Sanofi SA (SNY) 2012 Q3 法說會逐字稿

Ladies and gentlemen welcome to the Sanofi 2012 third quarter results conference call. (Operator Instructions). I now hand over to Mr. Sebastien Martel, Head of Investor Relations. Sir, please go ahead.

Thank you. Good afternoon and good morning. Welcome to our third quarter conference call. As always, I'd like to draw your attention to the Safe Harbor Statement.

I must advise you that the information presented into today's call will contain forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to differ materially. And I would suggest that you refer to our Form 20-F on file with the SEC and also our document de reference for a description of those risk factors.

So with us today on the call are Chris Viehbacher, our CEO; Hanspeter Spek, our President of Global Operations; Olivier Charmeil, our SVP for Vaccines; as well as Jerome Contamine, our Chief Financial Officer. Without any further ado let me turn the call over to Chris.

Thank you Sebastien. Hello everyone. We'll move straight to slide five where you can see the quarterly sales and the year to date sales. As you can see, on a reported basis, sales were up to just over EUR9b. On a constant exchange rate basis, that's a decrease of 3.1%.

Versus the prior two quarters in the year, this is a quarter where we've had a new product come into the list of those facing generic competition, and that's namely Eloxatin which faced generic competition really from early August onwards.

On a year to date basis, the sales continued to grow, even at CER. That's also because we consolidated two quarters of -- sorry three quarters of Genzyme last year. Or if I look on a nine month basis, two quarters of Genzyme in 2011 and three quarters in 2012. Obviously, the lower euro had a very favorable effect on our accounts again in the third quarter. Jerome will cover that in a little bit more detail.

If we look at the profit numbers on page six, there we see that quarterly business earnings per share declined at 14.5% at constant exchange rate. This is of course, to a great degree, driven by Plavix and Avapro on the profit line, and Eloxatin, but also the fact that we no longer have Copaxone sales revenues in our numbers. On a year to date basis, the decline is 8.4%.

If I look to page seven, this is a slide that we have used before and really over the last three years, and really tells the tale of the transformation of Sanofi. In the second quarter of 2009, the products that really added up to EUR2.2b really represented the patent cliff for the Company on a sales line, remembering that Plavix and Avapro in the US are consolidated in sales.

And if we look at what happened to that EUR2.2b over the last three years, we can see that there has been a steady erosion and what's left is essentially EUR400m of sales, or about 4.4% of total sales. So what you really see is that with the generic competition for Eloxatin, this is really in a lot of ways the last step in the decline of those former glory day blockbusters.

The real effort of course has been on the right side of the page. These were the growth platforms that we had to find in 2009. At that time they represented EUR3.3b of sales and really were less than 40% of sales. As you can see that really over the last three years, we've been able to almost double those growth platforms. And today they represent EUR6.4b on a quarterly basis and 70.9% of total sales.

So what I would say before we go into too much detail on the underlying results is that I think Q3 is completely in line with the solid progress that the Company has been making through, getting through the patent cliff and preparing for a new future. These results are completely in line with our expectations looking out towards 2015; the guidance that we gave back in September of 2011, so very satisfactory performance really on all fronts.

Now if we look a little bit in detail on page eight you can see the growth platforms. They grew 6.4% in the quarter. Nothing -- I won't go into all of them because Hanspeter will talk about some. I'll just point out a few.

Emerging markets of 6.8%, I would just caution everybody about not over-analyzing emerging market quarterly sales. We have a pristine situation in the United States where we have three wholesalers. 90% of the business goes through them. We get daily stock levels. We get weekly prescriptions. That contrasts with the Chinese market where you may have hundreds of primary, secondary, tertiary wholesalers. In some countries you've got tender businesses. So we are not going to see the nice smooth evolution always on a quarter to quarter basis. And that's why we prefer to guide you around performance on a full year basis. And Hanspeter will be able to give you a little bit more detail.

Diabetes is clearly a star performer here. A very satisfactory performance. But I think Hanspeter will also point out a number of things that really show the Company orienting itself to a diabetes franchise in emerging markets.

I will point out New Genzyme. This was clearly an important step in the Company's history as Genzyme joined the Sanofi Group. The critical element was being able to have recovery in the manufacturing. And I think when you see the very robust growth of 22.5%, this is a very strong indicator of how the manufacturing has rebounded, clearly driven by the recovery of Fabrazyme, but also very high single digit growth on a constant exchange rate basis from Myozyme and for Cerezyme.

I remind you that New Genzyme is essentially the rare disease business and also will be the launch company for Aubagio and for Genzyme.

Innovative Products, when you look at it from a growth platform point of view, is still very low. But I think when I come onto some of the things in the pipeline, I think this is an area where we can see significant growth for the future.

Looking at slide nine, this just gives you a little bit more detail again of the Genzyme performance.

On the Fabrazyme, clearly, this was related to the approval of the new Framingham plant in January. We are subsequently getting other countries on board from US, Europe and all the way out into Japan.

The withdrawal of Shire's product Replagal, which was a present and -- in a compassionate release program because they had their BLA outstanding, has obviously allowed us to convert patients from them to Fabrazyme. But we're also making good progress at regaining market share outside the United States.

Turning to slide 10, this is a -- we announced results for a third quarter study called ENGAGE. This is a new oral therapy in Gaucher disease. And you can see that this first set of Phase III results demonstrated an absolute difference of 30% in spleen volume, which is a key marker for efficacy of a product.

What we have seen -- these are nine months results. What we have seen with Cerezyme as well is that as you begin to treat patients, there is a progressive decrease in spleen volume. So our own first -- our own interpretation of this is that Eliglustat is demonstrating comparable efficacy to Cerezyme but obviously with the convenience of an oral form. These of course need to be validated with the results of a second Phase III study called ENCORE, which will be a study versus Cerezyme which will be expected in early 2013.

Slide 11, we've had two major approvals here, particularly with Aubagio. I had very good conversations at the ECTRIMS conference in Lyon a couple of weeks ago with key opinion leaders. And I was very satisfied with the favorable reception that key opinion leaders have for the product.

Clearly, this is an oral and has a huge implication for people who are going to be on treatment for 20 or 30 years. And given that this is -- has been able to demonstrate strong efficacy against Interferon but with the convenience of an oral, that we believe that this will be a very strong performer.

I would just point out one thing on Aubagio. The neurology community in multiple sclerosis is by nature a very conservative community. The Tysabri situation a number of years ago clearly enhanced that conservatism. The interesting -- and so new products are still looked at with some degree of caution until a safety record has been established. And that's why we still see 80% of patients being treated with Interferon or Copaxone.

