Q3 2022 Novo Nordisk A/S Earnings Call
Welcome to <unk> and I'm, the CEO of Novo Nordisk limits would tell you I have executive Vice President and head of commercial strategy and corporate Affairs, Camilla Sylvest Executive Vice President and head of North America operations talk Lana.
Vice President and head of development margin holds planning and finally, Chief Financial Officer, Kosmos amongst all of us will be available for the Q&A session.
Today's announcement and the slides for this call available on our website <unk> Com. Please note that the call will be webcast.
A webcast live and a recording will be made available on our website as well call is scheduled to last for one hour. Please turn to the next slide.
Yeah.
Good day, and thank you for standing by welcome to the Q3 2022.
The presentation is structured as outlined on slide two please note that all sales and operating income statements will be at constant exchange rates unless otherwise specified the Q&A session will begin in about 25 minutes. Please turn to slide three.
Earnings Conference call at this time all participants.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an entre magic message advising Johannes waste.
As always I need to advise you that this call will contain forward looking statements.
Please be advised that today's conference is being recorded.
These are subject to risks and uncertainties that could cause actual results to differ materially from expectations.
I would now like to hand, the conference over to your speaker today CEO , Laura Sweigert Jochen. Please go ahead.
For further information on the risk factors. Please see the Companys now for the first nine months of 2022 and the slides prepared for this presentation. Please turn to the next slide.
Thank you operator.
Welcome to this Nordisk earnings call for the first nine months 2022, and the outlook for the year.
In the first nine months of 2022, we delivered double digit sales and operating profit growth, which has enabled us to raise our outlook for the full year.
My name is large broke out jorgensen and I'm the CEO of Novo Nordisk limits would tell you I have executive Vice.
Ice president and head of commercial strategy and corporate Affairs Camilla Sylvest.
I would like to start this call by going through the performance highlights across situations before handing over the word to my colleagues.
Vice President and head of North American operations to Atlanta.
Vice President and head of development marketing hoist lung and finally, chief Financial Officer, Cognex amongst all of us will be available for the Q&A session.
We continue to make progress across all dimensions of all.
All dimensions of purpose and sustainability.
Our carbon emissions decreased by 18% compared to the first nine months of 2019, and we continue to reach even more patients compared to the same period last year.
Today's announcement and the slides for this call available on our website Northstar Com. Please note that the call will be wet.
A webcast of live and a recording will be made available on our website as well call is scheduled to last for one hour. Please turn to the next slide.
Within our aspiration of being a sustainable employer, we expanded the number of women in senior leadership positions to 38% compared to 36% by the end of September 2021.
The presentation is structured as outlined on slide two please note that all sales and operating income.
Within R&D, we are pleased with the encouraging phase II data with <unk> in type two diabetes as well as the successful completion of the pivotal phase III program for once weekly insulin <unk>.
Statements will be at constant exchange rates, unless otherwise specified the Q&A session will begin in about 25 minutes. Please turn to slide three.
As always I need to advise you that this call will contain forward looking statements.
Both support our exploration of further raising the innovation bar for diabetes treatments margin will come back to this and our overall R&D R&D.
These are subject to risks and uncertainties that could cause actual results to differ materially from expectations.
For further information on the risk factors. Please see the Companys now for the first nine months of 2022 and the slides prepared for this presentation. Please turn to the next slide.
Stones later in this call.
In the first nine months of 2022, we delivered double digit sales growth, reflecting solid commercial execution across geographies and our therapy areas. While both operating units contributing to sales growth, we saw particularly strong sales growth in North America, driven by accelerated demand for RG. One treatments. This is <unk>.
In the first nine months of 2022, we delivered double digit sales and operating profit growth, which has enabled us to raise our outlook for the full year.
I would like to start this call by going through the performance highlights across switching patients before handing over the word to my colleagues.
US to increase the outlook for the year.
<unk> will go through the details per therapy area later.
Logic customers will go through the financial details, but I'm very pleased with our sales growth of 16% and operating profit growth of 14% in the first nine months of 2022.
We continue to make progress across all dimensions of.
All dimensions of purpose and sustainability.
Our carbon emissions decreased by 18% compared to the first nine months of 2019, and we continue to reach even more patients.
I will now give the word to Camilla for an update on commercial execution.
And Pete.
<unk> for the same period last year.
Thanks.
And last mentioned, our 16% sales growth in the first nine months up from from Q with Jason both operating units with North America operations growing from 22% and international operations growing.
Within our exploration of being a sustainable employer, we expanded the number of women in senior leadership positions to 38% compared to 36% by the end of September 2021.
Our D&C one sales increase.
Within R&D, we are pleased with the encouraging phase II data with <unk> in type two diabetes as well as the successful completion of the pivotal phase III program for once weekly insulin <unk>.
North America, growing 49% and international operations growing 55%.
Insulin sales decreased by 11% driven by 7% decline in international operations, and a 20% sales decline in North America operations.
Both support our exploration of further raising the innovation bar for diabetes treatments margin will come back to this and our overall R&D R&D milestones later in this call.
U S insulin sales declined by 22% driven by lower realized prices and the decline in volume.
In the first nine months of 2022, we delivered double digit sales growth, reflecting solid commercial execution across geographies and our therapy areas. While both operating units contributing to sales growth, we saw particularly strong sales growth in North America, driven by accelerated demand for RG 100 treatments. This.
Insulin sales in international operations were impacted by implementation of volume based procurement in China from May 22, as well as lower sales in them.
Sure.
With PC cafes grew.
And overall in international operations extended sales grew 73% and North America operations.
It has enabled us to increase the outlook for the year.
<unk> sales grew 77% in the U S. <unk> sales grew 81%.
<unk> will go through the details per therapy area later.
Logic customers will go through the financial details.
