Q1 2021 Novo Nordisk A/S Earnings Call

Hello, and welcome to the Q1 2021 Novo Nordisk.

Operator: Welcome to the Q1 2021 Novo Nordisk AS I&M Conference. So, at the call, all participants will be in this in mode phoning, and afterwards there'll be a question and answer session. Today I'm pleased to present Lars Fjordgarder Jorgensen. Please go ahead with your meeting.

Earnings Conference call.

All participants ovarian or some of those earnings and afterwards there'll be a question and answer session. Today I am pleased presents laws are part of yoga.

Please go ahead with your meeting.

Lars Fruergaard Jorgensen: Thank you very much and welcome to this Novo Nordisk earnings call for the first three months of 2021 and outlook for the year. I'm Lars Ruhrgaard Jorgensen, the CEO of Novo Nordisk. With me I have our Chief Financial Officer, Karsten Munk-Knudsen, and Executive Vice President and Head of Development, Martin Holz-Lange.

Thank you very much and welcome traditional Norsk earnings call for the first three months for into 'twenty, one and outlook for the year.

I'm not sure what got Joe <unk>, the CEO of Nordisk.

With me I have our chief financial officer of customer conversions and <unk>.

<unk>, Vice President and head of development margin harsh longer also a person and available for Q&A session as executive Vice President and head of commercial strategy and corporate Affairs Camilla Sylvest.

Lars Fruergaard Jorgensen: Also present and available for the Q&A session is Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Sylvest. Today's earnings release and the slides for this call are available on our website www.no-noise.com. Please note that this call is being webcasted live, and a recording will be made available on Novo Nordisk's website. The call is scheduled to last one hour.

Today's earnings release, and the slides for this call are available on our website north-northeast outcome.

Please note that this call is being webcast of life and just recall and a recording will be made available on <unk> website. The call is scheduled to last one hour.

Lars Fruergaard Jorgensen: The presentation is structured as outlined on slide 2. Please note that all failed and operating profit growth statements will be at constant exchange rates unless otherwise specified. The Q&A session will begin in about 25 minutes.

The presentation is structured as outlined on slide two.

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 25 minutes.

Lars Fruergaard Jorgensen: Please turn to slide three. 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.

Please turn to slide three.

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

Lars Fruergaard Jorgensen: For further information on the risk factors, including the uncertainties related to COVID-19, please see the company announcement for the first three months of 2021 and the slide prepared for this presentation. Please turn to the next slide We want to continue to add value to societies while we are taking steps on prevention and action.

For further information on the risk factors, including uncertainties related to COVID-19. Please see the company announcement for the first three months of 'twenty to 'twenty, one and the slides prepared for this presentation.

Please turn to the next slide.

In the past three months no noise has progressed on all four dimensions of our strategic aspirations, we want to continue to add value to society.

We are taking steps on prevention and excess.

Lars Fruergaard Jorgensen: We have announced two partnerships where we invest in healthier urban populations as well as support frontline healthcare workers in low and middle-income countries to improve access to diabetes care. As part of our Circular for Zero Environmental strategy, we are pleased to note that several suppliers have already committed to the zero carbon emission target by 2030 when supplying Novo Nordisk, which is expected to eliminate an estimated 15% of Novo Nordisk supplier carbon emissions.

We have announced two partnerships, where we invest and healthier urban populations as well as support frontline health care workers, and low and middle income countries to improve access to diabetes care.

As part of our circling for silver environmental strategy. We are pleased to note that several suppliers have already committed to the cereal carbon emission targets by 2030, when supplying nordisk, which is expected to eliminate an estimated 15% of nordisk supply of carbon emissions.

Lars Fruergaard Jorgensen: Martin will come back to key milestones within innovation, but firstly, I want to mention that while we had an initial setback for Osempic 2.0 mg in the US with the FDA's issued refusal to file letter, we are working towards a resubmission in the second quarter. Furthermore, I am happy to share with you that Ozempic has been approved for type 2 diabetes treatment and established cardiovascular disease in China. For commercial execution, we have progressed on all three strategic aspirations.

Martin will come back to key milestones within innovation, but firstly I want to mention that while we had an initial setback for SMT to two milligram in the U S. With the FDA issued refusal to file letter we are working towards a resubmission.

In the second quarter.

Furthermore, I am happy to share with you that <unk> has been approved for type two diabetes treatment and established cardiovascular disease in China.

Full commercial execution, we have progressed on all three strategic aspirations lastly, within financials. Despite a tough comparison, which has been partly offset by inventory changes in timing of shipments in the first quarter finished nine sales grew by 7% while operating profit increased by 3% both measured.

Lars Fruergaard Jorgensen: Largely within financials, despite a tough comparator, which has been partly offset by inventory changes and timing of shipments in the first quarter of 2029, sales grew by 7% while operating profit increased by 3%, both measured at constant exchange rates. Please turn to slide 5.

At constant exchange rates.

Please turn to slide five.

Lars Fruergaard Jorgensen: The sales increase of 7% was driven by 9% sales growth in international operations and North America operations growing by 5%. The negative impact of COVID-19 related stocking in the first quarter of 2020 is primarily offset by inventory changes and timing of shipments in this quarter. All therapy areas contributed to growth, with diabetes care sales growing by 9%, driven by DL1 sales growth and unchanged incidence. Yield per month sales increased by 23%, driven by North America growing by 19%, and international rations growing by 31%.

The sales increase of 7% was driven by 9% sales growth in international operations, and North America operations growing by 5%.

The negative impact for COVID-19 related stocking in the first quarter of 2020 is primarily offset by inventory changes and timing of shipments in this quarter.

Core therapy areas contributed to growth with the diabetes care sales growing by 9% driven by tier one sales growth and unchanged instrument sales.

Jennifer one sales increased by 23% driven by North America, growing by 19% and international operations growing by 31%.

Lars Fruergaard Jorgensen: The unchained insulin sales were driven by 5% growth in international operations offset by 10% sales decline in North America. The U.S. internet sales declined by 10%, driven by declining volume. Rebate enhancement while partially offset by channel, Diabetes care sales grew by 9% as international operations grew by 18% and North American operations grew by 2%. Firefarm sales increased by 1%, driven by North American operations. Please turn to slide 6. In line with our suce...

John change instrument sales were driven by a 5% growth in international operations offset by 10% sales decline in North America.

The U S Internet sales declined by 10% driven by declining in volume.

Prepaid enhancement, while partially offset by channel mix.

Diabetes care sales grew by 9% in saturation grew by 18% and North America operations grew by 2%.

Biopharm sales increased by 1% driven by North America operations, Please turn to slide six.

In line with our strategic Okay.

Lars Fruergaard Jorgensen: I am pleased to inform you that with our ambitions of reaching one third of the diabetes value market by 2025, we have improved our market share by 0.6 percentage points, to 29.3%. The increase reflects GLP-1 market share gains in both operating units. We have increased our instrument volume market share to 47.3%, driven by market share gains in international operations, supported by all three areas.

Since reaching one third of the diabetes value market by 2025, we have improved our market share by a <unk> six percentage points to 29, 3%.

The increase reflects general won market share gains in both operating units.

We have increased our insulin volume market share to 47, 3% driven by market share gains in international operations supported by all three areas.

Lars Fruergaard Jorgensen: Please turn to slide 7, The U.S. volume market is around The U.S. GLP-1 volume market growth is around 20% in the first quarter of 2021, driven by once-a-week injectables as well as all GLP-1 products. Novo Nordisk market leadership is now 58%, driven by the uptake of Ocempic and supported by, Measured on total scripts, Novo Nordisk is the market leader with more than 50% market Please turn to slide 18.

Please turn to slide seven.

The U S. Just one what is it.

Baidu market is around sorry, the U S. <unk>, one volume market growth is around 20% in the first quarter of 2021, driven by once weekly injectable as well as all tier four one products.

Normalized market leadership is now 58% driven by the uptake of <unk> and supported by robust source.

Michelle on total scripts nynorsk as a market leader with more than 50% market share.

Please turn to slide eight.

Lars Fruergaard Jorgensen: In the US, Rebelsus increased its volume market share both in terms of total scripts and new patient starts, despite two lockdowns with no face-to-face interactions between Novo Nordisk and the prescribers. We have secured broad market access for verbelsos, while the majority of verbelsos scripts are now reimbursed, and more than 80% of new patients are from outside the GL4-1 class. Outside of the US, Rebelsus has now been released in 14 countries, with one key market being Japan.

In the U S with doses increases its volume market share both in terms of total scripts and new patient starts despite to lockdown the no face to face interactions between Nordisk and subscribers.

We have secured broad market access for proposals by the majority of our scripts are now reimbursed and more than 80% of new patients are from outside that you had for one class.

Outside of the U S. <unk> has now been launched in 14 countries with one key market being Japan.

Lars Fruergaard Jorgensen: Two-and-a-half months into the launch, Rebelsys has captured 0.5% of the all-anti-diabetes market. The OAD market in Japan constitutes around 80% of the diabetes market. Please go to slide 9. In international operations, diabetes care sales increased by 10%, driven by all geography. The continued rollout of new generation insulins and focus on the GFP1 product portfolio has resulted in an increase in diabetes market share, which is now 23.6%. This is driven by market share gains in both GF1 and in. The value share of the GF1 class of the total diabetes mark has increased 1.8 percentage points to 11.2%. Please turn to slide 10.

Two and a half months into the launch <unk> has captured <unk>, 5% of the old anti diabetes market.

You owe a D market in Japan constitutes around 80% of the diabetes market.

Please go to slide nine.

In SaaS operations diabetes care sales increased by 10% driven by all geographies.

The continued rollout of new generation Insulins and focus on the G. For one product portfolio has resulted in an increased diabetes market share, which is now 23, 6%.

This is driven by share market share gains in both tier one and insulin.

The value share of the tier one class of the total diabetes market has increased one eight percentage points to 11, 2% piece.

Please turn to slide 10.

Obesity care sales increased by 9% with 2% growth in North America operations, and 18% growth in international operations.