However, given that this is a metabolite of Leflunomide, there is actually quite a long safety story with this and I was actually hearing that there is a little bit more confidence given this history. So we'll have to wait and see how the uptake is on that.

On Zaltrap, clearly, approval for second line metastatic colorectal cancer. Again initial results seem to be promising, but it's early days. We've had sales of EUR7m since late August of 2012.

Looking forward to regulatory milestones, milestones over the next six months on slide 12, the first thing I'll say is that we are starting to get regular news flow now on the R&D story.

So I think this is a -- when I kind of looked out towards 2013 back in 2009 we were projecting out on the growth platforms and on where sales and profits were going to go, but our ambition was also was to have a decent late stage pipeline by 2013. We knew that would take time.

And I would say when you start looking at the news flow and the number of molecules we have now in Phase III, I think there are 17 molecules in Phase III, I think Sanofi's R&D outlook is looking much, much more robust.

On the specific milestones, Zaltrap clearly, we are expecting CHMP opinion in the fourth quarter along with Lyxumia. We are on track to submit to the FDA by the end of the year.

You've seen the Advisory Committee which voted in favor of Kynamro for homozygous familial hypercholesterolemia just last week with the PDUFA date in January, and an European opinion in the fourth quarter of this year.

Equally, the CHMP opinion on Aubagio is expected in Q1.

The re-filing of Lemtrada is -- there is nothing new on that. It's exactly as we said when we announced that we would be re-filing.

The -- I would alert you to the fact that we are going to revert to past practice, which is that we will announce filings at the time of FDA acceptance of a file.

We had made originally an exception with Lemtrada because of the proposed buyback for the CVR. Now that the -- that modified dioxin has taken place, we are going to -- we'll make a statement once we've had a decision by the FDA on the acceptance of the dossier.

And, of course, we are actually having a nice upside in the sense of being able to now awaiting approval for the Hexavalent vaccine in Europe, which we would hope for in the second half of 2013.

Looking out for the year on page 13, if I look at where the business is going, I think again this is very solid progress. Very good performance of our growth platforms in particular diabetes and Genzyme.

We continue to be disciplined on cost, but I would also point out that we have used some of that discipline on cost to reinvest which you don't always see. Significant investment has gone on to create a whole new multiple sclerosis team, for example. Phase III programs on things like the PCSK9, the Dengue vaccine. So, we have discipline on costs, but largely what we are trying to do is take out non-productive cost and make sure that growth drivers for the future are also well funded.

So -- and that's led to good operating margins. There are -- I'll let Jerome talk about some small tax rate improvements. What's going on in the marketplace is what you see with our -- some of our competitor results. The EU is not getting any easier. I wouldn't expect the EU to be an easy environment for a number of years to come.

There is the global macroeconomic environment. Although I would caution that the healthcare costs tend to track GDP growth on the way up. If there is a slowdown, you don't see the same tracking on that largely because people get accustomed to a certain level of healthcare. And really what drives this is not so much GDP growth but the increase in middle classes, and urbanization of populations. And of course, we have the competition.

So, if I take the tailwinds and the headwinds we are very confident in the outlook for 2012. And that's why we've moved our guidance to the top end of the range that we announced at the beginning of this year, and would predict that therefore that business EPS will be around 12% lower than 2011 business EPS. And I would remind you that's at constant exchange rates because clearly, the exchange rates have had a significant affect.

With that, I'll pass over to Hanspeter Spek

Thank you so much. Good morning, good afternoon to everyone. I propose to switch on page number 15 where you see a chart which you have seen in a similar outline already for the last quarter. It is illustrating our overall performance now for the third quarter.

First thing to state, we had a relatively strong quarter in absolute sales with sales north of EUR9b. In comparison, last quarter was at EUR8.8b, so we sold about EUR140m -- EUR170m more in this quarter.

More pronounced in the third quarter the loss due to generification. You see we have lost EUR448m in the third as a comparator. Once again, the second quarter was EUR163m. As you have heard already from Chris, this is mainly due to the loss of exclusivity for Eloxatin.

The other position is nearly identical EUR190m to EUR187m for the last.

The growth platforms as well EUR364m compared to EUR386m. And yes, we have an even strong tailwind in the third quarter coming from the positive ForEx impact with EUR561m compared to EUR486m.

So overall, I think we can summarize it is a good, it is a solid quarter; absolutely in line not only with our forecast but also what we have seen in the previous quarters.

Now to look into more detail on the overall portfolio I'll pass onto Olivier Charmeil who will give you some insight into vaccines first.

Good morning, good afternoon to everyone. So vaccine sales for Q3 showed solid underlying performance and this despite supply constraints. Our Q3 sales reached EUR1.5b up 0.7%.

Our growth for the quarter has been very much driven by our strong pediatric franchise. Vaccine sales up 16%. We are very happy about our performance in Pentaxim in China and in Mexico. We launched in China a little bit more than one year ago and we are really impressed by the uptake.

With regard to our recent launch in Japan, Imovax has been launched a little bit earlier at the end of the quarter, at the end of August. We have been able to record sales of EUR65m and it is the best launch ever of a pediatric vaccine. We have submitted our new hexavalent combination in EU.

Looking to the US, our sales are down 6.9%, reflecting different phasing for flu. The delivery of flu between Q3 and Q4 in 2011 and 2012 is different. We are expecting to continue to ship flu dose in Q4. We managed to ship in Q3 54m doses and since the beginning of October, we continue to ship and as we speak we already have shipped 58m which means that we are on track for 60m doses.

With regard to our differentiation strategy with regard to flu, we are starting to show positive signs, and it helps us to maintain our leadership position and to grow the market that is otherwise suffering some competition in standard dose presentations.

With regard to supply limitation for Pentacel that we discussed extensively in our July call, there is nothing new from what I told you except that we have now three batches that have been released since the beginning of the summer. Our objective really remains to get back to full supply early next year.

So to conclude, a solid underlying performance for Q3 despite supply constraints, and we are expecting to have a strong fourth quarter with double digit growth.

Now I hand over to Hanspeter.

So continuing with the other growth platforms, you find then on page 17 a closer look to emerging markets. Emerging market sales have been growing by 6.8%, which on first glance may look a little bit soft.

Now if you look to our major competitors, you see then for the same quarter a growth of 6% for AstraZeneca and 6% for Novartis and only Roche has done better with 11%.

