Core Viewpoint - Sanofi showcased its flagship product Dupixent at the China International Import Expo, highlighting its potential breakthroughs in new indications for chronic rhinosinusitis with nasal polyps and bullous pemphigoid [1] Group 1: Product Highlights - Dupixent's new indication for chronic rhinosinusitis with nasal polyps (CRSwNP) made its debut in China at this year's expo [1] - CRSwNP is a recurrent disease causing symptoms like nasal congestion, loss of smell, and runny nose, with high recurrence rates post-surgery [1] - Dupixent is the first and only biologic approved for treating both adults (18 years and older) and adolescents (12-17 years) with CRSwNP [1] Group 2: Regulatory Progress - The supplemental biologics license application for Dupixent in treating CRSwNP has been accepted by the National Medical Products Administration's Drug Evaluation Center [1] - In June, the FDA approved Dupixent for the treatment of adult bullous pemphigoid, marking it as the first targeted biologic for this condition [1]

Core Insights - The 8th China International Import Expo (CIIE) is being held from November 5 to 10 in Shanghai, showcasing 461 new products, technologies, and services, transforming into a global stage for innovation [1] Industry Highlights - The medical device and healthcare sector is highlighted as the most innovative, with major companies unveiling cutting-edge products, including Siemens Healthineers' brain-computer interface solution, which integrates advanced imaging and navigation technologies for surgical applications [3][5] - Sanofi's innovative drug, Trelagliptin, is the first to delay the progression of Type 1 diabetes, having received approval from China's National Medical Products Administration (NMPA) [5] - Abbott presents over ten innovative products, including cardiovascular and diabetes management solutions, emphasizing the importance of chronic disease management [7][9] - GSK introduces several groundbreaking products, including the first approved RSV vaccine and a long-acting treatment for chronic hepatitis B [9] - EssilorLuxottica showcases innovative products for vision health, including smart glasses and advanced myopia management solutions [10][19] Company Innovations - Skechers uses CIIE as a platform for launching new sports products, including various footwear models, demonstrating the brand's commitment to the Chinese market [20][22] - Ausnutria presents 61 products across six imported brands, focusing on innovative nutritional solutions for different life stages, including the launch of new probiotic products [23]

Financial Data and Key Metrics Changes - Total revenue and other income for Q3 2025 on a GAAP basis was $115.5 million, up from $51.8 million in the same quarter last year, with core revenue growing 68% year over year to $86.9 million [26][34] - Royalty revenue rose 47% year over year to $46.6 million, and adjusted EPS increased 68% to $3.09 [26][34] - The company raised its full-year 2025 guidance, now expecting core revenue of $225-$235 million and adjusted EPS of $7.40-$7.65 [35][36] Business Line Data and Key Metrics Changes - Royalty revenue growth was driven by strong performances from products like Travere's Filspari, Merck's Ohtuvayre, and Capvaxive, with Filspari becoming the largest royalty-generating asset [30][31] - Filspari reported Q3 sales of $90.9 million, a 155% year-over-year increase, while O2VARE sales reached $136 million, a 32% sequential increase [30][31] - Capvaxive generated $244 million in sales, an 89% sequential increase, reinforcing its market position [31] Market Data and Key Metrics Changes - The company noted strong uptake of Zelsuvmi in its early launch phase, with expectations for continued momentum [7] - Ohtuvayre is tracking ahead of initial forecasts, with Q3 sales growing 32% sequentially, and projected sales of $2 billion by 2029 [10][11] - The FDA has assigned a PDUFA date of January 13, 2026, for Filspari's second indication, FSGS, which could significantly expand its market opportunity [18] Company Strategy and Development Direction - The company has focused on building a diversified portfolio of high-margin royalties and has successfully executed a convertible debt financing to support growth initiatives [5][6] - The strategic direction set in 2022 has led to significant growth across core revenue and adjusted EPS, with a long-term royalty growth outlook of 22% CAGR [9][10] - The company is actively pursuing high-quality investment opportunities and expanding its business development team to capitalize on its robust pipeline [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the commercial royalty portfolio and the potential for indication and geographic expansion of key products [36][37] - The company highlighted the positive developments in the FDA's approach to accelerating timelines for innovative treatments, which aligns with its investment strategy [16][49] - Management remains optimistic about the ongoing progress of the Pelthos team and the launch momentum of Zelsuvmi [37] Other Important Information - The company ended the quarter with approximately $1 billion in deployable capital, including cash and investments [7][27] - The Pelthos transaction resulted in a $53 million gain recognized in Q3, reflecting the strategic value of the spin-out [24][25] - The company has seen record-setting origination activity, reviewing over 130 investment opportunities in the first three quarters of the year [13] Q&A Session Summary Question: Opportunities and special situations related to Pelthos and Palvella - Management indicated a robust opportunity set in special situations, focusing on companies needing more than just capital [38][39] Question: Changes in investment opportunities and capital demands - Management noted that while the deal flow may shift with market conditions, the demand for royalty capital remains high, particularly for development-stage assets [44][45] Question: Insights on the ZELSUVMI launch and future expectations - Management provided limited additional information but indicated that more specifics would be available during the upcoming earnings call [50][51] Question: Competitive landscape for royalty assets - Management acknowledged potential future competition but noted that they have not yet seen significant changes in the competitive landscape [53][54] Question: Thoughts on the recent approval of Furoscix - Management expressed optimism about Furoscix's potential to provide a differentiated treatment option in the market [56]