Lars Fruergaard Jorgensen: Obesity care sales increased by 9% with 2% growth in North America operations and 18% growth in international operations. However, throughout 2020 and into 21, fewer patients have started treatment with Zexenta due to COVID-19 lockdown and reduced access to health care providers. In the U.S., we have since the start of the year seen an upward trend in new patient starts on Taxenda, indicating early signs of recovery in patient flow. Please turn to slide 11.

Throughout 2020 and into 'twenty, one fewer patients have started treatment was extended due to COVID-19, lockdown and reduced access to health care providers.

In the U S. We have since the start of the year seeing an upward trend in the new patient starts on <unk> center, indicating early signs of recovery in patient flow.

Please turn to slide 11.

Biopharm sales grew by 1% driven by a 3% sales growth in North America operations and unchanged sales in international operations.

<unk> orders grew by 2% driven by new product launches with <unk> Andrew fixture.

Lars Fruergaard Jorgensen: BioPharm's sales grew by 1%, driven by 3% sales growth in North America operations and unchanged sales in international operations. Rare blood disorders grew by 2% during my new product launches with Espirot and Reflexiv. The 2% over 7 sales decline was more than offset by Haemophilia A products growing by 16% and Haemophilia B sales increasing by 18%. Rare endocrine disorders grew by 2%, driven by new indications and the global rollout of next-generation devices for Nordic troops. Now over to you, Martin, for an update on R&D. Thank you, Lars.

The 2% or same sales decline was more than offset by hemophilia a product for them by growing by 16% and hemophilia sales increasing by 18%.

Endocrine disorders grew by 2% driven by new indications and global rollout of next generation device for noticed trucking.

Now over to you Martin for an update on R&D.

Please turn to slide 12.

We continue to progress our late stage pipeline aiming at initiating phase III activities across all of our therapy areas over the next year.

In other serious chronic diseases, we need.

April initiated the phase III trial called Isms.

Evaluating subcutaneous once weekly some megawatts at two four milligram.

Martin Holst Lange: Please turn to slide 12. We continue to progress our late stage pipeline, aiming to initiate phase 3 activities across all of our therapy areas over the next year. In other serious chronic diseases, we initiated the Phase 3a trial called ESMO in April, evaluating subcutaneous once-weekly semaglutide 2.4 mg for treatment of non-alcoholic steatohepatitis or NASH. The trial will enroll around 1200 people with NASH in stages 2 and 3 of fibrosis. The trial is planned in two parts.

The treatment of non alcoholic hepatitis or Nash.

The trial will enroll around 200 people with Nash in stage stages, two and three of fibrosis.

The trial has been in two parts.

One we will assess the effect of <unk> 2.4 milligram versus placebo.

Both on top of standard of care. The primary assessment will be based on liver histology after 72 weeks of treatment.

Atul will.

It will be an extension of one, thereby preserving the randomization and assessing the effect of <unk> two four milligram on liver related clinical outcomes. After children of 240 weeks of treatment.

Martin Holst Lange: Part 1 will assess the effect of semaglutide 2.4 mg versus placebo, both on top of standard of care. The primary assessment will be based on liver histology after 72 weeks of treatment. Part 2 will be an extension of Part 1, thereby preserving the randomization and assessing the effect of semaglutide 2.4 mg on liver-related clinical outcomes after a total of 240 weeks of treatment. The regulatory submission is expected to be based on part one of the trial. Combined with the already completed and reported results from the Phase 2 trial for which we were granted breakthrough designation by the US FDA back in 2020. Please turn to the next slide.

The regulatory submission is expected to be based on part one of the trials.

Combined with the already completed and reported results from the phase II trial for which we have been granted breakthrough designation by the U S. FDA back in 2020.

Please turn to the next slide.

In obesity.

Strategic aspiration is to develop a leading portfolio of superior treatment solutions.

Consequently, we have decided to complement our injectable therapy portfolio with an all option.

For market research, we know that the majority of people with a wait and see.

You can chat with health care providers.

Not referred to an NCO piece of two medicines prescriber.

Further.

Research has shown that a number of patients as well as their prescribers have a preference for tablet based treatment.

Martin Holst Lange: In obesity, our strategic aspiration is to develop a leading portfolio of superior treatment solutions. Consequently, we've decided to complement our injectable therapy portfolio with an oil option. From market research, we know that the majority of people with overweight seeking care with healthcare providers are not referred to an anti-obesity medicines prescriber. Further, research has shown that a number of patients, as well as their prescribers, have a preference for tablet-

Consequently, we expect to be able to address a substantial unmet need by developing a broader palette of obesity offerings as we in April and announced our decision to enter into phase III.

<unk> was also magnified 50 milligram.

This decision follows the completion of the step phase III clinical program for once weekly subcutaneous <unk> two four milligram, which is currently under regulatory review in the U S as well in the EU.

Yes.

Global 68 week program also called Oasis.

Martin Holst Lange: Consequently, we expect to be able to address a substantial unmet need by developing a broader palette of obesity offerings, as we announced in April. Obesity With All Tamacrotide-15. This decision follows the completion of the Step Phase 3A clinical program for once weekly subcutaneous semaglutide 2.4 mg, which is currently under regulatory review in the US as well as in the EU. The global 68-weight program, also called OASIS, will enroll around 1,000 people with obesity or overweight with at least one weight-related comorbidity in a total of three trials. As usual, weight-related comorbidities are defined as hypertension, dyslipidemia, obstructive sleep apnea, and cardiovascular disease.

Around 1000 people with obesity.

Overweight with at least one weight related comorbidities and a total of free trials.

As usual weight related comorbidities are defined as hypertension dyslipidemia.

Obstruction.

Sleep apnea and cardiovascular disease.

We expect to end the second half of 'twenty, one to initiate the first of the free trial, which is expected to enroll around 650 <unk>.

The objective is to confirm superiority of also megabits at 50 milligram versus placebo on weight loss in people with obesity overweight.

Please turn to the next slide.

Now turning to the broader R&D high level milestones in 'twenty one.

As Lance mentioned earlier, we haven't U S. In March received a refusal to file letter for the label expansion.

For two.

Chevron belief of a simple for the treatment of diabetes.

The regulatory filing was based on the sustained forward to trial.

Martin Holst Lange: We expect to initiate the first of the free trials, which is expected to enroll around 650 trial participants. The objective is to confirm the superiority of oral semaglutide 50 mg versus placebo in weight loss in people with obesity or overweight. Please turn to the next slide. Now, turning to the broader R&D high-level milestones in 2021. As Lars mentioned earlier... We have in the U.S. received a refusal to file letter for the label expansion for two, 0.0 mg of ozempic for the treatment of diabetes. The regulatory dossier was based on the Sustain40 trial.

The U S has requested additional information mainly related to additional manufacturing data.

And it is our belief that no additional clinical data will be needed for the resubmission.

We're currently in a constructive dialogue with the FDA and work to resubmit during the second quarter of 'twenty one.

Moving on also in the first quarter of 'twenty. One we have initiated a phase III 52 week clinical trial with once weekly some magnetite two four milligram in people with obesity related heart failure with pressured ejection fraction also called him.

In the second quarter, we also expect to initiate the phase III program for all types in all the time as disease and we look forward to receiving feedback from the U S. FDA on the application for <unk> $2 four milligram.

Martin Holst Lange: The U.S. has requested additional information mainly related to additional manufacturing data, and it is our belief that no additional clinical data will be needed for the resubmission. We are currently in a constructive dialogue with the EFDA and will work to resubmit during the second quarter of 2021. Moving on, also in the first quarter of 2021, we initiated a phase 3, 52-week clinical trial with once weekly semaglutide 2.4 mg in people with obesity-related heart failure with preserved ejection fraction, also called HepPF.

Moving to the second half of 'twenty, one we expect to see phase one results within our insulin innovation.

And we also expect to initiate the phase III outcomes trials for simply vacuum up within cardiovascular disease.

Towards the turn of the year, we expect a decision from the EU on two Megabits at 2.4 milligram in obesity.

As well as for <unk> 2.0 milligram within diabetes.

And within Biopharm, we expect to have results from the phase III program for somewhat hesitant in children.

Lastly for the ongoing combined phase one or two trials with my mate.

Martin Holst Lange: In the second quarter, we also expect to initiate the phase 3 program for all semaglutide in Alzheimer's disease, and we look forward to receiving feedback from the US FDA on the application for semaglutide 2.4 mg in obesity. Moving to the second half of 2021, we expect to see Phase 1 results in our insulin innovation. And we also expect to initiate the Phase 3 outcomes trials for Ciltivecumab within cardiovascular disease. Towards the turn of the year, we expect a decision from the EU on magnetize 2.4 mg in obesity, as well as for ozempic 2.0 milligram in diabetes, and within BioPharm, we expect to have results from the Phase 3 program for some of our patients and children. Lastly, for the ongoing combined phase one and two trial with my mate, we expect to see results from the different cohorts during the coming three quarters. With that, over to you, Karsten. Thank you, Martin.

We expect to see results from the different cohorts during the coming quarters.

With that over to you.

Thank you Martin please turn to slide 15.

In the first three months of 2021 sales were unchanged in Danish krone and grew by 7% at constant exchange rates.

The gross margin declined to 82, 8% compared to 84, 1% in 2020.

The decline reflects negative currency impact and lower realized prices in the U S, partly offset by positive product mix and productivity.

Sales and distribution costs increased by 9% in Danish kroner, and 16% at constant exchange rates. The increase is driven by launch activities and promotional spend for rebellious simply Mark Andrew.

<unk> market development investments for obesity as well our sales force expansions in China.

Karsten Munk-Knudsen: Please turn to slide 15. In the first three months of 2021, sales were unchanged in Danish kroner and grew by 7% at constant exchange rates. The gross margin declined to 82.8% compared to 84.1% in 2020. The decline reflects a negative currency impact and lower realized prices in the US, partly offset by positive product mix and productivity.

Research and development costs increased by 4% in Danish krone, and 7% at constant exchange rates.

The cost increase is driven by a high activity level as we progress the early stage pipeline within other serious chronic diseases as.

As well as the ongoing cardiovascular outcome trials, so and select.

