Sanofi (Euronext:SAN) Q3 2026 Earnings Call

0:00 Hello everyone, this is Thomas Kudsk Larsen from the Sanofi IR team. Welcome to the third quarter 2026 results and strategy update for investors and analysts. Facts can be found on sanofi.com. Please turn to slide number two. Here are the forward-looking statements. We would like to remind you that information presented in this call contains forward-looking statements which are subject to substantial risk and uncertainties that may cause actual results to differ materially. We encourage you to read the disclaimer in the presentation. We also refer you to our Form 20F on file with the USHCC and our French Universal Registration Document. We'll make comments on our performance using constant exchange rates and other non-IFRS measures. Numbers used are in millions of euros and for the third quarter of 2026, unless stated otherwise.

0:50 Turning to our agenda on slide number three. Our CEO, Belen, will provide an update on third quarter progress and strategy followed by the business results. Our CFO, François, will review our financials for the quarter, followed by our new head of R&D, Paolo, who will share his first reflections and thoughts over the past two months and also cover the pipeline. For the Q&A, we have the support of Manuela and two times Thomas to cover our global businesses, as well as Jamie, our new general counsel. You can participate in the Q&A in two ways, either raise your hand in Zoom or submit your question using the Q&A feature. Now I hand you over to Belen. Thank you, Thomas. Hello, everyone, and thank you so much for joining us today.

1:35 First of all, a very warm welcome to Paolo Contura, our new head of R&D, who is eager to share initial reflections and priorities later on this call. I'm now on slide number five to start with the progress of our strategy and to signal the progress on execution during the quarter. When we last connected in July, we set out a number of priorities. Today, I can confirm we have made meaningful progress with the support of our board. After completing a rigorous diagnosis of our starting point, we are progressing well towards defining our roadmap for the future. We have confirmed our commitment to three focus areas. Immunology, Rare Diseases and Vaccines.

2:30 Where we are highly competitive, we see robust growth opportunities as well as the potential for differentiation. The new leadership team, including R&D, is driving sharper decision-making, including through new governance. Together, we made already our first Both are bold choices regarding pipeline optimization, deciding to discontinue AMLI-Telemap and Itepecimab. In parallel, we continue to execute on our simplification agenda. The partnership with the Teplafarm that we announced last month allows us to exit a growth dilutive business while ensuring these mature medicines will continue to reach patients.

3:23 Planning for Dupixent's loss of exclusivity is our top priority and we have taken the first step in this direction. We expanded our alliance with Regeneron and hence gain access to four new immunology compounds. This is simply a start and we will also turn to BD and M&A to secure growth. More to come on this later. While we continue to advance our transformation agenda, we stay very focused on maximizing our performance, as illustrated by the strong quarter where we deliver both robust commercial and financial results.

4:09 Moving forward, our journey will be catalyzed by a culture of greater accountability, increasing discipline, and rigorous execution, as I already mentioned during our Q2 call. On slide number six now, as previously said, our top priority is to secure growth through and beyond Looping Sense LOE. We will build on our strengths, notably commercial execution, create value through BD and M&A, leveraging our strong balance sheet and financial resources. And François will share more details on these points later on.

4:54 Between now and 2030, We expect Dupixent's sustained leadership, the momentum of our recently launched medicines and our resilient vaccine business to continue to expand our revenue base. While we reset R&D, external innovation will in parallel play a very significant role. We intend to leverage business development and M&A, including late stage and commercial medicines, with a center and shared focus on our three therapeutic areas. Discipline Bolton acquisitions will continue to further support the development of our early stage pipeline.

5:45 And additionally, we plan to source innovation globally, including from China, which, as you know, is a thriving hub for scientific advancement. Beyond 2030, we expect a stronger and more productive R&D engine to become a larger source of innovation than today, and this will complement external opportunities and help propel our growth trajectory. On slide number seven, I share with you in Q2 that our alliance with Regeneron was a strategic priority for me and the leadership team. Since then, we have delivered on our objective to define the next chapter of this partnership in a matter of a few weeks. This relationship has already been recognized as one of the strongest collaboration and success stories in the pharma industry with Dupitzen.

6:46 And that is the foundation from which we are building for the future. Benefits from Sanofi, as you see on the slide, stand well beyond the next three years. This is, no doubt, a win-win where both companies are equally incentivized to succeed with focused investment and payouts linked to milestones driving disciplined value creation. The long-acting anti-IL-13 in atopic dermatitis strengthens our leadership in the large and growing AD market Capitalizing on physician and patient preference for sustained efficacy and safety with less frequent dosing. Importantly, we aim to launch this medicine ahead of dupixent biosimilars.

7:46 The ability to leverage our commercial infrastructure grounded on specialty-rich, differentiated payer access and world-class patient services is expected to drive faster uptake. The expanded alliance shows our ability to execute swiftly on our priorities driven by transparent discussions and building trust as shown by the settlement of previous litigations. In summary, this transaction is an important first step to replenishing our early stage pipeline. But beyond this alliance with Regeneron, we will continue to build on our immunology leadership, both through external and internal innovation to secure sustainable growth well into the next decade. And this includes other important partnership, for example, the one with Teva for Duba Kituka.

8:51 Let me now summarize how we are preparing for the next decade on slide number eight. Between 2026 and 2013, our strategy will be focused on disease areas within immunology, rare diseases, and vaccines. We will continue to drive profitable growth through strong commercial execution and cost discipline. alongside robust cash flow generation to fund business development and M&A transactions in particular with a focus on late stage and or commercial opportunities. In parallel, our R&D transformation is already underway with the aim of enhancing our pipeline and our R&D productivity.

9:43 Beyond 2030, we aim to further capitalize on internal pipeline contributions to diversify our sources of growth. We expect total revenue at group level to be impacted only moderately by Dupixent's LOE, with our focus being on preserving earnings and cash flow. This is achieved, we will focus on accelerating earnings growth. As our progress since Q2 shows, we are fully committed to executing on our plan and moving with the necessary sense of urgency. We intend to keep moving at the same pace and look forward to providing greater granularity on our priorities and meet to long-term roadmap during a strategic update before The year end.

10:46 Now turning to the Q3 business performance on slide number 10. Q3 was another quarter of a strong growth. Our total sales reached 14.4 billion euros, up 14.3% versus last year. Our pharma launches grew over 31%, driven mainly by Altuvio, iVaKit and Resuro. Vaccine sales were impacted by respiratory vaccines facing this quarter. The increase in other medicines was driven by the diabetes portfolio, partially offset by divestments and legacy medicines. Dupixen again delivered a strong performance, surpassing 5 billion euros for the second consecutive quarter with the growth coming primarily from increasing demand.

