Q3 2024 Novo Nordisk AS Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the third quarter 2024 Nouveau Nordisk AS earnings conference call.
Speaker Change: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question in the answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To enjoy your question, please press star 1-1 again.
Speaker Change: Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today. Jacob Rode, Head of Investigation. Please go ahead.
Speaker Change: Thank you. Welcome to this Novonordisk earnings call for the first 9 months of 2024. My name is Jacob Martin Viperol and I'm the head of Investor Relations at Novonordisk.
Speaker Change: With me today I have CEO of Novonolis Lars Rorgensen, Executive Vice President and Head of Commercial Strategy in Corporate Affairs, Camilla Sylvestre, Executive Vice President and Head of Northern America Operations.Langer, Executive Vice President and Head of Development, Martin Holt Flange, and finally Chief Financial Officer, Karsten Knudsen.
Speaker Change: All speakers will be available for a Q&A session. Today's announcement in the slides for this call are available on our website, no-one-rodeys.com. Please note that the call is being webcasted live and a recording will be made available on our website as well. The call is scheduled to last one hour.
Speaker Change: Please turn to the next slide. The presentation is structured as outlined on slide 2. Please note that all sales and operating profit growth statements will be a constant exchange rates unless otherwise specified. Next slide please.
Speaker Change: Thank you. Thank you.
Speaker Change: We need to advise you that this call will contain forward-looking statements. These are subject to risk and uncertainty that could cause actual results to differ materially from expectations. For further information on the risk factors, please see the company announcement for the first nine months of 2024 and the slides prepared for this presentation.
Lars Rorgensen: With that, over to you Lars for an update on our strategic aspirations.
Lars Rorgensen: Thank you, Jakob. Next slide, please.
Lars Rorgensen: In the first nine months, we delivered 24% sales growth and 22% operating profit growth. This reflects continuous scaling of the company, and we now reach around three times more patients with our JP1 treatments compared to three years ago.
Lars Rorgensen: Increased visibility on the full-year performance has led us to narrow our guidance range.
Lars Rorgensen: We'd like to start this call by going through the performance highlights across our strategic aspirations before handing over the word to my colleagues.
Lars Rorgensen: Starting with our focus on purpose and sustainability, we are now serving more than 43 million patients with our diabetes and obesity treatments. This is an increase of almost 3 million patients compared to 12 months ago.
Lars Rorgensen: To uphold our commitment of being a sustainable employer, we expanded the number of women in senior leadership positions to 41%, compared to 40.5% 12 months ago.
Lars Rorgensen: Across all leadership positions, 47% are held by women.
Lars Rorgensen: In R&D, we had several exciting readouts this quarter, including that Phase III results from soul, stride, and essence.
Lars Rorgensen: These results are contributing to an already strong body of evidence on the cardiometabolic profile of semaglutide. Martin will come back to this and our overall R&D milestones later.
Lars Rorgensen: The quarterly sales growth reflects solid commercial execution across both operating units. Camilla and Doug will go through the details later.
Lars Rorgensen: Lars will also go through the financial details, but I'm pleased with a sales growth of 24% in the first nine months of 2024.
Lars Rorgensen: Before we move on to the detailed performance during the first 9 months of this year, I would like to update you on changes to executive management.
Lars Rorgensen: After more than 13 years with New Nordic and more than 7 years as head of North America Operations, Doug Langa has decided to step aside from his current responsibility
Lars Rorgensen: by the end of the year, and instead take up a role as Senior Advisor to Neuronautics Executive Management, effective 1st of January 2025.
Lars Rorgensen: I would like to thank Doug for his excellent contributions to No Noise and look forward to working with him in his new capacity.
Lars Rorgensen: Dave Moore, Executive Vice President with Responsibility for Business Development and Corporate Strategy, will now also take over the responsibility for North North commercial operations in the U.S. while maintaining his responsibility for global business development.
Lars Rorgensen: Since rejoining Novo Nordisk in 2022, Dave has made a substantial impact and built momentum within business development.
Speaker Change: I am confident he will be able to continue this in his new position.
Speaker Change: His experience with the U.S. business from previous roles within the company further strengthens his fit for this extended role. With that, I'll give the word to Camilla for an update on commercial execution for the first nine months of 2024.
Camilla Sylvestre: Thank you.
Camilla Sylvestre: Thank you, Lars, and please turn to the next slide. In the first nine months of 2024, our total sales increased by 24 percent.
Camilla Sylvestre: The sales growth was driven by both operating units, with North America operations growing 31 percent and international operations growing 15 percent. In the U.S., sales growth was positively impacted by gross-to-net sales adjustments related to prior years.
Camilla Sylvestre: Our GLP-1 sales in diabetes increased by 26 percent, driven by North America operations growing 32 percent and international operations growing 16 percent.
Camilla Sylvestre: Insulin sales increased by 10% driven by North America operations growing 31% and international operations growing 4%.
Camilla Sylvestre: Obesity care sales increased 44%, driven by North America, growing 32%, and international operations growing 95%. In both geographies, growth was driven by Vigovi, partly offset by declining Saxenda sales, as the market is moving towards once-weekly treatments.
Camilla Sylvestre: Rare disease sales increased by 3%, driven by a 21% sales increase in North America, partly offset by a 9% decline in international operations.
Camilla Sylvestre: Please turn to the next slide.
Camilla Sylvestre: Our patient reach across GLP-1 for diabetes and obesity has tripled over the past 3 years. We have now extended our global reach to around 11.5 million patients according to IQVIA numbers.
Camilla Sylvestre: This means that we have increased our reach by almost 8 million patients in 3 years.
Camilla Sylvestre: This increase has been driven by our weekly injectable treatments across both North America operations and international operations.
Camilla Sylvestre: Of all patients on DLP-1 across diabetes and obesity, Novo Nordisk is currently supplying treatment to almost two-thirds of those.
Camilla Sylvestre: Going forward, we will continue to pursue an innovation-based strategy driven by the growth of our GLP-1 treatments.
