example, there is a positive impact of currency, +€3.6b.

If I go on the main part of the assets, intangibles including goodwill, there is a +€3.5b improvement balanced by €2b of amortization. But this is the main source in, I'd say, almost each of the components of the balance sheet. It's more that currency than anything else, which explains the movements between the two periods.

Thanks Jean-Claude. I think that Hanspeter now on the operations.

Yes, thank you. Hello, all of you out there. I have given, I think, a lot of information on the performance of our products, at the opportunity when we presented our sales results before the holiday season. So what I will try to do today is to comment more on the market performance, and in front of this market performance, of our own performance, to give you some insight.

So let me start with the major trends in the markets. The chart may be a little bit confusing on first glance, so it takes a time to look to it. So what you see, of course, common knowledge, the growth of the world market is slowing down. Why is it slowing down? In very simple terms, because the very, very strong slowdown of the U.S. market cannot be totally compensated by a Europe which behaves relatively well.

When we went into CCL we had a lot of negative connotations on the future development of the European market. We have to say today that they did not entirely come true, so far at least. And then we see the two other trends, very important.

A very, very strong trend in Japan, very positive. Unfortunately this will not be entirely repeated. You know that there is a two-year term when Japanese prices are being revised. On top there has been a very good season for antibiotics and also antihistamines this year in Japan, which pushed the development. Nevertheless it is good.

Even better, the performance of the so-called rest of the world market, or in more modern terms the BRICs - Brazil, Russia, India, China. Also the developing markets contribute very strongly to the upswing you see in the market growth of rest of the world, which is then the light green column.

So overall, yes, we have a difficult environment, which is much more difficult than, let's say, one year ago. But nevertheless, has remained reasonable. Also today this is a market which is growing by more than 6% on a worldwide basis and, yes, those are the realities. But to say, of course, many other markets which show much, much less growth than the pharmaceutical one, and why? For the reasons outlined in the chart. You know them at least as well as I do.

How did we behave in front of this market? Yes, allow me to say I think well, even pretty well. We repeated once again, also during the second trimester, very, very solid two-digit growth rate. You see from the charts this is very homogenous. Between the two parameters we measure our sales performance. One is consolidated, the other one is developed, essentially the sales through BMS. So you see that both growth rates are between 11 and 12%. So, yes, we are doing fine.

First look to the portfolio. Also portfolio you see a very good trend towards the star products, the key products, the leading 15, which increased their share from 59% in the total portfolio to 63%.

As an angle to our performance, of course, the geographical one. How do we perform against this market on a geographical basis?

You'll see on the slide that we do overall worldwide, very simple, because we do everywhere better than the market. And consequently, yes, we have been in the first half of 2005, see a most important contributor to worldwide growth of pharmaceutical market. Again, in very simple terms, about 10% of our new sales of the pharmaceutical market came from this brand new Group, Sanofi Aventis, during those first six months. Consequently, of course, we have gained market share, which is rather obvious.

The growth is driven, as said before, by the key products. They are growing by 17%. But it's also driven or secured, perhaps better said, by all the other products, which are growing by 2%. And I will get back to this when analyzing the portfolio performance more in detail.

In the markets you have seen before, everywhere we are doing fine. More then in detail. The U.S., where we turned meanwhile to be the number four of the leading companies. So we also are important in terms of size meanwhile in the U.S., and we have a growth rate which is twice the growth rate of the market. You'll see once again we behaved very well also in Europe, where we are specifically proud because we have a very, very large market share in Europe of nearly 10%, as you know.

And then once again, in intercontinental, in rest of the world, where we had a little bit of a bouncy start at the beginning of this year. But meanwhile we do more and more well.

What are the perspectives of the U.S. market? Frankly, I don't believe that we will see much change before the end of the year, and then you need a crystal ball to know how 2006 will work out in terms of the extension of the Medicare plans. But so far what we see is we do good against the market, and we even increased in the recent months the gap to the market. So already from this, I think we have all reason to be confident.

Perhaps even a little bit more important, we have products to launch in the U.S. The launch of Ambien CR is very, very imminent. I would like to give you more information on that, but we are a little bit still bound to our contacts with the FDA. But believe me, we are very, very optimistic that this launch is very, very imminent. So perhaps during the question and answer session, we may discuss again a little bit further.

Second important element, this market undergoes restructurization. As you know, there is a reorganization of the relationships between the wholesalers and the industry. We are very well advanced in this. I am confident that we will sign those agreements, which are based on services and no more on overall margins, during the ongoing semester. And this is, of course, an important step in order to have a solid basis for the upcoming changes on the managed care front.

And there, if you look to the lower right part of the chart, you'll see that we have once again in the last six months significantly even increased our segment Tier parts for all of the major products. And this from very, very high levels, which range then between 36 or 38%, up to 83%, and now they go even up to 85%. So we take this as a very, very positive basis for the upcoming negotiations with the healthcare providers, in the light of the new changes as from 2006.

Last but not least, from a geographical standpoint, if you look for a weak point inside Sanofi-Aventis it has been and still may be a little bit Japan, but also there is very good news. As you see from the chart already, we have a very strong acceleration of our growth in the Japanese market. Consequently we have been the strongest growth company in the first six months in 2005, amongst the leading 20. So we are reasonably proud for this.

We are also confident because there is more good news ahead, as you have realized, during the second quarter. We have renegotiated all of our agreements with Daichi, which are very favorable for us now because, consequently, we have ensured that all -- 100% of the commercial rights of Plavix have been transferred to Sanofi-Aventis. And consequently, we are in the final stages to prepare the launch of this very, very important product for our future, not only in Japan, during the rest of the year, to be ready to launch during the first quarter 2006.

So far, on the portfolio I make a little reminiscence of what has been said much, much earlier. No small products and no small countries. So I made my comments on the countries, now on the small products, the so-called base business.

As you may see from the chart, this base business overall is very important for us as a Company. It represents nearly 40% -- still nearly 40% of the business, but the importance very strongly, let's say, between the U.S. where it represents only 13%, up to 59% in France and, let's say, in Africa and Middle East. So we have to have an original approach to this, which is exactly what we do.

We have given very clear targets, very clear methodology. It's hard to assess the potential of those products. And what we see is, yes, we start to harvest the fruits of this development of this part of our overall strategy, the portfolio which had been strongly negative in the legacy Aventis turned to be stable already in the -- at the end of 2004. And now for the first half of this year we can report a growth of nearly 2%.

