Novo Nordisk A/S

Good day and thank you for standing by. Welcome to the Q2 2023 Novo Nordisk AS Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Daniel Bosen, Head of Investor Relations. Please go ahead.

Thank you. Welcome to this Novo Nordisk earnings call for the first six months of 2023 and the outlook for the year. My name is Daniel Bosen and I'm Head of Investor Relations at Novo Nordisk. With me today I have CEO of Novo Nordisk, Lars Fogor Jørgensen, Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Sylvestre, Executive Vice President and Head of North America Operations, Doc Lange. Executive Vice President and Head of Development, Martin Holst Lange. And finally, Chief Financial Officer, Carsten Munch Knusen. All speakers will be available for the Q&A session. Today's announcement and the slide for this call are available on our website, novo-nordisk.com. Please note that this call is being webcast live and a recording will be made available on our website as well. The call is scheduled to last approximately 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 rate unless otherwise specified. Please turn to the next slide. As always, we 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 announcement for the first six months of this year and the slides prepared for this presentation. With that, over to you, Lars, for an update on our strategic aspirations.

Thank you, Daniel. Please turn to the next slide. In the first six months of 2023, we delivered 30% sales and 32% 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 word to my colleagues. Within purpose and sustainability, we continue to make progress across all dimensions. Our carbon emissions decreased by 28% compared to pre-pandemic levels in 2019. In line with our aspiration of being a sustainable employer, we continue to expand the number of women in senior leadership positions. This is now 40% compared to 38% last year. Within R&D, we are encouraged by the many phase three readouts with semaglutide in obesity. We are very pleased with the results of the recently completed cardiovascular outcome trial SELECT. SELECT is the largest trial ever undertaken by NorNordisk, and the results establish the semaglutide 2.4 mg as the only anti-obesity medication with proven cardiovascular benefits. We are committed to drive change in obesity and believe that the SELECT trial with semaglutide 2.4 mg underlines the importance of recognizing obesity as a serious chronic disease. We believe the benefits of semaglutide on major adverse cardiovascular events in this population will not only be a big difference for patients, but also add value to society. Martin will come back to this and our overall R&D milestones later. The quarterly sales growth reflects strong commercial execution across operating units. Both operating units contribute to sales growth driven by increasing demand for OGV1-based diabetes and obesity treatments. The performance in the first six months has enabled us to raise the outlook for the full year. Camilla and Doc will go through the details per therapy area later. Carson will go through the financials, but I'm very pleased with the performance for the first six months of 2023. With that, I'll give the word to Camilla for an update on execution.

Thank you, Lars, and please turn to the next slide. In the first six months of 2023, our total sales increased by 30%. The sales increase was driven by both operating units with North America operations growing 44% and international operations growing 17%. Our GLP-1 sales increased 50% driven by North America growing 44% and international operations growing 62%. Insulin sales decreased by 7% driven by a 2% decline in international operations and by a 25% sales decline in North America operations. The sales decline was driven by declining sales in the U.S., in region China, and EMEA. Obesity sales grew 157% overall. In international operations, sales grew 66%, driven by both Saxenda and Vigovi. In addition to Denmark and Norway, Vigovi has now also been launched in Germany. In North America operations, obesity care sales grew 207%. Sales of Vigovi increased by 344% in the U.S., reflecting the performance since the commercial relaunch in January 2023. Total rare disease sales decreased by 18%, driven by a 17% decrease in international operations and by an 18% decrease in North America operations. Rare endocrine disorder sales were impacted by a temporary reduction in manufacturing output. Please turn to the next slide. With 24% sales growth in our diabetes care, we are growing faster than the total diabetes market, improving our global diabetes value market share over the last 12 months to 32.7% from 31%. This is in line with the aspiration of strengthening the diabetes care leadership, aiming at reaching a global value market share of more than one-third in 2025. The increase primarily reflects GLP-1 market growth as well as share gains in both operating units. Please turn to the next slide. In international operations, total diabetes care sales increased by 20% in the first six months of 2023. This was driven by GLP-1 sales growing 62%. Novo Nordisk is the market leader in international operations with a GLP-1 value market share of 67%. Osambek continues its GLP-1 market leadership with around 45% market share. We're also pleased to see Rebelsus increasing its market share to just shy of 11%, driven by a strong uptake across geographies. And with that, I would hand over the word to Doug.

Thank you, Camilla. Please turn to the next slide. The U.S. GLP-1 market volume grew more than 60%, comparing Q2 of 2023 to Q2 of 2022. The volume growth acceleration is driven by a substantial increase in new patients initiating therapy with our portfolio of GLP-1 products, Ozempic and Rebelsis. Measured on total prescriptions, Novo Nordisk continues to be the market leader with a 55 percent market share. Please go to the next slide. Obesity care sales increased by 157 percent, mainly driven by the U.S. due to a strong Lugobi uptake and continued demand for sexenda. The global branded obesity market expansion continues, with a global volume growth of around 76 percent. In international operations, obesity care sales are driven by a strong sex-centered performance and the Wegovy launches in Denmark and Norway. We anticipate a continuation of the gradual rollout of Wegovy in international operations, which now includes Wegovy launches in Denmark, Norway, and Germany. In the U.S. alone, sales of WGOVI grew by 344%, and we continue to see an overwhelming demand for WGOVI. While supply capacity is gradually being expanded, the supply of the lower dose strengths will remain restricted to safeguard continuity of care. Next slide, please. Our rare disease sales decreased by 18%, driven by rare blood disorder sales decreasing 1%, and rare endocrine disorder cells declining 46%. Nordotropin cells were impacted by a temporary reduction in manufacturing output. Now, over to Martin for an update on R&D.