Glad to see sales grew 2% driven by a 4% sales increase and international operations offset by a 3% decline in auto.
We're pleased with our sales growth of 16% and operating profit growth of 14% in the first nine months of 2022 with.
EMEA calculations, please turn to slide six.
With that I'll now give the word to Camilla for an update on commercial execution.
Our 14% sales growth within diabetes care as fast or diabetes market that means we have improved our market share by one seven percentage points to 31, 6%.
Thank you and please turn to the next slide.
As Larry mentioned, our 16% sales growth in the first nine months of <unk> was driven by both operating units with North America operations growing 22% and international operations growing.
<unk> continues to be on track to reach one third of the diabetes value market by 2025.
Yes.
<unk>, one sales increased 4%.
This increase primarily reflects the SD wan market growth as well as share gains in both operating units.
By North America, growing, 39% and international operations growing 55%.
And please turn to the next slide.
Insulin sales decreased by 11% driven by a 7% decline in international operations and a 20% sales decline in North America operations.
In international operations diabetes care sales increased by 9% in the first nine months of 'twenty, two driven by tier two one sales that grew by 55%.
The U S instrument sales declined by 22% driven by lower realized prices and the decline in volume.
<unk> remains the market leader in international operations, where the GSP one value market share.
Sales in international operations were impacted by implementation of volume based procurement in China from May 22, as well as lower sales anymore.
Two 6% this is driven by share gains across geographies.
<unk> continues to expand its <unk> one market share leadership in international operations with a 41, 3% market share.
PC cafes grew.
In International operations extended sales grew 73% and North America operations.
While the TLC one class is growing more than 40% CLC one penetration remains slow at around 4% of total diabetes grapes globally and with that I will hand over to Doug.
Sales grew 77%.
In the U S <unk> sales grew 81%.
Glad to see sales grew 2% driven by a focus on sales increase and international operations offset by a 3% decline in North America operations. Please turn to slide six.
Thank you for that update Camilla, Please turn to the next slide.
The U S. <unk>, one market volume grew by more than 40% comparing the third quarter of 2022 to the third quarter of 2020 with once weekly injectable <unk> and rebel CIS as the main drivers.
Our 14% sales growth within diabetes care as fast.
The recent competitor launch and the <unk> NGL <unk> has supported the continued acceleration in market growth.
This market that means we have improved our market share by one seven percentage points to 31, 6%.
From an MBR perspective, as well as all time high levels for our portfolio of <unk> products during Q3.
We continue to be on track to reach one third of the diabetes value market by 2025.
This increase primarily reflects TLC, one market growth as well as share gains in both operating units.
Measured on total prescriptions Novo Nordisk has maintained its market leadership with a 52, 4% market share.
And please turn to the next slide.
Additionally, <unk> continues to be the market leader with a 38, 7% <unk> market share.
And international operations diabetes care sales increased by 9% in the first nine months of 'twenty, two driven by tier one sales grew by 55%.
Rebel CIS continues to grow and has now been launched in 43 countries in the first nine months of 2022. It was the second largest contributor to growth in Novo Nordisk afterwards epic.
What is it remains the market leader in international operations, where the GOP one value market share.
6% this is driven by share gains across geographies.
Please go to the next slide.
Obesity care sales increased by 75% with 77% growth in North American operations, and 73% and international operations. Furthermore, the global obesity market expansion continues with the volume growth of the global branded obesity market of more than 60%.
<unk> continues to expand its <unk> one market share leadership in international operations with a 41, 3% market share.
While the TLC one class is growing more than 40% TLC one penetration remains slow at around 4% of total diabetes scripts globally and with that I will hand over to Doug.
We continue to be encouraged by the performance of <unk> Centre in international operations.
Thank you for that update Camilla, Please turn to the next slide.
<unk> EMEA is a key growth driver with 96% growth in the first nine months of 2022.
The U S. <unk>, one market volume grew by more than 40% comparing the third quarter of 2022 to the third quarter of 2021 with once weekly injectable <unk> and rebel CIS as the main drivers.
Specifically the growth continues to be particularly strong in countries that have some level of reimbursement such as the UK, Norway and Israel.
The recent competitor launch and the <unk> NGL <unk> has supported the continued acceleration in market growth.
In the U S obesity care sales grew by 81% with both will go the in <unk> contributing to growth.
From an MBR perspective, as well as all time high levels for our portfolio of <unk> products during Q3.
Following the previously announced will go the supply issues in the U S. Our focus remains to continue continuity of care to the patients that have already initiated treatment.
Measured on total prescriptions Novo Nordisk has maintained its market leadership with a 52, 4% market share.
In line with expectations. This has negatively impacted will gobi prescription trends.
Additionally, <unk> continues to be the market leader with a 38, 7% <unk> market share.
Positively sex and the prescription trends have accelerated and continued to be at all time high levels.
Rebel CIS continues to grow and has now been launched in 43 countries in the first nine months of 2022. It was the second largest contributor to growth in Novo Nordisk afterwards epic.
Regarding will go the supply we expect to make all doses of bogo the available in the U S. In December .
We plan to initiate broad commercial activities in the beginning of 2023.
Please go to the next slide.
Now back over to <unk> for an update on rare disease.
Obesity care sales increased by 75% with 77% growth in North American operations, and 73% and international operations.
Thank you Doug next slide please.
<unk> sales increased by 2% in the first nine months of 2022. This was driven by a 4% growth in international operations offset by a 3% decline in North America operations.
Furthermore, the global obesity market expansion continues with a volume growth of the global branded obesity market of more than 60%.
We have blood disorders grew by 6% driven by number seven as well as the law has the lowest product excellence and received yet.
We continue to be encouraged by the performance of <unk> Centre in international operations.
EMEA is a key growth driver with 96% growth in the first nine months of 2022.
