Novo Nordisk A/S

Hello and welcome to the Q4 2020 NOVA Nordisk A S earnings conference call. Throughout the call participants will be in listen mode only and afterwards there will be a question and answer session. Today I'm pleased to present Lars Fruhgard Jorgensen. Please go ahead with your meeting.

Thank you very much. Welcome to this NOVA Nordisk full year 2020 and outlook for 2021 earnings call. I'm Lars Fruhgard Jorgensen, the CEO of NOVA Nordisk. With me I have our Chief Financial Officer, Karsten Munk Knudsen, and our Chief Science Officer, Mads Kroosgaard-Thompson. Also present and available for the Q&A session is Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camille Silvestre. Today's earnings release and the slides for this call are available on our website, knownnoise.com. Please note that this call is being webcasted live and a recording will be made available on Known Noise's website. This call is scheduled to last for one hour. The presentation is structured as outlined on slide 2. Please note all sales and operating profit growth statements will be at constant exchange rates unless otherwise specified. The Q&A session will begin in about 25 minutes. Please turn to slide 3. 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 uncertainties around COVID-19, please see the company announcement for the full year of 2020 and the slides prepared for this presentation. Please turn to the next slide. Nordisk has also been challenged in the last year from COVID-19. During this period, our key priorities have been to safeguard our employees, continue the supply of life-saving medicines and support societies around the world. We believe we have successfully delivered on these priorities while also delivering on our strategic aspirations. Nordisk has taken important steps towards reaching our strategic aspiration 2025 on all four dimensions. We launched our social responsibility strategy Defeat Diabetes and raised the ambition on renewable power to include our direct suppliers. Later, Mads will elaborate on the successful year within innovation and therapeutic focus. For commercial execution, we have increased our market share in diabetes and have progressed on obesity and biopharm aspirations. Lastly, on financials, both sales and operating profit grew by 7% at comparable exchange rates, and we continue to provide attractive capital allocation by returning 37 billion Danish kroner to shareholders. Please turn to slide 5. Before we move on to the particulars of this full year performance, I would like to update you on changes to executive management. After more than 30 years with Novo Nordisk and 20 years as Chief Science Officer, Mads Kortgaard-Thompson will retire from his current position by the end of February 2021 and take up a position as CEO at the Novo Nordisk Foundation. This leaves the role as CEO at a time where Novo Nordisk pipeline is strong and the entry into new therapy areas is on track. As a consequence and in accordance with succession planning as of 1st of March R&D will be reorganized into two separate areas. One of which is research and early development headed by Marco Schindler who is promoted to executive vice president and chief science officer. The other area is development headed up by Martin Lange who is also promoted to executive vice president. In a time where we are broadening our technology platforms and expanding our research into adjacent disease areas, markers will play a central role in bringing higher levels of innovation across all therapy areas, thereby ensuring that our business continues to be sustainable in the decades to come. Furthermore, with more projects and a broader strategic therapy area focus than ever before in our history, development is essential for ensuring that our portfolio of innovative drugs and devices The 10% sales growth at comparable exchange rates was driven by 10% growth in software operations, where all areas and therapies supported growth, and North America operations growing by 3%. Sales growth was driven by growth across all therapy areas. Diabetes care grew by 8% despite insulin sales decreasing by 3%, reflecting lower realized prices in the U.S. Tier 1 sales increased by 29%, driven by a 32% sales growth in international operations and a 28% sales growth in North America operations. Obesity care sales grew by 3%, driven by international operations, partly offset by North America operations. Sales growth was negatively impacted by COVID-19, driven by fewer patients initiating treatment. Biopharm sales increased by 1%, driven by international operations. Please turn to slide seven. We aim to reach one-third of the global diabetes value market and we are now at 29.3%. This increase is a reflection of GLP-1 market share gains. For insulin, we have increased our volume market share by 0.7% in the last 12 months, which was driven by market share gains in EMEA and rest of the world. Since 2019, we have increased our GLP-1 market share by around 3% to over 50%. This is driven by market share gains in EMEA, rest of world and the U.S. Further, it reflects the global uptake of Osempic and launches of Rebelsus in nine countries. Please turn to slide 8. The U.S. GLP-1 volume market continues to grow around 30%, driven by once-weekly GLP-1 products. With uptake of Osempic and the launch of Rebelsus, Nordisk has new-to-brand market share leadership of 57.1%, and is the market leader with around 50% market share measured in total prescriptions. Please turn to slide 9.

Since the initial focus launch, the Rebelsus uptake has been on par with that of select SGLT2 launches.