Administration costs increased by 1% in Danish kroner, and 3% at constant exchange rates.

Operating profit decreased by 8% in Danish kroner and increased by 3% at constant exchange rates.

Karsten Munk-Knudsen: Sales and distribution costs increased by 9% in Danish kroner and 16% at constant exchange rates. The increase is driven by launch activities and promotional spend for Rebelsis and Osempic market development investments for obesity, as well as sales force expansions in China. Research and development costs increased by 4% in Danish kroner and 7% at constant exchange rates. The cost increase is driven by a higher activity level as we progress the early stage pipeline for other serious chronic diseases, as well as the ongoing cardiovascular outcome trials, SOLE and SELECT.

The negative currency impact on operating profit, partly offset by around 1 billion Danish kroner in hedging gains.

Net financial items.

This compares to a loss of $1 3 billion Danish kroner in 2020.

Hedging gains a consequence of the U S dollar trading 9% lower compared to last year.

Net profit increased by 6% and diluted earnings per share increased by 8% to five kroner and 45.

Free cash flow was $9 5 billion teams kroner compared to $7 7 billion in Danish krone in 2020.

The increase reflects the higher net profit and the favorable impact from changes in working capital.

Please turn to slide 16.

Karsten Munk-Knudsen: Administration costs increased by 1% in Danish kroner and 3% at constant exchange rates. Operating profit decreased by 8% in Danish kroner and increased by 3% at constant exchange rates. The negative currency impact on operating profit is partly offset by around 1 billion Danish Kroner in hedging gains on the net financial items. This compares to a loss of 1.3 billion Danish Kroner in 2020. The hedging gains are a consequence of the US dollar trading 9% lower compared to last year.

In the first quarter of 2021 we have realized a negative currency impact on sales and operating profits the currency headwinds driven by most major currencies and the merch margin conscious trading at lower levels than towards 'twenty, one than in 2020.

Some of the negative currency impact from major currencies on operating profit as just mentioned, partly offset in net financial items <unk>. Please turn to the next slide.

Based on the strong underlying performance seen in the beginning of tranche. One we now expect <unk> trench, one sales growth between six and 10% at constant exchange rates.

Karsten Munk-Knudsen: Net profit increased by 6%, and diluted earnings per share increased by 8% to 5,45 kroner. Free cash flow was 9.5 billion Danish kroner compared to 7.7 billion Danish kroner in 2020. The increase reflects the higher net profit and the favorable impact from changes in working capital. Please turn to slide 16.

This guidance reflects continued diabetes care growth, mainly driven by simply Andrew pouches, as well as pieces to cat growth.

Also embedded is intensifying competition, both within diabetes care and Biopharm and continued pricing pressure, mainly within diabetes care in the U S.

Operating profit is now expected to grow between five 9%, reflecting the sales growth outlook and continued investments in current growth drivers as well as pipeline assets to secure future growth.

As previously mentioned, we expect negative currency impact for the full year. Consequently reported sales and operating profit growth is still expected to be four 6% lower than at constant exchange rates respectively.

Karsten Munk-Knudsen: In the first quarter of 2021, we realized a negative currency impact on sales and operating profit. The currency headwinds are driven by most major currencies and emerging market currencies trading at lower levels in 2021 than in 2020. Some of the negative currency impact from major currencies on operating profit is, as mentioned, partly offset by net financial items as they are hedged. Please turn to the next slide.

The current COVID-19 pandemic causes uncertainty to the outlook regarding new patient initiations to emphasize for the impacts <unk>.

Financial items is still expected to be a gain of around 0.7 billion Danish kroner.

Due to minor timing changes, we now expect capital expenditure to be around seven 5 billion Danish kroner interest wenchuan.

Lastly, free cash flow is parallel shifted upwards by 1 billion Danish krone, and now expected to be between 37, and 42 billion Danish kroner.

Karsten Munk-Knudsen: Based on the strong underlying performance seen in the beginning of 2021, we now expect 2021 sales growth between 6 and 10% at constant exchange rates. This guidance reflects continued diabetes care growth mainly driven by osympic and repulsive, as well as obesity care. Also embedded is intensifying competition both within diabetes care and biopharm and continued pricing pressure, mainly within diabetes care in the UK. Operating profit is now expected to grow between 5 and 9 percent, reflecting the sales growth outlook and continued investments in current growth drivers as well as pipeline assets to secure future growth. As previously mentioned, we expect a negative currency impact for the full year. Consequently, reported sales and operating profit growth is now still expected to be 4% and 6% lower than at constant exchange rates, respectively.

The consequence, the ongoing share buyback program has expanded with 1 billion Danish kroner to $18 billion.

Now back to you lost for final remarks.

Thank you Carsten, please turn to slide 18.

We are very encouraged with the start of the year same.

Sales growth was driven by all therapy areas and across Europe.

Geographical areas within international operations, as well as North America operations, where growth was accelerated in the U S.

We are also pleased to announce plans to develop alternate glu tight as a convenient and effective treatment option for people with obesity complementing our injectable piece to medications.

The solid financial performance in the first three months of 2021 has enabled us to raise our outlook range for the full year.

We are now ready for the Q&A, where kind of ask all participants to limit who I am.

So two questions operator, we're now ready to take the first question.

If you wish to Austin OCR question Pete.

There were one chuckling keypad, if you wish to withdraw from your question. Please press the.

Lars Fruergaard Jorgensen: The current COVID-19 pandemic causes uncertainty in the outlook regarding new patient initiations and societal impact. Financial items are still expected to be a gain of around 0.7 billion Danish Kroner. Due to minor timing changes, we now expect capital expenditure to be around 7.5 billion Danish Kroner in 2021. Lastly, free cash flow has parallel shifted upwards by 1 billion Danish Kroner and is now expected to be between 37 and 42 billion Danish Kroner

The council once again, please press <unk> one on selecting keypad, if you wish to ask a question.

Our first question comes from Manuel.

From Deutsche Bank. Please go ahead.

Thank you very much money from Deutsche Bank.

Perhaps I'll start with the guidance question.

Since the majority of the Q1 revenue beat was.

Stocking related perhaps you could just quantify that and.

Notably raised guidance, regardless, if you could just talk about the confidence that still can you saw in Q1, the revenue side will not reverse.

Through the course of this year and weather or any other factors driving your increased confidence for your outlet or indeed any other swing factors, we should be thinking about in terms of the range for this year.

Lars Fruergaard Jorgensen: As a consequence, the ongoing share buyback program was expanded by 1 billion Danish Kroner to 18 billion. Now back to you, Lars, for final remarks. Thank you, Karsten. Please turn to slide 18. We are very encouraged by the start of the year. Sales growth was driven by all therapy areas and across geographical areas within its natural regions, as well as North America regions, where growth was accelerated in the US.

And then perhaps I'll take the question around the outlook in China.

Have you assumed if anything at present.

Guidance for potential EVP and see that impact it appears possible it still could come within 2021, what are your expectations.

Around planning and plus impact from both options would be available to you to mitigate that.

Lars Fruergaard Jorgensen: We were also pleased to announce plans to develop oral semaglutide as a convenient and effective treatment option for people with obesity, complementing our injectable obesity medication. The solid financial performance in the first three months of 2021 has enabled us to raise our outlook range for the full year. 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 questions. Thank you.

EBIT level were to arise thank you.

Thank you Manuel.

Two questions related to guidance the guidance.

One linked to the stock struggling we saw in <unk>.

What more to say about the guidance lift and then.

The outlook for China.

And linked guidance and volume based pricing so customer with you.

Yeah. Thank you for those questions.

And.

And they clearly some movements.

Operator: Please press 01 on your telephone keypad if you wish to withdraw from the line.

Movements on Q1 results.

Important to take into account when providing full year guidance.

So just to reiterate our 7% sales growth in the first quarter it should.

Operator: If you wish to withdraw from your question, please press 02 to cancel. Once again, please press 01 on your telephone keypad if you wish to ask an audio question.

Should be considered in the light of the two presenting teekay stocking we saw in the first quarter last year, so if adjusting for that.

It would.

Operator: Our first question comes from Emmanuel Papadakis from Deutscher Bank. Please go ahead.

Take us to 40% sales growth and then what we saw in the first quarter of this year between wholesaler stocking in the U S partly related to the launch of <unk>.

Operator: Sobank, please go ahead.

Emmanuel Papadakis: Thank you very much, Emmanuel Papadakis and Deutsche Bank. Since I'm early, perhaps I'll start with a guidance question. Seems the majority of the Q1 revenue beat was stocking related, perhaps you could just quantify that and notably raise guidance regardless, so if you could just talk about the confidence that the stocking you saw in Q1 on the revenue side will not reverse during the course of this year and whether there are any other factors driving your increased confidence for the full year outlook or indeed any other swing factors we should be thinking about in terms of the range for this year.

With the three ml cost is one piece and then timing of shipments in in Iowa and tender as well.

Basically at just the <unk>.

Fortunately since sales growth down two 9% so.

So in adjusted terms or Q1.

Underlying sales growth is 9% and that's basically in the high end of the guidance range. We issued back in February where we said from me from five to nine and and being in the high end was it was one of the key indicators for us to increase our full year guidance.

Emmanuel Papadakis: And then perhaps I'll take a question around the outlook in China. What have you assumed, if anything, at present in your guidance for potential VPP insulin impact? It appears possible it could still come within 2021. What are your latest expectations around timing and price impact, and what options would be available to you to mitigate that at the EBIT level were it to arrive? Thank you.

On top of that.

Linking to our.

China impact to guidance question, then then of course.

When assessing the proper guidance for.

The remainder for the full year of course that also takes into account the risk picture, where we're looking into and.

Lars Fruergaard Jorgensen: Thank you, Emmanuel. Two questions related to guidance. One link to the stock price we saw and, No, what else to say about the guidance lift and then Outlook for China, also related to guidance and volume based pricing. So Karsten, over to you.

What we see in China, specifically is that we do see an impact from volume based purchasing on novo norm. So the so called VP for what we will see an impact on novo norm.

Starting from.

In may and onwards, so so that's it.