Camilla Sylvestre: This is supported by our continued scaling efforts and in significant investments in the supply chain in the past years.
Camilla Sylvestre: In order to reach even more patients with our treatments, we also continue to work with portfolio optimizations and product presentations.
Camilla Sylvestre: Please turn to the next slide.
Camilla Sylvestre: As a result, our global diabetes value market share has increased over the last 12 months to 33.9%. This is above our strategic aspiration of reaching one-third of the global diabetes market value in 2025.
Camilla Sylvestre: The market share increase was driven by market share gains in both North American operations and international operations.
Peter Veldt: and Daniel Bohsen. Thank you for joining us. I'm your host, Peter Veldt. We'll see you next time.
Camilla Sylvestre: Please turn to the next slide.
Speaker Change: In international operations, diabetes care sales increased by 10% in the first nine months of 2024, which was primarily driven by GLP-1 diabetes sales growing 16%.
Speaker Change: Novo Nordisk remains the market leader in international operations with a GLP-1 diabetes value market share of almost 67%.
Speaker Change: Sandpik is still the GLP-1 diabetes market leader with 44% market share.
Speaker Change: We are also pleased to see Rebelsus increasing its market share to almost 18% of the overall diabetes market in international operations, driven by solid uptake across geographies. And with that, I will hand over the work to Doug.
Doug Langa: Thank you, Camilla. Please turn to the next slide.
Doug Langa: Sales in North America were driven by a prescription volume growth of the GLP-1 class above 15% in the third quarter of 2024 compared with the third quarter of 2023, as well as Novo Nordisk market share gains.
Doug Langa: Sales of GLP-1 diabetes care products in the U.S. increased by 33 percent.
Doug Langa: The sales increase was mainly driven by the continued uptake of Ozempic. Over the past 12 months, Novartis expanded its market leadership to almost 54% measured on total prescriptions.
Doug Langa: Total weekly prescriptions have reached around 700,000 since the supply constraints at the beginning of the year with some impact from utilization management. Please go to the next slide.
Doug Langa: Mugobe sales increased by 77% globally.
Doug Langa: driven by a 50% growth in North American operations.
Doug Langa: The volume growth of the total brand in the obesity market was 95%.
Doug Langa: Nova Nordic sales growth was driven by increased volumes, partially countered by lower realized prices in the U.S.
Doug Langa: The positive growth development was also reflected in the Wgobie prescription trend in the U.S., which has now reached almost 215,000 weekly prescriptions.
Doug Langa: In Q3, we treated more than twice as many patients on Mogovian in the U.S. compared to 12 months ago.
Doug Langa: In the U.S., market access continues to increase.
Doug Langa: and McGovey currently has coverage for around 55 million people living with obesity.
Doug Langa: In international operations, Bugovi's sales accelerated in Q3 to 7 billion DKK and has now been launched in more than 15 countries.
Doug Langa: underlining our commitment to reach more patients.
Doug Langa: We continue to strive to safeguard continuity of care for patients.
Doug Langa: Next slide, please.
Doug Langa: Our rare disease sales increased by 3%.
Doug Langa: Sales in North America operations increased by 21%, reflecting the Segroia launch and positive growth adjustments related to prior years in the U.S.
Doug Langa: This was partially offset by a 9% sales decrease in international operations.
Doug Langa: Nordotropin supply is gradually improving and Novo Nordisk is working on re-establishing supply of rare endocrine disorder products.
Speaker Change: Rare blood disorder cells increased, excuse me, decreased by one by one percent, driven by lower NOVO7 and hemophilia A cells.
Speaker Change: The decline in hemophilia A cells was impacted by reduced demand for legacy products NOVO7 and NOVO8. While Spiroct uptake continues.
Speaker Change: This was partially countered by increased hemophilia B cells.
Speaker Change: Now with that, over to you Martin for an update on R&D.
Martin: Thank you, Doug. Please turn to the next slide.
Speaker Change: Chronic non-communicable diseases continue to affect millions of people around the world and represents a major public health concern.
Martin: By leveraging our extensive experience within metabolic diseases
Martin: We have deepened our understanding of what semaglutide can do for these patients.
Martin: Based on the clinical evidence we have generated so far, it has now become evident that the benefits of semaglutide extend beyond plasma control and beyond weight loss.
Martin: Smaglethyte has consistently demonstrated substantial cardiovascular and kidney risk reductions and functional improvements across several outcome studies.
Martin: These now include Sustained Sex, Pioneer Sex, Soul, Stride and Flow in Type 2 Diabetes along with Step-Heft-Pef and Selected Obesity.
Martin: The benefits of semaglutide have also been demonstrated in addressing knee osteoarthritis in the STEP-08 trial, as well as in the metabolic dysfunction associated stereotype hepatitis, in short MASH, in the ESSENCE trial.
Martin: I will get back to the latter later in this presentation.
Martin: Looking ahead, we continue to generate further evidence regarding the benefits of cementite.
Martin: For example, this includes the EVOKE trials in people with Alzheimer's disease and the ASCEND PLUS trials investigating primary prevention of atherosclerotic cardiovascular disease in patients with type 2 diabetes and no established cardiovascular disease.
Martin: All together, temaglutide is a remarkable molecule capable of addressing multiple comorbidities associated with diabetes and obesity in a holistic way, and we look forward to upcoming trial readouts.
Martin: Next slide, please.
Speaker Change: for more information. For more information on the University of Waterloo, go to www.waterloo.ca. For more information, go to www.waterloo.ca.
Martin: In October, Novo Nordisk announced the headline results from the SOL trial.
Martin: SOLE was a large cardiovascular outcomes trial and was conducted across 33 countries and more than 400 investigational sites.
Martin: 9,650 people were enrolled and randomized in a 1-to-1 ratio to receive oral semaglutide 14 mg or placebo on top of standard of care.
Martin: The eligibility criteria were designed to include patients with type 2 diabetes with established cardiovascular disease as defined by prior myocardial infarction, stroke, or peripheral arterial disease and or chronic kidney disease.
