Q2 2023 Novo Nordisk A/S Earnings Call
Okay.
Good day, and thank you for sending by welcome to the Q2 2023 nobody noticed yes earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on one.
On your telephone you will doesn't have an automated message advising Johan this ways to withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like on the comfort that virtual speaker today, Daniel Burke head of Investor Relations. Please go ahead.
Thank you welcome to this traditional Nordisk earnings calls for the first six months of 2023 and the outlook for the year. My name is Danielle Boseman I'm head of Investor Relations had nowhere Nordisk with me today I have CEO of Novo Nordisk last fall Johnson Executive Vice President and head of commercial strategy and corporate affairs can be serviced.
Executive Vice President and head of North America operations talk longer executive Vice President and head of development Martin Hall, Schlanger, and finally, Chief Financial Officer, Karsten Munk Knudsen, all speakers will be available for the Q&A session.
<unk> announcement and the slides for this call are available on our website <unk> Com. Please note that this call is being webcast live and a recording will be made available on our website as well.
<unk> is scheduled to last approximately one hour. Please turn to the next slide the presentation is struck just as outlined on slide two. Please note that all sales and operating profit growth statements will be at constant exchange rate unless otherwise specified please turn to the next slide.
As always we need to advise you that this call will contain forward looking statements. 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 company announcement for this first six months of this year and the slides prepared for this presentation with that but what's your last one update.
On our strategic aspirations.
Thank you Daniel please turn to the next slide.
And the first six months of 2023, we delivered 30% sales and 32% operating profit growth, which has enabled us to raise our outlook for the full year.
I'd like to start this call by going through the performance highlights across our strategic aspirations before handing over the word to my colleagues.
Within purpose and sustainability, we continue to make progress across all dimensions, all carbon emissions decreased by 28% compared to pre pandemic levels in 2019.
In line with our aspiration of being a sustainable employer, we continued to expand the number of women in senior leadership positions. This is now 40% compared to 38% last year.
Within R&D, we are encouraged by the many phase III readouts.
<unk> in obesity.
Very pleased with the results of the recently completed cardiovascular outcome trial select.
So that is the largest trial ever undertaken final notice and the results established semegran tied to formula Gram.
Only enter based medication with proven cardiovascular benefits.
We are committed to drive change in obesity and believe that the select trial with <unk> two four milligram on alliance importance of recognizing obesity as a serious chronic disease.
So we believe the benefits of <unk> on major adverse cardiovascular events. In this population will not only be a big difference for patients, but also add value to society.
Margin will come back to this and are all R&D milestones later.
The quarter sales growth reflects strong commercial execution across operating units, both operating units contributing to sales growth driven by increasing demand increasing demand for our <unk>, one based diabetes and obesity treatments.
Performance in the first six months has enabled us to raise the outlook for the full year Camilla and talk will go through the details per therapy area later.
Carson will go through the financials, but I am very pleased with the performance for the first six months of 2023 was that I'll give the word to Camilla on update on execution.
Thank you Lasse and please turn to the next slide in the first six months of 2023, our total sales increased by 30%.
This increase was driven by both operating units with North America operations, growing 44% and international operations growing 17%.
<unk> sales increased 50% driven by North America, growing 44% and international operations growing 62%.
Insulin sales decreased by 7% driven by a 2% decline in international operations and by a 25% sales decline in North America operations.
The sales decline was driven by declining sales in the U S in region, China and EMEA.
Obesity sales grew.
157% overall in international operations sales grew 66% driven by both <unk> and <unk>.
In addition to Denmark, and Norway <unk> has now also been launched in Germany.
In North America operations with BCC cafes grew 210, 207% sales of <unk> increased by 344% in the U S. Reflecting the performance since the commission we launched in January 2023.
Total <unk> sales decreased by 18% driven by a 17% decrease in international operations and by an 18% decrease in North America operations.
Well, our endocrine disorders.
We were impacted by a temporary reduction in manufacturing output.
Please turn to the next slide.
With 24% sales growth in our diabetes care, we are growing faster than the total diabetes market, improving our global diabetes value market share over the last 12 months to 32, 7% from 31%. This is in line with the exploration of strengthening the diabetes care leadership aiming at reaching a global value.
<unk> share of more than one third in 2025.
The increase primarily reflects TLC, one market growth as well as share gains in both operating units. Please turn to the next slide.
And international operations total diabetes care sales increased by 20% in the first six months of 2023. This was driven by a tier one sales growing 62% Novo Nordisk is the market leader in international operations with a tier one value market share of 67%.
With MP continues its DLP, one market leadership with around 45% market share. We also please proceed with balances increasing its market share to just shy of 11% driven by strong uptake across geographies and with that I would hand over the word to duck.
Thank you Camilla please turn to the next slide.
The U S. <unk>, one market volume grew more than 60% comparing Q2 of 2023 for Q2 of 2022.
The volume growth acceleration is driven by a substantial increase in new patients initiating therapy with our portfolio of <unk> products <unk> and rebel Sis.
Measured on total prescriptions Novo Nordisk continues to be the market leader with a 55% market share. Please go to the next slide.
Obesity care sales increased by 157%, mainly driven by the U S. Due to a strong will go the uptick and continued demand for <unk>.
The global branded obesity market expansion continues with a global volume growth of around 76%.
In international operations obesity care sales are driven by a strong <unk> performance.
