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spk06: Welcome to this Novo Nordisk earnings call for the first nine months of 2022 and the outlook for the year. My name is Lars Fugard Jorgensen and I'm the CEO of Novo 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, Doug Lange, Executive Vice President and Head of Development, Martin Holst Lange, and finally Chief Financial Officer, Carl Nussbaum. 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, newandnourish.com. Please note that the call will be webcasted live and a recording will be made available on our website as well. The 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 operator control 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. These are subject to risk and uncertainty that could cause actual results to differ materially from expectations. For further information on the risk factors, please see the company for the first nine months of 2022 and the slides prepared for this presentation. Please turn to the next slide. In the first nine 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 operations, before handing over the word to my colleagues. We continue to make progress across all dimensions of purpose and sustainability. Our carbon emissions decreased by 18% compared to the first nine months of 2019, and we continue to reach even more patients compared to the same period last year. Within our aspiration of being a sustainable employer, we expanded the number of women in senior leadership positions to 38%, compared to 36% by the end of September 2021. Within R&D, we are pleased with the encouraging Phase II data with CACS-Sema in Type II diabetes, as well as the successful completion of the pivotal Phase III program for once-weekly insulin IQR-DEC. Both support our aspiration of further raising the innovation bar for diabetes treatments. Martin will come back to this and our overall R&D milestones later in this call. In the first nine 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 GL1 treatments. This has enabled us to increase the output for the year. Camilla and Doug will go through the details per therapy area later. Lastly, Carsten will go through the financial details but I'm very pleased with a sales growth of 16% and operating profit growth of 14% in the first nine months of 2022. With that, I'll now give the word to Camilla for an update on commercial execution.
spk02: Thank you, Lars, and please turn to the next slide. As Lars mentioned, our 16% sales growth in the first nine months of 2022 was driven by both operating units with North America operations growing by 22% and international operations growing by 11%. Our GLP-1 sales increased 4% by North America, growing 39%, and international operations growing 55%. Insulin sales decreased by 11%, driven by a 7% decline in international operations, and a 20% sales decline in North America operations. The U.S. insulin sales declined by 22%, driven by lower realized prices and a decline in volume. Incident sales in international operations were impacted by implementation of volume-based procurement in China from May 22, as well as lower sales in EMEA. Obesity care sales grew 75% overall. In international operations, extended sales grew 73%, and in North America operations, obesity care sales grew 77%. In the U.S., obesity care sales grew 81%. where disease sales grew 2% driven by a 4% sales increase in international operations, offset by a 3% decline in North America operations. Please turn to slide 6. Our 14% sales growth within diabetes care is faster than all diabetes markets. That means we have improved our market share by 1.7 percentage points to 31.6%. We continue to be on track to reach one-third of the diabetes value market by 2025. This increase primarily reflects GLP-1 market growth as well as share gains in both operating units. And please turn to the next slide. In international operations, diabetes care sales increased by 9% in the first nine months of 2022, driven by GLP-1 sales that grew by 55%. Novo Nordisk remains the market leader in international operations with a GLP-1 value market share of 6.26%. This is driven by share gains across geographies. Outhampe continues to expand its GLP-1 market share leadership in international operations with a 41.3% market share. While the GLP-1 class is growing more than 40%, GLP-1 penetration remains low at around 4% of total diabetes groups globally. And with that, I will hand over the word to Doug.
spk04: Thank you for that update, Camilla. Please turn to the next slide. The U.S. GLP-1 market volume grew by more than 40%, comparing the third quarter of 2022 to the third quarter of 2021, with once-weekly injectable GLP-1s and Rebelsys as the main drivers. The recent competitor launch in GLP-1 has supported the continued acceleration in market growth, from an MBRX perspective, as well as all-time high levels for our portfolio of GLP-1 products during Q3. Measured on total prescriptions, Novo Nordisk has maintained its market leadership with a 52.4% market share. Additionally, Osempa continues to be the market leader with a 38.7% TRX market share. Rebelsys continues to grow and has now been launched in 43 countries. In the first nine months of 2022, It was the second largest contributor to growth in Novo Nordisk after Ozempic. Please go to the next slide. Obesity care sales increased by 75%, with 77% growth in North American operations and 73% in international operations. Furthermore, the global obesity market expansion continues, with a volume growth of the global branded obesity market of more than 60%. We continue to be encouraged by the performance of Saxenda in international operations. Region EMEA is a key growth driver, with 96% growth in the first nine months of 2022. Specifically, the growth continues to be particularly strong in countries that have some level of reimbursement, such as the UK, Norway, and Israel. In the US, obesity care sales grew by 81%, with both Wegovy and Saxenda contributing to growth. Following the previously announced Vagobi supply issues in the U.S., our focus remains to continue continuity of care to the patients that have already initiated treatment. In line with expectations, this has negatively impacted Vagobi prescription trends. Positively, sex and the prescription trends have accelerated and continue to be at all-time high levels. Regarding Vagobi supply, we expect to make all doses of Vagobi available in the U.S. in December. We plan to initiate broad commercial activities in the beginning of 2023. Now back over to Camilla for an update on rare disease.
