Novo Nordisk A/S

Thank you very much and welcome to this Nordisk earnings call for the first three months of 2021 and outlook for the year. I'm Lars Rurgard Jorgensen, the CEO of Nordisk. With me I have our Chief Financial Officer, Karsten Munk Knudsen, and Executive Vice President and Head of Development, Martin Holst Lange. Also present and available for Q&A session is Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Silvestre. Today's earnings release and the slides for this call are available on our website nonoise.com. Please note that this call is being webcasted live and a recording will be made available on Nonoise website. The call is scheduled to last 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 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 related to COVID-19, please see the company announcement for the first three months of 2021 and the slide prepared for this presentation. Please turn to the next slide. In the past three months, Nordisk has progressed on all four dimensions of our strategic aspirations. We want to continue to add value to societies while we are taking steps on prevention and access. We have announced two partnerships where we invest in healthier urban populations as well as support frontline healthcare workers in low- and middle-income countries to improve access to diabetes care. As part of our circular for zero environmental strategy, we are pleased to note that several suppliers have already committed to the zero carbon emission target by 2030 when supplying non-Nordisk, which is expected to eliminate an estimated 15% of non-Nordisk supplier carbon emissions. Martin will come back to key milestones within innovation. But firstly, I want to mention that while we had an initial setback for Osempic 2.0 milligram in the US with the FDA issued refusal to file letter, We are working towards a resubmission in the second quarter. Furthermore, I am happy to share with you that Osempic has been approved for type 2 diabetes treatment and established cardiovascular disease in China. For commercial execution, we have progressed on all three strategic aspirations. Lastly, within financials, despite a tough comparator, which has been partly offset by inventory changes and timing of shipments in the first quarter of 2029, Sales grew by 7%, while operating profit increased by 3%, both measured at constant exchange rates. Please turn to slide 5. The sales increase of 7% was driven by 9% sales growth in international operations and North American operations, growing by 5%. The negative impact for COVID-19-related stocking in the first quarter of 2020 is primarily offset by inventory changes and timing of shipments in this quarter. All therapy areas contributed to growth, with diabetes care sales growing by 9%, driven by VL1 sales growth and unchanged insulin sales. VL1 sales increased by 23%, driven by North America, growing by 19%, and international operations growing by 31%. The unchanged insulin sales were driven by 5% growth in international operations, offset by 10% sales decline in North America. The U.S. Internet sales declined by 10%, driven by declining in volume, rebate enhancement, while partially offset by channel mix. Diabetes care sales grew by 9%, as international operations grew by 18%, and North America operations grew by 2%. Firefarm sales increased by 1%, driven by North America operations. Please turn to slide 6. In line with our In terms of reaching 1 third of the diabetes value market by 2025, we have improved our market share by 0.6 percentage points to 29.3%. The increase reflects GLP-1 market share gains in both operating units. We have increased our insulin volume market share to 47.3%, driven by market share gains in international operations supported by all three areas. Please turn to slide 7. The U.S. GLP-1 volume market growth is around 20% in the first quarter of 2021, driven by once-weekly injectables as well as all GLP-1 products. Nordisk market leadership is now 58%, driven by the uptake of Osempic and supported by Rebelsus. Measured on total scripts, Nordisk is the market leader with more than 50% market share. Please turn to slide 8. In the US, Rebelsus increases its volume market share both in terms of total scripts and new patient starts, despite two lockdowns with no face-to-face interactions between Nordisk and the prescribers. We have secured broad market access for Rebelsus, while the majority of Rebelsus scripts are now reimbursed and more than 80% of new patients are from outside the GLP-1 class. Outside of the US, Rebelsus has now been launched in 14 countries, with one key market being Japan. Two and a half months into the launch, Rebelsys has captured 0.5% of the all anti-diabetes market. The OAD market in Japan constitutes around 80% of the diabetes market. Please go to slide 9. In international operations, diabetes care sales increased by 10% driven by all geographies. The continued rollout of new generation insulins and focus on the GLP-1 product portfolio has resulted in an increased diabetes market share, which is now 23.6%. This is driven by market share gains in both GLP-1 and insulin. The value share of the GLP-1 class of the total diabetes market has increased 1.8 percentage points to 11.2%. Please turn to slide 10. Obesity care sales increased by 9% with 2% growth in North America operations and 18% growth in international operations. Throughout 2020 and into 2021, fewer patients have started treatment with Saxenda due to COVID-19 lockdown and reduced access to health care providers. In the US, we have since the start of the year seen an upward trend in the new patient starts on Saxenda. Indicating early signs of recovery in patient flow. Please turn to slide 11. Biopharma sales grew by 1%, driven by 3% sales growth in North America operations and unchanged sales in international operations. Rare blood disorders grew by 2%, driven by new product launches with Espiroct and Refixia. The 2% or 7 sales decline was more than offset by Haemophilia A products growing by 16% and Haemophilia B sales increasing by 18%. Rare endocrine disorders grew by 2%, driven by new indications and global rollout of next generation device for Nordotropin. Now over to you Martin for an update on R&D.

