Q1 2020 Earnings Call

May 7, 2020

Karsten Knudsen: Life-saving medicines to patients on a global scale, which is our second priority in this context. Thirdly, we are also, while we've been navigating through the crisis, been very focused on how we as a company are able to support society getting through the crisis in the best possible way, using our capabilities and resources to support that. In Q4 2019, we hosted the Capital Markets Day, and as part of the Capital Markets Day, we launched a set of strategic aspirations, which are basically the aspirations we are pursuing from now until 2025, fully aligned with our corporate strategy and basically saying what we are aspiring to reach by 2025.

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Karsten Knudsen: In Q4 2019, we hosted the Capital Markets Day, and as part of the Capital Markets Day, we launched a set of strategic aspirations, which are basically the aspirations we are pursuing from now until 2025, fully aligned with our corporate strategy and basically saying what we are aspiring to reach by 2025.

Yes.

Karsten Knudsen: In Q1, we launched a number of affordability options in the US that are out there in the public. Part of that includes patient assistance programs that is linked to the new high unemployment levels in the US. As unemployed then, people have the possibility of accessing free insulin for a period of time until they find the right healthcare insurance. We supported, on a number of fronts, including international aid organizations, vis-à-vis the COVID-19 pandemic.

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Karsten Knudsen: Then finally, we went live with the solar power field in the US, thereby securing 100% renewable power across all production sites globally, which in round terms is reducing our global CO2 emissions by more than 10% on a global scale on an annual basis. On innovation and therapeutic focus, Mads will go through the pipeline later on, but worth noting, Rybelsus approval in the EU and UK, Ozempic submitted in China, and then this quarter, we reported the semaglutide Phase 2 data readout in NASH. We'll come back to that.

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Karsten Knudsen: In terms of commercial execution, we expanded our diabetes care leadership in terms of value market share increasing by 0.7 percentage points, thereby moving towards our strategic aspirations of 33% diabetes value market share. Our obesity business increased by 30%, thereby also tracking towards our aspiration of doubling our obesity care business over the period of the strategic aspirations. Biopharm grew by 16% in the quarter with some one-off impacts that we'll get back to later on. All in all, this led to a sales growth of 14% in the quarter, of which 7% was COVID-19 stocking related, and in turn delivering 12% operating profit growth for the quarter, also COVID-19 impacted.

Yes.

Thank you. Welcome to the virtual q1 noon work London Road show. This is Cosmo cruising CFO of noon work with me today. I have off so I'm at Costco Thompson and EVP of commercial Affairs and Commercial strategy Camilla serviced. So we have a broader presentation that we will go through briefly in the next 15 to 20 minutes afterwards. We will go move over to Q&A as in our normal London one road show me events. So first of all, I'd like to to thank Michael Jordan and and ups for for hosting this virtual call and we hope you're all safe out there walk in though. It's it's challenging times with the covid-19. This is the agenda for for today and as usual then

Karsten Knudsen: All in all, this led to a sales growth of 14% in the quarter, of which 7% was COVID-19 stocking related, and in turn delivering 12% operating profit growth for the quarter, also COVID-19 impacted. With that, I will hand over to Camilla Sylvest to go through the commercial execution for the quarter.

Karsten Knudsen: With that, I will hand over to Camilla Sylvest to go through the commercial execution for the quarter.

Camilla Sylvest: Thank you, Karsten. Before we get into the details of the growth and sales split, maybe it's worthwhile to just mention that we have established a new reporting structure in IO, meaning that we now have the EMEA region consisting of Europe, Middle East, and Africa. For this, we have grouped a couple of regions for this purpose, reporting here. We also have China consisting of Hong Kong, Taiwan, and mainland China, and then the rest of the world. As you can see, the sales growth is distributed across all geographical regions, meaning that they are all contributing to growth. The 14% sales growth is around 7% when adjusted for the COVID-19 related stocking.

This call might include some forward-looking statements. And of course they're surrounded by by uncertainty and I'll say even especially in these covid-19 times. There's a certain level of uncertainty regarding how how that plays out and and consequences of covid-19.

Camilla Sylvest: As you can see, the sales growth is distributed across all geographical regions, meaning that they are all contributing to growth. The 14% sales growth is around 7% when adjusted for the COVID-19 related stocking. International operations is driving a sales growth of 19% by all therapy areas. The stocking effect that we see here is mainly in the EMEA region.

Camilla Sylvest: International operations is driving a sales growth of 19% by all therapy areas. The stocking effect that we see here is mainly in the EMEA region. North America operations sales increased by 9%, and here the stocking is mainly at the patient level. When we look at how the sales growth is distributed across therapy areas, you see here that all therapy areas are contributing to growth. In insulin, we see a +2% increase with a very wide variation between the US and North America and IO. US -15%, including Canada, driven by channel mix, high rebates and coverage gap. Whereas in international operations, we see a growth in insulin of 14% driven by all insulin categories.

Camilla Sylvest: North America operations sales increased by 9%, and here the stocking is mainly at the patient level. When we look at how the sales growth is distributed across therapy areas, you see here that all therapy areas are contributing to growth. In insulin, we see a +2% increase with a very wide variation between the US and North America and IO. US -15%, including Canada, driven by channel mix, high rebates and coverage gap. Whereas in international operations, we see a growth in insulin of 14% driven by all insulin categories.

Saving medicines to patients on a global scale which is our second priority in this context. And then thirdly we are also while we've been navigating navigating to the club has been very focused on how we as a company are able to support Society getting through the crisis in the best possible way using our capabilities and and resources to to support that.

also a TRX gs1 leadership of 48% we see a continued uptake of send pic now with NPR X leadership compared to solicit e up 36.6% and on the TRX and continued improvement in our total market share and now at a level of 24% wage is has to quest to 8.8% and 2% total scripts and here is also important to say that the market wage is progressing and is now above 50% unrestricted access and we expect that to gradually increase over the year

In in the latest guidance. Thank you.

Thank you as a reminder, please. Press star one. If you wish to ask a question, our next question comes from the line of products from Goldman Sachs. May I please ask you question your line is open. Thank you. Now also includes unquantified impact kind of from further Channel mix pressure or kind of commercial commercial patients going to non-commercial channels and off and I realize that there are many variables just but help us understand how even within broad range is how we should think about what is included in your guidance for 2024. And I'm presuming that the bigger impact of that is likely in 2021 compared to 2020, but if you can just confirm that thank you.

In terms of covid-19 and and our response is a company then early on in a in the spread of the month. We saw what was happening in China and as a company we initiate

Camilla Sylvest: In the GLP-1 segment, we see a growth of 37%, driven by a 30% increase in North America and 55% increase in international operations. Summing all of that up, it means that, as Carsten said, we are expanding our global diabetes value market share with 0.7 percentage points to 28.7. That is driven by an increase in both the insulin volume market share to 46.5%, but also an increase in our GLP-1 market share of 2.2 percentage points to 43.3%. Obesity grew by 30%, with an equal split between international operations and North America. Biopharm grew by 16%, primarily driven by Norditropin and hemophilia products. As you can see.

In the fourth quarter of 2019. We hosted the capital markets day. And as part of the capital markets day. We launched a set of strategic aspirations with our basic the the aspirations we're pursuing from now until 2025 fully aligned with our cover strategy and basically saying what are we aspiring to reach by 20 25 days in the first quarter, we launched a number of affordability options in in the US that we've been that out there in the public bath part of that includes a patient assistant programs for that is linked to the new high unemployment levels in the unemployed and people have offered the possibility of accessing free in Flint for a period of time until they they find the right Health Care insurance.

Also in I owe we are now gaining market share in the total diabetes value market segment driven by growth. So in both insulin and GOP one and you see here that our chevreuse is now above our total diabetes market share.

Camilla Sylvest: Obesity grew by 30%, with an equal split between international operations and North America. Biopharm grew by 16%, primarily driven by Norditropin and hemophilia products. As you can see. When we look at the details of the early Rybelsus uptake, you see from this slide on the left-hand side that Novo Nordisk has a total GLP-1 NBRX leadership of almost 58%. We have also a TRX GLP-1 leadership of 48%.

Yep, you're perfectly right. We have included in our Guidance the starting point for us being able to maintain Guidance just to reiterate is that that we had a very solid progress in our business and very good commercial performance end of last year and going into the first quarter off. So so that were very satisfied with and and that is what is fundamentally enable enabling us to maintain our guidance for for this year. Despite impacts from Colby and US Channel mix in terms of makes specifically, then a lot of parameters going going into into our modeling around that and off and this is based on the same any assumptions like like covid-19.

What's driving the growth in I owe you see on the right hand side. You see that incident says is driving 44% of the growth and glp-1 is driving 35% of the growth with a distribution that makes insulin fill the speaker's most driver in most of the Region's so far on Obesity Thursday. We had the 30% growth in the quarter. We now have launched saxenda in 46 markets and we are continuing to invest in Market development. We have a mark up 39% in I owe and 72% in North America. However, our efforts is less focused on keep gaining market share loss on developing the market to meet our long-term aspirations of also doubling our visit to sales by 2025.

Camilla Sylvest: When we look at the details of the early Rybelsus uptake, you see from this slide on the left-hand side that Novo Nordisk has a total GLP-1 NBRX leadership of almost 58%. We have also a TRX GLP-1 leadership of 48%. We see a continued uptake of Ozempic now with NBRX leadership compared to Trulicity of 36.6%, and on the TRX a continued improvement in our total market share and now at a level of 24%. Rybelsus has progressed to 8.8% NBRX and 2% total scripts. Here it's also important to say that the market access is progressing and is now above 50% unrestricted access, and we expect that to gradually increase over the year.

Then we supported on a number of fronts including International organizations the covid-19, And then finally we went live with the with solar power field in the in the US thereby securing hundred percent Renewable Power across all production sites globally with in round terms of reducing Global CO2 emissions by more than 10% on a global scale on an annual basis.

Camilla Sylvest: We see a continued uptake of Ozempic now with NBRX leadership compared to Trulicity of 36.6%, and on the TRX a continued improvement in our total market share and now at a level of 24%. Rybelsus has progressed to 8.8% NBRX and 2% total scripts. Here it's also important to say that the market access is progressing and is now above 50% unrestricted access, and we expect that to gradually increase over the year.

An invasion and the beautiful Christmas will go through the pipeline later on but worth noting reveals his approval in the EU and UK was same pic submitted in China. And and then this quarter we reported the symmetrical face to data readout in in Nash. So we'll come back to that in terms of commercial execution. We offer expanded our Diabetes Care leadership in terms of value market increasing by 0.7 percentage points there by moving towards our strategic as raises of 33% diabetes that your market share.

We see growth of 16% driven by a Murphy and groceries order products and especially also 7% growth in over 7 sales office and also a continued Global rollout of our Innovative products in the hemophilia area as well as a growth of 28% for norditropin driven also by some stocking and changing inventories, but also an additional demands you to the competitive landscapes in selected countries, and now I'd like to hand over to mass for an update on our warranty.

Be a negative impact from patients moving from Commercial Insurance to either uninsured or made Medicaid insurance. So that will have a negative impact on a on profitability and potentially volumes on on our side that uncertainty or that modeling. Of course as uncertainty in terms of what coverage the people have money and and and and the coverage they they are moving through and the duration that we're seeing this impact. So that might be a positive Rebound in terms of unemployment numbers. When when the US economy opens opens back up when we look at the sector's mostly impacted by unemployment being for instance off Hospitality business and restaurants et cetera. So so the we have model a negative impact in twenty-twenty and and give them the move.

Camilla Sylvest: Also in IO, we are now gaining market share in the total diabetes value market share segment, driven by growth also in both insulin and GLP-1. You see here that our share growth is now above our total diabetes market share. What's driving the growth in IO? You see on the right-hand side, you see that insulin sales is driving 44% of the growth and GLP-1 is driving 35% of the growth, with a distribution that makes insulin still the bigger growth driver in most of the regions so far. On obesity, we had a 30% growth in the quarter. We now have launched Saxenda in 46 markets, and we are continuing to invest in market development. We have a market share of 39% in IO and 72% in North America.

