Sanofi SA (SNY) 2008 Q1 法說會逐字稿

Good day and welcome to the Sanofi-Aventis first quarter 2008 sales and results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Sanjay Gupta. Please go ahead, sir.

Thank you. Good morning, everyone. Thank you for joining us. With us today are four of Sanofi-Aventis management team members. They are Hanspeter Spek, Head of Operations, Jean-Claude Leroy, Head of Finance and Legal, Laurence Debroux, CFO, and Marc Cluzel, Head of R&D.

Hanspeter will start things off with comments on the quarter's performance. Marc will then comment on a few important R&D results that we are releasing today. And finally, Jean-Paul will present the Q1 financial results. We will be using slides that are currently available on our website.

Please note that the statements made by the Company contain forward-looking information within the meaning of applicable securities laws. Such statements involve uncertainties and actual results could differ materially. Additional information about the risk factors are contained in our Form 20-F and in our reference documents.

With that, I would like to pass things over to Hanspeter Spek.

Yes. This is Hanspeter speaking. Good morning, everybody. I propose that we proceed with our slides, starting with the slide number three.

So, when looking to our first quarter 2008, it is evident that two important impacts have to put into account, the dollar exchange rate and the fact that the first quarter 2008 will be the last quarter in 2008 with an unfavorable effect coming from the out of patent of Ambien IR in April 2007.

So, looking to our total comparable sales in euros, you see then our EUR6.937b of total sales, with a growth rate of plus 0.8%. When extracting the effect of Ambien IR in the United States and Eloxatine, the growth rate would theoretically go up to 7.2%, as expressed in the chart. Further worth noting is the fact that base business, those products we don't actively promote, continued to be relatively stable with 1.8%. This is also earmarked by a relatively weak flu season, which is important for our antibiotic portfolio.

On the regional split, you see that sales under the impact, but also without the impact of out-of-patent of Eloxatine in Europe, are relatively stable with minus 0.7% or plus 0.7%. And you see then once again, when looking to the U.S. figures, that there is an underlying very strong growth rate of nearly 15%, which means nearly threefold the American market. The rest of the world, consisting of South America, Africa, Asia Pacific and Japan, continues to show a nearly two-digit growth rate, equal to 9.2%.

When switching to chart number four, the leading 15 products, it is of course positive to see that our five leading blockbuster products all show high two-digit growth, starting with Aprovel at 11% growth, going up to Lantus with nearly 31% growth. I will get back on those products more in detail in a minute. You see then further that the overall top 15, excluding the Ambien IR effect and the Eloxatine effect in Europe, are supposed to grow by 12.2%.

Another headline of our performance, already traditionally, to look to the developing part of the world, the rest of the world or the BRIC plus M. And you see then, on page five, first of all, that overall we had in absolute terms a strong first quarter because there is a comparison where you see the EUR6.9b compared with EUR6.9b in 2007. Of course, the first quarter of 2007 is still including Ambien IR sales, which means we are on a very, very solid basis for this first quarter in absolute terms.

Still, repetitively, now you see that the contribution from the so-called BRIC plus M countries is outperforming all other parts of the world in terms of contribution to growth, plus EUR142m in the first quarter, and this underlining once again our very strong position as market leader in the BRIC plus M part of the world.

Focusing more on the United States performance, on chart number six, you see then that all our major products in United States showed very, very strong growth. The only one which has caused concern is Eloxatine. We are pleased to see that also Taxotere now is on a two-digit pattern, Lantus with 36% and Lovenox with 23%, partially, of course, benefiting from the current situation around the Heparin market.

We believe that further our performance in the U.S., our continued strong performance with nearly 15% growth, is driven by our regionalization projects in the United States, where we have totally reorganized our organization to get closer to our customers. And lastly, we have further improved our situation in managed care, as you see on the right side of the chart, where we have further improved the access for our major products, Plavix and Lantus, and in a spectacular manner also for Lantus through the launch of our new device, SoloSTAR.

Page number seven, Japan, in the past a weak spot in our geographical presence. This has changed. I could report you last time that we have undertaken a number of actions to strengthen our position. You see, then, on page number seven that we are currently growing in the first quarter by more than 22%. This performance is driven by all of our major products. Consequently, we have obtained a rank amongst the leading 10 companies in the Japanese market. The growth is further driven by Plavix, which is now approaching EUR40m of monthly sales. We have very, very good perspectives coming from the recent relaunch of Lantus, which will be further supported during the second quarter by the launch of SoloSTAR. And, yes, we have also obtained finally approval for Clexane, which will be equally launched in the second quarter of 2008.

On page number eight, I have summarized what I really think is an important headline for the mid-term future of our market, the overall contribution coming from the BRIC plus Mexico market. You see, then, very easily that the contribution to the growth of the worldwide pharmaceutical market from those countries in 2001 has been 3%, in 2007 it has been 19% and it is supposed to be nearly one-third of the growth as of 2012. You see that we are on a very, very good track, with a growth rate of nearly 13% coming from those markets. We have doubled our sales during the last six years and have further strengthened our market-leading position.

On page number nine, I focus on China, China being defined as Mainland and Hong Kong. You see, then, that our growth is 71%, I allow to say spectacular, obtaining nearly EUR100m in the quarter. You see that we are present with all our major products, but also with more traditional products like Essentiale. We are now, for eight consecutive quarters, the fastest-growing company in China and we are very, very confident concerning our future, given the fact that we have today six products which are therapy-captains in their class.

Going, then, on the major products, as of page 10, you see our vision for Lantus, which is today the number one insulin in the world. And yes, we have the ambition to make it the number one anti-diabetic in the world.

We have a continued success of our new device, SoloSTAR, next launches in major markets such as Japan. Brazil and Mexico are imminent for 2008. You see that there is a direct function between the launch of this very, very strong device and the sales of Lantus, given the example of our U.S. sales where you see a direct relation between both curves.

We have significant expectations concerning our clinical trials for Lantus, coming from two major new trials which will be published in June and in September 2008, TULIP and GINGER. And you'll find more details on the objectives of those trials on page 10 once again.