Specifically hemophilia a products grew by 6% hemophilia b sales by 9% in <unk> and five 6%.
Specifically the growth continues to be particularly strong in countries that have some level of reimbursement such as the UK, Norway and Israel.
We're endocrine disorder sales declined by 6% the declining sales was driven by international operations decreased <unk>, 2% and by North America operations decreasing by 13%.
In the U S obesity care sales grew by 81% with both <unk> and <unk> contributing to growth.
Sales were negatively impacted by lower realized prices in the U S and now over to you Martin Fund update on R&D. Thank you Camilla Please turn to slide 11.
Following the previously announced will go the supply issues in the U S. Our focus remains to continue continuity of care to the patients that have already initiated treatment.
In August we shared some exciting data from the phase III.
And pizza with type two diabetes.
In line with expectations. This has negatively impacted <unk> prescription trends.
I would like to briefly walk through these results.
This was a 32 week trial investigated the efficacy and safety of our fixed dose combination of <unk> compared to the individual components of Cemig what types of portfolio Graham <unk>.
Positively sex and the prescription trends have accelerated and continued to be at all time high levels.
Regarding will go we supply we expect to make all doses that will go the available in the U S. In December .
Later in two claims.
All products were administered once weekly.
We plan to initiate broad commercial activities in the beginning of 2023.
The trial included 92 people with type two diabetes and overweight.
Now back over to <unk> for an update on rare disease.
And people were equally randomized among the three treatment arms.
Next slide please.
In the trial, the mean baseline <unk> was eight 4% and the mean baseline body weight was 106 kilograms.
Alright.
<unk> increased by 2% in the first nine months of 2022. This was driven by a 4% growth in international operations offset by a 3% decline in North America operations.
After 32 weeks of treatment people treated with <unk> achieved a numerically higher <unk> adoption.
We have blood disorders grew by 6% driven by an over 7% as well as the law has the lowest product excellence and received yet.
218 percentage points compared to a reduction of $1 79 to seven percentage points for people treated with <unk>.
Specifically hemophilia a products grew by 6% hemophilia b sales by 9% and over 756%.
And Sarah nine three percentage points for people treated with <unk>.
We are in decline disorder sales declined by 6% the declining sales were driven by international operations, decreasing 2% and by North America operations decreasing by 13%.
People treated with <unk>.
American higher body weight reduction of 15, 6% compared to a reduction of five 1% for people treated with some magnified.
Sales were negatively impacted by lower realized prices in the U S and now over to you Martin for an update on R&D. Thank you Camilla Please turn to slide 11.
An eight 1% for people treated with <unk> alone.
In the trial <unk> appear to have a safe and well tolerated profile.
In August we shared some exciting data from the phase II.
Overall these results indicate indicate that <unk> reduces blood sugar more than the two motor components alone.
And people with type two diabetes.
I would like to briefly walk through these results.
The weight loss seen in the trial confirmed the substantial weight lowering potential okay Christian.
This was a 32 week trial investigated the efficacy and safety of <unk>.
Fixed dose combination of <unk> compared to the individual components of some macro types of pro forma Graham <unk>.
Based on the results the pension initiated program.
Specifically in people with type two diabetes during the course of 2023.
Great.
All products were administered once a week.
Next slide please.
The trial included 92 people with type two diabetes and overweight.
On was five was a 52 week efficacy and safety trial.
And people were equally randomize among the three treatment arms.
Once we get into the <unk> to once daily basal insulin.
In the trial, the mean baseline <unk> was eight 4% and the mean baseline body weight was 106 kilograms.
This was either insulin integrity, our insulin <unk>.
The trial included 1085 insulin they compete with type two diabetes.
After 32 weeks of treatment people treated with <unk> achieved numerically higher reduction.
The primary objective of the trial.
Demonstrating non inferiority of insulin <unk>.
218 percentage points compared to a reduction of $1 79 to seven percentage points for people treated with <unk>.
Compared to once daily.
Insulin analogues and reducing agency at 52 weeks.
And Sarah nine three percentage points for people treated with <unk>.
Almost five included a dose got it as well as real world evidence such as substantial as clinical visits compared to the other one which clubs.
People treated with <unk>.
American higher body weight reduction 15, 6% compared to a reduction of five 1% for people treated with some advertising and eight 1% for people treated with <unk> alone.
Altogether, we believe that this design win.
Our understanding of the dialogue of how <unk> can.
Make a difference for patients in an actual clinical practice setting.
In the trial <unk> appear to have a safe and well tolerated profile.
This.
It was a treat to target side and it achieved its primary endpoint by demonstrating non inferiority in reducing hemoglobin <unk> at week 52 was answered in aggregate as compared.
Overall these results.
Indicate that <unk> reduces blood sugar more than the two motor components alone.
And the weight loss seen in the trial confirmed the substantial weight lowering potential okay.
Two one daily basal insulin analogues.
Based on the results.
From an overall baseline.
It's initiated.
The agency of eight 9% once weekly insulin <unk> achieved a superior reduction in estimated agency of 168% compared to $1 three 1%.
In people with type two diabetes during the course of 2023.
Next slide please.
Onwards, five was a 52 week efficacy and safety trial.
Once daily insulin.
Once we get into the <unk> to once daily basal insulin.
Okay.
Estimated treatment difference of 0.38 percentage points in.
It was either insulin integrity or insulin in lodging.
The trial included 1085 insulin they compete with type two diabetes.
In addition.
Similarly in the rates of severe and clinically significant hyperglycemia.
The primary objective of the trial.
In the trial once weekly insulin <unk> appear to have a safe and solid credit rating profile.
Demonstrating non inferiority of insulin.
Compared to once daily.
In conclusion, we are very pleased to share the positive results from the <unk>.
Insulin analogues and reducing agency at 52 weeks.