Core Insights - Sanofi showcased its innovative products at the 8th China International Import Expo, emphasizing its commitment to the "Healthy China" strategy with a focus on chronic diseases and unmet medical needs [1][4] Group 1: Product Innovations - Sanofi presented ten innovative drugs and vaccines, including two groundbreaking cardiovascular treatments: Afikaytai tablets and Pulesiran sodium injection, marking their global debut [4][5] - Afikaytai tablets are positioned as a potential "best-in-class" treatment for hypertrophic cardiomyopathy, while Pulesiran sodium injection targets a novel mechanism to manage severe hypertriglyceridemia [4] Group 2: Strategic Partnerships and Investments - Sanofi launched the "China Type 1 Diabetes Diagnosis and Treatment Ecosystem" in collaboration with various stakeholders to enhance clinical research and management [4] - The company established the Sanofi-Kaihui Pharmaceutical Innovation Fund with a management scale of approximately 2 billion yuan to accelerate the transformation of research outcomes into industry innovations [5] - A 1 billion euro insulin raw material project was initiated in Beijing to strengthen local production capabilities and supply chain resilience [5] Group 3: Market Outlook - Sanofi's President for Greater China expressed confidence in the Chinese market, highlighting the company's long-term commitment to local innovation and development [5]

Core Viewpoint - China's ongoing deepening of open practices has transformed into tangible opportunities, enhancing the local medical innovation ecosystem and attracting global expertise while promoting Chinese innovation on a global scale [1] Group 1: Government Initiatives and Market Opportunities - Premier Li Qiang emphasized that the China International Import Expo (CIIE) serves as a vital bridge connecting the Chinese economy with the world, showcasing the vitality of China's vast market [1] - The number of participating companies at this year's CIIE reached a historical high, reflecting the robust dynamism of China's super-large market [1] - China is committed to high-level opening-up, providing clearer policy directions and stable expectations for foreign enterprises operating in China [1] Group 2: Corporate Responses and Investments - Executives from various pharmaceutical and medical device companies expressed encouragement from the Premier's speech, viewing CIIE as a crucial platform for foreign enterprises to connect deeply with the Chinese market [2] - AstraZeneca announced a $2.5 billion investment in Beijing, establishing a new global strategic R&D center to enhance drug discovery and clinical development [2] - Boehringer Ingelheim highlighted its commitment to innovation in China, marking its 30th anniversary in the market and emphasizing the supportive policies for biopharmaceutical innovation [3] Group 3: Long-term Commitment to China - Sanofi views China as a key strategic market and is optimistic about the future of the healthcare sector, having recently launched a new insulin raw material project in Beijing [4] - GE Healthcare has introduced over 50 precision medical innovations from the expo to clinical settings, indicating a strong commitment to the Chinese market [8] - Johnson & Johnson Medical Technology has been a witness and participant in China's healthcare modernization, aligning its strategies with China's support for industrial innovation [7]

Group 1 - Sanofi's innovative drug, Kybella, received approval from the National Medical Products Administration for use in treating adults and adolescents aged 12 and above with acquired thrombotic thrombocytopenic purpura [2] - The approval process for Kybella in China was expedited, taking only 6 months from application submission to approval, thanks to government support for urgently needed rare disease treatments [1] Group 2 - The drug was showcased at the China International Import Expo, highlighting its significance in the market [1]

Core Viewpoint - Sanofi's innovative drug Cablivi has received approval from China's National Medical Products Administration (NMPA) for the treatment of acquired thrombotic thrombocytopenic purpura (aTTP) in adults and adolescents aged 12 and above weighing at least 40 kg [1] Group 1 - Cablivi is the first and only targeted nanobody drug approved for the treatment of iTTP globally [1] - The drug aims to provide faster disease control, reduce related mortality, worsening, or major thrombotic events, and prevent recurrence [1] - Cablivi offers a more effective and safer treatment option for patients [1]

