Novo Nordisk A/S

Hello and welcome to the Q3 2020 Novo Nordisk A S earnings conference call. Throughout the call all participants will be in a listen-only mode and afterwards there will be a question and answer session. Today I'm pleased to present Lars Frubergård Jørgensen. Please go ahead with your meeting.

Thank you very much. Welcome to this Novo Nordisk conference call regarding our performance for the first nine months of 2020 and our financial outlook for 2020. I'm Lars Rurgardt Jørgensen, the CEO of Nuo Nordisk. With me, I have our Chief Financial Officer, Karsten Munk Knudsen, and our Chief Science Officer, Mads Kroosgaard Thomsen. Also present and available for the Q&A session are Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camille Silvestre, and our Investor Relations Officers. Today's earnings release and the slides for this call are available on our website, nuonordisk.com. Please note that this conference call is being webcasted live and a recording will be made available on UNOI's website. The call is scheduled to last for one hour. The presentation is structured as outlined on slide two. Please note all sales and operating profit growth statements will be at constant exchange rates unless otherwise specified. The Q&A session will begin in about 20 minutes. Please turn to slide three. As always, I need to advise you that this call will contain forward-looking statements. Such forward-looking statements are subject to risk and uncertainty that could cause actual results to differ materially from expectations. For further information on the risk factors, including the uncertainty around COVID-19, please see the company announcement for the first nine months of 2020 and the slides prepared for this presentation. Please turn to the next slide. In 2019, Nordisk introduced Strategic Aspirations 2025, which consists of four dimensions, purpose and sustainability, innovation and therapeutic focus, commercial execution, and financials. In 2020, Nordisk has progressed on both adding value to society and on our environmental footprint. During the course of 2020, Nordisk has launched a new social responsibility strategy, Defeat Diabetes, and as part of our access to insulin commitment, we have lowered the ceiling price of our human insulin in 76 low and middle income countries. Specifically, in the third quarter of 2020, Monoi set a target to reduce all direct supplier supply, sorry, Monoi set a target to ensure that all direct suppliers supply the company using 100% renewable power by 2030. In the third quarter, we made progress within our innovation and therapeutic focus aspiration. In particular, the phase 2B trial investigating siltivecumab in cardiovascular disease successfully completed. Mads will share more on R&D a little later. Moving to commercial execution, diabetes care sales increased by 8%. and we increased our diabetes value market share leadership by 0.8 percentage points to 29.2%. GLP-1 sales continued to perform well at 29% sales growth while Obesity Care and BioPharm sales increased by 6% and 4% respectively. Within financials, total sales increased by 7% with international operations growing by 12% and North America operations growing by 2%. Operating profit increased by 7% to 22.9 billion Danish kroner. As we disclosed on 8th of October, we now expect both sales and operating profit growth of 5% to 8% measured at constant exchange rates for the full year 2020. Please turn to slide five. Nordisk, like the rest of the world, continues to be impacted by COVID-19 pandemic. and like many other organizations, our commitment to employees, patients and communities remains unchanged. For production, Nordisk manufacturing sites continue to operate and products are being made available to patients throughout the world. Within research and development, trial recruitment is still below the pre-COVID-19 levels with some new trials being initiated. Commercially, fewer new patients initiated treatment during the lockdowns. This has specifically impacted launch products and products with a short stay time. A gradual recovery of patient initiations took place in the third quarter. The COVID-19 pandemic continues to evolve differently across geographies and operations are running accordingly. In many markets, sales representatives are partially back in the field. As alluded to, the pandemic has increased the number of new patients using our products. For the US GLP-1 class, as seen on the right hand side of this slide, new to brand prescriptions were substantially impacted by lockdown measures in Q2 of this year, but has since gradually recovered. However, total GLP-1 prescriptions growth has been relatively stable throughout this period. Please turn to slide six. For the first nine months of the year, total sales increased by 7%, which was driven by 12% sales growth in international operations and 29% sales growth for our global GLB-1 franchise. In international operations, all geographies