Keeping in mind what Chris said before concerning the relative volatility of sales in emerging markets from quarter to quarter, nevertheless what can we state? If there is a little bit of softening, this may be in Latin America. We have in Latin America only one minor issue, which is a tax situation in Brazil. I believe to know that we are not the only pharmaceutical company facing it.

We have on top a strong concentration of our Medley sales in the state of Sao Paulo which underwent a major tax restructurization and we hope to overcome this in the upcoming quarters by reallocating our forces in other parts of the country moving partially out of the state of Sao Paulo.

The Asian performance is very much in line with the previous quarter. There may be a little bit of slowdown in the Chinese sales, which is partially due to season. You know that our CHC sales are mainly driven by cough and cold products and there is a different seasonality and we hope to compensate this in the two upcoming quarters.

There is absolutely no change in trend concerning Eastern Europe and Turkey. We had in the previous quarter exactly the same sales and exactly the flat growth rate. Same explanation as last quarter, as those markets become more and more closer in their growth pattern to the Western European ones.

We have a clear difference now in Africa and Middle East where we had previously very strong two digit growth rate, 17% in the last quarter -- second quarter 2012. Now only 2.8%. This is entirely due to technical reasons.

You may know that the African market is largely dominated by tenders which vary from quarter to quarter, and we count on a strong acceleration of our sales for the upcoming and ongoing fourth quarter in Africa.

So overall, we feel confirmed in our extremely strong position for overall emerging markets. You see they represent 31.2% of our Company sales. And as such, we are, and we continue to be, by far the leading company in emerging markets. AstraZeneca achieving about 21% of company sales and Novartis 25% and Roche 26.8%.

Chris has mentioned the really excellent performance of our Diabetes franchise which you see in more detail on page 18. We have a growth of 17.5% achieving nearly EUR1.5b of sales in the third quarter.

Within, Lantus of course played really the role of a kind of engine with close to 21% growth. And yes, we are content and proud to report now the seventh consecutive quarter with the very strong growth.

And as you see on the right side of the chart, this is true for all parts of the world. If nothing else is growing, even in Western Europe, it is at least our portfolio in Diabetes with 6% growth whilst all the other segments are in high two digit numbers.

We continue to build on this, as you see on page 19. We do it of course in all dimensions in a geographical dimension. If I start with the bottom of the page, we have started to launch a specific device for emerging markets. It's a device that's produced at low cost by us and produced locally in India. We are convinced that with that can make an adequate offer to those populations with a high-tech device which nevertheless is affordable.

We continue to build up new products. We expect for the weeks to come the approval of Lyxumia, our next generation product as a launch in Europe approximately one year after. We are off to launch in the United States, waiting for the results of the ongoing CV outcome study.

And yes, we also continue to work on the successor of Lantus. The so-called insulin glargine formulation with a high concentration, which is currently undergoing six Phase III clinical trials, which are all right on track and perform accordingly to plan.

So also the mid-term future for our portfolio should be safe. We of course follow with a lot of attention the ongoing launch preparation of Novo Nordisk. We have taken a note of the labeling in Japan.

We see that there is no difference at all to the existing labeling of Lantus which makes us relatively confident and relaxed for eventually upcoming launches in Europe and later on in the USA where you know we have in a couple of weeks more to learn coming from the upcoming hearing with the FDA.

On page 20 information on consumer healthcare. We had good and very solid sales EUR733m in the quarter up by nearly 6%. Also, once again in emerging markets very strong growth above 16%.

We continue to build on this business by internationalizing our major brands. You see an example here the box of Allegra to be launched within weeks in Japan. We have concluded a joint venture with Hisamitsu, a well experienced OTC company in Japan. And if you compare the box with let's say the box we sell through Chattem very successful for nearly two years now you will see a high degree of similarity between those. So we feel very sure Allegra will be our real first world-wide brand and other brands will of course follow.

A word on page 21 then on Merial. Also Merial is very nicely on track. It is performing exactly to expectations. We have in the quarter close or -- very close to 4%. You see the comparison with last year, which is once again favorable.

We have benefited to a lesser degree from problems of our competitors in terms of quality and introduction which is well to the Fipronil Frontline generic competition, especially in the USA but also in Europe. And we do this in a way such that the business of Merial continues to perform extremely well also in terms of profitability with a business operating income of 33.6% after nine months, which means absolutely comparable to all other activities and far ahead of our competitors inside animal health in terms of profitability.

Last but not least I wanted to make you familiar with an upcoming launch in the United States. It's a very specific segment. It is a device. It is a product indicated for those people who are hyper-allergic to any kind of allergy being it from insects, being it from nutrition.

This is very often an under-estimated market. In fact, it is a market of approximately $600m. And it is totally dominated by mostly 95% today by a product called EpiPen from Mylan, which today has no competitor, or nearly no competitor at all.

We believe that our product Auvi-Q presents significant advantages. It is a small device. It is a talking device, which is extremely easy to be used in a nevertheless very dramatic, sometimes life threatening indication.

We will bring this product to the market. It is already approved by the FDA. And we will bring it to the market by the end of this year or very early next year just right in front of the upcoming season.

Once again, we feel it's a good example how we carefully diversify our portfolio. We have sound experience of course in allergy being it due to Allergan, being it due to Nasacort and we diversify here together with a licensor into a new device which combines our expertise with the expertise of others to the best of our customers.

So I close here and pass onto Jerome.

Thank you Hanspeter. So I move to slide 24 on the P&L. Well obviously, the P&L impacted this quarter by the loss of revenues coming from Plavix and Avapro in the US impacting those lines other revenues and share on profit of associates, which both are declining strongly. Of course this is -- this was expected. And I will give some more details on the next slide.

You may notice as well that we've reached business operating income margin for the quarter of 33.9% which put us well in the position to reach at least the high end of the 31%, 32% operating margin which we gave as a guidance now at the beginning of the year.

If you move to more details on slide 25, here you see the impact of Plavix on the quarter. So the net impact on the business net income after tax is EUR469m, after around EUR330m which we lost during Q2. So this is clearly in line with the guidance we gave at the full year to be around EUR1.4b of negative impact of the loss of Plavix and Avapro. And as we know, there will be another EUR700m to lose in the first and second quarter of 2013. So we'll see the impact over the coming three quarters obviously.

There is maybe some further comments. This line, during the third quarter, benefit from a one-off payment made by BMS in connection from -- with a litigation we had with them on the supply of Avalide where they had some shortage last year. So it has a positive impact on this contribution of $80m which of course will not be repeated in the coming quarters.

