Sanofi delivers strong 2019 business EPS growth of 6.8% at CER
PARIS, Feb. 6, 2020 /PRNewswire/ -- Sanofi (NASDAQ: SNY; EURONEXT: SAN)
Q4 2019 Change Change 2019 Change Change
at CER at CER
IFRS net sales reported
EUR9,608m +6.8% +4.7%
EUR36,126m +4.8% +2.8%
IFRS net income reported
-EUR10m -103.9%(2)
EUR2,806m -34.8%(2)
IFRS EPS reported
-EUR0.01 -105.0%(2)
EUR2.24 -35.1%(2)
---
Business net income(1)
EUR1,684m +23.5% +18.4%
EUR7,489m +9.8% +7.0%
Business EPS(1)
EUR1.34 +21.8% +17.3%
EUR5.99 +9.5% +6.8%
---
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Fourth-quarter 2019 sales performance(3) driven by
Dupixent
(R)
and Vaccines
-- Net sales were EUR9,608 million, up 6.8% on
a reported basis and 4.7%(3) at CER.
-- Dupixent(R) (global sales EUR679 million,
up 135%) the largest growth contributor,
drove Sanofi Genzyme GBU sales up 19.7%.
-- Vaccines sales increased 22.0%, reflecting
majority of U.S. influenza vaccine
shipments in Q4.
-- CHC sales down 5.2%, mainly due to
Zantac(R) voluntary recall, non-core
divestments and changing regulatory
requirements.
-- Primary Care GBU sales declined 8.7% due to
lower sales in Diabetes and Established
Products.
-- Lower China sales (down 21.0%) due to
anticipated price and inventory
adjustments on Plavix(R) and Avapro(R) in
the channel.
Full-year 2019 sales growth of 3.6% at CER/CS(4) and
business EPS growth of 6.8% at CER
-- Net sales were EUR36,126 million, up 4.8%
on a reported basis and 2.8% at CER (up
3.6% at CER/CS(4)).
-- Dupixent(R) sales reached EUR2,074 million,
on track with ambition to achieve more
than EUR10 billion peak sales.
-- Vaccines sales increased 9.3% to EUR5,731
million, supporting expected mid-to-high
single digit CAGR from 2018 to 2025.
-- Business operating income margin improved
1.2 percentage points to 27.0%, trending
towards objective of 30% by 2022.
-- Q4 2019 business EPS(1) up 17.3% at CER to
EUR1.34.
-- Full-year 2019 business EPS of EUR5.99 up
6.8% at CER.
-- Full-year 2019 IFRS EPS of EUR2.24 (down
35.1%(2)), reflecting a EUR3.6 billion
impairment charge mainly related to
Eloctate(R).
-- Board proposes annual dividend of EUR3.15,
the 26th consecutive increase in dividend.
Significant R&D advances and regulatory milestones
-- SAR442168, a BTK inhibitor, achieved proof
of concept in relapsing multiple
sclerosis; phase 3 program to be initiated
mid-2020.
-- Dupixent(R) submitted to FDA (priority
review) and EMA as first biologic for
children aged 6-11 years with atopic
dermatitis.
-- Dupixent(R) phase 3 pivotal studies
initiated in bullous pemphigoid, chronic
spontaneous urticaria and prurigo
nodularis.
-- Dupixent(R) efficacy and safety further
supported by 3-year data from OLE (Open
Label Extension) study.
-- Fluzone(R) High-Dose Quadrivalent approved
in the U.S.
-- Sutimlimab demonstrated positive phase 3
results in cold agglutinin disease.
-- SAR408701, an anti-CEACAM5 antibody-drug
conjugate, entered into phase 3 in non-
small cell lung cancer.
-- Olipudase demonstrated positive pivotal
topline data in adult and pediatric
patients with acid sphingomyelinase
deficiency.
-- Successful completion of Synthorx
acquisition enhances Sanofi's position as
an emerging leader in oncology and
immunology.
2020 financial outlook
Sanofi expects 2020 business EPS(1) to grow around 5%(5) at
CER, barring unforeseen major adverse events. Applying
average January 2020 exchange rates, the positive currency
impact on 2020 business EPS is estimated to be around 1%.