And it is exactly this which builds now the real focus for our overall growth, which of course has to come from the key products, from the leading 15. And you have in a very short summary the performance of those products here. You see this Company today has seven own blockbusters to show. All of those products, with the exception of Ambien, have a two digit, even a very high two-digit growth during the first year of -- during the first half of 2005.

And you'll see that those products play the leading, or at least one of the leading roles in the case of Taxotere, within their therapeutic field. And also therapeutic fields account to the most important and also to the most dramatic in pharmaceutical industry and medical science.

Now we have everything in place to enlarge this list, through Rimonabant, Acomplia. We have once again delivered what we promised. Gerard has deposited with his people the files with EMEA and FDA exactly on time. We know that the products have been received, that they are of course fileable. And we are now starting to prepare the market and, in parallel, our contacts with the FDA and with the EMEA continue, and we are on a very good trend.

Why? Again, nothing really new but there is a big interest for this product coming from the overall situation. Obesity, it's a more and more growing understanding that obesity is a predecessor and an early indicator for following cardiovascular diseases, and it's in this slide that we follow the actual debate on an academic level. If the metabolic syndrome exists or not, there's a lot of interest but without any excitement because this is not really the core of our interest and the core of our positioning.

The core of our positioning is the cardio metabolic aspects, and the consequences on the cardiovascular field. So, yes, we follow this debate but as I said, without any excitement.

With a lot of excitement we have initiated the Phase III program, totally in line with this positioning; you see it on the chart. We go in again once in those subsegments like diabetes, like dyslipidemia, like cardiovascular. And you see that overall there have been five large trials stratified this year.

So it is -- and meanwhile also initiated. And, of course, there is included also a large trial on morbimortality in the cardiovascular field, which of course is very important for the future for the segment or first step development of this product. So with Acomplia, Rimonabant is -- everything is doing well, and we advance well also with our first contacts with the future players, especially in the U.S. And once again, we are very much supported by our strong positions we hold today with the managed care providers.

An important word now on our vaccine division. The vaccines unfortunately have been in the past a little bit out of the limelight. You'll see that the vaccines have an excellent performance in the first half of 2005. They have fully contributed to the overall development in the Group, showing once again a two-digit growth, as the pharmaceutical operations.

You see, if you look into the two columns, that this is a development which is not at all only due to the success we have with the [anti-trip] products -- anti-flu products, excuse me, but also with meningitis and with the boostering of vaccines for adult people. So it is a growth which is very solid, and driven by three of the major activities of our today's vaccine business.

Within, Menactra plays a very, very important role. This is the most recent launch in the field. It is a revolutionary product and the results are, I believe, spectacular. As you see from the chart, sales have more than doubled in the first half and reached nearly €100m. So, yes, Menactra already today is one of the most important vaccine products at all. And everything is in place, and we will do everything to leverage the potential of this very, very important product, also in the future.

This is overall true for our position in vaccines. You are -- you know, of course, we are leader. Our President has stressed from the very beginning that he feels that the vaccines in the past have been insufficiently supported. So we do everything there to accelerate, which means in first line, of course, investment but there is also a lot of opportunity. And I'm sure that you'll get back to this during the question and answer session; it definitely merits.

So I think, at this point of time, I'm now ready to summarize. Once again, it is short and it is totally in line with what we -- what I have said before. The priorities for the rest of the year remain exactly the same. We will continue to outperform the pharmaceutical market, as we have done so far.

We will do so by leveraging the three major parts of our portfolio - vaccines, base business and blockbusters. And this is really a unique and beautiful combination, and an opportunity. And so consequently, we will continue to exercise our leadership in all key geographic areas where we are present. And, yes, in parallel and very importantly we will prepare our future by launching the new products, and we have rich opportunity in front of us.

Ambien CR ready for launch tomorrow. Plavix in Japan. And, of course then, overall in the world, Acomplia during the next 12 months.

So thank you so much for your continued interest.

Thanks Hanspeter. Now Gerard on the new -- the news and the new news in R&D.

Thank you. Hello everybody. So since I have quite a few slides, I will start right away, if you agree, with the first one. We have eight products entering the R&D portfolio since last March, last meeting. In fact, three of them are in the oncology area, two in the CNS area, one in malaria, one in COPD, and one in diabetes. The atypical compound is only Alvocidib, which was in the past Flavopirodol. And I will explain to you why, in fact, we start next year directly in Phase III in CLL, and I will explain that later on.

So, we stopped the development of eight compounds during the same period - two in Phase IIb, three in Phase 1, and three at the pre-clinical level. However, concerning the so-called two compounds in Phase IIb, Pranalcasan in fact was already annulled by Aventis, and we only decided not to start again the development of this compound.

In fact, among the seven compounds which are right now in Phase IIb and III, and that we present the results, the only negative results we got was with Osanetant in schizophrenia. And we were unable to reproduce what we got in Phase IIa in this Phase IIb study, which was validated by a reference compound. And for that reason, we decided to stop the development of this compound. Most of the time we stop compounds in Phase I, mainly because of a not good enough safety ratio. And most of the time we stop compounds in the pre-clinical development because of toxicological problems.

Concerning the vaccines, 2005 was really a very good year, so following Menactra, that Hanspeter already talked about. As you saw, we've got the approval with Adacel last June, and we already filed Pentacel very recently in the U.S.

And several other vaccines move on but maybe the most important results we got was obtained on the prototype vaccine on avian flu, the H1 -- the H5N1 strain. And that we got preliminary good results with this compound, meaning that be sure that we'll do everything we can do, if some day - and we'd hope it will not be the case - there will be a pandemia of flu, pandemia of flu avian pandemia.

We stop eight compounds, we enter eight compounds. That is to say that we still have 128 compounds in -- under development. More than 50 of them are in Phase II and III. And even more important, we have finally 35 compounds in late stage. That is to say, in Phase IIb and Phase III.

A few words about cardiovascular, as we mentioned cardiovascular earlier. As we mentioned previously, we filed in June dronedarone, both in Europe and United States. And I can tell you that dronedarone is fileable; in other words, we received a letter coming from the FDA, meaning that they accepted the dossier. So in other words, we are ready to start to answer the questions to the FDA with dronedarone.