The second thing I can mention is that on the income of assets which goes down to EUR6m, this includes also the contribution of the Sanofi Pasteur, the MSD JV in Europe. And this JV has paid for the quarter the previous research expenses to Sanofi Pasteur. Therefore the contribution of SP MSD has been negative over the quarter as a result of this one-off payment.

If I move to the next slide, well we are now aware that for this year we benefit from this very significant positive headwind from currency exchange rates impacting in Q3. In Q3 just taking the US dollars, the exchange rate has been against the euro 1.25 when it was 1.41 in the same quarter of last year. So the impact on sales has been EUR561m out of which EUR354m are due to US dollar, EUR82m due to the Japanese yen or versus euro, and EUR14m increasingly due to the renminbi versus euro which showed also the important of our Chinese operations.

This also has a positive impact on the business operating income as long as we have a cost base which is more euro-denominated than our sales base for -- obviously. And as you noticed, we have a positive impact of the exchange rate on our BOI of around 8% for the quarter.

Well let's be aware that when probably you could expect that in the coming quarters the euro remains not very strong against the US dollar, there is still high volatility. And if I just look at the present exchange rate for the present quarter versus the same quarter of Q4 2011 we will not see the same positive headwind on the like for like basis.

Now on cost, well basically I think the main message is that we have somewhat concluded our EUR2b cost savings objectives, which is an addition for the period 2012 to 2015, i.e. over four years.

As a matter of fact, I think that we can say today that if I include the synergies, as I said it was in the asset on Genzyme which is close to be completed -- will be completed in the first quarter of 2013, we will have reached around 40% of the overall objective over the year 2012.

So this clearly impacts positively on different ratios at different levels. We'll start with cost of sales. You remember that we gave at the beginning of the year a guidance of around 31.5% to 32% ratio. We end the third -- the final -- sorry the nine -- the first nine months at 31.1% which clearly says that we are well in line with the objective to be on the high end of the guidance i.e. around 31.5%.

Of course there is still some dilution arising from the evolution of the portfolio including in Q3 the loss of Eloxatin sales. But if you compare Q3 2012 to Q3 2011 the difference starts to be pretty minor. And we could say that 2012 should be at the bottom in terms of cost of sales to sales ratio or around the bottom.

On the next slide, 28, which is R&D expense, well clearly, we have reduced significantly our R&D expense over the quarter by 10.7%. Part of it is due to the same event which I mentioned earlier which is the repayment by the JV of the R&D expenditures incurred by Sanofi Pasteur over time in connection with Hexavalent so this impact is EUR44m.

But even if I don't include this element, then we continue to have a close and tight control on R&D expense with a significant decline of our internal expense while we are starting to spend more on external studies on trials in particular in connection with our large Phase III trials which we recently launched, whether in connection with our new formulation of insulin glargine or in connection with the launch of the studies for the PCSK9 product.

So all in all over the year, over the first nine months, we reach a decline of 0.6% of the R&D to sales ratio which is clearly showing the impact of the efforts we are doing to optimize our cost base and also the result of the reorganization which has taken place in the sales growth in the US and in Germany and other European countries over the beginning of this year.

SG&A, the message is pretty much the same. Our overall SG&A expense has declined by 2.7% on a quarter to quarter basis. This reflects the positive impact of Genzyme litigation synergies and the tight control on G&A expense which is down 4.1%.

It reflects as well a further decrease of expenses in mature markets whether in Europe or back in the US. And some increase in the new markets whether its emerging markets or behind new launches, and we have started to increase our expenses clearly behind Aubagio as well as Zaltrap and also preparing for the launch of Lyxumia.

On the net income which is slide 30, here I'd like to mention two elements. The first one is that the net financial expense benefit from the capital gains made on the disposal of Yves Rocher which is an element of the explanation of the decrease of the net balance sheet expense for the quarter.

And also we benefit from a new expected tax rate for the year. And this lower expected tax rate is connected to an agreement we signed with the Japanese authorities which, at the end of the day, reduced the overall taxation of the profit we generate from our Japanese sales.

So we now, as a result of this agreement, expect an effective tax rate of 27% for the full year, and this is what has been taken into account in Q3 for the three first quarters.

So thanks to these two elements we post EUR1.68 per share earnings per share, which is clearly ahead of consensus. And we would have been ahead of consensus without this -- with this -- without these elements, of course, slightly less. And this is 14.5% below the level of last year on a constant exchange rate basis. But thanks to the positive exchange rate impact I mentioned before, on a published basis it's a decrease by only 6.1%.

Cash flow, well clearly the Company is continuing to generate a strong cash flow despite a loss of revenues coming from Plavix, which of course was not only profit but also cash flow.

You see from the slide our free cash flow generated has been EUR5.8b, which is down 10.7%, so very much in connection with the decrease of profit. However, it allows us to more than pay the dividend which represented EUR3.5b as well as share repurchase which represented for the first nine months EUR825m including EUR375m over the third quarter.

As a result of that, we see a decrease of debt. We are now below EUR10b. And we have decreased debt by -- around -- net debt by around EUR1.5b over the first nine months and by EUR2b versus end of June.

So clearly, I think we have posted today solid results. Slightly better than anticipated for the first nine months. They have benefited from the solid growth and the solid performance of our growth platforms. Also in the first quarter from the consolidation of Genzyme which, was not consolidated in the first quarter 2011 as Chris mentioned earlier on.

We've seen, I would say, as expected the competition on our legacy blockbusters, and we've seen that in Q3 the last well has come generification being and excepting the US.

And, well let's be frank, the austerity measures have hurt the Company as expected with maybe some tendency to intensify here and there in Southern European market. But it's true as well, as Hanspeter showed to you earlier, that our exposure to Europe starts to decrease. We are now around 22% when we were three years ago around 33% of our overall sales being in Western Europe.

We have showed a continued discipline on cost and frontloaded our EUR2b savings plan. At the same time, we are positively increasing our investment into new product launches. So this will continue, and probably somewhat amplify in the coming quarters as we prepare for the launch of Lyxumia and thereafter for the launch of Lemtrada.

While the first nine months have been impacted by some specific items, some of them being positive but some of them also being negative. The net has been slightly positive and clearly, is also helping the overall evolution.

But with all that and with this solid performance, we managed today to feel comfortable that we will be on the high end of the minus 12%, minus 15% guidance we gave at the beginning of the year. And we expect to end the year at around minus 12% versus last year, despite the changing of -- global - challenging global environment that -- the economy in general but also our industry is facing.