Obese business increased by 30% there by also tracking towards ice-breaking of toppling business or the period of the lounge guest relations and buy a farm group by 16% in the quarter with some someone of impacts that will get back to it on all in all this led to a sales grew 40% in the quarter off with 7% was covid-19 stocking related and intern deriving 12% operating profit growth also cool with impacted. So with that I will hand over to community service to go through the commercial execution for the quarter.

Thank you Camilla. The next slide. I'll just start by saying that ever since film use them showed the the 39% natural solution with the 1.8 milligram in the UK in the larger paper five years ago. We've been increased by the potential of of vop one in the next field and we have to now report the outcome of a large phase to be. See driven trial dose-response Force America versus placebo and what you can see here is that point one which corresponds to a liar 1.8 milligram dose interests me to Pollock. If you can see actually also provides 40% natural solution coinciding more or less with what we have seen before and then growing all the way up to 59% natural solution as the primary endpoint versus 17 on the placebo in this study. The drug was well-tolerated. There were four discontinuation in the highest dose group as well as in the placebo group 4 out of 80 so low wage

Of General makes that that will also negatively impacted.

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Camilla Sylvest: We now have launched Saxenda in 46 markets, and we are continuing to invest in market development. We have a market share of 39% in IO and 72% in North America. However, our efforts is less focused on keep gaining market share, but more on developing the market to meet our long-term aspiration of also doubling our obesity sales by 2025.

you're perfectly correct. Thank you.

Thank you. Our next question comes from the line of Richard from JP Morgan Bank.

Thank you and constant and before we get into the details of the growth and saves bit maybe forty-five to just mention that we have established a new reporting structure. In fact, I owe meaning that we now have the Emir reading consisting of your Middle East and Africa and if this and we have proved a couple of reasons for this project reporting here, we also have China consisting of Hong Kong Taiwan and Mainland. Mainland China and then the rest of the world and ask as you can see the sales growth is distributed across all geographical regions, meaning that they are all contributing to to both the 14% sales growth is around 70% when adjusted for the covid-19 phone no talking and international operations is driving sales growth of 19% by All Therapy areas and the stocking effect that we see here is dead.

Camilla Sylvest: However, our efforts is less focused on keep gaining market share, but more on developing the market to meet our long-term aspiration of also doubling our obesity sales by 2025. In Biopharm, we see growth of 16% driven by hemophilia and growth disorder products, and especially also 7% growth in NovoSeven sales, and also a continued global rollout of our innovative products in the hemophilia area, as well as a growth of 28% for Norditropin, driven also by some stocking and change in inventories, but also an additional demand due to the competitive landscapes in selected countries. Now I'd like to hand over to Mads for an update on our R&D.

Take my question just a couple of questions about how does when we think about how those some of course the dose is just slightly higher than the height of diabetes days. So could you give us some ideas on how you can differentiate the price of that medicine. Given that sex offender is roughly double the price of Victoza and and attempted today, how how can you work around that going forward and may be linked to that page Nash has a a very interesting area but essentially treating the same obese patient, but with hard a potential avoidance of outcome just like the cardiovascular claim that you hope to get from select. So, how how should we think about that in terms of pricing and wage?

Camilla Sylvest: In Biopharm, we see growth of 16% driven by hemophilia and growth disorder products, and especially also 7% growth in NovoSeven sales, and also a continued global rollout of our innovative products in the hemophilia area, as well as a growth of 28% for Norditropin, driven also by some stocking and change in inventories, but also an additional demand due to the competitive landscapes in selected countries. Now I'd like to hand over to Mads for an update on our R&D.

continuation reach good safety and tolerability

And there were numerous readouts on secondary endpoints in terms of fiber Scan Imaging paste in the stock Rafi in terms of Market test panel in terms of numerous other assistance of of fibrosis that that actually point to the fact that the same side is arresting the fibrosis progression including also the histology assessments arresting the progression wage, but not significantly reverting progression during the course of the seventy two weeks. So very very encouraging and and exciting data that will be discussed with relevant stakeholders including Regulators in the near future on the next slide. This is 2 p.m. What will promise to be very exciting times? I hope for the evolution of obesity management or therapist in in June the the industry namely the step program. And the first of the step trials forsa macro tied in obesity once-weekly 2.4 milligram is the step for and I'll just spend a few seconds on Thursday.

In the in the region North America operation sales increased by 9% and hear this talking is mainly at the patient level.

Mads Krogsgaard Thomsen: Thank you, Camilla. If we turn to the next slide, I'll just start by saying that ever since Phil Newsome showed the 39% NASH resolution with the cagrilintide 1.8 mg in NASH in the UK in The Lancet paper five years ago, we've been intrigued by the potential of GLP-1 in the NASH field. We have to now report the outcome of a large Phase IIb biopsy-driven trial dose response for semaglutide versus placebo. What you can see here is that sema 0.1, which corresponds to a liraglutide 1.8 mg dose in terms of metabolic efficacy, actually also provides 40% NASH resolution coinciding more or less with what we have seen before, and then growing all the way up to 59% NASH resolution as the primary endpoint versus 17% on placebo.

Mads Thomsen: Thank you, Camilla. If we turn to the next slide, I'll just start by saying that ever since Phil Newsome showed the 39% NASH resolution with the cagrilintide 1.8 mg in NASH in the UK in The Lancet paper five years ago, we've been intrigued by the potential of GLP-1 in the NASH field. We have to now report the outcome of a large Phase IIb biopsy-driven trial dose response for semaglutide versus placebo.

Given the future potential savings that Health Systems can get thanks very much.

When we look at how the sales growth is distributed across therapy areas. You see here that all therapy areas are contributing to growth in insulin. We see plus 2% increase with a very wide variation between the US and North America and I oh so u s - 15% including Canada driven by Channel mix the high rebates and coverage Gap where as in international operations. We see a growth in insulin of 14th and driven by all insulin categories.

Thanks Rachel. I will hand the first question regarding pricing of of our phase 3 project for hydro to Camilla visible suprising and then an essay question for you miss.

there's so much strange design of the trial it's a trial where people essentially escalated to 2.4 mix up Uber. Of 20 weeks and at this point then randomized wage either withdraw therapy or continue therapy so this will draw a design in a way mimics a little bit what happens in the real world that people treat themselves for 5 months then they stop and put on weight again it would be exciting to see what is the difference between whether you actually treat yourself for a full six to eight weeks with some apple site or if you would draw the drug already after five months so it's actually an interesting trial that minimum wage but a real world situation of chronic therapy versus therapy and and that will then be followed by a classic step want obesity trial is the two diabetes and they step three Cocker Nation Interventional therapy trial all of that is coming during the first half of this year and hopefully gaining for a submission during the latter part of the year off

Mads Thomsen: What you can see here is that sema 0.1, which corresponds to a liraglutide 1.8 mg dose in terms of metabolic efficacy, actually also provides 40% NASH resolution coinciding more or less with what we have seen before, and then growing all the way up to 59% NASH resolution as the primary endpoint versus 17% on placebo. In this study, the drug was well tolerated.

Thanks Coston. Thanks reach you at so as you can imagine, it's early days to give details on how we will price also both the business in the future and also off Hydro Sima and how that corresponds but of course over time. It's likely that as we see more and more reimbursement in the Obesity channel is likely that there might be a convergence of the prices in the Obesity and diabetes business, but I cannot give more sort of a tangible details at this point in time. We need to see the results of the the trials and of course, we also excited to see the step program without now in the second quarter and much more on the commercial part of all of this once we have the approval of the of the mobile home.

And did you have to one segment we see a growth of 37% driven by a 30% increase in North America and 55% increase in international operations team and something all of that means that disgusting said we are expanding our global global diabetes value market share with 0.7 percentage points to 28.78 is driven by an increase in both the insulin volume market share to 46.5% But also an increase in our glp-1 market share of 2.2 percentage points to 43.3%

Mads Krogsgaard Thomsen: In this study, the drug was well tolerated. There were four discontinuations in the highest dose group as well as in the placebo group, 40 out of 80, so low discontinuation rates, good safety and tolerability. There were numerous readouts on secondary endpoints in terms of FibroScan imaging-based elastography, in terms of ELF biomarker panel, in terms of numerous other assessments of fibrosis that actually point to the fact that the semaglutide is arresting the fibrosis progression, including also the histology assessments, arresting the progression, but not significantly reverting progression during the course of these 72 weeks. Very, very encouraging and exciting data that will be discussed with the relevant stakeholders, including regulators in the near future.

Mads Thomsen: There were four discontinuations in the highest dose group as well as in the placebo group, 40 out of 80, so low discontinuation rates, good safety and tolerability. There were numerous readouts on secondary endpoints in terms of FibroScan imaging-based elastography, in terms of ELF biomarker panel, in terms of numerous other assessments of fibrosis that actually point to the fact that the semaglutide is arresting the fibrosis progression, including also the histology assessments, arresting the progression, but not significantly reverting progression during the course of these 72 weeks.

Regulatory review we're excited by this and the select trial will of course continue hopefully to show cart your protection in a non-diabetic context namely in obese individuals finally just to wrap up with that many exciting results milestones and approvals throughout the rest of the year. I would just right now highlight the corner here. What will follow is in Phase One the pcsk9 picture of lowering read out from from phase one in in phase two is actually the grill inside the new who name for the amlin 8 3 3 Once weekly analogue that result in a plus in Phase One be incomplete therapy for four months together with the medical side. And then in phase three is of course the step program and in terms of approval the most wage thing will be the Japanese robe else's approval which is relatively imminent. I think with that. I'll hand it over to thank U Mass briefly on financials. So as you age,

And then Richard on the issue it is interesting. Isn't it that that you know in the case of Victoza the hot outcomes for Victoza came in age of of the leader trial many years after the first relationship with the same Peak. It came aided by Pioneer six in terms of the cardiovascular education claims only a couple of years in Europe. And and I think you're right when it comes to to symmetrel side in the hot outcomes that will also facilitate, you know, better reimbursement and and and uptake or in in that specific markets will also come

Obesity grew by 30% with an equal split between International operations and no.

Mads Thomsen: Very, very encouraging and exciting data that will be discussed with the relevant stakeholders, including regulators in the near future.

Mads Krogsgaard Thomsen: On the next slide, this is to preempt what will promise to be very exciting times, I hope, for the evolution of obesity management or therapies in the industry, namely the STEP program. The first of the STEP trials for semaglutide in obesity once-weekly 2.4 mg is the STEP 4. I'll just spend a few seconds on explaining the somewhat strange design of the trial. It's a trial where people essentially are escalated to 2.4 mg of Sema over a period of 20 weeks. At this point, they're then randomized to either withdraw therapy or continue therapy. This withdrawal design in a way mimics a little bit what happens in the real world, that people treat themselves for 5 months, then they stop and put on weight again.

Mads Thomsen: On the next slide, this is to preempt what will promise to be very exciting times, I hope, for the evolution of obesity management or therapies in the industry, namely the STEP program. The first of the STEP trials for semaglutide in obesity once-weekly 2.4 mg is the STEP 4. I'll just spend a few seconds on explaining the somewhat strange design of the trial. It's a trial where people essentially are escalated to 2.4 mg of Sema over a period of 20 weeks.

Mads Thomsen: At this point, they're then randomized to either withdraw therapy or continue therapy. This withdrawal design in a way mimics a little bit what happens in the real world, that people treat themselves for 5 months, then they stop and put on weight again.

