Q2 2020 Novo Nordisk A/S Earnings Call

[music].

Hello, and welcome to the Q2 Twentytwenty never Nordisk, Yes earnings conference call.

Operator: Hello and welcome to the Q2 2020 Novo Nordisk AS earnings call. Throughout the call, all participants will be in listen-only mode, and afterwards, there will be a question and answer session. Today, I'm pleased to present Lars Fjordgrd Jrgensen. Please go ahead with your meeting.

Perhaps the cool all participants will be in listen only mode and afterwards, there will be a question answer session.

Today I'm pleased to present loss [laughter] gold you haven't done.

Please go ahead with your meeting.

Lars Fruergaard Jorgensen: Thank you. Welcome to this No Noise Conference call regarding our performance for the first six months of 2020 and our financial outlook for 2020. I'm Lars Jorgensen, the CEO of Novo Nordisk. With me, I have our Chief Financial Officer, Karsten Knudsen, and our Chief Science Officer, Thomas Mads Krosgaard-Thomsen.

Thank you.

Welcome to this North conference call regarding all performance for the first six months of 2020, and our financial outlook for 2020.

I'm not real got Jorgensen, the CEO of no wonder what is with me I have our chief financial officer customer inclusion and our Chief Science Officer, Thomas Mess courtrooms.

Unknown Executive: Also present and available for Q&A sessions are Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Sylvest, as well as our Investor Relations team. Today's earnings release and the slides for this call are available on our website, novonordisk.com. Please note that this conference call is being webcasted live and a recording will be made available on Novo Nordisk's website. The call is scheduled to last for one hour.

Waterproof now and available for commissions executive Vice President and head of commercial strategy corporate office commuter serviced as well as our Investor Relations Officer.

Today's earnings release, and the slides for this call available on our website Northstar come.

Please note that this conference call is being recorded live and recording will be made available on on risk website.

According to schedule to last for one hour.

The presentation structured as outlined on slide two we begin with highlights for the quarter addressing north continued responds to the covert 19 pandemic and then move onto the performance for the first six months of 2020.

Unknown Executive: The presentation is structured as outlined on slide two. We'll begin with the highlights for the quarter addressing Novo Nordisk's continued response to the COVID-19 pandemic and then move on to the performance for the first six months of 2020. Please note all sales and operating profit growth statements will be at constant exchange rates unless otherwise specified. The Q&A session will begin in about 20 minutes. Please turn to slide 3.

Please note all states and operating profit growth statements will be at constant exchange rates on this otherwise specified.

Accumulation will begin in about 20 minutes.

Turning to slide three.

As always I need to advice you that this call will contain forward looking statements such forward looking statements are subject to risk and uncertainty that could cause actual results to differ materially from expectations.

Unknown Executive: As always, I need to advise you that this call will contain forward-looking statements. Such forward-looking statements are subject to risk and uncertainty that could cause actual results to differ materially from expectations. For further information on the risk factors, including the uncertainties around COVID-19, please see the company announcement for the first half of 2020 and the slides prepared for this presentation. Now, please turn to the next slide.

For further information on the risk factors, including the uncertainties around Cobot 19, Please see the company announcement for the first half of 2020 and the slides prepared for this presentation.

Now please turn to the next light.

In 2019, Nordisk introduced our strategic exploration stringent trend to five which consist of four components purpose and sustainability innovation and therapeutic focus commercial execution and financials.

Lars Fruergaard Jorgensen: In 2019, Novo Nordisk introduced our Strategic Aspirations 2025, which consists of four components purpose and sustainability, innovation and therapeutic focus, commercial execution, and financial. In the second quarter of 2020, Novo Nordisk has continued its focus on adding value to society with the launch of a new social responsibility strategy called Defeat Diabetes. The strategy introduces new long-term ambitions to accelerate prevention to halt the rise of diabetes, provide access to affordable care for vulnerable patients in every country, and continue the drive of innovation to improve life. First steps in the strategy are to reduce the ceiling price of human insulin from $4 to $3 per vial in 76 low- and middle-income countries and to expand our aspiration in our Changing Diabetes in Children program to reach 100,000 children by 2030, up from 25,000 children. Furthermore, in July of this year, Novo Nordisk announced its participation in the AMR Action Fund, a $1 billion initiative from more than 20 biopharmaceutical companies to address the need We also saw encouraging progress within our innovation and therapeutic focus aspirations during the quarter. Rebelsis was approved in Japan for the treatment of type 2 diabetes, and as described at our virtual R&D event in June, the STEP Phase III program, AM833 monotherapy trial, and AM833 plus semaglutide trial were all successfully completed.

In the second quarter of Twentytwenty Norsk has continued to have focused on adding value to society with the launch of a new social responsibility strategy quote defeat diabetes.

The stretch introduces new long term ambitions to accelerate prevention to hold the rise of diabetes provide access to affordable care for bonus for patients in every country and to continue the drive.

Of innovation to improve lives.

First option strategy occupant due to reduce the ceiling price of human insulin from Threed, sorry, $4 to $3 provide in 76, low and middle income countries and to expand Harlem exploration in our changing diabetes in children program to reach 100000 children by 20 to 30 off from.

25000.

Right.

Furthermore, in July of this year Norsk announced our participation in the aim our action fund a $1 billion initiative from more than 25 biopharmaceutical companies to address the need for new antibiotics to combat antimicrobial resistance.

We also incurred we also saw encouraging progress within our innovation and therapeutic focus expiration during the quarter for both US was approved in Japan for the treatment of type two diabetes and as described at our virtual on to even in June.

The step phase three program.

833, monotherapy trial and a three three plus Semaglutide trial, all successfully completed.

Further north signed an agreement for the acquisition of Covidien therapeutics, including the phase to be project, so of TV commit to come up.

Lars Fruergaard Jorgensen: In addition, Novo Nordisk signed an agreement for the acquisition of Covidia Therapeutics, including the Phase 2b project, Siltifkema Project. Moving to commercial execution. Diabetes sales increased by 7%, with Novo Nordisk increasing our diabetes value market share leadership by 0.8 percentage point to 29%. Tier 1 sales continue to perform well at 28% growth. Obesity care and biofarm sales increased by 9 and 6%, respectively. Within finances, our total sales increased by 7%, with international rations growing by 12% and North America rations growing by 1%. Operating profit increased by 8% to 30 billion Danish Kroner. As a consequence of the solid underlying performance in the first six months of 2020, we are maintaining our sales growth guidance of 3-6% and raising the floor of our operating profit guidance from 1-5% to 2-5%. For 2020, the Board of Directors has decided to pay out an interim dividend for 2020 of 3 kroner and 25 euros, which will be paid out in August this year. Please turn to slide five.

Moving to commercial execution.

The Buda sales increased by 7% renewal noise, increasing our diabetes value market share leadership by so your 0.8 percentage point to trend to 9%.

Just one sales continue to perform well at 28% growth.

At least to care and biopharm sales increased by nine and 6% respectively.

Within farms within finances, our total sales increased by 7% with assess operations growing by 12% and North America operations growing by 1%.

Operating profit increased by 8% to 30 billion Danish kroner.

As a consequence of the solid underlying performance in the first six months of Twentytwenty, we're maintaining our sales guidance, our since growth guidance of 3% to 6% and racing the flow of our operating profit guidance from 1% to 5% through 2% to 5%.

For 20 to 20 of the board of Directors has decided to pay out an interim dividend for Twentytwenty of three kroner and 25 era.

Which would be paid out in August this year.

Please turn to slide five.

The past a month have been highly unusual given the covert 19 pandemic.

During this time on risk has continually focused on ensuring that our business is operating safely that we able to supply lifesaving medicines as well as for portal societies around the world.

Within production all north manufacturing sites continue to operate and products are still distributed and being made available to patients worldwide.

Within research and development, we continue conduct already initiated clinical trials for ongoing trials recruitment of new patients is negatively impacted but gradually improving.

It is now possible to initiate new trials in certain countries.

The majority of North medicines are used for treating chronic diseases. However, during the period of social distancing implemented in many markets. We have seen fewer new patients initiating treatment. This is especially impacting launched launched products and products with relative short stay time.

Lars Fruergaard Jorgensen: The past months have been highly unusual given the COVID-19 pandemic. During this time, Novo Nordisk has continuously focused on ensuring that our business is operating safely, that we are able to supply life-saving medicines, as well as support societies around the world. In production, all Novo Nordisk manufacturing sites continue to operate, and products are still distributed and made available to patients worldwide. In research and development, we continue to conduct already initiated clinical trials.

In the beginning of the pandemic stocking mainly at the patient level, we're seeing particular in the us and Europe.

But a gradual destocking started in the second quarter. The cobot 19 pandemic evolves differently across geographies, but operations are gradually normalizing in many markets.

The majority of the majority of sales Representatives are now partially back in the field.

Again, we take our responsibility to support society seriously recently, North together with partners has developed a new Carbone advisors antibody test, which would be used by leases Patel in Denmark as in and operate observational study to identify the level of submission transmission of code 19, among people in the Dana.

Lars Fruergaard Jorgensen: For ongoing trials, recruitment of new patients is negatively impacted but gradually improving. It is now possible to initiate new trials in certain countries. The majority of Novo Nordisk medicines are used to treat chronic diseases. However, during the period of social distancing implemented in many markets, we have seen fewer new patients initiating treatment. This is especially impacting launch products and products with relatively short stay times.

Labor markets.

Please turn to slide six.

During the past six months the covered 19 related lockdowns negatively impacted new patient initiations in the us across all therapy areas. We operate in indexed against January averages and offer initial stocking followed by significant drops in prescription volume, we see the new to brand prescription numbers down around.

Down 15% in the us, but there are signs of gradual recovery.

Patient initiations in in the International relations have also be negatively impacted by koby 19, but as mentioned despite the differences in how the pandemic evolves across geographies operations are gradually normalizing.

Lars Fruergaard Jorgensen: In the beginning of the pandemic, stocking mainly at the patient level was seen, especially in the US and Europe, but a gradual de-stocking started in the second quarter. The COVID-19 pandemic evolves differently across geographies, but operations are gradually normalizing in many markets. The majority of sales representatives are now partially back in the field. Again, we take our responsibility to support society seriously.

Please turn to slide seven.

For the first half of the year total sales increased by 7%, which was driven by a solid sales growth of 12% in international operations.

The covered 19 relate to stocking in the first quarter was largely offset by Destocking and fewer patient initiations in the second quarter.

In in several operations all areas and all therapy has continued to contribute to growth.

The growth includes.

Koby 19 relate to stocking.

Which was largely offset by fewer patients initiating treatment as well as although timing events.

North America operations increased by 1% driven by sales growth for tier one will be city and biopharm segments.

