Novo Nordisk A/S

Welcome to this Nordisk earnings call for the first six months of 2022 and the outlook for the year. This call follows the early announcement and race guidance published today. Due to Danish securities regulation, we advanced the release that was originally scheduled for tomorrow morning. My name is Lars Hrugard Jorgensen and I'm the CEO of Nordisk. With me today, I have Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Silvestre. Executive Vice President and Head of North America Operations, Dr. Lange. Executive Vice President and Head of Development, Martin Holst Lange. And finally, Chief Financial Officer, Carsten von Knudsen. All of us will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, noenordis.com. Please note that this call is being webcasted live and the recording will be made available on our website as well. This call is scheduled to last for one hour. Please turn to the next slide. The presentation is structured as outlined on slide two. Please note that 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 three. As always, I need to advise you that this call will contain forward-looking statements. such 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 six months of 2022, as well as the slides prepared for this presentation. Please turn to the next slide. In the first six months of 2022, we delivered double-digit sales and operating profit growth, which has enabled us to raise our outlook for the full year. I'd like to start this call by going through the performance highlights across our strategic aspirations before handing over the work to my colleagues. Within Purpose and Sustainability, we continue to make progress across all dimensions. Under our Defeat Diabetes strategy, we reached even more diabetes patients compared to the same period last year. In line with our aspiration to be a sustainable employer, we expanded the number of women in senior leadership positions to 38% compared to 35% by the end of the second quarter of 2021. Concerning Russia's invasion of Ukraine, our priorities remain to safeguard employees and continue the supply of essential medicines. Monozoic medicines are available in more than 90% of Ukraine, and we are collaborating with humanitarian organizations to make products available in the remaining areas. Within R&D, we are encouraged by the completion of five of the six phase three trials with once-weekly insulin ICODEC. The on-watch trial has shown that ICODEC has the potential to improve glycemic control with greater convenience and reduce treatment burden for people needing insulin treatment. The full on-watch program is an important step in support of our aspiration of further raising the innovation bar for diabetes treatment and our commitment to insulin innovation. Martin will come back to this and our overall RD milestones later in this call. In the first six months of 2022, we delivered double-digit sales growth, reflecting solid commercial execution across geographies and our therapy areas. While both operating units contributed to sales growth, we saw particularly strong sales growth in North America. driven by accelerated demand for our GP1 treatments, which has enabled us to increase the outlook for the year. Camilla and Doug will go through the details of the therapy area later. Last, Carson will go through the financial details, but I'm very pleased with the sales growth of 16% and operating profit growth of 14% in the first six months of 2022. With that, I give the word to Camilla for an update on commercial execution.

Thank you, Lance, and please turn to the next slide. In the first six months of 2022, our total sales increased by 16%. The sales increase was driven by both operating units with international operations growing 10% and North America operations growing by 24%. Our GFP1 sales increased 45%, driven by North America growing 41%, and international operations growing 53%. Insulin sales decreased by 8% driven by a 5% decline in international operations and an 18% sales decline in North American operations. The U.S. insulin sales declined by 19% driven by lower realized prices and a decline in volume. In line with expectations, insulin sales in international operations were impacted by the implementation of volume-based procurement in China as of May 22nd. Obesity care sales grew 84 percent overall. In international operations, Saxenda sales grew 60 percent, and in North America operations, obesity care sales grew 102 percent. In the U.S., obesity care sales grew 110 percent driven by Vigobi. Total rare disease sales were flat, driven by a 1 percent sales increase in international operations, offset by a 1 percent decline in North America operations. Please turn to slide six. Our 15% sales growth within diabetes care is faster than the overall diabetes market. That means we have improved our market share by 1.5 percentage points to now 31%, and that we continue to be on track to reach one-third of the diabetes value market by 2025. The increase reflects GFP1 growth of 45% and market share gains in both operating units. Please turn to the next slide. In international operations, diabetes care sales increased by 10% in the first six months of 2022, driven by GLP-1 sales that grew by 53%, and especially by Ocempic. Novo Nordisk remains the market leader in international operations with a GLP-1 value market share of 61.3%. This is driven by share gains across geographies, and I'm happy to share that Ocempic has become the GLP-1 market leader in international operations, with a 39% market share. In region China, the 83% sales growth of the tier 1 products was driven by the update of OCEMPIC following the launch in June 2021 and the inclusion on the national reimbursement list as of January 1st, 2022. And with that, I will hand over the word to Doug.