We reported 40% sales growth and 12%

Mads Krogsgaard Thomsen: Here it will be exciting to see what is the difference between whether you actually treat yourself for a full 68 weeks with semaglutide or if you withdraw the drug already after 5 months. It's actually an interesting trial that mimics a little bit a real-world situation of chronic therapy versus abrupt therapy. That will then be followed by a classic Step 1 obesity trial, a Step 2 diabesity trial, and a Step 3 combination interventional therapy trial. All of that is coming during the H1 of this year and hopefully gating for a submission during the latter part of the year and a regulatory review.

Mads Thomsen: Here it will be exciting to see what is the difference between whether you actually treat yourself for a full 68 weeks with semaglutide or if you withdraw the drug already after 5 months. It's actually an interesting trial that mimics a little bit a real-world situation of chronic therapy versus abrupt therapy. That will then be followed by a classic Step 1 obesity trial, a Step 2 diabesity trial, and a Step 3 combination interventional therapy trial. All of that is coming during the H1 of this year and hopefully gating for a submission during the latter part of the year and a regulatory review.

Operating profit growth when we adjust for covid-19 starting related defects in the first quarter then sales growth was 7% compared to the 14 and if we took I just for the one of reversal of repulses pre-approval inventories in q1 last year, then our operating profit growth was 4% And the reason for that was being lower than than the sales growth on an adjusted basis is basically driven by a low iron be spent in the first quarter last year wage, then it's more or less a flat operating margin and do not a 48% operating margin in the quarter net Financial items, uh-uh impacted by a significant deterioration of depreciation of emerging-market currencies very much linked to the oil price and countries like Russia Brazil Etc birth.

Mads Krogsgaard Thomsen: We're excited by this, and the SELECT trial will of course continue hopefully to show cardioprotection in a non-diabetic context, namely in obese individuals. Finally, just to wrap up, there are many exciting results, milestones, and approvals throughout the rest of the year. I would just right now highlight the quarter here. What will follow is in Phase I, the PCSK9 peptide, LDL lowering, readout from Phase I. In Phase II is actually the cagrilintide, the new name for the AM833 once-weekly analog, that reads out in monotherapy, plus in Phase Ib in combo therapy, for four months together with semaglutide. Then in Phase III is of course the STEP program, and in terms of approval, the most important thing will be the Japanese Rybelsus approval, which is relatively imminent.

Mads Thomsen: We're excited by this, and the SELECT trial will of course continue hopefully to show cardioprotection in a non-diabetic context, namely in obese individuals. Finally, just to wrap up, there are many exciting results, milestones, and approvals throughout the rest of the year. I would just right now highlight the quarter here. What will follow is in Phase I, the PCSK9 peptide, LDL lowering, readout from Phase I. In Phase II is actually the cagrilintide, the new name for the AM833 once-weekly analog, that reads out in monotherapy, plus in Phase Ib in combo therapy, for four months together with semaglutide.

impacting net Financial significantly in the quarter

all in order to 16%

in terms of outlook for 2020 we maintain our Outlook across all the main parameters with only one exception which is on financial items. And that way we have a movement from 1.5 billion to 2.5 billion. And that movement is for all practical purposes explained by by the depreciation of emerging-market currencies. I just spoke to before

Mads Thomsen: Then in Phase III is of course the STEP program, and in terms of approval, the most important thing will be the Japanese Rybelsus approval, which is relatively imminent. I think with that, I'll hand it over to Karsten.

Mads Krogsgaard Thomsen: I think with that, I'll hand it over to Karsten.

Karsten Knudsen: Yes. Thank you, Mads. Briefly on financials. As you saw, we reported 14% sales growth and 12% operating profit growth. When we adjust for COVID-19 stocking related effects in the first quarter, then sales growth was 7% compared to the 14. If we further adjust for the one-off reversal of Rybelsus pre-approval inventories in Q1 last year, then our operating profit growth was 4%. The reason for our profit growth being lower than the sales growth on an adjusted basis is basically driven by a low R&D spend in the first quarter last year. It's more or less a flat operating margin. Do note a 48% operating margin in the quarter.

So with that will end up presentation. This is just a slide showing a key Focus areas and milestones for 2020 that links to our strategic aspirations for for 20,000 including a news heavy warranty a new floor here in in the second quarter of this year that we're all looking forward to so with that. I would like to open it up for Q&A days. And please try to stay with the two questions and I'd like to to give the first set of questions to to Mike lighting package UPS.

Karsten Knudsen: The reason for our profit growth being lower than the sales growth on an adjusted basis is basically driven by a low R&D spend in the first quarter last year. It's more or less a flat operating margin. Do note a 48% operating margin in the quarter. Net financial items, impacted by a significant deterioration or depreciation of emerging market currencies, very much linked to the oil price in countries like Russia, Brazil, et cetera, impacting net financials significantly in the quarter.

Michael are you on you?

Karsten Knudsen: Net financial items, impacted by a significant deterioration or depreciation of emerging market currencies, very much linked to the oil price in countries like Russia, Brazil, et cetera, impacting net financials significantly in the quarter. All in all, diluted earnings per share up 16%. In terms of outlook for 2020, we maintain our outlook across all the main parameters with only one exception, which is on financial items. That where we have a movement from DKK 1.5 billion to DKK 2.5 billion, and that movement is for all practical purposes explained by the depreciation of emerging market currencies I just spoke to before. With that, we'll end our presentation.

Ladies and gentlemen, we are now beginning the question and answer session as a reminder. If you wish to ask a question, you will need to press the one on your telephone and wait for your name to be announced recent by would be compiled at UNH. This will only take a few moments. Thank you.

Karsten Knudsen: All in all, diluted earnings per share up 16%. In terms of outlook for 2020, we maintain our outlook across all the main parameters with only one exception, which is on financial items. That where we have a movement from DKK 1.5 billion to DKK 2.5 billion, and that movement is for all practical purposes explained by the depreciation of emerging market currencies I just spoke to before. With that, we'll end our presentation.

The line of mr. Michael engine is from us is not open.

Oh, thank you so I can start with one question. Actually, we spend a lot of time on on yesterday on on the international business. So on the on a business, I was wondering if you could talk a little bit in more detail about the trend in q1. We serve a strong performance in in China if you did refer to some tender business or a phasing there, but when we look at the corridor that you've said to fix the 10% for you into international business, obviously the the business seems to be tending towards the upper end of that that range so as you look at the the performance and strip out the phasing is there anything else that is worth flagging that would give us confidence that we can actually see the the pros range ending up in that upper end of the corridor for the rest of the year or or is it really an extraordinary quote in q1 and we should see a reversal to something more moderate in, Georgia.

Karsten Knudsen: This is just a slide showing our key focus areas and milestones for 2020 that links to our strategic aspirations for 2025, including a news-heavy R&D and news flow here in Q2 of this year that we're all looking forward to. With that, I would like to open up for Q&As, and please try to stay with two questions. I would like to give the first set of questions to Michael Leuchten from UBS. Michael, are you on mute?

Operator: Ladies and gentlemen, we are now beginning the question and answer session. As a reminder, if you wish to ask a question, you will need to press star one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. This will only take a few moments. Thank you. The line of Mr. Michael Leuchten from UBS is now open.

Okay, thank you Michael. And when you look at our business makes you makes then it's clear that that page operations in in Iowa performing extraordinary. Well, you will recall that last year I owe grew 11% And and when we just start talking back and say some of the ship and facing in there in Ohio in the first quarter, then then the number would be around the 10% Mark so so clearly in in the back end up the 60% range. We indicated in our strategic aspirations once always be careful with the with looking at I owe on a quarterly basis, but I would say that we see very very solid traction going for for iOS last year and into the first quarter and then it will say the balancing factors, of course covid-19.

Michael Leuchten: Oh, thank you. So I'd start with one question, actually. We spent a lot of time on NASH yesterday. On the international business though, on the IO business, I was wondering if you could talk a little bit in more detail about the trends in Q1. We saw very strong performance in China. You did refer to some tender business or phasing there. But when we look at the corridor that you've set, the 6% to 10% for your international business, obviously the business seems to be tending towards the upper end of that range.

Impact or over the coming quarters as well as stocking impact that you would have to take into account. But and then finally there could be some prioritization of our product launches, but all taken together very solid transfer I owe for the quarters and to come we're not guiding specifically based on where we are in the range, but but I think on the line with trending very positively in Iowa, thank you. Thanks God.

Michael Leuchten: As you look at the performance and strip out the phasing, is there anything else that is worth flagging that would give us confidence that we can actually see the growth range ending up in that upper end of the corridor for the rest of the year? Or is it really an extraordinary quarter in Q1, and we should see a reversal to something more moderate in H2?

Karsten Knudsen: Okay. Thank you, Michael. When you look at our business mix, our geo mix, then it's clear that our operations in IO are performing extraordinarily well. You'll recall that last year IO grew 11%. When we adjust out stocking and you say some of the shipment phasing in IO in Q1, then the number would be around the 10-11% mark. Clearly in the high end of the 6% to 10% range we indicated in our strategic aspirations.

Thank you. Once again, please tell one if you wish to ask a question.

once again

And so one if you wish to ask a question, thank you.

Our next question comes from the line or yes. He knew from Lee Gifford, please ask you question. Your line is open.

Karsten Knudsen: Clearly in the high end of the 6% to 10% range we indicated in our strategic aspirations. One should always be careful with looking at IO on a quarterly basis, but I would say that we see very solid traction going for IO last year and into Q1.

Karsten Knudsen: One should always be careful with looking at IO on a quarterly basis, but I would say that we see very solid traction going for IO last year and into Q1. Then you could say the balancing factor is of course COVID impact over the coming quarters as well as stocking impact that you would have to take into account. Then finally, there could be some prioritization of product launches. All taken together, very solid trends for IO for the quarters to come. We're not guiding specifically on where we are in the range, but I think underlying we're trending very positively in IO. Thank you.

Hello, thank you for this call. And if they to hear about your progress this quarter, and I was just wondering if you could speak to any lasting effects that you might have wage considered or noticed. Even from this covert crisis.

Karsten Knudsen: Then you could say the balancing factor is of course COVID impact over the coming quarters as well as stocking impact that you would have to take into account. Then finally, there could be some prioritization of product launches. All taken together, very solid trends for IO for the quarters to come. We're not guiding specifically on where we are in the range, but I think underlying we're trending very positively in IO. Thank you.

Yes, and that's a really good question. And and when you look at how to navigate through it then. Dividing it into a number of phases. So initially it's it's simply about getting or viewer and control of the entire situation then stabilize the business then prepare to get off on the other side. And as part of that look into what what can we bring with us offer learnings and and practices from from a nineteen. I would say as a company when when we look at it then just talking through the the value chain, then I'd say on on our supply chain side. I think we're very happy with the how we've managed to covid-19 those file with all factories running. But of course when when you put more pressure on the system dead,

[Analyst]: Thanks.

Michael Leuchten: Thanks.

Operator: Thank you. Once again, please star one if you wish to ask a question. Thank you. Our next question comes from the line of Jackie Liu from Baillie Gifford. Please ask your question. Your line is open.

Then it's also more clear where potential weaknesses are so we have good earnings to to become an even more resilient manufacturing organization in in in the years to come in in R&D and executing trials. I would say one of the learnings we have is how how to work even more remotely and that's the one example could be in executing our trials and and using more digital means in in terms of our trial trial execution something that we've been looking at all ready for em, but the but a trend that we believe will be accelerated in in the years to come commercially I would say about the commercial approach for for us and and many other Pharmaceuticals is based on sales reps detailing GPS and you know having this month.

Jackie Liu: Hello. Thank you for this call and update here about your progress this quarter. I was just wondering if you could speak to any lasting effects that you might have considered or noticed even from this COVID crisis.

Jiaxi Liu: Hello. Thank you for this call and update here about your progress this quarter. I was just wondering if you could speak to any lasting effects that you might have considered or noticed even from this COVID crisis.