And that will go Ob launches in Denmark and Norway.
We anticipate a continuation of the gradual rollout of ability and international operations, which now includes will go the launches in Denmark, Norway and Germany.
In the U S alone sales of <unk> grew by 344% and we continue to see an overwhelming demand for will go.
While supply capacity is gradually being expanded the supply of the lower dose strengths will remain restricted to safeguard continuity of care.
Next slide please.
Our rare disease sales decreased by 18% driven by rare blood disorder sales decreasing 1% and rare endocrine disorder sales declining 46%.
In order to open sales were impacted by a temporary reduction in manufacturing output.
Now over to Martin for an update on R&D.
Thank you Doug Please turn to the next slide.
Mr Pandemic FX more than 750 million individuals.
And is associated with more than 200 possible health complications, including cardiovascular disease, which is the leading cause of death globally.
Please proceed therefore has a profound impact on individual patients and the outcomes, but also a substantial impact on society and health care spending.
No pharmaceutical weight management intervention has to date has to date demonstrated improvement in patient cardiovascular outcomes.
Besides significant weight loss. So magnetite has shown benefits in a wide array of biomarker associated with cardiovascular risk.
This has been seen in the step development program.
This includes improvements in blood pressure Dyslipidemia HBA once again inflammatory markers.
These observations support observations for diabetes with magnetar treatment has been demonstrated to be associated with a 26% reduction in risk of experiencing a major adverse cardiovascular event on this.
To investigate the potential impact of the American side in patients with obesity on reduction in risk of major adverse cardiovascular events.
<unk> 2018 initiated you select filings.
Please turn to the next slide.
Select was a.
Large scale outcomes trial and was conducted across 41 countries and.
And more than 800 sites $17 604 patients were enrolled and randomized in a one to one ratio to receive once weekly <unk>, two four milligram or placebo.
The eligibility criteria were designed to include a broad population with overweight obesity and established as Russ sclerotic cardiovascular disease.
As defined by prior myocardial infarction.
Stroke, a peripheral artery disease.
Patients with a prior history of diabetes, which excluded.
The primary objective was to demonstrate superiority of <unk> $2 four milligram versus placebo on top of standard of care for prevention of the primary endpoint.
And this was consisting of major I'm, sorry, as defined by cardiovascular death, non fatal myocardial infarction or not fatal scope.
Key secondary objectives were to compare the effects of <unk>, two four milligrams or placebo with regards to mortality cardiovascular risk factors glucose metabolism.
Body weight and renal function.
I am very excited to announce that select achieved its primary endpoint and what is really some magnitude two port four milligram demonstrated a 20% reduction in major adverse cardiovascular events versus placebo.
All components of the primary endpoint contributors to the overall cardiovascular risk reduction.
The result from the Silicon establishes magnetite two port four milligram.
Only anti abuse to medication with a proven cardiovascular benefit.
In a population with overweight <unk> and established cardiovascular disease without prior history of diabetes.
We believe that the cardiovascular risk reduction demonstrated with magnetek two port four milligram insulet.
Hold immense value for patients and caregivers the scientific community as well as our society at large and that these results plus American side holds the potential will fundamentally change, our Pcs, who got it and treated.
In the trial, so maybe it's a two four milligram appear to have a safe and well tolerated profile in line with previous trials investigating to make them.
We aim to share the full select results at the American Heart Association Congress in 2023 and.
I would expect to file for regulatory approval of a label indication expansion plus magnetek two port four milligram later this year.
Please go to the next slide.
Okay.
Building on the potential.
Of broader cardiovascular benefits for some magnetite.
Nordisk initiated the step hip trial to investigate the impact of the magnetek treatment unofficial logical function in patients with obesity and established heart failure.
Australia with preserved ejection fraction or have piss FX half of the estimated 65 million patients with heart failure globally.
Around 80% of <unk> patients have all weight obesity, which is believed to contribute significantly to the Dcs as pathophysiology.
Individuals with obesity related have piss have a high risk of mortality and morbidity and experienced the greatest burden of debilitating symptoms and functional impairment.
Improving these outcomes is a major goal of management and very few treatment options.
In the state.
Trial.
529 patients with obesity related have faith and no. Prior history of diabetes were randomized in a one to one manner, comparing Samantha Super Bowl milligram with placebo.
When both were added to standard of care.
The primary endpoint.
Average change from baseline in the Kansas City Cardiomyopathy clinical summary skull question now.
And body weight.
Key secondary endpoints included the six minute walk in just.
Accomplish at hierarchical endpoint, including heart outcomes and high sensitivity.
C reactive protein.
In the trial to magnetite showed a 16 six points improvement versus eight seven points in the placebo at week 52.
The mean change was the US seven eight points in favor of magnified, which is considered a clinically relevant and very strong result within chronic heart failure.
Yes.
I would like to also touch completely.
Sorry.
Like to touch upon the headline results from Oasis one so please turn to the next slide please.
Or is this one was a phase III trial with once daily oral <unk> at 50 milligram.
The trial design details are on the slides.
Overall patients who received <unk> had 50 milligram achieved statistically significant weight loss of 17, 4% after 68 weeks of treatment compared to one 8%.
Placebo.
The results are comparable with a weight loss demonstrated in step one with injectables or maybe two four milligram.
And we'll get patients and caregivers and opportunity for individualized treatment.
Please go to the next slide.