Sanofi Chief Executive Officer, Paul
Hudson, commented:
"I am encouraged by the fourth
quarter results which position
Sanofi to deliver on our new
strategic priorities. The
acceleration in sales performance
was mainly driven by the impressive
growth of Dupixent
(R)
, our transformative
medicine for type 2 inflammatory
diseases and by our differentiated
Vaccines portfolio. At the same
time, our sharpened focus on
operating and financial efficiencies
helped us to deliver margin
expansion and significant cash flow
improvement. We are making great
progress in our ambition to
transform Sanofi R&D and I am
particularly excited by the positive
proof of concept data for our BTK
inhibitor, a potentially practice
changing therapy for multiple
sclerosis, announced today. There is
increasing momentum across the
entire Sanofi organization and I am
confident we will achieve the long-
term growth aspirations and margin
targets we set out at our Capital
Markets Day".
(1) In order to facilitate an
understanding of operational
performance, Sanofi comments on the
business net income statement.
Business net income is a non-GAAP
financial measure (see Appendix 11
for definitions). The consolidated
income statement for Q4 2019 is
provided in Appendix 3 and a
reconciliation of reported IFRS net
income to business net income is set
forth in Appendix 4; (2) Q4 2019 and
full-year 2019 included impairment
charge of EUR1,581 million and
EUR3,604 million, respectively,
mainly related to Eloctate
(R)
; (3) Changes in
net sales are expressed at constant
exchange rates (CER) unless
otherwise indicated (see Appendix
11); (4) Constant Structure:
Adjusted for divestment of European
generics business and sales of
Bioverativ products to SOBI; (5)
Base for business EPS growth is
EUR5.97, reflecting 2 cents impact
from IFRS 16 (see appendix 11).
R&D update
Consult Appendix 9 for full overview of Sanofi's R&D pipeline
Regulatory update
Regulatory updates since October 31, 2019 include the following:
-- In November, Dupixent(®) (collaboration with Regeneron) was submitted
to the FDA in children 6 to 11 years with moderate-to-severe atopic
dermatitis.The FDA has granted a priority review and set a PDUFA date of
May 26, 2020. Dupixent(®) was also submitted for the same indication in
the European Union in January.
-- In November, the FDA approved a supplemental NDA expanding the
indication for Toujeo(®) in the United States to include the treatment
of pediatric patients 6 years and older with diabetes.
-- In November, the FDA approved a supplemental Biologics License
Application for Fluzone(®) High-Dose Quadrivalent (influenza vaccine)
for use in adults 65 years of age and older.
-- In December, the China National Medical Products Administration (NMPA)
approved Praluent(®) for the treatment of adult patients with primary
hypercholesterolaemia or mixed dyslipidemia and for the treatment of
adult patients with established atherosclerotic cardiovascular disease
to reduce myocardial infarction, stroke or unstable angina requiring
hospitalization.
-- In December, the China National Medical Products Administration (NMPA)
approved Fabrazyme(®) as a long term enzyme replacement therapy in
patients with confirmed diagnosis of Fabry disease.
-- In January, the European Commission approved the expansion of the
indication for Toujeo(®) in the European Union to include the treatment
of diabetes in adolescents and children (6 years and older).
At the beginning of February 2020, the R&D pipeline contained 91 projects, including 38 new molecular entities in clinical development (or that have been submitted to the regulatory authorities). 39 projects are in phase 3 or have been submitted to the regulatory authorities for approval.
Portfolio update
Phase 3:
-- Three-year data from the OLE (Open Label Extension) study of
Dupixent(®) supporting the long term efficacy and safety profile were
presented at the Maui Dermatology Conference in January.
-- Positive results of a pivotal phase 3 open-label, single-arm trial
evaluating the safety and efficacy of sutimlimab in people with primary
cold agglutinin disease (CAD) were presented at the Late Breaking
Abstracts Session of the Annual Meeting of the American Society of
Hematology. This study met its primary and secondary endpoints.
-- Positive results from the EDITION JUNIOR phase 3 trial, evaluating
Toujeo(®) in children and adolescents with type 1 diabetes, were
presented at the International Society for Pediatric and Adolescent
Diabetes Annual Conference.
-- SAR408701, an anti-CEACAM5 antibody-drug conjugate, entered into phase 3
in second and third line non-small cell lung cancer (NSCLC).
-- Dupixent(®) entered into phase 3 in bullous pemphigoid, chronic
spontaneous urticaria and prurigo nodularis.
-- BIVV001 (recombinant coagulation factor VIII Fc) entered into phase 3 in
hemophilia A.
Phase 2
-- BTK inhibitor, SAR442168, met the primary endpoint in a proof of concept
trial in relapsing multiple sclerosis, with detailed results expected to
be presented at an upcoming medical meeting in Q2 2020.