Lovenox, on page 11, of course had a very exciting quarter in the overall turbulences of the Heparin market. I'm sure that you're aware. We have to state that Lovenox, to a certain extent, has benefited in this performance by this situation, which is specifically true for the United States, where we evidently benefited from the halt of Baxter's product. But let's keep in mind that the performance of the product already before has been in the upper two digits. And this is due to the very strong worldwide market-leading position of this product and the fact that you see on the right side of the chart -- the fact that the product has by far the largest spectrum of all approved products in this therapeutical field, which gives us also a lot of countries, in front of the upcoming new orals in this market segment, which will be, at least for the years to come, aiming for less than 10% of Lovenox' spectrum of indications.

On chart number 12, Plavix here is very much back to a very strong growth. Also here we have an effect in the basis of the first quarter 2007, when the Apotex generic still has been available. It is not easy to make a correction of the impact of the Apotex product on our sales performance. In very rough terms, we could say that the natural, so to say, un-impacted growth of Plavix in the United States we estimate at 11%, instead of those 44.6% you see on the chart. So, in short, the product, also corrected by the Lovenox effect, remains in the two-digit growth as a market-leading product. Respectable, I believe.

We have exciting times also in front of us. You know, of course, that we are more and more confronted with the intended launch of Prazotel. We are going to this launch with confidence, because we are waiting for the upcoming results of CURRENT, a 14,000 patient trial with a high loading dose of 300mg, respectively 600mg, which will be presented at the American Heart Association in November.

Meanwhile, the EMEA has approved the 300mg tablet mid of April, and of course this 300mg tablet is the right dosage from (technical difficulty) CURRENT will deliver positive results later in the year.

On page 13, then, Taxotere. Taxotere, I could report in the fourth quarter 2007 that we are, after significant efforts, to a two-digit growth outside the United States. And so I am content to report today that also in the U.S. the product is at a 14% growth for the first quarter. You see, then, further on the chart that the product has become the market-leading product in terms of market share in early breast cancer.

We have very interesting and additional support to be expected from a combination therapy with Herceptin and with Avastin. As you see from the chart, the data will be presented at ASCO. And yes, it will be supported potentially also by requests for expanding our package inserts and, of course, the package inserts of Herceptin and Avastin during the year.

Last word from my side now, on vaccine. The vaccine result, with a small growth only for the first quarter, may look, on first view, disappointing. I kindly ask you to be careful. The first quarter is traditionally very atypical for the overall performance of vaccines, due to the flu season mainly. To give you an indication, in 2007 our annual flu sales have been around EUR760m, out of which about EUR40m have been in the first quarter.

So, more importantly, again, we have a number of timing differences also on the other products. So we remain overall totally confident and optimistic that the first quarter will be more and more compensated by the upcoming quarter and that we will finish the year 2008, as we have finished 2007, with a two-digit growth rate. You may have also seen our very recent press release that we have agreed with the American government to deliver and to invoice already in the second quarter a delivery in vaccine against the avian flu, equivalent to approximately $200m.

So, for on the first quarter. So, in summary once again, we believe we have a reasonably good first quarter, which is the last quarter for a difficult time, looking on our portfolio in terms of generification early in 2007. And so I believe that it is a good indicator for further growth, in line with our expectations for the rest of the year.

So, for the R&D -- sorry. We continue to communicate, following the roadmap that we described in September '07 and confirmed in February '08.

So, first about sleep, we are waiting for the result of the third Phase III study for sleep and, as you can see, the result of GEMS. And as you can see, this further Phase III study is positive on both primary and secondary endpoints, so on the WASO and on the number of awakenings. What is interesting and confirming what was already observed in EPLILONG is the coherence of the result between week three and week six. We continue to say that with [Gamma-IJIK] it is very difficult to continue to have a certain effect after one month. Definitely, with this class, we have a very good effect which is sustained for a very long time.

At the same time, when you are looking at the full 50 for the two -- so next slide, slide 17, when you are looking to the full 50 of the two Phase III studies with three months' duration, you can see that we have a profile which is very similar to placebo. And I think it's interesting to compare with the safety profile of the Gamma-IJIK class.

Also, what is interesting, you know that we are developing two products of the same class in sleep. Eplivanserin is much more just for a simple sleep problem, while Volinanserin is for morbidity, or treatment of morbidity linked with the lack of sleep. And so we are presenting here the first results of the Phase III result which is confirmed for Volinanserin. And, as you can see again, which is I think also quite reassuring, with the trend potency of the class, we are showing a positivity -- a specifically significant positivity on both primary and secondary endpoints, so again on the WASO and the number of awakenings.

Now I think it's to Hanspeter to discuss a little bit the market of insomnia.

So, on page number 19, you'll find, in a rather genetic way, how we see this market of insomnia. So, evidently there is a large number of patients suffering. We divide the market, from our point of view, in two major groups, one with the target of sleep induction, the other one with repeated midnight or during the night awakening. And of course, there is a group of mixed people, as you see on the upper right side of the chart, as mixed insomnia.

What we tried to go for as a market segment is then what we have called with the abbreviation CINA, for chronic insomnia with night-time awakenings, on the right side. And you see that we target approximately 6m patients in the United States and nearly 11m patients in Europe.

So, if we are positive with our development program, we believe that the profile for Eplivanserin can be summarized as follows, on page number 20. First of all, we have a unique and first in class mode of action, the 5HT2 antagonist. We believe that we will have an optimal product profile, consisting of being a non-sedative hypnotic with no residual effects. We intend to increase the deep sleep, the important part of the sleep architecture, which means creating more restorative sleep. We further increase refreshing sleep, with a better following day functioning. And last but not least, serve an underserved population in being a safer product than the existing competition, especially for the elderly and those with respiratory depression.