spk02: Thank you, Doc. Next slide please. Our rare disease sales increased by 2% in the first 9 months of 2022. This was driven by a 4% sales growth in international operations, offset by a 3% decline in North America operations. Rare blood disorders grew by 6%, driven by NOVA7, as well as the launch products, Esperop and Refixia. Specifically, hemophilia A products grew by 6%, hemophilia B sales by 9%, and NOVA7 by 6%. Rare endocrine disorder sales declined by 6%. The declining sales were driven by international operations, decreasing 2%, and by North America operations, decreasing by 13%. The sales were negatively impacted by lower realized prices in the U.S. And now over to you, Martin, for an update on R&D.
spk08: Thank you, Camilla. Please turn to slide 11. In August, we shared the exciting data from the Phase 2 trial of SEMA and people with type 2 diabetes. I would like to briefly walk through these results. This was a 32-week trial that investigated the efficacy and safety of a fixed-dose combination of CAC or SEMA compared to the individual components of semaglutide 2.4 mg, and Cacrylitine 2.4 grams. All products were administered once a week. The trial included 92 people with type 2 diabetes and overweight, and people were equally randomized among the free treatment arms. In the trial, the mean baseline A1C was 8.4%, and the mean baseline body weight was 106 kilograms. After 32 weeks of treatment, people treated with Cacrosema achieved a numerically higher A1C reduction of 2.18 percentage points compared to a reduction of 1.79 percentage points for people treated with semaglutide and 0.93 percentage points for people treated with cagrelutide alone. People treated with cagrelutide achieved a numerically higher body weight reduction of 15.6% compared to a reduction of 5.1% for people treated with semaglutide and 8.1% for people treated with cacorinatide alone. In the trial, cacrocema appeared to have a safe and well-tolerated profile. Overall, these results indicate that cacrocema reduces blood sugar more than the two mono components alone, and the weight loss seen in the trial confirms the substantial weight-lowering potential of cacrocema. Based on the results, we plan to initiate a free program for people with type 2 diabetes during the course of 2023. Next slide, please. ONWARDS-5 was a 52-week efficacy and safety trial, from once-weekly insulin iacodec to once-daily basal insulin. This was either insulin deglutec or insulin glagen. The trial included 1,085 insulin-native people with type 2 diabetes. The primary objective of the trial was to demonstrate non-inferiority of insulin iacotec compared to one's daily basal insulin analogs in reducing A1c at 52 weeks. Onwards 5 included a dose guide app, as well as real-world evidence such as substantially fewer visits compared to the other Onwards trials. Altogether, we believe that this design will help quickly our understanding and dialogue of how insulin iacotec can make a difference for patients in an actual clinical practice setting. This file was a treat-to-target file, and it achieved its primary endpoint by demonstrating non-inferiority in reducing hemoglobin A1c at week 52 with insulin Igodek, as compared to one daily basal insulin analogs. From an overall baseline A1c of 8.9%, once-weekly insulin and ICODEC achieved a superior reduction in estimated A1C of 1.68% compared to 1.31% for once-daily insulin and ICODEC, with an estimated treatment difference of 0.38% exposure. In addition, we observed a rate of severe and clinically significant hyperglycemia. In the trial, once-weekly insulin and ICODEC appeared to have a safe and well-tolerated profile. In conclusion, we're very pleased to share the positive results from the Onwards 5 trial. These results confirm the data in the previously reported Onwards program. The results highlight that insulin iCO-DEC has the potential to be an ideal starter insulin for people with type 2 diabetes, as well as a very attractive option in combination with mealtime insulin as shown in onward form, thus covering the full spectrum of type 2 diabetes. We expect to be filing for regulatory approval of once-weekly insulin IgO deck in the U.S., in the EU, and in China during the first half of 2023. Please turn to the next slide. In September, we completed the 24-week main part of the phase 3 trial with Consirizumab or the EXPLORER-8 in people with hemophilia A or hemophilia B without inhibitors. The trial met its primary endpoint, confirming superiority of concesumab prophylaxis treatment compared to no prophylaxis treatment in reducing the annual bleed rate in both hemophilia A and hemophilia B patients without inhibitors. The secondary confirmatory endpoint of demonstrating non-inferiority of concesumab prophylaxis as compared to previous prophylaxis factor treatment in reducing the APR was not met. In the trial, contisomab appeared to have a safe and well-tolerated