11:46 Overall, this quarter reflected the strength of our core growth drivers. Moving on to slide number 11, the momentum of our portfolio of newly launched medicines and vaccines is providing a meaningful contribution already to our top nine. In Q3, we welcomed a new medicine into this portfolio, Anxu, Grovodytsinib, the first rock-jack dual-acting inhibitor for patients with myelofibrosis in China. Sales of new launches reached approximately 2.2 billion euros in Q3, a growth of 19.2%.

12:34 And this portfolio now accounts for roughly 15% of total company sales, showing the ongoing diversification of our business growth. Turning to immunology on slide number 12, Dupixent sales reached 5.7 billion euros in the quarter, and more than 1.5 million patients are currently under treatment globally. US growth was driven by a strong demand, as I already mentioned, and by an extended benefit from operational improvement, which resulted in favorable gross-to-net price adjustments.

13:25 In the US, 2% remains the number one prescribed biologic among key prescriber groups. Outside the US, strong growth was driven primarily by demand from market expansion across major indications in Germany, France, in Japan, Canada, and China. On slide number 13, we see rare diseases. And our rare disease portfolio reached 1.9 billion euro in sales, up by 12.6%. Must sell and other performance was driven by IVA kits with increasing number of patients starting therapy.

14:18 This category also includes three new medicines. Micorso, Anshu, and Redemplo, now available to Chinese patients. Rare blood performance was supported by Altuveer's continued growth momentum, complemented by recently launched medicine Wild Ritz, Tabibli, and Q-Fitlia. Lastly, sales from medicines for lysosomal storage disorders remained resilient despite short-term supply constraints for some of our pumping medicines. Overall, rare diseases deliver another strong quarter of growth.

15:07 Moving to vaccines on slide number 14, remember that at Q2, we have indicated the potential for a low to mid teens Sales declined in Q3, reflecting the fashion of our respiratory vaccines. While flu was down as expected, the franchise declined by 7% versus Q3 of last year, which is better than indicated in Q2, thanks to more favorable buying patterns than anticipated for before-truths late in the quarter. On PPH, Eplipsa B grew by 60% on a pro forma basis to 125 million euros, well ahead of our initial acquisition plans.

16:02 Overall, the franchise of vaccines demonstrated strong resilience in a dynamic market environment for the full year, We expect vaccine sales to be down by a low single digit percentage. And with this, I'm now going to hand it over to François, our CFO, who will take you through our financials in more detail. Thank you Belen and hello everyone. Starting with slide 16, net sales grew strongly again in Q3, up by 14% to 14.4 billion euros. UPIXAN continued to see strong growth, driven by demand and by favourable growth to net adjustments.

16:48 We have also made operational improvements last quarter that have had a positive impact on pricing, for example, controlling the inappropriate use of 340B rebates in the US and enhancing our gross to net provision management with data-driven tools. Our pharma launches maintained solid momentum and vaccines were impacted by an unfavorable sales phasing in Q3 versus last year. If you exclude the items that are more one-offs in nature, the underlying group sales growth during the quarter is estimated at around 12% in Q3. Gross margin improved by 2.1 percentage points. This was driven by a favorable product mix as well as by the pricing impact highlighted earlier. Operating expenses were basically stable as OPEX of acquired businesses were almost fully factored into our cost base last year.

17:43 And more importantly, as we execute very strongly our cost discipline programs, including R&D prioritization. BOI increased by 19.7% in Q3. BOI margin expanded by 1.9 percentage points, driven by operating leverage. This was partly offset by higher profit sharing with Regeneron, reflecting Dupixent's strong growth. And our Q3 BOI was also impacted by the end of the Regeneron development cost reimbursement that took place at the end of Q2. Overall, business EPS grew by 19.6%, delivering profitable growth once again this quarter. Turning to business dynamics on slide 17. As Belen highlighted, we expect vaccine sales growth to decrease by a low single digit in 2026.

18:36 We also expect other operating income and expenses to increase in Q4 versus the prior year, driven by the net impact of two opposite factors. On the one hand, regional profit sharing has steadily increased, reflecting Dupix and Strong Growth and in addition the reimbursement of the Regeneron Development Balance ended in Q2 resulting in a BOI headwind of about 500 million euros in H2 2026 evenly distributed between Q3 and Q4. On the other hand, capital gains for the full year 2026 are now expected to be lower this year at around 250 million euros, with most of it already booked to date.

19:22 The end of the R&D reimbursement by Regenerand will be fully offset by the increase of Amvutra royalties for the full year 2026. We are upgrading our 2026 guidance to reflect the strong business momentum to date. We now expect sales to grow at a low teens percentage, which usually means a range of 13% to 15%, and we expect business EPS to grow at a mid-teen percentage, which usually means between 15% and 17%. Now a quick word on 2027. While I do not intend to provide the formal guidance today, it's too early, I would like to flag a few items for early consideration.

20:11 In previous years, our sales growth has been driven by demand with a slightly negative price component. This year, sales growth is also driven mainly by demand, but as I highlighted before, we also experienced several positive price effects. Some of these are creating a new price base, while others are one-offs. While we expect our growth to be driven by demand again next year, we also expect pricing to return to its historical pattern in 2027 which means a slightly negative pricing contribution to our global sales growth. As announced earlier this year, we are continuing to actively manage our legacy portfolio, as evidenced by some business contribution and asset contribution to Chez Plafarm, and as evidenced by the sale of Medley, our generic business, in Brazil.

21:03 Both transactions will reduce our sales next year by around 1.3 billion euros, but they allow us to focus on science and to exit margin-dilutive businesses. Turning to slide 18, which echoes the strategic priorities Belen outlined earlier, we have a very strong cash flow generation, which enables us for disciplined capital allocation, including BD and M&A. We expect industry-leading growth until 2030, driven by continued momentum for Dupixent, new launches on vaccines, alongside our resilient base business. We are accelerating profitable growth with steady growth margin expansion as well as continued operational excellence and strict cost discipline.