Thank you, Doug. Please turn to the next slide. The obesity pandemic affects more than 750 million individuals and is associated with more than 200 possible health complications, including cardiovascular disease, which is the leading cause of death globally. Obesity therefore has a profound impact on individual patients and their outcomes, but also a substantial impact on society and healthcare spending. No pharmaceutical weight management intervention has to date demonstrated improvement in patient cardiovascular outcomes. Besides significant weight loss, semaglutide has shown benefits in a wide array of biomarkers associated with cardiovascular risk. This has been seen in the STEP development program. This includes improvements in blood pressure, dyslipidemia, HbA1c, and inflammatory markers. These observations support observations from diabetes, where semaglutide treatment has been demonstrated to be associated with a 26% reduction in risk of experiencing a major adverse cardiovascular event, or MACE. To investigate the potential impact of semaglutide in patients with obesity on reduction in risk of major adverse cardiovascular events, Novo Nordisk in 2018 initiated the SELECT trial. Please turn to the next slide. SELECT was a large-scale outcomes trial and was conducted across 41 countries and more than 800 sites. 17,604 patients were enrolled and randomized in a one-to-one ratio to receive once weekly semaglutide 2.4 mg or placebo. The eligibility criteria were designed to include a broad population with overweight or obesity and established atherosclerotic cardiovascular disease as defined by prior myocardial infarction, stroke, or peripheral artery disease. Patients with a prior history of diabetes were excluded. The primary objective was to demonstrate superiority of semaglutide 2.4 mg versus placebo on top of standard of care for prevention of the primary endpoint. And this was consisting of major, sorry, as defined by cardiovascular death, non-fatal myocardial infarction, or non-fatal stroke. Key secondary objectives were to compare the effects of semaglutide 2.4 mg to placebo with regards to mortality, cardiovascular risk factors, glucose metabolism, body weight, and renal function. I'm very excited to announce that SELECT achieved its primary endpoint, and once-weekly semaglutide 2.4 mg demonstrated a 20% reduction in major adverse cardiovascular events versus placebo. All components of the primary endpoint contributed to the overall cardiovascular risk reduction. The result from the SELECT trial establishes semaglutide 2.4 mg as the only anti-obesity medication with a proven cardiovascular benefit in a population with overweight or obesity and established cardiovascular disease without prior history of diabetes. We believe that the cardiovascular risk reduction demonstrated with semaglutide 2.4 milligram intellect hold immense value for patients and caregivers, the scientific community, as well as society at large, and that these results for semaglutide holds the potential for fundamentally change how obesity is regarded and treated. In the trial, semaglutide 2.4 mg appeared to have a safe and well-tolerated profile in line with previous trials investigating semaglutide. We aim to share the full select results at the American Heart Association Congress in 2023 and expect to file for regulatory approval of a label indication expense for semaglutide 2.4 mg later this year. Please go to the next slide. Building on the potential of broader cardiovascular benefits for semaglutide, Novo Nordisk initiated the STEP-HEF-PEF trial to investigate the impact of semaglutide treatment on physiological function in patients with obesity and established heart failure. Heart failure with preserved ejection fraction, or HEF-PEF, affects half of the estimated 65 million patients with heart failure globally. Around 80% of HEF-PEF patients have overweight or obesity. which is believed to contribute significantly to the disease's pathophysiology. Individuals with obesity-related HFpEF have a high risk of mortality and morbidity, and experience the greatest burden of debilitating symptoms and functional impairment. Improving these outcomes is a major goal of management, and very few treatment options are available. In the step HF trial, 529 patients with obesity-related HFPEF and no prior history of diabetes were randomized in a one-to-one manner, comparing to Magnetide 2.4 mg with placebo, when both were added to standard of care. The primary endpoint were the average change from baseline in the Kansas City Cardiomyopathy Clinical Summary Score Questionnaire and body weight. Key secondary endpoints included the 6-minute walking test, a composite hierarchical endpoint including hard outcomes and high sensitivity C-reactive protein. In the trial, semaglutide showed a 16.6 points improvement versus 8.7 points in the placebo arm at week 52. The mean change was thus 7.8 points in favor of semaglutide, which is considered a clinically relevant and very strong result within chronic heart failure. I would like to also touch completely, sorry, I'd like to touch upon the headline results from OASIS-1, so please turn to the next slide, please. OASIS-1 was a phase 3B trial with once daily oral semaglutide 50 milligram. The trial design details are on the slide. Overall, patients who received oral semaglutide 50 milligram achieved a statistically significant weight loss of 17.4%, after 68 weeks of treatment compared to 1.8% with placebo. The results are comparable with the weight loss demonstrated in step one with injectable semaglutide 2.4 milligrams and will give patients and caregivers an opportunity for individualized treatment. Please go to the next slide. In line with our business development strategy in obesity, Focused on either technology platforms or early to mid-stage assets, we are pleased to announce the acquisition on Inversargo Pharma. Inversargo has focused on the development of a cannabinoid receptor 1 inverse agonist, which is designed to help people living with obesity, diabetes, and complications associated with metabolic disorders. The acquisition includes the lead acid INV202, an oral cannabinoid receptor 1 inverse agonist designed to preferentially block cannabinoid receptors in peripheral tissues only. INV202 demonstrated promising results in terms of weight loss in a phase 1B trial and is currently in clinical development for diabetic kidney disease. Next slide, please. Turning to R&D milestones. I would like to highlight some of the other exciting events, trial readouts, and initiations across our therapy areas in 2023. Within diabetes, we anticipate the submission of oral semaglutide 25 and 50 milligram in US and Europe during the second half of 2023, and further to initiate a phase two trial with the GLP-1-GIP co-ergonist in the fourth quarter. Within obesity, we completed a phase two proof of concept trial with PYY in May. Due to a modest treatment effect, we have decided to terminate the development of this PYY agonist. On a separate note, we are anticipating the results from the ongoing phase 1 trial with oral amicretin during the fourth quarter. In rare disease, Sugroy was approved in Japan and in Europe for the treatment of children with low thermal deficiency. In other serious chronic diseases, we initiated HERMES. a phase 3 heart failure cardiovascular outcomes trial investigating cilcivecumab in patients with heart failure with preserved ejection fraction. The current treatment options for these populations are very limited, and this makes one of the greatest unmet needs in cardiology today. With that, over to you, Tan.