<unk>.
These results confirm the data.
Almost five included a dose got it as well as real world evidence such as substantial clinical visits compared to the other one which clubs.
In the previously reported almost program.
A result.
Highlight that insulin <unk> has the potential to be an ideal starter insulin for people with type two diabetes.
Altogether, we believe that this design win.
Understanding of the dialogue of how <unk> can make a difference for patients in an actual clinical practice setting.
As well as a very attractive offering in combination with mealtime insulin as shown enormous fall thus covering the full spectrum of type two diabetes.
This.
We expect to be filing for regulatory approval of once weekly insulin <unk> in the U S. In the EU and in China. During the first half of 2020.
It was accretive type of trial and it achieved its primary endpoint by demonstrating non inferiority in reducing hemoglobin <unk> at week 52 was installed in aggregate as compared.
Please turn to the next slide.
Two once daily basal insulin analogues.
In September we completed the 24 week main part of the Phase III trial will consist of met coal to explore <unk> in people with hemophilia, a or hemophilia b without inhibitors.
From an overall baseline.
You won't see of eight 9% once weekly insulin <unk> achieved a superior reduction in estimated agency of 168% compared to $1 three 1% for once daily.
The trial met its primary endpoints confirming superiority of considerably prophylaxis treatment compared to no prophylaxis treatment in reducing the annual bleed rate in both hemophilia, a and hemophilia b patients without inhibitors.
Hum.
Estimated treatment difference of 0.38 percentage points.
The secondary confirmatory endpoint of demonstrating non inferiority of consistent met prophylaxis as compared to previous prophylactic factor treatment.
In addition.
And the rates of severe and clinically significant hyperglycemia.
In the trial once weekly insulin <unk> appear to have a safe and well tolerated profile.
In reducing the APR was not met.
In the trial continues appeared to have a safe and well tolerated profile with no Trump.
In conclusion, we're very pleased to share the positive results from the <unk> five.
Trial.
Click events reported after the treatment restock following the treatment goals.
These results confirm the data.
In the previously reported on those programs.
Based on the results of exploit.
A result.
We have we are assessing further development activities and timing of regulatory submissions and people without insurance.
Highlight that <unk> has the potential to be an ideal starter insulin for people with type two diabetes as.
As well as a very attractive offering in combination with mealtime insulin as shown enormous role thus covering the full spectrum of type two diabetes.
Sure.
Now.
Stirring staying within rare disease I'm very excited to share the treatment has been initiated in the first <unk> phase III trial in hemophilia a this is called <unk>.
We expect to be filing for regulatory approval of once weekly insulin <unk> in the U S. In the EU and in China. During the first half of 2020.
Based on the results.
Please turn to the next slide.
So in phase one and two we had very high expectations for the trial and the difference that <unk> can make for patients with hemophilia, a and managing their disease.
In September we completed the 24 week main part of the Phase III trial will continue Smith will explore <unk> in people with hemophilia, a or hemophilia b without inhibitors.
Furthermore, we have submitted the dossier for regulatory approval in the U S for the treatment of primary Hyperoxaluria.
The trial met its primary endpoint confirmatory priority of considering a prophylactic treatment compared to no prophylaxis treatment in reducing the annual bleed rate in both hemophilia, a and hemophilia b patients without inhibitors.
<unk> was part of it is shown in Pharmaceuticals acquisition, we made back in 2021.
Within other serious chronic diseases, we have completed a 12 week phase III quad.
The secondary confirmatory endpoint of demonstrating non inferiority of confusion that prophylaxis as compared to previous prophylactic factor treatment.
<unk> in 206 to seven people.
With <unk> of risk of <unk>.
The trial met its primary.
In reducing the APR was not met.
And by demonstrating superiority versus placebo in during low density lipoprotein cholesterol and appear to have a safe and well tolerated profile.
In the trial consistent appeared to have a safe and well tolerated profile with no Trump.
Events reported after the treatment restock following the treatment course.
However, due to commercial and portfolio considerations the development of our appreciation will be terminated.
Based on the results of exploit.
We have we are assessing further development activities and timing of regulatory submissions and people without inhibitors.
Now, let's turn to the other high level R&D milestones that I did not cover in the previous slides.
Within diabetes, we have initiated a phase one trial with once weekly also magnified as well as a phase II trial with higher doses of <unk> in the third quarter of this year.
Sure.
Now.
Stirring staying within rare disease I'm very excited to share the treatment has been initiated in the first <unk> phase III trial in hemophilia a this is called frontier too.
The latter is 49 week trial investigating the efficacy and Tolerability of eight and 16 milligram of <unk> respectively.
Based on the results we saw in phase one and two we have very high expectations for the trial and the difference that <unk> made can make for patients with hemophilia, a and managing their disease.
The trial is expected to enroll around 240 people with type two diabetes.
Further in the first half of 2023.
Great results from the currently ongoing phase III trial will also magnified 25, and 15 milligram respectively.
Furthermore, we have submitted the dossier for regulatory approval in the U S for the treatment of primary Hyperoxaluria.
Yeah.
Finally, with MPC to we are very excited to have initiated the first is a free trial.
<unk> was part of the di Sirna Pharmaceuticals acquisition, we made back in 2021.
Called redefined one okay for seven <unk>.
Within other serious chronic diseases, we have completed the 12 week phase III.
Redefine one is a 68 week trial, comparing the efficacy and safety of once weekly <unk> with.
<unk> in 206% to seven people.
This amendment by $2 4 million.
<unk> of risk of <unk>.
Basically <unk>, two four milligram and placebo.
The trial met.
The trial is expected to enroll approximately 3400 people with obesity overweight and competitors and is the first pivotal trial in the redefined.
By demonstrating superiority versus placebo enduring low density lipoprotein cholesterol and appear to have a safe and well tolerated profile.