With that, I think that I turn to -- turn back to Sebastien ready to handle the questions and the Q&A session.

Thank you Jerome. So we are indeed now ready to open the call to questions. As you probably know, we have 38 analysts covering us, so I will keep on asking you to ask one question at a time, two maximum so that we can allow as many people as possible to participate in the discussions.

Operator, we're ready to take questions.

Okay. Thank you. (Operator Instructions). Thank you. We have a first question from Luisa Hector from Credit Suisse. Madam, please go ahead.

Good afternoon. So I'm wondering if you can give a bit more color on the outlook for the R&D spend. Clearly, there was a decline in spend during the third quarter and you've quantified the reimbursements from the Vaccines JV. But how do you see this as we move into 2013?

And linked to that, we've seen some pipeline disappointments today in the press release. And these come partly from products which you've in-licensed or acquired. And this was a key strategy to be more external looking. So I don't know if you can give any color on what you've actually spent on upfront for Fovea, Metabolex and BiPar. They stand out as being three that have failed. And are there some write-downs we should expect for the fourth quarter? Obviously none of this is going to be captured in your business net income. So how should we think about these R&D disappointments in terms of the financial side?

And are there any lessons to be learned here? You wanted to be more external looking in your R&D. And we're seeing a lot of the disappointments come through now. So was it -- was there not enough due diligence? Is it just we should expect this to happen? And as much as I've highlighted the negatives, there are positives that are also happening. So any color that you can give us on that please.

I'll take the R&D. I have to say, Luisa, I haven't got a clue what you're talking about on negative. Metabolex is kind of an older story. Iniparib is an older story. And the Iniparib we'll make some conclusions on next year in terms of having done work on mechanisms of action. There is a non-small cell lung cancer study ongoing that will read out next year. We have a Phase II in triple negative breast cancer. So I would say the overall story in R&D is extremely positive. The external development of the 17 projects that we intend to launch between now and 2015, all but two of them are external.

Just because you do external development doesn't mean you're going to change anything necessarily on attrition. You do this in a sense of trying to broaden and diversify your source of product and to that extent that you can expand your portfolio. At the end of the day, though, we all live with R&D risk. And there are going to be some things that work out and some things that aren't.

I wouldn't say that those three items, especially since they've been around for a while, have any particular reflection on whether or not the attrition rate is up or down.

So I would say, if I'm looking at the PCSK9 and look at the Dengue vaccines, I look at even our other mix of that, I look at Lemtrada, I look at Aubagio, I look at our U300, I look at Lyxumia, I would say I'm actually very satisfied with where the progress is going. And where I sit, I think there is a complete -- we continue with the strategy that we've laid out.

But perhaps, Jerome, you can give some color to Luisa's question on R&D spend.

Yes. I don't have all figures. I don't know all figures like that, but I will give some color.

So when it comes to Fovea, first of all, the Fovea was not just one product. And we have built also an ophthalmology unit which is ongoing. It is a handling of a few products coming either from Provera or from other sources, including one from [technical difficulty], as well as one coming from Genzyme.

So if I recall properly, the beauty of in-licensing is that you pay by steps or by milestones. So I think that we initially invested EUR19m in Fovea to acquire not only the product, but also the team and there is no impairment to be expected.

Metabolex, as Chris said, it's an old story. It was a pre-clinical investment. The write-off has been taken already, and I think it was in the range of EUR10m.

And BiPar we'll see. Iniparib there are two studies still ongoing. So the value of BiPar in our book and we've never paid anything since the very beginning and I think that the outstanding amount on the balance sheet is something like $350m. But once again, as Chris said, even if we take some external products and say that you could use the rate of attrition and once again, I think that Iniparib still ongoing studies. And we'll see later on what we do with that.

Okay. So specifically on Fovea, there is still some technology behind that, so you're not exiting here despite the two changes in the -- from the Phase II results that were in the press release today.

Exactly.

And maybe to clarify on the status of the Fovea 1101 project, we've basically decided to look for a sub-licensee that will potentially develop the compound further.

And then the other question of R&D expense, I think that we gave a guidance that R&D expense would be flat, declining with a threshold around EUR5b. This year clearly it will be somewhat below the EUR5b. Of course, depending upon the late phase studies, particularly on Barcon in next year, this may vary a lot, remaining below this ceiling. And we'll see exactly where we stand when we review our budget and set of priorities.

Okay. Thank you.

Next question, please.

We have a next question from Mark Dainty from Citi. Sir, please go ahead.

Thank you. Just a couple of specific ones. Just on Teriflunomide, I notice the only protection you have is NC exclusivity out until 2017. So I just wondered if there's a chance of a patent term extension there.

And then, just on Merial margins, obviously an impressive progression. Is that kind of reaching a peak now or do we think that continues to progress further? Thanks.

Just on Aubagio there will be work ongoing in the US. There is a patent but there could be a patent term extension, which could take it out towards 2019. Otherwise, you've got roughly seven years of data exclusivity between the usual five years plus pediatric exclusivity, if there is that available, and the time for generic approval. And of course, in Europe, we would enjoy pretty much a 10-year data exclusivity period.

Jerome, do you want to talk about margins on the business?

You want me to take it? Yes, on Merial, I believe that we have little room to drive this 36% margin even higher. I remind you, Mark, it's mainly driven by our high share in pets. And inside pets, it is of course the fact that we have this frontline, the only -- nearly blockbuster size animal health product on the overall market, which is a unique thing. As more as we balance the portfolio from a strategic point of view between production animals and pets, I the less chance we have to drive this margin even higher. So I believe if you keep it stable, it's already a significant achievement over.

Okay. Thank you.

Thank you. We have your next question from Tim Anderson from Sanford Bernstein. Sir, please go ahead.

Thank you. On Lantus and the new formulation, can you tell us when you'll likely be on track to file that for regulatory approval? My guess is that it could be around 2014, but hoping you can confirm that.

And related to Lantus, any updated perspective on Novo's Degludec and the upcoming FDA advisory panel? I guess our thoughts is that it may relate to the hypoglycemia claims they're trying to make against your product.

And then second question, Chris, can you describe Sanofi's current plans for M&A over the next couple of years just in terms of deal size?

Okay. Thanks, Tim. Hanspeter, do you want to start off on Diabetes and I'll pick up on the M&A?

Yes. The new Lantus we intend to file by 2014, being ready for launch in 2015, then. The second question in context was?