Lars Fruergaard Jorgensen: Recently, Novo Nordisk, together with partners, has developed a new coronavirus antibody test that will be used by Rieshospitalet in Denmark in an observational study to identify the level of transmission of COVID-19 among people in the Danish labor market. Please turn to slide 6. During the past six months, the COVID-19-related lockdowns negatively impacted new patient initiations in the U.S. across all therapy areas we operate Indexed against January averages and after initial stocking followed by significant drops in prescription volume, we see the new-to-brand prescription numbers down around 15% in the U.S., but there are signs of gradual recovery. However, patient initiations in international operations have also been negatively impacted by COVID-19. But, as mentioned, despite the differences in how the pandemic evolves across geographies, operations are gradually normalized. Please turn to slide 7.

Sales growth was impacted by the combing 19 related search in demand in Q1, twentytwenty fewer patients initiating treatment as well as less use of number seven due to the lockdown.

Speaking to second quarter of 20 to 20 sales were unchanged from the second quarter of 29 team. Following the stock stocking seen in March 20 to 20 sales were negatively impacted by calling 19 related destocking of around 500 million Danish kroner, possibly at the wholesale level.

Since were additionally, negatively impacted by few patients initiating treatment.

These effects largely offset the stocking of estimated 2 billion Danish kroner in the first three month of Twentytwenty.

Please turn to slide eight.

In the first six month of the year sales growth was driven by two to one obesity and biopharm, partially offset by decline in insurance sales growth in sales decreased by 3% driven by a 23% 23% reduction of the of the in the us partially offset by 10% growth in international operations.

The USA is decline was driven by lower realized prices due to an unfavorable channel mix rebate enhancements the launch of additional affordability programs and changes in color skeptic inflation.

Lars Fruergaard Jorgensen: For the first half of the year, total sales increased by 7%, which was driven by solid sales growth of 12% in international operations. The COVID-19 stocking in the first quarter was largely offset by destocking and fewer patient initiations in the second quarter. In his elaborations, all areas and all therapies continue to contribute to growth.

In in celebrations instant sales growth was driven by all into in segments.

Do you have one sales increased by 28% driven by a 37% sales growth in international relations and 25% sales growth in North America operations. The sales increase was impacted by koby 19 relate to stocking largely offset by fewer patients initiating treating.

Initiating treatment.

No not because expanded both our global into in volume modestly market leadership as well as our GLP. One market leadership. This has resulted in the previously mentioned expansion of no noise global diabetes market leadership now at 29%.

We used to say beauty care sales grew by 9% with both operating units contributing to growth sales growth was impacted by fewer patients initiating treatment due to cobot 19.

Lars Fruergaard Jorgensen: The growth includes a COVID-19 related stocking which was largely offset by fewer patients initiating treatment as well as other timing events. North America operations increased by 1% driven by sales growth for GLP-1, obesity, and biopharm segments. Sales growth was impacted by the COVID-19-related surge in demand in Q1 2020, fewer patients initiating treatment, as well as less use of Novo7 due to the lockdown. Speaking to the second quarter of 2020, sales were unchanged from the second quarter of 2019. Following the stock-stocking scene in March 2020, sales were negatively impacted by COVID-19-related de-stocking of around 500 million Danish Kroner, partly at the wholesale level. Sales were additionally negatively impacted by fewer patients initiating treatment. These effects largely offset the stocking of an estimated 2 billion Danish kroner in the first three months of 2020. Please turn to slide 8.

Biopharm sales increased by 6% driven by Norges broken.

Please turn to slide nine.

The Usdfour one market continues to grow around 30% volume.

When measured quarter over quarter, driven by once weekly GLP one products.

With uptake of for Cemig, and the launch Overbuilds with Northcoast neutral brand market share leadership around 58% and is a GLP one market leader measured on total prescriptions with around 49% market share.

Proposes market access has progressed has progressed well and we have around 70% on strict it access across commercial and Medicare planes. The weekly new to brand market share has reached 11% and the rebuilt a total rebels was prescription share is nearly 3%.

Well simply continuous to increase its market share in the us in terms of new to brand prescriptions or Semtech is close to 35% market share and in terms of total total prescriptions or cemig market share is slightly more than 26%.

Please turn to slide 10.

No no one is increasing our diabetes market share in international operations as indicated by the near 26% share growth versus on market share of around 22%.

Unknown Executive: In the first six months of the year, sales growth was driven by GLP-1, obesity, and biopharm, partially offset by a decline in insurance sales. Global instrument sales decreased by 3%, driven by a 23% reduction in the US, partly offset by 10% growth in international operations. The U.S. sales decline was driven by lower realized prices due to an unfavorable channel mix, rebate enhancements, the launch of additional affordability programs, and changes in coverage gap legislation. In international relations, instrument sales growth was driven by all instrument segments. Fuel for One sales increased by 28%, driven by 37% sales growth in international operations and 25% sales growth in North America operations. The sales increase was impacted by COVID-19-related stocking, largely offset by fewer patients initiating treatment.

This represents a market share increase of 2.4 percentage points versus 2019.

The market share increase in international operations is driven by both instant and Dearborn, the diabetes franchise represents around 80%.

Our growth in international operations.

With insulin share growth at 51% Angelica one share growth at 39%. Please turn to slide 11.

We'll be to care sales increased by 9% driven by both North America operations and international operations sales growth was negatively impacted by fewer patients initiating treatment due to koby 19.

Our strategic aspiration is to move to more than is to more than double sales in obesity by 20 to 25 into part of that sucks into has been launched in 40 countries globally, and we continue to invest in market development activities.

Please turn to slide 12.

Biopharm sales grew by 6% in the first half of Twentytwenty, driven by 10% sales growth in international operations and by one 1% sales growth in North America operations sales were positively impacted by timing of shipments changes in inventory and coated 19 related stockings sales were negatively in.

Active by lower domain due to cover 19 related lockdowns for hemophilia the declining sales of 1% were driven by loan or seven sales, partly reflecting reduced elective surgeries and leadings due to lock down.

Unknown Executive: Novo Nordisk has expanded both its global insulin volume market leadership as well as its GLP-1 market leadership. This has resulted in the previously mentioned expansion of Novo Nordisk's global diabetes market leadership, now at 29%. Obesity care sales grew by 9%, with both operating units contributing to growth. However, sales growth was impacted by fewer patients initiating treatments due to COVID-19. Biofarm sales increased by 6%, driven by Nordistropia.

But partly offset by the continued global rollout of new products were fixed year and as for us.

Norditropin sales increased by 18% driven by changes in the inventory Cody 19 related stocking as well as additional demand driven by supply challenges for competing products in selected countries.

No no risk remains the leader in human growth hormone disorder markets, where the value market share of 34.2%.

With this autumn mess for an update on R&D.

Thank you lost please turn to slide 13.

In the next couple of slides I'll discuss recently communicated results from our BC pipeline, starting with the step program.

Unknown Executive: Please turn to slide 9. The US DLP1 market continues to grow around 30% in volume when measured quarter over quarter driven by the once weekly GIL-1 protocol. With the uptake of Rosempic and the launch of Rebelsus, Novo Nordisk has new-to-brand market share leadership of around 58% and is the GLP-1 market leader measured on total prescriptions, with around 49% market share. Rebellious market access has progressed well, and we have around 70% unrestricted access across commercial and Medicare plans.

Step investigated once weekly subcutaneous Semaglutide 2.4 milligrams in the treatment of obesity and showed strong weight loss across the full phase III trials step 123 and four.

The step one three and four trials evaluate semaglutide in people with the PC overweight will co morbidities, whilst at to evaluate Smac decided overweight or obese people with type two diabetes.

When taken US intended we saw weightless of 17% to 18%, India Peachy trials and around 11% weight loss in the diabetes trial.

These are compared to a placebo related weight loss of 2% to 5%.

Additionally, cardiovascular risk markets were significantly reduced and health related quality of life improved significantly after 68 weeks of similar type treatment.

In all the individual step trials, some appetite 2.4 milligrams. Furthermore, pizza at the safe and well tolerated profile with the most common adverse events in the trenchant gastrointestinal Vince typical of the GLP one class.

Unknown Executive: The weekly new to brand market share has reached 11%, and the total Rebelsus prescription share is nearly 3%. Mozambique continues to increase its market share in the U.S. In terms of new-to-brand prescriptions, Osempic is close to 35% market share, and in terms of total prescriptions, its market share is slightly more than 26%. Please turn to slide 10.

No new and unexpected safety signals emerged in step.

Following completion of the four stepped trials you will notice go now prepared to five the regulatory dossiers, and then day submission, which is expected to plate take place around the turn of the year.

Please turn to slide 14.

In June Twentytwenty, the phase two results with a novel once weekly subcutaneous human animal in analog acreage we announced.

Unknown Executive: Novo Nordisk is increasing its diabetes market share in its national operations, as indicated by the near 26% share of growth versus a market share of around 22%. This represents a market share increase of 0.4 percentage points versus 2019. The market share increase in international operations is driven by both Insulin and Glucose-1. The diabetes franchise represents around 80% of growth in international operations, with indiscriminate share of growth at 51% and GLP-1 share of growth at 39%. Please turn to slide 11.

The 26 week phase two monotherapy trial with am Athree investigated the safety Tolerability and efficacy in weight management amongst 706 people with BT overweight plus at least one week related co mobility.

From a baseline body weight of 107.4 kilograms, amsthree demonstrated a substantial weight loss of 10.8% falling only 26 weeks of treatment.

Also in June Twentytwenty the results from the phase one trial investigating am athree in combination with Semaglutide were announced.

This 22 week multiple ascending dose trial investigated the safety Tolerability pharmacokinetics and weight loss potential of M- fix we administered in combination with some macro site 2.4 milligrams in 80 people with repeat your overweight.

After only 20 weeks of treatment and with only the last four weeks at the therapeutic doses of 2.4 milligram, some appetite plus ameet two three patients in the trial lost an average of 17.1% body weight from the mean baseline of 95.1 kilograms.

Unknown Executive: Obesity care sales increased by 9%, driven by both North America operations and international operations. However, sales growth was negatively impacted by fewer patients initiating treatment due to COVID-19. Our strategic aspiration is to move to more than double sales in obesity by 2025. In support of that, Succenta has been launched in 48 countries globally, and we continue to invest in market development activities. Please turn to slide 12.

66% of the participants on the highest dose of the combination therapy achieved the weight loss of more than 15% after only 22 weeks.

[noise] dual targeting of the GLP, one and Amlin subtlety pathways in the brain henceforth holds the potential supercom a strong future noninvasive treatment alternative to parametric surgery in patients with high PMI indices.

Furthermore mm three three in combination with semaglutide appear to be well tolerated with the most common adverse events being trenchant, mostly mild to moderate gastrointestinal events, which despite the increased efficacy of the combination therapy occurred only at the level similar to some magnetite monotherapy.