So now, the second set of data available at the present time, so this is the result of Phase III for Saredutant, so the NK2 receptor antagonist in depression for elderly. So, it's page 21 is the result of the last, the EFC5574. As you can see, this study's going in a good direction but it's not reaching statistical significance. In fact, it is the same for the comparator, with Escitalopram. We still have positivity for a meta-analysis.

When you are going for page 22, you can see that we continue to have an excellent safety profile for this kind of product. And we are waiting now for the result of MAGENTA, which is the maintenance -- the treatment of mental depression. MAGENTA is the effect of the depression effect, sorry.

I now hand to Jean-Claude.

Okay. Thank you, Marc. Good morning, everybody. On the financial side now, as you all know, the dollar, the U.S. dollar/euro parity has been very depressed during this first quarter, since it was $1.50 to be compared to $1.31 during the first quarter of 2007. So that means that increase in comparable sales of plus 0.8% translates into minus 3.3% in reported net sales. And in that difference, the exchange rate amounts to 4.5%, 85% of which being derived from the U.S. dollar.

If we go to page 25 now, you will see, as we showed during the end of the year charts, the difference excluding exchange rate on each of the main line items of the P&L. I just explained the net sales, the minus 3.3% as compared to 0.8%, excluding exchange rate. When you do that on the R&D expenses, as you can see, we have a slight increase of 4% as compared to the first quarter of last year. And when it comes to SG&A, it's minus 0.7%. In other words, and I'll be back on that, we go on decreasing these expenses. Globally speaking, I mean at the operating income, current, the minus 7% translates to minus 1% in comparison to last year.

Page 26, giving a little bit more detail on these line items. The cost of sales increased to 27.2%, an additional 1.2% as compared to last year. It is directly derived from the negative impact of Ambien IR generics. We said some months ago that the 2008 average would be around 27% and, as we will see later on, we will have an improvement which will be derived from the end of the contract of Copaxone, so we are perfectly in line with what we said earlier.

R&D expenses, once again, 0.7%, 4% excluding exchange rate. And no significant rise in 2008, as we said earlier in the full year, which is confirmed.

SG&A, I guess it's worth noting that once again we decreased this line item, especially when we compare with the competition, which we did as of the end of this first quarter. We've seen that, on an average basis, the ratio is around 30%, with a slight increase, when we're showing a decrease by 0.4%. So let me there say that now we are, I believe, the lowest ratio among our big competitors and this is exactly in line, once again, with what we said in February.

A few words on other line item of the P&L. Interest expense, simply to say that the net debt is back to EUR4b. I remind you it was EUR4.2b at the end of 2007. That means an improvement by only EUR200m, but now it's after having bought back close to a EUR1b of shares. And, as a matter of fact, you may have seen in the press release that we have reached a little bit over EUR2.9b in that share buyback program by the mid April. And the Board yesterday decided to cancel the equivalent number of shares, which is a little bit over 51m shares.

Income tax expense, we are at 29.6%, which is what we forecasted. This is down 1 point versus last year and, I remind you, this is mainly due to the decrease of the German tax rate.

Share of profits of associates. Worth noting, obviously, the positive impact from the recovery of Plavix U.S. sales, but also an improvement in Sanofi Pasteur MSD contribution because of the Gardasil success. I remind you that the sales were 162m in this first quarter, I'm talking of Gardasil now, when they were at 23m in the first quarter of 2007.

Selected items, on page 28. Not much to report on the restructuring costs but, as you can see, there was this important gain in the first quarter of '07 in the tax area which distorts the comparison on our level of profitability, and that's what drives us to giving a look at page 29.

And this evolution from the adjusted net income and adjusted EPS, the last one being minus 10% as compared to the first quarter of '07. To come back to the excluding selected items, which is a positive one, plus 1.4% on the adjusted EPS basis, but I would say, even more importantly, which is a plus 15.7% when we are referring this EPS evolution in the U.S. dollar, which is the only way to compare with our competitors. And maybe you've seen the average evolution of this quarter in U.S. dollar reporting by our main competitors. I dare say that it's around plus 6%, plus 7%, so I guess that it compares well with the competition.

As promised, page 30, a few words on the Teva Copaxone contract in the U.S. and Canada. You all know now that this contract is over as far as selling and booking the sales of -- in the U.S. and Canada of Copaxone. We also said that we would get a compensation for 24 months beginning April 1, 2008. We've given, page 31, the example of the first quarter figures, how we used to report, how we've been reporting, including in Q1 2008. And, as you can see, on what we call the pro forma new contract we will show the equivalent under the other operating income line item. And I remind you, it's going to be 25% of the combined sales of the U.S. and Canada.

To finish up, so as a conclusion, we said a strong quarter simply because, once again, in U.S. dollar we are showing a pretty good performance. In addition to that, we are on track to deliver R&D result according to roadmap and we have pretty interesting results on Eplivanserin. So, once again, we feel it's an interesting quarter despite, as we said on the last quarter, the comparison, the negative comparison to Ambien IR and the weak dollar, obviously.

We further go on reducing our SG&A. We have moderate R&D expense growth once again, as we already said. We deliver also, once again, a good EPS growth. And to finish up with figures, as you can see on the last line, the ratio of profitability, which is net income on sales, once again increased from 26.6% to 27.1%. Once again, if you have a look to the competition, you could see that as an average there has been a decrease by 1% in the general industry.

Thank you very much.

Thank you, Doctor. Joanne, can we open up the call for questions and answers, please?

Thank you, sir. (OPERATOR INSTRUCTIONS). We will take our first question today from Tim Anderson from Bear Stearns. Please go ahead, sir.

Hi. Yes. It's Tim Anderson with Sanford Bernstein. A few questions for you. I'm hoping you can talk about the situation with generic versions of Lovenox potentially coming to market, given what Novartis and Momenta have recently been talking about. Are you anticipating that this could be a 2009 event? And if not, why not?

Second, on Lovenox, can you talk about how you see branded -- new branded competition to Lovenox emerging, in terms of the direct thrombin inhibitors or the Factor 10As and that sort of thing? What's Lovenox' defense against some of these compounds that may offer a dosing advantage and maybe an efficacy advantage?