Karsten Knudsen: Yes. That's a really good question. When you look at how to navigate through COVID, then people are dividing it into a number of phases. Initially it's simply about getting overview and control of the entire situation, then stabilize the business, then prepare to get out on the other side. As part of that, look into what we can bring with us of learnings and practices from COVID-19.

And and doing sales calls and I'd say the technology and and detailing is clearly getting turbocharged engine in terms of a a virtual interactions with with our stakeholders from now on so a lot of a lot of good earnings there and then as a company culture generally operating as a company and I think this call is a good example about you know, the need for traveling could probably go down overtime and and more virtual means of operating as a company whether it's in investor relations and investor interactions or it's just generally company events and meetings. So, we're looking at at a number of of cases and and currently we are also in in in the process of defining one of the how and one of the better practice birth

Karsten Knudsen: I would say as a company, when we look at it, then just talking through the value chain, then I would say on our supply chain side, I think we're very happy with how we've managed COVID-19 thus far with all factories running. Of course, when you put more pressure on the system, then it's also more clear where potential weaknesses are. We have good learnings to become an even more resilient manufacturing organization in the years to come. In R&D and executing trials, I would say one of the learnings we have is how to work even more remotely.

Karsten Knudsen: We have good learnings to become an even more resilient manufacturing organization in the years to come. In R&D and executing trials, I would say one of the learnings we have is how to work even more remotely.

Search Wrangler going forward. Thank you next question.

Karsten Knudsen: One example could be in executing our trials and using more digital means in terms of our trial execution. Something that we've been looking at already for a while, but a trend that we believe will be accelerated in the years to come. Commercially, I would say, the commercial approach for us and many other pharmaceuticals is based on sales reps detailing GPs and, you know, having visits and doing sales calls. I'd say the technology and e-detailing is clearly getting turbocharged in terms of virtual interactions with our stakeholders from now on. A lot of good learnings there.

Okay, thank you. Thank you. Thank you. I will next question comes from the line of Michael Jordan from PBS. Please ask you a question. The line is dead. People can fly so two questions one just on your Geographic Geographic disclosure was wondering whether there's any anything more to it. Is there any any re-plumbing that is being done any so uh, what's the rationale behind it? That would be that would be question number one and then question number two is following up on the previous question when we think about things like medical conferences, obviously, the 88 is here is virtual life are many other conferences. Do you think there's going to be a change in the way companies like Novo Nordisk will will interact with Physicians on on the scientific wage.

Karsten Knudsen: I'd say the technology and e-detailing is clearly getting turbocharged in terms of virtual interactions with our stakeholders from now on. A lot of good learnings there.

Karsten Knudsen: As a company culture and generally operating as a company, I think this call is a good example about you know the need for traveling could probably go down over time and more virtual means of operating as a company. Whether it's in investor relations and investor interactions or it's just generally company events and meetings, we're looking at a number of cases. Currently we are also in the process of defining how and what of the better practices to anchor going forward. Thank you. Next question.

Site, and and and what implications might that have is we think about the world going forward if and when we come out of the the depend emack thinking.

Great. Thank you Michael. I'll take the first one and then I'll hand hand to handle automatic and can be left for the medical congresses. And in terms of birth geographical splits. Then the reason why we changed and and I apologize for the hassle on on the analyst side of of rebirth your forecast models, but it is purely a function of of an internal restructuring in in our commercial organization in international operations. We're we're basically looking at how do we most effectively organize that and and that that is the case from from time to time and and that's the fundamental fundamental driver for Samsung external disclosure. So that's nothing more to it than that and that's on the compasses. So so Michael if you consider all the The Many Many a d as in dog

Karsten Knudsen: Currently we are also in the process of defining how and what of the better practices to anchor going forward. Thank you. Next question.

Jackie Liu: Great. Thank you.

Jiaxi Liu: Great. Thank you.

Operator: Thank you. Our next question comes from the line of Michael Leuchten from UBS. Please ask your question. Your line is open.

Michael Leuchten: Thank you. It seems people are concise. Two questions. One, just on your new geographic disclosure. I was wondering whether there's anything more to it. Is there any replumbing that is being done? And if so, what's the rationale behind it? That would be question number one. Question number two is, following up on the previous question. When we think about things like medical conferences, obviously, the ADA this year is virtual like our many other conferences. Do you think there's going to be a change in the way companies like Novo Nordisk will interact with physicians on the scientific side?

He's not the conferences that that many of us have been too. They are fantastic in terms of getting your scientific messaging across from clinical trials to be scientific Community, but but do bear in mind when we mingle and walk around at the conference's you you can only attend one session at a time and the new thing with the way it's done virtually this year is that if the attendance is good enough and high enough, so to speak with that remains to be seen then you actually have the opportunity because they will be able to be live-streamed and downloaded each and every presentation. So one doesn't have to miss a presentation just because it's a nice with another one and you can actually revisit it later on. So, so if if people get the help the doctors get the habit of actually using this even after the event has occurred that gives a unique opportunity to better understand data and remember them going forward, but it remains to be see how it turns out and to be honest personally. I'm of course also looking forward to be able to to meet folks again at real live Country Club.

Michael Leuchten: Question number two is, following up on the previous question. When we think about things like medical conferences, obviously, the ADA this year is virtual like our many other conferences. Do you think there's going to be a change in the way companies like Novo Nordisk will interact with physicians on the scientific side?

Michael Leuchten: What implications might that have as we think about the world going forward, if and when we come out of the pandemic? Thank you.

Karsten Knudsen: Great. Thank you, Michael. I'll take the first one, and then I'll hand over to Mads and Camilla for the medical congresses. In terms of our geographical splits, the reason why we changed, and I apologize for the hassle on the analyst side of redoing your kind of your forecast models. It is purely a function of an internal restructuring in our commercial organization in international operations, where we are basically looking at how do we most effectively organize that. That is the case from time to time. That's the fundamental driver for our external disclosure. There's nothing more to it than that.

But that can be ups and downs to accumulate you have something to add.

T to reach out to a broader audience with the scientific data from being able to utilize some of these sessions with a broader audience that normally would not be able to travel all of them 88. So we already making plans in terms of how we can how we can do that and that takes place in most of the countries that would have joined the 88 and we expect the same to continue also in the future.

Karsten Knudsen: It is purely a function of an internal restructuring in our commercial organization in international operations, where we are basically looking at how do we most effectively organize that. That is the case from time to time. That's the fundamental driver for our external disclosure. There's nothing more to it than that.

Karsten Knudsen: Mads, on the congresses.

Mads Krogsgaard Thomsen: Yeah. Michael, if you consider all the many ADA, EASD, and other conferences that many of us have been to, they are fantastic in terms of getting your scientific messaging across from clinical trials to the scientific community. Do bear in mind, when we mingle and walk around at the conferences, you can only attend one session at a time. The new thing with ADA, the way it's done virtually this year, is that if the attendance is good enough and high enough, so to speak, that remains to be seen, then you actually have the opportunity because they will be able to be live-streamed and downloaded each and every presentation. One doesn't have to miss a presentation just because it's simultaneous with another one, and you can actually revisit it later on.

Mads Thomsen: Yeah. Michael, if you consider all the many ADA, EASD, and other conferences that many of us have been to, they are fantastic in terms of getting your scientific messaging across from clinical trials to the scientific community. Do bear in mind, when we mingle and walk around at the conferences, you can only attend one session at a time.

Thank you. Our next question comes from the line of Peter from Anvil sangam, please ask you a question. Your line is open Monday. Hi, it's Peter from heads back and I am so if this question has been asked before but I came into the call. So essentially it's from s and it's updating to the last data if you look across studies, which has recorded on the phase three in points preferred by the fact you may I mean, you're clearly bro a blow the roof here with your with your data with respect to this endpoint respect to the other in point, which is also important giving the correlation between fibrosis and off and and several says we still need to see even but nevertheless. Could you add some flavor here?

Mads Thomsen: The new thing with ADA, the way it's done virtually this year, is that if the attendance is good enough and high enough, so to speak, that remains to be seen, then you actually have the opportunity because they will be able to be live-streamed and downloaded each and every presentation. One doesn't have to miss a presentation just because it's simultaneous with another one, and you can actually revisit it later on.

Mads Krogsgaard Thomsen: If people get the habit, the doctors get the habit of actually using this even after the event has occurred, that gives a unique opportunity to better understand data and remember them going forward. It remains to be seen how it pans out. To be honest, personally, I'm of course also looking forward to be able to meet folks again at real live conferences. There can be ups and downs to it. Camilla, do you have something to add?

Mads Thomsen: If people get the habit, the doctors get the habit of actually using this even after the event has occurred, that gives a unique opportunity to better understand data and remember them going forward. It remains to be seen how it pans out. To be honest, personally, I'm of course also looking forward to be able to meet folks again at real live conferences. There can be ups and downs to it. Camilla, do you have something to add?

Ask for your confidence of showing a benefit. Do you have some internal studies? Can you make some kind of correlations? Just anything that can sort of, you know, add to the page to the confidence of being able to show a positive sign there in the in the phase 3 data and also as I believe and this may not be corrected here may actually requires both in points for approval. Thank you very much.

Camilla Sylvest: Yeah. Thanks, Mads. Just wanted to add that from a commercial point of view, of course, this also gives us a good opportunity to reach out to a broader audience with the scientific data from being able to utilize some of these sessions with a broader audience that normally would not be able to travel all of them to ADA. We already making plans in terms of how we can do that. That takes place in most of the countries that would have joined the ADA. We expect the same to continue also in the future.

Yep, so that's a good question. And one of the most important things first now is to align FTA and EMA expectations for the trial design that will lead to approval because we're supposed like to have something that satisfies both regulators and not just one regulator and I think there's a path forward in in that regard when we look at all the measures of fibrosis the back panel being one of them the type of scan the stock of the Imaging being another and the the histopathology data from the biopsy being a third we can actually consider that that the placebo group stays neutral and doesn't move much over a year-and-a-half in the trial where there's a consistent decrease in the promotion even actually less fibrosis dose-dependent the using the various assessments for Samantha sighed. The only thing we didn't hit as you know is the end game

Camilla Sylvest: That takes place in most of the countries that would have joined the ADA. We expect the same to continue also in the future.

Operator: Thank you. Our next question comes from the line of Peter Sehested from Handelsbanken. Please ask your question. Your line is open.

Peter Sehested: Hi, it's Peter from Handelsbanken, and I am sorry if this question has been asked before, but I came a bit late into the call. So essentially it's for Mads, and it's relating to the NASH data. If you look across studies which has reported on the phase three endpoints preferred by the FDA and EMA, I mean, you clearly blow the roof here with your data with respect to this endpoint. With respect to the other endpoint, which is also important given the correlation between fibrosis and cirrhosis, we still need to see them. Nevertheless, could you add some flavor here as to your confidence of showing a benefit? Do you have some internal studies? Can you make some kind of correlations?

fibrosis Improvement without wasting of and that that's where we had numeric around 10% increase in patients, but that was not statistically significant, but what it's

Peter Sehested: With respect to the other endpoint, which is also important given the correlation between fibrosis and cirrhosis, we still need to see them. Nevertheless, could you add some flavor here as to your confidence of showing a benefit? Do you have some internal studies? Can you make some kind of correlations?

Tells me is that we're arresting the progression also of the fibrosis and and that means that you should imagine that if we try will hit the endpoint of natural solution. And that is the approval in Palm least according to FDA and then you continue your if two or three patients into an extension not open label, but full extension where you go for heart outcomes, and they will then read out depending on how long it takes for people to progress on Placebo to a Feldman and the outcome such as liver failure Transportation or even mortality then that would read out later and of course give a stronger healthy choice that that you will then at that point in time. So that's how you should see. This is predominantly in metabolic and to some extent anti-inflammatory drug, but it clearly pans out in the way that it erased progressed. She also fibrosis

Okay, thanks message. Just wanted to add that from a commercial point of view. Of course. This also gives us a good opportunity.