However, due to commercial and portfolio considerations the development of oral <unk> will be terminated.
Yes.
Further during the first half of 2023, we expect results from the phase III trial with all symmetric signed 50 milligram as well as the phase one two trial results from the ongoing trial with <unk>.
Now, let's turn to the other high level R&D milestones that I did not cover in the previous slides.
Within diabetes, we have initiated a phase one trial with once weekly also magnified as well as a phase III trial with higher doses of <unk>.
Altogether, we're looking very much forward to an exciting period with clinical trial initiations as well as results across all therapy areas.
Third quarter of this year.
The latter is a 49 week trial.
Over to you.
Thank you Martin it's essential to the next slide.
Investigating the efficacy and Tolerability of eight and 16 milligram of <unk> perspective.
In the first nine months of 2022, our sales grew by 26% in Danish krone, and 16% at constant exchange rates driven by both our operating units.
The trial is expected to enroll around 240 people with type two diabetes.
Further in the first half of 2023, we expect results from the currently ongoing phase III trial with <unk>.
Gross margin increased to 84, 3% to 83 <unk> percent in 2021, driven by a positive product mix due to increased <unk> sales.
Awesome, Magnetite, 25, and 15 milligram respectively.
Finally within obesity, we are very excited to have initiated the first of three eight trial.
Positive currency impact of <unk>, nine percentage points and productivity improvements.
Cause redefined one okay persimmon.
These effects are countered by lower realized prices in the U S and China.
We defined one is a 68 week trial, comparing the efficacy and safety of once weekly <unk> with $2 4 million basically related to four milligram and placebo.
Service and distribution costs increased by 28% and things Corona, 19% at constant exchange rates.
The increase is driven by loss activities in promotional spend for <unk> and <unk>.
The trial is expected to enroll approximately 3400 people with obesity.
As market development activities for BSG.
Overweight and competitors.
The cost increase is reflecting low activity levels in 2021, due to COVID-19, as well as higher distribution costs.
And as the first pivotal trial and the redefined.
Further during the first half of 2020, we expect results from the phase III trial with all commercial side 50 milligram as well as the phase one two trial results from the ongoing trial with <unk>.
Research and development cost increased by 31% advanced Kona and 26% at constant exchange rates.
The increase was driven by higher clinical activity levels within other serious chronic diseases and tier one as well as the operating costs and amortization related to the acquisition of <unk> pharmaceuticals in the fourth quarter of 2021.
Altogether, we're looking very much forward to an exciting period with clinical trial initiations as well as results across all therapy areas that over to you guys. Thank.
Thank you Martin please turn to the next slide.
Administration costs increased by 9% in Danish kroner, and 5% at constant exchange rates.
In the first nine months of 2022, our sales grew by 26% in Danish krone, and 16% at constant exchange rates.
Operating profit increased by 28% in Danish kroner and by 14% at constant exchange rates.
Driven by both our operating units.
The gross margin increased to 84, 3% to 83 <unk> percent in 2021, driven by a positive product mix due to increased <unk> sales.
Net financial items for transparency two showed a loss of around 5 billion kroner compared to a gain of around 1 billion in 2021.
Yes.
This mainly relates to losses following the appreciation of the U S dollar as reflected in the favorable currency impact and operating profit.
The positive currency impact of <unk> nine percentage points and productivity improvements.
These effects are countered by lower realized prices in the U S and China.
The effective tax rate for the first nine months of 2022 was 25% compared to 19, 8% in 2021.
Sales and distribution costs increased by 28% in Danish krone, and 19% at constant exchange rates.
Net profit increased by 14% and diluted earnings per share increased by 15% to 18 Corona and 42.
The increase is driven by loss activities in promotional spend for <unk> and <unk>.
Well as market development activities for <unk>.
Free cash flow was 62 5 billion Danish kroner compared to $52 3 billion in Danish krone and 21.
The cost increase is reflecting low activity levels in 2021, due to COVID-19, as well as higher distribution costs.
The cash conversion in the first nine months of 2022 is positively impacted by timing of rebate payments in the U S, including provisions related to the revised 340 <unk> distribution policy.
Research and development cost increased by 31% in Danish krone, and 26% at constant exchange rates.
The increase was driven by higher clinical activity levels within other serious chronic diseases and tier one as well as the operating costs and amortization related to the acquisition of <unk> pharmaceuticals in the fourth quarter of 2021.
Income under the 340 <unk> program has been partially recognized.
We continue to <unk> with the solid growth momentum and now expect sales growth to be between 14% and 17% at constant exchange rates.
This is based on a number of assumptions as described in the company announcements.
Administration costs increased by 9% in Danish kroner, and 5% at constant exchange rates.
The raised guidance reflects expectations for sales growth in both international operations, and North America operations and across therapy areas, but mainly driven by diabetes and obesity care.
Operating profit increased by 28% in Danish kroner and by 14% at constant exchange rates.
Net financial items for 2022 showed a loss of around 5 billion kroner compared to a gain of around 1 billion in 2021.
The updated guidance is based on the expectation that all the cobot dose strengths are available in the U R. U S towards the end of the year.
Yes.
This mainly relates to losses following the appreciation of the U S dollar as reflected in the favorable currency impact and operating profit.
The outlook reflects that we expect continued periodic supply constraints and related drug shortage notifications.
The effective tax rate for the first nine months of 2020% to 25% compared to 19, 8% in 2021.
This was driven by higher than expected volume growth project, one based products such as Pacific <unk>.
And temporary capacity limitations at some manufacturing sites.
Net profit increased by 14% and diluted earnings per share increased by 15% to 18 Corona and 42.
We are aggressively increasing our supply capacity and expect this to be sufficient to support a potential continuation of the current sales growth trajectory.