In its first full financial year since broad launch, sales of Rebelsus was 1.9 billion Danish kroner. Despite a challenging launch environment, where on several occasions we have had to stop face-to-face interactions between our sales force and doctors, we are pleased with the Rebelsys performance. In the U.S., Rebelsys market access is now around 90%. Furthermore, the 80% of new prescriptions are new to GLP-1 class, with direct-to-consumer advertisement continuing. Outside of the U.S., Rebelsys has been launched in eight countries and has obtained around 5% volume market share in the modern non-insulin anti-diabetic market in select launch countries. Additionally, in the first quarter of 2021, we plan to launch for BELSUS in Japan, where the OAD class represents around 8% of the total diabetes market. Please turn to slide 10. In international operations, diabetes care sales increased by 11%, supported by all geographies and therapy areas. The sales performance reflects our increased diabetes value market share, as indicated by the 37% share of growth. This has driven a 1% point increase in our market share, which is now at 23%. Please turn to slide 11. Obesity care sales increased by 3% to 5.6 billion Danish kroner, negatively impacted by COVID-19, as fewer patients initiated treatment. In international operations, sales grew by 11%. In North America operations, sales declined by 1%, impacted by channel mix. Of note, we have submitted marketing authorization application in both the US and EU for semi-glutide 2.4 mg for the treatment of obesity. Please turn to slide 12. BioPharm grew sales by 1% in full year 2020, driven by 5% sales growth in its national operations, as well as the launch of new hemophilia products and growth disorders. For hemophilia, the 4% sales decline reflects declining NOAA 7 sales, while the hemophilia A and B franchises grew, driven by Asperox and Reflexia. Nordisropin sales increased by 8%, Sales growth was positively impacted by additional demand following supply challenges for competing products in select countries. With that, over to Mads for an update on R&D.

Thank you Lars. Please turn to slide 13. In the next few slides, I'll share with you our progress within both GLP-1 and insulin innovation, as well as within the rest of the pipeline. Starting with semaglutide, we were very pleased with the results from the SUSTAIN-40 2mg Osempic trial, including the greater than 2% HbA1c reduction that was accompanied by a benign safety and tolerability profile, thereby establishing an attractive benefit-risk ratio in type 2 diabetes. Across the SUSTAIN program, semaglutide 1 mg has demonstrated that up to 80% of patients have achieved an HbA1c level below 7%. With a statistically significant increase in the percent of patients reaching the A1c target on semaglutide 2 mg versus 1 mg, The trial demonstrates the potential of 2 mg weekly to further improve glycemic outcomes for patients in poor control. This is seen despite the low rate of gastrointestinal adverse events observed in sustained forwarded that were actually similar between both doses of semaglutide. We've now submitted regulatory applications for label expansion in both the EU and the US. Furthermore, we've now begun the phase 3 trial with all semaglutide 25 and 50 mg in type 2 diabetes. As you can see, the higher doses will be compared to the currently approved Rebelsis dose of form 14 mg. The trial has been designed to confirm superiority of the higher doses versus the 14 mg dose. Similar to high-dose subcutaneous semaglutide, the high doses of oral semaglutide aim at providing additional options for those needing oral treatment intensification over time. Please turn to the next slide. 2021 marks the 100-year anniversary of the Discovery of Insulin in Toronto. Despite the long history, Novo Nordisk's diabetes pipeline still showcases our continued focus on delivering improved treatments, including potentially preventative treatments. In the fourth quarter of 2020, we initiated the Phase III program for insulin ICODEC, poised to become the first-in-class once-weekly insulin. As you can see, the program will consist of six trials collectively known as the ONWARDS program. The ONWARDS program comprises multiple trials of varying designs to demonstrate ICODEC's efficacy and safety profile in different settings. We believe that ICODEC's improved pharmacodynamic profile, along with enhanced convenience and adherence, can drive improved patient outcomes, thus providing a differentiated profile versus the currently most used once-daily insulin. In this regard, one of the Type 2 diabetes trials, ONWARDS 5, sets out to prove the above in a pragmatic setting, resembling a real-world evidence trial. while also deploying app-based dosing guidance. Additionally, the first clinical trial for our first-in-class glucose-sensitive insulin has been ongoing since the third quarter. The target product profile for this insulin includes improved glucose control as well as the elimination of hypoglycemia and other side effects of today's insulin therapies. In Q4, we initiated a phase 1 trial for the so-called ideal pump insulin. This insulin seeks to deliver better glycemic control and improved convenience in general including its use in closed-loop insulin pump systems. This is principally achieved by avoidance of the lag time from insulin infusion to insulin action. Last but not least, we initiated a phase 1 trial investigating DNA plasmid-based immunotherapy as a potentially preventative treatment for people at high risk of encountering overt type 1 diabetes. This potentially disease-modifying treatment uses a subcutaneous torogenic DNA plasmid injection to prevent the onset of averse diabetes in high-risk subjects. Please go to the next slide. The upcoming year will prove particularly exciting as we plan to initiate new Phase III programs and have them running in each of our therapeutic areas, including the new ones. Starting with the fourth quarter of last year, several R&D milestones were reached. Starting with semaglutide and type 2 diabetes, we had both a successful completion and regulatory submission of the Phase III sustained forward health data. Moving to obesity, we have now submitted the new drug application in the US and the marketing authorization application in the EU for semaglutide 2.4 mg as a once-weekly treatment for people with obesity. In the US, a priority review voucher was used, reducing the expected review time from 10 to 6 months. This gives the opportunity for US approval mid-21. An EU decision is expected around the turn of the year. We just received a positive opinion in the EU and approval in Japan for Sogroya, the once-weekly treatment for adult growth hormone deficiency, also known as Somapatitan. Sogroya is currently being investigated in the REAL4 phase 3 trial for children and adolescents, and these pivotal results are expected around year 8. As we continue into 21, there are a number of exciting clinical developments. In the first half of this year, We expect to receive proof-of-concept data for MIMATE, a bispecific antibody for subcutaneous prophylaxis treatment in people with hemophilia A. In other serious chronic diseases, we also expect several phase III initiations during this year, namely for semaglutide 2.4 mg weekly in NASH and oral semaglutide once daily in Alzheimer's disease, as well as ciltivekimab in atherosclerotic inflammatory cardiovascular disease. On a personal note, I would like to round off my last roadshow, out of many, by mentioning that our wonderful company, including its liaison with stakeholders like yourselves, has been both my passion and my job for 30 years. It will luckily remain so in my new role as CEO of the Novo Nordisk Foundation, from where I expect to follow the future innovation-driven growth of Novo Nordisk very closely. I have treasured our many years of interactions, and I will miss them going forward. Good luck, stay safe, and now over to you, Karsten.