Peter Sehested: Just anything that can sort of, you know, add to the confidence of being able to show a positive sign here in the Phase 3 data. Also, as I believe, and this may not be correct, that EMA actually requires both endpoints for approval. Thank you very much.

Mads Krogsgaard Thomsen: Yeah. Peter, that's a good question. One of the most important things for us now is to align FDA and EMA expectations for the trial design that will lead to approval, because we would of course like to have something that satisfies both regulators and not just one regulator. I think there's a path forward in that regard. When we look at all the measures of fibrosis, the ELF biomarker panel being one of them, the FibroScan, elastography imaging, being another, and the histopathology data from the biopsy being a third, we can actually consistently see that the placebo group stays neutral, and doesn't move much over a year and a half in the trial.

Mads Thomsen: Yeah. Peter, that's a good question. One of the most important things for us now is to align FDA and EMA expectations for the trial design that will lead to approval, because we would of course like to have something that satisfies both regulators and not just one regulator. I think there's a path forward in that regard.

Should I interpret your answer as saying that monotherapy is mainly a stroke for the US in Europe the combination drug dog other way forward there and also in terms of Investments needed to sort of establish a mess infrastructure some comments on that and if it's something that could impact the piano in 2021. Thank you God. Well, first of all, in terms of the finance is cast and I have have built into the expected aren't any budgets progression of certain of the pipeline project. So there's no news on on on a one know on the other one. I would like to see how many station between colleagues and co-workers at EMA and other Regulators said that we can find one common stance on how to to develop such products and get approval and and preferably that would be meeting the FDA guidance of viewing National resolution birth.

Mads Thomsen: When we look at all the measures of fibrosis, the ELF biomarker panel being one of them, the FibroScan, elastography imaging, being another, and the histopathology data from the biopsy being a third, we can actually consistently see that the placebo group stays neutral, and doesn't move much over a year and a half in the trial.

Mads Krogsgaard Thomsen: Whereas there's a consistent decrease in the progression or even actually less fibrosis dose dependently, using the various assessments for semaglutide. The only thing we didn't hit, as you know, is the endpoint of fibrosis improvement without worsening of NASH. That's where we had numeric around 10% increase in patients, but that was not statistically significant. What it tells me is that we're arresting the progression also of the fibrosis, and that means that you should imagine that a phase 3 trial will hit the endpoint of NASH resolution, and that is the approval endpoint, at least according to FDA. Then you continue your F2-F3 patients into an extension, not open label, but full extension, where you go for hard outcomes.

Mads Thomsen: Whereas there's a consistent decrease in the progression or even actually less fibrosis dose dependently, using the various assessments for semaglutide. The only thing we didn't hit, as you know, is the endpoint of fibrosis improvement without worsening of NASH. That's where we had numeric around 10% increase in patients, but that was not statistically significant.

Mads Thomsen: What it tells me is that we're arresting the progression also of the fibrosis, and that means that you should imagine that a phase 3 trial will hit the endpoint of NASH resolution, and that is the approval endpoint, at least according to FDA. Then you continue your F2-F3 patients into an extension, not open label, but full extension, where you go for hard outcomes.

Or in the case of if all trials then fibrosis improvements and and we'll see how how far we get in the discussions with the European Regulators as well. But we'll try to harmonize. I think that is important for the whole industry.

Thank you. Have a good results. Thank you.

Mads Krogsgaard Thomsen: They will then read out, depending on how long it takes for people to progress on placebo to a fulminant outcome such as liver failure, transplantation, or even mortality. That would read out later and of course give a stronger health economic picture that you will then reap at that point in time. That's how you should see. This is predominantly a metabolic and to some extent anti-inflammatory drug, but it clearly pans out in the way that it arrests progression also of fibrosis.

Mads Thomsen: They will then read out, depending on how long it takes for people to progress on placebo to a fulminant outcome such as liver failure, transplantation, or even mortality. That would read out later and of course give a stronger health economic picture that you will then reap at that point in time. That's how you should see.

Thank you. I would next question comes on the line of Kia Parker from Goldman Sachs. Hi, good afternoon to have questions. Please costing coming out with love to your thoughts on what do you think this pandemic means kind of from a longer-term perspective kind of qualify or farmer in life kind of folk that relates to kind of what might be perceived as increased investment in health care over the next few years, but also kind of took it means for the social contract that the industry might have on a broad basis and if there are particular geographies, that one should kind of think about I think that would be Thursday. And then separately kind of match as we think about kind of this match data set and we will see that will see incremental data over the next few weeks.

Mads Thomsen: This is predominantly a metabolic and to some extent anti-inflammatory drug, but it clearly pans out in the way that it arrests progression also of fibrosis.

Peter Sehested: Should I interpret your answer as saying that as monotherapy, this is mainly a struck for the US, where in Europe, the combination, drug studies, are the way forward there? Also in terms of investments needed to sort of establish a NASH infrastructure, some comments on that, and if it's something that could impact the P&L in 2021. Thank you.

Mads Krogsgaard Thomsen: Well, first of all, Peter, in terms of the finances, Carsten and I have built into the expected R&D budgets progression of certain of the pipeline projects. So there's no news on that one. No. On the other one, I would like to see a harmonization between our colleagues and coworkers at FDA, EMA, and other regulators, so that we can find one common stance on how to develop such products and get approval. We will see how far we get in the discussions with the European regulators as well, but we'll try to harmonize the guidance.

Mads Thomsen: Well, first of all, Peter, in terms of the finances, Carsten and I have built into the expected R&D budgets progression of certain of the pipeline projects. So there's no news on that one. No. On the other one, I would like to see a harmonization between our colleagues and coworkers at FDA, EMA, and other regulators, so that we can find one common stance on how to develop such products and get approval.

I think yesterday you mentioned that while the secondary endpoint of fibrosis wasn't mad you were.

Encouraged by a lot of the other kind of secondary endpoints. So I kind of as you look at the totality of data. Are you more or less interest than a ton of on potential role in kind of Freeman pack and how would you categorize your excitement for seminar in May or December in obesity? Thank you.

Mads Thomsen: We will see how far we get in the discussions with the European regulators as well, but we'll try to harmonize the guidance. Yeah, I think that is important for the whole industry.

So so we'll take the first question to Camilla on long-term industry impact from a covid-19. And then how long does shein as versus OBC and then and how encouraged I really about these data?

Mads Krogsgaard Thomsen: Yeah, I think that is important for the whole industry.

Peter Sehested: Thank you. Congrats on the good results. Thank you.

Operator: Thank you. Our next question comes from the line of Keyur Parekh from Goldman Sachs. Your line is now open.

Okay, thank you Captain. So in terms of expectations for the longer-term for the farming industry, it's likely that of course, there'll be an increased focus on Healthcare in Jersey, but also likely that there will be an increased focus on emergencies and potentially some of the severe chronic diseases that we work with could risk getting life attention and be put under slightly more cost pressure. Of course our opportunity in this contract is to make sure this service cancellation discussion. We just have faith make sure that we can provide Healthcare systems with easier ways of diagnosing and following up and getting patients with chronic diseases and good controls and here we both diabetes and obesity. We have that opportunity to use digitalization effort to provide more information about each individual patient, for example via our connector pins and follow up with glucose name.

Keyur Parekh: Hi. Good afternoon. Two questions, please. Karsten and Camilla, would love to hear your thoughts on kind of what you think this pandemic means kind of from a longer-term perspective, kind of for the biopharma industry, kind of both as it relates to kind of what might be perceived as increased investment in healthcare over the next few years, but also kind of on what it means for the social contract that the industry might have on a broad basis. If there are particular geographies that one should kind of think about, I think that would be keen to hear that.

Keyur Parekh: If there are particular geographies that one should kind of think about, I think that would be keen to hear that.

Keyur Parekh: Separately, kind of Mads, as we think about kind of this NASH data set, and obviously we'll see incremental data over the next few weeks, but I think yesterday you mentioned that while the secondary endpoint of fibrosis wasn't met, that you were encouraged by a lot of the other kind of secondary endpoints. As kind of, as you look at the totality of data, are you more or less encouraged than you were kind of on sema's potential role in NASH kind of Cagri and stack? How would you categorize your excitement for sema in NASH versus sema in obesity? Thank you.

And getting that dataset ready for the doctor meaning that a longer distance dialogue with the patient online dialogue with the patients would be more likely and the same for obesity. No one could also Imagine where the diagnosis is easier to make the online scripts and potentially online pic of UR products and so on would be a ways to try to eliminate some of the pressure on the Health Care system. So whereas we do believe that there will be an increased pressure on the Health Care Systems. We also expect that we also from a social contribution point of view. I should be able to also improve both the efficacy of the system and with that also hopefully increase our reputation in the longer-term. So those are some of the Dynamics that that we are looking into

Keyur Parekh: As kind of, as you look at the totality of data, are you more or less encouraged than you were kind of on sema's potential role in NASH kind of Cagri and stack? How would you categorize your excitement for sema in NASH versus sema in obesity? Thank you.

Mads Krogsgaard Thomsen: We'll take the first question to Camilla on long-term industry impact from COVID-19, and then Mags, how do you see NASH versus obesity, and how encouraged are you really about this data?

Karsten Knudsen: We'll take the first question to Camilla on long-term industry impact from COVID-19, and then Mags, how do you see NASH versus obesity, and how encouraged are you really about this data?

Okay on first of all, it's very difficult to compare swings and also apples and pears and and you know, generally I am a relatively enthusiastic so and I would say my enthusiasm for the step program that will see results from in the next couple of months is remains very very high. I I've kind of hindered that a 15% weight loss would would be achievable based on phase two will see if that pans out or not. If that happens. I I will remain hiding Susie Astic but I must say QR that the next data also in in my view very encouraging because I I had hoped for like fifty percent natural solution. We we are homing in on around 64 for the hydros and and on top of that using as I mentioned a couple of times both Progressive bruises on the biases, but also fibrosis decreases on the stock Rafi on biomarkers panel, and and the other biomarkers is really encouraging because it's probably secondary to the metabolic and Ed.

Camilla Sylvest: Okay. Thank you, Carsten. In terms of expectations for the longer term for the pharma industry, it's likely that, of course, there'll be an increased focus on healthcare in general, but also likely that there'll be an increased focus on emergencies and potentially some of the severe chronic diseases that we work with could risk getting less attention and be put under slightly more cost pressure. Of course, our opportunity in this context is to make sure vis-à-vis the digitalization discussion we just had, to make sure that we can provide healthcare systems with easier ways of diagnosing and following up and getting patients with chronic diseases in good control.

Camilla Sylvest: Of course, our opportunity in this context is to make sure vis-à-vis the digitalization discussion we just had, to make sure that we can provide healthcare systems with easier ways of diagnosing and following up and getting patients with chronic diseases in good control.

Camilla Sylvest: Here, with both diabetes and obesity, we have an opportunity to use digitalization efforts to provide more information about each individual patient, for example, via our connected pens and follow up with glucose measurements and getting that data set ready for the doctor, meaning that a longer distance dialogue with the patient, online dialogue with the patients would be more likely. The same for obesity, where one could also imagine where the diagnosis is easier to make the online scripts and potentially online pickup of products and so on would be ways to try to eliminate some of the pressure on the healthcare systems.

inflammatory effects that are you

So it it on the liver Paisa metal side and in the system in circulation, maybe even but it's still hints that over time. You will improve fibrosis histologically that may take longer time to to prove that will then be seen in in a kind of the extension part of a a phase 3 trial. So I I remain very encouraged by the the biopsy data or the face to data.

Camilla Sylvest: The same for obesity, where one could also imagine where the diagnosis is easier to make the online scripts and potentially online pickup of products and so on would be ways to try to eliminate some of the pressure on the healthcare systems.