Thank you for that update, Camilla. Please turn to the next slide. The U.S. GLP-1 market volume grew by more than 35%, comparing Q2 of 2022 to Q2 of 2021, with once-weekly injectable GLP-1s and ribelsis as the main drivers. From an NBRX perspective, we have seen a step up in volume growth in 2021 that has accelerated further since the beginning of 2022. Measured on total prescriptions, Nova Nordic has expanded its market leadership to 56.4% market share. In other words, we continue to take share in a fast-growing market. Additionally, we are thrilled that Ozempic has now surpassed Dual Advertise, taking the lead in the TRX market with a 40.7% market share. The global rollout of Rebelsys is progressing, having now been launched in 39 countries. It remains one of the key contributors to growth in Novo Nordisk. Please go to the next slide. Obesity care sales increased by 84%, with 102% growth in North America operations and 60% growth in international operations. Furthermore, the obesity market expansion continues with a volume growth of the global branded obesity market of more than 60%. We are encouraged by the performance of Sexenda in international operations that was especially driven by the EMEA region that grew 78% in the first half of 2022. The growth was especially strong in countries that had some level of reimbursement, such as the UK and Norway. In the US alone, obesity care sales grew 110%. Following the previously announced will go be supply issues in the US, our focus remains to ensure continuity of care in the patients that have already initiated treatment. In line with expectations, this has negatively impacted Lugovia prescription trends. Positively, Saxenda trends have picked up and are now at all-time high levels. Regarding Lugovia supply, commercial production at the CMO was reinitiated in the second quarter of 2022 and inventory building is ongoing. We expect to make all doses of Volgovia available in the U.S. toward the end of the year. Now, Camilla, back over to you for an update on rare disease.

Thank you, Doug. And our rare disease sales were unchanged in the first six months of 2022. This was driven by a 1% sales growth in international operations, offset by a 1% decline in North America operations. Rare blood disorders grew by 3%, driven by NOVA7, as well as launched products Esproct and Refixia. Specifically, hemophilia A products grew by 1%, hemophilia B sales by 6%, and NOVA7 by 3%. Rare endocrine disorder sales declined by 5%. The declining sales were driven by international operations, decreasing by 1%, and by North America operations, decreasing by 14%. The sales decline was negatively impacted by lower realized prices in the U.S. and timing of shipments. And now over to you, Martin, for an update on R&D.

Thank you, Camilla. Please turn to the next slide. For the past months, it has been exciting to share the results from the five trials in the Onward program for once-weekly insulin iCodec. I would like to spend some time just summarizing the results that we've seen so far. Now, Onward's wanted to establish that insulin iCodec appears to have some of the best insulin data that we've seen with superiority on HbA1c control as compared to both insulin Gladion and insulin Degnotec respectively. This with no significant risk of hypoglycemia and at the same time an improved quality of life. We're very excited to see the results from onwards 1 and 2 confirmed in onwards 3. Onward3 was a double-blind, double-dummy, 26-week trial comparing once-daily insulin Degledec. The objective of the trial was to assess the efficacy and safety of insulin Degledec in 588 insulin-naive people who have true diabetes. The trial achieved its primary endpoint of demonstrating non-inferiority in reducing A1C at week 26 with insulin Igodek as compared with insulin Degnodec. From an overall baseline A1C of 8.5 percentage point, once weekly insulin Igodek achieved a superior reduction in estimated A1C of 1.57 percentage point compared to 1.36 percentage point for insulin Degnodec. thus again demonstrating superiority with an estimated treatment difference of 0.21 percentage points. Also in this trial, there was no statistically significant difference in estimated rates of severe or clinically significant hyperglycemia. And once weekly, insulin iQubec appeared to have a safe and well-tolerated program. With the OnWatch program being a truly global program, I'm also excited that ONWARD3 will cater for a potential Chinese approval. As already discussed in ONWARD6, we met the primary endpoint of demonstrating non-inferiority in reducing A1C with insulin ICODEC compared to insulin DECODEC in people with type 1 diabetes. We do, however, also recognize that managing type 1 diabetes is complex and that we still have work to do on the hypoglycemia risk. As also shown at this year's ADA, it's important to call out that the risk of hypoglycemia was similar for once-weekly insulin ICODEC and daily insulin large in people with type 2 diabetes as shown in a dedicated hypoglycemia trial, thus underlining the safety profile of insulin ICODEC. Now let's take a closer look at almost all. Next slide, please. OnWATS-4 was a 26-week efficacy and safety trial comparing once-weekly insulin-icodect to once-daily insulin-larging, both in combination with insulin-aspart. The trial included 582 people with type 2 diabetes on a basal bonus regimen. The primary objective of the trial was to demonstrate a non-inferiority of insulin-icodect versus insulin-larging in reducing A1c at week 26. This treat-to-target trial achieved its primary endpoint by demonstrating non-inferiority in reducing A1C at week 26 with insulin IgD as compared to insulin GLADA. But from an overall baseline A1C of 8.3 percentage points, once-weekly insulin IgD achieved a reduction in estimated A1C of 1.16 percentage points compared to 1.18 for insulin GLADA. with an overall estimated treatment difference of 0.02. In addition, we observed similar rates of severe and clinically significant hyperglycemia. And in the trial, once-weekly insulin iCodec appeared to have a safe and well-tolerated profile. In conclusion, we remain very excited about the attractive profile of once-weekly insulin iCodec based on the results from the onwards trials that have read out to date. These have underlined the iCODEX potential as an ideal starter insulin for people with type 2 diabetes. Further, also as an attractive option in combination with mealtime insulin, as shown in Orange 4, thus covering the full spectrum of type 2 diabetes. We look forward to sharing the results from the final trial on Orange 5 during the second half of 2022. Next slide, please. Now turning to the select trial and the interim analysis. As a reminder, SELECT is a double-blinded randomized placebo-controlled trial in patients with overweight and obesity and established cardiovascular disease. Previously stated, the Independent Data Monitoring Committee will be evaluating an interim analysis of the trial during Q3 of this year, with the potential for terminating the trial earlier than planned. The interim analysis has now been conducted, and based on that, the recommendation received from the Independent Data Monitoring Committee, we have decided to continue the selection. It's important to remind you that Novo Nordisk has not seen the data. As an additional reminder, the select trial is powered for 17%. This is the trial design, and given the cardiovascular reduction seen in Pioneer 6, as well as Sustained 6, both trials in type 2 diabetic populations we remain confident about the semaglutide and what semaglutide can do for people in obesity. The select trial is now expected to complete in the middle of 2023. Next slide, please. Let's turn to the high-level RNG milestones. We've already touched upon the Onward program and select So now I would like to highlight some of the other trial readouts and initiations across our therapy areas during the course of 2022. Within diabetes, we expect results from the exploratory phase 2 trials with CACOSIM for people with type 2 diabetes during the third quarter of 2022. In addition, we also expect to start a phase 2 trial in the same quarter to explore the potential of higher doses of injectable semaglutide for the treatment of type 2 diabetes. Within obesity, we have initiated a phase 1 trial with once daily oral amacretin, a combination of amylin and GLT1 analogs, and expect to start phase 3 with cagrezimib during the fourth quarter of 2022. Within rarities, we've initiated a phase 2 trial with Ndek, previously known as Eclipse, in 84 adults with sickle cell disease. We're also very excited about the recent U.S. approval of once-weekly repinine prophylaxis for people with hemophilia B. Furthermore, the results from the primary analysis for seven with Consistimab were presented at the ISTH Congress in London recently, and we expect to submit Consistimab for regulatory approval in the inhibitor segment during the third quarter of 2022. Finally, within other serious chronic diseases, We have initiated a phase two trial with the anti-amyloid immunotherapy acid we acquired from Prostina in 2021. The trial includes 99 people with a rare heart disease, trans-thyroid and amyloid cardiomyopathy. With that, over to you, Karsten.