So, concerning thrombosis, we have two compounds that we are testing in the prevention of venous thromboembolism in patients with atrial fibrillation. These compounds are Plavix, with the active program, and idraparinux with the Amadeus program. The steering committees of both trials have observed substantial lower incidents of events than initially planned in this study. So we were told to increase the sample size of both trials.

However, we decided in agreement with the steering committee and the DSMB of the Amadeus program not to go on, not to increase the sample size, for we were told to more than double the number of patients. Therefore, we decided to stop the recruitment of this clinical trial and we'll have the results of the Amadeus program in 2006.

I can tell you that the Amadeus program is only one of the four studies that we have currently in -- of the four Phase III studies that we have currently with either idraparinux. The so-called Van Gogh program, which is the treatment of VTE, the treatment of PE and the long-term extension is doing very well. That apparently with enough events and that all the patients are recruited, and one more time, we do hope to have the results of these three programs in 2006.

On the opposite, the steering committee proposed to ask to increase the number of patients in the active trial, in the clopidogrel trial, by 1,000 and 500. So we agreed and we'll do it. So, in other words, we still do hope to have the results of such a compound in 2007.

Concerning CNS, as Hanspeter already mentioned to you, I can reconfirm what we said last July. In other words, we still believe to get the NDA of Ambien CR before the end of summer. Secondly, concerning xaliproden in Alzheimer diseases, we recruited all the patients of the two Phase III studies that we have with this compound. The follow up of this -- of both studies are 18 months. That is to say that we'll have the results of these two Phase III studies in 2007.

And I will present to you results of three compounds - VSR 58611 in depression, which is currently in Phase III in depression; the partial nicotinic agonist, which is currently in Phase IIb for smoking cessation; and eplivanserin, which is also in Phase 11b in the maintenance of insomnia. Maybe there's no need for me to comment that, except that you know that we have quite a lot of compounds even in Phase 1 and the pre-clinical level in the CNS area, quite of them being first in class.

Concerning oncology, I will present to you two results, the first on the ex-flavopirodol, alvocidib, and I will present very new results with a new regiment in CLL. And a very interesting result with xaliproden in general therapy in use, neuropathy, which is quite important for sure for oncology, but also as a proof of concept study for the neuroprotective activity of this compound.

Concerning metabolic disorders, I'll just remind you one more time that Acomplia is fileable and we are starting to discuss with the authority concerning the dossier of this compound. And then for Exubera, the compound that we share with Pfizer, the inhaled human insulin that we share with Pfizer, that there will be an advisory board on this compound, September 8. So in other words, we have quite quickly new news coming for this compound.

So concerning internal medicine, I will present to you two Phase IIb studies in the cirrhotic ascites patients with the V2 receptor antagonist, the aquaretic agent that is currently both in Phase IIb for ascetic -- for cirrhotic ascites, and in Phase III for SIADH.

We already mentioned to you that, concerning vaccines, Menactra is really a blockbuster. And I'll just remind you that we file for this vaccine for young people, for two to ten years, and that we are currently in Phase IIb study with Menactra in total. And again, one more time, that we do everything we can concerning the possible flu pandemia with the -- a prototype vaccine we have on H1 -- H5 and 1.

So right now I will present to you the positive results that we got with six products which are in Phase IIb and III, and the first one here, the beta-3 agonist in depression. Here you have the protocol of the European study but, in fact, we got exactly -- we have exactly the same protocol in the United States. That is to say, a comparison of the SR compound versus Paroxetine, which is an SSRI, as you know, and versus placebo in recurrent major depressive patients.

So, as you can see here, the primary endpoint is significantly different from placebo, and the SR compound is at least as active as paroxetine on this endpoint. Moreover, when you consider the percent of patients with Hamilton Depression Score of less than eight, that is to say with patients with normal depression, we have roughly close to 27% of the patients which are under eight in the SR group, compared to 20.6% with paroxetine. This is a trend in favor; also, it is not significant.

Moreover, I can add that in more serious patient, that is to say in patients with baseline Hamilton Depression Scale above 25, apparently SR was even more potent versus placebo than it was in older patients. And it fits to what we got in Phase IIa. I reminded you that in melancholia, in Phase IIa, in proof of concept study, the SR compound, we have shown that this compound was more efficient, significantly more efficient than paroxetine in this compound.

However, in the American study, their study was inconclusive. That is to say, that in fact paroxetine itself was not significantly different from placebo, and this was also true for the SR compound. So in other words, we got - as it is very often the case - a very high success rate response with placebo in this study. And it is well known that roughly half of the Phase III studies with the antidepressant agents are quite often non-conclusive.

However, if we can say anything about potential activity in the American study, we decided to merge both studies for the safety. And as you can see here, and it was already the case in Phase IIb and in Phase IIa, the SR compound is very, very well tolerated. The only side effects reported are some GI disorders, which are mild and transient, and possibly this compound, opposite to SSRI, has no effect on the decrease in libido. It does not decrease libido.

So in other words, very good results in Europe with a very nice safety profile with this compound. Also we got a non-conclusive study in the States, and that this compound is very, very well tolerated. So we are quite happy to have for the third time a positive result with this compound.

A few words about Eplivanserin in sleep maintenance insomnia. As you know, the compound is -- it's a new concept for insomnia. We demonstrated by polysomnographic studies that this compound increases the slow wave sleep. That is to say that it is the good sleep, and we were able to demonstrate that by very objective parameters. But maybe, even if it is a little bit more complicated, we just wanted to have the feeling of the patient.

So we performed a Phase IIb study, where it was a comparison of two doses of Eplivanserin versus placebo. And we measured the effect, the feeling of the patient, by a visual analogic scale, in order to see whether, with this objective activity on slow wave sleep, we are able to get a positive result when we ask to the patient. And that's exactly what we got.

The primary endpoint was the WASO, and as you can see here, there was a very significant increase -- decrease in WASO versus placebo, 5 milligram Eplivanserin, and a trend to increase even the TST with this compound. Moreover, the number of awakenings are even more decreased under 5 milligrams of Eplivanserin than under placebo.

However, as expected, this compound is not a sleep inducer, like Ambien, and it has no effect on the question, how long after going to bed did you fall asleep? No difference versus placebo. It is not at all a sleep inducer.