and all therapies continue to contribute to growth. Sales growth was negatively impacted by COVID-19 as fewer patients initiated treatment, partially offset by COVID-19 related stocking and timing of shipments. Sales in North America operations increased by 2% in both Danish kroner and comparable exchange rates. Sales growth was negatively impacted by COVID-19 as fewer patients initiated treatment and increasing unemployment in the US, partly offset by COVID-19 related stocking in the first quarter. Sales growth was primarily driven by GLP-1, although we did see growth across our diabetes, biopharm and obesity franchises. Global insulin sales decreased by 3%, which is a result of 22% sales reduction in the U.S., partially offset by 10% sales growth in international operations. The U.S. sales decline was driven by lower realized prices following rebate enhancements, unfavorable channel mix, changes in coverage gap legislation, and the launch of affordability programs. In international operations, sales growth was driven by all insulin segments. GF1 sales increased by 29% driven by 37% sales growth in international operations and 27% sales growth in North America operations. Obesity care sales grew by 6% with both operating units contributing to growth. Sales growth was negatively impacted by fewer patients initiating treatment due to COVID-19. Biopharm sales increased by 4% driven by nortetropin. Please turn to slide seven. As part of our strategic aspirations 2025, we aim to reach one third of the global diabetes market. As previously mentioned, we have now reached 29.2%. This increase is a reflection of both the GLP-1 and insulin market share gains. For GLP-1, since 2019, we have increased our value market share by 3 percentage points to nearly 50%. The global rollout of Osempic in international operations and the uptake of Osempic and Rebelsus in North America have been key to this. For insulin, since 2019, we have steadily increased our market share by 0.8 percentage points. This can be attributed to the launch of new generation insulins in international operations facilitated by our market fit approach. Please turn to slide eight. The US GLP-1 market continues to grow around 30% in volume when measured quarter over quarter driven by once weekly GLP-1 products. With the uptake of Asympic and the launch of Rebelsus, Nordisk has new to brand market share leadership of over 60% in this GLP-1 and is the GLP-1 market leader measured in total prescriptions with around 50% market share. Despite facing difficult launch conditions due to COVID-19, Rebelsys continues to take market share both for new-to-brand prescriptions and total prescriptions, which are around 14% and 4% respectively. Please turn to slide 9. Rebelsys has had a promising start in the U.S. You can see in the graph on the left that in the 20 weeks after launch, new-to-brand prescription numbers were matching that of the SDLT2 class. Once the COVID-19-related lockdowns were implemented in March, we saw a substantial decrease in new-to-brand prescriptions. However, as the lockdowns were lifted, Rebelsus uptake has picked up. This launch uptake development reflects the improved market access of Rebelsus, which is now around 85% across commercial and Medicare. Furthermore, more than 80% of new prescriptions are new to the GLP-1 class, and Direct-to-consumer advertisement has begun. Outside of the U.S., Rebelsys has now been launched in eight countries. Please turn to slide 10. In international operations, diabetes sales increased by double-digit percentages across all geographical areas. This growth has been driven by both insulin and GLP-1 across all geographical areas. The sales performance reflects our increased diabetes value market share in international operations as indicated by the 30% share of growth. This has driven a 0.5% increase in our market share which is now at 22.7%. Please turn to slide 11. Obesity care sales increased by 6% to 4.2 billion Danish kroner. Growth was driven by both international operations and North America operations. Sales growth was negatively impacted by COVID-19 as fewer patients initiated treatment. We have now launched Saxenda in 54 countries and just yesterday the US National Institute for Health and Care Excellence recommended the reimbursement of Saxenda. All of this supports our strategic aspiration of more than doubling obesity sales by 2025. Please turn to slide 12. Biopharm sales grew by 4% in the first nine months of 2020, driven by 8% sales growth in international operations. Sales growth was driven by Nordotropin. For Haemophilia, the declining sales of 2% were a result of NOVA7 sales decline offset by Espiroct and Refixia launches. Nordotropin sales increased by 13%, reflecting commercial execution as well as changes in inventories, COVID-19-related stocking, and additional demand driven by supply challenges for competing products in selected countries. With this, I will now ask for an update on R&D.