21:55 Lastly, our strong balance sheet and low leverage allow us to access external financing for BDNM&E while retaining a strong investment-grade credit rating. We confirm our commitment to our dividend policy as reflected with 31 consecutive years of dividend increases in absolute value in euro. I now hand over to Paolo, our new head of R&D, who will share the latest development of our pipeline.

22:24 Thank you, François, and hello everyone. I am delighted to join Sanofi at this pivotal moment as we tackle the industry-wide challenge of sustaining R&D productivity. Tackling this problem requires addressing multiple interconnected factors, a bit like treating a complex chronic disease. R&D is really no different from that. There is no one simple solution. Success depends not only on strong science and individual capabilities, but on how well we connect them, make sound decisions and align around shared goals. We are building on our strengths, deepening collaboration. We can create a more integrated, agile R&D organization that translates scientific innovation into meaningful benefits for patients. On slide 20, let me share some initial reflections from my first eight weeks.

23:12 In research, we intend to leverage our platforms better, accelerate the integration of AI in drug discovery, and expand access to external innovation. In development, we will put rigorous evaluation of data and science first, continue to expand the use of adaptive study designs and build a balanced risk pipeline with few high-risk, high-return opportunities at a manageable overall risk profile with disciplined execution. Across R&D, globally, we intend to sharpen our portfolio focus around our core areas, while pursuing selected moonshots, further strengthening governance through technical reviews, and increase talent density overall. Above all, we will act decisively to build a sustainable pipeline.

24:02 Now on slide 21, turning to our pipeline status and key focus areas. Our pipeline comprises 61 development projects across pharma and vaccines, including 36 new molecules. While we lack peers, we have complete actions to close this gap. AI will be a key lever across the R&D value chain. We are going to use it to accelerate discovery through target identification, Screening for combinations and AI design candidates while enabling faster data-driven decisions and higher clinical success rates ultimately shortening development cycles. Our ambition is to deploy integrated AI agents company-wide and to expand strategic partnerships in this area.

24:50 China is another important source of innovation with an ecosystem that reaches translational efficiency faster. We intend to leverage these capabilities to shorten clinical timelines, reduce costs, and accelerate patient access to innovative treatments. We will keep on building strong relationships with the local biotech environment. On the appendix slide, we highlight some of our China deals, including the commercial agreements for Uru Demplo and Mycorrhizae, and the clinical development collaboration with Aung Suu. On slide 22, let me go through some of the Q3 highlights. We received the Avakit 50 mg US label expansion in Dolan systemic mastocytosis and Menquadfi in the EU for meningococcal disease from 6 weeks of age. Ezild was accepted for review in the EU for stage 2 type 1 diabetes in children aged 1 to 7. We also received two regulatory designations, Befortis Priority Review in China for the second RSV season and SP0289 EU Prime designation for pandemic H5 influenza.

25:59 On slide 23, and building on Belen's remarks, we've expanded our alliance with Regeneron to bring four next-generation long-acting monoclonal antibodies targeting type 2 inflammation from the Velocimune platform. The first is an anti-IL-13, which is already in phase 1 for atopic dermatitis, with potential dosing every 3 to 6 months. Registrational studies are expected to start in late 2027 or early 2028, positioning it as a potential follow-on to Dupixent as early as the beginning of the next decade. The other three are set to enter phase 1 studies in 2027. We have an anti-IL-4 receptor alpha antibody with potential to succeed Dupixent with improved properties on higher affinity and longer half-life, an anti-IL-4 antibody for combination use, and a bispecific IL-4, IL-13 antibody blocking both pathways in a single molecule.

26:59 Separately, Sanepi will complete the ongoing LUNSECIMIC COPD program with readouts expected in 2029. Upon completion of the two Phase III studies, there will be the option for Regeneron to bring this nanobody into the Alliance portfolio. On slide 24, let me talk about our research platform, where we are doubling down on replenishing internal innovation. We have approximately 2,000 colleagues across pharma and vaccines research, with main sites in France, Germany, the US and China, whose role will continue to grow. Our capabilities currently span biologics, synthetics, and genomics, and our priorities are to build a sustainable, high-quality portfolio in our focus areas while selectively exploring wide spaces and moonshots in areas of emerging science.

27:51 We aim for a balanced, lower-risk portfolio with a 50-50 internal-external sourcing split, increasing contributions from China, and upper quartile speed and cost performance. As the chart shows, we are ramping up output across pharma and vaccines with the ambition to start 12 to 15 first-in-human studies each year while maintaining the highest quality standards. Turning to slide 25. Our approach in development is guided by robust, beta-driven decisions. When the evidence supports advancing a program, we invest. When it doesn't, we reallocate resources. Following a thorough and ongoing benefit-risk review, we decided not to pursue global regulatory submissions for amlitalimab in atopic dermatitis, and we also discontinued etapecumab development in COPD and chronic rhinosinusitis, reflecting the available data and competitive landscape in these areas.

28:49 LUNSECAMID continues with phase 3 studies in COPD and phase 2 study in high-risk asthma, The Phase II results in moderate to severe asthma were encouraging, but differentiation remains to be established. For Dvacotoc, we are exploring potential additional indications while focusing on execution, differentiation, and generally expanding options for patients with IBD. In neurology, the Frexalamab Phase III program across multiple sclerosis is ongoing, with study adjustment for a longer observational period to capture sufficient events and strengthen statistical power. Finally, SINRIFKI has had a limited launch in Germany under a strict risk management program with encouraging initial feedback, but we did not plan to expand this development program.

29:38 On slide 26, let me share our key mid and late stage development portfolio. While the strategic assessment of our pipeline is ongoing, we continue to advance a portfolio of important medicines and vaccines for patients, with several key data readouts expected in the coming months that I will highlight on the next slide. Let me now turn to slide 27 and our expected news flow. Next year, we expect phase 2 data for luncecumic in high-risk asthma and brevecumic in hydrogenitis suppurativa, followed by multiple phase 3 readouts, including reliprobarc in CIDP versus IVIG in our pneumococcal and yellow fever vaccines. In 2028, we expect phase 3 readouts for duvacatab in ulcerative colitis, whale risk, life cycle indications, and frexalamab in multiple sclerosis.

30:30 Beyond these clinical milestones, we also anticipate multiple regulatory submissions and decisions for medicines and vaccines already under review. Before I conclude, I want to thank all our colleagues across Sanofi R&D for their continued commitment throughout this period of change and for their unwavering focus on bringing new medicines and vaccines to patients.