Free cash flow was $62 5 billion Danish kroner compared to $52 3 billion in Danish krone and 21.
We now expect that operating profit will grow between 13% and 16% at constant exchange rates. This primarily reflects the sales growth outlook and continued investments in current and future growth drivers.
The cash conversion in the first nine months of 2022 is positively impacted by timing of prepaid payments in the U S, including provisions related to the revised 340 P distribution policy.
We are also allocating additional resources to both early and late stage R&D pipeline activities.
Income under the 340 <unk> program has been partially recognized.
As mentioned before our acquisition of the Australia Pharmaceuticals has negatively impacted impacting operating profit growth by around two percentage points due to higher operating costs and amortization of intangible assets.
We continue to <unk> with the solid growth momentum and now expect sales growth to be between 14 and 17% at constant exchange rates.
This is based on a number of assumptions as described in the company announcements.
Given the current exchange rates, most notably the strengthening of the U S. Dollar we expect a positive currency impact for 2022, our reported sales are now expected to.
The raised guidance reflects expectations for sales growth in both international operations, and North America operations and across therapy areas, but mainly driven by diabetes and obesity care.
To be 10 percentage points higher than at CER and operating profit growth is now expected to be 15 percentage points higher than SCR.
The updated guidance is based on the expectation that all the <unk> strengths are available in the U R. U S towards the end of the year.
The positive currency impact on operating profit of 50 percentage points is partly offset by a net loss on financial items.
The outlook reflects that we expect continued periodic supply constraints and related drug shortage notifications.
For <unk>, we now expect that financial items will amount to a net loss of around $6 6 billion Danish kroner, mainly reflecting losses associated with foreign exchange hedging contracts.
This was driven by higher than expected volume growth for tier one based products such as specific.
And temporary capacity limitations at some manufacturing sites.
We are gradually increasing our supply capacity and expect this to be sufficient to support a potential continuation of the current sales growth trajectory.
Capital expenditure is still expected to be around 12 billion, Danish kroner, which mainly relate to investments in additional API production capacity at existing manufacturing sites.
We now expect that operating profit will grow between 13 and 16% at constant exchange rates. This primarily reflects the sales growth outlook and continued investments in current and future growth drivers.
Our free cash flow is now expected to be between $64 59 billion Danish kroner, reflecting the acquisition of former therapeutics. The acquisition closed in the fourth quarter of 2022.
We are also allocating additional resources to both early and late stage R&D pipeline activities.
That covers the update outlook for tries to now back to you launched profiling remarks.
As mentioned before our acquisition of <unk> Pharmaceuticals has negatively impacted impacting operating profit growth by around two percentage points due to higher operating costs and amortization of intangible assets.
Thank you Carsten please.
Please turn to the final slide.
We are very pleased with the double digit sales growth in the first nine months of 2022 and that we continue to reach even more patients.
The strong financial performance in the first nine months of 2022 has enabled us to raise our outlook for the full year.
Given the current exchange rates, most notably strengthening of the US dollar we expect a positive currency impact for 2022, our reported sales are now expected to.
From an R&D perspective, we have now successfully completed the full onboard program with once weekly insulin <unk>. The full results underlying our commitment to further raising the innovation bar in diabetes.
To be 10 percentage points higher than at CER and operating profit growth is now expected to be 15 percentage points higher than SCR.
We look forward to submitting instrument <unk> for regulatory approval in the first half of 2023. In addition, we are excited about initiating the phase III program for <unk> in obesity. This could further strengthen our portfolio of superior obesity products.
The positive currency impact on operating profit of 50 percentage points is partly offset by a net loss on financial items.
For <unk>, we now expect that financial items will amount to a net loss of around $6 6 billion Danish kroner, mainly reflecting losses associated with foreign exchange hedging contracts.
With that we're now ready for the Q&A, we're constantly kindly ask all participants to limit her or himself to one or maximum two questions. Operator, we're now ready for the first question.
Capital expenditure is still expected to be around 12 billion, Danish kroner, which mainly relate to investments in additional API production capacity at existing manufacturing sites.
Thank you.
Just to ask a question you will need to press star one on one on your telephone.
Our free cash flow is now expected to be between $54 59 billion Danish kroner, reflecting the acquisition of former therapeutics. The acquisition closed in the fourth quarter of 2022.
Wait for your name to be announced.
We will now take the first question.
It comes from the line of.
<unk> from Deutsche Bank. Please go ahead your line is open.
That covers the update the outlook for tries to Opex, we utilized for final remarks.
Great. Thank you very much for taking my questions. Chris mentioned escape, we'll go with supply if that's okay.
Thank you Carsten please.
Please turn to the final slide.
Start with the oral weekly <unk>. So it sounds quite interesting. So my question really is is this just a reformulation of <unk> doses will it be for diabetes and obesity does it use of snow technology. There are preclinical work have you seem to suggest the Gi tox would be acceptable and are you really trying to achieve injected.
We are very pleased with the double digit sales growth in the first nine months of 2022 and that we continue to reach even more patients.
The strong financial performance in the first nine months of 2022 has enabled us to raise our outlook for the full year.
From an R&D perspective, we have now successfully completed the full onwards program with once weekly insulin <unk>. The full results underlying our commitment to further raising the innovation bar in diabetes.
Like how come so I noticed there's a few bits to that question, but maybe a summary of that asset would be would be quite helpful. And then my second question.
Just to comment on enough supply of those Mpeg two maintained the current trajectory.
We look forward to submitting instrument I could take for regulatory approval in the first half of 2023. In addition, we are excited about initiating the phase III program for <unk> in obesity.
I guess my question really is how much of the current trajectory is actually being driven by lack of <unk> supply I E. Obesity. So one of your peers yesterday, let he suggested one third of the Mondale road patients were not on diabetes medicines prior to taking the drug.