Martin: The primary objective of the trial was to demonstrate the priority of all samaritans versus placebo on top of standard of care for prevention of the primary endpoint of major adverse cardiovascular events.
Martin: The key secondary objectives of the trial was to compare the effects of orosimagnetites with placebo with regards to mortality, renal function, peripheral artery disease, glucose metabolism, and body weight.
Martin: I'm very pleased to announce that SOHL achieved its primary endpoint and that all semaglutide demonstrated a 14% reduction in major adverse cardiovascular events versus placebo.
Martin: All components of the primary endpoint contributed to the overall cardiovascular risk reduction.
Martin: Given the extensive use of SGLT2 inhibitors, which are independently associated with cardiovascular benefits,
Martin: and I included as part of the standard of care in ZOO, we find that the overall risk reduction on top of standard of care aligns broadly with other semaglutide outcomes trials.
Martin: We're pleased that for patients who prefer an all-GLP-1 receptor agonist, SOLA has demonstrated that oral semaglutide provides a superior cardiovascular risk reduction compared to placebo on top of standard of care.
Martin: In the trial, oral semaglutide appeared to have a safe and well-tolerated profile. This is in line with previous trials investigating oral semaglutide.
Martin: We expect to file for regulatory approval of a cardiovascular label indication expansion for all semaglutide around the turn of the year.
Martin: Next slide, please.
Martin: On 1st of November, NOVO Nordic announced the headline results from Part 1 of the ongoing ESSENCE trial.
Martin: Essence is a phase-free trial evaluating the effect of once-weekly subcutaneous amalgamate 2.4 milligram in adults with MASH with moderate to advanced liver fibrosis.
Martin: Essence is being conducted across 37 countries and over 400 sites.
Martin: It's a two-part trial with 1,200 MASH participants were randomized in a 2-to-1 fashion to receive either somagnoside 2.4 mg or placebo on top of standard of care for a total of 240 weeks.
Martin: In part one, the objective was to demonstrate that treatment with Magnesite 2.4 mg improves liver histology at week 72 in the first 800 randomized participants.
Speaker Change: Thank you.
Speaker Change: In Part 2, the objective is to demonstrate that treatment with Magnetite 2.4 mg lowers the risk of liver-related clinical events compared to placebo at 240 weeks in 1200 randomized subjects.
Speaker Change: Next slide, please.
Speaker Change: I'm very pleased to announce that the ASIN trial achieved both primary endpoints and demonstrates statistically significant and superior improvements in both mesh resolution and liver fibrosis with semaglutide 2.4 mg compared to placebo.
Speaker Change: By week 72 from baseline, 37% of people treated with Magnetite 2.4 mg achieved improved liver fibrosis with no worsening of steator hepatitis, while 63% achieved resolution of steator hepatitis with no worsening of liver fibrosis.
Speaker Change: To put this into perspective, the Essence Phase III results are the best Phase III results within the MASH area to date.
Speaker Change: In the trial, semaglutide 2.4 mg appeared to have a safe and well-tolerated profile which is in line with previous semaglutide 2.4 mg trials.
Speaker Change: We are very pleased about the ESSENCE clinical trial results and the potential of simangetide to help people living with MASH.
Speaker Change: Among the many people with overweight obesity, one in three live with MESH.
Speaker Change: This has a serious impact on their health and represents a significant unmet need.
Speaker Change: We believe that with the ESSENCE data, semaglutide is well positioned as a foundational treatment for people with MASH at fibrosis stage 2 and 3 and offers further additional benefits including weight loss, glycemic control, cardiovascular risk reduction relevant for this population.
Speaker Change: We expect to file for regulatory approvals in the US and EU in the first half of 2025.
Speaker Change: The detailed results from ESSENCE will be presented at AASLD, the American Association for the Study of Liver Diseases.
Speaker Change: A tour of the essence trials will continue with the expected readout in 2029.
Speaker Change: Next slide.
Speaker Change: Now, I would like to bring to attention to some of the quarterly and upcoming R&D events, which include anticipated trial readouts and initiations for this year.
Speaker Change: During 2-3 in diabetes, the functional outcome trial stride was successfully completed.
Speaker Change: This slide trial is a 52-week trial comparing St. Michael's at 1.0 mg with placebo on top of standard repair.
Speaker Change: The trial included people living with type 2 diabetes and peripheral arterial disease with intermittent claudication and a condition characterized by muscle pains in the legs during physical activity.
Speaker Change: The primary functional endpoint is measured by constant-load treadmill tests.
Speaker Change: It is important to note that the treatment test is not equivalent to the six-minute walking test on a flat surface as we know it from, for example, the STEP heart failure studies.
Speaker Change: The Constant Load Treadmill Test in Stride is performed at a single work rate of 3 km per hour at an inclination of 12% which corresponds to walking up a steep hill at a constant pace.
Speaker Change: After 52 weeks, the trial achieved its primary endpoints by demonstrating a statistically significant and superior improvement in maximum walking distance of 13% for people treating with Magnetite 1.0 mg compared to placebo.
Speaker Change: The 13% improvement represents a median change in maximum walking distance of 26 m and a mean change of 40 m, which is considered clinically relevant.
Speaker Change: In the semaglutide arm, the maximum walking distance increased by 21% from a baseline of 185 meters, while in the placebo arm it increased by 8% from a baseline of 186 meters.
Speaker Change: Overall, the swipe results are good news for people living with peripheral artery disease.
Speaker Change: and type 2 diabetes whose everyday life is impacted by reducing walking capacity and pain.
Speaker Change: Novo Nordisk expects to file for regulatory approval of a label expansion for Osembic in the US and EU in the first half of 2025.
Speaker Change: The successfully completed SOLE and STRIPE trials add to the growing body of evidence underlying the cardioplanktobolic benefits of semaglutin.
Speaker Change: To continue within the diabetes domain, a Phase II trial has been initiated with once weekly, subcutaneous, and once daily oral amputation.