Thank you, Mads. Please turn to slide 16. In 2020, sales increased by 4% in Danish kroner and by 7% at constant exchange rates. The gross margin was unchanged at 83.5%. Sales and distribution costs increased by 3% in Danish kroner and by 6% at constant exchange rates. The increase was driven by global launch activities for Rebelsys and continued promotional activities for Simplic as well as rollout of Saxenda in international operations. R&D costs increased by 9% in Danish kroner and 10% at constant exchange rates. The increase is driven by amortization of the priority review voucher for semaglutide in obesity and a higher activity level within all the serious chronic diseases following progression of the early pipeline as well as patient recruitment for the ongoing cardiovascular outcome trials SOL and SELECT. Administration costs decreased by 1% in Danish kroner and increased by 1% at constant exchange rates, reflecting broadly on chain spend across administrative areas. Operating profit increased by 3% in Danish kroner and by 7% at constant exchange rates, resulting in an operating margin of 42.6%. Net financial items showed a loss of around 1 billion Danish kroner compared to a loss of 3.9 billion in 2019 I'll come back to this in the following slides. 16.3 billion Danish kroner from the acquisitions of Covidia and MS Share. Please turn to slide 17. In 2020, Nordisk returned approximately 37 billion Danish kroner in the form of dividends and share-by-backs to shareholders. At the Annual General Meeting on 25 March 2021, the Board of Directors will propose a final dividend of 5 kroner and 85 øre for a total 2020 dividend of 9 kroner and 10 euro and 9% increase from 2019. In addition to the dividends, 17 billion Danish kroner was used for the repurchase of shares. Nordisk has consistently returned its free cash flow to investors through both share buybacks and dividends with the dividends per share increasing for now 25 consecutive years. For 2021, the Board of Directors has approved a new share repurchase program of up to $17 billion to be executed during the coming 12 months. The total program may be reduced in size in case of significant business development transactions during 2021. Please go to slide 18. In 2021, we continue to focus on top-line growth with sales expected to grow between 5% and 9% at constant exchange rates. The guidance reflects expectations for continued sales growth in international operations, in line with the strategic aspiration of 6-10% growth, as well as growth in North American operations. On a therapy level, the guidance reflects continued sales growth within diabetes care, mainly driven by osempic and rubellsis, and growth within obesity care. The guidance also reflects intensifying competition in diabetes and biopharm and continued pricing pressure, mainly within diabetes in the U.S. Operating profit is expected to grow between 4 and 8%, reflecting the sales growth outlook and continued investments in current growth drivers as well as pipeline assets to secure future growth. As previously mentioned, following the strengthening of the Danish kroner versus our main currencies, reported sales and operating profit growth is expected to be 4 and 6% lower than at council exchange rates respectively. The current COVID-19 pandemic causes uncertainty to the outlook regarding new patient initiations and societal impacts, such as the unemployment rate in the US, which is impacting healthcare insurance coverage. Financial items is now expected to be a gain of around 0.7 billion Danish kroner. I'll get back to the impact from currency movements in the next slides. Capital expenditure is expected to be around 8 billion Danish kroner in 2021, primarily relating to investments in additional capacity for API production following the progression of R&D pipeline projects based on the oil technology platform. Lastly, free cash flow is expected to be between 36 and 41 billion Danish kroner. Please go to the next slide. The negative currency impact in 2020 reflects the Danish kroner appreciation versus most foreign exchange rates. This had a negative impact on operating profit but it was partially offset by gains on foreign exchange hedging. We are expecting similar developments in 2021 given the current spot rate and we are expecting a negative impact on operating profit of around 3 billion Danish kroner. We expect hedging gains of 1.1 billion Danish kroner mainly related to the US dollar with a hedging period of 11 months and associated hedging costs. And now, over to you Lars for final remarks.