Thank you, Martin. Please turn to the next slide. In the first six months of 2023, our sales grew by 29% in Danish kroner and 30% at council exchange rates, driven by both our operating units. The gross margin increased by 85.1% compared to 84.4% in 2022. The increase is driven by a positive product mix reflecting increased sales of G1-based treatments and a positive currency impact. This is partially countered by costs related to the ongoing capacity expansions as well as lower realized prices, mainly in the U.S. and region China. Sales and distribution costs increased by 27% in Danish kroner and by 28% at constant exchange rates. The increase is driven by both operating units. In North America operations, the cost increase is driven by the relaunch of Vigovi and promotional activities for SEMPIC, while in international operations, the cost increase is driven by promotional activities for Rebelsys as well as obesity care market development activities. The increase in sales and distribution costs are impacted by adjustments to legal provisions. Research and development costs increased by 34% in both Danish kroner and at constant exchange rates. The increase is driven by higher late-stage clinical trial activity and increased early research activities compared to the first six months of 2022. The acquisition of former therapeutics in 2022 also impacted costs. Administration costs increased by 9% measured in Danish kroner and by 10% at constant exchange rates. Operating profit increased by 30% measured in Danish kroner and by 32% at constant exchange rates, reflecting the sales growth. Net financial items showed a net gain of 96 million Danish kroner compared to a net loss of around 2.8 billion Danish kroner. The effective tax rate was 19.9% in the first six months of 2023 compared to 20.7% in the first six months of 2022. Net profit increased by 43% and diluted earnings per share increased by 44% to 17 kroner and 41 Danish kroner. Free cash flow was 45.5 billion Danish kroner compared to 42 billion in 2022, supporting the strategic aspiration to deliver attractive capital allocation to shareholders. The cash conversion is positively impacted by timing of payment of rebates in the U.S. This includes provisions related to the revised 340B distribution policy in the U.S. Note that income under the 340B program has been partially recognized. Capital expenditure for property, plant, and equipment was 10.6 billion Danish kroner compared to 4 billion Danish kroner in 2022. This primarily reflects investments in additional capacity for active pharmaceutical ingredient production and fill-finish capacity for both current and future injectable and oral products. Please go to the next slide. A key priority for NordNorsk is to ensure attractive allocation of capital to shareholders. For 2020, Two, the dividend per share increased 19.2% to 12 kroner and 40. For 2023, the Board of Directors has decided to pay out an interim dividend of 6 kroner per share, which will be paid out in August this year. In line with our strategy, we have returned more than 32 billion Danish kroner to shareholders in the first half during dividends and ongoing share repurchase programs. which is up to 30 billion Danish kroner for the full year. To secure liquidity for both the New Norse B shares and American depository receipts, the Board of Directors has decided to split the share in a two-for-one ratio in September 2023. Please go to the next slide. Midway through 2023, we're continuing our sales growth momentum, which has enabled us to raise the outlook for the full year. We now expect the sales growth to be between 27% and 33% growth at constant exchange rates. This is based on a number of assumptions as described in the company announcements. The guidance reflects expectations for sales growth in both North America operations and international operations, mainly driven by volume growth of GH1-based treatments for diabetes and obesity care, partially counted by declining sales in rare disease due to a temporary reduction in manufacturing output. The guidance reflects the level of volume growth of GLP-1-based diabetes treatment and the inherent uncertainty of the pace of the obesity care market expansion. Finally, the relaunch of Vigovi in the U.S. and the limited rollout in international operations. The outlook also reflects expected continued periodic supply constraints and related drug shortage notifications across a number of products and geographies. As mentioned by Doug, the supply of the lower Vigovido strengths in the U.S. will remain restricted to safeguard continuity of care while supply capacity is gradually being expanded. We expect that operating profit growth will be between 31% and 37% at constant exchange rates. This primarily reflects the sales growth outlook and continued investments in current and future growth drivers within R&D and commercial. For 2023, we expect net financial items to amount to a gain of around 2.8 billion Danish kroner, mainly reflecting hedging gains associated with the foreign exchange hedging contracts. Capital expenditure is still expected to be around 25 billion Danish kroner, reflecting investments in additional capacity for active pharmaceutical ingredients and finished capacity for both current and future injectable and oil products. The free cash flow is now expected to be between 64 and 72 billion Danish kroner, reflecting the sales growth, a favorable impact from rebates in the U.S., and investments in capital expenditure. The updated cash flow expectation is reflecting business development activities. This covers the outlook for 2023. Now back to you, Lars, for final remarks.