Yeah.
In line with our business development strategy.
<unk>.
Focused on either technology platforms, our early to mid stage assets.
We are pleased to announce the acquisition in Masako pharma.
And Massawa is focused on the development of a cannabinoid receptor one inverse agonist, which is designed to help people living with obesity diabetes and complications associated with metabolic disorders.
The acquisition includes the leaders at <unk>.
<unk> and oral cannabinoid receptor <unk> inverse agonist designed to preferentially block cannabinoid receptors.
Referral tissue zoning.
<unk> demonstrated promising results.
In terms of weight loss in a phase <unk> trial and is currently in clinical development for diabetic kidney disease.
Excellent.
Turning to R&D milestones.
I'd like to highlight some of the other exciting events trial, Readouts and initiations across all therapy areas in 2023.
Within diabetes, we anticipate the submission of <unk> 25, and 50 milligram in U S and Europe during the second half of 2023.
And further to initiate a phase two trial with a <unk> agonist in the fourth quarter.
Within obesity, we completed a phase two proof of concept trial with P. YY.
Hey, Duane.
Due to a modest treatment effect, we have decided to terminate the development of this P YY agonist.
On a separate note we are anticipating the results from the ongoing phase one trial with oral <unk> accretion during the fourth quarter.
In rare disease <unk> was approved in Japan and in Europe for the treatment of children with saw somewhat deficiency.
In other serious chronic diseases, we initiated Hermes.
Phase III heart failure cardiovascular outcomes trial investigating <unk> in patients with heart failure with preserved ejection fraction.
The current treatment options for these populations are very limited.
And this mix one of the greatest unmet needs and cardiology today.
With that over to that.
Thank you Martin please turn to the next slide.
In the first six months of 2023, our sales grew by 29% in Danish kroner and 30% at constant exchange rates driven by both our operating units. The gross margin increased by 85, 1% compared to 84, 4% in 2022.
The increase was driven by a positive product mix, reflecting increased sales of <unk> based treatments and a cost of currency impact.
This is partially countered by costs related to the ongoing capacity expansions as well as lower realized prices, mainly in the U S and region China.
Sales and distribution costs increased by 27% in Danish kroner and by 28% at constant exchange rates.
The increase was driven by both operating units.
And North America operations, the cost increase is driven by the relaunch of the Gui and promotional activities for <unk>, while in international operations. The cost increase was driven by promotional activities for <unk>.
Well as PCT care market development activities.
The increase in sales and distribution costs impacted by adjustments to legal provisions.
Research and development costs increased by 34% in both Danish kroner and at constant exchange rates. The increase was driven by higher late stage clinical trial activity and increased early research activities compared to the first six months of 2022.
Dx isn't a former therapeutics in 2022 also impacted costs.
Administration costs increased by 9% measured in Danish kroner and by 10% at constant exchange rates.
Operating profit increased by 30% measured in Danish krone, and by 32% at constant exchange rates, reflecting the sales growth.
Net financial items showed a net gain of 96 million Danish kroner compared to a net loss of around $2 8 billion Danish kroner.
The effective tax rate was 19, 9% in the first six months of 2023 compared to 27% in the first six months of 2022.
Net profit increased by 43% and diluted earnings per share increased by 44% to 17, Corona and 41 days.
Free cash flow was $45 5 billion Danish kroner compared to 42 billion in 2022, supporting the strategic aspiration to deliver attractive capital allocation to shareholders.
The cash conversion is positively impacted by timing of payments of rebates in the US This includes provisions related to the revised 340 B distribution policy in the U S.
Note that income under the 340 <unk> program has been partially recognized.
Capital expenditure for property plant and equipment was $10 6 billion Danish kroner compared to 4 billion Danish kroner in towards trying to too.
This permanent primarily reflects investments in additional capacity for active pharmaceutical ingredient production and field finished capacity for both current and future injectable and oral products.
Please go to the next slide.
A key priority for us to ensure attractive allocation of capital to shareholders for 2020.
Two the dividend per share increased 19, 2% to 12 krone and 40.
For transparency to treat the board of directors has decided to pay out an interim dividend of six <unk> per share, which will be paid out in August of this year.
In line with our strategy, we have returned more than 32 billion Danish kroner to shareholders in the first half during dividends and ongoing share repurchase program.
Which is up to 30 billion Danish kroner for the full year.
To secure liquidity for both the Nynorsk BCS and American Depositary receipts.
The board of Directors has decided to split the share in a two for one ratio in September 2023. Please go to the next slide.
Midway through 2023, we're continuing our sales growth momentum, which has enabled us to raise the outlook for the full year. We now expect sales growth to be between 27, and 33% growth at constant exchange rates.
This is based on a number of assumptions as described in the company announcements.
The guidance reflects expectations for sales growth in both North America operations and international operations, mainly driven by volume growth of tier one based treatments for diabetes and obesity care.
Partly countered by declining sales in red six due to a temporary reduction in manufacturing output.
The guidance reflects the level of volume growth of tier one based diabetes treatment Andy on here in <unk>.
Current uncertainty of the pace of the UPC care market expansion.
Following the relaunch of the group in the U S and the limited rollout in international operations.
The outlook also reflects.
Expected continued periodic supply constraints and related drug shortage notifications across a number of products and geographies.
As mentioned product the supply of the lower we go with those strengths in the U S will remain restricted to safeguard continuity of care.