Speaker Change: in people with type 2 diabetes in Q3, and we are anticipating the phase 2 readout from a luna band in diabetes kidney disease in Q4.
Speaker Change: Lastly, within diabetes, we are awaiting the regulatory decisions on the submitted flow data in U.S. and in EU in the first half of 2025.
Speaker Change: With an obesity, the European Medicines Agency has adopted a positive opinion for an update of the WGO label in EU.
Speaker Change: The label.
Speaker Change: This update incorporates data showing that Wigovi, when added to standard of care, can reduce heart failure-related symptoms and improve physical limitations and exercise function in people with obesity-related HF-PEF with or without type 2 diabetes.
Speaker Change: The positive opinion is based on results from the STEP-HEF-PEF and the STEP-HEF-PEF DM trials.
Speaker Change: Further, a positive opinion was also issued based on data from the Step 9 files in people with obesity and knee or arthritis.
Speaker Change: Thank you.
Speaker Change: In Q3, the Phase IIa trial with monodopam was completed.
Speaker Change: As previously communicated, we expect to initiate a larger phase 2 B trial in obesity to further investigate dosing and the safety profile of melanoban over a longer duration in a global population in 2025.
Speaker Change: We have also initiated a Phase I trial with once weekly subcutaneous Amblin 355.
Speaker Change: The 12-week trial is investigating safety, tolerability, pharmacokinetics and pharmacodynamics of different doses of adenine-355 in people with overweight or obesity.
Speaker Change: Thank you.
Speaker Change: Looking ahead, later in Q4 we anticipate the first Phase III results for Kagoshima, namely from the Redefined-1 study.
Speaker Change: The second pivotal trial for Category SEME-Redefined II will read out in the first half of 2025.
Speaker Change: As we approach the year-end, we are also looking forward to the Phase III results for Step Up involving semivitrite 7.2 mg. And finally, in the first half of 2025, we are expecting the Phase I readout for subcutaneous amitritin in obesity.
Speaker Change: Within Rare Diseases in Q3, we have initiated a Phase 1 trial with Inu-8 and oral, once daily, antibody fragment for the treatment of hemophilia A.
Speaker Change: More over different GFI files with MyMate was successfully completed.
Speaker Change: The trial was an open-label safety study in people with hemophilia A and demonstrated that switching from a mesosomal treatment to a mimate treatment appeared to be safe and well-tolerated.
Speaker Change: Lastly, within Rare Diseases, we have successfully completed the Phase II interim part of the Hibiscus Phase II free trial in people with sickle cell disease.
Speaker Change: The interim analysis established proof-of-concept for etabopivad in sickle cell disease, and etabopivad appeared to have a safe and well-tolerated profile.
Karsten Knudsen: The phase III part of the Hibiscus trial is currently ongoing with the expected readout in 2026. With that, over to you Karsten.
Karsten Knudsen: Thank you, Martin. Please turn to the next slide.
Karsten Knudsen: In the first nine months of 2024, our sales grew by 23% in Danish kroner and 24% at constant exchange rates, driven by both operating units.
Karsten Knudsen: Sales growth has resulted in periodic supply constraints and related drug shortage notifications across a number of products and geographies.
Karsten Knudsen: The Gross Margin increased to 84.6% compared to 84.5% in 2023.
Karsten Knudsen: The increase is mainly driven by positive price impact due to the growth to net sales adjustments related to prior years in the US and a positive product mix.
Karsten Knudsen: This is partially counted by costs related to the ongoing capacity expansions.
Karsten Knudsen: Sales and distribution costs increased by 10% in both Danish kroner and at constant exchange rates.
Karsten Knudsen: While in international operations the increase is mainly related to obesity care market development activities, we go with launch activities as well as promotional activities for GLP-1 diabetes products.
Karsten Knudsen: Additionally, the increase in sales and distribution costs is impacted by adjustments to legal provisions in the second quarter of 2023.
Karsten Knudsen: Research and development costs increased by 56% both measured in Danish kroner and at currency exchange rates.
Karsten Knudsen: The increase in costs is mainly reflecting increased late-stage clinical trial activity and increased early research activities, as well as the impairment loss related to intangible assets, including osaduronone at 5.7 billion Danish Kroner.
Karsten Knudsen: Administration costs increased by 9% both in Danish Corona and at concert exchange rates.
Karsten Knudsen: Operating profit is impacted by the impairment loss related to osadurenon of 5.7 billion Danish Kroner and as a consequence EBDI increased by 28% measured in Danish Kroner and by 30% at constant exchange rates.
Karsten Knudsen: Net financial items showed a net gain of 32 million Danish Kroner compared to a net gain of 1.246 billion Danish Kroner.
Karsten Knudsen: Bill in Danish Corner last year.
Karsten Knudsen: The effective tax rate was 20.6% in the first nine months of 2024 compared to 19.9% in the first nine months of 2023.
Karsten Knudsen: Net profit increased by 18% and diluted earnings per share increased by 19% to 16 Danish kroner and 29 ører.
Karsten Knudsen: Net profit and diluted earnings per share are negatively impacted by the 5.7 billion Danish Kroner impairment of Ossoduron.
Karsten Knudsen: Free cash flow realized in 2024 was 71.8 billion Danish Kroner compared to 75.6 billion in the first nine months of 2023.
Karsten Knudsen: The lower free cash flow reflects increasing capital expenditure partially countered by net cash generated from operating activities.
Karsten Knudsen: Capital expenditure for property planning and equipment was 31.1 billion Danish Kroner compared to 16.4 billion in 2023.
Karsten Knudsen: This was primarily driven by investments in additional capacity for API, production and fill finish capacity for both current and future injectable and oil products.
Karsten Knudsen: The extensive increase in capital expenditure underscores our dedication to internal growth initiatives as part of our capital allocation strategy.
Karsten Knudsen: Our number one priority is to invest in internal growth opportunities followed by returning capital to shareholders through dividends and pursuing business development opportunities.