30:53 We'll now open the call to your questions. As a reminder, we would like to ask you to limit your questions to one or two each. You will be notified when your line is open to ask a question. At that time, please make sure you unmute your microphone. Option two, submit your question by clicking the Q&A icon at the bottom of the screen. The question will be read by our panelists. The first question is for Matthew Weston from UBS. Matthew?

31:22 Thank you very much. Two questions, please. The first, I think, probably for Manuela. Looking into 2027, your Depixent competitor is getting much more vocal on EBGLIS and stepping up DTC. Given we're solidly in PBM negotiating season, can you let us know whether you think there's any risk of major formulary changes next year or net price movements, or are payers prepared to support all of the products like they did this year? and just quickly following up on the comment around more normal trends for Dupuy in 2027 should we expect the normal step down in gross to net price in Q1 that is just the traditional seasonality and then a second quick one for Pablo you use the term registrational enabling studies for the long-acting IL-13 is that phase three and I ask because it triggers a milestone Very good. So thank you, Mathieu.

32:21 First of all, about your question on EPCLS DTC, I think The first thing that I will say across all indications, and the same is true for atopic dermatitis, we're very pleased with Depixen's performance in Q3, but also throughout the year. The vast majority of that performance is driven by demand, and that is true also for atopic dermatitis. What you will remember is that advanced therapy penetration in atopic dermatitis and almost all the other indications are still very low. We're talking about 20%. Advanced Therapy Penetration and AD, and by EPCLS and other competitors, but also ourselves, educating patients through DTC and other means, you're actually helping create more awareness for all products in this space, and that's what we need.

33:14 We need more patients to come into advanced therapies, including Depixent, and with us Having the majority of the market share in this space, we will also have the majority of the benefit. But again, more players in this space is going to help actually create more awareness, more market growth and that's ultimately what we want to see, more benefits for patients. On your second question for 2027, we've had an amazing year this year. We obviously create a larger base then for comparison for next year. So we expect year to year growth to moderate. But we also expect that demand growth will continue. You will likely see the same Q1 adjustment that we see in the US every single year. But again, demand growth will continue to stay strong also in 2027.

34:06 Thank you, Matt. Just to clarify, currently the status is that we've started the Phase 1 studies in the Q2 of this year, and the studies are ongoing right now. We are looking forward to seeing the full Phase 1 data, which includes PK and safety. So far, the data looks good. And of course, we will, if those data continue to be positive, accelerate towards Phase 3 studies. Okay, the next question is from Louisa Hector from Berenberg. Louisa?

34:36 Thank you very much. A couple from me, please. So maybe just to remind us on M&A business development, your capacity for deals now that you've struck the Regeneron with the payments there. So this capacity for deals and perhaps a little bit more colour on how this is different from before, because M&A was a strategy previously. So how are you thinking about it differently to before? And then on the comments, the slide that mentions Frexalamab and the optimization of those phase three trials, can you explain anything? What was that optimization? And are there other trials which have been similarly optimized?

35:25 I'm thinking, for example, in lunsecumig, COPD, maybe some of the HS trials. So just keen to get any color there. from Paolo. Thank you. So thank you Luisa. Let me start with what is different from before and then I will ask François to speak about the capacity for deals. So as I mentioned, we are laser focused on ensuring growth beyond DUPIX and LOE, ensuring that we mitigate our DOI impact. We know that the pipeline and the R&D reset will take a bit of time to materialize and bear fruits. So the reason why we are moving to later stage commercial assets will allow us to the risk scientifically and clinically, but also leverage our commercial capabilities much better A priori, I have to once again emphasize that we will stay extremely disciplined to ensure that any deal, regardless of the size, fits our strategic, scientific, and financial criteria. With this, François, perhaps you can comment on capacity.

36:41 Thank you Belen and good afternoon Louisa. I know that everybody is looking at an amount, so I'm not in a position to give you an amount. I wish I could. First of all, because we are looking at a different set of options in terms of BD and M&A. It's not necessarily one asset, it could be one asset, it could be different deals and several deals and transactions as well. It's less a matter of value, it's exactly what Belen just said. First and foremost, it's about strategic intent and scientific relevance. and then obviously from a financial point of view first of all we are conservative people so we have a conservative financial policy so it's driven by returns obviously and it's driven by outcome and by outcome what I mean is that we want to retain a strong rating anyway so that puts a limit to a certain extent to what we can do because we do intend to retain a strong rating and as you heard me saying earlier we are totally committed as well to our dividend practice where we have increased our dividend for 31 consecutive years.

37:39 Now turning to your question, Louisa. So first of all, thank you. I would say this is very much one of my areas of focus in my first eight weeks here and will continue if we've gone through and I'm going through the whole pipeline and speaking with the teams and looking at the ongoing studies and what else we can do or should be doing to increase probability of success. So very, very specifically on the Fraxelimab program, this is a phase three program that, as you know, is being studied both across relapsing and secondary progressive multiple sclerosis patients. The trials are fully enrolled right now. And these are superiority studies looking at analyzed relapse rate and confirmed disability worsening at six months as a key endpoint. And the trials were designed as event-driven trials.

38:26 So as part of what we've started since I came in, which is very thorough technical review process of all of these studies, we continuously monitor how the trials are performing. And in this case, we feel that prolonging the observational period for those studies actually allows us to collect the sufficient events that will sufficiently power the studies for the statistical analysis plan. I would say that's one of the, let's say, more impactful decisions in the short term, but this is certainly an ongoing process. The next question is from Sachin Jain from Beaufort. Sachin?

39:04 Hi there, Sachin Jain, Bank of America. Two questions, please. Firstly for Belen, I think in your intro commentary you mentioned the potential for a strategy event by year-end. You'd previously indicated you would do that when you had enough to say, so should we be hopeful of M&A by year-end, or what would you think you could discuss over and above what you've talked about today? The second question is for François on margins. Obviously, the quarter is evidenced by very strong cost control. So maybe you can just update us on your thoughts on margin development into 27. Prior comments have been, I think, flattish. So where do you sit now? And if I can add an addendum to that, I know you used consensus for Amvutra, but there's substantial debate overnight on the All-Ireland call regarding 27 Amvutra outlooks. So just any thoughts there?