-- Olipudase alfa, a recombinant human acid sphingomyelinase, demonstrated
positive results in two separate clinical trials evaluating olipudase
alfa for the treatment of acid sphingomyelinase deficiency (ASMD) in
adult and pediatric patients. Olipudase alfa is the first and only
investigational enzyme replacement therapy in late-stage development for
the treatment of ASMD. No treatments are currently approved for ASMD.
-- SAR439859, a selective estrogen receptor degrader (SERD), has entered
into a pivotal phase 2 study in second and third line metastatic breast
cancer as a monotherapy, a phase 2 study to enable examination in the
adjuvant setting, and a phase 1 combination with palbociclib.
Phase 1
-- A candidate vaccine for Yellow Fever entered into phase 1.
-- THOR-707, an engineered "not-alpha" IL-2, entered into phase 1 for the
treatment of solid tumors, with the acquisition of Synthorx.
-- SAR441000, an mRNA-based intratumoral immunotherapy, entered into phase1
in combination with PD-1.
Synthorx
-- On January 23, Sanofi announced the completion of its acquisition of
Synthorx, enhancing Sanofi's position as an emerging leader in the area
of oncology and immunology. Through the acquisition Sanofi gained access
to THOR-707 and an innovative platform that complements the company's
oncology and immunology research.
Sustainable performance update
Sanofi's leadership in water management was recently recognized by CDP in its rating upgrade to A- from B. CDP is a global non-profit organization that drives companies and governments to reduce greenhouse gas emissions, safeguard water resources.
Sanofi considers water as a sustainable renewable resource and believes that shortages of water could become a major obstacle to public health involving diseases associated with lack of access to safe drinking water, inadequate sanitation and poor hygiene. Consequently the company has implemented a dedicated program to reduce water consumption and promote its reuse. Sanofi has already exceeded its 2020 target to reduce water consumption.
2019 fourth-quarter and full-year 2019 financial results((9))
Business Net Income((9))
In the fourth quarter of 2019, Sanofi generated net sales of EUR9,608 million, an increase of 6.8% (up 4.7% at CER). Full-year 2019 sales were EUR36,126 million, up 4.8% on a reported basis (up 2.8% at CER).
Fourth-quarter other revenues increased 24.3% (up 20.4% at CER) to EUR409 million, reflecting the VaxServe sales contribution of non-Sanofi products (EUR358 million, up 32.4% at CER). Full-year 2019 other revenues increased 24.0% (up 18.0% at CER) to EUR1,505 million, driven by the VaxServe sales contribution of non-Sanofi products (EUR1,273 million, up 26.3% at CER) and the consolidation of collaboration revenues from Swedish Orphan Biovitrum AB (SOBI).
Fourth-quarter Gross Profit increased 6.0% to EUR6,562 million (up 3.8% at CER). The gross margin ratio decreased 0.5 percentage points to 68.3% (68.2% at CER) versus the fourth quarter of 2018. The negative impact from net price adjustments of inventory in the channel in China, products and geographical mix in CHC, U.S. Diabetes net price evolution and Vaccines more than offset the favorable impact from Dupixent(® )growth. In the fourth quarter of 2019, the gross margin ratio of segments were 72.8% for Pharmaceuticals (up 0.7 percentage points), 64.5% for CHC (down 1.5 percentage points) and 60.1% for Vaccines (down 0.3 percentage points). Full-year 2019 Gross Profit increased 5.3% to EUR25,657 million (up 3.1% at CER). In 2019, the gross margin ratio increased 0.3 percentage points to 71.0% (70.8% at CER) versus 2018.
Research and Development (R&D) expenses increased 0.5% to EUR1,687 million in the fourth quarter of 2019. At CER, R&D expenses decreased 0.7% reflecting smart spending initiatives as well as portfolio prioritization. In the fourth quarter, the ratio of R&D to sales decreased 1.1 percentage points to 17.6% compared to the fourth quarter of 2018. In 2019, R&D expenses increased 2.2% to EUR6,022 million (up 0.2% at CER). In 2019, the ratio of R&D to sales was 0.4 percentage points lower at 16.7% compared to 2018.
Fourth-quarter selling general and administrative expenses (SG&A) increased 0.1% to EUR2,724 million. At CER, SG&A expenses were down 1.4%, reflecting a decrease in general expenses which more than offset increased investments in Specialty Care and Vaccines. In the fourth quarter, the ratio of SG&A to sales decreased 1.8 percentage points to 28.4% compared to the fourth quarter of 2018. In 2019, SG&A expenses increased 0.5% to EUR9,880 million (down 1.4% at CER). In 2019, the ratio of SG&A to sales was 1.2 percentage points lower at 27.3% compared to 2018.