Thank you, Martin. Please turn to the next slide. In the first six months of 2022, our sales grew by 25% in Danish kroner and 16% at constant exchange rates, driven by both operating units. The gross margin increased to 84.4% compared to 83% in 2021, driven by a positive product mix due to increased GF1 sales, a positive currency impact of 1.4 percentage points, and productivity improvements. These effects are countered by lower realized prices in the U.S. Sales and distribution costs increased by 29% in Danish kroner and 22% at constant exchange rates. The increase is driven by launch activities and promotional spend for Rebelses and Rosempic, as well as market development activities for obesity. The cost increase is also reflecting low activity levels in 2021 due to COVID-19 as well as higher distribution costs. Research and development costs increased by 31% in Danish kroner and 26% at constant exchange rates. The increase is driven by higher clinical activity levels within other serious chronic diseases and GILD-1, as well as the operating costs and amortizations related to the acquisition of Dicerna pharmaceuticals in the fourth quarter of 2021. Administration costs increased by 7% in Danish kroner and 3% at constant exchange rates. Operating profit increased by 26% in Danish kroner and by 14% at constant exchange rates. Net financial items for 2022 showed a loss of around 2.8 billion Danish kroner compared to a gain of around 1.1 billion in 2021. This mainly relates to losses following the appreciation of the US dollar, which is also reflected in the favorable currency impact on operating profits. The effective tax rate for the first six months of 2022 was 20.7% compared to 19.8% in 2021. Net profit increased by 11%, and diluted earnings per share increased by 13% to 12 kroner and 8 euro. Free cash flow was 42.7 billion Danish kroner compared to 32.7 billion Danish kroner in 2021. The cash conversion in the first half of 2022 is positively impacted by timing of rebate payments in the U.S., including provisions related to the revised 340B distribution policy in the U.S. Income under the 340B program has been partially recognized. Next slide, please. A key priority for Novo Nordisk is to ensure attractive allocation of capital to shareholders. In line with our strategy, we have returned 28 billion Danish kroner to shareholders through dividends and the ongoing 24 billion kroner share-by-back program. For 2022, the Board of Directors has decided to pay out an interim dividend of 4 kroner and 25 öre per share. which will be paid out in August this year. This is an increase of 21% compared to the 2021 interim dividends. Please turn to the next slide. We continue 2022 with a solid growth momentum and now expect the sales growth to be between 12 and 16% at constant exchange rates. This is based on a number of assumptions as described in the company announcements. The RAISE guidance reflects expectations for sales growth in both international operations and North America operations and across therapy areas, but is mainly driven by diabetes and obesity care. The guidance update incorporates an accelerated NBRX volume trend within injectable GIF1 in the U.S., favorable obesity market expansion, and the expectation of making all the Gobi dose strains available in the US towards the end of the year. Following a continued higher-than-expected volume growth of GF1-based products, including Osimpic, the outlook also reflects expected periodic supply constraints. We now expect that operating profit will grow between 11% and 15% at constant exchange rates. This primarily reflects the sales growth outlook and continued investments in current and future growth drivers. We are also allocating additional resources to both early and late-stage R&D pipeline activities. As mentioned before, our acquisition of Dicernus Pharmaceuticals is negatively impacting operating profit growth by around 3 percentage points due to higher operating costs and amortizations of intangible assets. Given the current exchange rates, most notably strengthening of the US dollar, we now expect a positive currency impact for 2022. Our reported sales are now expected to be 9 percentage points higher than at constant exchange rates, and operating profit growth is now expected to be 14 percentage points higher than at constant exchange rates. The positive currency impact on operating profits of 14 percentage points is partly offset by a net loss on financial items. For 2022, we now expect that financial items will amount to a net loss of around 5.5 billion Danish kroner, mainly reflected losses associated with foreign exchange hedging contracts. Capsule expenditure is still expected to be around 12 billion Danish kroner in 2022, which mainly relates to investments in additional API production capacity at existing manufacturing sites. Our free cash flow is now expected to be between 57 and 62 billion Danish kroner. That covers the updated outlook for 2022. Now back to you, Lars, for final remarks.