Thirdly, this compound concerning the sleep quality has a significant effect on the so-called refreshing quality of the sleep. And the trend versus -- the question, how would you describe your sleep last night?

What about the next day residual effect? We got no next day residual effect, by the two questions we have here - do you feel sleepy this morning or how would you describe your ability to concentrate this morning. And even the trend, even if it is not significant, is in favor of the compound versus placebo.

So you can see moreover that the compound is very, very well tolerated, roughly no difference versus placebo and roughly no side effects at all. So in conclusion, it's really a new concept in insomnia, and you know that we are leader in this area. Compared to placebo, this compound reduced WASO and the number of awakenings. There's a trend in the increase in TST and improved the refreshing quality of sleep. Moreover, the next day we got no residual effect and no rebound. So for all these reasons, for sure we'll start Phase III study with this compound in 2006.

To us right now, for a compound which is -- which was in Phase IIb in smoking cessation. This compound is a partial agonist of a nicotinic receptor, the alpha-4 beta-2 [indiscernible]. And we compared this compound -- compared three dose of this compound versus placebo, and the main -- the primary endpoint was prolonged abstinence during the last four-week treatment, which is the primary endpoint accepted by the FDA.

Moreover, this abstinence was documented by biological parameters, that is exhaled CO measurement and the plasma cotinine level, which is the metabolite of nicotine. You have here the protocol of this Phase IIb study, which is, I would say, quite classical right now. And you have the results on the primary endpoint, both ITT population and for the completers. And we roughly, for the higher dose, we got a very nice dose response curve, and we roughly tripled the response rate versus placebo with the higher dose.

So concerning the side effects, these side effects are, let's say, manageable and correspond to what we expected, which was already the case with nicotine patch. That is to say, GI disorders and for again that reason, we start Phase III study with this compound in smoking cessation next year.

As we mentioned to you, we got a very significant effect on the primary endpoint, which is the abstinence rate in the last four weeks of treatment. And this was confirmed, as I mentioned to you, with biochemical parameters and with a classical and acceptable overall safety profile.

A few words about the V2 receptor antagonist, which is an antagonist of anti-diuretic hormone, a V2 receptor in the kidney. And we tested three doses of this compound versus placebo in cirrhotic ascites patients, on top of diuretic. That is to say, on patients which was -- which were, I would say, very, very ill, and the first study it was a so-called HypoCAT study. That is to say, patients with hyponatraemia.

So serum sodium was the primary endpoint, for sure, with a change in body weight. This compound, as it was already the case in Phase III, increase urinary output, increase urinary excretion and only water, since it is an aquaretic, nothing with ions. However, as expected, concerning the primary endpoint, that is the serum sodium level, we got a very significant versus placebo increase in the mean serum sodium level, starting from the lower dose of 5 milligram.

In a similar manner in the composite endpoint, which roughly corresponds to a decrease in body weight, we got a very nice response curve. Which indicates that in these patients, definitely, this V2 receptor antagonist is active. So we also tested this compound in other patients with cirrhotic ascites but which are normonatraemic. That is to say, no difference in the sodium level in the plasma. So the primary endpoint for sure can be plasma level nataraemia, but it was change in body weight.

And one more time, since they were very ill patients, it was already untreated patients, both on spironolactone and furosemide. So one more time, in patients which are very difficult to treat. And as it was the case in the previous study, we got a very significant effect, more than 2 kilogram decrease, starting from the lower dose of 5 milligram. So the primary endpoint was reached by this compound.

And concerning the side effects, we do the study and the only significant side effect we got was, I would say, classical for this compound, which increased urinary output. It was thirst. So in other words, this compound was very safe and active in cirrhotic ascites. One more time, we start Phase III study with this compound in 2006. This compound was active both on hyponatraemic patients and on normonatraemic patients.

A few words about flavopirodol or Alvocidib in CLL. Just remind you that this compound is a very potent and selective inhibitor of some kinase, which are deeply involved in oncology. And I remind you that this compound was stopped by Aventis because, by using only infusion, as you can see here, continuous infusion, they got no response rate. And a very poor response, a very poor, partial response after one-hour bolus.

But very recently, a so-called NCI study, which corresponds to bolus plus infusion, we got a very, very nice response in CLL, and maybe what, a 43% partial response. But what is quite important, that it was in patients resistant to classical treatments, such as fludarabine. In other words, we got roughly the same response rates in fourth line with flavopirodol, and we got roughly the same result that was obtained in first line or third line with other reference compounds.

So in other words, for CLL such compounds are very, very impressive, and these very impressive compounds are associated with a very acceptable safety profile. Just to remind you that for sure it is an anti-cancer agent, and especially this compound induced a very classical Tumor Lysis Syndrome, for sure, which is a side effect but which might also be considered as a surrogate marker of biological activity.

And we talk about -- quite a lot about the so-called Tumor Lysis Syndrome, so we developed rasburicase in order to prevent such a Tumor Lysis Syndrome. So really, we are very happy to start again in Phase II, in association with NCI, with flavopirodol, because of the safety profile of the compound and because of its activity.

This compound, as I mentioned to you, roughly has the same activity in resistant patients that was obtained in first line patients with fludarabine, for instance. And this response rapid and prolonged. It was independent of so-called high-risk genetic markers, and possibly by historical comparison, the safety of this compound seems to be or possibly might be superior to reference compounds. So again, one more time, in 2006 we'll start Phase III study in CLL with this compound.

And to finish, just the last result we have, the effect of xaliproden in chemo-induced neuropathy. I mentioned to you that xaliproden is currently in Phase III as a possible disease-modifying agent in Alzheimer disease, and that we recruited all the patients this summer. And with a follow up of 18 months, we'll have the results of these two Phase III studies in 2007.

Xaliproden has neuro-protective activity and stimulates neurotrophic growth, certainly through the production of a growth factor such as NGF. And here you have a model -- a so-called model of Alzheimer disease. NGF, when it is injected in the brain, is able to counteract the effect of increase in the hippocampus. And this we got roughly similar results with xaliproden, except that xaliproden was administered by oral route once a day, in the same model.