Thank you, Carsten. Please turn to the final slide. We are very satisfied with the sales growth in the first six months of 2023. The goal is driven by increasing demand for G1-based diabetes and obesity treatments, and we're serving more patients than ever before. The performance in the first six months has enabled us to raise the outlook for the full year. Within R&D, we are very excited about the results from the SELECT trial. Obesity is a serious chronic disease associated with many comorbidities, and the results from SELECT demonstrate that comorbidities associated with the condition can be significantly reduced by treating people with semaglutide 2.4 mg. With that, I'd like to hand over the word to Daniel. Thank you, Lars.

Next slide, please. We're now ready for the Q&A session. 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 question.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now take your first question. And your first question comes from the line of Martin Pakhoy from SEB. Please go ahead.

Yes, Martin Pakhoy, SEB. First one question for Martin on the select data actually related to Kakasema. Will it be possible to utilize fully or partly select data in a potential labeling of Kakasema? And then second question is also in Carcassima, but maybe to Carsten or Lars. Of course, you're building up production hopefully every day, but respect to the pin for the device for Carcassima, do you think you'll be able to have a commercially acceptable amount of scale of production of the pin of Carcassima at the time of launch? Or the time of approval, I mean, of course.

Thank you, Martin, for these questions. So, Martin, if you start with CAC-Crusema and Select.

Thank you very much, Martin. Obviously, something that we also discussed. I have to say that CAC-Crusema is a couple of years down the road, so it's probably too early to speculate what we can and cannot do in terms of regulatory interactions. I think it's important to call out that for CAC-Crusema, we're also doing a redefined freeze, so CAC-Crusema will have in and of itself cardiovascular data, but obviously we are super excited for that outlook as well, given the select data.

And Martin, to a question around scaling of CACOSIMA, then our starting point is that we see the dynamics in the obesity market now and the significant unmet needs, and that is also what is informing our supply chain strategies and scaling in preparation of CACOSIMA launch and also the elevated demand CAPEX level that you're seeing in our guidance this year.

Thank you, Carsten. Thank you, Martin. So we're ready for the next question.

Thank you. We will now go to our next question. And your next question comes off the line of Richard Parks, BNP Paribas. Please go ahead.

Hi, thanks for taking my questions. Firstly, I wondered if you could talk about your thoughts over would go be commercial access in the US going into 2024. There's been a few reports of payers restricting access or increasing co-pays due to the extent of current strong demands. wondering how you're seeing it from a holistic perspective and do you think you can leverage the select results to impact that immediately or will you have to wait for a label update to influence your discussions with commercial payers then the second question is would wondered if you could walk us through the timelines of how results of select can influence potential legislative change in medicare is that something that you can straight away start to lobby for or do we again need to wait for label updates? Thanks very much.

Thank you, Richard. Doc, I'll give the word to you. I believe both are related to North America.

Yeah, so thank you, Richard. So for the first one, as it relates to access, the starting point is we're pleased with the level of access that we have today and we continue to build on that. Remember, all major PBMs are covering it right now, and that means over 45 million people have access. And today, currently, 80% of them are paying less than $25. So I think that's important. As it relates to Select specifically, one important channel we still don't have access to is Medicare. Now, will Select change that overnight? Maybe not. However, Select enhances the value proposition of Smagitide. And longer term, I think it will be difficult for anyone to restrict access to this phenomenal molecule and its life-saving properties. So we'll continue to utilize that. But we're pleased with the level of access today, and we continue to build on that. Thank you. Thank you, Doc.

Thank you.

We're ready for the next question.

Thank you. We will now go to your next question. And your question comes from the line of Emily Field, Barclays. Please go ahead.

Hi. Thanks for taking my questions. I'll ask two questions. The first is there's been some attention to reports in the U.S. media about state time for Wigovi for a majority of patients potentially being less than a year. Do you have any updates on sort of your own data or what you're expecting for Wigovi state time? And then secondarily, could you just remind us of your targets for the supply ramp for Wigovi for the end of 2023 versus the end of 2022? Thank you.

Good. So, Doug, if you'll take the first one on what we see on state time, and Carsten, you'll take the Govi ramp-up this year.

Yeah, thanks, Emily, for the question. I'd start with there's still too few data points to conclude on Govi state time, so we're really going to have to wait until 2024. I would say, though, we're encouraged at looking at some of the early snapshots data that we see from payers and databases, but again, it's really too early to conclude on state time.

Thank you, Doug. Carsten?