39:50 Thank you. Thank you, Sachin. You know, our strategic event is aimed to bring additional clarity to you and your investors and our investors on the disease areas where we intend to play and not to play, how we aim to mitigate the duplex and LOE and long-term ambitions, including How are we going to deal with the R&D turnaround? So Paolo shares some impressions, but I think it merits a bit more color so that you understand what we are going to be doing in coming months. And of course, showing to you our capital allocation strategy and framework, including the role of BD and M&A in our long term trajectory. Of course, this is You know, regardless of any potential event that can be communicated at any time before the end.

40:59 I think that covers your question. It's a question on cost control. So Sachin, on cost control, indeed, we are very pleased by what we have seen in Q3 and you will see the same in Q4, which is strong growth and alongside basically flat OPEX, which means that we get the fall through to the bottom line and we get the benefit of the growth leverage. It's too early to give some guidance on 27 and this is not the right time to do it. But that being said, do expect probably something similar, which means profitable growth, which means that we will have a certain level of growth, which I don't want to comment at this stage, but our cost base will grow at a lower level than ourselves. So we do confirm what we have confirmed anyway for what we have said for a few, for some time already. We will increase our BOI in absolute value next year as well as in BOI margin. By the way, it's not only for 2027.

41:54 We expect to do that each and every single year between now and 2030. So profitable growth each and every single year. And that in spite of two things. In spite of 2027, The impact in H127 of the end of the R&D reimbursement, because we get the impact in H226, but we will get the impact as well in H127. But in spite of that, we expect to grow our BOI. In absolute value and in BOE margin. As far as Ambutra is concerned, we took note of what they announced yesterday. We don't see any impact for 2026. We're already well advanced. You can see anyway that we will get probably a billion euro of royalties from Ambutra this year in 2026. I don't see any change versus what we had in our plan.

42:41 as far as 27 and the following years is concerned I need a little bit of time to update our model because we are not speculating to a certain extent on the level of royalties going forward we are taking the consensus from the market extracted from sales of as provided by analysts. So I wait a few days to see a little bit what that means for the medium term. It may have some moderate impact going forward for us from 27 to 2030, but it's still early for me to comment. I'm not necessarily worried. I don't think that this will be that material for us. The next question is from Michael Lushton from Jefferies. Michael?

43:23 Thank you. Two questions, please. One, François, just going back to your comment just now, when you talk about the OPEX growth below sales for 2027 and 2028, is that purely organic or are you already leaving some wiggle room here for M&A, BD that may come into the equation? So if you did something that came with R&D, can that be tucked into your outlook or would that be incremental to what you just said? And then a question for Paolo. My understanding is you've joined with one remit to really focus a little bit more on research as opposed to development, which I think is what your slide was all about. Now managing for speed of execution, it's all well and good, but can you talk a little bit about how you're going to think about Getting assets into the organization that allow you to be quick with or is there enough there that you can go through?

44:17 So like getting the stuff to work on that you then can speed up and deploy the stuff that you outlined to like, how do you think about that? Thank you. Michael, I would say difficult to answer to your question. My comment, obviously, for 27 is based on an organic growth next year. Plus, we always factor some Bolton in terms of acquisition. After that, as long as we have not announced anything or done anything in terms of BDNM&A, if there was anything more significant than Bolton, difficult for me to reflect and to comment on that because we have not announced anything. So Let's see what the future will be made of. But once again, it's based on organic growth plus the traditional Bolton that we have done traditionally over the last couple of years.

45:03 Yeah, thank you, Michael. Maybe one point before the full answer. My focus is not only on research. My focus is across the whole R&D value chain. And research is definitely very much a part of that. But we're looking at development deeply as well as we speak. Even right now, you saw the comments I made about the review of the pipeline and increasing the probability of success for our ongoing study. So again, the focus is very, very end-to-end. Regarding your question specifically, we do have some very good internal assets, both in research as well as in development. And we're going to maximize their use. We have the ongoing review for all of them. But again, if there's an opportunity to either increase their PTS, increase their speed, expand their use across more line extensions, etc., we're looking at all of those things as we speak. Internally, we have a number of partnerships that I'm particularly excited about. I don't need to go into all those details, but it's also clear from my comments that this is not going to be enough for us.

46:04 So we are doing, as we review the ongoing internal pipeline, we are looking at many opportunities to either strike collaborations. Belen and François already mentioned the opportunities for BD and for M&A. Obviously, the expansion of the alliance with Regeneron is something I am very excited about. This is a great company with amazing scientists and the assets we're getting in from that collaboration are going to be really key for us in one of our core areas of strength. And then just to finalize, what I want to make sure as well is that we are expanding not just in traditional biopharma, if you want, we're also incorporating AI technology very much in research, but across research and development. with two different intentions if you want on the research side to increase the research funnel to have more targets more drugs more diversity of chemical space and in development to do there to focus on speed efficiency delivery but i would say this is a very encompassing end-to-end strategy right now the next question is from richard vosser from gp morgan richard

47:12 Hi, thanks for taking my questions. Two, please. Just on the back of Paolo's comments there, how should we think about the R&D spend going forward? There's not a lot of late stage development at the moment. So should we anticipate, you know, even spend being slightly down in 27 before increasing again or a flat budget? Just thoughts on that. and then secondly just going back to Dupixen it sounded from the comments that you know we should anticipate volume growth with a little bit of price decline next year I mean that sort of pushes towards almost the 25 billion euro level even next year so just wanted your thoughts on that sort of thinking thanks very much

47:57 Maybe I'll take that first part. So it's a great question. Sanofi already has a very significant investment in R&D. We don't expect it to really change much in the next year. The focus will change though, because as you say, of course, the late stage pipeline is now shorter. We are looking at existing molecules to see what else we can do with them. So you might see some additional trials, indications, etc. But where we're actually pivoting towards is the earlier stage in research. So we will increase definitely investment there, including in AI, as I mentioned. And of course, as we bring in these new molecules, including the Regeneron molecules, we may increase investment there. But overall, our commitment to investing in R&D is the same as it was.

48:46 And on the dopixent question, Richard, as I said earlier, we definitely expect that the strong demand growth will continue. But when you look at it on a comparable base, the base, of course, increases and therefore the growth will moderate. But having said that, when we look at the 25 billion, and that was a number that we gave at constant exchange rate, we're very confident that we can confirm that by 2030. At this point, we're not prepared to talk about an acceleration here, but definitely strong growth. We're very happy with the growth and we're definitely confident that we'll get there. The next question is from Peter Veldhoud from BNP Exxon. Peter?