So first slide of the hippocampus, this is the control. The second slide in the hippocampus, you have the effect of vincristine, which induces a very dramatic loss in neurons, which was third picture. Which was fully antagonized by xaliproden. And it is a model in animals for sure. It is a model of Alzheimer, since this decrease in neurons induced a decrease in memory, which was reversed by NGF injected directed in the brain, but was -- which was also reversed by xaliproden administered by oral route. And we got again, one more time, similar results with xaliproden oral route than with NGF injected intra-cerebrally.

So it's well known that anti-cancer agents, and especially Platinum compounds, induce neuropathy, and this is the case, for instance, of xaliplatin. So we decided to try to see whether, first of all in vitro, xaliproden is able to have neuro-protective activity versus the decrease -- the aggressiveness, let's say, of oxaliplatin versus neurons. And you have, and you see here, that in DRG explants alone, xaliproden is active per se.

However, it's even more potent when we add, let's say, glial cells. So in other words, in vitro xaliproden is able to protect neurons versus a neuropathy induced neurotoxicity, induced by oxaliplatin. So the next question is very simple, what about in vivo? And it's possible to reproduce the cold allodynia that we got in humans with oxaliplatin.

It's possible to reproduce it with animals, with rats, and as you can see here, the neurological score increased under oxaliplatin treatment versus Sham, that is versus placebo. And that this increase in neurological score, that is to say in cold allodynia, so in neuropathy, is fully reversed by a 3 milligram and 10 milligram per kilo oral route with xaliproden. So that compound is active in vitro and in vivo in animals.

The next question is, the decrease in side effects in vitro and in vivo induced by xaliproden, does it correspond to a decrease -- in an overall decrease in activity in oxaliplatin. So in other words, does xaliproden change the anti-cancer activity of oxaliplatin in animals? And the answer is no, and we performed the following experiment.

We injected colon adenocarcinoma to mouse, and after a few days there was, this corresponds to the control, let's say, the dark line. There's an increase as a function of time in control animals of the size of the tumor. Xaliproden itself, it corresponds to the blue circle. Xaliproden has for sure no effect on this increase in tumor size. Oxaliplatin alone, which corresponds to the red circle, has a dramatic decrease in the tumor weight after two injections of oxaliplatin.

If you add xaliproden to oxaliplatin, it corresponds to the green circle, no difference versus oxaliplatin itself. So in other words, xaliproden has no effect on the anti-cancer activity of oxaliplatin. After a few days since we stopped the administration of oxaliplatin, and this corresponds to the, one more time, to the red circle, there was, one more time, an increase in the tumor weight in the animal. But again, when we add xaliproden, no change versus oxalipatin.

So, in animals we demonstrate -- we demonstrated definitely that xaliproden has no impact on the anti-tumor activity of oxaliplatin. So it's really a neuro-protective activity and not a decrease in the activity of the cancer -- anti-cancer activity of oxaliplatin.

So knowing that, we decided to build up the Phase III study, a study versus placebo, so all the patients received the FOLFOX4 regimen of oxaliplatin, and they received either placebo or xaliproden. And you can see here the results of the probability of a first onset of grade 3 peripheral neuropathy. Grade 3 are really the very important neuropathy which are in use by oxaliplatin.

As you can see here, the green, which corresponds to xaliproden treatment versus the blue, which is the placebo, there was a very significant decrease in the probability of first onset of grade 3 study, with the hazard ratio of 0.61. That is to say that there's a relative risk reduction of 39%, a significant 39% in grade 3 PSN, peripheral neuropathy. And this effect for sure is very, very significant.

So what about the anti-cancer activity of oxaliplatin? And as you can see here by the effect on response rate, progressive disease, and so on, we got no difference versus placebo. So, in other words, even in humans for sure and fortunately, xaliproden has no effect on the anti-cancer activity of oxaliplatin, although it decreased the side effects, the neuropathy induced by these compounds. And, as you can see here, concerning the side effects, we got roughly the same profile versus placebo of xaliproden here.

So in other words, both in vitro and in vivo, xaliproden in animals was able to significantly prevent the peripheral neuropathy induced by cumulative dose of oxaliplatin. We were able to reproduce this effect in humans and this corresponds to a neuro-protective activity, that for sure will be very interesting for patients which are treated with oxaliplatin.

But it's also a proof of concept study, showing that in humans xaliproden has neuro-protective potential whatever the activity of this compound, in both oncology patients and in possibly patients in neuro-degenerative diseases.

So in order to conclude, I just would like to say that last February we mentioned to you that we'll have more than ten results on compounds which are currently in Phase IIb and III. But right now we release seven results and only one was negative in Phase IIb. The others, six others, are positive and especially four are compounds which were initially -- which were in Phase IIb, which are positive, will be in Phase III in 2006.

So in other words, the success rate that we got was much higher than we thought, and that's why we are very, very confident in the future, one more time, of our portfolio. Thank you.

Thank you Gerard. Just perhaps to finish quickly, a short -- some words on where we are after one year.

I think that you'll remember that we have a very clear and simple objective. This objective is to have a strong, sustainable, and profitable growth. That is important because it's easy to have a profitable growth by cutting the costs and having nothing in terms of sustainable. And if you cut the costs and if you have just a very small growth, I think that the future is not very clear. So we continue to fight for strong, sustainable and profitable growth.

What we can say? We can say that, yes, perhaps it's not to us to say that, but I think that clearly that the integration of Sanofi-Aventis is something which is a success now and it's key for our results. Why this merger, this acquisition is a success? I think that the clear strategy is something very important. As soon as you have a clear strategy, which is exactly what we said in January '04.

We asked to the management team to be totally united behind the project, and that's something which is very important. And we have a team, a management team totally, as I said, behind the project.

Further the way to make a very speedy and -- very speedy decision and implementation, and what could be said is yes. We made a very speedy decision and the implementation of our decision, and especially during this first part of the year, was very, very quick.

At the same moment, respecting employees and improving motivation. I think that if we succeed in these results, it's only because the management is totally devoted to the project. But also because the majority, the large majority, of our employees are totally motivated behind this project. Because they know very well that if we succeed in such a project, with a strong growth and defending the future, it is their future which is in front of them. So we have to thank certainly the people. All the employees are running behind the project.

Something which is very important. You'll remember that one year ago, when we starting -- when we started to speak around synergies, it was not so clear or believable for many people that it could be possible to make these synergies. And many will say that yes, but it will be so difficult in France and Germany and so and so.