Yeah, Emily, in terms of the global supply scaling, that is, of course, top priority for us, given the significant unmet need we see. As to the single-dose platform that we are applying in the U.S., the process and the progress we have seen is that we started out this year with one CMO filling line, Then during the first half, we added another line and we are on track with adding a third CMO filling line as we go into 2024. And then on top of that, we'll be adding additional filling line capacity. So a significant step up in the Google capacity over time. And in addition to that, it's important to note that we're also deploying our big platforms in terms of our in-house cartridge filling and FlexTouch platforms for our European launches of Vigubi. So there we are also building optionality in terms of how to deploy Vigubi going forward. And then finally, in terms of scaling, I'd say, again, our CapEx program of 25 billion is also scaling, both on the peptide API as well as field finish capacity.

Thanks, Carsten.

Thank you.

Get ready for the next question.

Thank you. Your next question comes from the line of Peter Fedult from Citigroup. Please go ahead.

Yeah, thanks, Peter. Two questions for Martin on Select and the CB1 asset you acquired today. Martin, I realize you can't go into very much detail on Select, but are you at least able to characterize qualitatively the strength of the data with respect to any of the key secondary endpoints, as well as reassure us that when we see that data at AHA on the primary endpoint, we're not going to be tripped up by any subgroup analysis showing regional efficacy differences or the KM curves doing anything funky. And then secondly, on the CB1 inverse agonist, I mean, those old enough on the call will remember the infamous Ramonaban. So can you just sketch out what's different here from both an efficacy and a safety perspective. I thought from memory, Ramona only gave about five kilos of weight loss and obviously came with a big safety concern around suicide. So what's different here? When could phase three start? And how does NOVA want to position this asset relative to your existing obesity portfolio? Thank you.

Yeah, so Martin, on select totality of data and then on safety on our new asset from Inversargo.

Yeah, thanks very much, Pete. So you're absolutely right. For better or worse, I can't go into too much detail. Obviously, we disclosed that for the primary endpoint, we saw that the individual motor components, being myocardial infarction, stroke, and cardiovascular death, all contributed to the estimate that we saw, suggesting, at least in the primary endpoint, a level of consistency that gives us a lot of comfort, potentially also for the secondary endpoints. We will embargo those data until American Heart later this year. In Versago, I think you're absolutely right. And obviously, we've also looked at historical data. I think it's important to recall that historically, the CP1 approach has been primarily directed towards the brain and effect on the brain. And that is... with a high likelihood attributable to the negative effects seen with historical approaches. With the INV202 molecule, we're actually seeing a primarily peripheral activity, so designed to reach the brain with minimal activity but maximum activity in the peripheral tissue. And what we have seen in the clinical space is actually an efficacy that is somewhat beyond what you just described for the historical compounds, and a safety profile that appears, at least in a smaller setting, to have been de-risked in accordance with the design. So we're not saying that, and we'll say that for any drug development program, we have to de-risk this further during our development. Next stage is to investigate this in phase two, and the focus is to look at this in monotherapy because we do believe the compound has a place in potential monotherapy, but also to look at it in combination with other modalities.

Thanks, Martin. Thank you. We are ready for the next question, please.

Thank you. We will now go to the next question. And your next question comes from the line of Sajin Jain from Bank of America.

Hi there. Two questions on Wegovy supply, if I may. So, Carson, thanks for the updates on supply. It sounds like everything's on track. So, try and understand the driver of the vague language you've used. So, just very simply, is there still uncertainty or issues with supply, such as timing of the second Catalan facility or speed of the second CDMO ramping, or is this simply demand uncertainty post-select? And then secondly, just as we're all trying to model, we're going through for the second half, what color can you give us on how you dynamically manage supply? Should we be expecting a supply increase in the second half at any point? I guess what I'm trying to get a sense of is when you change the wording on the U.S. supply website, which isn't updated yet, what are you going to say, assuming you want to give some visibility relative to your prior September commentary? Thank you.

Thanks, Sachin, for that long question. Aston?

Yeah, thanks, Sachin. Again, it's important to note that this all starts with a very, very substantial demand driven by the unmet patient need in the U.S. and rest of the world. And that's, of course, what we're scaling our supply chain to as top priority, as I alluded to before. The language in the company announcement should absolutely not be understood as we are uncertain about our supply to the market. So our supply is rolling according to plans in terms of getting the new lines on track. And we have a supply plan which has been shared with our commercial colleagues. And then, of course, there are some uncertainties about what dose strengths are being utilized in the specific markets. And the only responsible way to manage this as a company is, of course, that the patient starting on Vigovi they should be able to titrate up to the 2.4 mg dose and thereby achieve the benefits that we showed in the STEP program of up to 17% weight loss. And the best way to do that is, of course, not to start more patients than we can secure continuity of care and then furthermore not to launch in more affiliate than we can support. So you should not see the language as... as uncertainty on the supply side, but more that we'll be navigating the market in a sustainable manner. And therefore, also, the starter doses in the U.S. will be managed more dynamic in terms of how many we start, given the fluctuations between the dose strengths.

Thanks, Captain. Next question, please.

Thank you. We will now go to your next question. And the question comes from the line of Richard Potter from JP Morgan. Please go ahead.

Hi, thanks for taking my questions. Just coming on to select and some of the safety concerns you've seen with regulators and the press around Wagovi, suicide, thyroid cancer, a couple of those. So what have you seen in Select around those issues and what do you have in your own adverse event databases that could be used to address these concerns from our side? And then secondly, just thinking about the legal provisions that you alluded to, increasing SG&A, are they due to your litigation against the counterfeit producers or anything else you could say on those? Thanks very much.

