Sanofi's sunny forecast for Dupixent and its aging diabetes drugs just might be achievable: analyst

Ever since he took over as CEO of Sanofi late last year, Paul Hudson has been promising skeptical investors that the company’s hot immunology drug Dupixent could eventually hit €10 billion in annual sales. That would go a long way towards making up for Sanofi’s flagging diabetes drugs, but Wall Street analysts aren’t necessarily convinced it’s achievable.

Now, one influential Wall Street firm is making the bull case for Sanofi, declaring not only that the company’s Dupixent forecast is achievable, but that the diabetes situation isn’t as bad as it looks.

Geoffrey Porges and his colleagues at SVBLeerink peg sales of Dupixent at €3.5 billion this year and €9.1 billion in 2026. That long-term forecast is 10% to 15% higher than the consensus estimate.

It's built on expectations for new Dupixent approvals. The med is currently approved to treat atopic dermatitis, sinusitis and asthma, but SVBLeerink’s analysts believe it has a good chance of success in a half-dozen or so other diseases, including esophagitis.

The reason for their optimism? Anecdotal reports published in the scientific literature suggest that Dupixent works in several diseases that are not yet included in the product’s label, they said. That bodes well for “multiple label expansion opportunities,” they wrote in a report to investors.

Several trials are underway and “adoption should be relatively high, provided Dupixent shows efficacy consistent with the anecdotal reports. At this stage the biology of these diseases … suggests that there is a relatively high probability of a positive outcome from these trials,” they said.

During Sanofi’s fourth-quarter earnings call last week, Hudson said that with Dupixent, “I think we have a realistic expectation to be the leading biologic in the dermatologist's office. Likewise in allergists.” As for the future, he added “the foundation stones are very, very strong for what we are doing with Dupixent across multiple geographies, multiple indications and multiple specialty groups.”

RELATED: Dupixent sales of €10B? We're on track, Sanofi CEO Hudson says

Dupixent’s strong 2019 growth—sales jumped 151% to €2.1 billion for the year—came amid declining sales of Sanofi’s diabetes products. Revenues for the diabetes franchise fell 8% to €5.1 billion.

In fact, Sanofi’s diabetes sales grew reliably until 2015, but they've been falling every year since, SVBLeerink pointed out in a second report to investors. Much of the decline was attributed to biosimilar competition from Eli Lilly, which has cut into Sanofi’s dominance in the long-acting insulin market. Sales of Sanofi’s Lantus have been cut in half by Lilly’s rival Basaglar.

Still, SVBLeerink predicts that the decline of Sanofi’s diabetes business will stabilize starting in 2021, thanks to Toujeo, its ultra-long-lasting insulin product. Sales of Toujeo grew 3% to €883 million last year. The analysts expect sales of the product will increase to €1.2 billion in 2023.

“Our estimates and confidence in the [diabetes] business unit’s stabilization are based on flattening market share loss, moderating price declines, and ex-US revenue growth,” they wrote.

RELATED: Sanofi CEO Hudson singles out his digital ambitions in big executive shakeup

Earlier this week, Sanofi followed up on its fourth-quarter report by shaking up its top management ranks, shrinking the executive committee from 14 to 10 people. The change included separating the roles of chief medical officer and chief digital officer, both of which were held by Ameet Nathwani. He was among the executives who headed for the exits.

Hudson said during the fourth-quarter conference call that boosting the role of chief digital officer would help the company “improve our user experience and data science management internally.” He admitted Sanofi has been slow to embrace technologies like AI in drug discovery and development.

Whether all these changes will help Sanofi reach its lofty goals for Dupixent remains to be seen. There are plenty of obstacles, including brewing competition from more than 20 immunology drugs in the pipeline. Nevertheless, SVBLeerink said, “Dupixent is the brightest spot in an otherwise fairly lackluster pipeline and portfolio.”