What is clear now is that synergies are on target even in France, even in Germany, and that's something which is important. As said before, Jean-Claude Leroy, all the synergies will be finished at the middle of '06 and we are really faster than expected.

Strong growth. Hanspeter told you of the figures. 11% is not something which is current in this industry today, and you know very well the figures of our competitors. I think that the market is more and more difficult, and especially in the States. And to succeed by double-digit growth is not something which is very impressive, it's even for me impressive.

I think that looking at the 15 top drugs because, okay, you can say that Plavix is a problem because nobody knows what could happen in the trial. Yes, but we have 15 products and a lot of them are running very well, and it's not -- this Company is not a one-product company. It's a company with between eight and ten blockbusters, if we are looking not only at the pharma products but also vaccines.

What is also very important is the fact that this famous base business, which is in many, many companies decreasing, you know that in our objective we say that there is no small product, no small country, and we are fighting on all the products in all the countries. And the stabilization in '04 was something but, if you look at the beginning of this year, we have a growth in '05. And as Hanspeter gave the figures, I think that it's very important if you look at how -- what is the weight of this famous base business in some areas around the world.

Vaccines - we spoke about vaccines. Yes, we are rebuilding a very strong momentum with new launches for the future but also with higher investments to be sure. That will be ready to be in front of the market for the vaccines.

Yes, it's strong growth, sustainable growth rate. It's two areas. The most important area perhaps is research. Gerard give you the last information, the last six information in the results. And we spoke only on Phase IIb and III because we will continue to be like in the past, we are not here for dreaming, we are here for delivering. And as soon as we are not in IIb or III, we think that it's more dream than delivering. So, yes, it's impressive even for us, on seven results to have only one negative result.

The second part of the sustainable growth is to be sure that we are pushing the pole on the field, and we are pushing the pole on the field. If you look at what we are doing in China, what we are doing in the south, but also what we are doing in the States or what we are doing in Europe, I think that the future and the sustainable growth of the Company is in the hands of the field -- the teams on the field, and we continue to improve these teams. We continue to improve the number of the people, and we continue to improve the pace and the quality of the people. Another reason why we have so good a result.

So we are in sustainable growth in our mind clearly. I think that I don't go back to these figures, you know that. Gerard explained all these figures also and, yes, profitable growth, which from my view is a very profitable growth.

I think that all what we said, all what Jean-Claude said about the gross margin, about the operating income, about the earnings per share. Yes, we say that we will be around 18%. We are at 26%. That's not something so easy and it's impressive, even for me. And that's the reason why we increased our full year guidance, saying that we will be at least 20%.

So I think that we had a very good first part of '05, and we will finish a good '05, I'm sure of that. So now, I think that we have to go to the questions naturally.

Thank you sir. [OPERATOR INSTRUCTIONS]. We pick up the question from Tim Anderson from Prudential Securities. Please go ahead.

Thanks. I have a few questions on xaliproden. I know you are looking at prevention of severe PSN but if I look at your results in Grade 2, it looks like xaliproden patients, in fact, had a worsening of symptoms compared to placebo. And I guess in Grade 1 there was no difference in placebo, so I am wondering how you interpret those?

Second question is I know in the first meeting you had this morning, you were asked about what you would need to file on. And I also realize that this data is fresh. But I would imagine that all along the way here you had discussions with regulatory agencies, in terms of what exactly you would need for filing. So I am just hoping to get more clarity. Are you talking about maybe just one Phase III trial? Are you going to need to show the PFS data or what exactly? And then, with the standard of care in colorectal cancer changing, doesn't this represent a hurdle in achieving PFS in the FOLFOX4 patients?

No. In fact, there is no worsening of Grade 2 PSN. In fact, if you -- it's a relative percentage. So if you decrease the Grade 3, the percentage of Grade 3 PSN with xaliproden, that is to say that patients who were supposed to have Grade 3 PSN, in fact have Grade 2 PSN. So it's not a worsening, it's a relative percentage. So for sure xaliproden never [indiscernible] so-called Grade 2 PSN.

And concerning the filing, as you understood, we are -- we discussed the results very simply. So we'll have to discuss with the authority, in order to see what they will need with a potential filing. And again, we are quite happy on these reasons for two reasons.

The first reason is for sure for oncology, that is to say we decrease the side effects of oxaliplatin. That is to say that possibly we can increase the number of cycles with oxaliplatin. So if it is the case oxaliplatin will be more efficient in association with xaliproden.

And secondly, and maybe as important, is a kind of proof of concept showing that xaliproden in humans, by oral route once a day, 1 milligram, is as neuro-protective activity. But again, too early to say when we'll file with these results and what will be the questions of the authorities. Really, I can't answer this question.

Okay. And then the last question about standard of care in colorectal cancer changing?

Yes, right now, right now we do it with oxaliplatin but possibly we'll do it in association with other compounds, as you know. So maybe we can do it with, let's say, a biological compound in association with oxaliplatin. We can do everything you can think about, but right now here are the data we have. But possibly we will do it. Again, too early to say.

Okay. And then the last question is the study of PSN well validated from a clinical development standpoint, in terms of what exactly you need to measure?

I don't understand the question.

Well, when you measure efficacy of a disease, in certain cases they have been well validated in other either clinical or animal models, from a regulatory perspective. So I am wondering, in this case, in the case of PSN, if regulatory authorities have basically said, well, here's exactly what you need to deliver to show efficacy in PSN.

Again, it's not a direct activity on PSN. It's just to try to antagonize the worsening of the PSN induced by chemotherapy. It's not to test this compound in PSN. Again, one more time, possibly we will do it. But right now, we don't have in mind to do so.

Yes. Okay, thank you.

Thank you. We will take our next question from Michael Leacock from Nomura. Please go ahead.

Thank you. I have a couple of questions, if I may, for Dr. Le Fur. Firstly, on Alvocidib, certainly some interesting data you've presented. This is a new dosage regimen. Is that the only dosage regimen you will now pursue or are you looking at a range of further dosage regimens?

Secondly, I gather with the Lysis Syndrome you say it's coming early. I think in some reports it's at the first dose of the product. Does this perhaps pose even more challenge for managing such side effects? When will the survival data be mature for your open label study?