Whether we have any update about --

I know. On Degludec, we really have no update to give. And as I mentioned before, of course we have taken note of the labeling in Japan, which confirms our conviction that the product by no means is better than Lantus, and that Lantus really is the gold standard. But we all wait, as you, for the upcoming FDA ADCOM and we have no further knowledge.

Tim, on M&A, if you were to take Genzyme out but look at everything else we've done, it's pretty much an indicator of what we want to do. Genzyme was a unique transaction in the sense of really trying to get that credible scientific platform in the US, as well as boosting our own portfolio. But I think most of what we've been doing has been gradually building up on these growth platforms.

You know, on a practical basis, compared to what you can buy, obviously given the fairly high concentration in animal health, most of what we can do, from an antitrust point of view, is going to be smallish. So we acquired a company earlier this year in the United States, which really was designed to expand our Swine Vaccine business.

Emerging markets is clearly an opportunity. The difficulty with emerging markets has been -- is that where we started in 2009, and we didn't have too many of our competitors looking at that. Obviously everybody now is interested in emerging markets. The advantage of our footprint is that we can actually go therefore into emerging markets where fewer of our competitors are actually present. And what you're actually seeing is a lot of countries that are non-BRIC really experiencing some pretty significant growth.

If you take a country like Vietnam, for example, 100m people in Vietnam. We acquired a business there. We already have a significant business, two factories in Vietnam. We acquired a business in Nigeria. Nigeria is one of the fastest growing populations in the world, as is the whole African continent. A lot of money going into Africa, particularly from China, and investments by China in education and healthcare in Africa.

We bought, as Hanspeter already said, the business in Colombia. Colombia is probably one of the most exciting economies on the Latin American continent these days.

So we'll continue to look for that -- for those types of acquisitions and try to find value where we can.

CHC is clearly another area. We've been able to essentially almost double our business in three years, largely on the back of acquisitions such as Chattem and Sunstone. And we'll be on the look. But they might be individual brands or smaller businesses. So that's pretty much where we're going to do. We've, I think, guided of around EUR1b to EUR2b per year on average in terms of our M&A strategy.

Thank you.

We have your next question from Richard Vosser from JP Morgan. Sir, please go ahead.

Hi. It's Richard Vosser from JP Morgan. Thanks for taking my two questions. First one, just following up on the comment on the R&D spend being flat, if I work through looking at the operating margin for 2012, even with the fourth quarter impact from Plavix and Eloxatin I think it seems like you've so far surpassed the 32% original guidance for the operating margin. So could you help us understand any uncertainties that might impact this view around the margin for 2012?

And then secondly, just thinking about the positioning within your Diabetes franchise, you've got the new formulation coming in 2015 you said. There's the combo vaccine that potentially would be hitting the market at a similar time, maybe slightly after. How do you think of the positioning of these projects within the market, within -- geographically within different markets and also within the same market and of course, Lantus as well, the original product? Any help there would be useful. Thanks very much.

Jerome and Olivier then.

Yes. Richard, well there is no uncertainty as such. But I can just make a few comments. For the first one, in terms of cost of sales, of course, as you mentioned, to start with, we'll see the impact on Plavix on Q4 and this will be the full impact so being a bit more than the 470 because we clearly do not have the one-time payment we got from the third quarter from BMS. So you could say around 525 or around 530 on the constant exchange rate basis.

Now, in terms of cost of sales to sales ratio, I just recall that because we are going to sell more vaccines and that the cost margin of vaccine is more in the range of 60%, we see some dilution as usual when we sell more vaccines on our cost of sales to sales ratio in the fourth quarter. We see also the full impact of the loss of revenues from Eloxatin. We still had some positive contribution in Q3. So this is where you understand why we are expecting to land around 31.5% over the -- for the full year.

When it comes to R&D, we discussed that already. The one-off event will not impact again. And at the same time, we will probably spend a bit more on external R&D on expenses in connection with late stage Phase III studies, in particular PCSK-9. So we should be back more in the same level of where we were in the previous quarters.

When it comes to SG&A, we'll continue to play a -- to closely monitor our cost base. We will, however, invest a bit more in Q4 than in Q3 in MS in particular, in terms of SG&A, in order to, as I said before, to accompany the launch. And I would say, traditionally, there is always a sort of seasonality of our -- on our expenses on a quarter-to-quarter basis. And we spend a bit more in the fourth quarter than in the third quarter, as an example, so this will probably replicate as well to a certain extent.

So with that, there is not more -- I mean I can't go in more detail. But you can do your own calculation. And I think this clearly is totally in line with the guidance we gave for the full year.

The positioning is perhaps a little bit far away to be really final on it. But we strongly believe that this market, which is already today an enormous market and will be more even important tomorrow, is a paradise for product differentiation. And there are a number of actions where you can position being it the time to insulinisation being it the question to be in parentals and/or orals. I remind you that besides Amaryl, Sanofi today is not at all an actor in the oral field or being it in the field of combinations, products having synergistic effects.

And so talking just about Setuvia working concretely on, U-300 will be positioned depending on the outcome of the ongoing Phase III trials, based on the much flatter, much longer levels U-300 produces. And besides, it is an excellent opportunity to take advantage of the growing market segment of those patients who need high doses, where of course we can play with the fact that the product has a high concentration so presents a clear convenience.

You said that there would be a vaccine under development. Probably you were talking -- Olivier confirms to me is that this is not the case. So you probably refer to the combination of Lyxumia with Lantus. So there the final combination once again will be more in the convenience area because, as you know, we launched both -- we launched Lyxumia today at Lyxumia side in the Mono presentation. And it will be freely combined with Lantus because the intended positioning is on top of insulin and this is versus the established. We hopefully will have the fixed combination, which then has the convenience of giving just one injection instead of two.

So I'm really convinced there is a lot of opportunity to segment the market and to position very successfully.

Did we get your question, Richard, because I had heard vaccine too, and I wasn't sure whether --

No. It was on the combination product. Hanspeter was exactly right. That's where -- thank you.

All right. Thank you.

We have the next question from Vincent Meunier from Exane. Sir, please go ahead.

The first one is on Eligustat. Can you please explain us what will be the positioning of the drug, well assuming that there is, again, one trial ongoing, ENCORE. But I would like to know if you consider the drug is likely to become a new standard of care, i.e. first option, like Cerezyme or VPRIV or if the drug is likely to become a sort of a companion drug for Cerezyme or VPRIV.

The second question is with regards to Lantus. I would like to have more information, if possible, on the evolution of price and volume, especially in the US and in emerging markets, where it was up by 22% and 35%, respectively. Thank you.