Mads: Biopharm sales grew by 6% in the first half of 2020, driven by 10% sales growth in international operations and by 1% sales growth in North America operations. Sales were positively impacted by timing of shipments, changes in inventory, and COVID-19 related stockings. Sales were negatively impacted by lower demand due to COVID-19-related lockdowns. For hemophilia, declining sales of 1% were driven by lower NOV-7 sales, partly reflecting reduced elective surgeries and bleeding due to lockdowns, but partly offset by the continued global rollout of the new products Refixia and Esperox. Nordic Tropian sales increased by 18% driven by changes in inventory, COVID-19-related stocking as well as additional demand driven by supply challenges for competing products in selected countries. Novo Nordisk remains the leader in the human growth hormone disorder market with a value market share of 34.2%. With that, over to Mads for an update on R&D.

Following the completion of the phase two monotherapy trial with they meet three three and the combination trial with this we and some appetite a multi dose funko kinetic study off the combination will be initiated in the second half of this year.

And faced redevelopment is expected to begin next year.

Please turn to slide 15.

In the second quarter of Twentytwenty and number of R&D milestones will reached milestones that have already mentioned include the rebuilt us approval in Japan as well as the step results New Beastie phase two results for EMEA chemotherapy and the phase one trial results for the combination therapy.

Regarding some other GLP one related clinical peach projects, we've been pursuing namely the co agonist and try agonists projects, we've decided to terminate both projects.

This decision is based on the strong obesity data obtained for some appetite and Im Threexthree in act that in aggregate have raised innovation path for future, New Nordisk obesity care and with Apple prioritized, our resources accordingly to achieve the best possible patient outcomes and product benefit risk profile.

Within the cardiovascular space the PC asking nine inhibitory peptide successfully completed its first human dose trial in June of this year.

Mads: Thank you, Lars. Please turn to slide 13. In the next couple of slides, I'll discuss recently communicated results from our obesity pipeline, starting with the STEP program. STEP investigated once-weak subcutaneous hemaglutide 2.4 mg in the treatment of obesity and showed strong weight loss across the four Phase 3a trials, Step 1, 2, 3, and 4. The Step 1, 3, and 4 trials evaluated semaglutide in people with obesity or overweight with comorbidities, while Step 2 evaluated semaglutide in overweight or obese people with type 2 diabetes. When taken as intended, we saw a weight loss of 17-18% in the obesity trials and around 11% weight loss in the diabetes trials. These results are compared to a placebo-related weight loss of 2 to 5.

The peptide has a long lasting efficacious save safe and well tolerated profile.

Following completion of the trial the next steps in clinical development and our being evaluated.

Lastly, and also in June Staton, and we'll Nordisk initiated the first human dose trial from their monoclonal so-called sweeping antibody STT 50, 58 designed to target and eliminate lipoprotein APC three leading to equal C. Lowering.

This in turn is expected to significantly lower triglycerides, leading to a potential reduction of cardiovascular events in the hypertriglyceridemia target population.

The trial is a single center randomized double blind placebo controlled trial designed to investigate safety Tolerability pharmacokinetics and pharmacodynamics.

The remainder of the year end into 2021 promises a number of milestones, including results and potential regulatory submission for sustained for which is a large trial involving some macro tight dosed at 2.0 milligrams in type two diabetes.

Additionally, we are planning to initiate the phase three program for the first in class once weekly in iconic before the end of the year.

Likewise, we expect regulatory submission in the us for Semaglutide 2.4 milligrams LPC towards year end.

Mads: Additionally, cardiovascular risk markers were significantly reduced, and health-related quality of life improved significantly after 68 weeks of semaglutide treatment. In all the individual STEP trials, semaglutide 2.4 mg furthermore appeared to have a safe and well-tolerated profile, with the most common adverse events being transient gastrointestinal events typical of the GLP-1 class. No new and unexpected safety signals emerged in STEP. Following completion of the four-step trials, Novo Nordisk will now prepare to file the regulatory dossier, an NDA submission which is expected to take place around the turn of the year. Please turn to slide 14.

Finally, there will be Nash read outs for Semaglutide in combination with the FX are an ADC compounds from Hilliard.

Well its phase to be results related to the NT interleukin six monoclonal antibody suitability map in patients with atherosclerotic cardiovascular disease and chronic kidney disease.

With that over to cost and for an update on the financials.

Thank you ma'am, please turn to slide 16.

In the first six months of 20 to 20 sales increased by 8% and Danish kroner and by 7% at constant exchange rates.

The gross margin was 84.1% compared with 83.9% in the first six months of 29 team.

The increase in gross margin reflects productivity improvements, mainly within insulin and tier one.

A positive product mix driven by increased year to one sales.

And a positive currency impact of 0.2 percentage points.

This was partly countered by a negative impact from lower realized crisis in the U.S.

Mads: In June 2020, the Phase II results with the novel once-weakly subcutaneous human amylin analog AM833 were announced. The 26-week Phase 2 monotherapy trial with AM833 investigated the safety, tolerability, and efficacy in weight management amongst 706 people with obesity or overweight plus at least one weight-related comorbidity. From a baseline body weight of 107.4 kg, AM833 demonstrated a substantial weight loss of 10.8% following only 26 weeks of training.

Second distribution cost increased by 3% and Danish krone and by 3% at constant exchange rates.

The increasing costs was driven by North America operations, reflecting launch activities for both us and continued promotional activities for centric.

This is partly offset by lower promotional spend within insulin.

And is that collaboration promotion activities are focusing on the continued rollout affect saxenda and launch activities for or simple and process.

The spend was impacted by covert 19, resulting in a lower activity level and delays in promotional activities.

Research and development costs increased by 13% and Danish krone and by 30% at constant exchange rates.

The cost increase is impacted by the reversal of write downs of pre launch inventory in the first quarter of 2019. Following the filing of also macro site with the Usfifty.

Mads: Also in June 2020, the results from the Phase 1B trial investigating AM833 in combination with somatrotide will be announced. This 20-week multiple ascending dose trial investigated the safety, tolerability, pharmacokinetics, and weight loss potential of AM8P3 administered in combination with semaglutide 2.4mg in 80 people with obesity and overweight. After only 20 weeks of treatment, and with only the last 4 weeks at the therapeutic doses of 2.4mg semaglutide plus AMA3-3, patients in the trial lost an average of 17.1% body weight from a mean baseline of 95.1kg. Furthermore, 66% of the participants on the highest dose of the combination therapy achieved a weight loss of more than 15% after only 20 weeks. Dual targeting of the GLP-1 and amyloid satiety pathways in the brain henceforth holds the potential to form a strong future non-invasive treatment alternative to bariatric surgery in patients with high BMI.

The cost increase is driven by increased activities within other Sears chronic diseases due to progression of the early pipeline with the Nash and cardiovascular disease as well as increased spend within insulin and biopharm.

This is partly offset by lower spend within piece to cap driven by Finalization of this macro site will be two phase three program.

Administration costing decreased by 1% and Danish krone and was unchanged at constant exchange rates, reflecting broadly on chain spend across administrative areas.

Operating profit increased by 9% and Danish kroner and by 8% at constant exchange rates.

Net financial items showed a loss of around 1.7 billion Danish kroner compared to a loss of around 2.3 billion in 2019.

Diluted earnings per share increased by 14% to nine kroner and 58.

Free cash flow increased by 62% to 30.3 billion Danish kroner.

The increase.

What's driven by timing of rebate payments in the US the increase in net profit as well as lower capital expenditure.

Additionally, the board of directors has decided to pay out an interim dividend for twentytwenty of free krona and 25.

For each new most NP share of Serpent 20.

Danish kroner, which will be paid out in August 20 to 20.

Please turn to slide 17.

Mads: Furthermore, AM833 in combination with semaglutide appeared to be well tolerated, with the most common adverse events being transient, mostly mild to moderate, gastrointestinal events which, despite the increased efficacy of the combination therapy, occurred only at a level similar to semaglutide monotherapy. Following the completion of the Phase II monotherapy trial with AM833 and the combination trial with AM833 and semaglutide, a multi-dose pharmacokinetic study of the combination will be initiated in the second half of this year, and Phase III development is expected to begin next year. Please turn to slide 15.

The foreign exchange rates have moved significantly since our Q1 Twentytwenty financial release in May with especially the U.S. dollar depreciating against the Danish kroner, followed by many emerging market currencies.

This development impacts our full year outlook, while we now expect currency headwinds on sales growth and operating profit growth of minus 2% and minus 3% relet, respectively relative to growth rates at constant exchange rates.

Furthermore, in May 2020, we expected net financial items for the full year to be a loss of 2.5 billion Danish kroner, but with the latest currency movements. The expected loss has been reduced to 1.2 billion Danish kroner, reflecting gains associated with foreign exchange hedging contracts, partially offset by non hits currencies.

Despite.

The expected negative impact from cope with 19 in Twentytwenty sales growth is still expected to be between three and 6%.

The guidance reflects an expectation for continued robust sales performance of the tier one based the diabetes care products simply Victoza and resources.

Mads: In the second quarter of 2020, a number of R&D milestones were reached. Milestones that have already been mentioned include the rebels' approval in Japan, as well as the STEP results in obesity, Phase 2 results for AM833 monotherapy, and the Phase 1b trial results for the combination therapy. Regarding some other GLP-1-related clinical obesity projects we've been pursuing, namely the co-agonist and tri-agonist projects, we have decided to terminate both projects. This decision is based on the strong obesity data obtained for semaglutide and AM3-3 that, in aggregate, have raised the innovation bar for future Novo Nordisk obesity care, and we therefore prioritized our resources accordingly to achieve the best possible patient outcomes and product benefit-risk profile. Within the cardiovascular space, the PCSK9-inhibitory peptide successfully completed its first human dose trial in June of this year. The peptide has a long-lasting, efficacious, safe, and well-tolerated profile.

The portfolio of new generation insulin and the pipeline products.

The guidance also still reflects intensified competition within diabetes care Biopharm continued pricing pressure within diabetes care as well as the expansion of affordability initiatives.

As discussed in the previous slides.

Given the current exchange rates versus Danish kroner growth reported in Danish krone is now expected to be around two percentage point lower than at constant exchange rates.

The current koby 19 pandemic costs uncertainty to the outlook regarding new patient Initiations and society will impact success, the unemployment rate in the us.

Which is impacting health insurance coverage the estimated annualized impact here off is around 3% on USA us.

The outlook is based on a number of assumptions related to severe itch and duration of impacts from core with 19, including a gradual normalization across geographies of new patient initiations in third and fourth quarter as well as the continued gradual destocking during 2020 and 2021 of the increased stock levels realized in the first call.

Them.

Consequently volatility in quarterly sales should be expected.

Operating profit growth is now expected to be 2% to 5% the updated outlook reflects savings due to cope with 19.

The expectations for operating profit growth, primarily reflects the sales growth outlook and continued investments in current and future growth drivers across the operating units.