Camilla Sylvest: Whereas we do believe that there will be an increased pressure on the healthcare systems, we also expect that we also from a social contribution point of view would be able to also improve both the efficacy of the system and with that also hopefully increase our reputation in the longer term. Those are some of the dynamics that we are looking into.

Thank you. Our next question comes from the line of Michael from UVS. Please ask your question your life.

Oh, thank you again. I was wondering if I could go to the to the Outlook. So you've maintained your guidance for the year. You've given us the money from Tailwind In q1 from from the pandemic. But when I go back to you a GM, you did make an assumption about a normalization in the patient flow early then then then you assuming now so so as you sit here today, obviously the underlying performance that has gone a little bit better than than you had expected. This is how I would read your commentary. How how are you tracking separation flow is it says sort of like we would do on an RX basis? Um, what what are variables that you keep an eye on and the reason I'm asking is the hdm1 that long ago and and you've changed it changed to view and then how you think that the decision a situation like go back to normal. Thank you.

Mads Krogsgaard Thomsen: Okay. Kier, on first of all, it's very difficult to compare swings and carousels or apples and pears. You know, generally, I am a relatively enthusiastic CSO, and I would say my enthusiasm for the STEP program that we'll see results from in the next couple of months remains very, very high. I've kind of hinted that a 15% weight loss would be achievable based on phase 2. We'll see if that pans out or not. If that happens, I will remain highly enthusiastic. I must say, Kier, that the NASH data are also, in my view, very encouraging because I had hoped for like 50% NASH resolution. We are homing in on around 60% for the high dose.

Mads Thomsen: Okay. Kier, on first of all, it's very difficult to compare swings and carousels or apples and pears. You know, generally, I am a relatively enthusiastic CSO, and I would say my enthusiasm for the STEP program that we'll see results from in the next couple of months remains very, very high. I've kind of hinted that a 15% weight loss would be achievable based on phase 2.

Mads Thomsen: We'll see if that pans out or not. If that happens, I will remain highly enthusiastic. I must say, Kier, that the NASH data are also, in my view, very encouraging because I had hoped for like 50% NASH resolution. We are homing in on around 60% for the high dose.

Mads Krogsgaard Thomsen: On top of that, using, as I have mentioned now a couple of times, both progression of fibrosis on the biopsies but also fibrosis decreases on elastography, on ELF biomarker panel and other biomarkers is really encouraging because it's probably secondary to the metabolic and anti-inflammatory effects that are exerted on the liver by semaglutide and in the systemic circulation maybe even. It still hints that over time you will improve fibrosis. Histologically, that may take longer time to prove, but that will then be seen in a kind of the extension part of a phase 3 trial. I remain very encouraged by the biopsy data or the phase 2 data.

Mads Thomsen: On top of that, using, as I have mentioned now a couple of times, both progression of fibrosis on the biopsies but also fibrosis decreases on elastography, on ELF biomarker panel and other biomarkers is really encouraging because it's probably secondary to the metabolic and anti-inflammatory effects that are exerted on the liver by semaglutide and in the systemic circulation maybe even.

Good. Thank you Michael. So in in terms of our Outlook and the impact from covid-19, I think it's fair to say that both of us have seen a situation like this ever before. So in terms of modeling impacts, we're we're normally diabetes is is a very stable market then a estimating impact from something as covid-19 and and basically estimating how epidemic rolls across the globe is is highly complex. And and I think we we see that also with all the immunologists that are making comments in the space. So the way we're looking at it is and the way we modeling is that you allude to we're looking at a duration of impact. So what's what's our recovery assumptions and that links to you know, what you read in the wage.

Mads Thomsen: It still hints that over time you will improve fibrosis. Histologically, that may take longer time to prove, but that will then be seen in a kind of the extension part of a phase 3 trial. I remain very encouraged by the biopsy data or the phase 2 data.

Operator: Thank you. Our next question comes from the line of Michael Leuchten from UBS. Please ask your question, your line is now open.

Michael Leuchten: Oh, thank you again. I was wondering if I could go to the outlook. You've maintained your guidance for the year. You've given us the sort of tail ending Q1 from the pandemic. When I go back to your AGM, you did make an assumption about a normalization in the patient flow earlier than you're assuming now. As you sit here today, obviously the underlying performance has gone a little bit better than you had expected. This is how I would read your commentary. How are you tracking said patient flow? Is this sort of like we would do on an NBRX basis? What are the variables that you keep an eye on?

About the model. So you models are based recoveries, et cetera and so duration and and and then death impact of it needs to say mainly on the new patients. So on our front and and the new patient starts, we we model based on in in a US setting based on interest levels as we've been talking to in order to geographies. It's different data sources. We have different data source for instance in Brazil and in other places, it's it's Julie like an an app pic expect three trading tool. We we used to to estimate impact. So I say that there are many uncertainties in in all that and I'd say even though it seems like a short period of time between 8 p.m. And and then this this guidance I think some of us feel it's it's actually it's a long time in, New Jersey.

Michael Leuchten: This is how I would read your commentary. How are you tracking said patient flow? Is this sort of like we would do on an NBRX basis? What are the variables that you keep an eye on? The reason I'm asking is the AGM wasn't that long ago, and you've changed your view on how you think this situation might go back to normal. Thank you.

Michael Leuchten: The reason I'm asking is the AGM wasn't that long ago, and you've changed your view on how you think this situation might go back to normal. Thank you.

Karsten Knudsen: Good. Thank you, Michael. In terms of our outlook and the impact from COVID-19, I think it's fair to say that none of us have seen a situation like this ever before. In terms of modeling impact, where normally diabetes is a very stable market, then estimating impact from something as COVID-19 and basically estimating how a pandemic rolls across the globe is highly complicated. I think we see that also with all the epidemiologists that are making comments in this space. The way we're looking at it is, and the way we're modeling it is, as you allude to, we're looking at duration of impact.

and what has happened to in in just those those weeks and I think generally speaking also when you look at the impact across the globe, I think more people are being clearer on a on the shape of recovery and and that this is not a V shape shape recovery, but for the more gradual recovery, which is often informed about what what we see in the Chinese market and when we look at the data points in China in terms

Karsten Knudsen: I think we see that also with all the epidemiologists that are making comments in this space. The way we're looking at it is, and the way we're modeling it is, as you allude to, we're looking at duration of impact.

Karsten Knudsen: What's our recovery assumptions, and that links to, you know, what you read in the papers about V models or U models or L-based recoveries, et cetera. Duration and then depth or impact of it, which is mainly on the new patient starts on our fronts. The new patient starts, we model based on in a US setting based on NBRX levels, as we've been talking about. In other geographies, it's different data sources. We have a different data source, for instance, in Brazil. In other places, it's purely like a pack ex-factory trending tool we use to estimate impact. I say there are many uncertainties in how to model that.

Karsten Knudsen: We have a different data source, for instance, in Brazil. In other places, it's purely like a pack ex-factory trending tool we use to estimate impact. I say there are many uncertainties in how to model that. I'd say even though it seems like a short period of time between AGM and this guidance, I think some of us feel it's actually a long time in terms of COVID-19 and what has happened in just those weeks.

Karsten Knudsen: I'd say even though it seems like a short period of time between AGM and this guidance, I think some of us feel it's actually a long time in terms of COVID-19 and what has happened in just those weeks. I think generally speaking, also when you look at the impact across the globe, I think more and more people are being clearer on the shape of recovery and that this is not a V-shaped recovery, but a more gradual recovery, which is also informed about what we see in the Chinese market.

Karsten Knudsen: I think generally speaking, also when you look at the impact across the globe, I think more and more people are being clearer on the shape of recovery and that this is not a V-shaped recovery, but a more gradual recovery, which is also informed about what we see in the Chinese market.

Karsten Knudsen: When we look at the data points in China, in terms of impact to the overall pharma market in China, then we saw some impact to the tune of 7% down versus baseline in Q1. Our estimate is that that is gradually improving over time, but it's not rapidly improving. That's why we've been adjusting kind of our impact modeling in the latest guidance. Thank you.

Operator: Thank you. As a reminder, please press star one if you wish to ask a question. Our next question comes from the line of Keyur Parekh from Goldman Sachs. Please ask your question, your line is now open.

Keyur Parekh: Thank you. Kasper, just to follow up to Michael's question there, obviously your kind of reiterated guidance now also includes an unquantified impact kind of from further channel mix pressure or kind of commercial patients going to non-commercial channels. I realize that there are many variables, but just help us understand how, even within broad ranges, how we should think about what is included in your guidance for 2020 for that. I'm presuming that the bigger impact of that is likely in 2021 compared to 2020. If you can just confirm that? Thank you.

Keyur Parekh: I realize that there are many variables, but just help us understand how, even within broad ranges, how we should think about what is included in your guidance for 2020 for that. I'm presuming that the bigger impact of that is likely in 2021 compared to 2020. If you can just confirm that? Thank you.

So it could be $19.

Karsten Knudsen: Yeah. You're perfectly right, Keir. We have included US channel mix in our guidance. The starting point for us being able to maintain guidance, just to reiterate, is that we had a very solid progress in our business and very good commercial performance end of last year and going into Q1. That we're very satisfied with, and that is what is fundamentally enabling us to maintain our guidance for this year, despite the impact from COVID and US channel mix. In terms of US channel mix specifically, a lot of parameters going into our modeling around that. This is based on, I'd say many assumptions like COVID.

Karsten Knudsen: That we're very satisfied with, and that is what is fundamentally enabling us to maintain our guidance for this year, despite the impact from COVID and US channel mix. In terms of US channel mix specifically, a lot of parameters going into our modeling around that. This is based on, I'd say many assumptions like COVID.

Karsten Knudsen: Fundamentally, we start with the unemployment numbers in the US and then clearly there will be a negative impact from patients moving from commercial insurance to either uninsured or Medicaid insurance. That will have a negative impact on profitability and potentially volumes on our side. That uncertainty, or that modeling, of course, has uncertainty in terms of what coverage did people have before and the coverage they are moving to and the duration that we're seeing this impact. There might be a positive rebound in terms of unemployment numbers when the US economy opens back up. When we look at the sectors mostly impacted by unemployment being, for instance, hospitality, business, and restaurants, et cetera.

Karsten Knudsen: There might be a positive rebound in terms of unemployment numbers when the US economy opens back up. When we look at the sectors mostly impacted by unemployment being, for instance, hospitality, business, and restaurants, et cetera. We have modeled a negative impact in 2020 and, given the movement of channel mix, that will also negatively impact 2021. You're perfectly correct. Thank you.

Karsten Knudsen: We have modeled a negative impact in 2020 and, given the movement of channel mix, that will also negatively impact 2021. You're perfectly correct. Thank you.

Operator: Thank you. Our next question comes from the line of Richard, also from JP Morgan. Thank you.

[Analyst] (JP Morgan): Thanks for taking my question. Just a couple questions about high-dose sema. When we think about high-dose sema, of course the dose is just slightly higher than the high-dose diabetes dose. Can you give us some ideas on how you can differentiate the price of that medicine, given that Saxenda is roughly double the price of Victoza and Ozempic today? How can you work around that going forward? Maybe linked to that, you know, NASH is a very interesting area, but essentially treating the same obese patients, but with hard potential avoidance of outcomes, just like the cardiovascular claim that you hope to get from SELECT.

Richard Vosser: Thanks for taking my question. Just a couple questions about high-dose sema. When we think about high-dose sema, of course the dose is just slightly higher than the high-dose diabetes dose. Can you give us some ideas on how you can differentiate the price of that medicine, given that Saxenda is roughly double the price of Victoza and Ozempic today?

Richard Vosser: How can you work around that going forward? Maybe linked to that, you know, NASH is a very interesting area, but essentially treating the same obese patients, but with hard potential avoidance of outcomes, just like the cardiovascular claim that you hope to get from SELECT.

[Analyst] (JP Morgan): How should we think about that in terms of pricing and, given the future potential savings that health systems can get? Thanks very much.