Supply capacity is gradually being expanded.
We expect that operating profit growth would.
It would be between 31% and 37% at constant exchange rates.
This primarily reflects the sales growth outlook and continued investments in current and future growth drivers within R&D.
R&D and commercial.
For transfer entry, we expect net financial items to amount to a gain of around $2 8 billion Danish kroner, mainly reflecting hedging gains associated with foreign exchange hedging contracts.
Capital expenditure is still expected to be around 25 billion in Danish krone, reflecting investments in additional capacity for active pharmaceutical ingredients and fill finish capacity for both current and future injectable and oil products.
The free cash flow is now expected to be between 64, and 72 billion Danish kroner, reflecting the sales growth favorable impacts from rebates in the U S and investments and capital expenditure the updated cash flow expectation is reflecting business development activities.
This call is the outlook for transfer three now back to you for final remarks.
Please turn to the final slide we are very satisfied with our sales growth in the first six months of 2023.
The growth is driven by increasing demand for tier one based diabetes and obesity treatments and we're serving more patients than ever before.
The performance in the first six months has enabled us to raise the outlook for full year. Then R&D. We are very excited about the results from the select trial with <unk>.
As a serious chronic disease associated with medical Comorbidities and the results from select demonstrate the comorbidities associated with the condition can be significant currently reduced by treating people with SMA type two four milligram with that I'd like to hand over the word to Daniel Thank.
Thank you Lasse next slide. Please we are now ready for the Q&A session I kindly ask all participants to limit.
Himself to one or maximum two questions.
Operator, we're now ready to take the first question.
Thank you. So I'll take question Press Star one on one on your telephone and wait for your name to be announced.
Your question. Please press star one on one again.
We will now take your last question.
And your first question comes from the line of Martin <unk> from Seb. Please go ahead.
Yes.
Yes.
First one question follow up for Martin on the select data actually related to cognizant.
Will it be possible to utilize fully or partly so.
<unk> data in a potential labeling of Taco Zimmer.
And then second question is also in cognizant, maybe through the costs and the loss.
Of course, as Youre building up adoption hopefully.
Date, but respect to the pin.
<unk>.
But the device for Kaka Sema do you think youll be able to have.
Commercially acceptable amount of.
Scale of production of the pillar of Pakistan at the time of launch.
At the time of approval I mean of course.
Thank you last one for these questions so much and if you start with that.
<unk>.
Thank you very much margin, obviously, it's something that we also disclose I have to say that the type of semi was a couple of years down the road. So it's probably too early to speculate what we can and cannot do in terms of regulatory interactions.
I think it's important to call out that Falkirk with Hema will also to win redefine free so okay Kusama will have.
In and of itself cardiovascular data, but obviously, we are super excited for that outlook as well given the select data.
Yes.
And my answer to your question around scaling.
Scaling of <unk>.
Our starting point is that we see the dynamics in the <unk> market now and the significant unmet need and that is also what is informing our supply chain strategies and scaling in preparation of <unk> launch and also the elevated capex level that youre seeing in our guidance this year.
Thank you Catherine Thank you Martin So we're ready for the next question.
Thank you.
We will now go to our next question.
And your next question comes off the line of Richard Parkes BNP Paribas. Please go ahead.
Alright, thanks for taking my questions.
I wondered if you could talk about your commercial access in the U S going into 2020 Cool thing few reports of pilots restricting access are increasing co pays to extend the current strong demand. So I'm just wondering how youre seeing it from the other.
What's that.
Do you think you can leverage the select results to win.
Oh well.
Have to wait for label.
Your discussions with commercial partners.
And the second question I, just wondered if you could walk us through the timeline style results of slots you can influence potential.
China and monetize.
Is that something that you can.
Hawaii starts are lumpy for again.
The label update.
Thanks very much.
Thank you Richard talk I'll give the word to you I believe both are related to north.
North America.
Okay.
Yes, so thanks.
Richard So for the first one as it relates to access the starting point is we're pleased with the level of access that we have today and we continue to build on that remember all major pbms are covering it right now and that that means over 45 million people have access.
And today currently 80% of them are paying less than $25. So I think that's important as it relates to select specifically.
One important channel, we still don't have access to as Medicare now will select change that overnight, maybe not however, select enhances the value proposition with magnetite and longer term I think it will be difficult for anyone to restrict access to this phenomenal molecule in this life saving properties. So we will continue to utilize that but we're pleased with the level of access today, we continue to.
Build on that.
Thank you thank you Doug.
I think we're ready for the next question.
Thank you we will.
Now go to our next question.
And your question comes from the line of Emily Field Barclays. Please go ahead.
Hi, Thanks for taking my questions I'll ask two the first is.
There's been some attention Q reports in the U S media about state time for recovery for a majority of patients potentially being less than a year.
Do you have any updates on sort of your own data or what youre expecting for with all the stay time and then secondarily could.
Could you just remind us of your targets for the supply ramp per week already for the end of 2023 versus the end of 2022. Thank you.
Good talking to you will take the first one on on what we see on stay time and costs and we will take the coal we ramp up this year.
Yeah. Thanks, Alex for the question I'd start with there's still too few data points to conclude on Golden State time, So we're really going to have to wait until 2024.
Would say that we're encouraged at looking at some of the early snapshots of data that we see from payers and databases, but again, it's really too early to conclude on to state that.