Again, given the current exchange rates versus Danes grown growth reported in Danish kroner is now expected to be around three percentage points lower than at CR.

Mads: Following completion of the trial, the next steps in clinical development are now being evaluated. Lastly, and also in June, Statin and Novo Nordisk initiated the first human dose trial for their monoclonal so-called sweeping antibody, STT5058, designed to target and eliminate lipoprotein ApoC3, leading to ApoC3 lowering. This, in turn, is expected to significantly lower triglycerides, leading to a potential reduction in cardiovascular events in the hypertriglyceridemic target population.

Consequently, we are on track to deliver our 20 to 20 financial guidance set before the Koby 19 pandemic.

Financial items is now expected to be a loss of around 1.2 billion Danish kroner, reflecting the lower losses associated with foreign exchange hedging contracts. Lastly, we now expect free cash flow to be between 33, and 38 billion Danish kroner, reflecting the acquisition of coverage therapeutics incorporated.

And now auto loss for his final remarks.

Yes.

Thank you question, please turn to slide 19.

Despite covered 19, we are satisfied by the performance in the first half of Twentytwenty and by the progress made on our strategic aspirations. We saw strong uptake in RG, one portfolio and we continue to increase our diabetes value market share within R&D, our beauty Crinkle cut fries result are very encouraging.

Karsten: The trial is a single-center, randomized, double-blind, placebo-controlled trial designed to investigate safety, tolerability, pharmacokinetics, and pharmacodynamics. The remainder of the year and into 2021 promises a number of milestones, including results and potential regulatory submission for SUSTAIN-40, which is a large trial involving semaglutide dosed at 2.0 mg in type 2 diabetes. Additionally, we are planning to initiate the Phase 3 program for the first-in-class once-weekly in-student iCodec before the end of the year. Likewise, we expect regulatory submission in the U.S. for semaglutide 2.4 mg in obesity by year-end. Finally, there will be NASH readouts for semaglutide in combination with the FXR and ACCI compounds from Gilead, as well as phase 2B results related to the anti-interleukin 6 monoclonal antibody, Siltivecimab, in patients with atherosclerotic cardiovascular disease and chronic kidney disease. With that, over to Karsten for an update on the finances.

Let's cover 19 continues to severely impacted sizes around the world. All products has continued to be to safeguard our employees continued supply of our lifesaving medicines and to help societies around the world to fight the pandemic.

With that I'd like to thank you for support and we're now ready for the Q in a where kindly ask all participants to limit him or herself to two questions. Operator, we're now ready to take the first set of questions.

Thank you.

Participants if you do wish to 100 question. Please press zero worn on your telephone keypad.

You can press zero two to cancel at any time and our first question comes from the line of Peter Verdult of Citigroup. Please go ahead.

Thank you Pete Verdult from city to your questions laws.

Can you characterize how the Beast data.

Generated in Q2 for summer.

Hey, I made three three and the combination of played versus internal expectations.

One could argue that the profile emerging.

The thing versus an existing obesity franchise that was approaching 1 billion pre cobot.

Make sure sort of 2 billion dollar plus Bcf duration look rather conservative I realize Q2 is not the four imply which you change strategic objectives, but I would like to your thoughts about.

The conference of reaching all far exceeding that target.

And secondly on a little bit more near near term.

Matt can you just remind us how you think about the magnitude of threat if any to some magnetite from upcoming to the upside phase three data.

Karsten: Thank you, Matt. Please turn to slide 16. In the first six months of 2020, sales increased by 8% in Danish kroner and by 7% at constant exchange rates. The gross margin was 84.1% compared with 83.9% in the first six months of 2019. The increase in gross margin reflects productivity improvements mainly within insulin and GLD1, a positive product mix driven by increased GLP-1 sales, and a positive currency impact of 0.2 percentage points. This was partly countered by a negative impact from lower realized prices in the U.S.

The profile Youre expecting and a quick reminder, as to when in Q4, we should expect to sustain forte data. Thank you.

Thank you Pete.

So it's clear that we're very encouraged by the clinical profile, we have seen not only for semaglutide visits per clearly also.

Made three three alone and in combination with Semaglutide.

We add our capital markets day set that we expected to at least double the obesity franchise and it's clear that that's a statement was set with the set with confidence.

That we will also get strong clinical data, but no way has we have we seen.

Any weakness in that position. So if anything it has certainly strengthened our confidence in achieving that but as you say I'm not going today to put out a new strategic aspiration for beauty, but we are very.

Karsten: Sales and distribution costs increased by 3% in Danish kroner and by 3% at constant exchange rates. The increase in costs was driven by North America operations reflecting launch activities for Rebelsis and continued promotional activities for USENPIC. This is partly offset by lower promotional spend within insulin. In international operations, promotional activities are focusing on the continued rollout of SACSENDA and launch activities for OCEMPIC and REBELS.

Pleased with the data and we were confident that we can make this into a very sizeable business from onwards.

And then mess on.

On on the clinical profile file and the potential split of.

Competing product, obviously limits to what we can say about competitive products, but.

Some comments, yes, there on de Los and so I will refrain from being very specific on on the two separate had molecule time will show the data, but I can make some generic comments. One is that we are now understanding very much the profile of some macro tied at higher doses do bear in mind, Pete that we have actually conducted semaglutide in Nash.

Karsten: The spend was impacted by COVID-19, resulting in a lower activity level and delays in promotional activities. Research and development costs increased by 13% in Danish kroner and by 13% at constant exchange rates. The cost increase is impacted by the reversal of write-downs of pre-launch inventory in the first quarter of 2019 following the filing of all smuggled sites with the U.S. FDA. Additionally, the cost increase is driven by increased activities within other serious chronic diseases due to progression of the early pipeline within NASH and cardiovascular disease, as well as increased spend within insulin and biopharm. This is partly offset by lower spend within obesity care driven by the finalization of the Simacrotide Obesity Phase 3 program.

Where a significant portion of the patients had diabetes and that was had a dose of up to more than two milligrams, where we saw very substantial weight loss and very significant agency lowering we from done the same also in as an element in the step program. So I can say with the confidence that the sustained folder trial in in my mind will show.

Very powerful lowering both of glucose and body weight and I do expect to see a a benign adverse event profile in inline with what we've seen both in the Nash trial and also in the step program, where the high doses were deployed.

Obviously to separate type being a GLP one slashed VIP agonist.

We'll in my mind based on data we've seen so far unlike the combination of an E. Three three and say my which is an eminent analog and the GLP one analog.

There will probably be a additivity of the Gi side effect profiles of the VIP and the GLP one component at least this is what we have seen both in a trial. We've conducted our sell two years back with my seven to nine our dual agonist, but also so far in the trials in phase two and the escalation trials that our colleagues at the left.

Karsten: Administration costing decreased by 1% in Danish kroner and was unchanged at constant exchange rates, reflecting broadly unchanged spend across administrative areas. Operating profits increased by 9% in Danish kroner and by 8% at constant exchange rates. Net financial items showed a loss of around 1.7 billion Danish kroner compared to a loss of around 2.3 billion in 2019. Diluted earnings per share increased by 14% to 9,58 kroner.

But we will see the data late this year and I guess during the course of next year.

Segment mathematics is critical.

Yep.

Just quickly on I would say the timing yet its acute the Q4 timeline to that we're talking value for years the for sale.

Yes. It is right we are talking Q4 Q4.

Okay. Okay. Thank you.

Thank you. Thanks for trying next question. Please our next question comes from the line of another couple idea of Bernstein. Please go ahead.

Thanks, very much Taylor questions on local body, although as being the first the commenced off little about a again pick pricing.

I look my math, it down around 21% or per milligram and in the first off of Twentytwenty versus full year 19, a lot follows a 17% decline in lighting versus 18. So you described the impacts across you know unfavorable channel mix rebate enhancements and changes in coverage got legislation.

Karsten: Free cash flow increased by 62% to 30.3 billion Danish Kroner, driven by the timing of rebate payments in the US, the increase in net profit, as well as lower capital expenditure. Additionally, the Board of Directors has decided to pay out an interim dividend for 2020 of 3,25 euros for each Novo Nordisk A and B share of 0.20 DK, which will be paid out in August 2020. Please turn to slide 17.

You just help us better understand the contribution from each of these three factors and the pricing dynamics and then tied to that should we assume similar trends moving forward and then my second question is just on Saxenda locally tough twoq as expected. So could you just talking about what you've seen.

In the last month, or so, particularly within the old U.S. out of pocket market. How should we expect continued weakness to a seminal extent for the remainder of the or or should we actually see a return to growth.

Thanks very much.

Thank you remodel so cost and first on or simply pricing and then Camilla can comment on a six cents for Q2.

Karsten: Foreign exchange rates have moved significantly since our Q1 2020 financial release in May, with the US dollar depreciating against the Danish kroner, followed by many emerging market currencies. This development impacts our full-year outlook, where we now expect currency headwinds on sales growth and operating profit growth of minus 2% and minus 3%, respectively, relative to growth rates at constant exchange rates. Furthermore, in May 2020, we expected net financial items for the full year to be a loss of 2.5 billion Danish Kroner, but with the latest currency movements, the expected loss has been reduced to 1.2 billion Danish Kroner, reflecting gains associated with foreign exchange hedging contracts, partly offset by non-hedge currencies. Despite the expected negative impact from COVID-19 in 2020, sales growth is still expected to be between 3% and 6%. The guidance reflects an expectation for continued robust sales performance of the GLP-1-based diabetes care products Osympic, Victrosa, and Rebelsis. The Portfolio of New Generation Insulin and the Biopharm Project. The guidance also still reflects intensified competition within diabetes care and biopharmaceuticals, continued pricing pressure within diabetes care, as well as the expansion of affordability initiatives, as discussed in the previous slide.

Yeah, so and so the model I cannot.

Recognized the percentages, you're alluding to from and from your analysis and so and so we're we're looking at the at different that they data points first of all so.

Yeah. So so what we're looking at day in terms of simply pricing in the second quarter is exactly in line with what we saw in in the first quarter Sodano structural changes here in the second quarter come compared to first quarter.

I am.

As to our pricing in India, if you want to oriented but also in a way to simply specifically then and then you're right there there's a gap between the.

The volume growth and the realized net net sales growth. There then again the main building blocks.

Remain and first of all we have a cover escape impact in the USA and this year and of course, we don't have that the impact.

Next year, then a then we have the channel mix and the pair mix impacting and then finally, there the rebate enhancements to secure that with that we continue to have the around 90% unrestricted access so and so we actually.

Rather encouraged by the performance all bio simply can't and we believe that the performance is strong and continues to be strong.

Thank you constant and Camilla on Saxenda.

Performance in Q2, and what to expect.

Yes, so as Saxenda performance have been no significant impact at bank of 19, as you sell in especially because sand.