49:32 Hello, I'm Peter Veldhoud from BNP. Two questions on R&D and depiction, please. Paolo, I realize this is unfair, given you're only two months in, but just a bit more on how you're trying to improve R&D culture and scientific rigor at CINEFI, given... Over and above what you laid out in your prepared remarks. And I'm asking that question given that, you know, I think 60% or over 60% of your majority of your headcount is based in Europe. So is this about just upgrading talent? Is it bringing clinical trial operations more in-house? Is there a significant R&D reel coming? And how do you keep your scientists and neurology and oncology motivated, given that the focus is clearly going forward going to be rare disease and immunology? And then for Belen, Manuel, if I could just build on the prior question around the picks and I mean you've got five years of growth left, at least five years of growth left, you're annualizing at 25 billion, what stops this franchise from topping 30-35 billion at peak and just shorter term anything around this 340b litigation so that the industry and Sanofi is an example but across the industry we're seeing better policing of these 340b discounts but states starting to push back with litigation so Peter, your line is breaking up, so let me ask, can you repeat the questions?

50:58 Just to confirm, R&D culture and scientific rigor, geographical location, and the second one is water stop slope between 30 to 35 billion and the 340 billion. Okay, thank you.

51:11 Correct, thank you. Thank you, Belen.

51:12 All right, Peter, I'll take the first one. So what I mean by changing the culture in R&D to have more scientific reason, part of it is obviously, let's say, intangible. It has to do with having the right conversations, truth-seeking. We have now established a thorough scientific review process and technical review governance that will act in parallel to the normal governance of all of our portfolio. This starts in the preclinical stage, continues in development all the way through, and it's an ongoing dialogue. So that is clearly a change for something which we didn't really have or didn't have institutionalized. As I was saying, now it's very much core to our new ways of working. Regarding the organization, I think it's a bit premature now. One thing is clear, we want to have more of an end-to-end integrated Therapeutic Area Focus to also be able to be deep in those areas where we are working to attract the right talent and also to ensure the right ownership of that pipeline. So that's already ongoing now.

52:21 And in terms of location, et cetera, I think we're fortunate to have great talent in Germany, in France, in the US, in China. We don't really envision or I don't look at talent in a geopolitical lens. I know we have strong capabilities. I want to make sure that we create a system in which those people can thrive and do their best job. And then maybe finally, on one aspect that I know I keep coming back to, but it is the integration of new types of talent as well. including if we want to be players in AI we have to be open to new sorts of talent and where those talents are. It's a very competitive area and we want to be leaders in it as well. Peter, on Dupixent, we just upgraded our guidance to 25 billion. As Manuel just said, we are very confident about it, especially so that the latest news on the foreign exchange seems to support anyway the 25.

53:15 Be assured that if we can go to beyond that, I mean, we are working on it on a daily basis, but I don't think this is a time to do it anyway. As I said earlier, we are conservative. When we give a guidance, it's with the idea to meet or exceed this guidance. for the time being we stick to the 25 billion but be assured that we are working towards uh i mean even to get even more if we can but this is not the right time to do it now anyway we talk each uh every every three months so let's see how it goes in in the next couple of quarters And Peter, on your question on 340B litigation, I wish we had a crystal ball as to what will happen in both the state and federal litigation that's been ongoing in 340B. I think what you see there is, given the dollars at stake, it is very dynamic. It continues to be. I think the best we can say is we continue to have a really robust program that's aimed, as Francois said in his opening comments, at ensuring the appropriate utilization of 340B. And beyond that, we can't speculate as to what the outcome of litigations will be.

54:10 The next question is from David Riesinger from Lering. David?

54:18 Great, thanks very much and congrats on the exceptional performance. So I have two questions, please. First, for Dupixent in 2027 in the US, could you talk about the volume growth pushes and pulls? And then second, with respect to 340B scrubbing activities, could you just talk about What has been accomplished to date in 2026 and opportunities for additional scrubbing benefits in future quarters? Thanks very much. Thank you, David. I'll take both of those questions. So on the first one, pushes and pulls when it comes to volume.

55:07 As I said earlier, you know, depiction being The leader across all the specialties that Belen had outlined earlier in her presentation. We really are very confident in continued volume growth. Of course, when you're thinking about the base that we now have, more than 1.5 million patients on treatment, the growth as a percentage of that base is going to slightly moderate. And that's what we're highlighting. Of course, when you also have more players coming into the space, That will impact growth as well, even though there is a lot of opportunity to still grow the market. Let's not forget that. So I think those are the main elements. We are really looking at growth from a cross-indication perspective. We're currently growing across all of the indications that Apixent has online, across all geographies, and that's our continued focus also in the future. On 340B scrubbing, to your point, we've had operational improvements. 340B is one of those examples.

56:12 But once you have done the work, and we will continue to do work to see how do we optimize gross-to-net. That's part of operational excellence. But eventually you get to a point where you don't grow on that base, right? So I think that needs to be the expectation here. We will continue to do An excellent job on operational improvements and cross-to-net management, but don't expect that to continue to grow is my point. The next question is from James Quigley from Goldman Sachs. James?

56:46 Great, thank you for taking my questions. I have two, please. So both for Paolo. So firstly, you mentioned that Sanofi lags competitors in terms of pipeline size and maybe productivity. So what are the most important factors of the ones you highlighted today that help you to close the gap? And you mentioned AI as one of the important factors earlier, but why is Sanofi going to be better or potentially more successful than others in integrating AI into the R&D processes? Secondly, on China and the innovation expansion here, again, as you said earlier, China only makes up around 1% of R&D colleagues. So how easy is it to hire in China, given that there's a lot of demand, a lot of activity in the region, 7,000 biotechs, I think there is. You've just opened a new R&D site there but how are you thinking about the speed of build-up of this facility? What are you planning to do in China that maybe you can do faster or can't do in the US or Europe and how does that then feed into your R&D productivity goals? Thank you.

57:50 Thank you. It's a pretty complex question. So starting with the productivity, as I mentioned, there's many, many factors here. Volume is clearly something that we need to increase. We don't have a large pipeline right now. and of course we need more options okay i'm as i said i'm happy with the pipeline we have internally they're good molecules we need more of those good molecules the fact that we're going to start focusing more on certain key areas allows us to go deeper and broader in those areas as well instead of dispersing our efforts much more broadly okay the second thing really is around uh the speed of decision making and the speed of you know execution decision making as i mentioned We've revamped our whole governance. We have very strong technical reviews that allow us to move faster. And we are using AI-assisted tools to help us make stronger decisions based on data.