Thank you, Carsten. Please turn to the final slide. We are very pleased with the double-digit sales growth in the first half of 2022. In particular, the sales growth was driven by an increasing demand for our portfolio of GLV-1 treatments for diabetes and obesity care, and we continue to reach even more patients. While both operating units continue to drive growth, we did see a very strong sales growth in North America. The strong financial performance in the first six months of 2022 has enabled us to raise our outlook for the full year. From an R&D perspective, we have now successfully completed three trials with once-weekly insulin ICODEC. I believe the results underline that we are still committed to further raising the innovation bar in diabetes. We look forward to share results from the final trials in the UNBARPS program in the second half of 2022. 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. Operator, we are now ready to take the first

This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press a star and one on their touch-tone telephone. Anyone who has a question may press star and one now. The first question is from Peter Verdalt of Citi. Please go ahead.

Thank you, Peter Verdalt, Citi. Two quick questions. Martin, firstly, The market seems to have taken a very binary view that selects not being stopped at the interim as a negative. I thought you'd been at pains to point out since the CMD that you had pre-agreed with DSMB. that the trial would be allowed to continue even in the event the primary endpoint had been met if certain key secondary endpoints were showing curve separation but not quite reaching stat 6. So I realize you're blinded to the data. My question is, though, what is the working assumption at Novo? Is it that the primary endpoint was not met at the first interim, or are you confident the primary endpoint was met, and are you excited that potentially you were also hitting on some of the secondaries? Carsten, second question, much quicker and cleaner. When I look at the litigation section of the report, the appeal of the 340B discount ruling is the only thing you cite as potentially being impactful from a financial perspective. Just in terms of being transparent, can you ballpark, quantify what the percentage impact would be if you were to lose that appeal and forced to offer full 340B pharmacy discounts? Thank you.

Thank you, Pete. First, Martin, on the Select interim.

Thanks very much, Pete. I very much agree. We're not disappointed with having to continue the trial because, as you also alluded to, you designed the outcome trial to, at the finalized date, having a power of showing 17 percentage point difference between semaglutide and placebo on the primary endpoint on MACE. If you were to stop at the interim analysis, 17% would actually be statistically significant at meeting the primary endpoint. But as any sponsor, we want to be very, very certain that stopping at an interim analysis is basically a very secure bet. And therefore, we had agreed with the DMT obviously to look at a primary endpoint positive estimate substantially above that of 17. And obviously, that was an upside. Our base has always been to continue the study through the end. I think it's also important to call out if we see 17% differential between semaglutide and placebo at the end, does 17% cardiovascular reduction. That would, from a clinical perspective, a medical perspective, also from a commercial perspective, be very, very attractive.

Thank you, Martin. Very clear. Karsten, the 340B related litigation, potential impact?

Yeah, so this is kind of a complicated issue, but as you know, we changed our distribution policy under the 340B program beginning in January 2021. And part of that policy change has meant that that we are paying less rebates under the 340B program. So we have a positive cash flow impact compared to what we had previously. On the other hand, the benefit we have in our P&L in 21 as well as in 22 is limited. And recall last year we said that we have a benefit which is less than 3% of U.S. sales, and that still holds for this year. So a number of scenarios to play out. But I would say in terms of revenue recognition, as you also described in our company announcement on page 14 on the cash flow, we are recognizing income under the program partially and income according to the accounting rules is that it has to be highly probable. So I would say in terms of an adverse ruling, I would expect limited impact on our P&L, whereas there would be a one-off impact in terms of financial resources or cash flow linked to the delta between income recognition and cash flow benefits. The exact magnitude I would not want to go into at this point in time.

Thank you, Carsten, and thank you, Pete. Next set of questions, please.

The next question is from Vimal Kapadia of Bernstein. Please go ahead.