And then, lastly, hoping you can reconfirm some of the new product filings in 2008 that you described in 2007. Are you still on track to file Multaq, S1 VEGF trap and Eplivanserin?

Okay, Tim. Perhaps I'll start with the two first questions, giving time to Marc to prepare for the third. Well, of course we have read last night Momenta's press release and you must understand that it's difficult for me to add anything to this. I have taken note that the FDA has asked for additional animal data, in vitro and in vivo. I have taken note that Momenta is hopeful to submit the requested data during the third quarter. So I cannot go very much beyond. So they are hopeful to do so in the third quarter, which may also indicate that they do it only in the fourth quarter. Then we have to see how the FDA is finally deciding on this file.

Overall, in the current climate, what we, of course, ought to feel directly as a market-leading company, there is of course a high, high sensitivity concerning side effects of this group of products, given the known incidents in the United States. And I believe it is fair to assume that this will sharpen the sensitivity of the FDA concerning this class of products even further, but beyond I cannot go.

To answer your question on 2009, it would be just speculating and I'm not here for doing this.

On branded competition, especially, of course, the new orals in this segment, as I said during my presentations, the new orals for the years to come will go for approximately 10% of Lovenox potential. We believe that we have a very solid line of defense. We see a vast spectrum of indications for Lovenox, which means 90% more of market which we have secured. I believe that a further line may be cost. And, of course, we have to see how those new oral products will perform in terms of clinical results. This is true for efficacy, but it is definitely also true for side effects, where this class, as you know, has a certain difficult track record.

Nevertheless, as you know, also Sanofi-Aventis is doing research in this field, which will take us a couple of years. But we feel that, overall, we are very well prepared to resist, for the two or three years to come, the upcoming new competition for the reasons given.

Now, on the filing dates, I pass on to Marc.

So, the filing is also -- it's always a difficult question. Just we are on time with results, so of course filing with the -- depending on the results, so when we are going to that for Eplivanserin. Now we have the third Phase III, so we have good reason to think that we should submit this year for sleep. For Multaq, you all know that the data will be presented in San Francisco. I think it's at 11am on Friday the 15th.

On the two oncological products, we are waiting for the result when it's flagged S-1. For VEGF, we always said that the ovarian cancer is a little bit of a risky submission, just because of the design of the study, not of the quality of the product but the design of the study.

So now you have the most risky group for submission is the depressive or anti-depressive group. So for Amibegron we are still waiting for positive data, as we said in February. For Saredutant, of course we would have preferred a positive study in (inaudible). We have a failed study, so it's not going in the good direction. At the same time, it is not totally wasted, it's not jeopardizing the filing. So we are still waiting, as I said before. We are still waiting for the MAGENTA results. We are also, at the last extremity, waiting for the result of Saredutant on top of SSRI or SNRI.

Thank you.

Thank you.

Can we have the next question, please?

Thank you. We'll take our next question today from John Murphy from Goldman Sachs. Please go ahead, sir.

Yes, thanks a lot. Good morning. Three questions, please, two for Jean-Claude first. As you mentioned, you had a very strong quarter here. No increase in guidance at this stage and I just wonder why that might be the case.

Second, within your guidance for the full year, can you tell us what assumptions should be with regard to buyback? In other words, the 7% growth at constant euro/dollar parity, which is off 5.17, can we also assume that's off net income of [69.61] or are there assumptions on buyback there?

And then, third, for Marc, I wasn't clear, and apologies for this, on Volinanserin, how that is actually going to be differentiated from Eplivanserin. Thanks.

Okay. To say that we reiterated our guidance in our press release this morning and let me simply say that we're still at the end of the first quarter. So we believe that it's a bit early in the year to reshuffle everything, relative the figures. So we'll do that for mid-year and that will be my answer to this question.

Coming to the share buyback program, let me give you an impact. This year, I'm talking of the 2008 figure, the EPS is going be positively impacted by around 2% because of the share buyback, and this is obviously included in our 2008 guidance. Now, you may remember that when we began last year the share buyback, I mean some time in September, we had only an impact of 0.3%, 0.4% on the EPS evolution. In other words, what we've done is of magnitude. What you do by the end of the year is, in any case, not very influential on EPS evolution.

Thanks.

For Volinanserin, I think it was described at the R&D Day, we are taking the hypothesis that the lack of sleep is inducing some kind of morbidity, and especially one which is (inaudible). So we are looking at the effect of Volinaserin in improving the (inaudible) people, of course, with lack of sleep.

Thanks a lot.

Thank you. We'll take our next question today from Kevin Scotcher from HSBC. Please go ahead, sir.

Thanks very much. I've got a couple of questions. Firstly, on Lovenox generics, can you explain to us whether the Citizen Petition process is different to the process that Momenta made their announcement about last night with regard to generic Lovenox? And if it is different, what is different and is there any update there?

Secondly, on Saredutant, if I heard you correctly, you said that the recent negative study does not jeopardize the filing of Saredutant. I thought you were going to file in '08, but it appears from your statement that there won't be a filing in '08 now. Am I wrong relative to time lines there?

And finally, a question just clarifying the share buyback impact for '08. Is that 2% just the current shares that you've bought back before the AGM may or may not change the share buyback program or announce a new one? Or does that 2% include what you may or may not be announcing at the AGM? Thank you.

Okay. I'll take the last one to clarify. The 2% is only the impact of the share buyback which is now finished. And once again, it's only the impact in 2008 and in that you would have to add up the impact which I mentioned in 2007 and remaining impact in 2009, simply because we added up April 15. I mean by that that the global impact on the EPS is around 3%, once again, 2% of which being the impact in 2008. And that takes care only, if I make it this way, of the share buy -- the existing share buyback program.