Thank you, Karsten. Please turn to slide 20. We are very pleased with the progress on our strategic aspirations in 2020, despite the challenges of COVID-19. The financial results reflect sales growth in both international operations and North American operations, driven by more patients using our GF1 treatments. Within R&D, key milestones in the fourth quarter were the regulatory submission, of Semaglutide 2.4 mg, which has potential to redefine the treatment of obesity. In 2021, we will continue our focus on commercial execution while conducting more late-stage clinical trial programs than ever to meet the unmet needs of people living with diabetes and other serious chronic diseases. We are now ready for the Q&A, where I kindly ask you to limit yourself to two questions. Operator, we are now ready to take the first questions.

Thank you. If you wish to ask an audio question, please do so by pressing 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Once again, please press 01 on your telephone keypad if you wish to ask an audio question. There will be a brief pause as you wait for questions to be registered. Our first question comes from Peter Verdot from Citi. Please go ahead.

Yeah, thank you. Peter Verdot here from Citi. Two big picture questions for Mads, given it's his last quarterly conference call. Firstly, please remind us, Mads, on the sort of broader technologies and timelines Novo is working to with respect to your stem cell therapy efforts in diabetes. I'm asking the question in light of other companies beginning to talk More about this area. I just want to know or get a gauge how you're feeling whether NOVA is in the vanguard of developments and how you handicap the technologies you are using versus the competition. And then secondly, usually when you ask a head of R&D to name their most promising pipeline assets, you get a very bland and boring answer about loving all their children equally. Now, given that you're heading off to a well-deserved retirement from being CSO and perhaps can talk more openly Could you maybe just call out what you believe to be the most interesting and exciting early stage pipeline assets in the NOVO portfolio? Thank you and all the best going forward.

Thank you Peter. Mads, that was two questions for you. Stem cell and then your darling.

Apologies, there seems to be a technical issue. Please hold while you solve the issue.

I will start all over because I was muted. Sorry, Pete. No, of course, I'm still CSO for the remainder of February month, so there are limitations to how much I can be specific on my pet projects. I would say, though, that all Biologics leadership position now that we also have made the MSV acquisition allows us to broaden out into very, very exciting target areas in many different therapeutic arenas. And you can do things with all biologics that are not amenable to classical small molecules. So I'm very excited there without singling out one project. But you can imagine that if you could take the combination of amylin and semaglutide and I can now tell you the amyloid is called cagrelinside. We are achieving WHO approval of the name cagrelinside. So if you can take cagrelinside and SEMA and deploy that more or less in all versions, you're standing in a unique position. So these are kinds of exciting things that you should be looking out for in the future. But in terms of the stem cells, well, the ambition that management has approved for the Transformation Research Unit doing stem cells is one new clinical IND that is in Investigation new drug application every year starting this year. The first indication will be in Parkinson's disease and not in diabetes. Diabetes is going to come in the second place. This also means that you should imagine an IND towards the end of next year or thereabouts depending on the progress. I have to make the comment that the sematherapeutics company that was acquired by Vertex in the not too distant past, they have announced that they are deploying initially A non-encapsulated, raw injection of stem cell-derived beta cells that will call for the use of an immunosuppressive cocktail. So this kind of approach is nice for them to show proof of principle, you might argue, but it's highly unlikely to deliver a product to the market, which is also why they themselves are stating that their next generation product is using encapsulation. And I may remind you, Pete, that we did a development, a research agreement with Professor Pappas and the Procyon company for having the most elegant encapsulation device available for our beta cells and they are the ones that are now taking into toxicology trials aiming at the second indication being type 1 diabetes for the company. And we hope and maybe celebrate that at the 100th anniversary not of insulin in Toronto but of the Novo Nordisk company.

Got it, thank you.

Thank you, Mads, and there was some goodies there, Pete. So next question please.

Our next question comes from one more from Bernstein. Please go ahead.

Great. Thank you very much for taking my questions. I'm Michael Pardes from Bernstein. Firstly, just congrats to Madge on the great success at Novo. You'll be missed, and best of luck in the new role at the Novo Foundation. So my first question is just on the onwards program for weekly insulin iCADEC. Now, I kind of always assumed that you would run a relatively tight phase three program that was quite cost effective, ensuring quick speed to market. So it looks like quite a robust program is planned. So just your thoughts, you know, if anything has changed on the potential role of a weekly insulin, you know, and the role it could play in the basal market. And if so, was there any data that's driven that change? And then my second question is just one on the guidance and obesity. You know, clearly this is the most impacted franchise within your portfolio from a COVID perspective, given it's, you know, highly discretionary. So I'm just trying to get a sense of how Novo think about the next six months for Saxenda. and then the launch of SEMA in obesity. Should we be expecting a strong uptake in the second half, even in the COVID world, given it's significantly superior to Saxenda? So just your thoughts on the launch there would also be helpful. Thank you.