Actually the very short stay time likes Xcenda four to five months, if the impacted by at the fact that they npis scripts at going it had been reduced especially in there in the second quarter, we sell at the lowest point around April and now we are seeing <unk> that'd be a padley getting at closer to.

Karsten: Given the current exchange rates versus the Danish kroner, growth reported in Danish kroner is now expected to be around 2% lower than a constant exchange rate. The current COVID-19 pandemic causes uncertainty regarding new patient initiations and societal impacts, such as the unemployment rates in the US, which is impacting health insurance coverage. The estimated annualized impact hereof is around 3% of US sales. The outlook is based on a number of assumptions related to the severity and duration of impacts from COVID-19, including a gradual normalization across geographies of new patient initiations in the third and fourth quarter, as well as the continued gradual destocking during 2020 and 2021 of the increased stock levels realized in the first quarter. Consequently, volatility in quarterly sales should be expected.

Every quarter, we have that and we're still not that back to where we went to fall koby 19th will be approximately at index 85 of the difficulty 19. So as we have seen some signs of recovery, but not completely bat and of course, enabling me incoming call. It actually we see how that develops in the U.S.

But also the rest of tomorrow.

Thank you Alex Thank you for the thanks Mueller. Thank you remodel next question. Please.

Our next question comes from the line off trillion of Credit Suisse. Please go ahead.

Hi, guys. Thanks for taking my questions I've, two if I can.

First one just on the broader politics, given the political cross has for diabetes say Im just wondering if you could just tell us your thoughts on what you think might happen with regard to potential us health care reform.

And with a particular reference international reference price and then perhaps some comments on the European pricing outlook, given that we're probably going to enter a period of austerity.

And then my second question is just on the initial price of right Bell sits in the E.

And how a fuel pricing discussions golden here and are you getting much price acceptance on what you want thanks very much.

Karsten: Operating profit growth is now expected to be 2 to 5%. The updated outlook reflects savings due to COVID-19. The expectations for operating profit growth primarily reflect the sales growth outlook and continued investments in current and future growth drivers across the business. However, given the current exchange rates versus the Danish kroner, growth reported in Danish kroner is now expected to be around three percentage points lower than at CER. Consequently, we are on track to deliver our 2020 financial guidance set before the COVID-19 pandemic. Financial items are now expected to be a loss of around 1.2 billion Danish Kroner, reflecting the lower losses associated with foreign exchange hedging contracts. Lastly, we now expect free cash flow to be between 33 and 38 billion Danish Kroner, reflecting the acquisition of Kovidze Therapeutics Inc. And now, all to last, for his final remarks.

Thank you very much I will try to work.

Give some or comments on the health care system, a U.S. Europe, and then can we look and touch on the doses pricing in a in Europe.

Yeah.

So many many attempts has been made to try to reform the U.S. healthcare system.

And.

Most have.

Turned into a some you know chancing.

Prospects of actually getting implemented and it's important to bear in mind that the U.S. healthcare system is largely a private.

Oh, I get locked up in a in contracts between different partners.

And.

Yeah.

There is a cross and net.

Play here where in aggregate.

I think in 2019 $175 billion were paid and rebates that helped fund the healthcare system. So any any change in that market structure will.

Have to accommodate how those profit pools structured and a and allocated today and Thats a significant challenge the recent.

Executive orders.

Two of them dealer will increase passthrough rebates to two patients. We welcome any initiative that would help patients at a at the at the point of sale in actually doing there are part of course, but also clear that that would then mean that some rebates that today being used to lower premiums and fees.

Lars Fruergaard Jorgensen: Thank you, Karsten. Please turn to slide 19.

Lars Fruergaard Jorgensen: Despite COVID-19, we are satisfied by the performance in the first half of 2020 and by the progress made on our strategic aspirations. We saw a strong uptake in our G1 portfolio, and we continue to increase our diabetes value market share. Within R&D, our obesity clinical trials results are very encouraging. As COVID-19 continues to severely impact societies around the world, our priorities continue to be to safeguard our employees, continue the supply of our lifesaving medicines, and to help societies around the world to fight the pandemic. With that, I would like to thank you for your support, and we are now ready for the Q&A, where I kindly ask all participants to limit themselves to two questions. Operator, we are now ready to take the first set of questions.

Other expenses expensive.

Medicines.

Good.

I have to be.

Function that money, we're happy found someone else.

So I.

I think something has to to change obviously for the benefit of the patients, but it's not easy to do it as reference pricing.

Again.

While the complex what price I'm going to reference.

And the cross net.

Many products are launched first in the us.

So so again.

While the complex so I don't I don't expect a lot to change a short term.

Regarding use price as our European pricing.

The pricing strategy in Europe is such that you negotiate your price with authorities. So this.

Health Technology assessment, where you assess the value of a product up against the price you pay for it.

And I think that that is rational way of going and that will most likely continue having said that of course society is pending or government spending a lot of ammonia on a on.

Operator: Participants, if you do wish to ask a question, please press 01 on your telephone keypad. You can press 02 to cancel at any time, and our first question comes from the line of Peter Verdult of Citigroup. Please go ahead. Thank you.

Getting economies scale back to growth.

Somehow that we'll have to be recouped in a way so thats, one trend that could potentially make healthcare spending a harder on the other side I think it's also appear that that a healthy population is important in a koby 19 perspective, not least the diseases retreat, where.

Peter Verdult: Two questions, Lars... Can you characterize how the obesity data generated in Q2 for SEMA AM833 and the combination played versus internal expectations? One could argue that the profile emerging versus an existing obesity franchise that was approaching $1 billion pre-COVID makes your sort of $2 billion plus obesity aspiration look rather conservative. I realize Q2 is not the forum by which you change strategic objectives, but I would like to hear your thoughts about confidence of reaching or far exceeding that target. And then secondly, and a little bit more near-term for MADS, can you just remind us how you think about the magnitude of threat in any.., and Mark Goulden, Mark Bollinger, Peter Welford, Simon Baker, Emmanuel Papadakis, Eric Berrigaud, Benjamin Yeoh, Rajesh Kumar, Harry Sephton, Mark Purcell, Martin Lunge, Lars Joergensen, Michael Novod, Thomas Bowers, Harry Sephton, Lars Joergensen, Daniel Bohsen, Martin Hugglen, Andres Hggblom, Andreas Hggblom, Daniel Bohsen, Peter Wolfson, Andres Hgglom, Andreas Hgglom, Andres Hgglom, Andres Hgglom, Andres Hgglom, Andres Hgglom, Andres Hgglom, Andres Hgglom,

There is evidence that having diabetes of being overweight is a is additional risk factors to getting covered 19. So I think there's probably an intensive through to treat the patients retreat or even more intensively going forward than what we've seen in the past.

So that was a long answer to really say that I don't I don't believe there'll be a major change short term.

Camilla on the built with pricing in Europe.

Yes on every does the same gear up and we have initiated did pricing and reimbursement discussions in a number of countries and we are now well on track for the first launch is now in quarter three this quarter.

You will see that coming up here very soon they reimbursement negotiations are generally going very well and today, we are achieving and also reinvestment act at price never ended GLP one at both pack. So it around the same lever as you see fall Atlas and pick another GLP ones in Europe. So all in.

In all of that if there is progressing very much.

Thank you.

Excellent thanks very much.

Thank you.

Our next question comes from the line of Simon Baker of Redburn. Please go ahead.

Thank you for taking my questions I'm, just continuing on your last comment laws out.

More intensive treatment to patients in light of candidate I'm, we've already seen in the UK.

Recent initiative on the base take.

Which is tied in with with Covanta, although it was in part pre.

Pre existing so I just wanted to have you seen any.

Any tangible evidence.

Government, yet that in like counterfeit there may be more.

Lars Fruergaard Jorgensen: Thank you, Pete. So it's clear that we are very encouraged by the clinical profile we have seen, not only for semaglutide and obesity but, clearly, AM833 alone and in combination with semaglutide. We, at our Cancer Markets Day, said that we expected to at least double the obesity franchise. And it's clear that that statement was said with confidence that we would also get strong clinical data, but in no way have we seen any weakness in that position. And so, if anything, it has certainly strengthened our confidence in achieving that. But, as you say, I'm not going today to put out a new strategic aspiration for obesity, but we are very pleased with the data, and we are very confident that we can make this into a very sizable business for Novo Nordisk, and then Matt will talk about the clinical profile and the potential spread of competing products. Obviously, there are limits to what we can say about competitive products, but I make some comments.

Setting view on a therapeutic options for treating a city.

And then secondly.

On a on costs and you said that the operating profit guidance has been racing party to covert related savings I'm, Firstly I'm I Wonder if you could give us an idea how much of that cause the savings have fallen through to the guidance and how much is being reinvested and also how sticky.

All those savings do you expect that to be a.

Our long term benefits and simply doing business more efficient way, we'll have a positive affecting 21 and Piedmont. Thanks, so much.

Thank you say assignments so on the on obesity.

Yes I.

I do see.

At growing acknowledgment of the importance of dealing with obesity I I had the pleasure of meeting a ended and discussing this will help ministers around the world obviously, it's not a lot recently.

As as as one travels and you have these engagements. It is clear that it's recognized that will be cities a significant challenge.

Mads: Yes, there are indeed, Lars, and so I will refrain from being very specific about the trisepatide molecule. Time will show the data, but I can make some generic comments. One is that we are now very much understanding the profile of semaglutide at higher doses. Do bear in mind, Pete, that we have actually conducted semaglutide in NASH, where a significant portion of the patients had diabetes, and that was at a dose of up to more than two milligrams, where we saw very substantial weight loss and very significant A1C lowering. We've also done the same as an element in the STEP program. So I can say with confidence that the SUSTAIN 40 trial, in my mind, will show a very powerful lowering of both glucose and body weight, and I do expect to see a benign adverse event profile in line with what we've seen both in the NASH trial and also in the STEP program, where the higher doses were deployed.

I think many are struggling with how much is then medical intervention and how much is is no lifestyle and how to you.

Did was both.

So we are as part of our beauty strategy is true to really.

No drive that agenda.

I understand to make people understand that it's a it's a it's a disease. It takes a medical intervention for for many.

Educate physicians, but also make a people living with BC understand that it makes sense to seek a treatment.

So thats part of our strategy and then obviously as we now come will significantly stronger efficacy. We believe that is the say breakthrough in innovation that's going to.

Make this no accelerate this development and I think it'll come hand in hand with.

Accruing and all this meant supported by code 19 that obesity is something that a health systems needs to deal with.

[noise] constant on the Koby 19 savings.

Yeah, Hi, Simon.

On a on savings said then a if you look at our spending the in the second quarter, and where we have our spend could going down by to tune of 3% and then compare that to how would it have looked a had we not had the equity 19, a pandemic then the that spread the is to the tune of a of one.