For Saredutant, no, I think I've not been clear enough. The only problem is that when you have a failed study, the FDA is looking at the study and is taking its own point of view about if it is a fail or a negative study. So the fact you have now three failed studies within our dossier is, of course, putting a little bit more at risk the submission of the product. But we still think that, first, the excellent safety profile of the product is confirmed. At the same time, the product is always -- the results are always getting or going, sorry, in the good direction, so its superiority versus placebo. So, as I said, it is -- we have the feeling that the result of MAGENTA will be quite important for the decision to submit the product this year.

Thank you.

So, on the first question, frankly, I have difficulties to construct a context between Momenta and the Citizen Petitions. Those are two totally independent initiatives and I have difficulty to put them together under the same roof. What Momenta has communicated is that they have understood the FDA. It's their understanding that the FDA has requested animal data, which is what they have potentially received from the FDA. What the Citizen Petitions have claimed for is much larger, of course. In very rough terms, the Citizen Petition says that those products, the biogenerics in the field of Heparin, have to be seen with care. So I cannot go any further and I kindly ask you to understand that.

Thank you.

Thank you. We'll take our next question today from Graham Parry from Merrill Lynch. Please go ahead.

Thanks for taking my question. Firstly, on Multaq, I was just wondering if you could confirm whether you now have the data in-house and the fact that you're flagging the upcoming data at a conference is indicating any confidence in the product.

Secondly, on the Copaxone agreement with Teva, I was just wondering, could you just detail any cost reduction in terms of your detailing of the products that will be going through the P&L from April onwards?

And also, could you just detail for us how the agreement plays out for territories outside the U.S.? I think, from 2010, Teva can begin to regain some rights there, but most of this is from 2012. So could you just give us some feel for what the -- or how that agreement changes from 2010 onwards? Thanks.

Okay. On Teva, as a matter of fact, we were not promoting directly with [our own sales] the Copaxone product. We were participating in the cost, which is totally different. So we don't have no impact to expect from the interaction they had of this contract in the U.S. and Canada. When it comes to Europe, you're right, the contract will have [an add] later on to 2008, to 2012, depending on the countries. And the same kind of mechanism should apply when this contract interacts. So that takes care of Teva.

So, for Multaq, I think I have already answered this point at the first question. So, if I can [in person] go to San Francisco, the presentation will be at 11am Friday morning the 15th.

You see, of course we are in a certain dilemma because there is a financial and an economic interest and there is, of course, a scientific interest. And the attitude of Sanofi-Aventis is to give priority to the scientific interest, which means to give those people, which means investigators, who have worked all the years on this project, the first opportunity to expose the results and discuss them on a scientific level, which is the attitude we exercise not only in the context of Multaq but with all our other major pivotal trials.

Thank you. Joanne, are there any other questions?

Thank you. We'll take our next question today from Alexandra Hauber from Bear Stearns. Please go ahead.

Good morning. I've got three questions. First, you mentioned the low yields of the influenza vaccines for the southern hemisphere, due to the formulation change. And can you remind us how much the southern formulation changed relative to -- compared to the northern formulation, which has totally changed, and whether, based on the low yields here, there was any sort of preliminary conclusions we should have for yields for the vaccine for the northern hemisphere?

The second question is on COGS. You mentioned continuing adaptation measures and, Copaxone aside, is there really any absolute upside to that COGS ratio or are the adaptation measures just there to keep you where you are, given negative mix effect?

And sorry to have to come back to Saredutant, and I hope I did catch everything which was said up to this point. I was under the impression that MAGENTA is not required for the U.S. filing, other than the long-term safety data. Is that still correct? And therefore, why wouldn't you go ahead with the Saredutant U.S. filing later this year, assuming there is nothing wrong with the safety in MAGENTA?

Perhaps we'll start with the yield question on southern hemisphere and northern. Sanjay?

Okay. Alexandra, it's quite unprecedented that the FDA and the World Health Organization decided to change all three strains. So for the northern hemisphere, in the 2008/2009 season, they've decided to change all three strains. That adds considerably to the complexity of the production process. So, as we speak, it's kind of early in the year for us to tell you what would be the impact. Our last year's production was roughly 170m doses, so we think in 2008/2009 we should be in a position to produce 170m doses again. The key question is at which month would you be able to deliver. So I think it's difficult to predict, at the point that we speak, whether it would be a Q3 or a Q4 delivery.

So you think the complexity's more going to affect the timing, rather than the absolute amount?

At this point, when we're talking right now, that's what we would think, yes.

And is that similar also to the (multiple speakers)?

So it's more an effect of timing than of the quantities delivered. And our target, and we feel confident about it, is to deliver 170m doses.

And is that, then, similar with the southern hemisphere vaccine that -- or is that -- actually, I guess that's probably moot now because -- are you still delivering, therefore, more in the second quarter?

No, it's very little. It's mostly a first quarter event. And then also in the southern hemisphere what the World Health Organization changed were two strains and not three strains. So what has happened is that we have expertise in making these two strains and that's why there was a lower yield, but we think that we can catch up for the northern hemisphere.

Thank you.

Coming back to the Copaxone, in fact, when you go to slide -- chart page 31, as you can see, it's only a quarter, but the SG&A value is only EUR50m, around EUR50m, so we are talking of small figures on a yearly basis as compared to the global company figures. So, yes, it's going to improve, but a very little bit when it comes to percentage of evolution. And obviously, we are confirming that the kind of measures of adaptation we have been taking all along during '07 and beginning of '08, we go on as we have told you we would do, depending on the situation of the countries where we have the greatest difficulty. So this is the -- I guess it takes care of the Copaxone issue.

Sorry, I apologize. My question was probably not very clear. I meant when you strip the Copaxone effect out, that the COGS -- can the COGS ratio actually improve from the current levels, based on your adaptation measures, or are the adaptation measures more likely to keep you where you are, given the mix effect?

The answer would be slightly equivalent. If you look to that chart page 31, you'll see that the COGS on the Copaxone was over 50%. So, yes, when you remove, it's going to increase a little bit the ratio, but at the same token, as we've written on page 26, we'll go on on the adaptation process measures also in the industrial area, and I'm sure you've heard about that, even though we don't mention that very loudly. We've taken a certain number of decisions in this area. So be sure that it's -- the improvement is not only -- or the stabilization is not only to come from the interaction of the contract with Teva.