Karsten Knudsen: Finally, we view the share buyback program as a flexible measure contingent on the first three priorities. This allows us to effectively distribute potential excess cash.
Karsten Knudsen: We continued the growth momentum in 2024 and have narrowed our sales growth guidance to between 23 and 27 percent at constant exchange rates.
Karsten Knudsen: The guidance reflects expectations for sales growth in both North America operations and international operations, mainly driven by volume growth of GL21-based treatments for both obesity and diabetes care.
Karsten Knudsen: Following the expectation of continued volume growth and capacity limitations at some manufacturing sites, the outlook also reflects continued periodic supply constraints and related drug shortage notifications across a number of products and geographies.
Karsten Knudsen: Noon Orlsk is investing in internal and external capacity to increase supply both short and long term.
Karsten Knudsen: Operating profit growth is now expected to be between 21 and 27 percent at constant exchange rates.
Karsten Knudsen: Capital expenditure is still expected to be around 45 billion Danish Kroner in 2024, reflecting expansion of the global supply chain.
Karsten Knudsen: and Peter Verdult. Thank you. Thank you.
Karsten Knudsen: The free cash flow is now expected to be between 57 and 65 billion Danish Kroner, reflecting the sales growth, a favorable impact from rebates in the U.S. countered by investments in capital expenditure.
Karsten Knudsen: The updated cash flow expectation mainly reflects phasing of payments related to rebates in the U.S., as well as timing of investments related to capital expenditure.
Karsten Knudsen: Income under the 340B program in the U.S. has been partially recognized. One ruling from the U.S. Court of Appeals for the Seventh Circuit remains pending, and along with the D.C. Circuit ruling may be subject to further discretionary appellate review before the U.S. Supreme Court.
Karsten Knudsen: Depending on the outcome of any subsequent rulings and appeals in these matters, there may be a material impact on NONO's financial position, net sales and cash flow.
Karsten Knudsen: The Catalan transaction is still expected to close towards the end of the year and financial impacts have not been included in the financial guidance.
Karsten Knudsen: Contingent on the timing of closing, the acquisition is expected to have a low single-digit negative impact on operating profit growth in 2024 and low to mid-single-digit impact in 2025.
Karsten Knudsen: That covers the outlook for 2024. Now back to you, Lars.
Lars Rorgensen: Thank you, Karsten. Please turn to the final slide. We are very pleased with the sales growth in the first nine months of 2024.
Lars Rorgensen: The growth is driven by increasing demand for our G1-based diabetes and obesity treatments.
Lars Rorgensen: reflecting the continued scaling of our supply chain.
Lars Rorgensen: and we are serving more patients than ever before.
Lars Rorgensen: Then R&D, we're very pleased with the readouts across our semaglutide portfolio, including the SOLID trial in people living with diabetes and cardiovascular disease, and the ESSENCE trial in people living with MASH. Lastly, we look forward to a number of exciting readouts over the next quarter. With that, I would like to hand the word back to Jakob.
Jakob: Thank you, Lars. Next slide, please.
Jakob: With that, we are now ready for the Q&A, where I kindly ask all participants to limit her or himself to one or maximum two questions, including sub-questions.
Jakob: Operator, we are now ready to take the first question.
Speaker Change: Thank you. As a reminder to ask a question you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question please press star 11 again. We will now take our first question.
Jakob: Please stand by.
Speaker Change: And the first question comes in the line of Richard Parks from BNP Pariberg saying please go ahead your line is now open
Richard Parks: Thanks very much for taking my question. I'm going to ask one on Cagrasemma. I think in the press you've been reiterating your...
Richard Parks: that number and the number that was reported in earlier clinical trials, obviously at an earlier time point. So I know you've mentioned that's based on internal modeling assumptions, but can you help us understand a little bit more in terms of the details that underpins that modeling and again your confidence on hitting that? Thank you very much.
Richard Parks: Thanks a lot for that, Richard. That goes to you, Martin, on the high-level CACUSEMA expectations.
Martin: Thank you very much, Richard. So, first of all, it's important to call out we have no new data, and therefore our confidence remains to be the same. The way that we think about this is that we have three sets of data to look at from a modeling perspective. One is...
Martin: Phases 1 and 2 for cagrelentide in monotherapy, then Phase 1-2 for obesity and caglosema, and thirdly, the Phase 2 trial for caglosema in type 2 diabetes.
Martin: We can then apply our models, I would say, on this, based on our extensive knowledge and experience within the obesity space, and we arrive then at the 25% weight loss.
Martin: Nothing has really changed there. I've not seen any new data and basically a couple of hours after I've seen that you will be in the know. So that's where we are today.
Speaker Change: Thank you.
Speaker Change: Thank you, Martin and thank you, Richard. We are ready for the next question, please.
Speaker Change: Thank you. Your next question comes from the line of Satin Jain from Bank of America. Please go ahead, your line is now open.
Satin Jain: Hi there, 2 questions please. Firstly on Catalan, you've noted confidence in the deal closed by year end. I wonder if you could just give any more colour on the process that drives that confidence?
Satin Jain: and confidence in no delays or preliminary injunctions given there's been a lot of market debate there. And then secondly, I'm going to chance my arm Karsten, given the limited visibility we have on supply,
Satin Jain: I wonder if you're willing to just give some early indications of 2025 growth and key pushes and pulls as we think about next year.
Satin Jain: By asking for guides or perhaps a high-level commentary that you've made before, perhaps you could frame 2H24 as a decent indicator of growth in 2025 or 2024 absolute growth continuing to 2025. Any high-level commentary you'd be willing to make. Thank you.
Speaker Change: Thank you for the question session, both of those to you Karsten, firstly on the Catalan transaction and then on supply momentum in Nordic.
Karsten Knudsen: Yeah, thank you for those two relevant questions. So, as to Catalent, we still expect the deal to close towards the end of this year, and that statement is based on our ongoing interactions with the regulators in the different geographies.