Thank you Lars. Please turn to slide 12. We continue to progress our late stage pipeline, aiming at initiating phase 3 activities across all of our therapy areas over the next year. In other serious chronic diseases, we in April initiated the phase 3A trial called Essence, evaluating subcutaneous once-weekly semaglutide 2.4 mg for treatment of non-alcoholic stale to hepatitis or NASH. The trial will enroll around 1200 people with NASH in stages two and three of fibrosis. The trial is planned in two parts. Part one will assess the effect of semaglutide 2.4 milligram versus placebo, both on top of standard of care. The primary assessment will be based on liver histology after 72 weeks of treatment. Part two will be an extension of part one, thereby preserving the randomization and assessing the effect of semaglutide 2.4 milligram on liver related clinical outcomes after a total of 240 weeks of treatment. The regulatory submission is expected to be based on part one of the trial, combined with the already completed and reported results from the phase two trial for which we have been granted breakthrough designation by the US FDA back in 2020. Please turn to the next slide. In obesity, our strategic aspiration is to develop a leading portfolio of superior treatment solutions. Consequently, we have decided to complement our injectable therapy portfolio with an oral option. From market research, we know that the majority of people with overweight seeking care with healthcare providers are not referred to an anti-obesity medicines prescriber. Research has shown that a number of patients, as well as their prescribers, have a preference for tablet-based treatment. Consequently, we expect to be able to address a substantial unmet need by developing a broader palette of obesity offerings, as we in April announced our decision to enter into Phase III in obesity with all Tamaglutide 50 mg. This decision follows the completion of the STEP Phase IIIa clinical program for once-weekly subcutaneous semaglutide 2.4 mg, which is currently under regulatory review in the US as well as in the EU. The global 68-week program, also called OASIS, will enroll around 1,000 people with obesity or overweight with at least one weight-related comorbidity in a total of three trials. Usual weight-related comorbidities are defined as hypertension, dyslipidemia, obstructive sleep apnea, and cardiovascular disease. We expect to, in the second half of 2021, to initiate the first of the three trials, which is expected to enroll around 650 trial participants. The objective is to confirm superiority of oral semaglutide 50 mg versus placebo, on weight loss in people with obesity or overweight. Please turn to the next slide. Now turning to the broader R&D high level milestones in 21. As Lars mentioned earlier, we have in U.S. in March received a refusal to file letter for the label expansion for 2.0 milligram of Osempic for the treatment of diabetes. The regulatory file was based on the sustained forwarded trial The U.S. has requested additional information mainly related to additional manufacturing data, and it is our belief that no additional clinical data will be needed for the resubmission. We are currently in a constructive dialogue with the FDA and work to resubmit during the second quarter of 2021. Moving on, also in the first quarter of 2021, we have initiated a Phase III 52-week clinical trial with once-weekly semaglutide 2.4 mg in people with obesity-related heart failure with preserved ejection fraction . In the second quarter, we also expect to initiate the Phase III program for all semaglutide in Alzheimer's disease, and we look forward to receiving the feedback from the US FDA on the application for semaglutide 2.4 mg in obesity. Moving to the second half of 2021, we expect to see Phase 1 results within our insulin innovation, and we also expect to initiate the Phase 3 outcomes trials for ciltivecumab within cardiovascular disease. Towards the turn of the year, we expect a decision from the EU on semaglutide 2.4 mg in obesity, as well as for osempic 2.0 mg within diabetes. And within BioPharm, we expect to have results from the phase 3 program for somatopacitin in children. Lastly, for the ongoing combined phase 1 and 2 trial with MyMate, we expect to see results from the different cohorts during the coming three quarters. With that, over to you, Karsten.