Karsten Munk-Knudsen: Yeah, thank you for those questions, Emmanuel. And clearly, some movements on Q1 results that are important to take into account when providing full year guidance. So just to reiterate, our 7% sales growth in the first quarter should be considered in the light of the 2 billion GDK stocking we saw in the first quarter last year. On top of that, linking to your China impact on guidance question, then of course, when assessing the proper guidance for the remainder of the full year, of course, that also takes into account the risk picture we're looking into.

Fully included into our guidance in terms of a.

Pursuing VB piece in China.

We do not expect insulin to be included in <unk>.

It's happening now with effect from some timing Q2, three and hence any potential impact from insulin on volume based pricing in China would be later in the year.

So truly quantifying that is hot because we don't know exact structure and timing.

But that's also why we were working with guidance ranges. So it can be big.

A smaller part, but we do expect a negative impact in the time to come.

Karsten Munk-Knudsen: And what we see in China specifically is that we do see an impact from volume-based purchasing on Novo Nordisk, so the so-called VPP4, where we'll see an impact on Novo Nordisk starting from May and onwards. So that's fully included in our guidance. In terms of pursuing VBPs in China, we do not expect insulin to be included in VBP5, which is happening now with effect from sometime in Q3, and hence any potential impact from insulin on volume-based pricing in China would be later in the year.

From insulin in China.

Thank you Carsten. Thank you even with the next set of questions. Please.

Our next question comes from Pizza Hut from Citi. Please go ahead.

Thanks Pete.

Citi two questions.

Alright Carsten.

Simple one just tax.

Patients would be U S goes to 28% realize it.

And perhaps 'twenty, one, but just going forward any sort of sensitivity to that would be helpful.

And then assuming Camilla is on the line.

Could you just remind us how big the current U S six into Salesforce.

Karsten Munk-Knudsen: So, truly quantifying that is hard because we don't know the exact structure and timing, but that's also why we're working with guidance ranges, so it can be bigger or smaller, but we do expect a negative impact in the time to come from insulin in China.

On your current approach to the launch.

Should we be thinking sort of Omnichannel omnichannel approach.

Are you, particularly focusing on either widening prescriber base getting patients to seek treatment initially or to improve the reimbursement access or you're trying to do all things at the same time, so anything youre willing to share at this juncture would be appreciated. Thank you.

Lars Fruergaard Jorgensen: Thank you, Karsten. Thank you, Emmanuel. Next set of questions, please. Our next question comes from Peter Birdall from City. Please go ahead.

Peter Verdult: Is he? Please go ahead. Yeah, thanks. Peter, two questions. Mads, sorry, Karsten, a simple one, just tax: what the implications would be if the US goes to 28%? I realize it won't have an impact on 21, but just going forward, any sort of sensitivities there would be helpful. And then, assuming Camilla is on the line.

Thank you Peter So first cost on.

Impact from potential change in tax structure in the U S. And then later on can be done.

Yep. Thanks Pete.

Clearly something that we're looking at so and as you know.

It's it has not been concluded in Congress at this point, but I'd say the simple sensitive to Michele on the tax impact is that a.

And what we saw.

When the Trump administration reduced rates.

Some years back was set on.

On the U S corporate income tax rate reduction or movement of 10 percentage points on that moves our global effective.

Effective tax rate by one percentage point, so so taking the U S rate from 'twenty, one to 'twenty eight.

Peter Verdult: Could you just remind us how big the current US sales force is and your current approach to the launch? Should we be thinking sort of omni-channel approach, or are you particularly focusing on either widening the prescriber base, getting patients to seek treatment initially, or improving reimbursement access, or are you trying to do all things at the same time? So anything you're willing to share at this junction would be appreciated. Thank you.

Would move our growth rates by some 58 basis points or something like that.

There are a number of other potential element in the rulemaking process and I'm sure you read about global minimum taxes and so on the at this point, it's simply too early to assess.

Whether it has an impact or not.

Karsten Munk-Knudsen: Thank you, Pete, for first, Karsten, on the impact of a potential change in the tax structure in the U.S. and then later on Camilla. Yeah, thanks, Pete.

But the simple sensitivities around half a percentage point from the U S corporate income tax.

Thank you Kaki and then Camilla what can you share in terms of tactics for PCT commercial efforts in the U S.

Karsten Munk-Knudsen: That's clearly something we're looking at. So and, and as you know, it's, it's, it's, it has not been concluded in Congress at this point. But I'll say the simple sensitivity measure on tax impact is that, and what we saw when the Trump administration reduced rates some years back, on the US corporate income tax rate, if a reduction or a movement of 10 percentage points on that moves our global group effective tax rate by one percentage point.

<unk>.

Yes, so in terms of tactics present PCT in the U S and we of course.

Focus on driving the expansion in the commercial segment, but we of course also looking John Girton too wet to get into the Medicare segment. This of course is not.

There is no sort of an immediate time gone through that but what we what we can say about the access in the commercial segment is that it.

Karsten Munk-Knudsen: So, taking the US rate from 21 to 28, that would move our group rate by some 50 basis points or something like that. There are a number of other potential elements in the rulemaking process, and I'm sure you read about global minimum taxes and so on. At this point, it's simply too early to assess whether it has an impact or not, but the simple sensitivity is around half a percentage point from the US corporate income tax. Thank you, Karl. And then, Camilla, what can you share in terms of tactics for the obesity commercial efforts?

And we are working on making sure that the guys up into the.

Glass coverage, meaning that we can improve also on a net coverage.

We also expect that over time, when we go into our next product <unk>.

<unk> attached to painful subject to approval.

That would also of course be end.

Us.

Effectively in terms of gaining coverage so if so when.

Congress continues to be important in terms of sales reps, we are complementing our efforts.

From sales reps with their Omnichannel approaches and of course also working to see if we can expand and what we call. The direct care approach, which means that and since there are very few physicians that are prescribing obesity products at this point it might be easier to read in April that with an omnichannel approach, meaning online.

Camilla Sylvest: Yeah, so in terms of tactics for obesity in the US, we are, of course, focused on driving the expansion in the commercial segment, but we are, of course, also working longer term to get into the Medicare segment. This, of course, is not, there is no sort of an immediate timeline for that.

This is potentially over time and online scripts and so thats something that we are working on but it's not in full force at this point in time.

Camilla Sylvest: But what we can say about access in the commercial segment is that there is, and we are working on making sure that there is opt-in to the gross coverage, meaning that we can improve also our net coverage. And of course, we also expect that over time, when we launch our next product, the Semaglutide 2.4, subject to approval, that that will also be effective in terms of getting coverage.

Thank you. Thank you. Thank you Pete next set of questions. Please.

Next question comes from where more Katia from Bernstein. Please go ahead.

Great. Thank you very much for taking my questions that will not completely convincing somebody I'm supposed to ask one on <unk> one pricing. Please you think.

The net price of fibrosis in the U S.

And one key was around $13 per day compared to closer to 20% $20 per day portfolios that big So just curious if we now believe this is the steady state from which future declines.

Camilla Sylvest: So coverage continues to be important, and in terms of sales reps, we are complementing our efforts with omnichannel approaches. And, of course, also working to see if we can expand what we call the direct care approach, which means that since there are very few physicians that are prescribing obesity products at this point, it might be easier to enable that with an omnichannel approach, meaning online diagnosis potentially over time and online scripts. So that's something that we are working on, but it's not in full force at this point in time.

It will appear.

Or is there still some co pay impacting my analysis, which will mean that the net price could be slightly higher for the rest of 2021.

And then my second question is just following up on China and BBB again.

I just wanted to get a sense of what is your current base assumption. When we eventually do see GBP, how will it be implemented would it be the more traditional approach like the typical way five.

In the future will could it be a wuhan style DPP, which was clearly very different than just tied to that any thoughts on the potential <unk> Pvp at some point in the future with the Chinese government actually consider <unk> in the same class like they did with a different history classes. Thank you.

Lars Fruergaard Jorgensen: Thank you, Camilla. Thank you, Pete. Next set of questions, please.

Operator: Our next question comes from...

Umar Karpati: One more, Kapadia from Bernstein, please go ahead. Oh, great. Thank you very much for taking my questions. I'm Umar Karpati from Bernstein. Can I just first ask about GLP-1 pricing, please? It seems that the net price of ribels in the US in 1Q was around $13.5.

Thank you. Thank you so first karsten on <unk> pricing.

Yeah. So.

So on repurchase and if one pricing so as we model it.

<unk> always said dangerous to do this value per script.

On a quarterly basis, but I would say in trying to make it make it as simple as possible.

When you compare centric end to end rebel to say then that there's a delta.

11% on a list price per day simply.

Operator: Novoselic, Peter Welford, Simon Baker, Emmanuel Papadakis, Eric Berrigaud, Benjamin Yeoh, Rajesh Kumar, Harry Sephton, Lars Jorgensen, Michael Novod, Thomas Bowers, Harry Sephton, Lars Jorgensen, Matthew Weston, Daniel Bohsen, Martin Lange, Ludovic Helfgott, Lars Jorgensen, Daniel Bohsen, Novo Nordisk Novoselic, Stephen Atkins, Daniel Bohsen, Andres Jensen, Daniel Thank you.

Sure.

This of the script between new weekly.

And the daily treatments so.

That's one Delta then then Furthermore, we do see continued.

Use of affordability programs for repurchase so that's both a bigger copay buy down compared to that of <unk>. Since we're competing in the oral segment it down to down to $10 and then we still see a sale of some of the affordability programs from 2020.

Operator: Thank you. Thank you very much.

Karsten Munk-Knudsen: So first, Karsten on JLP1 price. Yeah, so on Rebelsis and GF1 pricing. So it's always dangerous to do this value prescription on a quarterly basis, but I would say, in trying to make it as simple as possible, then when you compare Osempic and Rebelsis, then there's a delta of 11% on a list price per day simply due to the size of the script between a weekly and So that's one delta.

What do you have some runway before it before that that ends and.

And then of course as usual Shannon makes dynamics, where you start out in the high margin channels and then what time products that are available.