And then, if I may, more simply on the smoking cessation product, 813, the abstinence rate in placebo seems quite low at around 7%. I gather the usual rate is more like 15% in the placebo group. I wonder if you have any comment about that? And also, did you see any weight gain with the product?

Well, concerning the regimen of, if I understood well, of the beta-3 agonist, we tested this BID administration because initially we did three times a day, we started with three times a day administration of the SR compound. But for sure we performed bio-equivalent activity and we showed that two times 350 milligram was quite similar to the three times administration. So that's why we did it, because we just would like to decrease the number of administrations per day.

Concerning Lysis Syndrome, again, it's possibly a surrogate marker showing efficacy. And as we already mentioned to you in the past and we launched rasburicase exactly for this clinical indication. So in other words, certainly in the Phase III study that we built up with this compound, and the Phase III study will be the only very important study we need. We'll certainly try to decrease Lysis Syndrome by using rasburicase, but again, it's just too early to say what will be the proper call. And we will discuss with NCI, in order to be in the best condition to see what is the effect of flavopiridol in these patients.

Concerning the low response rate under placebo, I'll just remind you that opposite to other clinical trials, I know this is the abstinence rate for the last four weeks. So it is to say very difficult to achieve. So that's why we got a low placebo response rate. And you know, what is important is the difference in our condition and not by historical comparisons, to compare the effect of the compound, of the three doses in this case, versus placebo.

Moreover, again, the clinical efficacy was very high, as I mentioned to you, by biological marker. That is to say CO measurement and cutting plasma levels. So it's certainly part of the explanation of the so-called low placebo activity in this clinical trial.

Thank you.

Thank you. Our next question comes from Jo Walton from Lehman Brothers. Please go ahead.

Two quick questions please. Concerning the cost savings, you say that you have taken cost savings perhaps earlier than expected and that most of the work will have been completed by the middle of next year. Presumably the payoff for some of that work will, however, take some time to come through, things like manufacturing savings, etc., which take a while to come through. Do you have any feel for what the ultimate peak cost savings may now be? Presumably they will be higher than they were before.

And secondly, is there any impact yet in your numbers for pre-launch costs for Acomplia?

Okay. At least I'll take the first one on the cost saving. When we mentioned that we would -- we were going faster than anticipated, then Jean-Francois Dehecq said that the end of the program would be the end -- the middle of '06 rather than the end of '06, what he was mentioning is that we would reach the, I would say, the peak level on a cumulative basis quicker than anticipated. Now, that being said, and let's be clear about that, more than 75% on a cumulative basis end of '05 to reach obviously quickly the total, the €1.6b is one part of the answer.

Now, you are talking about is there any additional in the future manufacturing and so on to come up to a new peak. I'll remind you that when we described the kind of synergies, even though we didn't give any precise figures on the components of the €1.6b, we said from day one that manufacturing was a very, very small part of that €1.6b. And for good reasons, which are still valid. You know very well what is the impact or the weight of the manpower in the cost of sales, and what it is compared to the -- as a percentage to the sales level. You know that on a financial basis we are talking of nothing. So that's the reason for which we didn't include that in our program. That's the first part of it because that's not the way you make savings.

In addition to that, because this is not the only answer on that manufacturing part of it, you know that we've been basing a large part of our growth, I mean on the synergies, on the growth, on the positive growth of it. And you know, and I mentioned that in already in the first half of the year-end, it is true also at the end of this year, that we are in advance as compared to the market. We are much more in advance as we were last year. That does mean a lot more activity. And also, because it is made on the so-called tail business, it is a large part of the volume activity of the plants of the Company.

So what was probably at the zero, what could have been seen as something which has to be rationalized, is no more to be seen as something which is rationalized, just because we are increasing the volume of activity. So once again, I would say for strategical reasons, just because it was part of the project, manufacturing was not on the screen. In addition to that, you know very well that on a financial measure, it doesn't bring a lot to the profitability of the Group.

So no, there are no additional unseen targets, additional targets to be taken into account. Maybe we will do some rationalization in the years to come. But that's not only for cost saving, it's for, I'd say, a lot of optimization reasons. If we do so in the future in the world, not especially in France or Europe, so we don't increase our target €1.6b. And again, there are -- there is not much of the manufacturing, I said purchasing policy, which is different, but not manufacturing per se.

Can I ask what your overall staff numbers are as well, please, at the half-year?

Well, the global staff is obviously decreasing. As we said earlier, we don't give a precise figure. If you want to ask us if the effect of rationalization this quarter brings a negative effect on the global situation of the Group, I'd say yes, it's a decrease. If you ask me if there are more people in R&D, more people in the commercial, behind the product, the answer is also yes. If there are a lot more -- a lot less people at the headquarters, G&A so-called, I would say yes.

But it's -- the global answer is not the total answer. The answer is a little less probably, but what is to prepare the future is a plus, and what is to rationalize what is the normal result of a merger, yes, obviously there is a decrease. So it's a mix of both, so that we are in a position to develop the Company.

Yes. Then on your questions around pre-marketing Acomplia. So what can I tell you, yes, as I said earlier, we are actively pre-marketing the product of course. So certainly I would like to give you perhaps two orientations. I would estimate that we have today about 200 FTEs worldwide active in the field force. So Acomplia [average] should not be misunderstood, of course they don't promote Acomplia but, say, promote the underlying conditions, [indiscernible] as cardiovascular metabolic risk and financial for us.

In terms of money, you know very well that we don't give precise figures, products related, but I would give you an estimate. I would say that in the first half our spendings, except clinical research, are below €100m in direct marketing expenses. Direct marketing expenses is our field force.

Thank you very much.

Thank you. We will take our next question from [Kurt Schagenbert] from [River Edge Capital]. Please go ahead.

Yes, thank you. You said you expect Acomplia to be on the market by a year from now, but you filed it in the first quarter of '05. So why shouldn't you expect it to be approved by first quarter '06?

First of all, I'm sorry, we filed second quarter this year, not first quarter; second quarter this year. And if you add, let's say, nine months, have a look, let's take it in 2006. That's very classical.

The American estimate would be yes, and in the second quarter of 2006, please keep in mind that the usual figure, you get the 12-month period. That does not include the so-called [DD MAG] negotiations, which means in the U.S. you have to submit all promotional material before to a subdivision which is called [DD MAG].