Oh, great. Thank you very much for taking my question. So can I just first, just touching on your comment, Martin, just now, what is your view on the perception of the extent of the MACE benefit with payers and physicians? So what I'm really asking is, does it actually matter if the MACE benefit is 17% or 20% or 25%? And is it really the key that the trial succeeds both with respect to reimbursement and uptake. So just any feedback you could share would be much appreciated. And then my second question is just on the phase three Cagri-Semma obesity start. I appreciate you mentioned 4Q start, but did the Wagobe supply timeline change actually have any impact on that phase three study? And, you know, what is your confidence in starting that study on time? Really, I'm asking because thinking about timelines here, given the Govi relaunch is potentially only coming a few months ahead of Tazepital in obesity, so the Kagari Center timelines are becoming increasingly important. Thank you.

Thank you, Reemal. So, Martin, first on the level of MACE benefits, and maybe also talk to the many other benefits of these treatments.

So, absolutely, and obviously from a clinical, from a medical perspective, goes without saying, any reduction in MACE, MACE being obviously myocardial infarction, stroke, and cardiovascular death, is a positive. Ten percent has previously been shown to be okayish, 12-15% has been shown to be positive. Anything beyond 12-15% and obviously beyond that is seen as a positive from a clinical perspective and I think also from a payer perspective. That being said, and obviously Camilla and Doug should maybe speak to that, but given the takeoff, I think it's very, very clear that we see a very nice reception even without the cardiovascular data But goes without saying, with the cardiovascular data, that will not be at our side, to put it like that. I think it's important to also call out, beyond cardiovascular, we look at other comorbidities of obesity in the select trial. Obviously, we look at quality of life. We look at risk of developing dementia. So we have it at dementia score. We look at osteoarthritis. So a number of other obesity-related comorbidities are in the SELECT trial. I may have misspoken on the dementia score. I actually think that's the sole trial, so I apologize for that. But overall, we actually also look for dementia in this specific trial as an adverse event. On the CAGROSIMA, as we alluded to in first quarter of this year, we took a sort of time hit in terms of initiating CAGROSIMA because we wanted to prioritize U.S. supply forward going. That has already been accrued, and we are still confident that we'll initiate CAGROSIMA in Q4 of this year.

Okay.

So to kind of wrap up, we see a very, very strong demand for anti-BG medicine. And the market is opening up now at a time where there's no cardiovascular data. And so we are very bold on the market itself. And we also, I would say, bowled on still the prospects of the series trial. And I think as a prior, the first question alluded to, and I think we have been quite clear about that all along, that a case where we have to continue the trial is still a very good outcome for us. Thank you, Vimal. Next question, please.

The next question is from Matthew Weston of Credit Suisse. Please go ahead.

Thank you very much. Two questions, please. First, Martin, can I just ask for a clarification in your answer to Pete's question? Because Pete's question implied that you knew that you had hit the primary endpoint and that you were waiting for secondary endpoints that were close. And I just want to be absolutely clear. Do you have any data? I realize that's a possible reason for continuing, as is it didn't hit the interim stopping criteria. So can you just please clarify what you know and what you don't while we all acknowledge that there is still a positive reason for Select to continue? And then secondly, it's a question regarding this. You keep caveating guidance with the risk of supply shortages to GLP-1. And I'd be very interested to understand what progress you've made, because clearly we can see the prescription data, we can see the sales of GLP-1, and it looks like there is absolutely no handicap at all to your current ability to grow. So can you please tell us whether or not you've managed to improve yield, whether you anticipate in the second half that we will see an impact of these potential supply shortages, or whether you're working very hard and hopefully therefore able to mitigate it? Thank you.

Thank you, Matthew. First on what we know, and I think that's quite easy to answer.

That's the easiest question, but it's also an important question because, as we also said in the presentation, basically we know nothing in terms of the data. I received a phone call saying the DMC recommends that you continue the trial, and that's basically all the interaction and all the data that I have received. In response to Pete's question, we wanted to clarify For us, having designed a study to be looking at a 17% differential, it's absolutely a positive thing to continue because if we should have stopped for the interim, the data on the primary input should have been substantially beyond 17%. Again, there we're speaking in hypotheticals because we haven't seen the data.

Thank you, Martin. On supply of GSP-1, I'll start by saying if you look at our GSP-1 business, today Osympic is the best-selling diabetes medicine in the world. In the first six months of 2022, it grew by 73%. I think we all know that we're not getting price increases. We're actually seeing modest price decreases, so the volume growth is higher. So I think that speaks its clear language that from a high base, we are significantly increasing manufacturing as we go. And we have plans that are on track to further expand volumes produced in our facilities. We have major new facilities coming in line as we speak, state-of-the-art approved facilities. So we are on a journey of driving growth and we're ramping up manufacturing capacity to cater for that. But it's clear that we are in a situation now where there is a very, very strong demand for our medicines. So we guided after Q1 that we would see periodic supply shortages here and there. And now we raise our guidance further while also increasing capacity. So that's also what we're facing now. It's not that we don't have supply. We keep growing supply to meet a demand that also keeps growing. So from time to time, we'll have issues in certain markets, but there are products coming in a continuous matter, and we try to manage this the best we can. And we have capacity expansions coming in line, so we will eventually get to a state where we believe we have also excess capacity. So it's a challenging situation, but it's from a very, very positive starting point of a very strong and large platform that's showing tremendous growth. Thank you, Matthew. Next question, please.