In more channels also in lower margin channels.

So I'd say in short.

For the ability piece.

With the tails go in and going out on some of the launch programs that should be beneficial, but the channel mix as we've seen it with other products.

Karsten Munk-Knudsen: Then furthermore, we do see continued use of affordability programs for Rebelsis, so there's both a bigger co-pay buy-down compared to that of Osempic since we're competing in the oral segment down to $10, and then we still see a tail of some of the affordability programs from 2020, where you have some runway before that ends. And then, of course, there's the usual channel mix dynamics, where you start out in the higher-margin channels, and then over time, products are available in more channels, also in lower-margin channels.

Should be negative.

Going forward on a ERP.

Per script basis, but on a net value it will be positive.

Thank you.

On China order based pricing, we cannot really go in and speculate about what will happen in the future I'll just say that I believe it's it's slightly more complicated to handle biological medicines for physicians and patients.

If you go into these types of tend to.

Situations compared to small molecules, but it's not really possible for us to speculate on.

How this will play out in the future.

Thank you Vin model set up.

Question. Please.

Our next question comes from Nick <unk> from <unk>. Please go ahead.

Karsten Munk-Knudsen: So I would say, in short, the affordability piece with the tail going out on some of the launch programs should be beneficial, but the channel mix, as we've seen it with other products, should be negative going forward on an ARP per script basis, but on a net value, it will be positive.

Hi, Thanks for taking my questions is on some EBT can ask a little about human newer room right now in the U S. In terms of getting right Bill says on the road essentially now this is the third time, you're trying to launch it with your field force coming so can you talk a little more about your a few falls into action. So I understand that you are approaching some 85% or so.

Karsten Munk-Knudsen: Thank you, Karsten. And on China, volume-based pricing, we cannot really go in and speculate about what will happen in the future. I'll just say that it's slightly more complicated to handle biological medicines for physicians and patients if you go into these types of tender situations compared to small molecules.

The court in Texas with Acp's face to face how does that translate into productivity in terms of usual number of course that you make and then secondly also on <unk> rollout in Japan. Obviously this this 14 day limitation for the first year.

Camilla Sylvest: But it's not really possible for us to speculate on how this will play out in the future. Thank you, Vimal. Next set of questions, please. Thank you. Our next question comes from Janik Endergoed from AVG. Please go ahead. Hi, thanks for taking my questions; this is Yannick Denholm from ABC. Can I ask a little about your maneuver room right now in the U.S. in terms of getting the right belts on the road?

Prescription so how should we think about the uptake in Japan. This year, because obviously longer term. This is a huge opportunity.

Thank you again I'll pass on both questions to Camilla.

Thank you Yannick and yes correct.

And we are quite optimistic around when we get back into the field and we see that the <unk>.

<unk> comes back to a similar slopes of the curve. So to say of course, we are not fully I should take back in the field yet so there's still some room, but we have caused to constantly increasing our presence in the field also and.

Camilla Sylvest: Essentially, now this is the third time you're trying to launch it with the Field Force. Can you talk a little bit more about your field force interaction? I understand that you are approaching some 85% or so of the call interaction. Peter Welford, Simon Baker, Emmanuel Papadakis, Eric Berrigaud, Benjamin Yeoh, Rajesh Kumar, Thank you. Yannick, I'll pass on both questions to Camilla.

In 2020, we also got some quite some experience on how to.

Supplement our infield presence with other types of multi channel engagement parameters. So that's the way that we try to do this but over time as it comes.

Camilla Sylvest: Thank you, Janik. Yes, correct that we are quite optimistic around when we get back into the field. We see that the NBRX curves of Rebelsus come back to similar slopes of the curve, so to say. Of course, we are not fully, I should say, back in the field yet, so there's still some room, but we are, of course, constantly increasing our presence in the field also. And in 2020, we also got quite some experience of how to supplement our infield presence with other types of multi-channel engagement parameters.

Cindy sugarcane should increase also with it with the U S and opening up.

Then on Japan, and we felt this rollout.

We are quite satisfied with the uptake so far, especially when we look at also our share of voice, where we together with Nick has the highest share of voice in the D.

These statements.

In Japan at this point in time, so despite the.

And sort of special conditions in Japan, with a two week prescription.

And then we feel that on a comparative note we are tracking quite well in Japan and following the very recent launch of <unk>.

Camilla Sylvest: So that's the way that we try to do this, but over time, this should constantly increase also with the US opening up. Then, on Japan and the Rebelsus rollout, we are quite satisfied with the uptake so far, especially when we look at our share of voice, where we, together with Merck, have the highest share of voice in the OAD segment in Japan at this point in time. So despite the sort of special conditions in Japan with the two-week prescription rules, we feel that, on a comparative note, we are tracking quite well in Japan following the very recent launch of Rebelsus.

Thank you Camilla and thank you <unk>. So as you can hear we are very confident and very pleased with how the business is performing both in the U S and Japan and we are very optimistic about the future for doses. So next set of questions. Please.

Next question comes from Simon Baker from Redburn. Please go ahead.

Thanks for taking my questions. Two please firstly on phasing I Wonder if you could.

Give us any.

As to the phasing of <unk>.

<unk> SG&A costs across the remaining three quarters is there any things we should remember in terms of trial stops and launch costs.

Camilla Sylvest: Thank you, Camilla, and thank you, Yannick. So, as you can hear, we are very confident and very pleased with how Rebelsys is performing both in the US and Japan, and we are very optimistic about the future for Rebelsys. So next set of questions, please. The next question comes from Simon Baker from Redburn. Please go ahead.

Also on <unk>, if you could remind us on the stocking destocking.

Last year Q2.

Billing in Q1 five from the destock in Q2.

And as what the Q4 impact was.

And then secondly on obesity.

I Wonder as you are moving into supplement injectable with all if you could give us any thoughts on the potential payment reimbursement challenges all of us.

Simon Baker: Thanks for taking my questions. Two, please.

Simon Baker: Firstly, on phasing, I wonder if you could give us any pointers as to the phasing of R&D and SG&A costs across the remaining three courses, and if there are any things we should remember in terms of trial starts and launch costs. And also on phasing, if you could remind us of the COVID stocking and destocking for last year, obviously it was 2 billion in Q1, 500 destocking in Q2, if you could just remind us what the Q3 and Q4 impact was.

<unk> injectable.

Long benign.

Suggesting some courses such high is probably more receptive.

Because you've seen is the quote unquote more serious medical intervention and than you thought.

Scott your belief and are there any things we should be thinking about in the future. Thanks. So much.

Simon Baker: And then secondly, on obesity, I wonder, as you're moving into supplementing injectables with oral, if you could give us any thoughts on the potential pay and reimbursement challenges of oral versus injectable. There's long been a suggestion in some courses that payers are probably more receptive to an injectable because it's seen as a, quote unquote, more serious medical intervention than a pill.

Thank you <unk> assignment first costs on facing.

Both on cost and stuff.

Yep. Thank.

Thank you Simon.

That set of questions. So so on facing I would say the key aspect to be looking out for in terms of comparable.

This last year is in Q2.

We saw a quite significant destocking last year, taking our Q2 sales growth last year down to down to basically zero. So so so of course.

Simon Baker: Is that your belief, and are there any things we should be thinking about in the future? Thanks so much.

Karsten Munk-Knudsen: Thank you, Simon. First, Karsten, on phasing, both on cost and stocking. Yeah, thank you, Simon, for that set of questions.

That will impact the comparator.

As we saw impacting the comparison in the first quarter of this year the other way round.

So that would be the main on sales growth I think on the on the other.

Karsten Munk-Knudsen: So on phasing, I would say the key aspect to be looking out for in terms of comparables versus last year is in Q2, where we saw quite a So I wouldn't be hunching that, you know, vis-a-vis other impacts on the top line. In terms of our spending, I'd say you should not expect any significant changes to our spending pattern this year. So the way it happens, I'd say if I take R&D first, then we're basically facing our spending vis-à-vis trial execution.

The partial destocking between Q3 and Q4 last year.

It will be on the desk, so so I wouldn't be announcing that.

Vis vis the other impacts on topline.

In terms of.

<unk> spending.

I'd say you should not expect any any significant changes to our spending pattern.

This year, so so the way.

It happens I would say if I take R&D first then they then then were basically facing a spending vis vis <unk>.

Tried to execution. So that's the startup cost in a close down costs and the remainder of the spending on trials basically spreads over the lifetime of the trial and it's being faced.

Karsten Munk-Knudsen: So there's a start-up cost and a close-down cost, and the remainder of the spending on trials is basically spread over the lifetime of the trial, and hence it's being faced rather gradually. Then there would only be significant bumps in the case of, you could say, any impairments to intangible assets. And as you know, we don't have a lot of acquired assets in Novo Nordisk. So don't expect significant bumps in terms of R&D spending.

Rather gradually.

That would only be a significant bumps in case of you'll see any any impairments to intangible assets.

As you know we don't we don't have a lot of.

Acquired assets.

In Illinois, So so don't expect a significant bumps on in terms of R&D spending.

SMT.

What you saw here in the first quarter with SD being up 16%.

Karsten Munk-Knudsen: What you saw here in the first quarter with S&D being up 16% was an artifact of us both pushing Rebelsis and Ocempic, especially in the U.S. market from the beginning. So we're basically running parallel DTC campaigns behind the brands. So we front-loaded the spending, but more granularity in terms of the facing, I would not want to give at this point in time because that also indicates some of our commercial tactics vis-à-vis, for instance, DTC programs in the U.S.

That was not affect the offer of us both pushing <unk>, Andrew same pick, especially in the U S market the front from the beginning so we're basically running parallel.

<unk> campaigns behind it behind the brands, so and so we frontloaded the spending.

But put more granularity in terms of the facing I would not want to give at this point in time because that also indicates that some of our commercial tactics vis vis for instance, DTC programs in the U S.

Thank you Carsten and on.

If payer reception of.

Of all Sema in obesity.

We are starting to try now so maybe its bit early to start talking about market access, but I would just make the comment that we see that fallbrook doses, which is an alteration of semi.