So starting on Eliglustat, as you point out, we have to wait for the ENCORE study and get, obviously, a full picture of, first of all, safety. This is clearly an oral which is convenient and it appears to have comparable efficacy to the Cerezyme. At the same time, and certainly at least at the start, the product will not have a pediatric indication. So we're talking about adolescent, adult patients principally.

I think you're also going to find that physicians have had a long experience, not only with Cerezyme, but Ceredase before that. And so I would be surprised if Eliglustat rapidly moved Cerezyme out from a primary position, especially because if you're starting on this drug as a child, switching at some point, may be a decision about how confident physicians feel. That having been said, there are clearly going to be a number of settings where an oral therapy is going to be extremely important.

I was recently talking to our general manager in Malaysia who talked about a patient who needs to bring her four children with her on the bus every two weeks to do a 50 kilometer trip for infusion. Obviously, in such settings -- and you could be in rural areas, where infusion centers are far and few between. So I would say it's a good tool for us to gain back market share from VPRIV and will certainly provide a benefit for a number of patients. But I would see it -- at this stage, I would say its market position is gradually taking place rather than anything revolutionary.

On the Lantus price volume, we have a quota, as you know, of 22, in terms of value. Half of it -- on a worldwide basis, half of it comes from price. The other half comes from volume. If you look in the three market segments, you see very, very controversial trends. You have a relatively high share, in terms of price with once again 50% of steady development in the USA.

Inside the market, we have, once again, very controversial trends depending on which customer and which channel you look to in the US.

In Europe, we have a quota, as you have seen before, of approximately 6% and this is entirely volume. We have even a little bit of a negative price effect coming mainly from Germany, to a lesser extent also from France.

And in the emerging markets, it's nearly entirely volume what we see.

So to sum it up, yes, there may be some potential risk on the price element in the US. But I'm convinced that for the years to come, this will be overplayed by the strong volume increases which we have in all market segments, being it emerging into US or in Europe.

Can I have a last question? In the US, can you tell us what is the daily average price per patient?

It's above $5.

Thank you very much.

We have the next question from Peter Verdult from Morgan Stanley. Sir, please go ahead.

Yes, good afternoon. It's Pete Verdult here from Morgan Stanley. I just wanted to follow up on the Lantus pricing question. Hanspeter, in terms of going forward, regardless of where you stand in the debate, there is a new competitor in the basal insulin space coming aboard for sure in Japan and Europe, and potentially US at some point going forward. Wherever you stand on the debate, the pricing of that product is going to be at significant premium to the current basal insulin analogs that are currently available. So I just want to know -- is that an opportunity for Sanofi, in terms of how we should be thinking about pricing flexibility going forward, given the comments you've made about how you believe the products stack up against each other?

And then a shifty one for Chris. You've beaten consensus by 5%, 10% each Q1, Q2, Q3. You've mentioned some of the potential headwinds you might be facing in Q4. But I was just wondering whether the reluctance to change guidance further will be more positive on the outlook. Does that reflect some sort of political situation in France, in terms of what you can do, in terms of the productivity initiatives you're trying to push through in France, and at the same time potentially raising guidance in that climate?

Chris, you want me to go first?

Yes, sure. Go ahead on that, Hanspeter.

So it's a little bit difficult to say. You may have heard before as means that Novo Nordisk has always claimed to go for a superior pricing for Degludec in respect to Lantus. I am not very optimistic in this respect. I have said earlier and I'll repeat it -- now I'll repeat it after I have seen the labeling in Japan, that I don't see any room for superior pricing definitely in the emerging markets and in Europe. In the US, we would have to see, depending on the -- probably on the channel.

Second, the real issue is not the issue for Sanofi. It is an issue for Novo Nordisk in the first instance, because they have to position the new product, in terms of price, against their present batch of products, which are there for many, many years and representing 60%, 70% of their total insulin sales. And on top, they have to position it against Levemir, which probably will suffer anyway. So besides having market shares in the analog segment of 60%, 70%, I believe we have really each and every reason to look what will Novo Nordisk try to do and what they will effectively achieve. And then yes, there may be an upside for us. I believe that we can exclude any downside on us, which in nowadays is already very positive.

Thanks.

Yes, Peter, concerning outlook, no, it's not really related to French politics because, in any case, the general opinion would be looking at published numbers versus constant exchange rates which are clearly better than where we are on a current exchange rate basis.

No, I think the beat really in Q3 was, to a degree, driven by some non-recurring items, the payment from BMS, some reimbursement here and there. I think broadly, when I look at the business, is that the growth platforms are really performing -- are performing well, but performing consistently and in line and consistent with our more medium-term guidance. Obviously every quarter, we try to do the best we can. But I think we are plugging along pretty solidly and pretty well through it. And being up at the top end of the guidance kind of reflects that.

Thanks.

Thank you. We have your next question from Seamus Fernandez from Leerink Swann. Sir, please go ahead.

Thanks very much. Just a couple of quick questions for Jerome and then a question on Merial. Jerome, can you just update us on your thoughts on the sustainability of the tax rate as we see it this year? Post 2012, it sounds like some of these changes may actually be structural. And also, Jerome, did I hear you right that you believe that 2012 will really be the bottom, or the worst, for the positioning of the cost of goods?

And then separately, maybe two additional questions quickly. On Merial, we're actually hearing that there may be some new products in Merial, particularly on the flea and tick side that may be breakthrough in nature. Just wondering what your enthusiasm is for the Merial pipeline.

And then the final question, on the Lantus -- the new Lantus, how should we think about the opportunity there? Is this really more of an extension or improvement of the franchise, or really more an extension of the franchise with IP protection that allows you to be incrementally competitive? Are there any production benefits that could be seen so that gross margins could even improve to some degree? Thanks a lot.

Okay. Maybe I can take the two questions, two financial questions. On the tax rate, well as you know, the share of our profit which is derived from royalties being taxed at a low tax rate under the French taxation scheme is decreasing significantly. So we have been working on compensating for that through various means, including some renegotiation. You heard about the negotiation with the Japanese authorities, which is a sustainable one. However, I think that we are heading, on a sustainable basis, to a tax rate which would be around 30%. We are still working on having something better. There is some room for improvement, but I will not, at this stage, commit for a better rate than the 30% let's say, on the medium-term, then say that next year we could still maybe get some optimizations which could get us to a lower rate than 30%.