Mads: Obviously, trisepatide being a GLP1-GIP agonist will, in my mind, based on data we've seen so far, unlike the combination of AM833 and SEMA, which is an amylin analog and a GLP1 analog, there will probably be additivity of the GI side effect profiles of the GIP and the GLP1 components. At least this is what we have seen both in a trial we conducted ourselves two years ago with MARS-709, our dual agonist, but also so far in the trials in phase two and the escalation trials that our colleagues at Eli Lilly have done. But we will see the data late this year and, I guess, during the course of next year.

Billion, Danish Danish kroner and to that 1 billion you can say part of that is facing and the pilots savings. So the facing could for instance be commercial launch activities that and that our deferred it a from a from first half into into second half and demarse opening up or clinical trial activities, where patients are rich.

Through the to slightly laid out our trials and initiated slightly later, so that would be the facing part end to end the saving part would.

More.

Directly appealing to a for instance on travel where a for instance, our airline sites in the second quarter was down 19% compared to the second quarter at a year before.

Unknown Executive: Thank you, Matt. Yep.

Peter Verdult: Just quickly on Forte, the timing, the Q4 timelines, are we talking very early in the year for Forte? Yeah, we are talking Q4, Pete. Okay. Thank you.

And those savings of courseware, we're allocating our resources in in an awful alternate way also investing some of them in a in increased distribution costs, a enter and in digital initiatives. So on the hot math for for this year's guidance you can say, a 1 billion savings and.

Operator: Thank you. Thanks for trying. Next question, please.

Wimalka Padia: Our next question comes from the line of Wimalka Padia of Bernstein. Please go ahead.

Wimalka Padia: Great, thank you very much for taking my questions; we'll mark a party up from Bernstein.

And since we raise a flaw in the in our guidance and then a mathematically the midpoint would go up by quarter familiar <unk> billion, so 25% of the 1 billion.

Wimalka Padia: So firstly, can I just ask a little bit about Zempik Park?

Wimalka Padia: Pricing. If I look at my math, it's down around 21% per year.

Man being delivered to shareholders and the rest being and facing and there and they relocations.

Unknown Executive: [inaudible]

Unknown Executive: , Peter Welford, Simon Baker, Emmanuel Papadakis, Eric Berrigaud, Emmanuel Papadakis, Michael Novod, Thomas Bowers, Harry Sephton, Lars Joergensen, Martin Lange, Douglas Langa, Lars

And then a as the final note to bear in mind that there that we are operating a already at very high level in terms of our operating margin.

First half at 47%. So so we believe that we generate more value for shareholders by whatever resources, we can free up from a business that we invest in future growth and whether it's a commercially ROI in a in future pipeline activities and pipe pipeline assets. So that's our strategic approach to.

Unknown Executive: Should we actually?

Unknown Executive: RCCA Return to Growth, OUS

Unknown Executive: Thank you very much.

Karsten Munk Knudsen: Thank you very much. So, Karsten will start with OCEMPIC pricing, and then Camilla can comment on SACSENDER for Q2.

Resource allocation.

Great. Thanks, so much.

Thank you next questions. Please our next question comes on line of Mark So of Morgan Stanley. Please go ahead.

Karsten Munk Knudsen: Yeah, so Vemal, I cannot recognize the percentages you are alluding to from your analysis. So we're looking at different data points, first of all.

Thank you very much for taking my question.

That's one it's on the old go you'll you'll medium term guidance given it was given creek hybrid or just sort of check on that you talked about north American great. Obviously basal flattish I got 2020 or 25, all the reasons you gave it then it recovers to mid single digit Tonight, I have great big or the upper end of the range. So.

Karsten Munk Knudsen: So what we're looking at in terms of OCEMPIC pricing in the second quarter is exactly in line with what we saw in the first quarter. So there are no structural changes here in the second quarter compared to the first quarter. As to our pricing in GLP-1 overall, but also with OceanPeak specifically, you're right. There is a gap between volume growth and realized net sales growth. Again, the main building blocks remain. First of all, we have a coverage gap impact in the U.S. this year. Of course, we don't have that impact next year. Then we have the channel mix and the payer mix. And then finally, the rebate enhancements to secure that we continue to have around 90% unrestricted access. So we're actually rather encouraged by the performance overall by OceanPeak, and we believe that the performance is strong and continues to be strong.

It's a 10% so I would it help us understand where you are relative to that medium term guidance given that cadence or what not a discussion point. When you. When you gave the guidance back in November I.

I think it comes in North America, you make adjustments, but that's stocking and then that the new patient starts you you seem to be on strike in other zero to 2% growth guidance range I guess your be sports on spot, where you are in 7 billion to dedicate a patient put a bit of finished its oh sorry.

Our first halt and also the impact that that's part of the coverage Scott I and weather clearly the increase in unemployment could increase the patient affordability niche that you thought we're going to be roughly 1 billion DKK.

Sorry, I again, making the adjustments he looks like you're actually other topic now even slightly about your fixed attempts then sounds great range. If you adjust for the patient starts is what it taking out the stocking and so again to the more looking forward a given that we now have guided chicken sandwich do you anticipate more slowing down.

On a GDP growth impact your business, so all potential for governments rebuilding balance sheets on that basing that mountain to have to reduce prices potentially it had been more than you'd expect about that.

Camilla Sylvest: Thank you, Karsten and Camilla, for SACSENTA's performance in Q2 and what to expect.

Camilla Sylvest: Yeah, so sex center performance has been significantly impacted by COVID-19, as you saw, especially because products with a very short stay time, like four to five months, are impacted by the fact that the NBRX scripts are going, have been reduced, especially in the second quarter. We saw the lowest point around April, and now we are seeing that we are partly getting closer to a recovery of that. And we are still not back to where we were before COVID-19, but we are approximately at index 85 before COVID-19. So we have seen some signs of recovery, but not completely there yet. And of course, in the remaining coming quarters, we will see how that develops in the US but also in the rest of the world.

Then the second one other quick one its housekeeping.

Keep in DKK, Oh, I've spoken with one of the has been in DKK remain could you help us understand broadly how they spent by geography and also by by product. So help us without modeling for the remaining quarters of yeah. Thank you.

Thank you Mark there was there was a number of questions and data points. So so carton if you try to talk a bit to the medium term a guidance and I can try to address some of the no longer term prospectus.

And so in terms of medium term <unk> guidance and that there.

Andrew Lu talk have some octane in the fourth quarter of last year, then you're absolutely correct. When we look at international operations were very encouraged about a about the growth and the old performance. Both that how we closed out last year end to end the performance. This year. So the 12% growth. We're looking at is a is above the 6% to 10%.

Present, with which we talked about.

There are covered this is largely neutral.

And then we have some timing effect. So so yeah. So you say where when in the top end affair.

Camilla Sylvest: Thank you very much. Thank you. Thank you, Camilla. Thank you, Michael. Next question, please.

Of that range the end to end very encouraged about the performance and all the launches sets.

That are taking place and there.

And.

In terms of the U.S.A.

Chunhyang: Our next question comes from the line of Chunhyang of Credit Suisse. Please go ahead. Hi guys, thanks for taking my questions. I have two, if I can.

As you recall, then then our strategic aspiration talks to add the transformation of our us business and that we have to transform 70% of our business.

Chunhyang: First one just on the broader politics given the political crosshairs for diabetes. So I'm just wondering if you could just tell us your thoughts on what you think might happen with regard to potential US healthcare reform, and with a particular reference to the international reference price, and then perhaps some comments on the European pricing outlook, given that we're probably going to enter a period of austerity. And then my second question is just on the initial price of Ribertus in the EU. And how have your pricing discussions gone here? And, you know, are you getting much price acceptance on what you want? Thanks very much.

Two products launched after 2015 antenna and that is basically what we see between the instant business and an entity each one business. So in North America, where we're growing 1% in first half of this year and the one 1% should be seen in the light offer of the cars.

Cap you talk to which has an impact to the tune offer of two cents point on on growth.

As well as affordability initiatives, then and then as I said before then.

Then of course U.S. unemployment.

And we'll have a negative impact on our channel mix because.

Some people will move from the employer sponsored health plans.

Our estimate at this point is that it will have an annualized impact of 3% on UL sales.

If we stay around current day unemployment levels in the U.S.

Lars Fruergaard Jorgensen: Thank you very much. I will try to give some overall comments on the health care system in the US and Europe, and then Camilla can touch on rebel pricing in Europe. So many, many attempts have been made to try to reform the U.S. health care system, but most have turned into some, you know, challenging prospects of actually getting implemented.

I am so so I think looking at the U.S.A. into next year than first half year and performances is a good starting point and donut hole and affordability.

It is perhaps not the same level when looking into a next year why the unemployment. The then puts your other way and then of course, we have the performance of our tier one business and and the role rollout and today and launched refer approval, so say, helping us a continue to two.

Lars Fruergaard Jorgensen: And it's important to bear in mind that the US healthcare system is largely a private market locked up in contracts between different partners. There is a gross and net play here where, in aggregate, I think in 2019, $175 billion were paid in rebates that helped fund the healthcare system. So any change in that market structure will have to accommodate how those profit pools are structured and allocated today. And that's a significant challenge.

Drive growth.

In terms of stocking taking that period before going to GDP growth.

Then the 2 billion stocking.

Well, we know a ahead and saw a 0.5 billion reversal in the second quarters 1.5 remaining is broadly equally split between.

Between North America, and Io and there I'd say in relative terms, you should split it relative to size on on products.

Yeah, I think thats, the best way to do it.

Last on GDP growth yet so.

Lars Fruergaard Jorgensen: The recent executive orders, two of them deal with increased pass-through rebates to patients. We welcome any initiative that would help patients at the point of sale in actually lowering their out-of-pocket costs, but it's also clear that that would then mean that some rebates that today have been used to lower premiums and fund other expensive medicines would have to be, you know, found that money we have to be found somewhere else. So I think something has to change, obviously, for the benefit of the patients, but it's not easy to do. In terms of reference pricing, again, rather complex: what price are you going to reference? And gross net, many products are launched first in the U.S., so again, rather complex. So I don't expect a lot to change in the short term. Regarding US prices, sorry, European pricing; the pricing structure in Europe is such that you negotiate your price with authorities.

I think everybody is is a struggling to estimate.

What what will look like a poster covert 19, I'll just say like I mentioned before I think that different forces here one is obviously that.

Comments are spending our money on fueling economic growth and I see that creates.

Lots of challenges in funding healthcare, having said that as I mentioned before.

The disease areas, We act exposed for a chronic diseases and to some degree risk factors in relation to cope with 19. So I think it also creates an underlying pick a acknowledgement of the importance of treating diabetes and dealing with obesity.

So I think that that can create a say a volume opportunity going forward.

And you also see right now that we are actually executing.

In a way, where we take market share.

So.

I think we also had an opportunity of actually mitigating any say a potential price pressure by by volume upside so.