Martin, you take the select cast and you take legal provisions afterwards.

Thanks a lot, Richard, for that question. As you know, safety is very high if not top of our agenda, and we do that for all of our compounds. You also know that broadly GLP-1 has been on the market for 15 years in diabetes, 8 years in obesity, so we have a huge safety database across GLP-1 companies, but obviously also collected by the authorities. And in addition to that, we have data from our clinical trials. Select obviously, due to its size, can almost stand alone in most safety assessments. And I think it's fair to say, again, I'm not allowed to go into any details. I think it's fair to say that Select is supporting our broad assessment of the attractive safety profile of semaglutide and the broader GLP-1 approach, including when looking at some of the issues that have been in the media in recent months. So we take a lot of comfort from being able to add the select data to the data pool.

And on legal provisions, so it's standing operating procedure that every quarter we assess our portfolio of ongoing litigations and look at our exposure there and then update our legal provisions. Sometimes some provisions go up, sometimes they go down. And what we say here is that we have increased our provisions based on the current standing of our ongoing litigations as described in in the annual report in detail and the subsequent company announcements. We're not really able to comment on ongoing litigations and specifically on provisions related to that.

Thanks, Carsten. Next question, please.

Thank you. We will now take the next question. And your next question comes from the line of Michael Leusten, UBS. Please go ahead.

Oh, thank you very much. Two questions, please. You obviously called out a meaningful rebate adjustment for rubellas in the quarter, but there's also some language in the press release around wholesale stocking. Just wondering how meaningful was that stocking effect in the second quarter, if at all? And I'm very sorry to go back to the supply question, but just following from Sachin, will you or will you not be able to start supplying the lower doses from September? I think the question that we all have is, will he be able to come back to patients at the lower dose in September or not? Thank you.

Yeah, so Carsten, I think both for you. Yeah, thank you, Michael, for those questions. So in terms of wholesaler stocking, this is in our first half commentary, and it's basically linked to the wholesaler stocking we saw in the first quarter and communicated already in in our first quarter release, so no material wholesaler movements in the second quarter. As to the lower dose strengths of Vigovi in the U.S., again, it's important for us to reiterate that all dose strengths are available in the U.S. market of Vigovi, but we are limiting the lower dose strengths, so we only start the amount of patients that can titrate up as also evidenced in in the ongoing IQV script monitoring. And after September, we expect that to continue to be the case. And then, of course, we'll dynamically be managing how many new patients we take on onto the lower doses.

Thank you, Karsten. Next question.

Thank you. Your next question comes from the line of Peter Welford from Jefferies, please go ahead.

Hi, thanks for taking my questions. Two, one, coming back to select. I wonder if Martin, I'm not asking for any details, but I wonder if you can just tell us, will the AHA presentation, is the focus going to be on the primary endpoints? or wondering, you know, how many of the sort of interesting secondary endpoints, I guess I'm looking at the slide where you highlight, for example, slowing type 2 diabetes and some of the other sort of interesting, do you think we'll get any insight into any of those sort of endpoints from selected AHA? Or is it going to be, is your strategy, I guess, more going to be a drip-wise sort of release of select data as we go over time? And then secondly, just looking, sort of coming back to the prior question on ribelsis, looking more at the rebates, I wonder if you can just comment, if we look at the gross to net adjustments that we can sort of see from prescriptions in 2Q for a Zempic and ribelsis, it sounds as though for a Zempic, 2Q is a real number. But for ribelsis, is there anything we should consider when we look at that number for any changes at all during the second quarter? Thank you.

Thank you, Peter. Martin, on Select, what you can say about American Heart Association?

Yeah, thank you very much. Obviously, our focus or primary focus for the presentation at American Heart is going to be on the primary endpoint and the confirmatory secondary endpoint. But to your point, we also have a great number of really interesting secondary endpoints that would be of relevance to a wide range of people. And our aim is obviously to share information as much as we can during the Congress and in the potential related publications.

Thank you, Martin. Carsten, on rebates in the U.S.?

Yeah, rebates in the U.S. and rebalances specifically. And it's correct, as you point out, there's some fluctuation in the gross to net on rebalances. And I think the way you should think about it is that we had a slight positive rebate adjustment in the first quarter this year on rebalances, and a slight negative rebate adjustment on rebalances in the second quarter. So that's why when you do a quarter or a quarter, the sequencing doesn't look completely obvious. It's minor amounts. We're talking about a few hundred million DKK. So it's not something we normally close out. But that's what's happening. The basic trends and the demand dynamics are still very strong, as evidenced by more or less a doubling of rebalances sales on a global scale.

Thank you, Carsten. Next question, please.

Thank you. Your next question comes from the line of Simon Baker, Redburn. Please go ahead.

Thank you for taking my questions. Firstly, going back to Wigovi capacity, but not on fill and finish on API. I just wonder if you could update us on where you are versus your current capacity on API. And then secondly, a question on Invisago and Zevaquenibant. Looking at the data that was presented at ADA, there was a, even after a week, there was a pretty broad range of responses in terms of weight loss. And at 10, the weight loss was greater than we saw in the phase one study a week for Cagri-Semmer. So I just wonder if you could give us firstly an idea of of any potential reasons for that spread of results? And secondly, is there any data, preclinical or clinical, beyond 28 days to see whether this is plateauing at a fairly modest level or whether it continues to go down as we see with your existing events?