Could further strengthen our portfolio of superior obesity products with that we're now ready for the Q&A. We're constantly kind of ask all participants to limit her or himself to one or maximum two questions. Operator, we're now ready for the first question.
So unless youre using a drug treatment assortment.
That number's one third so I guess what is that number for <unk>. Thank you.
Thank you so much.
Reminder, to ask a question you will need to press star one on one on your telephone.
Thank you for your models first our margin on the exciting prospects of all of our all weakness Emma yes, absolutely. So.
For your name to be announced.
Exactly right. We are very excited about this this is an offering that is.
We will now take the first question.
As you rightly point out it's based on our <unk>.
It comes from the line of.
Technology, it's a little more than a reformulation, but we do expect it to to allow for a full offering of once weekly dosing. Our intent is that this should be available potentially in both diabetes and obesity and with any efficacy and safety profile similar to that of Injectables. So so.
<unk> from Bernstein. Please go ahead your line is open.
Great. Thank you very much for taking my questions. Chris mentioned escape will go we supply if that's okay.
Start with the oral weekly <unk>. So it sounds quite interesting. So my question really is is this just a reformulation of <unk> doses will it be for diabetes and obesity does it use of snow technology. The preclinical work have you seem to suggest the Gi tox would be acceptable and are you really trying to achieve injected.
I think I heard you mentioned Gi tolerability, there should be on par with what we've already seen in our subcutaneous.
Tomato side pro funds.
Thank you much and an exciting opportunity.
So I know Thats, a few bits to that question, but maybe a summary of that asset would be would be quite helpful. And then my second question.
Underlying all capabilities than cost we added some caveats on on.
Just to comment on enough supply of those Mpeg two maintained the current trajectory.
Potential.
And linked to supplies for next year. So can you put some comments on that yes.
I guess my question really is how much of the current trajectory is actually being driven by lack of <unk> supply I E. Obesity. So one of your peers yesterday, let he suggested one third of the Mondale road patients were not on diabetes medicines prior to taking the drug.
Yeah. So so as we put it into a company announcements.
Then we are stating that that as we gradually are expanding.
Expanding our supply capacity and we expect to have enough capacity to support a potential continuation of the current sales growth trajectory. So so this is nothing on or simply an oscillation part, but this is a macro statement for novo Nordisk, all sales growth and supply capacity.
So unless you're using a drug free measurement.
That number is one <unk>. So I guess what is that number for Olympic. Thank you.
Thank you for your models first marching on the exciting prospects of all weekly Soma, yes, absolutely. So so you're exactly right. We are very excited about this this is an offering that is.
So just to clarify that.
As the source of business on <unk> and the read across you allude too then.
When we're looking at social business on an Olympic our estimate is that that to the tune in the U S marketplace to the tune of 40% of <unk>.
As you rightly point out it's based on our <unk> technology.
Technology, it's a little more than a reformulation, but we do expect it to to allow for a full offering of once weekly dosing. Our intent is that this should be available potentially in both diabetes and obesity and with any efficacy and safety profile similar to that of Injectables. So so.
Vic.
New <unk> business.
From nave patients who have not received their diabetes medications for.
Thank you Kirsten and thank you every month and the next question. Please.
Yes.
I think I heard you mentioned Gi Tolerability this should be on par with what we've already seen in our subcutaneous.
Keith.
We will now take the next question.
It comes from the line of Matthew Weston from Credit Suisse. Please go ahead. Your line is open.
Tomato side profiles.
Thank you much and an exciting opportunity.
Underlying all capabilities than cost we added some caveats on on potential.
Thank you very much.
And linked to supplies for for next year. So can you put some comes on.
Can I ask two questions. Please the first coming back to the mall and pick capacity can I understand the cadence of capacity increases into 23. Please.
Yeah. So so as we put into our company announcement.
Then we are stating that that as we correctly.
Our expanding our supply capacity, then we expect to have enough capacity to support a potential continuation of the current sales growth trajectory. So so this is nothing on or simply an isolation part, but this is a macro statement for novo Nordisk, all sales growth and supply capacity.
There are specific bolus coming online or is it very much gradual.
Try and put into perspective your comments about.
The current trajectory do you believe you will have capacity to deliver consensus sales expectations for 'twenty three.
So just to clarify that.
As for social business on <unk> and the read across you allude too then.
And then secondly, a question about U S healthcare reform, we're getting close to the abolition of the Medicaid Penny rule cap in January 2024 should we assume that novo withdrawal penni roll products from the U S. During next year.
When we're looking at is also a business on an Olympic our estimate is that that to the tune in the U S marketplace to the tune of 40% off of peak.
New <unk> business.
You have to withdraw that product in its entirety, you call just step away from Medicaid.
Comes from nave patients, who have not received their diabetes medications before.
That is the case can you redirect that volume to other markets or can you use the fill finish infrastructure for <unk>.
Thank you Kirsten and thank you remodel next question. Please.
Keith.
We will now take the next question.
Thank you for those.
So on a same peak.
It comes from the line of Matthew Weston from Credit Suisse. Please go ahead. Your line is open.
You Shouldnt expect us kind of a one off event.
Sure.
A step change so it's a gradual expansion offer of capacity and I will not go in and comment on our ability to supply against consensus we'll give our guidance for 423 at the full year.
Thank you very much.
Can I ask two questions. Please the first coming back to venmo and zelle pick capacity can I understand the cadence of capacity increases into 'twenty. Three please is there a spa.
And then talk on U S healthcare reform and Medicaid.
<unk> is coming up.
I guess, we cannot be really detailed on what our plans are but.
Pacific Bolus coming online or is it very much gradual.
What can you share.
Yes, I think the question specifically was on the Amp cap repeal going into 2024, and certainly we're working on the potential mitigating actions by wouldn't want to get into the specifics.