The next question is from Sachin Jain of Bank of America. Please go ahead.

Thanks for taking my questions. And Martin, apologies, I'm going to try round three on select. So I think Pete's question, just to be clear, was not really around the 17 or above or below. So I'm going to rephrase it. Is there a scenario where the primary endpoint was substantially above 17, let's say 22, 23, at the interim, and the study still didn't stop for whatever discussions you'd had prior to the date of the BSNB on secondaries? And I guess the reason investors are asking this question is to gauge the probability of select hitting at final analysis. i.e. if you're in the 17% to 20% range now at interim, people feel differently to if you're well north of 20% and the studies only not stop because of secondaries. So apologies again, but I'm just trying to really clarify the point on secondaries there. The second question is on where do we supply a couple of months perceived delay, just if you could provide any colour behind that. Is it utilisation level at plants? Is it a different level of inventory you decided to build? I just want to confirm there are no regulatory issues in the background. Thank you.

Thank you, Sachin. So interesting number of interpretations of what Pete said. Maybe we have to get Pete back on the line. Martin.

Yes, a limited number of times you can answer the same, but... Yeah, so again, first of all, I'm not privy to the data monitoring committee's deliberations. Obviously, we have a data monitoring charter, and in that, we specifically stated that in order to stop for the interim analysis and without going into numbers, it was important that we had safeguarded ourselves, and therefore, specifically on the primary endpoint, we needed to be substantially beyond 17%. Based on the fact that we are being recommended to continue the trial, I'm not privy to speculate what the DMC has seen, what kind of data they have seen. And that also means that we are as confident as we have ever been in terms of reaching the primary endpoint and the purpose of the select trial, because basically all of our assumptions still hold true. And our base case has always been to continue the trial until the end. Doing the interim analysis was an interesting upside. But again, I really don't like to speculate on the data that the DMT has seen, because I'm simply not privy to that.

Thank you, Martin. And let me try to address the we go, we supply. As you recall, during our Q1 release, we communicated our expectation of making all dose strength available in the U.S. during the second half of the year. And also, as Doug also just mentioned, that the CMO had reinitiated manufacturing. And we also mentioned that we had stopped supplying the two low starter doses as we experienced really, really strong demand that was hard to control. And we wanted to ensure that patients starting treatment could stay on treatment. So what is new now is that we have experienced a bit lower ramp up versus plan and hence volumes coming from the CMO. And that's why we now explain that we expect all those things to be available towards the end of the year, hence the couple of months delay you alluded to. And this is really because we want to make sure that we have sufficient inventory levels not to disappoint patients and physicians, again, you can say. I'd also like to underline that in parallel with this, we are tracking well on establishing the second and the third manufacturing site for Wegovi, which will result in a significant step up in supply availability already in 2023. And as such, we remain really confident in the potential of Wegovi being a game changer in a very significant obesity market currently opening up. And we have a lot of focus on the U.S., but if you look at the IO data, you can really see that obesity is taking up. So strong confidence in our ability to build capacities and also drive that into patients and fulfilling patient demands in the coming period. Thank you, Sachin. Next question, please.

The next question is from Simon Mather.

of bnp paribas please go ahead well thank you for taking my questions um i've got two firstly um obviously the last few days has been increased noise over u.s uh pricing reform biden trying to push something through the 11th hour i'm just wondering if you could give perspective on that obviously short-term potential upside for you guys but i'm thinking more when the direct negotiations come in 2027 your thoughts and the potential inclusion of mpic to that part please and then secondly it's on select and it might be a crazy question but i appreciate the double blind study um but obviously if you're on placebo you're not going to lose weight so there's potential for quite a high dropout rate in the placebo arm i'm just wondering if you know over large scale dropouts within that placebo arm could have actually in fact led to you know reduced power of the uh of the trial to be stopped at interim. Thank you.

Thank you, Simon. So let me try to talk to the US health care reform. Obviously, we don't have a lot of details around it. We know some of the elements. We support elements that would overall improve, say, affordability for patients. reforms perhaps like what could be coming out of a Medicare Part D redesign that could help patients, we think are welcomed. In terms of, say, what is being labeled as renegotiation or ability to directly negotiate with the industry, we're more worried about that because it's It sounds more like, say, government pricing mandates. It's too early for us to speculate when it would and how it would impact us. But I would say that overall, we believe that there would be rather limited impact short term. So it's more in a medium, longer-term impact we could be expecting. But it's a bit difficult for us to be very precise and quantify what impact we see. And then, Martin, again, again, on select, could there be anything about dropout rates that impacts discovered binding?

It's actually a super important question, and it's something that we've been focusing on for many years. Patient dropout missing data is a scientific and regulatory headache, so therefore we've spent the last 10 years refining our approach during outcomes trials. And one of the success parameters in doing these trials is actually to secure that we don't have dropout in either treatment arm. So we predefined a very, very small a single-digit percentage number that is allowed to, so to speak, drop out from price. And so far, both Intellect, Insolent Flow, and our other outcomes trials, we are very, very happy with the retention rate, including on the placebo arm. And just to give you an example that I can actually share, for example, for the entire ICODAG program, we are looking at retention rate in excess of 95%. And that's something similar that you have to imagine for the internet one.