Good. Thank you, Simon. Carsten, I don't know if you have comments to the first question.

Yeah. So in terms of semaglutide API, Simon, and thank you for that, I think You know, the starting point here is really look at our track record. So on OSIMPIC, so OSIMPIC being the best-selling diabetes care product globally, growing more than 60% last year, growing pretty much at the same pace now in value, so even higher in volume. So that speaks to the scalability that we're doing on the API front. And you put on top of that Vigobi. So, we are scaling our API set up significantly and a key part actually of our 25 billion Kroner CapEx program this year goes into peptide API, which most likely will be multi-use and hence also cater for semaglutide manufacturing in years to come.

Martin Invertago.

So, thanks very much Simon. So first of all, we've seen a broader set of data than what has been publicly available. We can't disclose that now, but obviously it gives us a lot of comfort in not only the level, but also the consistency of weight loss. Obviously with weight loss, there is some variation. We see that with most drugs, but it has not been anything that has concerned us. And similarly, obviously, on the safety side, we've seen more than what has been publicly disclosed, and again, and also with longer exposure time, and it has given us sufficient comfort to do the acquisition. Thank you, Martin.

Next question, please.

Thank you. We will now go to the next question. And your next question comes from the line of Florence Espedes from the Society General. Please go ahead.

Good afternoon. Thank you very much for taking my questions. Two, please. First, on Jupyna, could you elaborate on the dynamic on this territory and if the back-to-growth is sustainable? And my second question, a follow-up on the product acquired today, the CB1, could you confirm that you will initiate soon a phase two program in monotherapy and in combo? And if it's highly likely that you will combine this product with VigoV and Gagarin-Sema. Thank you.

Good. If I got the question right, it was first on China and now back to growth in China. Carsten, will you provide some color to that?

Yeah. So, Florian, thank you for that question. And this is really something we've been looking forward to because the volume-based procurement impact in China, which started in May of last year, was, of course, a sizable impact on our Chinese business. And when you look at the growth rate for China here in the second quarter of more than 30%, that is really impressive. And this is really a story about... the value of innovation. So we are being impacted by VVP on our older brands, but then on the contrary, then we see most notably Ocempic growing significantly in China and also Salsify and Rysotec pushing forward. So the Chinese opportunity remains intact as long as we continue to provide innovation into that market. And as you know, we also filed... for Vigubi approval in China now. So we do see China as a significant long-term opportunity for the company.

Thank you, Carsten. Martin? Yeah, thank you very much. I can confirm indeed that we will initiate a Phase II trial investigating the INV202 in patients with obesity in both mono and combination therapy. I cannot at this point not go into which combinations that we will investigate. Thank you, Martin. Next question, please.

Thank you, Martin.

Thank you. We will now go to your next question. And your next question comes from the line of Kerry Holford, Borenberg. Please go ahead.

Thank you. Yes, two questions, please. Firstly, on oral GLP-1, aside from the Q2 performance, I wonder if you can just talk to why, perhaps, ribosis update in the diabetes market, at least relative to azimuth. has not been as substantial as you might have expected by now. And with that in mind, as you're approaching the launch of oral Wagovi, what you within Novo expect from the ramp of a new oral therapy into that obesity market. And then secondly, on GLP-1 formulation, your key competitor in the diabetes space has announced plans to launch its new incretin in certain markets in a vile format. And I wonder if that's something you would consider for Wegovy in order to meet those supply demands. Thank you.

Good. So first, Camilla, if you can talk about the way we look with the oral therapy one, Rebelsys, the commercial dynamics.

Yeah. So in terms of dynamics for Rebelsys, we continue to gain share in the more segment, more all antidiabetic segment. And of course, some patients prefer the oral therapy, some patients prefer the injectable therapy, but it's clear that in its totality, we continue to, of course, grow the use of DLP-1. If you are also asking into the oral opportunity in obesity, then we also expect that there will be people who will be favoring oral therapy in obesity as well. And, of course, you have just heard about the recent data that we have presented on the 50 milligram. And we will continue to, of course, evaluate our launches of that based on portfolio prioritization and manufacturing capacity. But there is no doubt that there is a big unmet demand in obesity also for the oil compounds with an efficacy that is quite similar in 50 milligram to the Vigobi 2.4.

Thank you, Camilla. And last, supply chain strategy.

Yeah, so I think we have a situation where we have two different device presentations for our Geliborne portfolio. We have the single shot device where we go in the U.S. and we leverage our FlexTouch platform outside of the U.S. I think we have significant flexibility and also you can say better scalability in that approach compared to relying on a single dose approach solely. So we don't have any current plans of going to Weill say, dosing or vial presentation for GF1 formulation. Thank you.

Thank you, Lars.

Next question, please.

Thank you. We will now take the next question. And your next question comes from the line of Mike Nedelkovich from TD Cowan. Please go ahead.

Thank you for the question. I have two for Martin. The first is, based on the impressive result we've seen with SELECT, do you have any plans to conduct a cardiovascular outcomes trial in a primary prevention setting, perhaps with Cagrisema? And if not, why not? And the second question is, Martin, you recently suggested you would consider running a trial which tested alternative maintenance phase regimens after achieving target weight loss with either Wegovy or possibly Cagrisema. Can you update us on your thinking around a potential trial in that vein, and might we see an initiation sometime in the near future? Thank you.