So, for Saredutant and depression, you are right, the FDA is not requiring a long-term study in depression, except that in fact they asked for it two years ago, I think, and after that it was dismissed by an advisory committee. But you know the results of MAGENTA are coming rather soon, so we think it's very difficult to submit a dossier in depression with a large study and long term, with, in fact, the wish of the FDA of getting long-term data. So I think it's quite difficult to submit without the result of MAGENTA. And of course, since we will have the result of MAGENTA within the dossier, it's difficult to be 100% sure to submit without having a look at the result of MAGENTA. And in fact, I think for that we were clear from the beginning. We always said that we were waiting for the result of the two studies before to take the final decision to submit.

Okay. Thank you.

Thank you. We'll take our next question today from Tim Walton from Lehman Brothers. Please go ahead.

I guess that's me, Jo Walton. I've got two questions, one on Eplivanserin and one more general. So, on Eplivanserin, are you happy that the FDA is going to believe that patient-reported data is good enough? I understand that in the past you've not had success looking at polysomnographic evidence here.

Secondly, looking at the adverse events, you see 1.2% with depression versus 0.8% in the placebo. Do you think that that could give the FDA any cause for concern?

And finally, do you have any data on slow sleep wave or drug impact on time to sleep onset? I mean any positive or negative data.

And on the general comment, you've suggested that your SG&A is one of the lowest in the industry. How do you think you've managed to drive sales with that very low SG&A? Is it something to do with your geographic mix and the fact that you are so strong in some of these emerging markets? And is that a trend, as you continue to grow in those, that we'll be able to see the SG&A come down even further? Or is this purely a temporary phenomenon and, when you have got another five new products to launch in the next couple of years, that SG&A will go up again?

Yes. Good morning, Jo. So perhaps I'll take the last one. First, I believe it's a mix. It's a mix of what you say, yes, we are strong in the developing parts of the market, but let's not overlook that in those markets we still have a direct function between the number of sales representatives and the growth of our sales. But it is fair to say, it's not very nice, but it's factual, that the cost of promotion in those countries today still is relatively, not to say, very low compared to, let's say, the European or the American market.

So we are benefiting from this. And the other side I believe we are benefiting from is that we have started in 2006, already, to carefully reduce our overall promotional headcount in the U.S. and in Europe, anticipating that there is a significant change, as you know, of course, in the way decision-making takes place in the pharmaceutical market. Now, in simple terms, you don't need any more those large fleets of pharmaceutical sales forces. We have adapted to this relatively early. We have driven, since 2007, further regionalization, as I outlined in my presentation, in the U.S. and also in major European markets such as Italy and United Kingdom, and we are benefiting from this.

When I look into the future, it of course depends how those products we are working -- will finish in terms of clinical trials, but I believe it's fair to say that many of those products will replace products we are promoting today, if I think on the continuation of our portfolio for Lovenox, if I look to what we tried to do in diabetes. Some of those products are also targeting, in very selective marketing models, everything we do in oncology, first of all, but not only. So, overall, I don't believe that our promotional costs, proportionally to our sales, will increase for the years to come, in contrary.

So, for Eplivanserin, you're right that the fact that we are not particularly significant at six weeks will be the point of discussion with the FDA. At the same time, I still would like to remember that we have a positivity on the polysomnography at week three and also on number of awakenings at week three and at week six. At the same time, we are very clear on the results in terms of safety. In fact, the profile of Eplivanserin, (inaudible) this was an anticipated action, so we have no specific concern about depression.

We have absolutely no effect on induction, in that way, that people are going -- are falling asleep exactly at the same time with placebo or our product. And we have -- but there is plenty of data with the 5-HT2 receptor antagonist, showing that with this kind of drug, and in fact we have also this kind of data in our study, showing that you decrease Stage 1 mainly, a little bit of Stage 2 and you increase Stage 3 and a little bit of Stage 4 without activity on REM. I think I've answered the question.

Thank you.

Thank you. We'll take our next question today from Sebastien Berthon from Exane. Please go ahead.

Yes. Hello, gentlemen. Sebastien Berthon from Exane BNP Paribas. Just to follow up on Eplivanserin and the polysomnography data, would you consider starting another polysomnographic study to address any potential U.S. FDA concerns?

And with regard to Lovenox and Plavix appeals, could you update us on when do you expect any element from that?

And lastly, with Saredutant, what is the timing for data for the use of Saredutant on top of SSRI? Thanks.

Plavix appeals, (multiple speakers).

Okay. Plavix appeal, as you know, that the appeal took place at the beginning of the year. And as usual, this -- sorry, but we don't know the date, nobody knows. It's only the Judge's decision, or in this case a Judge's decision of the Court of Appeal, so it might be any time, weeks, months, we don't know. Sorry.

And for the Lovenox, it -- the appeal took place back in January and that's going to be the same, I'm sure, unfortunately. We don't know because there is no [agenda rule] in the United States for these appeals, so it might be any time. But we have no clue, sorry, or otherwise we would obviously tell you.

So, for Saredutant, the result on top, the first result should be available at the turning of this year. For Eplivanserin, most of the time we're not commenting, but we are doing with the FDA too much, but we have no specific plan to perform another PSG at the present time. It does not mean that we are not performing some polysomnography, because you know that we are interested by some kind of [prediction], especially above 65 years old.

Thank you.

Thank you. We'll take our next question now from Philippe Lanone from Natixis. Please go ahead.

Good morning. Most of my questions have been answered, but two quick ones. Number one, Lovenox, has there been any impact of the Heparin discussions, the contaminant, meaning has there been any one-off aspects in the first quarter? I know that there have been some inventory shortages in France, for instance.

And the second question, on share buyback. The authorizations for the Annual General Meeting are of a 10% share buyback and that means 7% considering what has been already done. What is your view today? Are you going to implement that at the same kind of rhythm that we have had so far, or are you going to accelerate that level?