See pricing similar to what we see on Olympic. So I think this is all about efficacy and bear in mind that.

Karsten Munk-Knudsen: Thank you, Karsten. And on, [inaudible] and bear in mind that the obesity market is a market to be opened up, and I think there is plenty of opportunity to segment that market, and I'm sure that there's a very large segment who would prefer an all-to-one solution. So for us, that's a significant opportunity. Thank you, Simon. Next set of questions, on next.

The recent market as a market to be opened up and I think there is.

Plenty of opportunity to segment that market and I'm sure that there is a very large segment would prefer an oral treatment.

So far so for us that's a significant opportunity.

Thank you Simon next question please.

Operator: Our next question comes from Chong Yang from Fredericksburg. Please go ahead.

Our next question comes from Chung in young from Credit Suisse.

Please go ahead.

Chong Yang: Hi guys, it's Charlie Kim from

Yes.

Hi, guys. Its turned him from credit Suisse three questions if I can.

Chong Yang: Credit Suisse. Three questions, if I can.

Chong Yang: First one, Oral Sema. I know these...

First one oral sema in obesity.

Chong Yang: The 50 mg dose that you're going for is 25 times more than the injectable semi-dose for obesity.

It makes sense that yoga employees 25 times more than the injectable cemeteries for ABC.

Chong Yang: for OBC

Chong Yang: I know you're working on improvements in yield, but how should we think about the gross margin impact of this in the short term and also in the long term?

I know you're working on improvements in yield how should we think about the gross margin impact of this in the short term, but let's say the long term secondly.

Chong Yang: Secondly, you initiated the study of SEMA in obesity with HF-PF. So perhaps, can you discuss some of the rationale for starting this study?

Secondly, you initiated the study of semi you might be with have passed.

Hey, Pat.

Discuss some of the rationale for starting the study.

Chong Yang: Thank you for watching this study. Maybe the commercial opportunity you have there is there any opportunity to move beyond the obesity and diabetes patients?

Maybe the commercial opportunity you have there is there any opportunity to move beyond the obesity and diabetes patients.

Chong Yang: And then finally, just on MIM-8, the Phase 1-2 results are now listed as 2Q2.

And then finally just on midnight.

The phase two results now.

Chong Yang: [inaudible]

Q2, two H.

Karsten Munk-Knudsen: So, thank you, Chung-Yung. So first, Karsten, on the 50 MHz gross margin impact. Yeah, thank you for pointing to that trial trunk because that's actually one of my favorite trials these days because, actually, what you're looking at is a phase 3 asset that only takes a thousand patients in clinical trials to get to a regulatory decision. Then, in terms of commercialization, you know all about the volume opportunity in obesity and the attractiveness of having an asset with an efficacy in the magnitude of what we see with CIMA 2.4 and up to 18% weight loss, as we saw in the STEP program.

You're seeing somewhat.

Somewhat slight delay that or are we expecting multiple data sets throughout this year. Thanks very much.

So thank you Cheng young so first karsten on.

The fifth MC gross margin impact.

Yep.

Thank you for pointing to ensure that the trial trunk because that's actually one of my favorite process. These days.

Because actually what you are looking at us as a phase III asset.

That oh, when it takes a thousand patients in clinical trials in the clinical trials to get to a regulatory decision so our costs to get to market.

In the first place relatively menschville compared to most other phase III programs.

Then in terms of commercialization you know all about the volume of <unk> and the attractiveness of having an asset with efficacy in the magnitude of what we see with the CMA to fall.

Karsten Munk-Knudsen: And of course, before entertaining such a trial, we do a lot of financial modeling, including cost of goods and manufacturing. And I would say with the scaling we're doing in our manufacturing setup and the process improvement we're making in manufacturing, first of all, we do see improvements in our cost of goods, as we've also been discussing with the Rebels early on. Furthermore, what we're also doing is that we're looking at the formulation of the tablets in the 50 mg version, thereby also looking at certain opportunities in terms of improving our gross margin profile for the product.

And up to 18% weight loss as we show on the step program and and of course before entertaining sorts of trials and then we do a lot of financial modeling, including including cost of goods end to end manufacturing.

<unk>.

And I would say with the.

With the scaling we were doing in our manufacturing set up and to and the process improvements we are entertaining and manufacturing first of all.

We do see improvements in our cost of goods is we've also been discussing with the with the rebels. This early on.

Furthermore, once we're also doing is that we're looking at the formulation of the tablets in the 50 milligram version.

That by also looking at certain opportunities in terms of improving our gross margin profile for the product. So so all in all.

Karsten Munk-Knudsen: So all in all, we expect to see an attractive product also on a gross margin level if and when we get to market. Thank you, Karsten and Martin. Combined answer, to make it sound like one answer to the second question on Semmerhef and MIMATE.

We expect to see an attractive product on also on a gross margin level.

If and when we get to market.

Thank you Karsten and matching combined answer to make it sounded like one answer to the second question on <unk> and.

Martin Holst Lange: That's going to be a tall order, combining obesity and hemophilia, but I'm going to give it a try. In HFPAF, we see obviously a great number of patients suffering from heart failure. And... And... There is no treatment specifically for HFPAF out there.

<unk>.

That's going to be a tall order combining obesity and.

In hemophilia, but I'm going to give it a try.

On <unk>.

We see obviously, a great number of patients suffering from heart failure.

And.

And.

Martin Holst Lange: These patients have a severe impact on their everyday life, on their function, on their quality of life, and, obviously, on their outcome, and we have indications that semaglutide may be an impactful treatment in this space, specifically because 80% of people will suffer from obesity, and we have clear indications that weight loss will improve the outlook, the quality of life, and the activity of daily living in these patients. So we see this as an opportunity to serve some patients with currently no treatment and a potential for a label expansion of the obesity label for semantic purposes.

There's no treatment specifically for <unk> out there these patients have a severe impact on the everyday life on that function on their quality of life and obviously on the outcomes.

And we have indications that magnetite b b.

Yeah.

And impactful treatment in this space, specifically, because 80% of people will suffer from obesity and we have clear indications that weight loss will improve the outlook the quality of life and the activity of daily living with these patients. So we see this as an opportunity to serve some patients.

Currently no treatment and the potential for a label expansion of the label for US It makes the tide.

Martin Holst Lange: Moving fastly then to the MiMADE question, we will see readouts from different cohorts throughout the next three quarters. We will combine our assessment of those readouts and report on the efficacy and safety of MiMADE later this year, based on this data. Thank you, Martin. So really, there was really no change to my mate compared to the previous quarter's comments. Thank you, Chongyang. Next set of questions, please. Our next question comes from Sachin Jain from Bank of America.

Moving faster.

They might make question we will see.

Readout from different cohorts throughout the next three.

Three quarters.

We will combine our assessment of those read out and report on.

On the efficacy and safety of my made later this year.

Based on these data.

Thank you Martin so really no change to my mate compared to.

Previous quarters comments. Thank you John Young this next set of questions. Please.

Next question comes from Sachin Jain from Bank of America. Please go ahead.

Sachin Jain: of America. Please go ahead. Hi there, thanks for taking my questions. I've got a two-parter on obesity, if I may. I understand your mid-term excitement about building the market, but I wonder if you could indulge me and just give some color on launch expectations. I'm going to frame the question versus consensus. Consensus has Sema launching 50% faster than the original Saksenda launch, layering on top of Saksenda, Flax, and Goodyear. The two perspectives on the speed of the summer launch versus prior Saksenda, what factors should we be thinking about as we think about this launch versus prior in terms of pricing, pay for minority, and where education is?

Hi, guys. Thanks for taking my questions.

Possible on NBC, if I may.

I understand your midterm is starting to build in the market, but I wonder if you could indulge me just give some color on launch expectations I'm going to frame the question versus consensus consensus on sum of launching 50% faster than the national sex and the launch.

On top of snacks and flat.

Okay.

I'll take one more.

With respect to the speed of semi launch versus price.

I won't factor should we be thinking about as we think about this launch versus prior in terms of pricing passive minority where education is.

Sachin Jain: And then the second is how to think about the two products in combination. What short-term dynamics should we be thinking of in terms of potential semi-cannibalization of SACSENDER patients? I understand your stay-time dynamic debate, but I expect that takes time to manifest in terms of patient build. Thank you.

And then the second is how to think about the two products in combination what short term dynamics should we be thinking of in terms of potential semi cannibalization of snacks and the patients I understand you'll stay time dynamic debate, but I expect that takes time to manifest in terms of patient bills and Keith.

Sachin Jain: Thank you, Sgt. Jane. While we do not provide any kind of guide on the launch trajectory, etc., for products or comment on consensus estimates, Camilla, what can we say about this?

Thank you Sachin Jain.

While we do not.

Kind of guide on the launch trajectory et cetera.

Our products are coming on.

On the on the consensus estimates.

Can we love what what can what can we say.

Camilla Sylvest: Yeah, so... What we are trying to do in many countries, but also, of course, in the U.S., is to build the market, as you rightly said, and with the launch of semaglutide 2.4 with much higher efficacy. We know from our early discussions with payers, in general, that a weight loss of the magnitude of what we are seeing with 2.4 is, of course, of high relevance. So it will feed into our attempts to build the market in terms of making sure that more patients seek treatment for obesity care because obesity care has such a big influence on the healthcare system and the cost.

On this.

Yeah. So.

Yeah.

What we are trying to do.

In many countries, but also of course in the U S is to filter market as you rightly said and with the launch of <unk> two point full with a much higher efficacy. We know from our early discussions with payers in general that weight loss and the magnitude of what we have seen with two point full course of high relevance. So it will feed into it.

Our attempts to build the market in terms of.

Making sure that more patients to seek treatment for obesity care, because obesity care headset chip obese, just such a big influence on the health care system and the cost and so of course, we higher efficacy we are more likely to see at AAN as Joe.

Camilla Sylvest: So of course, with higher efficacy, we are more likely to see a strong uptake of 2.4, but that is, of course, early days to say. But we are basing this just on efficacy. But we are also launching into a market that is more mature than when we launched the sex center. So in the meantime, of course, we have built awareness around obesity. We are working to have it recognized as a disease.