Thank you, Lars. Please turn to slide 13. In the next couple of slides, I will first share the results from the recently completed Phase 2b Rescue Trial for Siltivecumab, and thereafter review some recent and imminent R&D milestones. Siltivecumab, to be referred to as SILTI, is the first fully human anti-IL-6 ligand monoclonal antibody that we obtained as part of the Covigia Therapeutics acquisition back in June of this year. At the time of the acquisition, the Phase IIb rescue trial was well underway. Now it's completed and we're happy to share the results. To start with a bit of context, our head of global drug discovery, Dr. Markus Schindler, described Novo Nordisk's ambition to enter the cardiovascular disease space at our R&D investor event held in June. Within this therapeutic area, CILTI seeks to address the residual inflammation related risk that exists despite today's state-of-the-art management of atherosclerotic cardiovascular disease, also known as ASCVD. In ASCVD, reduced inflammation within the heart and blood vessels, typically assessed clinically by measuring CRP, has been shown to correlate with a robust reduction in major adverse cardiovascular events in a follow-up analysis to the CANCERES trial with IL-1 antibody canakinumab. Thus, in the CANCERES trial, patients in whom canakinumab treatment resulted in an end-of-treatment reduction in CRP and interleukin-6 levels below 1.65 nanograms per liter had a MACE risk reduction of no less than 36%. Patients who did not reduce their IL-6 levels below this level at the end of treatment correspondingly had no reduction in MACE events. Encouraged by this, as well as the documented robust human genetic association between high IL-6 expression and ASCVD risk, we measured CRP and other surrogate markers of anti-inflammatory cardiovascular action in the rescue trial. We found immediate dose-dependent and sustained CRP reduction at all levels of CLT, in fact by 93% at the highest dose. Additionally, we saw reductions in the number of other cardiovascular inflammation biomarkers such as fibrinogen, serum amyloid A, and haptoglobin, as well as a decrease in the heart failure biomarker N-terminal proBNP. The very encouraging data set we now have for the CILTI molecule in ASCVD should be seen in the light of CILTI's ability to reduce inflammation in atherosclerotic patients at a very low dose level that is expectedly clinically safe. Thus, and unlike any other proved interleukin-6 blockers, we did not observe any clinically meaningful impact on neutrophils, platelets, liver enzymes, or cholesterol in the rescue trial. Currently, a Japanese phase 2 trial is ongoing, and a major pivotal phase 3 cardiovascular outcome trial is being planned for initiation in the second half of next year, following interphase 2 meetings with regulators. Please turn to the next slide. In the third quarter of 2020, several R&D milestones were reached, including the notion that we now have, for the first time ever, more than 40,000 patients active in clinical trials. Starting with our semaglutide franchise, we have initiated a phase 3 B trial investigating 1 mg of Sempic in around 800 people with type 2 diabetes with peripheral artery disease, also called PAD. The background for the trial is the finding of a significant 35% risk reduction in both peripheral and coronary revascularization events in sustained six. The PAD indication represents yet another example of how we see continuous semaglutide label expansions based on demonstration of efficacy and safety in areas of high unmet medical need. Intriguingly, the first clinical trial has now been initiated for our first-in-class glucose-sensitive insulin. The trial investigates the safety, tolerability, pharmacokinetics, and dynamics of subcutaneously administered once-daily glucose-sensitive insulin. The target product profile for this molecule includes improved glucose control as well as the virtual elimination of hypoglycemic and other side effects seen with today's insulin therapies. Another phase 1 trial that has just started investigates higher doses of oral semaglutide for type 2 diabetes, aiming for oral semaglutide to ultimately match the full efficacy level associated with even high dose administration of injectable semaglutide. Within BioPharm, we've received approval of Somapacetan, now also known as Sogroya, in the US for adults with adult growth hormone deficiency. Also noteworthy within BioPharm is the re-initiation of Phase III clinical development activities for Concisumab, which is the subcutaneous prophylactic TFPI antibody treatment in hemophilia A and B patients regardless of inhibitor status. This follows pausing of the EXPLORER trials in March of this year related to the occurrence of non-fatal thrombotic events. A revised dosing regimen is now being deployed in the EXPLORER trials. Regarding the Factor VIII mimicking antibody project MI-MATE, We have, despite a COVID-19 related period of delay in phase one, caught up with the timelines and are now in phase two in hemophilia patients with or without inhibitors, hemophilia A patients. Within other serious chronic diseases, the NASH trial investigating semaglutide in loose combination with Gilead's ACC inhibitor and FXR agonist has completed. Results will be communicated at scientific conferences during this quarter. Importantly within NASH, Semaglutide has recently been granted breakthrough therapy designation by the FDA. Breakthrough designation implies, amongst other things, that the FDA will work closely with Novo Nordisk to develop, and hopefully approve, semaglutide expeditiously for the treatment of NASH. Looking towards the rest of this year and into 2021, we will soon initiate the Phase 3 onwards program for once-weekly insulin i-codec. Furthermore, there will be a number of exciting readouts, including Sustained Forte, which is the investigation of semaglutide 2.0 mg in type 2 diabetes. In obesity, we will be submitting semaglutide 2.4 mg in both the US and EU. We accordingly expect a decision on the US submission by mid-21, since we decided to use our priority review voucher for this application. Also within obesity, in 2021, We will seek to have Phase 3 initiation for our once-weekly combination product consisting of amylin 833 and semaglutide, along with reporting of the Phase 1 results for our long-acting GDF15 project. Lastly, within other serious chronic diseases, we will, during 2021, initiate Phase 3 trials for both semaglutide in NASH as well as the cardiovascular outcome trial for CILTI. With that, over to Karsten for an update on the financials.