Just try and put into perspective your comments about.
The current trajectory do you believe you will have capacity to deliver consensus sales expectations for 'twenty three.
Thank you next question please.
Thank you.
And then secondly, a question about U S healthcare reform, we're getting close to the abolition of the Medicaid Penny rule cap in January 2024 should we assume that novo withdrawal penni roll products from the U S. During next year.
We will now take the next question.
It comes from the line of Mike <unk>.
Caveach from Cowen. Please go ahead your line is open.
Thank you for the question. So as has been mentioned many people are now taking other anchor tenants for weight loss, while we go be supply constrained it would seem that switching these people over to Adobe once it's available could be complicated and then the timing of generic Saks and availability at further complexity, yeah investors seem to be expecting.
Do you have to withdraw that product in its entirety you call. It just step away from Medicaid.
If that is the case can you redirect that volume to other markets or can you use the fill finish infrastructure for <unk>.
Thank you for those questions so on <unk>.
The pace of sales that we go the once the supply is available to recapitulate. Its initial launch trajectory I'm wondering how you think about these factors and would you advise us to temper our expectations at all.
You Shouldnt expect that's kind of a one off event.
Triggers step change so it's a gradual expansion offer of capacity.
And then my second question is yesterday Lilly appeared to imply better weight loss drug with efficacy in obesity associated conditions, such as sleep apnea and heart failure might have a route to Medicare reimbursement without the passage of new legislation in the U S. I don't believe this is no view, but why is that not a reasonable assumption.
<unk>.
Go in and comment on our ability to supply against consensus we'll give our guidance for 423 at the full year.
And then talk on U S healthcare reform and Medicaid.
Changes coming up.
We cannot be really detailed on what our plans are but what can you share.
Thank you.
Yes.
So I'll start with a bit.
Yes, I think the question specifically was on the Amp cap repeal going into 2024, and certainly we're working on the potential mitigating actions by wouldn't want to get into the specifics.
On on use of our <unk> and then maybe talk you can talk a bit to what we expect when we come back to the U S and launch and perhaps.
Thank you next question please.
What it takes to get new DCT product reimbursed.
Thank you.
And the public accounts so.
So as you mentioned that there is use of other anchor tenants now that we go is short on supply I would actually say that the majority of uptake on our own center, we are seeing succentor doing really really well step change in uptake.
We will now take the next question.
It comes from the line of Mike <unk>.
From Cowen. Please go ahead your line is open.
Thank you for the question.
As has been mentioned many people are now taking other anchor tenants for weight loss, while we go be supply constrained it would seem that switching these people over to Adobe once it's available could be complicated and then the timing of generic zacks and availability at further complexity, yeah investors seem to be expecting the pace of sales that we go be once supply.
As we unfortunately had to.
Slow down.
The launch curve.
No.
That really proves that the obesity market is opening up.
So before that as we go.
<unk> really created the excitement about what weight loss potential.
As available to recapitulate. Its initial launch trajectory I'm wondering how you think about these factors and would you advise us to temper our expectations at all.
As possible.
We saw a much slower uptake of <unk>. So so we are pleased with what we see and we believe that we can both in markets, where we don't have to go with we can sustain the growth with <unk> and then obviously as we get to pick over back towards the end of this year in the U S and Greg to start launching outside the U S. We see we expect to see.
And then my second question is yesterday Lilly appeared to imply that a weight loss drug with efficacy in obesity associated conditions, such as sleep apnea and heart failure might have a route to Medicare reimbursement without the passage of new legislation in the U S. I don't believe this is note that view, but why is that not a reasonable assumption.
Yeah.
A very nice uptake on that.
What what what should people look for in terms of uptake of <unk>, when we come back and what's the.
Thank you.
Okay.
So I'll start with a bit of perspective on and use of our <unk> and then maybe talk you can talk a bit too.
Okay.
<unk> reimbursement.
We expect when we come back to the U S and launch and perhaps.
Yes. Thank you I think what's important to note is there remains a significant unmet medical need with obesity and that was evidenced when we launch we'll go over in 2021, I think what we can expect as a strong and stable.
What it takes to get new PCC product reimbursed.
And in the public accounts so.
So you mentioned that there is use of other anchor tenants.
Growth and our focus is on building a long term sustainable business, maybe it's a reference that could take a look at the Q1 of 'twenty. Two this year, whereas assume that few of the MBR access we're using a bridge or a co pay program. So again when you look at that quarter were looking at roughly 6000, <unk> and 25000 <unk>.
Now that we go is short on supply I would actually say that the majority of uptake is on our own and we have seen succentor doing really really well step change in uptake.
As we unfortunately had to.
Slow down.
I think it's important to long term sustainable businesses, what we're looking for.
The launch curve.
So.
That really proves that the obesity market is opening up.
Thank you Doug.
So before that <unk> really created the excitement about what weight loss.
<unk>.
As possible.
We saw a much slower uptake of <unk>. So so we are pleased with what we see and we believe that we can both in markets, where we don't have to go we can sustain the growth with <unk> and then obviously as we get if we go back towards the end of this year in the U S and retro start launching outside the U S. We see we expect to see.
Very nice uptake on that.
But what what what should people look for in terms of uptake of <unk> when we come back in.
What's the.
So our broader reimbursement.
Yes. Thank you I think what's important to note is there remains a significant unmet medical need with obesity and that was evidenced when we launch we'll go over in 2021.
I think what we can expect as a strong and stable.
<unk> growth and our focus is on building a long term sustainable business, maybe as a reference we could take a look at the Q1 of 'twenty. Two this year, whereas assume that few of the MBR access we're using a bridge or a co pay program. So again when you look at that quarter. We're looking at roughly 6000, <unk> and 25000 <unk>.
I think it's important to long term.