Thank you Doug.
Yes.
Terms of.
Oversupply scaling that is of course top priority for us given the significant unmet need we see as to the cyclic dose.
That form that we're playing in the U S.
The process and the progress you've seen we have seen is that we.
We started out this year with the with one CMO filling line then.
And then during the first half we added another time and we are on track with adding a third CMO filling line and.
As we go into 2024, and then on top of that we'll be adding additional filling line capacity. So a significant step up in the in vivo capacity overtime and in addition to that it is important to note that we're also deploying our big platforms in terms of our car.
Its in house cartridge filling in fixed platforms for our European launches of <unk>. So there. We are also building optionality in terms of how to deploy because we going forward and then finally in terms of scaling I would say again, our Capex program of 25 billion is also scaling both on the peptide.
That's what a strict finish capacity.
Thanks Catherine.
Okay.
I think we're ready for the next question.
Thank you.
Your next question comes from the line of.
Pizza from Citigroup. Please go ahead.
Yes, Thanks, Pete <unk> Citi.
Two questions.
<unk> select and the <unk>.
One is that your question today.
I realize you can't go into very much detail on select but are you at least able to characterize quantitatively.
The strength of the data with respect to any of the key secondary endpoints as well as reassurance that when we see that data on the primary endpoint, we're not gonna be tripped up of any subgroup analysis, showing regional differences because there anything funky.
And then secondly on the CB, one inverse agonist I mean those are.
On the call remember the influence.
So can you just sketch out what's different here from both.
Efficacy.
So with respect to total for memory grew ammonia behind you gave about <unk> as a weight loss of multi county, where the big safety concern around suicide. So what's different here when could phase III start.
How does neighborhoods positions asset relative your relative to your existing obese people project. Thank you.
Okay.
Yes, so much on the on selected <unk> data and then the safety on the.
Under our new asset from in the cycle.
Yes, thanks very much Pete.
So you're absolutely right for better or worse I can't go into too much detail.
Honestly, we disclosed that for the primary endpoint.
So that.
Individual motor components, being myocardial infarction stroke and cardiovascular death.
Contributors.
The estimate that we saw.
Suggesting at least in the primary endpoint a level of consistency that gives us a lot of comfort potentially ultra for the secondary endpoints, but but.
We will embargo those data.
Until American Heart later this year.
In the Congo.
I think you're absolutely right and obviously, we've also looked at historical data I think it's important to recall.
That that historically the CB one approach has been primarily directed towards the brain and effects on the brain and that that is.
I'll highlight <unk> attributable to the negative effects.
Historical approaches.
With the <unk> molecule, we are actually seeing it primarily peripheral activity. So so so it's assigned to two to reach.
The grain with minimum minimal activity, but maximum activity in the peripheral tissue and while we have seen in the clinical space of safety and efficacy that is somewhat beyond what you just described for the historical compounds and a safety profile that that appears at least in a smaller setting to have been derisked.
In accordance.
With the design.
So so.
We are not seeing that and we will tell you that <unk> got development program, we have to Derisk. This further to an hour development next stages to investigate this and tissue.
Our focus is to look at this.
In monotherapy, because we do have.
We do believe the.
Come on has a place in potential monotherapy, but also to look at it in combination with automotive.
Thanks, Martin. Thank you were ready for the next question. Please.
Thank you.
We will now go to the next question. Your next question comes from the line of Sachin Jain from Bank of America.
Hi, guys Sachin Jain Bank of America two questions on we gave me supply if I may I'm.
Awesome, Thanks for the updates and supply it sounds like everything's on track so trying to understand the driver of the vague language. So just very simply is there still uncertainty where issues with supply such as timing of the second canceling facility will speed up the second CDMA ramping or is this simply demand uncertainty <unk> select and then.
Secondly, just as we were all trying to model. We gave you for the second half what color can you give us on how you done manage supply should we be expecting a supply increase in the second half at any point I guess, what I'm trying to get a sense of is when you change the wording on the U S supply website, which is an update as yet.
Are you going to say, assuming you want to give some visibility relative to your prior September commentary. Thank you.
Thanks for that long question.
Thanks Sachin.
Again, it's important to note that this all starts with the with a very very substantial demand driven by the unmet patient need in the U S and rest of world and Thats of course, what we're scaling our supply chain there to as top protests as I alluded to before the language in the company.
This meant that should absolutely not be understood as we are uncertain about our supply to the market. So.
So all of our.
It's rolling according to your plans in terms of getting.
Getting better.
New lines on track and we have a supply chain, which has been shipped with our commercial colleagues and to and then of course, there's some uncertainties about what those strengths are being utilized in the specific markets and.
Wanted responsible way.
<unk> as a company is of course, the patient starting on the Kobe.
It should be able to titrate up to the two four milligram dose and thereby achieve the benefits that we showed in the step program of up to 17% weight loss and the only way to the <unk>.
Best way to do that is of course not to stock more patients.
Then.
And then we can secure continuity of care and then Furthermore, not not through launching more affiliate and we can support.
So you should not see the language S.
Uncertainty on supply side, but more that we'll be navigating the market in a sustainable manner and therefore also with the start of doses.
In the U S.
Will it be managed more dynamic in terms of how many we start given the given.
Fluctuations between the dose strengths.
Thanks Scott.
Next question please.
Thank you.
We will now go to your next question.
And the question comes from the line of.