Thank you, Vimal. Mads first on the OnWatch program.

So, Vimal, originally we were anticipating a very slim program, realizing that this was in all likelihood An undifferentiated clinically speaking insulin but with an attractive convenience and thereby adherence profile because it was once a week instead of once daily. What we came to learn in the data that were published for instance in the New England Journal of Medicine recently for one of the most critically important phase 2 trials was that we actually exceeded our own expectations for the molecule. This means that the coupling of a molecule that we believe is clinically differentiated compared to for instance insulin Glargine while at the same time being more convenient and the advent of new technology. If you look into the ONWARDS 5 trial, we have done a real-world evidence-like study with very few clinical interventions, quite few site visits. It resembles very much a real-world evidence trial and that means that you get an impression of how does this perform in a real-life setting and integrating that with some new technology where we have an electronic patient interaction device which enables both dose guidance but also easy interaction remotely between physician-patient and even the company collection of data for that matter has allowed us to do a slightly broader program than originally anticipated. But we are recruiting and there's high enthusiasm we can see from the investigators and part of that of course is based on high impact publications with good data such as in the Journal of Medicine. So we're excited, it's a slightly broader program than we originally anticipated. We apologize for that but it will also mean that we'll get a more attractive label we hope. Thank you very much.

Camilla, some perspectives on obesity?

Thank you, Lars. So on obesity, there's no doubt that we will continue our efforts on developing the market. As you recall from when we discussed last time, there are 650 million people suffering from obesity, but only 10% of those are actually seeking care. And when they seek care, it's only a fragment of those that are being treated with anti-obesity medication. So from the 650 million down to less than a million being treated with Saxenda. So there is still a lot to do on market development in the coming six months and hopefully that will also pave the way for a much more efficacious product in the semaglutide 2.4 with almost twice the efficacy of Saxenda. So the awareness building, the physician support and then of course also the digitalization are some of the efforts that we are working on right now. that hopefully will also be useful in the COVID-19 context, meaning that online care for obesity is something that we are also embarking on.

Thank you, Camilla. Thank you very much. Thank you. Next question, please.

Our next question comes from Simon Baker from Redburn. Please go ahead. Simon Baker, please go ahead with your question from Redburn. Okay, it appears Simon is unable to answer at this moment, so we'll proceed to our next question from Martin from Danske Bank. Please go ahead.

Hello, Martin Parker, Danske Bank. Two questions. First one, maybe it's Lars or Camilla. Just on the market growth, because you have talked a lot about your growth this year are hurt by Less treatment starts on GLP-1 and so forth. But the reality is that if you look at the reported growth for all the diabetes companies in the world, then it's actually been a quite strong growth rate. I think that it's at the tune of 6% for the global diabetes market in 2020. And I remember back at your Capital Markets Day in 2019, you were looking for long-term growth rate at the tune of 4% adjusting for the January patent expiry. So what are your thoughts on why we have seen this strong growth? Is this due to better compliance? And how do you look into the overall market going into 2021? And then the second question, of course, has to be for Mads. I just had a question to the slide on slide 13 and on the higher doses of all semaglutide. Can you come a little bit because it's a little bit like comparing apple with oranges because the 14 milligram are based on the old formulation and the 25 and 50 milligram are based on a new formulation. So in reality the efficacy of 50 milligram on the new formulation is probably corresponding to more than 60 milligram on the old formulation. Is that correlation correct? And then What do you actually think this will match? This is something will match the currently approved Osempic dose or do you think that it can be all the way to the 2.0 milligram that we have the data on the same slide? Thanks.

Thank you Martin. First Camilla, some perspectives on what we believe of the GLP-1 growth.

It's actually for the whole diabetes market.

Okay, the whole diabetes market.

Thank you. So on the whole diabetes market, it's important when we talk about less treatment starts, we need to separate between existing treatments and new treatments in the light of COVID-19. So it's also important to understand that as we add new and better treatments to a segment like we've seen in GLP-1, We have seen increased growth rates as more and better treatment becomes available. However, when we talk about less treatment starts, it mainly reflects on new launches, whereas for existing products, we see a continuation of the existing trend. But the simple facts are that for new launches, it just is more difficult to get to the same and more and better treatment options of course will drive a better underlying growth as we've seen in the GLC1. Martin, it's a very smart and crisp observation you've made because we hate to waste too much time in R&D.