Thank you, Martin. Thank you, Simon. Next question, please.

The next question is from Martin Parkoy of SED. Please go ahead. Mr. Parkoy, your line is open.

You might be muted, Martin.

Can you hear me? Yeah, now we hear you. Hi, Martin. Okay, Pablo here. Thank you very much. I have two questions. Firstly, on the Gobi. I know it's only one year ago that you made the initial launch, but that has happened a bit since then. I think that the perception in the U.S. has really strengthened that the Usenping and the Gobi is the same molecule, and and maybe you could speculate that many of the patients which have gone on the drug this year is maybe for obesity, and maybe the same on Mojave. Do you think that there is actually some change dynamics already now for the obesity potential compared to one year ago, looking at the Gobi, since maybe some of the upside are captured by the so-called GL1 diabetes market? And then second question, just on manufacturing again, or supply last, Are you making long-term, if you look at sales this quarter, the growth on an absolute basis from 2.1 to 2.2 is more than the total sales of ribelsus this quarter. So firstly, are you making long-term changes where you actually now can use some of the previous plant production capacity for ribelsus that is now used for the sucratanias? And maybe Martin can share some light on the trial, which have recently been put on clinicaltrials.gov, where you're looking at a new production or manufacturing method for something that you could elaborate on.

Thank you, Martin. Camilla, can you maybe talk a bit through what has, if anything, happened over the year we've been in the market? products with the same molecule and how this is looked at.

Yeah, so there's no doubt that there is, if we take the big picture, there is a big overlap between the number of people living with this and the number of people living with this. And of course, having, we go beyond the market for a year has underlined the importance of treating people with obesity. It's also clear that many of living with diabetes, they are also suffering from overweight and obesity. Even up to 80% of people living with diabetes are suffering from obesity. So, of course, with the benefits of USMPIC, the proven cardiovascular profile, the A1C profile, and also the weight loss profile, it's clear that this will benefit, of course, also people living with obesity. So we've seen that whole connotation around how important it is to also treat obesity and also treat overweight in people with diabetes has simply just increased. And this, of course, has been underlined, and we see that effectively by the growth both in the diabetes segment and the strong unmet need in obesity and the demand for Vigogi. Having said that, it's, of course, also important for us to just underline that we promote in each segment the benefits of the Vigovir and, of course, Osempic in the diabetes segment, and hope to cater for each of those two groups of patients. But basically, the understanding and the perception of TLC1 in general has really taken off, and Lars was just talking to the significant growth rates that we have seen underlying the profile of the hematocytes. Yeah.

and maybe picking up on that and trying to address supply, you can say we see a really, really strong dynamics now with Osympic. We have Repulsus as well, we have WeGobi, and we have further combinations and all formulations as well. So it's important for us to build as a medium-long-term flexible manufacturing setup that can produce all products, so to say, because, to be honest, our ability to precisely forecast which presentation and which administration of a molecule like semaglutide is delivered in can be hard. So to your point, it's a priority for us to build flexibility both in our API but also you can say in our say filling set up and you you're well aware that we have for years been investing in a significant API facility in the in the US which is now coming in line so we have a huge and obviously also out of Denmark where we have an ongoing significant investment in building more API. And then you can say it's relatively easier and faster to scale up with different types of filling lines, be that for different types of devices. So yes, flexibility across presentations and dosing forms is important. And then finally, Martin, on a new trial.

Yeah, without going into too much detail, we are continuously upgrading our formulations of not only Osempic, but also Repelsuz and other drugs. And obviously, we had to generate clinical data to support that.

Thank you, Martin. And Martin, next question, please.

The next question is from Michael Norwood of Nordea. Please go ahead.

Yeah, thanks a lot. Just one question. Sorry about sort of digging down into supply again. I was just wondering, is there any risk that the supply constraints on the bulk side could also lead to sort of a delayed launch in IO of VEGOVI, i.e. will you be significantly ramped up on the production side to also ensure that VEGOVI is broadly launched throughout 2023? as it seems like you're expecting also significant demand there.

Thank you, Michael. um i i spoke to our investments in api capacity some kicking in shorter term some kicking in medium term and even within the api api capacity we have now we have you know extra say capacity available for for next year so we believe we have capacity to start rolling out Rigobi in the outside of U.S. countries starting significantly next year. We're already active in France, and we expect to have a couple of launches later this year. So 2023, we'll see a broader launch plan for Rigobi in its aspirations. And of course, with the dynamics we see for Saxenda, that is also based on that we believe there'll be significant volumes there. We have built flexibility on say device platform, which gives some optionality. So back to also the question from before, it is a lot about with the dynamics we see now, which are, you know, it's massive volumes we are expanding year over year. So the more we build flexibility, the more we can cater for these demands. But that's a pleasure to do when you see the demand we are experiencing now. So we have a lot of happy colleagues in product supply working really hard and doing a great job. Thank you, Michael. Next question, please.

The next question is from Richard Vosser.