And uptake of the two painful but that is of course early days to say, but we are facing this just on the efficacy, but we also launching into a market that is more mature than what it was when we launched the <unk> center. So in the meantime of course, we have built the awareness around obesity. We are working so avid recognized as a disease.

Camilla Sylvest: In many countries around the world, we have launched new websites, Truth About Weight, for patients where they can learn about obesity, and also Rethink Obesity for physicians where they can also obtain more information about obesity in general. So a bigger sort of base to build on for a more effective product. So that's basically the difference in the situation compared to sex center, where we started very much from scratch. In terms of cannibalization, it's difficult for us to comment on, and we cannot give the details on that. But of course, we are launching a product that has more than twice the efficacy into the market.

Many countries around the world, we have launched new websites.

I'll wait for patients where they can learn about obesity and also rethink obesity for physicians, where they can and also obtain more information about obesity in general so of Vega.

Sort of if phase two where two built on fall and more effective product. So that's basically the difference in the situation compared to some extent that will be started.

Very much from them.

Scratch.

In terms of cannibalization, it's difficult for us to comment on and we cannot give the details on that but of course and we are launching a product that has more than twice the efficacy into the market.

Lars Fruergaard Jorgensen: Thank you, Camilla. So it's, of course, still early days, but looking at the reports that come out from the medical community, observing, say, the early payer dialogue, I think this is a significantly different trajectory than what we have seen in the past. And I think, in my view, this is the first time there's a real solution to managing obesity with medical interventions.

Thank you Camilla.

So it's of course still early days, but looking at.

The reports that come out from the medical community.

Observing.

Early payer dialogue I think this is this is a significant different.

Trajectory than what we have seen in the past and I think in my view. This is the first time there is a real solution to managing <unk>.

With medical intervention so.

Lars Fruergaard Jorgensen: So I think it's really, really exciting. Thank you, we'll catch you in the next set of questions. Our next question comes from Michael Novod from Ordea. Please go ahead. Yes, thanks a lot.

I think it's really really exciting.

Thank you Sachin next set of questions. Please next question comes from Michael Newgard from Nordea. Please go ahead.

Yes, Thanks, a lot so it's Michael from Nordea.

Michael Novod: Also, maybe you could elaborate a bit on the sales differences between Q4 and Q1 in terms of rebalancing in the US, which, of course, looks quite dramatic. I know you've been talking about the general volatility between quarters, but this looks very dramatic, so it would be great to get an update on that in more detail. And then, secondly, on the 2.0 milligram refused-to-file letter from the FDA in diabetes and what kind of feedback you're getting on the 2.4 milligram semi-obesity file, and also whether we should see a potential risk on any type of read-a Good. Thank you, Michael.

Two questions also maybe you could elaborate a bit on.

The sales differences between Q4 and Q1 in terms of fibrosis.

In the U S, which of course looks.

Quite dramatic I know you've been talking to.

The general volatility between quarters, but this looks very dramatic so it'd be great to get in.

Right on on that in more detail and then secondly.

On the 2.0 milligram refuse to file letter from the FDA.

In diabetes.

And what kind of feedback you're getting on the two four milligram sema.

<unk> file and also with the.

Should see a potential risk on so they need to.

Any type of read across between the two on the manufacturing side.

Good. Thank you Michael first of all the costs on the pencil sales Q4 last year versus Q1 this year.

Karsten Munk-Knudsen: First, Karsten, on Rebels or Fails, Q4 last year versus Q1 this year, Absolutely, and I recognize that it looks odd that actually Rebels Is Fails, being a launch product, is lower in Q1 this year compared to Q4 last year. I would say there are a couple of technicalities that explain basically all of it, and then I think we should talk about the online kind of dynamics of the products, which are 100% So on the technicalities, let me just start out with two pieces.

Absolutely.

And I recognize that it looks at that that actually a reversal.

Being a launch product.

Slower in Q1, this year compared to Q4.

Last year.

I would say that a couple of couches that explains basically all of it and then I think we should talk to the online.

Kind of dynamics of the products, which are 100% in Texas. So so on the couch is so let me just start out by two pieces.

Karsten Munk-Knudsen: First of all, looking at quarterly sales on a launch product is always super dangerous, and we've seen that again and again with different dynamics. The two key dynamics you should take into account here are, first of all, there's a so-called ex-factory ratio, so basically the ratio between what we sell to wholesalers and scripts being written to patients, and there's quite some volatility on launch products in that ratio since we are building a pipeline in the supply chain when you're launching a product. So basically, the product is going into rural pharmacies and distribution centers across the nation.

First of all looking at quarterly sales on a launched product is always super dangerous and we've seen that again and again.

For different dynamics, the two key dynamics you should take into account.

Here is first of all that's a so called ex factory ratio, so that basically the ratio between.

What we sell to wholesalers and scripts being it being written to patients and thats quite some volatility on launch products.

That ratio since said that we are building pipeline in supply chain, when you're launching a product so basically product going into rule pharmacies and distribution centers across the nation. So we saw that in the fourth quarter of last year.

Karsten Munk-Knudsen: So we saw that in the fourth quarter of last year that there was quite a high ex-factory ratio, and where we see a more normal ex-factory ratio in the first quarter of this year, so that would be kind of natural launch supply chain volatility. And then the second piece to take into account is adjustments to rebates, as we've also seen on launch products. So being a launch product, you don't know exactly how much is being utilized through cash programs, co-pay, and different insurances.

Quite a high ex factory ratio.

And where we see a more normal expense ratio in the first quarter of this year, so that would be kind of it.

Natural launch supply chain volatility and then the second piece to take into account is on.

On the adjustment to rebates.

We've also seen a launch products so being launched products you don't know exactly how much is being utilized through cash.

Cash programs, and copay and different insurances and.

Karsten Munk-Knudsen: And there, of course, with the lag we have, there will be some adjustments over time, and that was what we talked about in Q4, that we had a favorable impact on our GF1 business. And I would say for Rebelsys, it's in isolation. We didn't call it out on the brand. It's less than $100 million in the fourth quarter, but, of course, for a launch brand with somewhat limited sales, then of course, it's a bigger piece. So the ex-factory ratio and changes to rebates and estimates in the fourth quarter, adjusting for that 20% volume increase from the fourth quarter to the first quarter. But Camilla, on the underlying fundamentals of Rebelsys?

And there of course with the lag there will be some some adjustments over time and that.

That was what we talked to you in Q4.

We had a favorable impact.

To our tier one business and I would say for <unk> its.

In isolation, we didn't call it out on the brand its less than $100 million in the fourth quarter, but of course for launch France with somewhat limited sales there and of course, it's a bigger piece, so ex factory ratio and changes to rebate. Some estimates in the fourth quarter adjusting for that.

20% volume increase from the fourth quarter to the first quarter, but.

Camilla on the underlying fundamentals on robustness.

Yeah on the underlying fundamentals.

Camilla Sylvest: Yeah, on the underlying fundamentals, we track on a number of parameters to understand, of course, our uptake and launch with Rebelsus. And all of that is in line with our ambition. So it means that the breadth, that means the number of prescribers, is continuing to progress well. And we also see that awareness and preference are improving over time, especially the preference to prescribe Rebelsus, which has increased significantly and looks very strong also compared to other branded OEDs in the market.

We track on a number of parameters to win to understand of course I'll Oh.

I've taken launch with <unk> and all of that is in line with our ambition. So it means that the question.

That means the number of prescribers continuing to progressing well and we also see that awareness and preference is improving.

Time.

Especially on the.

Preference to prescribe and we felt that.

That has increased significantly and you'll see a very strong also compared to other branded <unk> in the market. So what we are working on right now is to increase our awareness of the brand and that comes with the <unk> coming back into the market and as we continue the loan sale Protectory, So and so we are quite.

Camilla Sylvest: So what we are working on right now is to increase our awareness of the brand, and that comes with us and the reps coming back into the market, and as we continue the launch project. So we are quite confident with that path. We also continue to see that the source of business and the positioning is working out so that the sourcing is 80% outside the GLP-1 class, as we have talked about before.

Consistent with that path. We also continue to see that the source of business and the positioning is working out so that the sourcing.

Is 80% outside the <unk> one class as we have talked to before also.

Camilla Sylvest: So it means that we continue to be very confident in Rebelsus and the commercial strategy. But, of course, we also see that it's a very promotion-sensitive launch product, and we have, and as we talked about before, whenever we have reintroduced the product, we see that we get back on a very, very strong trajectory. We continue to support Rebelsus, of course, also with DTC, and of course, also with more and more reps in the field, as we just talked about before.

It means that we continue to be very confident in with us and the commercial strategy, but of course, we also see that is very promotion sensitive launch product in behalf.

And as we talked to the fall whenever we have reintroduced a product we see that we get back on a very strong trajectory and we continue to support with US of course also with DTC and then and of course also with reps and more and more in the field as we just talked about this one.

Martin Holst Lange: Thank you, Karsten and Camilla, strong confidence from our side in the launch trajectory for Rebels. And with that, over to Martin on reading across from the refusal to file letter from the FDA to 2.4 milligrams. Yeah, thank you very much. So broadly speaking, I don't think I will speculate on an ongoing regulatory review but maybe just say that the FDA has accepted the submission of the 2.4 milligram dose and it's under review. And we currently have no indications of that file being impacted by the refusal to file on the new sample.

Thank you Karsten Camilla strong confidence from our side and the launch trajectory for both doses and with that over to Martin on read across from the refusal to file letter from the FDA to two four milligram. Thank you very much so broadly speaking I don't think.

Will speculate on an ongoing regulatory review, but maybe just say that the FDA has accepted the submission of the two four milligram. It's under review and we currently have no indications of that file being impacted by the refusal to file on the specifics with one two milligram.

Lars Fruergaard Jorgensen: Good. Thank you. Thank you. Thank you, Michael.

Good. Thank you thanks. Thank.

Thank you Michael next set of questions. Please next question comes from Michael <unk> from UBS. Please go ahead.