So we actually decided to embark on a very rapid-onset phase 3 trial for these high doses. And it is also true that the so-called type 9 Rebelsis tablet, which is on the market, represents the 14 mg, whereas we are into one of the newer generations with the other ones. These studies are rather long, as you can see, because we have a full 52 weeks on treatment in the maintenance period at steady state. Making it a rather long trial and also a relatively big trial. So when we get data which is happening during the course of the next month on these new properties of these new tablet formulations, we are actually able to correct for that before we have, you can see, the completion of such a trial. It is actually possible via bioequivalents and those kinds of simulations and data to actually exchange one tablet with another. So you have the go-to-market tablet ultimately generating the pivotal data. Another option is of course if you are very bold, I think the 25 milligram in the new formulation does fantastic stuff, you might not need to go above that one. We're just investigating a full dose response range you can argue. And by the way, Martin, the ambition is, as you stated very correctly, to go all the way to the 2mg Osempic Sustain Forte efficacy level. That is actually the target for this tablet. Very exciting.

Thank you, Mads.

Can I just follow up? Because I don't think that you answered my first question. Maybe I didn't express myself. I was just looking at the overall diabetes market and not the other one. We have seen, if you look at the overall diabetes market reported by all diabetes companies, it looks like we have had actually a quite good diabetes growth of around 6% reported. which is more than the 4% that you have put into your long-term aspirations. So I'm just thinking, is this driven by a high compliance rate? You can see the insulin growth in international relations has been much higher than historic growth rates. So have you seen a higher compliance? Meaning that people have been, because diabetes is a risk factor due to COVID, if you are infected by COVID-19, so people better maybe have to be more compliant. And does that mean that 2020 on a market perspective may be actually served as a top comparison?

So thank you Martin, I know you do some detailed research in this area and I know that Karsten has written in detail, so he would like to make a comment on it.

Yeah, so Martin, first of all, now we talked about comparing apples and oranges, so the 4% we presented at our capital markets day, That was an IMS or IQV based value market growth. And what you have here is company reported and one is CAGR and another one is for one year. So just to say that there are a couple of differences in data as I'm sure you understand. That said, then you're correct. There's a solid diabetes market growth and we're growing faster than the market as you see it at 8%. And despite COVID, So we have also been surprised around how resilient our diabetes care business is. And of course, it's a function of it. We're talking about chronic therapy. So patients are on treatments. When we look at adherence data on therapy adherence data in terms of impacting the usage, we have not been able to prove statistically that it has increased during COVID. And then the final comment is that, as Camilla said, so where we do see the main impact is on launch brands and then you could say as a physician and when you're initiating treatments and you're not too familiar with a new brand because you've not had too much education from sales reps on the product, then you will start patients on a different, more kind of classic product, be that Osympic or Victosa.

and I guess in particular around 2020 it also plays in that there was some stock building in the beginning of the year and part of that is still sitting with patients. I'm not sure how big a share that is but that probably also plays in.

Thank you.

I hope that satisfied you, Martin. We'll move on to the next question. Thank you very much.

Thank you. Our next question comes from Sachin Jain from Bank of America. Please go ahead.

Hi, Sachin Jain here from Bank of America. Thanks for taking my questions. Firstly, just to echo prior comments, Matt, thanks for all the insights over the years and best of luck with the next ventures. Actually, financial questions first, if I may. So, for Karsten, firstly, one of the key deltas within the guidance range, which is slightly wider than usual, and I guess investors this morning have gravitated to top end, given your usual conservatism at this time of year. So, why don't you just outline some of the factors within that range? And then related, the guide seems to imply U.S. growth. in a sort of mid-single digit range versus commentary, obviously, almost a year and a half ago for this year to be around two. So could you use some color on variables within that? And I guess most importantly, what have you seen for 340B and risk of that benefit being realized? And then just one for Mads, if I may, NIM8 phase one, two data this year, expectations for that data set, where you see differentiation and how quick could a phase three program be run there? Thank you.

Thank you, Sachin. First, Karsten, on guidance for 2021, the range, U.S. growth and potential clarity on 340B.

Yeah, so thank you for that question, Sachin. So first of all, on the ranges, you could say our top line range is one notch wider than a year ago, but given COVID, I don't think Thank you very much for joining us. Then the starting point we take is that we have indicated in our strategic aspirations that we aim at I.O. growing between 6 and 10 percent and for the last couple of years we've been in the high end of that range or even slightly above in 19. So if you assume I.O. somewhere in that range then implicitly that would entail that U.S. growth for next year will be higher than U.S. growth was in 2020. So we do see a step up in U.S. growth in 2021 compared to 2020. The building blocks on the step up in that growth is, first of all, we have a couple of drags in our 2020 performance that will be in the base in 2021 being donor toll, and a step up in our affordability offerings in the US as one key point. Then we do see a continuation of our underlying performance in TF1 business and in our insulin business. And then specifically to 340B, yes, we have included in our guidance a positive effect from 340B We have changed our 340B shipping principles as of 1st of January 2021. And as you know, historically, then when we have been being more explicit around specific impacts to our business, that U.S. business, we have commented specifically when we've had impacts, I would say 3% or greater. You remember the historic donor toll or mid last year U.S. unemployment at 3%. So since we're not calling out specifically 340B positive impact next year, you can assume that that's because it's less than 3% positive impact on growth next year.