Karsten Knudsen: So, from the get-go, we assessed that this transaction would not violate any antitrust legislation. And since then, we have produced
Karsten Knudsen: a lot of documents and had a number of interactions with regulators and it's basically based on those interactions that we believe, while not concluded at this point, we still believe that the deal will close by the end of this year.
Karsten Knudsen: Then, first of all, it's important to note, as we also showed in one of the prior slides by Camilla, that we scaled the number of people we reached with GLP-1s by a factor of three over the last three years, and now have around two-thirds of the market of GLP-1 treatments on NOVO products.
Karsten Knudsen: And as to the more detailed 2025 outlook, the way I would frame it is that when you look at our absolute growth,
Karsten Knudsen: Last year, in 2023, which turned into a 36% growth rate last year, that absolute growth is somewhat similar to the absolute growth we're delivering this year, yielding a mid-20s-like growth.
Karsten Knudsen: So to get a sense for what could growth mathematically be next year, then if you take that magnitude and apply it to a higher base, namely this year's sales,
Karsten Knudsen: then adjust for the tailwind we've had from variable U.S. growth to net adjustments related to prior years.
Karsten Knudsen: then you end in the high teens in terms of sales growth the next year. Again, this is a forward-looking statement, mathematically based, and we'll come back with more detailed guidance come early February 2025.
Karsten Knudsen: Thank you.
Speaker Change: Thank you, Karsten, and thank you, Sachin, for those two questions. With that, we are ready for the next set of questions, please.
Speaker Change: Thank you. Your next question comes from the line of Louise Chen from Cantor. Please go ahead, your line is now open.
Louise Chen: Hi, thanks for taking my questions here, so I had two.
Louise Chen: First one, I wanted to ask you what your filing strategy for Essence may be. Are you looking at label expansion or filing it as a new product? And then I'm a little bit, what do you think the street is missing here? You showed some favorable data, but I guess the street isn't really picking up on that. So what do you think is good about your studies here that people haven't really appreciated? Thank you.
Speaker Change: Thank you for those two questions, Louise. Perhaps firstly on essence data, Martin, and Camilla can add a little bit on commercial potential, and then we move back to Martin for Moluna band data.
Speaker Change: Thank you.
Speaker Change: So the regulatory framework in the MASH space is that regulators, at the end of the day, require heart endpoints, heart-liver endpoints, but also heart-cardiovascular endpoints, because these patients also die from cardiovascular disease.
Speaker Change: We aim to do a regulatory filing to get the approval from ASH and thereby also continuing the ASUS trials to get the harder endpoints in the coming years that the regulators will require.
Speaker Change: I'll leave it to Camilla to talk to the commercial position.
Speaker Change: F2 to F4, and this is, of course, in the U.S. alone.
Speaker Change: Of course, also the diagnostic space has a big impact.
Speaker Change: So, of course, that in itself is something that we are also focusing on from a commercial point of view via partnerships.
Speaker Change: You can say blood-based, but also scanning-based, so that we don't have to rely on only liver biopsies, but of course,
Speaker Change: It's important that all of this works out towards the launch. So I think, all in all, we feel that here we have an important asset that can make a big difference in an area where there previously has been very limited treatment.
Speaker Change: and Karsten Knudsen.
Speaker Change: Thank you Camilla, and thank you Martin, and then we go back to you Martin for question number two, Moluna band data and how that informs us going forward. Yeah, absolutely, so I can't speculate as to what other people have been thinking about the Moluna band data, but I can tell you what we've been thinking about it.
Speaker Change: We have all along communicated two things. First of all, obviously, we have a high focus on the safety aspects of this class of drugs. There is a history and we need to make sure that we only introduce safe drugs into the market in this space, as in all other spaces.
Speaker Change: And secondly, I think people tend to forget that all along, to that end, we would conduct a phase two beat file to really establish the safety profile of Maluna Band before we progressed into further development. And we communicated that, actually, before we saw the data.
Speaker Change: Then we saw the data, and they actually confirmed that we saw a good efficacy profile of monolunar band. We also saw both gastrointestinal, but also some neuropsychiatric events increasing with those.
Speaker Change: On the efficacy part, it was very clear that we were high on the dose response and exposure response curve, indicating maybe...
Speaker Change: that two high doses had been tested from a clinical and from a commercial perspective and therefore we can actually say that this
Speaker Change: this work from a weight loss perspective, but we have to work with the dosing to mitigate potential safety issues. And that is exactly what we intend to do in the phase two B trial. So from our perspective.
Speaker Change: It's still a potential, it's still high risk, we communicated that all along as well, but something that we will as planned continue to investigate further in a phase 2b trial.
Speaker Change: Thanks a lot Martin and also thank you to you Louise, then we are ready for the next set of questions please.
Speaker Change: Thank you. The next question comes from a line of Michael Nedeljkovic from TD Cohen. Please go ahead, your line is now open.
Speaker Change: I think you fell out, Michael. Are you able to hear us?
Speaker Change: Thank you.
Speaker Change: Dear Michael, I think the line has been compromised.
Speaker Change: Would you like to go on to the next question?
Speaker Change: Yes, please.
Speaker Change: We will now take our next question. Please stand by. And the next question comes from the line of Jo Walton from UBS. Please go ahead so your line is now open. Thank you. My question is firstly on marketing costs. So you've been, marketing costs were up 10% year-to-date but up much more strongly in the third quarter. I wonder if you could tell us...
Speaker Change: How competitive you think the...
Speaker Change: The situation is in the U.S.
Speaker Change: Given this such strong demand, but there is also increasing supply, how should we be thinking about your marketing costs going forwards?
Speaker Change: and I'm obviously thinking about, you know, longer-term leverage here.
Speaker Change: And within that, can I also ask your latest view on what proportion of the market is being served by compounded product?
Speaker Change: So presumably, now that you are out of shortage in the US, you would be expecting that compounded market to go away, so I'm just wondering if you are confident that you can absorb that demand if it comes back to look at the branded product. Thank you.