Richard Vosser: How should we think about that in terms of pricing and, given the future potential savings that health systems can get? Thanks very much.

Karsten Knudsen: Thanks, Richard. I will hand the first question regarding pricing of our Phase 3 project for high-dose sema to Camilla vis-à-vis obesity pricing and then NASH question for you, Mads.

Camilla Sylvest: Thanks, Carsten. Thanks, Richard. As you can imagine, it's early days to give details on how we will price also both the obesity business in the future and also high-dose sema and how that corresponds. Of course, over time, it's likely that as we see more and more reimbursement in the obesity channel, it's likely that there might be a conversion of the prices in the obesity and the diabetes business. I cannot give more sort of tangible details at this point in time. We need to see the results of the trials, and of course, we're also excited to see the STEP program read out now in Q2, and much more on the commercial part of all of this once we have the approval of sema obesity.

Camilla Sylvest: I cannot give more sort of tangible details at this point in time. We need to see the results of the trials, and of course, we're also excited to see the STEP program read out now in Q2, and much more on the commercial part of all of this once we have the approval of sema obesity.

Operator: Mm-hmm.

Karsten Knudsen: Then, Richard, on the NASH issue, it is interesting, isn't it, that you know, in the case of Victoza, the hard outcomes for Victoza came in the form of the LEADER trial many years after the first launch. With Ozempic, it came aided by PIONEER 6 in terms of the cardiovascular indication claims only a couple of years into the launch. I think you're right, when it comes to semaglutide in NASH, the hard outcomes that will also facilitate you know, better reimbursement and uptake in that specific market will also come a couple of years probably after the first launch and approval. But it's coming out of the same trial, so we don't have to do additional trials, which is one good thing.

Karsten Knudsen: I think you're right, when it comes to semaglutide in NASH, the hard outcomes that will also facilitate you know, better reimbursement and uptake in that specific market will also come a couple of years probably after the first launch and approval. But it's coming out of the same trial, so we don't have to do additional trials, which is one good thing.

Karsten Knudsen: I think we should watch out not only to lump, even though one of the comorbidities of obesity clearly is NASH, we know that. It's also one of the comorbidities of Type 2 diabetes. When I look at the 60% who had diabetes in this population, they were on average less obese than the non-diabetic obese. The things that induce NASH are both weight-related, but also non-weight-related, inflammation-related, and metabolically related. Of course, as a management team, we will now look into strategically how we'll make all of this come together.

Karsten Knudsen: The things that induce NASH are both weight-related, but also non-weight-related, inflammation-related, and metabolically related. Of course, as a management team, we will now look into strategically how we'll make all of this come together.

Karsten Knudsen: The short version is that whether you do a mixed diabetes obesity trial or only one of the two or whatever, you will still do the same kind of trial with the same kind of endpoint where you will extend the trial and we're speaking with the power that we can see from the phase 2, not thousands of patients, but maybe 1,500 to 2,000 patients. Also a little bit depending on the safety database that the agencies want. That's a little bit uncertain because sema is already on the market, so it's known to be a safe product, but still there are demands in new indications. We'll revert with a lot more of our strategic and operational thinking once we have met with the regulators also and ourselves.

Karsten Knudsen: Also a little bit depending on the safety database that the agencies want. That's a little bit uncertain because sema is already on the market, so it's known to be a safe product, but still there are demands in new indications. We'll revert with a lot more of our strategic and operational thinking once we have met with the regulators also and ourselves.

[Analyst] (JP Morgan): Great. Thank you.

Richard Vosser: Great. Thank you.

Operator: Thank you. Our next question comes from the line of Wimal Kapadia from Bernstein. Please ask your question. Your line is now open.

Wimal Kapadia: Great. Thanks very much for taking my questions. Sorry if I missed the first few minutes here because it's already come up. Just in terms of the Rybelsus co-pay program

Wimal Kapadia: I mean, I know it was three times the size of the Ozempic program, so I guess I just wanted to know how far you are in giving those volumes and those copays away. You know, previously you made a comment that, you know, by the end of Q1, most of the volumes would have been distributed. So just to get some context there on when we think, given COVID-19, if there's been a delay there. The second question, a bit of a random one, but I thought I'd ask, is just on the new remuneration policy.

Wimal Kapadia: The second question, a bit of a random one, but I thought I'd ask, is just on the new remuneration policy. I guess and can you give any color on what's actually being included and what, you know, what the weightings are for the long-term incentives? Whether they're R&D-based or financial-based, just some weighting color there would be, I think, really interesting.

Wimal Kapadia: I guess and can you give any color on what's actually being included and what, you know, what the weightings are for the long-term incentives? Whether they're R&D-based or financial-based, just some weighting color there would be, I think, really interesting. The final question is just on insulin rebates. If I look at basals now in the US, we're looking at about 80%, close to 80% rebate levels. I guess I wanted to get your thoughts on at what point do you think the biosimilar players will be unable to compete, given your scale and your ability to manufacture peptides very cost-effectively? Any comments there will be helpful. Thank you.

Wimal Kapadia: The final question is just on insulin rebates. If I look at basals now in the US, we're looking at about 80%, close to 80% rebate levels. I guess I wanted to get your thoughts on at what point do you think the biosimilar players will be unable to compete, given your scale and your ability to manufacture peptides very cost-effectively? Any comments there will be helpful. Thank you.

Karsten Knudsen: Great. Thank you, Vimal. I will hand the question on the Rybelsus program, copay program to Camilla, and then I'll talk to the LTIP program structure, and then, Mads, we can split the biosimilar comments.

Camilla Sylvest: Thank you, Carsten. On Rybelsus copay program, as you said, we currently have a copay program. That means that the patient maximum copay is $10. This program we are continuing with as we are developing our market access. That will eventually replace that program. As we spoke to yesterday in our news, we now have 50% combined access for Rybelsus, and we expect that to continue to increase over the rest of the year. Gradually with that, of course, the copay program will diminish in its importance as we sustain more and more access. Thank you.

Camilla Sylvest: As we spoke to yesterday in our news, we now have 50% combined access for Rybelsus, and we expect that to continue to increase over the rest of the year. Gradually with that, of course, the copay program will diminish in its importance as we sustain more and more access. Thank you.

Karsten Knudsen: Great. On the LTIP program and our remuneration policy, and in case you have not all read it, then I encourage to find it on our website. So it was approved in connection with the AGM. In terms of to your question on the specific targets on LTIP, Vimal, then this is something which will for management roll into effect from 2021. The main targets group will be on sales/commercial, then it'll be on profits, and then it'll be on pipeline as the main groups that we're looking at in the LTIP program going forward.

Karsten Knudsen: The main targets group will be on sales/commercial, then it'll be on profits, and then it'll be on pipeline as the main groups that we're looking at in the LTIP program going forward. Mads, on biosimilars, productivity, and ability to get to our scale and productivity.

Karsten Knudsen: Mads, on biosimilars, productivity, and ability to get to our scale and productivity.

Mads Krogsgaard Thomsen: Yeah. I think it is a fact that coming from a beer brewing country, place called Carlsberg, we have a very long experience with yeast physiology and technology. That also means that the way we produce our insulins, not only if we did x yield per liter fermentation broth 20 years ago, will we now be doing 10 or even 20x because of the constant technology improvements. We're also doing them in a way where it's continuous fermentation and not batch fermentation, where you have to clean up every time you've done a batch, et cetera, in most other companies. Technology-wise, we are in a situation where even in a commoditized biosimilarized insulin market, we can produce at extremely competitive cost.

Mads Thomsen: Yeah. I think it is a fact that coming from a beer brewing country, place called Carlsberg, we have a very long experience with yeast physiology and technology. That also means that the way we produce our insulins, not only if we did x yield per liter fermentation broth 20 years ago, will we now be doing 10 or even 20x because of the constant technology improvements.

Mads Thomsen: We're also doing them in a way where it's continuous fermentation and not batch fermentation, where you have to clean up every time you've done a batch, et cetera, in most other companies. Technology-wise, we are in a situation where even in a commoditized biosimilarized insulin market, we can produce at extremely competitive cost.

Mads Krogsgaard Thomsen: That's also why you quite often see that government tenders in countries like Latin America and so on are won by our company. We are very competitive. Carsten, I don't know whether you have more non-technical stuff to add.

Mads Thomsen: That's also why you quite often see that government tenders in countries like Latin America and so on are won by our company. We are very competitive. Carsten, I don't know whether you have more non-technical stuff to add.

Karsten Knudsen: No, I think that's sufficient for now. Let's take the next question.

Operator: Thank you. Our next question comes from the line of Peter Verdult from Citi. Please ask your question. Your line is now open.

Peter Verdult: Yeah, thank you. Good afternoon. Peter Verdult, Citi. Apologies if this question has already been asked, but I'm a little late on the call. Just Mads going into the setup for STEP 4 or the obesity program. You know, we've also got the Phase 2 data that we can look at. If we speak to some of the KOLs out there, you know, they're saying, you know, a game changer would be if they see up to 30% of patients losing 15% of their weight in the trial. So look, just help me understand, at least from a Novo perspective, what you would define as, you know, a minimum expectation and what for you would be a win in terms of interpreting the upcoming data sets for semaglutide in obesity.

Peter Verdult: So look, just help me understand, at least from a Novo perspective, what you would define as, you know, a minimum expectation and what for you would be a win in terms of interpreting the upcoming data sets for semaglutide in obesity.

Mads Krogsgaard Thomsen: Yeah, Pete, excellent question. First of all, you do recall from The Lancet paper with the Phase 2 data that my aspiration of the 15% weight loss on average, in, for instance, you know, the STEP 1 trial, for instance, that's a classic obesity trial, hinges upon the weight loss seen in Phase 2. And the fact that we are having a full year on the steady state dose, and there was weight loss even at week 52. This time we're doing 68 weeks. Also, the way the FDA wants data analyzed is that if you have a lot of patient dropouts, missing data counts as placebo values, i.e., non-responders. That's bad news in terms of the percent you can report weight loss.

Mads Thomsen: Yeah, Pete, excellent question. First of all, you do recall from The Lancet paper with the Phase 2 data that my aspiration of the 15% weight loss on average, in, for instance, you know, the STEP 1 trial, for instance, that's a classic obesity trial, hinges upon the weight loss seen in Phase 2. And the fact that we are having a full year on the steady state dose, and there was weight loss even at week 52. This time we're doing 68 weeks.

Mads Thomsen: Also, the way the FDA wants data analyzed is that if you have a lot of patient dropouts, missing data counts as placebo values, i.e., non-responders. That's bad news in terms of the percent you can report weight loss.

Mads Krogsgaard Thomsen: Since we know even on a blinded basis, that the dropouts in these trials are very low and much lower than they were in the SCALE program for Saxenda, we will not be hit by all of these estimate things to the same extent as we could have done if we had greater drop out. I remain optimistic about this. If your KOLs say that if a third lose 15% or more body weight, then you could actually argue if my theory holds true, that it's around 15% on average, then you would expect to see more than 30% above 15% weight loss. Let's see who's right.

Mads Thomsen: Since we know even on a blinded basis, that the dropouts in these trials are very low and much lower than they were in the SCALE program for Saxenda, we will not be hit by all of these estimate things to the same extent as we could have done if we had greater drop out.

Mads Thomsen: I remain optimistic about this. If your KOLs say that if a third lose 15% or more body weight, then you could actually argue if my theory holds true, that it's around 15% on average, then you would expect to see more than 30% above 15% weight loss. Let's see who's right.

Mads Krogsgaard Thomsen: I would agree that number would still be a major improvement because I know what the number is for Saxenda, and that's very low. By the way, Pete, we have those categorical weight loss elements, 10, 15, 20, with all of them included as secondary endpoint. You will have them coming soon. They are secondary endpoints. The weight loss, of course, per se, is the primary endpoint.