On the share buyback question, you've seen that, as I said, we have finished, we're through with the EUR3b program, meaning that we've bought back around 3.8% of the whole share capital. I said that because yesterday these shares were -- once again were cancelled. For the future, you know that we are going, each year, like every other company, to request an authorization from the AGM for a new share buyback program. The maximum in France is 10%, so we ask for 10%, but that has no other meaning than utilizing the potentiality of the law. And for the rest, it's going to be up to the Board to decide whether or not we put in place another share buyback program. So, today, I can't say more about that.

So, on the Heparin environment, it's impossible to really quantify for evident reasons. To make it simple, we have a strong underlying growth of two digits on a worldwide level. I believe that there is some positive additional growth in our figures in the United States, simply because we have had no negative effects in the U.S. at all on Lovenox, given the fact that we don't source from China for the U.S. In Europe, the situation is more mixed because, as you know, in some of the markets we have put on hold all the single batches of our products, or the authorities have done so.

So I believe that what you see in Europe is the overall classical picture. And a certain backwind in the United Sates, but I cannot be any more specific because we just cannot differentiate where the growth comes from for our product, which had a strong positive two-digit growth already before the [event].

Okay.

Thank you. We'll take our next question today from Andrew Baum from Morgan Stanley. Please go ahead.

Good morning. Three quick questions. First, Novartis and Momenta are obviously trying to help you increase your goal of exposure to emerging markets. Are there any additional avenues open to you, in terms of finding new Citizen's Petitions, or is what you've done the limit and it's just a matter of waiting?

Second, on Eplivanserin, could you just give us some light of discussions you've had with the payers, giving the availability of Traperzone, and also remind us on the composition of matter patents on Eplivanserin?

And then, finally, for Jean-Claude, to what extend is the potential approval of Prasugrel in the U.S. market a swing factor in the change or no change to your guidance for full year 2008?

Andrew, good morning. So, on the first question, kindly understand that we will not discuss our further strategy in our defense of Lovenox versus upcoming generic competition. And this also concerns our policy, eventual further initiatives in the sense of Citizen Petitions.

And also accept that we are aware of the Momenta statement since last night and the first thing we did today was preparing for this call today, so we will see if there is an opportunity.

On the patent side, Andrew, the Eplivanserin patent expires in December of 2009 and we would expect this to be augmented by the patent term extension, as the (inaudible) will be launched in Europe and the U.S.

Coming to your question on Prasugrel and the guidance, obviously we all know that there is a potentiality of a launch of Prasugrel at any time this year. But we also know, we all know, that the part of the market which would be touched by the product, when compared to the Plavix market, is rather a small percentage. So the answer is we are not going to change the guidance whether or not the product is launched this year.

I guess I was thinking more of the SG&A costs associated that you may wish to put behind Plavix, given there is a new entrant, rather than the impact on revenues in the near term.

All of that is already factored in, in our guidance.

Okay. Thank you.

Thank you. We'll now move to Marietta Miemietz from Societe Generale. Please go ahead.

Yes, good morning. A couple of timing questions on the pipeline for Saredutant. Can you just give us a reason why MAGENTA is delayed from the second to the third quarter, and maybe what month you're expecting the MAGENTA data now?

And then, in terms of the submission, I guess we could be getting pretty close to the end of the year for the Saredutant submission, which means you would be submitting very shortly before the first SSRI combo data would become available. So is there a chance you might actually have to wait for those data, to include them in the dossier?

And just quickly on Eplivanserin, when exactly do you think that the long-term data that you still need for filing could be available?

And finally, a quick financial question. Copaxone, the sales look very strong this quarter, so I was just wondering is that underlying demand or was there any stocking in there, or maybe any funny impact from the Teva contract that's phasing out? Thank you very much.

The last one, very quickly, no funny impact, nothing special during this quarter, when it comes to Copaxone in the U.S.

Thank you.

For Eplivanserin, we can file without the long-term data, so I think the submission is still at this time. And second, I think we never said if it was the second, the third semester and so. We always give our guidance, which I think is already quite precise, by semester. So we are waiting for the result of MAGENTA, which are scheduled at the same time as before. Again, I think that submission will be partly depending on the result of MAGENTA, because if we have some bad signal we will change our point of view. If we have excellent safety, if we have no safety signal, and if at the same time we have good date on maintenance, it will reinforce the dossier. So, after that, we will see, we will adapt, based on the result.

Marietta, is there anything else?

No, that's it. Thank you very much.

Thank you. We'll now take our next question from Ben Yeoh from Dresdner. Please go ahead.

Thank you. Just a couple of follow-up questions. Just on Multaq, both on the filing strategy and on ATHENA, I was just wondering, have you met with the FDA to discuss the ATHENA study yet, or are you going to wait till after the conference?

And then, just on Prasugrel, will you be changing the sales force strategy to deal with a possible launch of that drug, or is it basically going to be the same strategy that you've been following before?

Starting with Prasugrel, it depends, of course, what labeling Prasugrel will get, but we anticipate today that this is a labeling which will largely focus on the (inaudible) and nothing else. So, suppose that the product would be approved in this sense, what we would consider is strengthening our pressure in (inaudible), which is a relatively limited market. So we have the necessary muscle to become even stronger there, but this would not translate into a sizeable increase of our SG&A.

Great. Thanks.

For Multaq, I understand, I appreciate your effort to try to have some kind of idea about the result. But, as Hanspeter said, we are taking -- in fact, we have taken the decision a long time ago for very important results to have them presented at scientific communities. So, again, results will be presented at San Francisco.

Thank you.

Thank you. We will now move to Louisa Hector from Lehman Brothers. Please go ahead.

Good morning. Two questions, please. The first one is on your cholesterol absorption inhibitor, 5530. At the full year results, you were very confident about moving into Phase III in the second half. Did anything change in that assumption, after the fallout from the ACC around the Zetia/Vytorin situation?