58:45 We will expand and continue to do that. On the execution side, I think we've shown that we have global capabilities to execute. We will continue to try and improve those to deliver faster at lower costs. Everyone benefits from it. Your question on AI, why are we going to be better? I think different companies have do it different ways. Sanofi has been a pioneer actually in adopting a lot of AI technology. I was pleasantly surprised when I came here to find how much we're already doing and also the openness, the willingness for us to do a lot more. Different companies, as I said, have different strategies. We're elaborating ours. One thing is clear to me, this is a very fast-moving field with a lot of external partners we can collaborate with and want to work with us.

59:34 We already have some strong partnerships with Recursion, with Auken. We'll continue to do more of those. On China, it's pretty early days. Our intent right now is to access the local ecosystem. We've had some earlier starts there with TigerMed and with Intrepid. I think we want to build on those. We certainly feel we need to have a strong presence on the ground to be able to access that environment. But again, it's pretty early days to give you more details. Maybe just to complement on China, what's very interesting is that, and it will of course remain a competitive place to hire, which was the heart of your question, but what's interesting to highlight is that we have a strong commercial presence today with more than 2.5 billion euro sales in China.

1:00:25 We have also a strong manufacturing presence. As you know very well, we are building an insulin facility in China. In addition to the capability, we are expanding as just laid out by Paolo in terms of R&D and of course there are multiple ways to expand our R&D capabilities but ourselves both also in partnership and we're looking at all these opportunities all together. The next question is from Florent Cespedes from Odo. Florent?

1:00:54 Good afternoon, Florent Cespedes from OdoBHF. Thank you very much for taking my questions. Two quick ones, please. First for Belen, on the collaboration with Regeneron, as you announced that you could acquire late-stage products or eventually products already on the market. So, Could you consider at some point if you acquire a company with a product already inflammation on the market to ask Regeneron if they're interested to add this product into the GV? So that's my first question. I have a very quick follow-up question for Paolo regarding China and the Chinese ecosystem. Maybe, Paolo, could you share with us if you see areas in China where the local companies Hi Florent, on the Regeneron collaboration, first of all let me tell you that, as I mentioned already, this is a very very important alliance for us.

1:02:07 Right now we have the four compounds within, and Regeneron took an option on luncecumib. Then, yes, we have all flexibility to pursue late-stage deals, early-stage deals inside and outside of the alliance, and we can do it on our own, which is you know giving both partners tremendous flexibility or we can do it together if this is something that would be of interest to both partners so the current approach as i mentioned is a win-win is giving us either or either Regeneron or Sanofi tremendous flexibility to opt in to the alliance or to go independently if we believe this is better for the individual partners.

1:03:12 And thank you just to follow up on your question regarding China. I've been going to China now for over a decade, and I think there's two areas where they make enormous progress. One is in access to different technologies for drug discovery and essentially chemical matter creation. Right now, their speed of generating new binders, new molecules, whatever technology you want, is just really much higher than we can do in many other areas. and that obviously gives us a lot of optionality so we're very interested in that the second one is around translational speed so the speed at which they can generate quickly proof of concept data in the relevant disease states we we want so if you want those two things combined could actually be really interesting for a company like ours because we have more chemical matter more shots on goal quicker to find out if they work or not so i'm very interested in leveraging that The next question is from Graham Barry from Citi.

1:04:12 Graham?

1:04:15 Great, thanks for the question. So just going back to Depixen, could you just quantify in Euro terms the gross net benefits that you saw across Depixen, Atlantis, Touje and then across the group? And then if you look at the Depixen growth of 40%, That was 23 points higher than the prescription growth. So how much of that is a one-off benefit from right-sizing the gross-to-net versus the ongoing productivity improvements on gross-to-net that would carry forward into 2027? So in essence, how much of a headwind is there of one-off gross-to-net in the base that it picks as we go into next year? And then on the slide five, Belen, you say that there are other focus areas under review. Just wonder if you could elaborate on that, given most of the focus here has been on the core therapeutic areas. And when you're looking at M&A, is there a preference across rare disease, immunology or vaccines at the moment?

1:05:13 When you're looking at immunology transactions, it sounds like Regeneron isn't that interested in putting any new mechanisms of action into the alliance for atopic dermatitis. So if you were looking for a different mechanism of action in that space, you know, is it safe to say that would be something you'd be doing on your own and would have to negotiate Salesforce allocation over time for? Thank you. Let me maybe take the first question. I won't answer specifically for Dupixen, but be aware of the fact that we grew 14% in Q3. The underlying growth, if we exclude the one-offs, is 12%, which means that between 85% and 90% of our growth is is recurring, demand-driven, sustainable growth and is not linked to one-off. So the impact of one-off is relatively minimal.

1:06:06 But we just wanted to flag it. So this is the same conclusion for Dupixent and this is the same conclusion for Insulins, by the way. But once again, more than 85% of our growth is sustainable and demand-driven and there is only a small portion of it which is linked this quarter to exceptional items. And building on the second part of that question, Graham, on the net sales growth versus script data growth, remember that script data does not always reflect total demand because you also have to account for patient mix. So that is a piece to remember. And then, as I said earlier, we've also continued to make operational improvements across various programs.

1:06:52 Jamie mentioned, you know, making sure that patient benefits reach the intended recipients. And that has also contributed to year-over-year gross net improvement. François was saying that part of one-offs is a smaller part of that equation. And to your question on other mechanisms of action in atopic dermatitis, for example, do we have flexibility outside of the alliance? Yes. First, as we always do, and Belen has reiterated that before, we always look at, you know, does it make scientific sense? Is it strategically compelling? And then the question whether it goes in the alliance or not is a subsequent question. And we do have flexibility, absolutely, in AD and other indications as well.

1:07:37 INI is a broad space to do things on our own. And, you know, immunology outside of the alliance remains a strategic pillar for us. So, Graham, part of your third point has been addressed already by Manuela. Back to the therapeutic area, in focus for M&A, as I mentioned, our three pillars, immunology, rare diseases, and vaccines are in focus. and we are looking at different options within but keep in mind that within those therapeutic areas there are several disease areas for example if I take immunology we have an undisputable leadership in dermatology We have a leading position in respiratory and we are emerging in gastrointestinal, for example, right?