Operator: Next set of questions, please. The next question comes from Michael Leuchten from UBS. Please go ahead.

Michael Leuchten: Thanks so much, Michael Weston from UBS. Just two quick ones, please: just in terms of the price mix effect on the insulin side, there seems to be quite a few things going on in the US at the moment with patient access coming out, and 340Bs playing a part. As we think about this beyond 2021, would you be able to give a bit of a feel for what the underlying conventional price mix effect is, and what is sort of 2021 specific? And then the second question, just going back to the text question, it doesn't look like there will be any manufacturing.

Thanks, So much Michael Weinstein from UBS, just two quick ones. Please.

In terms of the mix price mix effect on the insulin side, there seems to be quite a few things going on in.

In the U S at the moment with patient access coming out with 340, <unk> playing a part.

Think about this beyond 2021 would you be able to give a bit of a feel for what the underlying conventional price mix effect.

And what is sort of 2021 specific.

And then the second question just going back to the tax question it.

It doesn't look like there will be any manufacturing offset in terms of tax rebates in the U S does that have any relevance in terms of how you think about <unk>.

Michael Leuchten: , Peter Welford, Simon Baker, Emmanuel Papadakis, Eric Berrigaud, Benjamin Yeoh, Rajesh Kumar

Manufacturing setup as you increase your oral manufacturing platform. Thank you.

Karsten Munk-Knudsen: Thank you. Thank you Michael. Two questions for you, Karsten, on the price mix effect on insulin and also looking a bit into the future and then again on taxes in the US combined with the manufacturing footprint in the US. Yeah, thank you for those questions, Michael.

Thank you Michael two questions for you on on price mix effect on insulin and also looking a bit into the future and then.

I know in Texas in the U S combined with the manufacturing footprint in the U S.

Yeah.

Thank you for those questions Michael So so first of all.

Karsten Munk-Knudsen: So first of all, on insulin and insulin dynamics, you see our North American business being down 10% in the first quarter on insulin, which is a function of both lower volumes, it's enhanced rebates, and then offset from positive channel mix. So what you should expect going forward is that, of course, there will be competition in the market for volumes with potentially more bioswimmers entering the market. So that will intensify, but, of course, we will be defending our leading position in the market in terms of market share.

On insulin <unk> and <unk>.

Dynamics.

You see our north American business being down 10% in the first quarter on an insulin which is a function of both lower volumes.

Enhanced rebates and then the offset from positive channel mix. So so what you should expect our goal going forward is that.

Of course, there'll be competition in the market for volumes.

With potentially more biosimilars entering into the market. So so that will intensify but of course, we will be defending our leading position in the market in terms of market share.

Karsten Munk-Knudsen: With competition comes pressure on rebating and pricing, so the dynamic around pricing and rebating we do expect to continue for those reasons. And as to channel mix, the positive factor on channel mix is mainly related to 340B, where basically we stopped our shipments for the full year; we stopped our shipments to contract pharmacies, which enables us to avoid the double dipping of rebates and hence a better channel mix impact on our insulin sales. That is, of course, only something one can do one time.

With competition comes also pressure on on Rebating and pricing so the dynamic around.

Pricing and Rebating.

We do expect to continue.

For those reasons and.

As to channel mix.

The parts effect on channel mix is mainly related to 340 <unk> where.

Where we are basically we stopped our shipments as Scott.

Scott just with the full year, we stopped our shipments to two contract pharmacies, which.

Enables us to avoid the operative thing of rebates and hence it better.

The channel mix impact on our insulin sales.

That is of course, the only something one can do onetime.

Karsten Munk-Knudsen: I would have to say that on 340B, while comfortable in terms of what we included in the first quarter, there is still some uncertainty vis-à-vis legal cases and legislative impacts around future rulemaking on a prospective basis. Then, to your question on taxes and manufacturing offsets, I would say the starting point when we look at our manufacturing footprint is that we look at supply chain backup and redundancies, and closeness to markets.

I would have to say that on <unk>.

Why are you comfortable in terms of what we included in the first quarter of course, there's still some uncertainty vis vis legal cases and less specific impacts around to.

Future rule, making on a perspective basis.

Then to your question on Texas and manufacturing of offsets then.

I will say the starting point when we look at our manufacturing footprint is that Oh, that's we look at our supply chain.

The backup.

And redundancies and closeness to two markets.

So of course would take Texas into account.

It's not a prime criteria for when we decide where to where to put our Manny.

Manufacturing footprints. So what we're looking at now is that we're we're just in a final stages of finalizing documentation on on a U S. API expansion project.

Karsten Munk-Knudsen: So now we're moving into a ramp-up phase, and the CapEx ramp-up we've been signaling with now 7.5 billion dollars in CapEx spent this year is mainly driven by expansions in Denmark, so I would say there are no implications for our CapEx manufacturing strategy from the changes in U.S. tax legislation.

So.

The project is running according to plan so.

So we are.

Now we are moving into a ramp up phase and the Capex ramp up we've been signaling with now seven 5 billion. Capex spent this year is mainly driven by expansions in Denmark, So I'd say no.

Occasions for our Capex manufacturing strategy from it from the changes in U S tax legislation.

Karsten Munk-Knudsen: And then we have time for the last set of questions. Thank you, Michael. Our next question comes from Karsten Madsen from SEB. Please go ahead. Yeah, thank you very much. Maybe I'll actually only take one question here for Martin.

Thank you Scott and then we have time for last set of questions. Please. Thank you Michael Thank you.

Our next question comes from Carsten Madsen from Seb. Please go ahead.

Yes. Thank you very much maybe I'll actually you only take one question here for margin.

Karsten Munk Knudsen: It's in relation to the NASH phase 3 trial with the stemmer. You mentioned that there are two binary histology endpoints. What does this actually mean? In phase 2, you showed the resolution of NASH, but with no worsening of fibrosis. Do you now also need to show?

In relation to the phase III trial with Zimmer.

You mentioned that the two binary histology endpoints what does this actually mean.

Phase II you showed the resolution.

But with the bursting of fibrosis.

Do you now also need to show an improvement in fibrosis.

Karsten Munk Knudsen: The worsening of fibrosis

Karsten Munk Knudsen: Thank you, Karsten, over to you. Yeah, it's a really relevant question. And the regulatory guidance basically stipulates that you have to win on two counts; you have to show improvement in steatohepatitis, and you have to show improvement in fibrosis. But to clarify, of course, being a Phase II trial, this trial was not powered to look at fibrosis. However, numerically, we did see an improvement in fibrosis as well as a sort of stopping of the worsening of fibrosis.

Worsening of fibrosis.

Thank you <unk>.

Yes.

It's a super relevant question and the regulatory guidance basically stipulates that you'll have to win on two counts you had to show improvement in theater in hepatitis and you had to show improvement in fibrosis, just to clarify of course being a phase II trial. This trial was not powered to.

Look at fibrosis, However, numerically, we did see an improvement in fibrosis as well as.

The.

Sort of.

Stopping in worsening of fibrosis, if we see the same numerical change in the phase III trial.

Martin Holst Lange: If we see the same numerical change in the Phase III trial, we will actually be in a place where we are not only clinically relevant but also statistically significant and thereby living up to the regulatory guidance. So, so, so, what we need is for our phase three trial to confirm what we saw in. Okay. Thank you. And then, Okay, the second second question. Yeah, I had a quick second question that was just for the other Karsten.

We will actually be in a place where we not only clinically relevant but also statistically significant and thereby living up to the regulatory guidance. So so so so what we need is for all phase III trials to confirm what we saw in phase two.

Okay. Thanks, so much and then.

Okay. Okay. The second the second question.

Yes, I had a quick second question that was just for the other costs.

Karsten Munk-Knudsen: In terms of gross market development, 80 bps of the 130 bps lower gross market this quarter versus last year's FX. How is the remaining 50 bps divided between amortizations and price pressure on your price mix, can you say? Yeah, so that's what was for the cotton and I think when we disclosed upon acquiring a hemisphere was that we do expect a negative impact here in the first year of less than 1% of OP simply due to the delta between the royalty payments under the previous contract and then the amortization profile having acquired the company.

As of the gross margin development.

Bps of the one part of it.

Lower gross margin this quarter versus last year's ethics.

How is the remaining 50 bps divided between them of stations and the price pressure on your price mix you can see.

Yes.

Yeah, So that's a.

That's what it was part of the cost in <unk>.

I think when.

What.

We disclosed upon acquiring atmosphere was say that.

<unk>.

That we do expect a negative impact here in the first year of less.

And then 1% off or simply due to the delta between the royalty payments under the previous contract and then the amortization profile.

Having acquired the company. So if you take that one.

Karsten Munk-Knudsen: So if you take that 1% or less than 1%, then that will make you into that corresponds to less than 50 bps on the margin. So, the main driver is, in reality, amortizations are related to the hemisphere. You can look in the cash flow statement on the step up in depreciations and amortizations also just to get a feel for it. But that's the main driver. The other effects remain the same, and we continue to drive productivity. We continue to get product mix gains from year to one, and we continue to see some negative impact from prices.

1% or less than 1%.

Than that.

Make you into that corresponds to less than 50 bps on the on the margin. So the main driver is in Reg amortization relates to atmosphere. You can look in the cash flow statement on the step up in depreciation and amortization is also just to get a feel for it but that's that's the main driver.

The other effects remains the same we will continue to drive productivity. We continue to get the product mix gained from <unk> and <unk> and we continue to see some negative impact from price in the U S.

Karsten Munk-Knudsen: Thank you, Karsten, and thank you, Karsten. With that, we thank you for your attention today on our conference call, and if you have more questions, feel free to contact our investor relations officers. And with that, we wish you a good day. Thank you. Bye-bye. Thank you, this now concludes our conference call.

Excellent. Thank you Karsten and thank you Carsten was that we were.

Thank you for your attention today at our conference call and if you have more questions feel free to contact our investor relations offices and with that we wish you a good day. Thank you bye bye.

This now concludes our conference call. Thank you all for attending you may now disconnect your lines.

Operator: Thank you all for attending. You may now disconnect your lines.

Okay.

Okay.

Yeah.

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