Richard <unk> from JP Morgan. Please go ahead.
Hi, Thanks for taking my questions just coming on to select and some of the safety concerns.
Scene with regulators in the press around what that would be two sides now rare cancer.
<unk>.
So what are you seeing in select around those issues and what you have in your own adverse event data basis that could be used to address these concerns.
From our side.
And then secondly, just thinking about the legal provisions.
You alluded to.
Increasing SG&A and <unk>.
<unk> litigation against accounts juices or anything else you could say on that thanks very much.
Martin you take the select cost new technical provisions absolutely.
Thanks, a lot Richard for that question as you know safety is very high if not top of our agenda.
And we do that for all of our compounds.
You also know that broadly GOP one has been on the market for 15 years in diabetes Ats.
So we have a huge safety database across tier one.
But obviously also collected by the authorities and in addition to that we have data from our clinical clients.
Select obviously due to its I can almost stand alone in most safety assessments.
I think it's fair to say again.
I am not allowed to go into any details.
I think it's fair to say that select is supporting our broad assessment of the attractive safety profile of magnified in the product.
One approach, including window can at some of the issues that have been in the media.
Hey.
So we take a lot of comfort from being able to add select data to the data pool.
And on legal provisions.
So its standing operating procedures that every quarter, we assess our portfolio of ongoing litigations and look at our exposure there and then update our legal provisions.
Sometimes some.
Risks go up sometimes they go down.
But what we say is that we have increased our provisions.
Just on the current standing of our ongoing litigations.
As described.
In the annual report in detail and the subsequent company announcements, we're not really able to comment on ongoing litigation and specifically on the provisions related to that.
Thanks, Scott next question please.
Thank you.
We will now take the next question.
And your next question comes from the line of Michael <unk> UBS. Please go ahead.
Thank you very much two questions. Please.
You, obviously called out a <unk>.
Meaningful rebate adjustments overall balances in the quarter, but Theres also some language in the press release around wholesale stocking just wondering how meaningful was that stocking effect in.
In the second quarter if at all.
Sorry to go back to the supply question, let's just following from Sachin will you or will you not be able to start supplying the lower doses from September I think the question that we all have this.
Will you be able to come back to patients with a lower dose in September or not thank you.
Yes, so Catherine I think both to you yeah.
Thank you Michael for those questions. So in terms of wholesale.
Wholesaler stocking.
In our first half commentary and and it's basically linked to the wholesaler Destocking. We saw in the first quarter and communicated already in our first quarter release, So no no no material.
Wholesale movements in the second quarter.
As to the lot of strengths.
If you go in in the U S.
And it's important for us to reiterate that all those strengths are available in the U S market.
<unk>.
But we are limiting the lower dose strengths. So we only start the amount of patients that can titrate up.
Also evidenced in the ongoing <unk> script monitoring.
And after September we expect that to continue to be the case and then of course, we'll dynamically managing how many new patients we take on answer the lordosis.
Okay.
Thank you next.
Next question.
Thank you.
Your next question.
Comes from the line of.
Peter Welford from Jefferies. Please go ahead.
Hi, Thanks for taking my question two one coming back to select wondering maarten.
And for any details, but I wonder if you could just tell us will EBITDA J presentation is the focus going to be on the primary endpoint.
Wondering how many of the sort of interesting secondary endpoints I guess I'm looking at the <unk>.
Slide <unk> highlights for example slowly type two diabetes and some of the others as I mentioned.
We will get any insights into any of those sort of endpoints and from select today or is it going to be your strategy I guess Morgan B y sort of relief.
Released select data as we go over time.
And then secondly, just looking at sort of going back to the prior question on notice that they're looking for the rebates I Wonder if you can just comment we look at the gross to net adjustments that we can sort of see for prescriptions and <unk> for <unk> and.
San Jose is represented <unk> is a real number that provide analysis can you just is there anything we should consider when we look at that number if any changes at all joined the second quarter. Thank you.
Thank you Peter Martin on select what you can say about American Heart Association, yes. Thank you very much.
Obviously, our focus our primary focus.
The presentation at the American heart is going to be on the primary endpoint.
In the confirmatory secondary endpoint, but to your point, we also have a great number of really interesting.
Secondary endpoints.
Would be of relevance to a wide range of people and our aim is obviously to <unk>.
Sure as much as we can during the Congress and in the potential related publications.
Thank you Martin Cass on rebates and deal with.
Rebates in the U S and Roberto said specifically.
And it's correct as you point out.
There's some fluctuation in the gross to net on <unk> and I think the way you should think about is that we had a slight positive rebate adjustment in the first quarter. This year on <unk> and a slight negative rebate adjustment on <unk> in the U S. In the second quarter. So that's why when you do a quarter over quarter.
Kind of the sequencing doesn't look completely obvious it's minor amounts we're talking about a few hundred million DKK. So it's not something we normally course out but thats whats happening.
Click trends and the demand dynamics are still very strong as evidenced by more or less adopting of rebels a sale on a global scale.
Next question please.
Thank you.
Your next question comes.
From the line of Simon Baker of Redburn. Please go ahead.
Thank you for taking my questions I'm curious how many please.
Firstly going back to <unk>.
Capacity, but not on the fill and finish on API. Just wondering if you could update us on.
Where you are.
Your current capacity on <unk>.
And then secondly, a question on <unk> and <unk>.
