- 36% P/E discount to SXDP, despite earnings momentum (24-28 CAGR 9% vs. 7.5%).
- Amlitelimab concerns overdone. Market still estimates EUR2.5-3.0bn in peak sales.
- Upside risk from likely guidance upgrade at 3Q results and market tilt to defensive.
Following recent share price weakness, we revisit our Dec24 Sanofi trade idea as the name has retreated to attractive entry levels after disappointing late-stage efficacy data for its eczema drug, amlitelimab. The primary let-down stemmed from placebo-adjusted efficacy falling short of expectations (20% vs. 25%), despite the trial meeting all primary and key secondary endpoints with statistically significant skin clearance improvements at week 24.
Investors pinned hopes on amlitelimab as a replacement for Sanofi's Dupixent, which faces patent expiry in 2031 and accounts for c.40% of total revenue. Nevertheless, analysts still see blockbuster potential, projecting EUR2.5-3.0bn in peak sales, due to amlitelimab's more convenient dosing, a broader addressable market, lower biologics penetration and Sanofi enjoying full ownership of the drug vs. half of Dupixent.
Following the sell off, Sanofi now trades at a 36% P/E discount to the SXDP, even as analysts forecast a 9% 2024-28 earnings CAGR – outpacing the sector's 7.5%. Spot is near range lows after recent underperformance versus peers, at a time when we expect the broader healthcare sector to outperform SXXP, buoyed by its defensive tilt amid fresh growth fears. Although results for amlitelimab will only be available in mid-2026, we see upside risk from likely upgraded guidance on the Amvuttra royalty stream at the 3Q results (24 October) and Tolebrutinib US approval (end September).
With rich upside skew (110% IV: 1YPc95) we propose Long Dec25 85/90 Call spread costing 1.2% of underlying (Spot ref. 80.7, Fut. ref 81.6) for a 4x maximum payout.