When Belén Garijo, M.D., Ph.D., left the top job at Germany’s Merck KGaA to head over to Sanofi, she was inheriting a company in need of course correction.
Paul Hudson, the previous CEO at the French pharma, had been pushed out after a string of high-profile setbacks in Sanofi’s clinical-stage pipeline. They included the anti-OX40L-ligand antibody amlitelimab flunking a phase 2 asthma trial, the oral TNF inhibitor balinatunfib missing the goal of a midstage psoriasis study and the Regeneron-partnered IL-33 candidate itepekimab failing one of a pair of phase 3 studies in chronic obstructive pulmonary disease.
Every setback increased the pressure on Sanofi to find a replacement for the revenue lost when Dupixent comes off patent around 2031.
Sanofi’s decision only last week to finally call time on amlitelimab in atopic dermatitis—once touted as a $5 billion opportunity—was a reminder of how far the company’s pipeline had drifted off course.
When Sanofi’s board appointed Garijo in February, they were clear about her mission: to “bring an increased rigor to the implementation of Sanofi's strategy,” as well as “strengthen the productivity, governance and innovation capacity of R&D.”
It seems like Garijo got the memo. While the incoming CEO has kept a low profile for her first few months in the post, she used a second-quarter earnings call with journalists on Thursday to open herself up to detailed questions on her approach to the business, clinical strategy and acquisitions.
Garijo explained that she has spent the first 12 weeks on the job getting to grips with the company, as well as “translating those convictions into decisions.”
Backed by former Roche executive Paulo Fontoura, M.D., Ph.D., who Garijo has appointed to join as Sanofi’s head of R&D in September, the CEO is looking to “simplify the way we make decisions.”
“Our principle is quite straightforward,” she explained on the July 30 call. “We will continue to invest where science is strongest, where unmet medical need is greatest, and where we can create sustainable long-term value.”
This ruthless approach to the pipeline was demonstrated by some updates in this morning’s earnings announcement. They revealed that amlitelimab has now been joined on the scrapheap by two other culprits behind last year’s poor clinical track record—balinatunfib and itepekimab.
Garijo acknowledged these changes, while pointing out that the “portfolio strategic assessment is still ongoing.”
So could other high-profile programs also soon find themselves joining amlitelimab and balinatunfib in the clinical trashcan? Garijo told Fierce on the call that the company doesn’t “have a target number of products to discontinue.”
“We are going to look very deeply at our current late-stage portfolio, and we will decide on scientific needs, potential to create long-term value, and obviously ensuring the right risk profile of our pipeline moving forward,” she added.
Despite more changes on the horizon, Sanofi’s commitment to its key focus areas of immunology, rare diseases and vaccines remains unchanged, Garijo said on the call.
Fierce also asked Sanofi’s leadership whether these pipeline changes are likely to entail a wider restructuring across the company and related job losses.
“We don’t have restructuring plans per se that we are working on—we have many initiatives of cost efficiencies across the organization,” Sanofi’s Chief Financial Officer François Roger responded. “At the end of the day, what matters is what will be the impact on our bottom line.”
Acquisitions remain on the table as a way to restock the pipeline, with Garijo explaining that Sanofi is looking for “potentially additional growth opportunities [that] will continue to complement our internal innovation.”
In his own response to a question on the topic, Roger hinted that Sanofi would consider joining the recent Big Pharma trend for megadeals.
“Historically, we had said that we were rather targeting smaller assets in the range of $2-5 billion, because we were essentially focusing at that time more on early-stage assets—phase 1, phase 2,” he told journalists on the call. “We have a little bit of a larger view today.”
Still, the CFO was careful to stress that the company is “not focusing on size” when it comes to dealmaking.
“We are more focusing on the relevance from a scientific point of view, from—as Belén just said—in terms of unmet medical need, in terms of commercial potential,” he added. “So it’s not about size; it's more about relevance against our portfolio, against our skills and knowledge.”
Apart from clearing out some underwhelming late-stage candidates and a willingness to slightly dial up the M&A spend when needed, how else will Garijo’s reign differ from the past few years? It sounded like the rhetoric is going to become more realistic, with the new CEO seeking to avoid getting swept up in blockbuster predictions. Instead, the benchmark for keeping a drug in the clinic is going to be raised.
“Whenever we have a transition between phase 2 and phase 3, I want to make sure that the data that we have coming from phase 2 studies or phase 1b—depending on the therapeutic area—justif[ies] a significant commitment of capital and, of course, that we have a realistic view of the potential of the asset in order to make a fact-based decision,” she said.
With the pharma raising its full-year sales forecast on the back of strong Dupixent sales, it looks like Garijo has some breathing space to see her new strategy take root. Whether it blossoms into a higher hit rate for late-stage trials remains to be seen.