Novo Nordisk A/S

good day and thank you for standing by welcome to the first six months of 2024 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 first speaker today, Jakob Rode, Head of Investor Relations. Please go ahead, sir.

Thank you. Welcome to this Novo Nordisk earnings call for the first six months of 2024. My name is Jakob Martin Viborod, and I'm the 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 Sudvest. Executive Vice President and Head of North America Operations, Doug Lange. Executive Vice President and Head of Development, Martin Holtz Lange. And finally, Chief Financial Officer, Carsten Munch Knudsen. All speakers will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, novenordis.com. Please note that this call is being webcasted live and a recording will be made available on our website as well. The call is scheduled to last 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. Please turn to the next slide. 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 2024 as well as the slides prepared for this presentation. With that, over to you, Lars, for an update on our strategic aspirations.

Thank you, Jareb. Please turn to the next slide. In the first six months, we delivered 25% sales growth and 19% operating profit growth, both at constant exchange rates. The operating profit growth was impacted by the impairment loss related to orthodurinone. We'd like to start this call by going through the performance highlights across our strategic aspirations before handing over the word to my colleagues. Starting with our focus on purpose and sustainability, we are now serving more than 42 million patients with our diabetes and obesity treatments. Our total carbon emissions rose by 31% as compared to the first six months of 2023. This was primarily driven by our increased investments in capital expenditure to meet the high demand for our products. To uphold our commitment to being a sustainable employer, we expanded the number of women in senior leadership positions to 41%, compared to 40% in the first six months of 2023. Across all leadership positions, 46% are held by women. Within R&D, we had a number of exciting readouts this quarter, including the positive MyMate Phase 3 results. Martin will come back to this and our overall R&D milestones later. The quarterly sales growth reflects solid commercial execution across both operating units. The performance in the first six months has enabled us to raise our outlook for the full year. Camilla and Doug will go through the details later. Karsten will go through the financials, but I'm very pleased with our performance in the first six months of 2024. With that, I'll give the word to Camilla for an update on commercial execution.

And please turn to the next slide. In the first six months of 2024, our total sales increased by 25% at constant exchange rates. The sales growth was driven by both operating units with North America operations growing 36% and international operations growing 11%. In the U.S., sales growth was positively impacted by gross-to-net sales adjustments related to prior years. Our GLP-1 sales increased in diabetes by 32%, driven by North America operations growing 39%, and international operations growing 20%. Insulin sales increased by 10%, driven by North America operations, growing 36%, and international operations growing 3%. Obesity care sales increased 37%, driven by North America, growing 35%, and international operations growing 47%. In international operations, we continue to roll out VGOVI gradually with volume cap launches to balance supply and demand. In both geographies, growth was driven by Vigovi, partly offset by declining Saxenda sales as the market is moving towards once-weekly treatments, where disease sales decreased by 3%. Please turn to the next slide. With 25% sales growth in diabetes care, we are growing faster than the total diabetes market. As a result, our global diabetes value market share increased to 34.1%. This is above our strategic aspiration of reaching one-third of the global diabetes value market in 2025. The increase reflects market share gains in both North America operations and international operations. Please turn to the next slide. In international operations, diabetes care sales increased by 11% in the first six months of 2024, which was primarily driven by GLP-1 sales growing 20%. Novo Nordisk is the market leader in international operations with a GLP-1 value market share of 69%. Osempic continues its GLP-1 market leadership with 46.6% market share. We are also pleased to see Rebelsis increasing its market share to more than 16%, driven by a solid uptake across geographies. And with that, I will hand over to Doug.

Thank you, Camilla. Please turn to the next slide. Sales in North America is driven by market share gains and healthy prescription volume growth of the GLP-1 class above 10% in the second quarter this year compared to the second quarter last year. Sales of GLP-1 diabetes care products in the U.S. increased by 42% at constant exchange rates. The sales increase was mainly driven by a continued uptake of Ozempic. Measured on total prescriptions, Novo Nordisk expanded its market leadership, now with around 56% market share. Note that the sales growth of Ozempic was negatively impacted by periodic supply constraints in the beginning of the year. Please go to the next slide. To safeguard continuity of care for Wegovy, we reduced the supply of the lower dose strengths in May of 2023, which continued throughout the remainder of last year. In the beginning of this year, we gradually started increasing the supply of the lower dose strengths, and I am pleased to see that this has been reflected in prescriptions And we are now seeing more than double the number of prescriptions in the market compared to the beginning of the year. Further, while demand is still expected to exceed supply, we grow more confident in our ability to supply. We will continue to dynamically manage supply, but only the initiation dose strength of 0.25 milligrams. Well, Gobi still has broad market access with coverage for more than 50 million people with obesity. And importantly, Around 10 million vulnerable people with obesity now have access to Ogovi through channels such as Medicaid, which is now available in more than 20 states. Ultimately, our focus is to reach more patients living with obesity. And as volumes go up, prices will come down. In the first six months of 2024, sales growth was driven by increased volumes partially countered by lower realized prices. Next slide, please. Our rare disease sales decreased by 3 percent. Sales in international operations declined by 14 percent. This was partly offset by a 13 percent sales increase in North America operations, reflecting the SEGROYA launch and positive gross net adjustments related to prior years in the U.S. Rare blood disorder sales decreased by 2 percent, driven by lower NOVA7 and hemophilia A sales. This was partially countered by increased hemophilia B sales. Rare endocrine disorder sales decreased by 8%. We are working on reestablishing full supply capacity of rare endocrine disorder products following a reduction of manufacturing output. Now, over to you, Martin, for an update on R&D.