profile with no thrombobolic events reported after the treatment restart following the treatment pause. Based on the results of Xplor8, we are assessing further development activities and timing of regulatory submissions in people without inhibitors. Now, staying within rare disease, I'm very excited to share that treatment has been initiated in the first MyMADE Phase 3A trial in HemofreeA. This is called Frontier 2. Based on the results we saw in Phase 1 and 2, we have very high expectations for the trial. and the difference that MyMate can make for patients with hemophilia in managing their disease. Furthermore, we have submitted Nidosuran for regulatory approval in the U.S. for the treatment of primary hyperoxaluria. Nidosuran was part of the Dicerna pharmaceutical requisition we made back in 2021. Within other serious chronic diseases, we have completed a 12-week Phase II trial with oral PCSK9 in 267 people with ASCVD or risk of ASCVD. The trial may by demonstrating superiority versus placebo in lowering low density lipoprotein cholesterol and appear to have a safe and well tolerated profile. However, due to commercial and portfolio considerations, the development of oral PCSK9 will be terminated. Now let's turn to the other high level RNG milestones that I did not cover in the previous slide. Within diabetes, we've initiated a phase one trial with once-weekly oral semaglutide, as well as a phase two trial with higher doses of Osempic in the third quarter of this year. The latter is a 49-week trial investigating the efficacy and tolerability of eight and 16 milligram of Osempic, respectively. The trial is expected to enroll around 240 people with type two diabetes. Further, in the first half of 2023, expect results from the currently ongoing phase three trial will also magnetize 25 and 15 milligram respectively finally within obesity we are very excited to have initiated the first free a trial called redefine one for kakusema redefine one is a 68-week trial comparing the efficacy and safety of once weekly kakusema with semaglutide 2.4 mg, cagrelatide 2.4 mg, and placebo. The trial is expected to enroll approximately 3,400 people with obesity or overweight and comorbidities and is the first pivotal trial in the redefined process. Further, during the first half of 2023, we expect results from the Phase III-A trial with all semaglutide 50 milligram, as well as the Phase I-II trial results from the ongoing trial with PYY. Altogether, we are looking very much forward to an exciting period with clinical trial initiations, as well as results across our therapy areas. With that, over to you, Carsten.
spk07: Thank you, Martin. Please turn to the next slide. In the first nine months of 2022, our sales grew by 26% in Danish kroner and 16% at constant exchange rates, driven by both our operating units. The gross margin increased to 84.3% compared to 83.0% in 2021, driven by a positive product mix due to increased GLP-1 sales, a positive currency impact of 0.9 percentage points, and productivity improvements. These effects are countered by lower realized prices in the U.S. and China. Sales and distribution costs increased by 28% in Danish kroner and 19% at constant exchange rates. The increase is driven by launch activities and promotional spend for Rebelsys and Osempec, as well as market development activities for obesity. The cost increase is 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 council exchange rates. The increase is driven by higher clinical activity levels within other serious chronic diseases and GLV-1, as well as the operating cost and amortizations related to the acquisition of Dicerna Pharmaceuticals in the fourth quarter of 2021. Administration costs increased by 9% in Danish kroner and 5% at constant exchange rates. Operating profit increased by 28% in Danish kroner and by 14% at constant exchange rates. Net financial items for 2022 showed a loss of around 5 billion kroner compared to a gain of around 1 billion in 2021. This mainly relates to losses following the appreciation of the US dollar as reflected in the favorable currency impact in operating profits. The effective tax rate for the first nine months of 2022 was 20.5% compared to 19.8% in 2021. Net profit increased by 14% and diluted earnings per share increased by 15% to 18 kroner and 42 øre. Pre-cash flow was 62.5 billion Danish kroner compared to 52.3 billion Danish kroner in 2021. The cash conversion in the first nine months of 2022 is positively impacted by timing of rebate payments in the U.S., including provisions related to the revised 340B distribution policy. Income under the 340B program has been partially recognized. We continue 2022 with the solid growth momentum and now expect the sales growth to be between 14% and 17% 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 mainly driven by diabetes and obesity care. The updated guidance is based on the expectation