Speaker Change: Thank you for those two questions, Joe. For the first one, I'll hand it over to Doc on the promotional efforts behind Begovi, and after that, we turn to Lars for overall on compounding. Doc, over to you.
Speaker Change: Thanks Joe, I appreciate the question. Maybe as a starting point I'd like to say that certainly pleased with the overall efforts and it was another strong quarter. I mean we continue to see leadership in market access in both diabetes and obesity, you know we're driving market growth in both segments.
Speaker Change: and I think that both products are performing well. And to your question specifically, we'll continue to invest in those markets appropriately, and I do believe that those investments are competitive and they are appropriate, and we continue to evaluate and we invest as appropriate as we see the market growth.
Speaker Change: and Daniel Bohsen. Thank you.
Speaker Change: Thank you. Thank you, Doug. Then over to you, Lars, on compounding. Thank you, Jakob. Thank you, Joe, for the question. So I would say our first and foremost concern about compounding is really the product quality.
Speaker Change: what patients are exposed to.
Speaker Change: And I think that's quite alarming, what we see of safety reports.
Speaker Change: We feel an obligation for taking action on this so patients who seek treatment and perhaps believe they are getting a quality product from an Onoiski is not misled and with that say belief treat themselves for something that is potentially harmful.
Speaker Change: agreed with FDA that this is increasing to a magnitude where they can take away the drug shortage notification also on the starter dose, so we are off for all doses.
Speaker Change: And that, of course, means that we'll see, say, an uptick in the U.S. in the coming weeks in terms of supply.
Speaker Change: to your questions about, you know, what share.
Speaker Change: compounders take? Honestly, we don't know.
Speaker Change: We promote our products as products for people living with serious chronic disease, and they should really be helped by insurance, and I don't think these products are in, say, the classical insurance channel.
Speaker Change: So, we feel confident in our ability to scale and treat more and more patients.
Speaker Change: But for us it's really not about a business opportunity, it's more about the safety for patients and no patient should believe that they get access to semaglutide and that not being the case because we're the only one producing an approved version of semaglutide.
Speaker Change: Thank you, Lars. So two areas that have our utmost focus. Thanks, Joe. And we're now ready for the next set of questions, please.
Speaker Change: Thank you. We will now take our next question, and the next question comes from the line of Richard Botter from J.P. Morgan. Please go ahead, your line is now open.
Richard Botter: But how do you see sales developing for that? And also, as MPIC, it seems your supply constraints still, when we can expect that, those supply constraints to ease.
Richard Botter: And then maybe one on amylin monotherapy, starting the phase three, phase one trial, getting ahead of myself there. How do you see the utility of this product relative to, say, Kagri-Sema, and how have you changed?
Richard Botter: The amylin relative to Kegrel lindtide on its own. Thanks
Speaker Change: Thank you, Richard. Firstly to Karsten on supply and I.O. and afterwards we'll turn to Martin for MLN 355.
Speaker Change: as well as Absolute Sales.
Speaker Change: And that acceleration will be driven by both units. And what we've seen in the third quarter in IEO, with a very significant step up for Vigovi sales, it's pretty much a doubling compared to Q2, albeit with some tailwind from inventory movements which are associated with launches.
Speaker Change: Then a nice acceleration in IO in the third quarter, now growing 22% in the quarter, and to get to Q4, even further acceleration into the fourth quarter.
Speaker Change: As to supply between OCEMPIC and Vigovi, then yes, you're correct. So far, IO has been constrained on OCEMPIC. On the other hand, you see 60 plus percent sales growth for rebuses in IO. So that's kind of the portfolio play we're pursuing in that geography. And then with now more than 15 Vigovi launches in IO, the momentum we're building there is of course rather substantial.
Speaker Change: Thank you, Karsten, and over to you, Martin, on Emelyn Mono.
Speaker Change: with a holistic approach, building the broadest possible pipeline to cater to individual patient needs. These are complex diseases, and it's very, very clear. Also, if you take the analogy from GLP-1,
Speaker Change: You can always...
Speaker Change: address the same biology with slightly different modalities. Our own analogy is moving from lyraglutide to semaglutide, changing the pharmacokinetics and thereby also the pharmacodynamics in a beneficial way. The amylin biology is
Speaker Change: at least at the receptor level, even more complex than GP1, and therefore to build a broader pipeline of different generations of amylin acids is prudent. I think it's too early to speculate before we've seen any clinical data where and how we would see that being positioned.
Speaker Change: Thank you very much. Thank you.
Speaker Change: Thank you, Martin, and also thank you for the questions. Then we are ready for the next set of questions, please.
Speaker Change: Thank you. Your next question comes from the line of Florence Zepedis from Bernstein. Please go ahead, your line is now open.
Florence Zepedis: Good afternoon. Thank you very much for taking my question. Two quick ones.
Florence Zepedis: First, for Martin on Caglycema, I know that everybody is focused on weight loss, but Martin, could you share with us what kind of tolerance profile you're looking for in this product as based on Phase II data from diabetes patients? We see that there is increased efficacy on weight loss, but also an increased level of nausea or gastrointestinal adverse events with the combination Caglycema versus the individual component. So, could you share with us what kind of level of efficacy you're looking for?
Florence Zepedis: side effects, adjacent effects you are looking for. It will be the same vein as stema monotherapy or higher. And my second question, very quick, maybe could you share with us when you believe that you could provide a new midterm guidance for the group? Thank you.
Speaker Change: Thank you for those two questions. Firstly on Martin, if you could reiterate your previous tolerability commentary on Category 7. Thank you very much for that question.
Speaker Change: As we just discussed, these are still early days. We are still basing all of our assumptions on data derived from phases 1 and 2. Based on what we know and based on how we understand the biology, as you said yourself,
Speaker Change: We expect to see really unsurpassed weight loss at this point in time. We expect to see good glycemic control in type 2 diabetes together with a strong weight loss.
Speaker Change: And based on what we've seen so far, that will come with a safety and solubility profile broadly in line with what we see with GLP-1 treatment.