JP Morgan please go ahead hi thanks for taking my questions first question can you hear me sorry yeah yeah excellent awesome brilliant so when I have a look at other obesity trials one of the challenges apart from keeping patients on them has been maintaining weight loss over such a long period of time so Just from what you can see, how well have you been able to achieve the maintenance of weight loss in Select? And then just one thought on the prevention of diabetes. It was a discussion at ADA. And, you know, with the new timelines or full timelines, I should say, on Select, at what point do you think you can use it to gain a prevention of diabetes claim for Wigovi? Thanks very much.

Thank you, Richard. I think those were two questions to you, Martin.

Yeah, I think if I'm maybe sorry about not seeing an interim analysis on select, it could be because I'm not allowed to see the data. And obviously, I am as you curious to not only cardiovascular outcomes, but also other aspects of the trial and specifically on the weight loss. Again, I'm not privy to any data, including the weight loss. What we do know obviously is that we've conducted a two year trial where we've seen a sustained weight loss over those two years with a similar weight loss as we've seen in our previous trials. So based on what we know so far, at least at two years, semaglutide is able to maintain the weight loss accrued. On the prevention and diabetes, Basically, this doesn't delay anything in the sense that the regulatory requirement and potentially also the payer requirement is to observe patients off treatment for a specific period of time and still see a differential to the comparison treatment in terms of risk of developing diabetes. Based on what we've seen so far, semaglutide might have that potential. And what we obviously intend to do with the extension of the SELECT trial is after termination of the original trial, we'll continue to follow up. And we'll do that after one and two and so on, up to 10 years. As soon as we have the first readout, we will be able to engage in dialogue with not only regulators, but also payers on the potential should the data support us in that. Thank you, Martin.

Thank you, Richard. Next question, please.

The next question is from Carrie Holford of Barenburg. Please go ahead.

Thank you. A couple of questions, please. Firstly, on chagricema. You're on track for that phase 2 diabetes data later this quarter. Can you remind us what you really need to see from that study in order to proceed to phase 3 in diabetes? Are you looking for superior HbA1c lowering as well as weight loss, superior weight loss versus Ozympec. So just an idea of your hurdles there in order to proceed. And then just a quick check on select. Are there any further interim analyses planned or are we now moving straight towards the final data? Thank you.

Thank you, Kerry. Again, Martin, to you. Yeah.

So so thank you very much for the question on on cat with Emma from a regulatory perspective in diabetes, we obviously primarily looking at glycemic control. We are also looking at weight loss, but the primary sort of purpose is to look at glycemic control. And in that space, we need to be able to show a differential between the combination therapy and the individual model components. Now, the important comparison here is obviously semagnetide, and that basically means that we need to have a statistically significant but also clinically relevant differential to semagnetide on HbA1c. So that's basically what we're looking at, and given that we have virtually no data in this space, it's also obviously important to call out that the study is exploratory, and this is specifically why we do it before we potentially initiate phase three. On the select, the answer is easy. We are now looking towards the planned finalization of the trial, and no more interim analysis will be conducted. Thank you, Martin.

Thank you, Kerry. We have time for the last question, please.

The last question is from Mark Purcell of Morgan Stanley. Please go ahead.

Yeah, thank you for taking my questions. First question, going back to the WGOV resupply. Should we think about this as a resupply, Lars, or will this be a relaunch in the latter part of this year? I'm thinking about going back to sort of Martin's question, DTC promotion, will we see this kick in? What should we think about the shape of the relaunch? Will it be a hockey stick or will it be more gradual? So is it a relaunch or is it a resupply effectively? And then the second question, I was intrigued by the phase two trial starting with a higher dose of injectable SEMA I would have thought you would have gone straight into phase three. So what is there about this trial, which means you have to do a proof of concept trial versus going straight into phase three? What's the target product profile? And what does it mean when it comes to fighting back versus the incoming competition? Will you use this higher dose in combination with Cagri-Semmer and potentially in combination with a GIP, which could give you a wider therapeutic window? Thank you very much.

Thank you, Mark. On resupply, you can rest assured that we are eagerly awaiting when we can make all those things available. I would like to refrain from getting into the specific tactics. I think we are in a situation where we are talking a lot to the details about how we run our business, and it's a very competitive space. I hope you respect that we would prefer not to get into all the details of that. Having said that, we are very confident in the product. We know that it does a trick for both physicians and patients, and we expect that we can get back strongly when we have the products in the market. Martin, on the high-dose SIMR trial.

So in the space of diabetes, again, the purpose has to be showing primarily a differential on glycemic control and subsequently on weight loss. Increasing the doses of semaglutide is something that is interesting for us because based on data that we've seen also from the outside world, it appears that we have not with semaglutide reached sort of the maximum effect potentially in glycemic control, potentially also on weight loss. And we've seen other data from the outside where the ceiling appears to have been sort of reached. And therefore, it's relevant for us to see if we can achieve more with semaglutide. Doing a phase two trial, looking at both obviously safety and efficacy vis-a-vis the different doses is a proven approach and can potentially save us time and effort in the other end.

Thank you, Martin, and thank you, Mark. This concludes our earnings call. Thank you for participating, and please feel free to reach out to our Investor Relations colleagues regarding any follow-up questions you might have. Thank you, and have a great day.