Thank you, Martin. Please turn to slide 15. In the first three months of 2021, sales were unchanged in Danish kroner and grew by 7% at constant exchange rates. The gross margin declined to 82.8% compared to 84.1% in 2020. The decline reflects negative currency impact and lower realized prices in the US, partly offset by a positive product mix and productivity. Sales and distribution costs increased by 9% in Danish kroner and 16% at constant exchange rates. The increase is driven by launch activities and promotional spend for rebellious and osempic market development investments for obesity as well as sales force expansions in China. Research and development costs increased by 4% in Danish kroner and 7% at constant exchange rates. The cost increase is driven by a higher activity level as we progress the early stage pipeline within other serious chronic diseases as well as the ongoing cardiovascular outcome trials, SOL and SELECT. Administration costs increased by 1% in Danish kroner and 3% at constant exchange rates. Operating profit decreased by 8% in Danish kroner and increased by 3% at constant exchange rates. The negative currency impact on operating profit is partly offset by around 1 billion Danish kroner in hedging gains under net financial items. This compares to a loss of 1.3 billion Danish kroner in 2020. The hedging gains are a consequence of the US dollar trading 9% lower compared to last year. Net profit increased by 6% and diluted earnings per share increased by 8% to 5 kroner and 45 euro. Free cash flow was 9.5 billion Danish kroner compared to 7.7 billion Danish kroner in 2020. The increase reflects the higher net profit and the favorable impact from changes in working capital. In the first quarter of 2021, we have realized a negative currency impact on sales and operating profits. The currency headwinds are driven by most major currencies and emerging market currencies trading at lower levels in 2021 than in 2020. Some of the negative currency impact from major currencies on operating profit is as mentioned partly offset in net financial items as they are hedged. Please turn to the next slide. Based on the strong underlying performance seen in the beginning of 2021, we now expect 2021 sales growth between 6 and 10 percent at constant exchange rates. This guidance reflects continued diabetes care growth mainly driven by Osympic and Rebelsis as well as obesity care growth. Also embedded is intensifying competition both within diabetes care and biopharm and continued pricing pressure mainly within diabetes care in the U.S. Operating profit is now expected to grow between 5 and 9 percent Reflecting the sales growth outlook and continued investments in current growth drivers as well as pipeline assets to secure future growth. As previously mentioned, we expect negative currency impact for the full year. Consequently, reported sales and operating profit growth is now still expected to be 4% and 6% lower than at constant exchange rates respectively. The current COVID-19 pandemic causes uncertainty to the outlook regarding new patient initiations and societal impacts. Financial items is still expected to be a gain of around 0.7 billion Danish kroner. Due to minor timing changes, we now expect capital expenditure to be around 7.5 billion Danish kroner in 2021. Lastly, free cash flow is parallel shifted upwards by 1 billion Danish kroner and now expected to be between 37 and 42 billion Danish kroner. As a consequence, the ongoing share-buy-back program is expanded with 1 billion Danish kroner to 18 billion. Now back to you Lars for final remarks.