Fourth-quarter operating expenses were EUR4,411 million, an increase of 0.3% and a decrease of 1.2% at CER. Full-year 2019 operating expenses were EUR15,902 million, an increase of 1.1% and down 0.8% at CER.
Fourth-quarter other current operating income net of expenses was -EUR70 million versus -EUR148 million in the fourth quarter of 2018. In the fourth quarter of 2019, this line included an expense of EUR241 million (versus an expense of EUR65 million in the fourth quarter of 2018) corresponding to the share of profit to Regeneron of the monoclonal antibodies Alliance, reimbursement of development costs by Regeneron and the reimbursement of commercialization-related expenses incurred by Regeneron. In the fourth quarter of 2019, this line also included a one-time income due to a legislation change related to supplementary pension plans in France. In the fourth quarter of 2018, the "other current operating income net of expenses" line also included charges related to a legal contingency provision as well as a capital gain on an associate company and other accruals, which in aggregate represented a net charge of EUR72 million. In 2019, other current operating income net of expenses was -EUR382 million versus -EUR64 million in 2018. The full-year 2019 expense associated with the monoclonal antibodies Alliance with Regeneron was EUR681 million, which compared with an expense of EUR211 million in 2018 (see appendix 7 for further details).
The share of profit from associates was EUR119 million in the fourth quarter versus EUR121 million in 2018, mainly reflecting the share of profit in Regeneron. In 2019, the share of profit from associates was broadly stable at EUR420 million versus EUR423 million in 2018.
In the fourth quarter, non-controlling interests were -EUR8 million versus -EUR22 million in prior period, reflecting the end of non-controlling interests related to the Alliance with Bristol-Myers Squibb on Plavix(®) and Avapro(®). In 2019, non-controlling interests were -EUR35 million versus -EUR106 million for 2018.
(9) See Appendix 3 for 2019 fourth-
quarter consolidated income
statement; see Appendix 11 for
definitions of financial
indicators, and Appendix 4 for
reconciliation of IFRS net income
reported to business net income.
Fourth-quarter business operating income increased 26.0% to EUR2,192 million. At CER, business operating income increased 20.9%. The ratio of business operating income to net sales increased 3.5 percentage points to 22.8% versus the fourth quarter of 2018. Over the period, the business operating income ratio of segments were 28.7% for Pharmaceuticals (up 1.6 percentage points), 27.3% for CHC (down 1.7 percentage points) and 37.6% for Vaccines (up 1.5 percentage points). In 2019, business operating income was EUR9,758 million, up 9.8% (up 7.1% at CER). In 2019, the ratio of business operating income to net sales increased 1.2 percentage points to 27.0%.
Net financial expenses were -EUR63 million in the fourth quarter versus -EUR60 million in the same period of 2018, reflecting lower cost of net debt. The fourth quarter of 2018 included a gain of EUR22 million in the market value of a financial investment. Full-year 2019 net financial expenses were -EUR264 million versus -EUR271 million in 2018.
Fourth-quarter and full-year 2019 effective tax rate were 22.1% and 22.0%, respectively. Sanofi expects its effective tax rate to be around 22% in 2020.
Fourth-quarter business net income((9)) increased 23.5% to EUR1,684 million and increased 18.4% at CER. The ratio of business net income to net sales increased 2.3 percentage points to 17.5% versus the fourth quarter of 2018. In 2019, business net income((9)) increased 9.8% to EUR7,489 million and increased 7.0% at CER. The ratio of business net income to net sales increased 0.9 percentage points to 20.7% versus 2018.
In the fourth quarter of 2019,
business earnings per share(9)
(EPS) increased 21.8% to
EUR1.34 on a reported basis
and 17.3% at CER. The average
number of shares outstanding
was 1,253.1 million versus
1,245.6 million in the fourth
quarter of 2018.
In 2019, business earnings per
share(9) was EUR5.99, up 9.5%
on a reported basis and up
6.8% at CER. The average
number of shares outstanding
was 1,249.9 million in 2019
versus 1,247.1 million in
2018.