Thank you, Doc. Please turn to the next slide. I'm very pleased to share the results of the Frontier 2 Phase 3 trial with my mate, which we provided headline results for back in May. The full data set was also disclosed at the ISTH in June. Before I walk you through the results, I would like to briefly remind you of the innovative clinical trial design. Frontier 2 was a pivotal, phase-free, 26-week, open-label, randomized, controlled, and multi-arm trial. The trial investigated the efficacy and safety of once-weekly and once-monthly subcutaneous Vymid versus no previous prophylaxis treatment or on-demand treatment, and versus prior coagulation factor prophylaxis treatment. 254 people aged 12 years and older with hemophilia A with or without inhibitors were included in the trial. The co-primary endpoint was mean annualized bleeding rate for treated bleeds for both once-weekly and once-monthly myomate versus on-demand treatment and versus prior coagulation factor prophylaxis treatment. Let's turn to the next slide. Overall, in Frontier 2, MyMed demonstrated superiority of MyMed prophylaxis with both weekly and monthly doses. In the on-demand treatment population, MyMed demonstrated superior reductions of 97% and 99% in estimated mean annualized bleeding rate for once-weekly and once-monthly treatment, respectively. This was compared to those receiving continued on-demand treatment. In the intrapatient comparison in people with prior coagulation factor prophylaxis, MyMan demonstrated superior reductions of 48% and 43% in estimated mean annual bleeding rates for once-weekly and once-monthly treatment, respectively. Of note, in the population with prior on-demand treatment, 86 and 95% of people receiving once-weekly and once-monthly MyMate treatment respectively experienced zero treated bleeds. In the population with prior coagulation factor prophylaxis, 66% and 65% of people receiving once-weekly and once-monthly MyMate respectively had zero bleeds. In the trial, MyMate appeared to have a safe and well-tolerated profile with no thromboembolic events observed and no evidence of neutralizing antimimate antibodies. Further, only 5% to 12% of patients experience injection site reactions across all five treatment arms. In conclusion, we're very excited about the Frontier 2 results. Given the differing needs of people living with Haemophilia A once weekly, or a once-monthly dosing provides optionality and flexibility for people living with Haemophilia A with and without inhibitors. We now expect to file for first regulatory approval of MyMed during the first half of 2025. Next slide, please. Turning to diabetes, I would also like to share the results from the Combine-1 trial, which investigated the use of once-weekly Icosema a combination of once-weekly insulin icodect and once-weekly semaglutide in people with type 2 diabetes. The objective of the 52-week trial was to assess the efficacy and safety of switching to once-weekly icosema compared to once-weekly insulin icodect alone in people with type 2 diabetes inadequately controlled on a daily basal insulin with or without oral antidiabetic drugs. The trial achieved its primary endpoint with Icosema demonstrating superiority in reducing A1c at week 52 with once-weekly Icosema compared with insulin Icodec. From an overall HbA1c baseline of 8.2%, Icosema achieved an estimated reduction in A1c of 1.6 percentage points compared to 0.9 percentage points for insulin Icodec. People in the trial had a baseline body weight of 84.5 kilograms. Treatment with Icosema achieved a superior change in body weight with a weight loss of 3.7 kilograms compared with a 1.9 kilograms weight gain with insulin IcoDec. The estimated treatment difference was 5.6 kilograms. In the trial, the rate of clinically significant or severe hypoglycemia was statistically significantly lower with Icosema at 0.14 events per patient years of exposure versus 0.63 events per patient year of exposure with once-weekly insulin Icodec. In the trial, once-weekly Icosema appeared to have a safe and well-tolerated profile. Now that the third and last pivotal phase three trial is completed, we expect to file for regulatory approval of Icosema during the second half of 2024. Next slide, please. Now I would like to highlight some of the additional exciting R&D news, including trial readouts and initiations anticipated for the rest of the year. Within diabetes, insulin Icodec under the brand name of iWeekly has been approved in multiple countries. In the U.S., however, we are disappointed to have received a complete response letter from the FDA for insulin iCodec. The letter outlined requests related to the manufacturing process, and these had one diabetes indication before the application review could be completed. We are evaluating the content of the CRL and will work closely with the FDA to fulfill the requests. We do not expect to be able to fulfill the request during 2024. In the first half of this year, the flow data were submitted as a label expansion application to the FDA in the U.S. and to the European regulatory authorities. Submissions to regulatory authorities in Japan and China are expected in the second half of 2024. Additionally, in the second half of this year, we are expected to see the readout of the STRIDE outcome trial with Osempic 1.0 mg in peripheral artery disease. We also expect readout of the sole cardiovascular outcome trial with a Rebelsus 14 milligram. Both trials are expected to further strengthen the comprehensive cardiometabolic evidence that we have for semaglutide. Also in the second half of the year, we look forward to initiate a phase two study for amitritin, demonstrating our commitment to continuously raising the innovation behind diabetes. Moving to obesity care. In the second quarter, we successfully completed the OASIS-IV trial. OASIS-IV investigated once daily semaglutide 25 mg for weight management in adults with obesity or overweight with one or more comorbidities. The trial achieved its primary endpoint with oral semaglutide 25 mg, demonstrating superiority compared to placebo with respect to change in body weight. from a baseline body weight of 105.9 kg, oral semaglutide 25 mg, achieved a 13.6% reduction compared to 2.2% reduction with placebo. The global launch of oral semaglutide 25 mg is contingent on portfolio prioritization and manufacturing capacity. Four weeks ago, we received regulatory approval for the treatment of obesity or overweight in China, And in the EU, the EMA adopted a positive opinion for an update of the WEGOI label to reflect data from the SELECT trial. The SELECT cardiovascular outcomes trial demonstrated that WEGOI statistically significantly reduced the risk of major adverse cardiovascular events by 20% compared to placebo. The label update will also include SELECT data showing a numerical risk reduction in cardiovascular death by 15%, a significant risk reduction of death from any cause by 19%, as well as a significant risk reduction of 18% in heart failure composite endpoints. Last for FIGOI, based on interactions with the FDA, we decided to withdraw the results from the STEP-HEF-PEF trials for regulatory review in the US and EU to further substantiate the likelihood of getting heart endpoints into the label update. We now expect to resubmit the file in the beginning of 2025 with additional relevant data. We remain excited about the potential of semaglutide 2.4 mg in this population, given the data that we've seen from the two completed STEP-HEP-PET trials. Looking ahead, we are in the second half, expecting Phase II results for monolunar band as well as Phase III results for the step-up trial with semaglutide 7.2 mg around the turn of the year. Lastly, we anticipate first Phase III results for Redefine-1 with Cagliosema and Obesity. With all of this activity, we are confident with the progress we are making towards developing superior treatment solutions for people with obesity. Within cardiovascular and emerging therapy areas, we in June 2024 announced that the Clarion CKD Phase III trial involving oseduralon was terminated. This was based on an interim analysis performed by an independent monitoring committee that concluded that the trial met the pre-specified futility criteria, meaning that the trial unfortunately did not meet its primary endpoint. We've initiated a randomized and placebo-controlled phase III cardiovascular outcomes trial called the ARTMS. The trial will assess the efficacy and safety of ciltivecumab 15 mg in acute myocardial infarction. Lastly, we look much forward to the phase III readout of the ESSENCE trial, investigating semaglutide 2.4 mg in mesh. With that, over to you, Karsten.