Mads Thomsen: I would agree that number would still be a major improvement because I know what the number is for Saxenda, and that's very low. By the way, Pete, we have those categorical weight loss elements, 10, 15, 20, with all of them included as secondary endpoint. You will have them coming soon. They are secondary endpoints. The weight loss, of course, per se, is the primary endpoint.

Peter Verdult: Great. Can I have one follow-up?

Mads Krogsgaard Thomsen: Yeah.

Mads Thomsen: Yeah.

Peter Verdult: Just shifting gears, SELECT. So we're hearing that that's a difficult patient population to recruit for because relatively young had to have a prior CV event, and that, you know, that is unlikely to read out until 2023, 2024. Is that? I think you were hinting at that yesterday in your comments. I think someone else asked the question. I think it was Peter from earlier at Handelsbanken. Is that fair that SELECT is even pre-COVID has been enrolling pretty slowly?

Peter Verdult: I think it was Peter from earlier at Handelsbanken. Is that fair that SELECT is even pre-COVID has been enrolling pretty slowly?

Mads Krogsgaard Thomsen: No, it's not quite fair, Peter Verdult. We were nervous. We were truly nervous pre-SELECT about the frequency and occurrence of these patients because of the reasons you mentioned. However, pre-COVID-19, we were actually trading ahead of the recruitment curve. I would like to say that we probably have more than 12,000 patients enrolled at this point in time. We were ahead of the anticipated recruitment curve, planned recruitment curve pre-COVID-19. Right now, we're still tracking on it, but that is due to us being ahead pre-COVID-19. The longer that COVID-19 draws out, it is true that we will then end up being behind the recruitment curve.

Mads Thomsen: No, it's not quite fair, Peter Verdult. We were nervous. We were truly nervous pre-SELECT about the frequency and occurrence of these patients because of the reasons you mentioned. However, pre-COVID-19, we were actually trading ahead of the recruitment curve. I would like to say that we probably have more than 12,000 patients enrolled at this point in time.

Mads Thomsen: We were ahead of the anticipated recruitment curve, planned recruitment curve pre-COVID-19. Right now, we're still tracking on it, but that is due to us being ahead pre-COVID-19. The longer that COVID-19 draws out, it is true that we will then end up being behind the recruitment curve.

Mads Krogsgaard Thomsen: Of course, once we have all the patients, 17,000, if we decide to go for the full 17,000, it's the event rate that drives when you have events enough to terminate the trial, and it's too early to speculate on the event rate. But it's lower than it is in a LEADER SUSTAIN 6-like population, but it's higher than it is in a normal diabetic population. We're probably speaking around a couple of percent event rate, but let's see.

Mads Thomsen: Of course, once we have all the patients, 17,000, if we decide to go for the full 17,000, it's the event rate that drives when you have events enough to terminate the trial, and it's too early to speculate on the event rate. But it's lower than it is in a LEADER SUSTAIN 6-like population, but it's higher than it is in a normal diabetic population. We're probably speaking around a couple of percent event rate, but let's see.

Peter Verdult: Thank you.

Peter Verdult: Thanks.

Karsten Knudsen: Thanks. I think we have just time for two rounds more of questions. Two more, and then we'll have to close out for today.

Operator: Certainly, sir. Our next question comes from the line of Sachin Jain from Bank of America. Please ask your question. Your line is now open.

Sachin Jain: Hi. Sachin Jain, Bank of America. Again, apologies if these have already been asked. I dialed in a little bit late. One question on Rybelsus. You just talked about Q2 trends with lower new patient visits and how we should think about Q2 sales relative to Q1. You haven't ever really confirmed the $2 billion sort of consensus forecast, but that is basically unchanged since COVID. Just your perspectives on being able to achieve that should H2 patient flows normalize. The second one on NASH. Mads, maybe just touch on if you, in your data or reading, see any evidence of metabolic versus cirrhotic phenotypes within NASH.

Sachin Jain: Just your perspectives on being able to achieve that should H2 patient flows normalize. The second one on NASH. Mads, maybe just touch on if you, in your data or reading, see any evidence of metabolic versus cirrhotic phenotypes within NASH.

Sachin Jain: There's been a little bit of a debate there, and whether you think GLP-1 can act across both or more favorable in a metabolic phenotype. Then a very quick third question just on oral SEM and next gen formulations. We haven't heard about those for quite a while, so I just wanted to check in where you were with progressing those. Thank you.

Karsten Knudsen: Great. Thank you, Sachin. Camilla, Rybelsus script trends into Q2 and how do you see Rybelsus impacted by COVID-19? Over to Mads on NASH and fibrotic phenotypes.

Camilla Sylvest: Yeah. Thanks, Carsten. Rybelsus, first of all, we'd like to just reconfirm that the early uptake before COVID-19 was very encouraging, and therefore, we also expect that the NBRX trend will pick up again when patient dynamics are less affected by COVID-19. Our assumptions are, as our general assumptions are, that when the patient flow gets back to normal, as we assume now in H2 of this year, then we will also be able to see the trend of the early uptake of Rybelsus to come back to that level. Right now we are seeing a sort of a weekly slight change in the NBRX uptake on Rybelsus that has increased slightly also over the last few weeks.

Camilla Sylvest: Our assumptions are, as our general assumptions are, that when the patient flow gets back to normal, as we assume now in H2 of this year, then we will also be able to see the trend of the early uptake of Rybelsus to come back to that level. Right now we are seeing a sort of a weekly slight change in the NBRX uptake on Rybelsus that has increased slightly also over the last few weeks.

Camilla Sylvest: That is a little higher than the average for GLP-1 impact on NBRX. As I said, with the early uptake we had before, we do expect this to come back to normal in H2.

Mads Krogsgaard Thomsen: Then Sachin on, yeah, there is a lot of debate in the community around metabolic and cirrhotic phenotypes and so on. Based on the data we have at our hands, and we'll of course, I mean, disclose in the conferences and in the major publications, then I would argue that the life cycle of a standard NASH or MASH patient

Mads Thomsen: Then Sachin on, yeah, there is a lot of debate in the community around metabolic and cirrhotic phenotypes and so on. Based on the data we have at our hands, and we'll of course, I mean, disclose in the conferences and in the major publications, then I would argue that the life cycle of a standard NASH or MASH patient

Mads Krogsgaard Thomsen: This is actually driven by dysmetabolism that causes inflammation in the liver. Then when you have ballooning of the cells, i.e., the cells are dying, that is quite often replaced by fibrous tissue. The reason why I can say this, we had very nice effects on ballooning in this trial. We had very significant reductions in cell death in the biopsies. When I then look at the fibrosis markers in the ELF biomarker panel, but also in the elastography FibroScan, we're actually seeing that those fibrosis parameters come down dose dependently. For me, the cirrhotic phenotype is typically a consequence of the dysmetabolism inflammation that drives the disease. Then the fibrosis is the end outcome. You might have patients that are more prone to fibrosis even at lower levels of steatohepatitis.

Mads Thomsen: This is actually driven by dysmetabolism that causes inflammation in the liver. Then when you have ballooning of the cells, i.e., the cells are dying, that is quite often replaced by fibrous tissue. The reason why I can say this, we had very nice effects on ballooning in this trial. We had very significant reductions in cell death in the biopsies.

Mads Thomsen: When I then look at the fibrosis markers in the ELF biomarker panel, but also in the elastography FibroScan, we're actually seeing that those fibrosis parameters come down dose dependently. For me, the cirrhotic phenotype is typically a consequence of the dysmetabolism inflammation that drives the disease. Then the fibrosis is the end outcome. You might have patients that are more prone to fibrosis even at lower levels of steatohepatitis.

Mads Krogsgaard Thomsen: I don't have much proof in the pudding from this trial. On the oral. Yes, it is true we are doing these new generation or new ways of formulating Rybelsus in a smarter way. And those trials are ongoing. They might be a bit delayed because they are ongoing trials, and of course, these are early stage trials, and you know that phase I like trials are more hurt by the COVID-19 situation. Again, we have a Rybelsus on the market, and we are not desperate for having a new formulation of Rybelsus on the market, even though we'd like to have it, of course for obvious reasons.

Mads Thomsen: I don't have much proof in the pudding from this trial. On the oral. Yes, it is true we are doing these new generation or new ways of formulating Rybelsus in a smarter way. And those trials are ongoing. They might be a bit delayed because they are ongoing trials, and of course, these are early stage trials, and you know that phase I like trials are more hurt by the COVID-19 situation.

Mads Thomsen: Again, we have a Rybelsus on the market, and we are not desperate for having a new formulation of Rybelsus on the market, even though we'd like to have it, of course for obvious reasons.

Sachin Jain: Thank you. Can I just take one follow-on for Camilla? Thanks for that color on NVRX and QH. What are you seeing in terms of real life discontinuation rates versus what was in the label?

Camilla Sylvest: It's too early for us to say anything on that at this point in time. We would have to see sort of the continuous uptick of Rybelsus before we can say that with a reasonable patient number. Yeah. We don't see any signals that there are any issues on this regard, so we don't have any qualitative sort of feedback on that.

Sachin Jain: Thank you.

Operator: Thank you. Our last question comes from the line of Michael Leuchten from UBS. Your line is now open.

Michael Leuchten: Oh, thank you for the final question. Just talking about risk management, one of your big driver of the returns has been your ability to be extremely efficient on the manufacturing side, which obviously includes the yield improvement that Matt was referring to. As we now go through the pandemic, is there an argument that you may have to decentralize your manufacturing process to be able to stop potential disruption that a pandemic such as we are experiencing now might bring to a manufacturing side? Or are you able to manage this in your minds with the setup you have, maybe by just segmenting the existing facilities? Thank you.

Michael Leuchten: As we now go through the pandemic, is there an argument that you may have to decentralize your manufacturing process to be able to stop potential disruption that a pandemic such as we are experiencing now might bring to a manufacturing side? Or are you able to manage this in your minds with the setup you have, maybe by just segmenting the existing facilities? Thank you.

Karsten Knudsen: Thank you, Michael. It's a very relevant question that we of course ask ourselves as part of the learnings from COVID-19. In reality, it's a question that we've been discussing with our board for a number of years as part of general risk management. We have a review of the biggest risks for the company across the value chain.

Karsten Knudsen: I would say in conclusion, when you look at our manufacturing, and if I take kind of the value chain in manufacturing, then for our supplier base, then for our critical suppliers of the various raw materials, we are very focused on having dual sourcing from different manufacturers or from different geographies for the critical raw materials in manufacturing. If for some reason that is not the case, then for those few raw materials, we set inventory policies that are very high. We could have perhaps 6 or 12 or even more months worth of raw material on inventory.

Karsten Knudsen: In terms of our in-house manufacturing, if we move through the value chain in API, this is basically a key part of our API manufacturing that now we have our diabetes API facility soon to be up and running within the next year, in Clayton, North Carolina. Actually we have a better hedge than ever before on insulin API on top of the inventory policies we have that are between, I would say 9 and 24 months on API. Biopharm, we also have facility in the US now in New Hampshire for some of the Biopharm products apart from the inventory levels.

Karsten Knudsen: Then finally on the finished goods manufacturing, we have filling factories in France, in China, in Brazil, in the US, and in Denmark, and then a few others. There we are securing dual approvals for our products. So for instance, when China closed down early in the year, then we had other finished goods facilities that Tianjin could not supply. I don't foresee any significant change to our global manufacturing network as a learning from COVID-19. But that said, of course, there are other learnings that we'll take into account.

Michael Leuchten: Thank you.

Karsten Knudsen: With that, thank you for attending the UBS virtual Novo Nordisk Q1 roadshow, and thank you for the interest in our company. If you have further questions, please do not hesitate to reach out to investor relations, and we'll get back to you swiftly. Have a good rest of the day, and stay safe out there. Thank you.

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