Thank you, Karsten. And Mads, some perspectives on MyMate?

Yes, absolutely. Thanks for the kind words, Sachin. A couple of comments on the technology. What we did was to license the so-called dual-body technology from the GenMap company in Denmark, and then we've used it in our own discovery efforts to come up with what we call an optimized second-generation factor VIII mimicking bispecific antibody of the IgG4 subclass. And we've optimized it on three horizons, one being potency. And why is potency interesting? It's interesting because with imicisumab, for instance, you have to have rather high injection volumes We then also optimized it for efficacy and you might have read the paper in the circulation journal where we actually, I believe in that paper, have shown that in severe bleeds in animals that are anesthetized, where you actually have a rather severe tail bleeding. Imacizumab showed to show efficacy, but this one did, and it's probably because my mate has the ability to very potently stop tissue factor-induced bleeding episodes, which is a very unusual parameter, and efficacy-wise, there might be an upside. This might be difficult to call out in the PACE-3 trials because the HAVEN studies by the Roche company were done in a very smart way vis-à-vis how How bleeding was registered and so on. So that means that we are also planning to do some early real-world evidence insight into actually showing real-world differences between imicisomab and our new MyMate molecule, but more about that a couple of years from now. The final thing we have tried to optimize for is safety, in that we have designed a molecule that can only really bind when you are having an activated platelet surface. So if you have circulating factor IX and X in the freeze state, there will be no binding of the antibody, and hence No risk of intravascular coagulation. So we actually believe that at least based on animal and lab data, we have a very strong offering and we are targeting proof of concept this summer. And if that looks good, we will then initiate phase three immediately. Thank you.

Can I just go back to the first question, Karsten? The question on the guidance range is more what are the key factors between top and bottom, if you are able to comment on that? Thanks.

Yeah, okay, sorry, then I misunderstood you, Sachin. So, the key factors is, I would say, is fairly the classic ones. So, IO growth is, of course, something that, you know, given potential healthcare reforms in different geographies, which can, if nothing happens, can pull it up, and if we have significant healthcare reforms, Thank you very much. The second, third wave and all that, so there will be some uncertainty related to COVID-19 and I think that would be kind of the main uncertainties and 340B is perhaps the last one I'll call out since it's kind of, there's some uncertainties regarding the legal situation as to 340B and some legal proceedings ongoing.

Very good, thank you.

Thank you, Karsten. Thank you, Sejin.

Our next question comes from Truong Nguyen from Credit Suisse. Please go ahead.

Hi, guys. It's Truong from Credit Suisse. First question is simply on the timings of the data of that high dose oral SEMA study. If we have a look at clinicaltrials.gov, it slates it for early 2023, but could Could this come a bit earlier with some faster recruitment? Because presumably this is pretty key to compete with things like the Pfizer's oral GLP-1 and Tazepatide, which are on the horizon. Second question is on ribelsis. So can you perhaps talk about the coverage of ribelsis that you have within Europe in terms of the price and access? And then on the US, is the level of patient assistance support required Thanks very much. Thank you, John.

Timing of all seven days without getting too excited on the way out.

Yes, I promised my boss not to be too excited. By the way, say hello to Jo and remind her that my former boss, also called Lars and I, we had perpetual discussions about what was most likely to happen, oral GLP-1 or oral insulin. And one of them happened and one of us supported that one. But do say hello to Jo from me. When it says early 23 on clinicaltrials.gov, we have to remind ourselves this is a rather big trial. We want to have these as pivotal data for a new dosage indication. And we are living in COVID-19 times, even though recruitment is going quite well across our pipeline. It is, of course, hurt a little bit by COVID. Bear in mind that it's a long treatment study. We have a full 68-week period plus some end-of-study follow-up. So I think you should, for now, follow the guidance seen in clinicaltrials.gov, and then there are pluses and minuses to that. But we realize we want to be out in the marketplace with a high efficacy oral biologic, whatever the dose becomes, that is superior to what we could expect to see from competition, and we'd rather do it sooner than later. So it's a high-priority project.

Thank you, Mads. And Camilla, some perspectives on Rebels' launch, EU and US access.

Yes, so in EU the coverage is in general on par with the injectable GLP-1 and that means that in most of the countries where we have launched now we do have access at fully reimbursed levels, prices on par with the GLP-1 roughly. In the U.S., we are now at a stage where the majority of the results of Scripps are reimbursed reflecting the board market access level we have, which is around 90% now. So that's the short status. And then, of course, we are excited to launch in Japan very soon where we have also obtained access and full reimbursement.

Thank you, Camilla. Thank you, Mads. Thank you, John. Next question, please.