On your question of COGS, on COGS, yes, I strongly believe that on the basis of our existing business, that we should be able to somewhat, of course -huge- in the first row, but somewhat increase or improvement, of let's say, of COGS to sales ratio. We know the term decrease of COGS to sales ratio has come next year. Of course, it may vary on a quarter by quarter basis depending upon the mix of business. I mentioned before the contribution of vaccine, as an example. But on average, from next year, we should see a slight improvement of COGS to sales ratio.

On Merial, yes it's true we have over the last year, significantly invested into a replacement strategy, and not only replacement, expansion strategy for Frontline. We intend to deposit those products with the authorities, which means in the US with the FDA during 2013.

It is a group of new products for cat and dog. It is products against flea and tick, and also endo/ecto, which means also against parasites like heartworm for dogs. It will be product in a totally new form, chewables, which means orals and not only Spot On. And yes, it is fair to say that we in fact plan a major offensive into these things where have this terrific heritage franchise around Frontline, which of course will give us an excellent starting phase. It is even more as it will be built around a new set of molecules. We will launch those products as of 2014-2015. And it's therefore that we also expect for 2014 and 2015 an acceleration of growth.

Now on the new form on Lantus, I think it's really too early to say. I said earlier that we have today six Phase III trials going on and I don't want to be premature. It's clear that beyond, this product will present us interesting aspects in terms of patent protection or IP overall. As more as we will be able to replace, as better off we are. And yes, at least theoretically, there is also potential upside for the cost of goods because this product will be coming out of our Frankfurt insulin fermentation and filling plant. And whatever we produce more in Frankfurt is absorbing overheads and is therefore good for the overall portfolio. But I cannot be much more specific for the reasons I gave in context this year, ongoing clinical trials.

Thank you.

Operator, we're now going to have to take the last question, please.

Very well. The last question is from Graham Parry from Bank of America Merrill Lynch. Sir, please go ahead.

Thanks for just squeezing me in at the end there. So just the first question, just the thought process on expanding glargine to compare with non-insulin agents, which would be an arguably milder patient population when you haven't gone for patients on mid to low doses, Atlantis and a rough date -- timeline for the data from those trials.

And second, you say you see no scope for differentiation of Degludec pricing. And so I just wonder what your thoughts were on the fact that CHMP's statement in the approval document said that Degludec has a better hypo profile than Lantus.

And then just on the 32% growth on Lantus in emerging markets, just trying to work out if there is anything lumpy in that. Is there any tender or new reimbursement in any specific country or region that would have led to do that? Thank you.

Perhaps I'll take the Degludec part. First -- no, there is a statement, which is one thing. What will be finally in the label is another thing and once again I refer to what has been published and issued from the Japanese authorities. But even beyond, I doubt, given our experience in authorizing prices and access for Lantus in Europe, I remind you that it took us nearly 10 years to get access in major countries like Italy with Lantus, where we had very, very good arguments. And I remind you that even today, we have a bundesland in Germany which unfortunately is the second most important buyer where Lantus still is not being reimbursed. So I'm extremely doubtful if you would have something in the labeling with a little advantage in terms of hyposensitivity in Europe to justify a higher price. But ready to look to the opposite when it should be proven by Novo Nordisk.

I take the opportunity also to express the thought we have. Overall, we have a clinical program for Degludec of approximately 16 or 17 trials. Out of those, two are published as of today. And once again, we will see what comes out of the remaining 15 or 14, at the upcoming ADCOM conference of the FDA.

Maybe just, Graham, on the question about testing the use of the new formulation of Lantus in non-insulin patients. There has indeed been a study from the Addition program initiated just over the summer in August and I can forward you the details of that trial. It's listed in clinicaltrials.gov.

But that's against lower dose Lantus patients?

Yes.

Great. Thank you.

(inaudible)_patients.

So maybe, Chris, at this point if you would like to say a few words to wrap up the call.

Yes. No, I think it's pretty much like the reply I had to Peter. I think the Company is progressing well through the patent cliff. Pretty much everything that is going to face generic competition in US and Europe is now in that process. The impact, I think, has been pretty well signaled, really, for almost two years now. What is important is to look at the growth platforms. We gave medium-term guidance out to 2015 where the growth platforms are expected to get to 80% of sales. I think the fact that we're at 70.9% shows that that's not an unrealistic target.

So I think the business continues to perform really in line with both short-term as well as medium-term expectations. There are some headwinds, notably in Europe, as we said. But equally, I think the diversified nature of our business is -- positions us well. When I look at the last two or three quarters, I would have to say that those companies who bet only on R&D have had some difficulties. And I think having a broader range of more sustainably growing franchise is a way to deal with a difficult world. There is really no question that we've got very strong leadership in emerging markets versus most of our competitors. The diabetes franchise is shaping up well, and I think really reflects the enormous size of this market on a worldwide basis.

So as I say I think we come through the quarter and feel very confident in the outlook. And we'll continue to really closely manage costs, obviously. I think the R&D portfolio is shaping up and we need to get those products to market now. And we are making those investments.

On R&D, clearly we do have some major programs coming along. And the approach thus far has really been to, as I say, transfer non-productive spending into more project-related spending, continue to reduce our fixed cost percentage of our R&D spend, versus the more project-driven costs. And I think the very extensive restructuring that has been undertaken over the past year in research really is an example of that and that was largely enabled by Genzyme.

And perhaps I'll close with Genzyme. I think today -- I think Genzyme is clearly contributing strongly to the Company and very much in line with the benefits that we had forecast when we completed the transaction.

So as I say, I think we continue to go through this. There is choppy water here and there but there's opportunities elsewhere as well. And I think the Company is well positioned to deal with both. So I thank everybody for listening and we'll see you out there on roadshows. I'll turn it back to Sebastien.

Thank you, Chris. Maybe just before closing I'd like to remind you of two upcoming IR events for November. First Sanofi and Regeneron will host a conference call during the upcoming AHA Congress, which will be focusing on our PCSK-9 antibody with the launch of the Phase III program Odyssey. This will take place on Monday, November 5. The webcast will be available as of 4.15 p.m., Paris time or 7.15 a.m. Los Angeles time, where the Congress is taking place.

And the next event will be in South America where we will be organizing an IR thematic seminar in Sao Paulo on the 29th and 30th of November. You will have a chance to meet with Hanspeter Spek, as well as Heraldo Marchezini, who is in charge of the LatAm region. There will also be opportunities to meet with local management for the Diabetes, Vaccines, Animal Health, Generics, as well as industrial affairs, and will visit the pharmacy and a plant.

So with that, I'd like to thank you for your participation and wish everybody a good day.

Thank you. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.