---
Reconciliation of IFRS net income reported to business net income (see Appendix 4)
In 2019, the IFRS net income was EUR2,806 million. The main items excluded from the business net income were:
-- An amortization charge of EUR2,146 million related to fair value
remeasurement on intangible assets of acquired companies (primarily
Genzyme: EUR727 million, Bioverativ: EUR488 million, Boehringer
Ingelheim CHC business: EUR240 million, Aventis: EUR197 million) and to
acquired intangible assets (licenses/products: EUR102 million). An
amortization charge of EUR510 million related to fair value
remeasurement on intangible assets of acquired companies (primarily
Genzyme: EUR177 million, Bioverativ: EUR108 million, Boehringer
Ingelheim CHC business: EUR56 million, Aventis: EUR44 million) and to
acquired intangible assets (licenses/products: EUR22 million) was
recorded in the fourth quarter. These items have no cash impact on the
Company.
-- An impairment of intangible assets of EUR3,604 million mainly related to
Eloctate(® )(EUR2,803 million due to revision of sales projections),
Zantac(® )(EUR352 million), sotagliflozin and Lemtrada(®). The fourth
quarter included an impairment of intangible assets of EUR1,581 million
of which EUR1,194 million related to Eloctate(® )and EUR169 million to
Zantac(®).
-- Restructuring costs and similar items of EUR1,062 million (of which
EUR158 million in the fourth quarter) mainly related to streamlining
initiatives in Japan, Europe and the U.S.
-- An income of EUR238 million mainly reflecting a decrease of Bayer
contingent considerations linked to Lemtrada(®) (an income of EUR214
million of which EUR74 million in the fourth quarter), a contingent
price adjustment on the disposal of SP MSD (EUR192 million) and a fair
value remeasurement on the CVR price (a charge of EUR49 million of which
EUR32 million in the fourth quarter).
-- A net income of EUR327 million (of which a charge of EUR67 million in
the fourth quarter) mainly related to litigation.
-- A EUR1,866 million tax effect arising from the items listed above,
mainly comprising EUR1,409 million of deferred taxes generated by
amortization and impairments of intangible assets and EUR311 million
associated with restructuring costs and similar items. The fourth
quarter tax effect was EUR587 million, including EUR503 million of
deferred taxes generated by amortization and impairments of intangible
assets and EUR64 million associated with restructuring costs and similar
items (see Appendix 4).
-- An expense of EUR165 million net of tax (of which EUR71 million In the
fourth quarter) related to restructuring costs of associates and joint
ventures and expenses arising from the impact of acquisitions on
associates and joint ventures.
(9) See Appendix 3 for 2019 Fourth-
quarter consolidated income
statement; see Appendix 11 for
definitions of financial
indicators, and Appendix 4 for
reconciliation of IFRS net income
reported to business net income.
Capital Allocation
In 2019, Free Cash Flow (see definition on Appendix 11) increased 48.6% to EUR6,026 million, after net changes in working capital (-EUR580 million), capital expenditures (-EUR1,405 million) and other asset acquisitions(1) (-EUR576 million) net of disposal proceeds(1) (EUR490 million), and payments related to restructuring and similar items (-EUR1,142 million). Over the period, the dividend paid by Sanofi was EUR3,834 million and proceeds from disposals(2) were EUR672 million. As a consequence, net debt decreased from EUR17,628 million at December 31, 2018, to EUR15,107 million at December 31, 2019 (amount net of EUR9,427 million cash and cash equivalents).
(1)Not exceeding EUR500 million per transaction.
( 2)Amount of the transaction above EUR500 million per transaction.
To access the full press release of the 2019 Q4 and full-year results, please click here.
Financial statements are not audited. The audit procedures by the Statutory Auditors are underway.
Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects", "anticipates", "believes", "intends", "estimates", "plans" and similar expressions. Although Sanofi's management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Sanofi, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include among other things, the uncertainties inherent in research and development, future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when to approve any drug, device or biological application that may be filed for any such product candidates as well as their decisions regarding labelling and other matters that could affect the availability or commercial potential of such product candidates, the absence of guarantee that the product candidates if approved will be commercially successful, the future approval and commercial success of therapeutic alternatives, Sanofi's ability to benefit from external growth opportunities, to complete related transactions and/or obtain regulatory clearances, risks associated with intellectual property and any related pending or future litigation and the ultimate outcome of such litigation, trends in exchange rates and prevailing interest rates, volatile economic conditions, the impact of cost containment initiatives and subsequent changes thereto, the average number of shares outstanding as well as those discussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those listed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in Sanofi's annual report on Form 20-F for the year ended December 31, 2018. Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.
Media Relations:
Investor Relations:
Ashleigh Koss
Felix Lauscher
908-981-8745
+33 (0)1 53 77 45 45
Email: Ashleigh.koss@sanofi.com
Email: IR@sanofi.com
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