Our next question comes from Simon Baker from Redburn. Please go ahead. Simon Baker from Redburn, please unmute your microphone and please go ahead with your question. Okay, we move on to our next question from Michael Novo from Nordea. Please go ahead with your question.

Thanks a lot. It's Michael Novo from Nordea. First of all, a question to the CAPEX expansion. It comes rather soon after you complete the large expansion in the US. How comfortable are you with the current expansion plans and what you put into your demand schedule for semaglutide going forward? How far does this take you in terms of your projections on the demand for oral SEMA across different indications? And then secondly, on ICODEC and also circling back to previous question regarding market growth, how do you see ICODEC going forward, also bearing in mind the larger Phase 3 program? Is this more a market share game globally? Is it also a market volume growth game in the rest of the world? Is it even a potential market expansion game in the U.S. and also on the value side, whether it can drive additional value to the U.S. insulin market?

Thank you, Michael. First, Karsten, on CapEx. Paul Semme and how far that will get us.

Thanks Michael for this question. So as we said historically then if we had to upgrade our capex from the I would say around 6 billion DKK per year as we discussed at the Capital Markets Day, if we had to up it from there then it would be based on a positive pipeline progression and that's in reality what we're seeing here. So the current status on our CapEx projects is that we are in the final phases in terms before we get moved to a regulatory site submission to the FDA of our site in the US. So all the main construction and construction companies are pretty much off the site. So it's a quality approvals that are currently outstanding before we can We will start producing from the first parts of the factory being purification and then later on we will be able to go live with fermentation and recovery also. So that project is following the plan that we laid out. What we are now contemplating and the reason why we are upping our CAPEX forecast is that with the pipeline projects that we have talked about Now we just talked about high-dose Alzheimer and you heard about our Alzheimer phase 3 trial late last year that we intend to initiate. Then the reason why we are upgrading our capacity is basically to meet the potential demand on some of these pipeline projects and also potential pipeline projects on the same platform which are not publicly disclosed at this point in time.

Thank you, Karsten. If I should give some perspectives on ICODEC, it's clear when you see the dynamics in the diabetes market today, the swing we've seen in the one category going from daily to weekly. If you think about the physician setting where you have a patient that's looking for intensified treatment, it's clear that if you can develop a product that gives a clear Thank you very much. So I think we have a great opportunity. Obviously we need to see the phase three program, but I think we have an opportunity in both enlarging the market for use of insulin and obviously also taking share because this is hopefully a differentiated product both from a convenience and a clinical profile point of view. So it's a project that I'm really I strongly believe there is a role for insulin in the future and that we can significantly increase innovation height and redefine that market. After that, our glucose sensitive insulin program. Thank you, Michael, and we have time for one final set of questions.

Our next question comes from Richard Vosser from JP Morgan. Please go ahead.

Just going back to the ribaltis launch in Japan.

Richard, please unmute your mic.

Can you hear me?

Yes, now we can.

Okay, excellent. Sorry about that. So just going back to the Ibellsis launch and thinking about the launch in Japan and how we should think about that launch relative to the uptake in the U.S. Clearly there's not much COVID in Japan, but also the OAD market in Japan. Maybe give us some idea of the sizing of that relative to the GLP-1 market in the US and what opportunity you see there. And then second question, just thinking about if we could have an update on the PCSK9 and other options there to To add on within the SNAC technology with semaglutide, maybe how many things can you co-formulate and maybe an update on PCSK9. Thanks very much.

Thank you Richard. Camilla first, perspectives on launch of Rebelsus in Japan.

Yeah, so we're quite excited about the launch of Rebelsus in Japan because the OAD market, as you know, is 80% of the diabetes market in Japan. The GLP-1 market in Japan is still in a size of less than 10%, so there's a big opportunity here, of course, to expand the treatment of GLP-1 with Rebelsus. and we are planning for of course launching very soon from now and we are of course also building on many of the experiences we've had in other markets but we have also co-teamed up with Merck MSC to make sure that they can help us co-promote with also in the primary care space where they have a lot of experience where we primarily up until now have had experience in the injectable segment.

Thank you Camilla, very exciting. And then Mads, ending up on perspectives on PSK9.

Yeah, and I think maybe, Richard, I'd rather take general perspectives on the oral platform with SNAC and other enhancers we are deploying, because at this point in time we have a great many options for peptides up to the size of approximately 10,000 D, i.e. 10 Kd, that seem to lend themselves to varying degrees to being buy available vis-a-vis the newest generations of our snack technology. We are actually on to the fourth generation in that regard and PCSK9 is one option, we have many and we'll keep you updated as we one by one enter them into the clinic or not we, as the company enters them into the clinic one by one over time. Thanks. And I can confirm we will update you as we have progress.

So this concludes our earnings call. Thank you for participating and feel free to contact our investor relations officers should you have any follow-up questions. Thank you very much and have a good day.