Speaker Change: Thank you.
Speaker Change: Thank you, Martin. And over to you, Karsten, in the midterm direction.
Karsten Knudsen: As to mid-term guidance, right now we're rolling on our Strategic Aspirations 2025, so you shouldn't expect us to issue any new mid-term guidance until we're done executing on that plan. So late 2025, beginning of 2026 would be a fair expectation.
Speaker Change: Thank you very much.
Speaker Change: Thank you Karsten and thank you Florent. Then we are ready for the next set of questions please. Thank you. Your next set of questions come from the line of Martin Pacoe from SEB. Please go ahead, your line is now open.
Speaker Change: Yes, Martin Parker, SAP. This was not a planned question, but...
Martin Pacoe: but this is for Karsten, since the stock is down 5% since you on the call commented on your potential mathematical course in 2025
Martin Pacoe: I would like to know, was this a planned attempt by you to talk down consensus forecasts, or was this just an improved, hypothetically, mathematically way to suggest something on the supply next year?
Martin Pacoe: And then, second question, this is for Martin, just on...
Martin Pacoe: Thank you Martin, firstly on previous commentary for UCAS in relation to 2025, and then we'll hand it over to Martin afterwards.
Speaker Change: Yeah, thanks for that question, Martin. So I'm not trying to manipulate consensus numbers. So my comment was, first of all, just to say that we issue guidance in February, as we always do.
Speaker Change: and then just a reminder about the magnitude of growth in terms of absolute growth and a higher base and what that entails in terms of growth rates.
Speaker Change: I'm sure you can all calculate that, but there is no more than that.
Speaker Change: Thank you, Karsten. Very clear. And Martin, on the once-monthly technology and the timelines for the lead candidate?
Speaker Change: Yeah, thank you very much for that question. I have to say it's still early days. It's exciting, but it's still early days, and we're not even in first human dose, and this is a novel technology, so I cannot really speculate as to when we could have that specific opportunity on the market.
Speaker Change: Thank you. Bye.
Speaker Change: Thank you Martin, and also thank you to you Martin for those two questions. Next set of questions please. Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Kerry Holford from Berenberg. Please go ahead, your line is now open.
Kerry Holford: Thank you very much. Just a couple of questions remaining for me, please, for Karsten. Can you quantify the rebate adjustments that you mentioned in the press release for Q3?
Kerry Holford: The Ex-US Regions in Q3.
Kerry Holford: Should we expect this to reverse in Q4, or should we expect stocking to continue to build from here? It sounds like your commentary with regard to underlying IO growth is still very positive. So, just looking to understand the magnitude of that stocking and your expectations going forward.
Speaker Change: © 2013 University of Georgia College of Agricultural and Environmental Sciences UGA Extension Office of Communications and Creative Services
Speaker Change: Thank you. Carry over to you, Karsten, for one-offs in the quarter, US and IO.
Speaker Change: Thank you.
Speaker Change: Yeah, so as to growth tonight, I just must say, in the quarter, it's largely neutral.
Speaker Change: We do have negative adjustments on Victoza, related to prior periods, driven by a higher exposure towards Medicaid in the U.S. And on the other hand, then we have some variability, mainly on Ozempic, but net-net, broadly neutral in the quarter.
Speaker Change: So, we do not expect a major reversal of inventories into Q4, but of course it's...
Speaker Change: We cannot continue to build inventories in connection with launches unless there are new launches. So just noting that it's a one-off positive impact in the quarter, that's the way to think about it.
Speaker Change: and Peter Rode. Thank you. Have a good day.
Speaker Change: Perfect. Thank you, Karsten, and thank you, Kerry. Then we are ready for final set of questions, please.
Speaker Change: Thank you. We will now take our final set of questions. Please stand by. And the next question comes from the line of Mathias Hogblom from Handelsblanken. Please go ahead, your line is now open.
Mathias Hogblom: Thank you so much. I have two questions, please. So firstly, at the CND earlier this year, NOVA shared that Cagri lintide is sourced externally through CDMO contracts. So
Mathias Hogblom: In light of what appears to be a very likely commercial launch roughly a year from now, I wanted to ask if external CDMO sourcing of Cagri remains the plan and why producing Cagri in-house is not critical in light of the experience from Semaglutide.
Mathias Hogblom: And then secondly, I wonder if you could remind me, assuming antitrust authorities for whatever reason still decide to try and block the Catalan transaction, what flexibility do you have in a plan B to scale up gas capacity as quickly as possible, not least in light of constraints for expertise in setting up these sites? Thanks so much.
Speaker Change: Thank you, Matthias, and both of those to you, Karsten, firstly on Cacosema supply chain and then on Catalan afterwards.
Karsten Knudsen: Yeah, thank you for those questions, Matthias. It's correct that the crack component we source externally, and that's basically based on a consideration around capabilities and manufacturing footprints, so it's rational choice. And of course, we take historic learnings with us in terms of ensuring that we have a resilient setup into the future for external sourcing approaches, including cagrelian sites.
Karsten Knudsen: And this is really a question about continuing to scale the way we've been scaling in the past few years. So really driving more output from our internal supply chain as well as continue to contract external capacity should we get into that situation.
Speaker Change: Thank you, Karsten, and thank you to you, Mathias. And this concludes the Q&A session. Thank you for participating and feel free to contact Investor Relations regarding any follow-up questions you might have. Before we close the call, I would like to hand it over to you, Lars, for any final remarks.
Lars Rorgensen: with Dave Moore, good luck, as his successor. As we spoke about, NuvaNorsk is in a strong growth momentum and that's driven by our GLP-1 products both in diabetes and obesity and I hope it's also clear for all of you that we are scaling significantly to sustain this attractive growth profile in the coming years.
Lars Rorgensen: And we also have very exciting phase 3 readouts later this year, so we look forward to sharing those data with you in the future and to have robust discussions around that. So with that, thank you again for your interest and we hereby close the call. Thank you.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.
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