At the data.
Okay.
Even after a week so it was a pretty broad.
Range of responses in terms of weight loss.
And weight loss was greater than we saw in the phase one study of a week.
So I just wonder if you could give us an idea of.
Any potential reasons for that.
This spread of results and secondly is there any data preclinical or clinical beyond 28 days to see whether this is really fairly modest level, whether it continues to go down as we see with your existing thing.
Okay.
Thank you Simon Cathie I don't know if you have some comments to the first question, yes. So.
In terms of.
Macro tied to API Simon and thank you for that I think.
The starting point here is really look at our track record so.
<unk>, so simply being the best selling diabetes care product globally.
Growing more than 6% last year growing pretty much at the same pace now in value. So even higher volume so that speaks to the scalability that we are doing on the API front.
And you put on top of that JV Kobe.
So we are scaling our API set up significantly and a key part actually of our 25 billion kroner Capex program. This year goes into peptide API.
Which most likely will be multi use and hence also cater for some macro site manufacturing and he is to come.
Thanks, Martin in the cycle. So so thanks very much Amit.
So first of all we've seen a broader set of data than what has been publicly available.
Can't disclose that now, but obviously it gives us a lot of comfort in not only the level, but also the consistency of weight loss, obviously with weight loss. There is some variation we see that with most drugs.
But it has not been anything that has concerned us.
And similarly, obviously.
On the safety side, we've seen more than what has been publicly disclosed an alert and again and also with longer exposure to time and it has given us sufficient comfort to do the acquisition. Thank you Martin next question. Please.
Thank you.
Well now go to the next question.
And your next question comes from the line of Florent Cespedes from Society Generale. Please go ahead.
Good afternoon. Thank you very much for taking my questions. Two please first on.
Could you elaborate on the dynamics there.
<unk> is back.
Back to growth is sustainable and my second question a follow up on the quote right.
This would be one.
Could you confirm that you will.
Soon a phase two program in monotherapy and combo.
Ideally it will combine this product.
The goofy techniques.
Thank you.
Clearly if I got the question right towards first on China back to.
Growth in China.
And will you provide some color to that yes. So so.
So florent. Thank you for that question and this is really something we've been looking forward to it because.
The volume based procurement impact.
In China, which started in may of last year.
It was of course, a sizable impact.
On our Chinese business and and when you look at the growth rates.
For China here in the second quarter of more than 30% that is really impressive and this is really a story about.
The value of innovation so.
We are being impacted by BP on our older brands private but then on the contrary than we see.
Most notably with <unk> growing significantly in China, and also certify and rise to take pushing toward so so the Chinese opportunity remains intact as long as we continue to provide innovation into that market and as you know we also filed.
Because the approval in China now so we do see China as a significant long term opportunity for the company.
Thank you Martin Thank you very much I can't confirm indeed that we will initiate a phase II trial investigating <unk> in patients with obesity in both mono and combination therapy.
Again at this point not go into which combinations that we will investigate. Thank you Mark next question. Please state your question.
Thank you.
We will now go to your next question.
And your next question comes from the line of Kerry Holford back. Please go ahead.
Thank you, yes, two questions. Please.
Oral <unk> one.
Aside from Nikki Keith I Wonder if you can just talk.
July perhaps lighthouses uptake diabetes market.
And at least relative Joseph Bank.
No business substantially as you might have expected.
With that in mind as you're approaching the launches coil Daisy.
You would expect.
And then you hold the <unk> market.
And then secondly on <unk> formulation.
Can you come back and tell you, where the diabetes space announced plans.
If you include 10 in certain markets in a vial format.
And I Wonder is that something you would consider.
In order to meet that supply.
Thanks Keith.
So first if you can talk about the way, we look with the oral <unk> one the commercial dynamics.
Yes, so in.
In terms of dynamics, how we've also said we continue to gain share in demo what segment of all anti diabetic segment and of course, some patients prefer the old therapies and patients prefer the injectable therapy, but it's clear that in its totality we continue to.
Sure of course grow our the use of <unk> one.
If you also asking into the <unk> opportunity in the obesity. Then we also expect that there will be people, who will be favoring oral therapy in the obesity as well and and of course you have just heard about the recent data that we have.
As presented on the 50 milligram and we will continue to of course evaluate.
Our launches of that based on portfolio prioritization and manufacturing capacity, but there's no doubt that there is a big unmet demand thesis you also slightly all compounds.
With any efficacy data quite similar 50 milligram QD.
Over to Paul.
Thank you Camilla and lot supply chain strategy, yes. So.
I think we have a situation where we have two different device presentations for our tier one portfolio. We have the single shot device. So we go in the U S and we leveraged our fixed hutch platform outside of the U S. I think we have significant flexibility and also you can say better scalability in that approach compared to relying on.
Single dose.
Roche shortly so we don't have any current plans offer according to vial.
Dosing of old presentation <unk> formulation. Thank you and your last question. Please.
Thank you.
We will now take the next question.
And your next question comes from the line of Mike <unk> from TD column. Please go ahead.
Thank you for the question I have two for Martin that first.
Based on the impressive result, we've seen with select do you have any plans to conduct a cardiovascular outcomes trial in a primary prevention setting, perhaps with the CAGR number and if not why not.