that all the COVID dose strengths are available in the U.S. towards the end of the year. The outlook reflects that we expect continued periodic supply constraints and related drug shortage notifications. This is driven by higher than expected volume growth for GLQ-1 based products, such as SOSIMPIC, and temporary capacity limitations at some manufacturing sites. We are gradually increasing our supply capacity and expect this to be sufficient to support a potential continuation of the current sales growth trajectory. We now expect that operating profit will grow between 13% and 16% 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 Dicerna pharmaceuticals is negatively impacted impacting operating profit growth by around 2 percentage points due to higher operating costs and amortizations of intangible assets. Given the current exchange rates, most notably strengthening of the U.S. dollar, we expect a positive currency impact for 2022. Our reported sales are now expected to be 10 percentage points higher than at CER, and operating profit growth is now expected to be 15 percentage points higher than at CER. The positive currency impact on operating profit of 50 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 6.6 billion Danish kroner, mainly reflecting losses associated with foreign exchange hedging contracts. Capital expenditure is still expected to be around 12 billion Danish kroner, which mainly relate to investments in additional API production capacity at existing manufacturing sites. Our free cash flow is now expected to be between 54 and 59 billion Danish kroner, reflecting the acquisition of Forma Therapeutics. The acquisition closed in the fourth quarter of 2022. That covers the updated outlook for 2022. Now back to you, Lars, for final remarks.
spk06: Thank you, Carsten. Please turn to the final slide. We are very pleased with the double-digit sales growth in the first nine months of 2022, and that we continue to reach even more patients. The strong financial performance in the first nine months of 2022 has enabled us to raise our outlook for the full year. From an R&D perspective, we have now successfully completed the full Onwards program with once-weekly insulin IQODEC. The full results underlying our commitment to further raising the innovation bar in diabetes We look forward to submitting insulin for regulatory approval in the first half of 2023. In addition, we are excited about initiating the phase three program for catechism in obesity. This could further strengthen our portfolio of superior obesity products. With that, we're 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're now ready for the first question.
spk03: Thank you. As a reminder, to ask a question you will need to press star 1 and 1 on your telephone and wait for your name to be announced. We will now take the first question. It comes from the line of Wimal Kapadia from Bernstein. Please go ahead, your line is open.
spk00: Well, great. Thank you very much for taking my questions, please. I'm actually going to skip. We'll go with supply, if that's okay. And start with the oral weekly summer glue ties. So this sounds quite interesting. So my question really is, Is this just a reformulation of ribosis? Will it be for diabetes and obesity? Does it use a snack technology? What preclinical work have you seen to suggest the GI tox would be acceptable? And are you really trying to achieve injectable-like outcomes? So I know that's a few bits to that question, but maybe a summary of that asset would be quite helpful. And then my second question, just to Novo's comments on enough supply of Ozempic to maintain the current trajectory. I guess my question really is how much of the current trajectory is actually being driven by lack of Wegovy supply, i.e. obesity? So one of your peers yesterday, Lili, suggested, you know, one-third of the Mundoro patients were not on diabetes medicines prior to taking the drug. So unless they're using a drug, pre-metformin, that number is one-third. So I guess what is that number for Ozempic? Thank you.
spk06: Thank you, Rimal. The exciting prospects of all week this summer.
spk08: Yes, absolutely. So exactly right. We are very excited about this. This is an offering that is, as you rightly point out, it's based on our technology. It's a little more than a reformulation, but we do expect it to allow for a full offering of once weekly dosing. Our intent is that this should be available potentially in both diabetes and obesity and with an efficacy and safety profile similar to that of injectables. So I think I heard you mentioned GI solubility. This should be on par with what we've already seen in our subcutaneous semaglutide profiles.
spk06: Thank you, Martin. An exciting opportunity underlying our all capabilities. Then, Karsten, we added some caveats on on potential growth and link to supplies for next year. So can you put some comments on that?