Under normal circumstances, this already takes between four and 12 weeks if you go up with a totally new molecule and you have a certain idea how this product should be communicated. You'd better estimate, let's say, ten weeks than four weeks. And, as you know, the European period is at least 12 months from a purely administrative point of view. But then, unfortunately, it is still European reality that each member state has to recognize the European decision, which unfortunately takes between, let's say, four weeks in Germany and up to 12 or 18 months in Belgium. And then, in certain markets, you even have another period of negotiating the reimbursement conditions.

Okay. Thank you.

Thank you. We will take our next question from Sachin Jain from Merrill Lynch. Please go ahead.

Good afternoon, gentlemen. It's Sachin Jain from Merrill Lynch. Two questions, if I may. Firstly, on Acomplia, I just wonder if you are able to provide further details on the Phase IIIb program, and just a broad overview of the size, when you started recruiting it and an approximate timeframe for the studies.

And then secondly, on Lovenox, I was just wondering if you could update us on your legal strategy, where you are in the appeal process and whether you are able to provide any color on how you will use the new patent in your defenses yet. Thank you.

So, concerning the lifecycle management with rimonabant, as you know, we have a new study starting or already started in diabetes, that is to say in a very -- in monotherapy because the so-called RIO-diabetes it was on top of all anti-diabetic agents. And we have a new study already started for monotherapy in type 2 diabetes.

We'll start another study with more parameters, which might be quite similar to RIO-Lipids, as we call it, [indiscernible] lipids, you will see. And we have also two studies in order to see what will be the benefit of -- the potential benefit of rimonabant on coronary arterial sclerosis, either for -- by using IMT techniques or by using [high-res] techniques.

And thirdly, and maybe even more important, we'll start very soon a very large morbimortality study on top of existing therapy, for the cardiovascular reach in the population, which is quite similar of the one we use in the dossier that we filed, with a two-year follow up. That is to say that it will be a very huge study with, let's say, between 15,000 and 20,000 patients, two-years follow up. So we are currently doing and starting a very large lifecycle management with rimonabant, both in comorbities with studies around diabetes associated with obese patients and also with hyperlipidemia. And again, more important, three studies in the -- for the cardiovascular risk, which are very, very important.

On Lovenox, you will understand that I cannot go too much into detail concerning our legal tactics but our strategy is two-fold. One axis is a purely legal strategy in defending our patents. You probably know that we have lost in the first instance but meanwhile we have filed appeals. This appeal will also integrate the extended patent, which wasn't subject to the first decision. The outcome of this by nature is totally open and we can give no orientation even on timing.

The second axis is that we basically challenge and see as totally in line with a citizens' petition which has been filed with the FDA, where the underlying assumption is being challenged that there could be made reference to the clinical file of Lovenox, in saying that generics of biological products would have to be handled as generics of, let's say, a synthetic product. We are convinced, we believe, and once again totally in line with this petition, that biological products are totally different from synthetic products.

This decision has been filed with the FDA. So far, the reaction of the FDA has not taken place. We believe it is imminent. But once again, it is in the hands of the authorities. We cannot say anything more. But our different strategy is two-fold and we believe we have a very good case in both directions.

Thank you.

Thank you. We will take our next question from Edmund Kim from JP Morgan. Please go ahead.

Thank you for taking my questions. I have two quick questions. In the analysts' meeting early this morning, it's my understanding that management made comments that it would be better prepared to discuss promotion next week. Can you elaborate on what next week means? Does that mean that the [indiscernible] and the final label negotiations, what gives you confidence that launch is very, very imminent, as you stated earlier in this call?

I would make reference to what my friend Gerard said before. Gerard said we are confident that we launch the product before the end of the summer and next week is well before the end of the summer. So please take it cryptically, as it is being said.

Thank you. And secondly, Sanofi had also indicated early in the morning that it would be competitive on length of usage, the maintenance and price. So given those comments, do you expect to receive a maintenance claim as measured by WASO at eight hours?

We have requested this and yes, of course, we are confident.

Great. Thank you.

Thank you. [OPERATOR INSTRUCTIONS]. We take our next question from Elizabeth Mitchell from MainFirst. Please go ahead.

Hello. My question is about the stopping more recruitment to the Amadeus by comparing that to trial. Could you tell me, first of all, in terms of the study design, why didn't you just in the first place have the same number of patients in the clapidogrel trial as in the idraparinux trial?

And secondly, why did you decide actually not to double the number of patients in it, because it seems to me it's actually quite cheap to recruit patients for that type of study?

And finally, just as an option, couldn't -- to get more events, couldn't you just carry the study on longer? If you wait long enough, you would get more events.

Again, it's always difficult to choose when you have such a proposal. First of all, I would say fortunately for the patient, apparently right now people are very well treated in atrial fibrillation when we tried to see whether they are even associated with thromboembolism.

The number of patients, when you have to double the number of patients, it's really a little bit complicated to go on and to decide to do so. Because you know it is a proposal from the steering committee and if you consider in the active trial, the increase of 1,500 patients is roughly a little bit between 10 to 15%, which is not too much. But to double the number of patients is quite complicated to manage. And for that reason, we believe that it's more interesting for the Company to decide to not to double the number of patients, because that means that possibly the study will be futile. So that is to say that we will be unable to detect any difference. So for all these reasons, it's certainly very difficult to double the size of a study, never.

But why were the numbers of patients not similar in the first place? Therefore, you know you are going to get similar statistical significance.

Well, keep in mind this is a proposal from the steering committee but maybe it's in the wrong way. So when you decide to double the size, this does not mean that you will be sure to be, let's say, to reach the primary endpoint. So we had the feeling that with such a huge increase in patients, maybe it's a little bit too risky and it will take quite a lot of time to do so.

For all these reasons, and the steering committee agree, we decided not to follow this proposal, which was only a proposal. And we had to choose and we decided to do it with the clopidogrel group. I'll just remind you that in the so-called Van Gogh, the three other Phase III studies, apparently all the patients are recruited. And apparently we have enough, let's say, events in order to possibly see a difference between idraparinux and the reference compound.

So for that reason, we prefer to stop the recruitment and we'll see with the patients we have right now, which are close to 5,000 patients, whether we can find -- reach the primary endpoint or not.

Okay. Thank you very much.

Thank you. Gentlemen, we don't have any further questions.

So thank you very much for your time and see you soon.