And the second question Martin You recently suggested you would consider running a trial, which tested alternative meat phase regimens after achieving target weight loss with either <unk> or possibly categories that months can you update us on your thinking around a potential trial in that vein and might we see an initiation sometime in the near future. Thank you.
Yes. Thank you very much two great questions. So first the primary prevention.
We are of course, considering this given the select results.
It would be a little bit remiss not doing the consideration.
Hey.
They know that we're also investigating primary prevention plus mainly tied in the space of diabetes already.
If there was or why not and Thats, obviously part of our considerations. It is that the event rate and it appears to somewhat lower than we see it in diabetes and that means that it would be have to be a very large trial, specifically look at primary prevention, where.
Patients don't have an established cardiovascular disease.
So we're taking all of this into account and we will keep you updated but we've made no decisions at this point.
And.
Uh huh.
Yeah. So so so in terms of the maintenance.
This is part of our commitment to securing that Ana.
Weight loss can be maintained.
I actually think and again I can't disclose any data, but we are also being selective.
During this call in this perspective, because obviously we were very curious to investigate to what extent are we.
Net loss was maintained over what follow.
For the sort of early patients would be a full five year period.
So so so given that I can't disclose the data I can't really give.
If you are thinking, but just iterate our commitment to.
We're investigating how to best maintain and accrued weight loss.
Following obviously, some macro type, but also keiko somewhere down the road. Thank.
Thank you Martin next question.
Thank you.
We will now go to the next question.
One moment please.
Your next question.
It comes from the line of how receptive from credit Suisse. Please go ahead.
Britta. Thank you very much for taking my questions. My first one is on the is there a number in the U S. In the second quarter. So prescription growth was about 96%, but you reported 44% sales growth I was just hoping that you could.
That it wasn't any one off gross to nets.
<unk> in the second quarter and.
And that's just a reflection of your expected level of Rebating with the growth in the product.
And then my second question on tax at.
At this stage can you indicate the expected impact to your effective tax rate from implementation of the global minimum tax rate. Thank you.
Yes, Catherine I'll get close to you.
Yeah.
Thank you for those two questions.
For the first one.
No <unk> and no there are no no special major gross gross to net adjustment in the quarter I think it's it's important to note that between what you see in it.
<unk> numbers and our net sales you have inventory movements also.
Eh.
Good.
<unk> numbers.
So no major movements and basically a reiteration around that when we look at <unk> in the U S. We're still in the I call it 10% to 15% net price to decline rate.
So no changes compared to prior quarters, there and always to be careful in looking at individual quarters right. When you do a gross to net and reconciliations to onshore Trs.
As to as to impact from perhaps on our effective tax rate.
It was it will be minor so.
So I think we're running around to 20% effective tax rate currently.
When we look forward that's approximately.
The level, we'll be looking at an effective tax rate going forward also barring any major BD M&A transaction set that would change our structure, but but at this point brought a new photo around training. Thank.
Thank you Catherine we have sample one final set of questions. Please.
Thank you.
Our final question comes from the line.
One moment please.
The final question comes from the line of Michael <unk> from Nordea. Please go ahead.
Thank you very much two questions.
One to sort of the year the gradual rollout of the gove in Io. So you commented to 2023.
How confident are you.
Of course, I was relating to supply.
It's sort of a gradual but also more accelerated rollout in 'twenty four 'twenty five in Io of goby and what should we be able to expect in terms of the larger markets and then secondly.
Relating to Germany can you detail a bit around the.
Disease modification program in Germany that has triggered that you had launched albeit in a controlled fashion in Germany for the Gobi.
Thank you Michael.
Yes, Thanks, a lot Michael as you know we've now launched in May in the U S and in Denmark, and Norway, where we see consistent trends.
<unk> and <unk>.
And we will.
<unk> two <unk> in a matter that is of course responsible observing.
The uptake in the demand in particular that we get we have decided to launch in Germany as the fed.
Third country in IL.
Because that was a good opportunity to include <unk> in the disease management program and that basically means.
That we hopefully will be able to ensure that the people most in need of a weight loss product line to go visit the efficacy that it has that they can get access to it at the same time of course as you said slightly different approach that we have taken to fall given the and the high demand that there is so we are continuing to work.
We rolled it out both in Germany, but we would also do that the subsequent quickly in other countries in a way where we could take and you can say a responsible approach and they add and post that.
It considers the high uptake on the demand so that we can ensure patient continuity that is reality.
The most important part of how we are trying to rollout <unk> more and more countries.
Thank you Camilla. So this concludes our Q&A session. Thank you for participating in the call and feel free to reach out to Investor relations with any follow up questions before closing the call I'd like to give the word to last for any final remarks.
Thank you Daniel So also a warm thanks for me for the interest yesterday.
I hope it's clear to all of you that we are very pleased with the momentum we have in our business a strip.
It represented in the growth for the first six months and our guidance for the year and also the growth opportunity in the coming years reassuring.
Based on our growth strategy and its clear that the data we have received from select.
Underpinned a very attractive mid to long term growth profile for similar types and we're very pleased with it and I also like to underline a spin.
I'll ask a couple of times, we are very confident in our ability to scale and supply.
This growth aspiration, and we see capacity is coming in line as we speak and we have yes back and Amsterdam, making very important investment decisions to build what is needed to support this growth aspirations for the coming years, so with that I'll close the call and thank you again all for your interest. Thank you.
Thank you. This concludes today's conference call. Thanks for participating you may now disconnect.
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