spk07: Yeah. So as we put into our company announcement, then we're stating that as we gradually are expanding our supply capacity, then we expect to have enough capacity to support a potential continuation of the current sales growth trajectory. So this is nothing on simply in isolation, but this is a macro statement for all sales growth and supply capacity. So just to clarify that. As to source of business on OCEMPIC and the read across you alluded to, then when we're looking at source of business on OCEMPIC, Our estimate is that to the tune, in the U.S. marketplace, to the tune of 40% of new OSIMPIC business comes from naive patients who have not received diabetes medication before.
spk06: Thank you, Carsten, and thank you, Vimal. Next question, please.
spk03: Thank you. We will now take the next question. It comes from the line of Matthew Weston from Credit Suisse. Please go ahead, your line is open.
spk01: Thank you very much. Can I ask two questions, please? The first coming back to Vimal and a Zempic capacity. Can I understand the cadence of capacity increases into 23? please, is there a specific bolus coming online or is it very much gradual? And to try and put into perspective your comments about the current trajectory, do you believe you will have capacity to deliver consensus sales expectations for 23? And then secondly, a question about U.S. health care reform. We're getting close to the abolition of the Medicaid penny rule cap. in January 2024. Should we assume that Novo will withdraw Penny Rule products from the US during next year? Do you have to withdraw that product in its entirety? You can't just step away from Medicaid. And if that is the case, can you redirect that volume to other markets? Or can you use the fill finish infrastructure for GLP-1?
spk06: Thank you for those questions. So on Osempic, You shouldn't expect that's kind of a one off event that triggers a step change, so it's a gradual expansion of capacity, and I will not go in and comment on our ability to supply against consensus. We will give our guidance for 23 at the full year. And then, Doug, on U.S. healthcare reform and Medicaid changes coming up, I guess we cannot be really detailed on what our plans are, but what can you share?
spk04: Yes, I think the question specifically was on the AMP-CAP repeal going into 2024, and certainly we're working on the potential of mitigating actions, but I wouldn't want to get into the specifics.
spk06: Thank you. Next question, please.
spk03: Thank you. We will now take the next question. It comes from the line of Michael Nedeljkovic from Cohen. Please go ahead. Your line is open.
spk05: Thank you for the question. So as has been mentioned, many people are now taking other incretins for weight loss while Wegovy is supply constrained. It would seem that switching these people over to Wegovy once it's available could be complicated. And then the timing of generic Saxenda availability adds further complexity. Yet investors seem to be expecting the pace of sales of Wegovy once supply is available to recapitulate its initial launch trajectory. I'm wondering how you think about these factors, and would you advise us to temper our expectations at all? And then my second question is, yesterday, Lilly appeared to imply that a weight loss drug with efficacy in obesity-associated conditions, such as sleep apnea and heart failure, might have a route to Medicare reimbursement without the passage of new legislation in the U.S. I don't believe this is NOVA's view, but why is that not a reasonable assumption? Thank you.
spk06: So I'll start with a bit of perspective on use of all incretins, and then maybe, Doug, you can talk a bit to what we expect when we come back to the U.S. and launch and perhaps what it takes to get an obesity product reimbursed in the public account. So you mentioned that the use of other incretins now that we go with is short on supply. I would actually say that the majority of uptake is on our own Saxenda. We have seen Saxenda doing really, really well, step change in uptake as we unfortunately had to slow down the launch curve. So that really proves that the obesity market is opening up. So before that, Wegovi really created the excitement about what weight loss potential is possible. We saw a much slower uptake of Saxenda. So we are pleased with what we see, and we believe that we can both, in markets where we don't have Wegovi, we can sustain the growth with Saxenda. And then obviously, as we get Wegovi back towards the end of this year in the U.S., and graduates start launching outside the U.S., We expect to see a very nice uptake on that. But, Doug, what should people look for in terms of uptake of the GOVI when we come back? And what's the broader reimbursement?
spk04: Yeah, thank you. I think what's important to note is there remains a significant unmet medical need with obesity, and that was evidence when we launched GOVI in 2021. I think what we can expect is a strong and stable growth. And our focus is on building a long-term sustainable business. Maybe as a reference, we could take a look at the Q1 of 22 this year, where it was assumed that few of the MBRXs were using a bridge or a copay program. So, again, when you look at that quarter, we're looking at roughly 6,000 MBRX and 25,000 TRX. But I think it's important that long-term sustainable business is what we're looking for.
spk06: Good. Thank you, Derek.
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