Yeah, thank you very much. Two great questions. So first on primary prevention, we are of course considering this. Given the select results, I think we would be a little bit remiss not doing the consideration. You may know that we're also investigating primary prevention for semaglutide in the space of diabetes already. If there was a why not, and that's obviously part of our considerations, it is that the event rate in obesity is somewhat lower than we see it in diabetes, and that means that it would have to be a very large trial, specifically looking at primary prevention where patients don't have an established cardiovascular disease. So we're taking all of this into account, and we'll keep you updated, but we've made no decisions at this point. So in terms of the maintenance, this is part of our commitment, securing that an accrued weight loss can be maintained. I actually think, and again, I can't disclose any data, but we've also been awaiting the select file in this perspective, because obviously we were very curious to investigate to what extent a weight loss was maintained over what for the sort of early patients would be a full five-year period. So given that I can't disclose the data, I can't really give you our thinking, but just iterate our commitment to investigating how to best maintain and accrue weight loss following, obviously, semaglutide, but also cagliosema down the road. Thank you, Martin. Next. Question?

Thank you. We will now go to the next question. One moment, please. And your next question comes from the line of Harry Septon from Credit Suisse. Please go ahead.

Brilliant. Thank you very much for taking my questions. My first one's on the exempted number in the US in the second quarter. So prescription growth was about 96%, but you reported 44% sales growth. I was just hoping that you could confirm that there wasn't any one-off gross to net exceptionals in the second quarter. And that's just a reflection of your expected level rebating with the growth in the product. And then my second question on tax. At this stage, can you indicate the expected impact to your effective tax rate from implementation of the global minimum tax rate? Thank you.

Yes, Carsten, I'll give both to you.

Yeah, thank you for those two questions. And for the first one on USEMPEG, no, there are no special major gross to net adjustment in the quarter. I think it's important to note that between what you see in IQVIA numbers and our net sales, you have inventory movements also that could impact the numbers significantly. So no major movements and basically a reiteration around that when we look at OSIMPIC and gross to net in the U.S., we're still in the, I'd call it, 10% to 15% net price decline range. So no changes compared to prior quarters there. And always do be careful on looking at individual quarters when you do gross to net and reconsiderations to TRX. As to... Impact from BEPS on our effective tax rate, it will be minor. So I think we're running around the 20% effective tax rate currently, and when we look forward, that's approximately the level we'll be looking at on effective tax rate going forward also, bearing any major BD or M&A transactions that would change our structure. But at this point, broadly neutral around 20%.

Thank you, Carsten. We have time for one final set of questions, please.

Thank you. Your final question comes from the line of one moment, please. The final question comes from the line of Michael Novod from Nordea. Please go ahead.

Thank you very much. Two questions. One to sort of the gradual rollout of the GOVI in IO. So you commented to 2023. How confident are you Of course, also relating to supply, about sort of a gradual but also more accelerated rollout in 24 and 25 in IO of Vigovi and what should we be able to expect in terms of larger markets. And then secondly, relating to Germany, can you detail a bit around the disease modification program in Germany that have triggered that you have launched, albeit in controlled fashion in Germany for Vigovi?

Thank you, Michael. Camilla, I'll give the word to you.

Yeah, thanks a lot, Michael. As you know, we've now launched in the U.S. and in Denmark and Norway, where we see consistent trends on Vigobi. And we will continue to roll out Vigobi in a manner that is, of course, responsible, observing the uptake and the demand in particular that we get. We have decided to launch in Germany as the third country in I.O., because there was a good opportunity to include Vigovi in the disease management program. And that basically means that we hopefully will be able to ensure that the people most in need of a weight loss product like Vigovi with the efficacy that it has, that they can get access to it. At the same time, of course, this is a slightly different approach that we have taken before, given the high demand that there is. So we are continuing to... roll it out both in Germany, but we'll also do that subsequently in other countries in a way where we take, you can say, a responsible approach and an approach that considers the high uptake on the demand so that we can ensure patient continuity. That is really the most important part of how we are trying to roll out the Vigovi in more and more countries.

Thank you, Camilla. So this concludes our Q&A session. Thank you for participating in the call and feel free to reach out to Investor Relations with any follow-up questions. Before closing the call, I'd like to give the word to you, Lars, for any final remarks.

Yeah, thank you, Daniel. So also a warm thanks from me for the interest today. I hope it's clear to all of you that we are very pleased with the momentum we have in our business as represented in the growth for the first six months and our guidance for the year and also the growth opportunity in the coming years. We're pursuing an innovation-based growth strategy, and it's clear that the data we have received from Select underpins a very attractive mid- to long-term growth profile for semi-glutide, and we're very, very pleased with that. And I'd also like to underline, as has been asked a couple of times, we are very confident in our ability to scale and supply this growth aspiration, and we see capacities coming in line as we speak. and we have years back and are today making very important investment decisions to build what is needed to support this growth aspiration for the coming years. So with that, I'll close this call, and thank you again all for your interest. Thank you.

Thank you. This concludes today's conference call. Thanks for participating. You may now disconnect.