1:08:35 So that is the distinction that we need to make because the choices are broader, right? When you look at what is within the therapeutic area, right? Same for rare. Right now we play mostly on hematology and genetic diseases, right? There are multiple other rare diseases which we may look at if this brings opportunity, scientific robustness, and are within our financial guardrails. So this is exactly the clarity that I want to bring to you, that we want to bring to you mid-December, so that you understand what is going to be the focus that we will place beyond The broad therapeutic area, immunology, for example, or vaccines.

1:09:34 We have three person left for the call. Please try to ask only one question that we have time for everyone. So the next question is Thibaut Boutrin from Morgan Stanley. Thibaut?

1:09:45 Yes, thank you very much. I just want to touch on the comment you make on your slides on the moderate impact on sales at GPX and loss of exclusivity. Just to understand what gives you confidence here, is it the transition of the franchise to the new asset In the collaboration with Regeneron, or is it execution on pipeline, on business development, M&A, to sort of compensate for the revenues, so the building blocks to basically get confidence that the top line will only see a moderate impact? Once again, our priority is to generate revenue growth post-2031.

1:10:32 And we expect the total revenue at group level to be impacted moderately by reductives and loss of exclusivity. The point that I want to make is that our current focus is going to be really preserving the earnings. Due to the alliance with Regeneron and the profit split, you can imagine that the impact on earnings is lower than on revenue. And of course, above all, we aim to preserve our cash flow. Once we get there, we will also focus on accelerating earnings growth. And once again, I would like to point at the December timeframe to give you a bit more granularity of the roadmap.

1:11:32 The next question will be from James Gordon from Barclays. James?

1:11:36 Hello, James Gordon from Barclays. Thanks for taking the question. One result for Paolo and thoughts on the existing pipeline. So looking at slide 25, the second differentiation unclear, and 26, Rina Prupa, and then Hibrix, there's not a lot of mention there. So are there assets beyond the recently partnered Regeneron assets that you are more excited about? Because you talked about good molecules. So what makes you excited, even if it's something earlier, maybe the stat six or anything else that the market is overlooking that is more exciting? And if I could just squeeze in a clarification, there was a talk about therapeutic focus like INI, rare and vaccines. But what does that mean for other areas? Are you just talking about M&A focus where you buy more? Or are you considering more base business divestments like the Chepler deal? Could we see you become a more sharply focused company because you're going to make significant divestments?

1:12:26 Do you want to start with the first? Yes, please. So thank you. This is the type of question that gets me into trouble because all the teams are looking to see which molecules I like or don't like. So I'll restrict my comments maybe to the ones that are most visible or that have like recent news flow. After all, PrenAlpha is something we haven't really mentioned today. This is a very exciting program. It addresses a real medical need in the population that up until now is really poor standard of care. And it could be both best in disease in terms of convenience, but also in terms of efficacy. And actually in our ongoing conversations with the Health authorities, it's clear they share the excitement, but also the data standards they hope us to fulfill, which is why we're making sure to take enough time to collect all the data to support the good application.

1:13:15 Proxalamab, we spoke about this. I mean, it's a very exciting new mode of action for MS in there, in which I've worked for many, many years. We are also exploring it in type 1 diabetes, in transplant. So again, this is one of those broad immunological mechanisms that can stand to do a lot of good things across a range of conditions, and we are taking that exploratory approach as well. For the luncecumig, I want to clarify maybe, this is clearly a drug that works in moderate to severe asthma. The question is around differentiation. And this is a highly competitive space where Pixen certainly is a very good drug. There are other very good drugs. We're looking to see what is the advantage in that specific population for this dual mode of action. But I personally am very excited about the COPD potential for this drug. So we're focusing on execution on that.

1:14:04 And again, within the scope of this partnership, we have the opportunity to come back with good data and have that conversation. And, you know, of course, we can spend a lot of time here. I'll finish maybe on the... Duvacutuc. This is a very exciting new mode of action for IBD. Our earlier data in phase two actually shows very strong efficacy, both in terms of induction and potential in terms of maintenance. So this could actually be a best in disease drug as well, which including has a sub-Q development, which means it would actually be the only sub-Q launched from the start like that. So again, I'm just really excited about what we have. I just think we need more and that's what the focus is on now which is actually reviewing the ongoing to maximize their chances and increasing the size of our pipeline both through internal and from you know BD and from M&A.

1:14:58 Let me now address the last question on your therapeutic area focus and I will start by saying what does it mean for the therapeutic areas in focus, right? So what it means is that the majority of our capital, both R&D as well as external innovation, will be allocated to those therapeutic areas in focus. For example, our R&D spending over the last few years have been extremely fragmented and focus on many disease areas. And of course, when you do that, the risk is increased exponentially. So it is important that we link the CSI strategy and capital allocation.

1:15:51 What does it mean for the areas that are not going to be in focus? It depends. We will have to look for the strategic options, and it could come as an out-license eventually. It could be that we decide to partner or eventually to close, depending on what is the contribution. But the majority of the capital and resources of the company will go behind the therapeutic areas and the disease areas that we will put in focus. And last but not least, Simon Baker from Redburn. Simon?

1:16:30 Thank you very much for squeezing me in. I'll save the R&D question for Monday and one for François. I just wonder if you'd give us a little bit more detail on the data-driven gross-to-net management that you've introduced. Have we effectively seen the main impact? And going forward, the impact will simply be a smaller gap between volume and sales, or is there more to come there? Any insights there would be really helpful. Thank you. Simon, it's a good question. I don't expect much more to come beyond what Manuela mentioned earlier anyway. Traditionally, in Q1, maybe a bit in Q2, we have some reversal of provisions. Once we have closed a few weeks or months after we have closed the year, So this will come anywhere, the traditional one. This year we have a little bit more because indeed we made some good progress, which is data-driven, partly linked to AI as well, where we have a much better control of growth to net, which is a super complex issue, as you know, in the industry. But data management and AI can help.

1:17:33 So with these tools, we have improved tremendously our knowledge. and that allows us to improve the accrual level and the provision level that we do for growth to net and as a consequence of that we had some kind of one-off exceptional in Q3 that we talked about earlier and I don't expect that to replicate so not to the extent that we saw in Q3 so this is the reason why we see that more as a one-off which is explaining these two percentage points of exceptional growth that we had in Q3. I don't expect that to be Big again and happen in the other quarters.

1:18:11 Very good. Thanks for this last question. With this, I would like to thank you for the interest in Tenovia. I will now close the call.