All for say the foreseeable time horizon, we feel quite confident in our ability to manage and drive growth within the frame. We have we have outlined.

Thank you very much. Thank you Omar and as we want to next question. Please. Our next question comes from the line or Richard Vosser of JP Morgan. Please go ahead.

Thanks for taking my question, perhaps you could give us an idea that are that the breakdown in dictate the 11 their interest deeper in the second quarter seem to be it a lot like just wondering whether some of the unemployment changes at what do you change the rebate structurally night or do you anticipate going forward.

Lars Fruergaard Jorgensen: So there's a health technology assessment where you assess the value of a product up against the price you pay for it. And I think that that is a rational way of going, and that will most likely continue. Having said that, of course, society is spending or governments are spending a lot of money on getting economies back to growth. Somehow, that will have to be recouped in a way. So that's one trend that could potentially make healthcare spending harder. On the other hand, I think it's also clear that a healthy population is important from a COVID-19 perspective, not least the diseases we treat where there's evidence that

If you can give some detail that that would be great and then secondly around next steps and the PC SK, knowing or what can we expect can we expect a combination with chemically tight or in a phase two trial.

Monotherapy can you give it tonight, there on and timings and and your thoughts that thanks very much.

Thank you Richard So carton first on a.

Breakdown rebate levels for our branch yeah. So so rates at the clearly when you look at the end at the quarterly reported sales. A then that some fluctuations on these brands has as you Lou too.

By far the key explanation on these three branches is said the cope with movements between Q1 Q2. So.

Lars Fruergaard Jorgensen: HealthCurse

Lars Fruergaard Jorgensen: So that was a long answer to really say that I don't I don't believe there'll be a major change in the short term. Camilla on rebellious pricing in Europe.

So you should not a look look too detailed at at the Q2 non backed by a put rather look at the at the first happy anomalous that then no significant changes so.

Camilla Sylvest: Yeah, on the rebalances in Europe, we have initiated pricing and reimbursement discussions in a number of countries, and we are well on track for the first launches now in quarter three, this quarter, so you will see that coming up very soon. The reimbursement negotiations are generally going very well, and we are also achieving reimbursement at price levels in the GLP-1 ballpark, so around the same level as you see for OCEMPIC and other GLP-1s in Europe.

On the on pricing on on the process, perhaps on one of the process slight tweak on a on channel makes sense, but but noma no major U.S. unemployment include it in Q2 non bus antenna and no major changes to estimate and rebates in the quarter either.

Thank you cash mess, what to expect with a readout from Pcsknine.

Yes, well Richard the first of all we sold the hoped for very long nice high fives that the high potency and and also the strong upper single dose pronounced and prolonged lowering of LDL cholesterol and lipitor improvements so either fully lived up to what we're hoping for and and that then picks the question.

Simon Baker: So all in all, all of that is progressing very well. Thank you. Our next question comes from the line of Simon Baker of Redburn. Please go ahead.

Is this a a combination part partner in a in a cardio drug income people with that with some macro side. If you have 21 as you know which was after the pipeline sooty Vicki map and so on and this analysis the ongoing but it is it is a nice small neat peptide that due to its potency and small size and the loop.

Simon Baker: Thank you for taking my questions. Just continue on your last comment, Lars, about more intensive treatment of patients in light of COVID. We've already seen in the UK a big recent initiative on obesity, which is tied in with COVID, although it was in part pre-existing. So I just wonder if you've seen any, any tangible evidence from governments yet that, in light of COVID, there may be a more accepting view on therapeutic options for treating obesity, and then secondly... On costs, you said that the operating profit guidance has been raised in part due to CO Firstly, I wonder if you could give us an idea how much of those COVID savings have fallen through to the guidance and how much has been reinvested. And also, how sticky are those savings? Do you expect there to be a long-term benefit from simply doing business in a more efficient way that would have a positive effect on printing?

Capacity actually can be combined with what he basically anything and everything and it has a neutral ph value. So so it's a nice partner for anything and when mitigating that right now.

Thank you Miss Thank you Richard.

The next set of questions. Please.

Our next questions come from the line of Martin Parkway of Danske Bank. Please go ahead.

Yes.

First question for for mass just on your portfolio decision in <unk>.

Terminated its a phase one program. So the question is actually what now than what will you didn't you bought it will be more.

Hey, making up Astra Supreme device for the for the company you a combo of Emmerling. Some equity side is it a convenience because I guess that the.

It appears that that in a enjoyed quotes that that did you have the gap of closing the gap to Oh, you read the toggle of closing that gap to two baths or surgery, so what will be.

Talk at fault and next generation of obesity drugs. If we can talk about that already now and then just on a on the on some equity side filing. It would you expect to <unk> the turn of the year. It do you believe it there.

Simon Baker: Thank you so much.

Lars Fruergaard Jorgensen: Thank you, Simon. So on obesity, yes, I do see a growing acknowledgement of the importance of dealing with obesity. I have the pleasure of meeting and discussing this with health ministers around the world, obviously not a lot recently. But as one travels and you have these engagements, it is clear that it is recognized that obesity is a significant challenge. I think many are struggling with how much is medical intervention and how much is lifestyle, and how do you deal with both? So, as part of our obesity strategy, we want to really drive that agenda, make people understand that it's a disease, it takes medical intervention for many, educate physicians, but also make people living with obesity understand that it makes sense to seek treatment.

As part of the time that if he has the capacity to.

To handle a regulatory process in six month, if you decide to use the voucher and then secondly, if you decide to use the voucher.

And then you have to alerted if he and I think it's pretty much prior which means that you need to make a write down of the value of that also this you have is that something that you can have sold in the current guidance for you or even growth.

It's a mess first on a on the heavy situation. What's next in obesity go because you've already delivered so much. If you can see so what can we do better yeah, and indeed, Martin that its Nixon point and it's something that my R&D team and myself have been looking the quite a bit into lately.

Following the M- Q3, and Semaglutide data.

There are things that pick themselves such as looking into increasing in a safe way whole body energy expenditure.

Lars Fruergaard Jorgensen: So that's part of our strategy. And then, obviously, as we now come with significantly stronger efficacy, we believe that is the, say, breakthrough in innovation that's going to make this, you know, accelerate this development. And I think it will come hand in hand with a growing acknowledgement supported by COVID-19 that obesity is something that health systems need to deal with.

You are aware that in the old days, we're working with Weve companies on Brown fat and the likes of it Unfortunately without success, but but we might revisit some pops will have done that already in some research projects within the field of safe increased energy expenditure. We also looking into the Holy Grail of identifying the whom you said.

Except point, we all live in a world, where we have a genetic band, which we can operate in body mass index wise and that is driven by what we call. The homeostatic set point probably in the hypothalamus, we're investigating whether we can identify that and tweak it to actually get it to a lower level like changing the thermostat under 88, our old fashioned.

Karsten Munk Knudsen: Yeah, hi Simon. On savings, then if you look at our spending in the second quarter,

Karsten Munk Knudsen: [inaudible] We are allocating our resources in an optimal way, also investing some of them in increased distribution costs and in digital initiatives. So on the hard math, for this year's guidance, you can say $1 billion in savings. And since we raised the floor in our guidance, then mathematically, the midpoint would go up by a quarter of a billion, so 25% of the $1 billion being delivered to shareholders, and the rest being facing and reallocations. And then, as a final note, do bear in mind that we are operating already at a very high level in terms of our operating margin, the first half at 47%. So we believe that we generate more value for our shareholders by whatever resources we can free up from our business that we invest in future growth, whether it's commercially or in future pipeline activities and pipeline assets. So that's our strategic approach to resource allocation.

Radio he does a in the old days, we can also look into all and more convenient delivery of various mortgages and the different combinations to their off so so that lot of things to do margin, but you have a good point and that's why actually the call agonist Drupal agonist. They didn't it did not live up to the target product profile of the future because they have been increased in terms.

So if if you can see and the actually also improved in terms of what we want to see in terms of safety.

And marching on your other question in terms of a if they capacity and tactics around a potential accelerated revenue et cetera.

It would you have today is designed to be able to Henry's so we can only assume that they have the capacity.

We have not just made in decisions on whether to pursue that or not so will refrain from commenting more on that including.

Simon Baker: Great, thanks so much.

Operator: Thank you. Next question, please.

What is no capacity in our guidance et cetera.

Mark Purcell: Our next question comes from the line of Mark Purcell of Morgan Stanley. Please go ahead.

So a.

Very optimistic Miss on the on obesity. So that's great. So with that thank you Martin and we have time for ones last set of questions.

Mark Purcell: Yeah, thank you very much for taking my questions. The first one is on your medium-term guidance, given it was given pre-COVID. And so just to sort of check on that, you talked about North American growth obviously being sort of flat-ish over 2020 and 2021, for some of the reasons you gave, and then it recovering to mid-single digits, and then IO growth being at the upper end of the range of six to 10%. So I wonder if you could help us understand where you are relative to that medium-term guidance, given that coverage gap, and whether clearly the increase And then turning to IO, again, making the adjustments, it looks like you're actually at the top, if not even slightly above your six to 10% sales growth range, if you adjust for new patient starts, as well as take out the stocking.

Okay, I guess I'll ask questions comes on line of Sachin Jain of Bank of America Merrill Lynch, He's going to high Sachin Jain yeah. Thank you can fit you mean couple of questions just to clarify the pay a mixed commentary a 3% annualized he may cost me just clarify how much like being seen in one H one is implied but to age.

And it's 3% affair asking the into 21 just to clarify that I'm second question is on that right bells access, which is now 70% I think a similar level of access strike if any material inflection is them in a day. So should we expect something similar.

Alright, Bell Cincinnati happy access and I, just one clarification on an earlier question you asked growth for next year costs. You listed a number of puts and takes a U.S. growth versus a zero to two could I just clarify lives here to chase still stands. Thank you.

Thank you Sachin first cost and on a on payer mix first half second half and and the comment on impact from unemployment.

Yeah, So and so thanks has had 10, so so so to clarify the unemployment impact in the U.S.A. that I mentioned is set on 3%, it's an annualized impact. So yeah. So so the impact in terms of specific facing is of course super speculative because it's it's it's I'd say.

Mark Purcell: And so again, sort of more looking forward, given that we now have COVID to contend with, do you anticipate more tearing down of GDP growth impacting your business, or the potential for governments rebuilding balance sheets, and they're facing debt mountain, to have to reduce prices potentially a little bit more than you'd expected back then? And then the second one's a quick one, it's housekeeping. Of the 2 billion DKK of stock, of which 1.5 billion DKK remain, could you help us understand broadly how this is split by geography, and also by product, to help us with our modeling for the remaining quarters of the year?

It's of course Naismith standing on on a many many variables in the first place.

Yeah as I said before no nothing material included in one eights.

This year.

We expect to see a part of a pot paki an impact the in the second half of this year and then you see a full impact in 20 to 21.