Core Viewpoint - Sanofi views the China International Import Expo (CIIE) as a vital platform for connecting China with the global market, facilitating the rapid introduction of innovative healthcare solutions and deepening integration into the local healthcare ecosystem [1][5]. Group 1: Participation in CIIE - Sanofi has participated in the CIIE for eight consecutive years, leveraging the event's "spillover effect" to accelerate the introduction of innovative drugs into China [2][6]. - The company will showcase 10 innovative products at this year's expo, focusing on key health issues such as cardiovascular diseases, metabolic disorders, respiratory diseases, tumors, and rare diseases [2][5]. Group 2: Innovation and Market Strategy - Sanofi's strategy includes using the CIIE as a launchpad for global product debuts, which allows the company to convert its "first-mover advantage" into market benefits, ensuring that innovative drugs reach Chinese patients quickly [5][6]. - The company has introduced over 60 innovative drugs and vaccines in China, addressing seven of the top ten causes of death in the country and providing immunization for over 10 million people annually [5][6]. Group 3: Local Manufacturing and Investment - Sanofi is investing €1 billion to establish a new insulin raw material production facility in Beijing, marking a significant commitment to local manufacturing as it approaches 30 years of operations in China [7][8]. - The new facility will enhance Sanofi's supply chain resilience and support the company's transition from "Made in China" to "Intelligently Made in China" [8][9]. Group 4: Long-term Vision and Collaboration - Sanofi aims to become a leading multinational pharmaceutical company in China by 2030, focusing on long-term partnerships with local enterprises to explore comprehensive innovation collaborations [9]. - The company has established three production bases and four R&D centers in China, creating an end-to-end value chain from research and development to commercial operations [8][9].

Investment Rating - The report maintains an "Outperform" rating for the industry [1] Core Insights - ASCVD (Atherosclerotic Cardiovascular Disease) is a leading cause of death globally, with significant mortality rates in both the US and China. In 2022, approximately 370,000 deaths from coronary heart disease and 160,000 from stroke were reported in the US, while China saw around 1.96 million deaths from ischemic heart disease and 2.3 million from stroke in 2021 [2][5][26] - The report highlights the increasing focus of multinational pharmaceutical companies (MNCs) on cardiovascular treatments, particularly targeting PCSK9 and Lp(a). The global market for PCSK9 is projected to reach between $11 billion and $19 billion, while the Lp(a) inhibitor market is expected to reach $3 billion to $7 billion [2][3] - Upcoming Phase 3 clinical trials for cardiovascular endpoints are anticipated to yield significant data in the coming years, with several studies scheduled for completion between 2025 and 2029 [2][3] Summary by Sections ASCVD Disease Burden - ASCVD encompasses a range of conditions including coronary artery disease, cerebrovascular disease, and peripheral artery disease. It is associated with significant mortality and morbidity, with controllable risk factors such as dyslipidemia, diabetes, hypertension, and smoking [5][6] LDL-C: Unmet Needs Post-Statin Therapy - Despite the widespread use of statins, a substantial proportion of patients do not achieve target LDL-C levels, indicating a significant unmet need in the market for additional therapies [26] Lp(a): An Independent Risk Factor - Lp(a) is identified as an emerging risk factor for ASCVD, independent of LDL-C levels. Its levels are primarily genetically determined and show a skewed distribution in the population, with a notable percentage of individuals having elevated levels that correlate with increased cardiovascular risk [35][40] Investment Recommendations - The report identifies key companies involved in the development of Lp(a) inhibitors, including Hengrui Medicine and CSPC Pharmaceutical Group, which have entered into licensing agreements with major pharmaceutical companies for their respective Lp(a) small molecule inhibitors [2][3]

Group 1 - The China International Import Expo (CIIE) is seen as a significant opportunity for global trade and cooperation, especially amid rising trade protectionism [1] - Standard Chartered has participated in CIIE for eight consecutive years, benefiting from the platform to showcase business strategies and foster partnerships [1] - Medtronic views CIIE as a crucial event for engaging with stakeholders in the vibrant healthcare sector, emphasizing China's role as a key market and innovation driver [1] Group 2 - Sanofi highlights CIIE as a window for China's ongoing openness and a platform for global exchange and cooperation [2] - The upcoming eighth CIIE will take place from November 5 to 10 in Shanghai, featuring participation from 155 countries and regions, with over 4,108 foreign enterprises exhibiting [2] - The exhibition area for this year's CIIE exceeds 430,000 square meters, marking a new record in scale [2]