And then, on Lantus, I was just interested to see your slide on the tiering there. So I noticed that Lantus was purely tier three as recently as 2007. Can you just discuss why that was, what changed? Is it your discounting policy? What has led to you increasing your tier two access and do you see that continuing?

Louisa, I think the slide mentions Lantus SoloSTAR, not (multiple speakers).

It is SoloSTAR; it is not Lantus.

Oh, okay. So, it's divided, yes

Yes, and SoloSTAR is only a couple of months available, so naturally we could not have any access before. But what we tried to show was that we have received a very positive response in terms of access with this new device.

Okay. Thank you.

And for cholesterol inhibitor AVE 5530, no, we have no change in our plan. In fact, there is some kind of confirmation of what we said with another company because, just for the indication, a reduction of LDL, there was no requirement at the FDA of a long-term outcome study, except if the Company wanted to have a specific outcome in the application, outcome claim in the application.

Okay. So your Phase III will be looking at LDL reduction only?

Clear. As a good surrogate endpoint so far.

Okay. Thank you.

Thank you. We will now take our next question from Amit Roy from Citigroup. Please go ahead.

Hello, yes. Thank you. Just a couple more questions on Lovenox and one on Multaq. Firstly, on Lovenox, what is the average duration you have on your contracts? I believe you have hospital contracts on Lovenox. What is their average duration?

And secondly, Lovenox went generic in Canada a while ago now and I think I asked this question about a year ago, in terms of what the impact was like there from the Apotex version. It's been a year since then. Are you still having any impact from the Apotex Lovenox generic in Canada or not?

And thirdly, on Multaq, assuming you have no worsening in mortality with the drug but you do have an improvement in hospitalization, I assume you will still try to file that with the FDA?

And on that premise, in Europe, my understanding is they are looking for head-to-head data with Amiodarone and you've started that study. When would that study come through and then, hence, when would you have a European filing? Thank you.

So, starting on Lovenox, on Canada it was not Apotex, it is Teva. For reasons we believe to understand, but which have been never really mentioned, the product has been never commercialized. There may be some difficulties in the sourcing of the product or lack of commercial interest, I don't know. The fact is that the product has never been commercialized, at least so far, in Canada.

On Multaq, the primary endpoint which was discussed by the FDA following the result of EURIDIS, ADONIS and ANDROMEDA is a mixed primary endpoint of hospitalization and total death. So we'll see the result and have a document on that. On Europe, we have -- I will not comment either, but we have an agreement. So the timing of the two filings will be similar in Europe and the U.S. But it is true that we have to include in our filing, at one time, a comparison versus Amiodarone in Europe.

And just a last question on the length of the Lovenox contracts you have with hospitals. Is that -- what is the average duration of that?

This is a very sensitive question and I don't want to elaborate on our commercial strategies. But, of course, the duration of those contracts varies, but of course, and it goes, I believe, without saying, we have an interest to make those contracts as long as possible. But I cannot give you more details about this.

All right. Thank you very much.

Thank you. We will now take our next question from Thierry Verrecchia from Raymond Jones. Please go ahead.

Yes. It's Thierry Verrecchia at Raymond Jones. Three questions. First, there seems to be some price increases in Plavix in the U.S, given that BMS mentioned some underlying trend of around 4% and you mentioned an 11% underlying, or perhaps there is another event implemented or stock activity or if you can clarify that.

Second, in terms of restructuring costs, we had EUR20m in the first quarter. Do you expect some other restructuring costs in the coming quarters, or at least for the second quarter?

And the third question on Eloxatin. Could you update us on which of the European countries the generics are not yet available and what we can expect, at least for 2008? Thank you.

I'll start with Eloxatin. I think it's fair to say that we have generic competition in all major markets. So perhaps I overlooked something, but if so it would be really a minor market, a small market. In all other markets, we have generics available. We don't always have available ready to use formulations, which means in some markets, or some major markets, we may have a certain edge. What is the overall impact, the overall impact is that due to our overall philosophy we have a very flexible price policy, which means the aim is to maintain volume. We are very successful in doing so. We maintain volume between 60% and 90% of the market, at partially very much lower prices, of course, but we are confronted everywhere with these generics.

Now, on the Plavix price question in the U.S., there has been one price increase which was announced in December '07, which was 6.5% on a nominal level, which translates into an absolute price increase which is slightly lower. Currently, the growth rate of prescriptions in the first quarter or total prescriptions in the U.S. is 4%.

On the restructuring costs, I'll pass on to Jean-Claude.

Restructuring, you know that we've been -- within these restructuring costs are selected items. So, we are giving guidance and reporting before selected items and this is the best -- my best answer. We're not going to anticipate whether or not we're going to have some restructuring. You know that we don't want to manage the Company this way. But fortunately, looking at the before selected items result and guidance, you have the good answer since they are not included in these figures.

Joanne, I think we have time for one last question, please?

Thank you, sir. We'll take our last question today from Laurent Flamme from Cheuvreaux. Please go ahead.

Yes. Good morning, gentlemen. Specifically a question to Jean-Marc on Saredutant, a follow-up, just to clarify the possible strategy for filing. In case MAGENTA comes negative, would you wait for the comparative data versus SSRI and SNRI to file, or would you need definitely this good maintenance data study to file?

I'm not Jean-Marc. I'm Marc, at least. I'm sorry. Just -- in fact, we have done a lot of studies versus SSRI, SNRI, so the new set of studies is on top of SSRI/SNRI. I think we -- it's very difficult to say. Filing will be depending, of course, on the result of MAGENTA. Filing will be also depending how the FDA will consider if our first study are a (inaudible) study or a negative study. So I think difficult, at this time, without the full dossier in hand, to know exactly where we will go. At the same time, we still think that the advantage of this product is -- we already said that it is, at least on the mid-term scale, it is less effective as SNRI, but it has an excellent safety profile and it's a brand new class. So we'll see.

Okay. I think that brings us to an end of our Q1 conference call. Thank you very much for attending. And if there are any further questions, myself and the rest of my team will remain at your disposal. Thank you.

That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.