So on and so that's on the on 3% and again this assumes unemployment level say around the current level off they say, 11%, we see now in the U.S.

Okay and then two on on Nov is we're very pleased with a 70% combined access we have which means that all of our territories are now in strike mode and we have we have basically all reps back in the field in the U.S.

Mark Purcell: Thank you.

Karsten Munk Knudsen: Thank you, Mark. There were a number of questions and data points. So, Karsten, if you try to talk a bit about the medium-term guidance, and I can try to address some of the, you know, longer-term perspectives.

They are not having the say the full face to face contact they had expected before we have around 80% and some of that is by by virtue means but we are in we're now in full swing on redemptions and we're quite optimistic about what that would lead to in terms of uptake with that will close our our.

Karsten Munk Knudsen: Yeah, so in terms of medium-term guidance, and you allude to our Capital Markets Day in the fourth quarter of last year, then you're absolutely correct. When we look at international operations, we're very encouraged about the growth and the overall performance, both how we closed out last year and how we are performing this year. The 12% growth we're looking at is above the 6% to 10% we talked about. COVID is largely neutral, and then we have some timing effects.

Paul here across do you want to comment on the on the U.S. growth, yes, yeah.

Sorry last so answer Sachin on an annualized growth.

And again the commentary at CMG was a once given in light of a transformation of our portfolio I think now it's it's better to interrupt you know standing on on something with the smallest 10 10 months old. Then then using kind of the current performs off of our U.S businesses or North America, where we had wanted.

Karsten Munk Knudsen: So you would say we're in the top end of that range and very encouraged about the performance and all the launches that are taking place there. In terms of the U.S., as you recall, then our strategic aspiration talks to the transformation of our U.S. business and that we have to transform 70% of our business to products launched after 2015. And that is basically what we see between the insulin business and the GH1 business.

Sensei, given the put and takes where we have so so I think where we are encouraged stand today and you say that puts and takes compared to where we are antenna and then we are focusing a lot on on RG, one business and driving a propels us out in the market in the coming quarters.

I agree.

Thank you all four for listening in I'm, sorry for running a bit over time, we're close our investor call now and.

I wish all that you stay safe in these difficult times. Thank you all for your attention.

Snacking political thank you for attending participants you may disconnect you lines.

Karsten Munk Knudsen: So in North America, we're growing 1% in the first half of this year, and that 1% should be seen in the light of the chorus gap you talked about, which has an impact to the tune of 2% on growth, as well as affordability initiatives. Then, as I said before, then, of course, U.S. unemployment will have a negative impact on our channel mix because some people will move from employer-sponsored health plans. Our estimate at this point is that it will have an analyzed impact of 3% on U.S. sales if we stay around current unemployment levels in the U.S. So I think looking at the U.S. into next year, then the first half-year performance is a good starting point. Then donor toll and affordability are perhaps not at the same level when we look into next year while unemployment then pulls the other way.

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And.

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Karsten Munk Knudsen: And then, of course, we have the performance of our GF1 business and the rollout and launch of Rebelsys helping us continue to drive growth. In terms of stocking, taking that before going to GDP growth, then the 2 billion stocks, where we now saw a 0.5 billion reversal in the second quarter, so 1.5 remaining, is broadly equally split between North America and IO. And I would say, in relative terms, you should split it relative to the size of the products. Yeah, I think that's the best way to do it.

[music].

Mm.

[music].

Karsten Munk Knudsen: , , , , , , , ,

Lars Fruergaard Jorgensen: So I think everybody is struggling to estimate what the world will look like post-COVID-19. I would just say, like I mentioned before, I think there are different forces at play here.

Lars Fruergaard Jorgensen: One is obviously that governments are spending a lot of money on fueling economic growth, and i.e., that creates a larger challenge in funding healthcare. Having said that, as I mentioned before, the disease areas we are exposed to are chronic diseases and, to some degree, risk factors in relation to COVID-19. So I think it also creates an underlying, bigger acknowledgement of the importance of treating diabetes and dealing with obesity. So I think that can create a lot of opportunity going forward. And you also see right now that we are actually executing in a way where we take market share, so I think we also have an opportunity of actually mitigating any potential price pressure by

Lars Fruergaard Jorgensen: So overall, for the foreseeable time horizon, we feel quite confident in our ability to manage and drive growth within the framework we have outlined.

Mark Purcell: Thank you very much.

Richard Vosser: Thank you, Mark. And let's move on to the next questions, please.

Richard Vosser: Our next question comes from the line of Richard Vosser of JP Morgan. Please go ahead.

Richard Vosser: Hi, thanks for taking my questions. Perhaps you could give us an idea of the breakdown in Victoza, Levermere, and Treceba in the second quarter. Seems to be a lot lower. Just wondering whether some of the unemployment changes, whether you've changed the rebate structure in those to anticipate going forward. If you could give us some details there, that would be great. And then, secondly, around the next steps for PCSK9, what can we expect? Can we expect a combination with semaglutide in a phase 2 trial and monotherapy? Could you give us some idea on timings and your thoughts there? Thanks very much.

Karsten Munk Knudsen: Thank you, Richard. So, Karsten first on. I'll break down rebate levels for all brands.

Karsten Munk Knudsen: Yeah, so Richard, clearly, when you look at the quarterly reported sales, then there are some fluctuations on these branches, as you alluded to. By far, the key explanation for these three branches is the COVID movements between Q1 and Q2.

Karsten Munk Knudsen: So you should not look too detailed at the Q2 numbers but rather look at the first half-year numbers. There are no significant changes in pricing on the products. Perhaps on one of the products, there's a slight tweak on channel mix, but no major U.S. unemployment numbers are included in Q2 numbers and no major changes to estimates and rebates in the quarter either.

Mads: Thank you, Karsten. Mads, what should we expect with the readout from PCSK9?

Mads: Yes, well, Richard...

Mads: Richard, first of all, we saw the hoped-for very long and nice half-life, the high potency, and also a strong, after a single dose, pronounced and prolonged lowering of LDL cholesterol and lipid improvements. So it fully lived up to what we were hoping for, and that then begs the question, is this a combination partner in a cardio drug in combo with some agrocytes, FGF21, as you know, which we also have in the pipeline, Siltivecimab, and so on. And these analyses are ongoing, but it is a nice, small, neat peptide that, due to its potency and small size and low viscosity, can be combined with basically anything and everything, and it has a neutral pH value. So it's a nice partner for anything, and we're investigating that right now.

[music].

Mads: Thank you, Matt. Thank you, Richard. The next set of questions, please.

Martin Parkhoi: Our next questions come from the line of Martin Parkhoi of Danske Bank. Please go ahead.

Martin Parkhoi: Yes, Martin Parkhoi, Danske Bank. First, a question for Matt.

Martin Parkhoi: for

Martin Parkhoi: Will it be more making up a story?

Martin Parkhoi: , Peter Welford, Simon Baker, Emmanuel Papadakis, Eric Berrigaud, Benjamin Yeoh, Rajesh Kumar

Martin Parkhoi: And your quotes that you have reached the goal of closing the gap, or you have reached the target of closing the gap.

Martin Parkhoi: have to biotic surgery. So, what will be the target for the next generation of obesity drugs, if we can talk about that already now? And then

Martin Parkhoi: , Peter Welford, Simon Baker, Emmanuel Papadakis, Eric Berrigaud, Daniel Bowers, Harry Sephton,

Martin Parkhoi: , Peter Welford, Simon Baker, Emmanuel Papadakis, Eric Berrigaud, Benjamin Yeoh, Rajesh Kumar

Martin Parkhoi: to make a write-down of the value of the voucher this year.

Martin Parkhoi: Is that something that you can absorb in the current guidance for your e-book groups?

Mads: Mass First on the heavy situation, what's next in obesity because you have already delivered so much efficacy, so what can we do better?

Mads: Yeah, and indeed, Martin, that is an excellent point. And it's something that my R&D team and myself have been looking quite a bit into lately, following the AM833 and semaglutide data. There are things that beg themselves, such as looking into increasing whole body energy expenditure in a safe way. You are aware that in the old days, we were working with companies on brown fat and the likes of it, unfortunately, without success. But we might revisit some paths we have done that already in some research projects within the field of safe, increased energy expenditure. We're also looking into the holy grail of identifying the homeostatic set point. We all live in a world where we have a genetic band within which we can operate in terms of body mass index, and that is driven by

[music].

Lars Fruergaard Jorgensen: and marching on to the other question in terms of FDA capacity and tactics around potentially accelerated review, etc. You know the FDA is designed to be able to handle these, so we can only assume that they have that capacity. We have not made any decisions on whether to pursue that or not, so we'll refrain from commenting more on that, including what is, you know, capacity in our guidance, etc. So, very optimistic mess on obesity, so that's great, so with that, thank you Martin, and we have time for one last set of questions.

Operator: In that case, our last question comes from the line of Sachin Jain of Bank of America. Hi, Satch and Jane here. Thank you for fitting me in.

Sachin Jain: A couple of questions, just to clarify the payer mix commentary of 3% annualized that you made Karsten, can you just clarify how much of that has been seen in 1H and what is implied for 2H, and is 3% a fair estimate into 21, just to clarify that. Second question is on Rybelsis access, which is now at 70%. I think a similar level of access drove a fairly material inflection in Zempik back in the day, so should we expect something similar for Rybelsis now that you have this access? And I just want clarification on an earlier question, US growth for next year. Karsten, you listed a number of puts and takes for US growth versus a 0-2, could I just clarify that 0--2 still stands? Thank you.

Sachin Jain: Thank you, Satyen. First, Karsten, on payer mix, first half, second half, and the comment on the impact of unemployment.

Karsten Munk Knudsen: Yeah, so thanks, Satyen. So to clarify, the unemployment impact in the U.S. that I mentioned at 3% is an annualized impact. So the impact in terms of specific phasing is, of course, super speculative because it's, I'd say, it's, of course, an estimate standing on many, many.

Karsten Munk Knudsen: to Karsten, and then to, on rebellion.

Karsten Munk Knudsen: Yes, sorry Lars. So Satyen, on U.S. growth, again the commentary at CMD was given in the light of the transformation of our portfolio. I think now it's better to, instead of, you know, standing on something that is more or less 10 months old, then using kind of the current performance of our U.S. business or North America, where we're at 1% given the put-and-takes we have. So I think we're encouraged, and you say they're put-and-takes compared to where we are, and then we're focusing a lot Thank you.

Lars Fruergaard Jorgensen: Thank you all for listening in and sorry for running a bit over time. We'll close our investor call now and wish you all that you stay safe in these difficult times. Thank you all for your attention. That concludes our call. Thank you for attending.

Operator: This now concludes our call. Thank you for attending. Participants, you may disconnect your lines. You can support the making of more such films by becoming a patron on Patreon or buying a copy of my book at my website, www.patreon.com. Thank you for watching!

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