Thank you, Martin. Please turn to the next slide. In the first six months of 2024, our sales grew by 24% in Danish kroner and 25% at constant exchange rates, driven by both operating units. In the US, sales growth was positively impacted by gross-to-net sales adjustments related to prior years. The gross margin decreased to 84.9% compared to 85.1% in 2023. the decline is mainly driven by increased costs related to ongoing capacity expansions. This is partially countered by a positive price impact from gross-to-net adjustments related to prior years in the U.S., in addition to positive product mix reflecting increased sales of GLP-1-based treatments. Sales and distribution costs increased by 5% in Danish kroner and by 6% at constant exchange rates. The increase in sales and distribution costs is impacted by adjustments to legal provisions in the second quarter of 2023. In North America operations, the cost increase is mainly driven by promotional activities related to VGOVI. While in international operations, the increase is mainly related to promotional activities for rebalances as well as obesity care and market development activities. Research and development costs increased by 79% measured in Danish kroner and by 78% at constant exchange rates. The increase in costs is mainly driven by increased late-stage clinical trial activity and increased early research activities, as well as the impairment related to osedurinone of 5.7 billion Danish kroner and other impairments of intangible assets. Administration costs increased by 8% measured both in Danish kroner and constant exchange rates. Operating profit increased by 18% measured in Danish kroner and by 19% at constant exchange rates. Operating profit is impacted by the impairment loss related to Osaduranon of 5.7 billion Danish kroner. Net financial items showed a net loss of 530 million Danish kroner compared to a net gain of 96 million Danish kroner last year, mainly reflecting hedging losses on the U.S. dollar. The effective tax rate was 20.6% in the first six months of 2024 compared to 19.9% in the first six months of 2023. Net profit increased by 16% and diluted earnings per share increased by 17% to 10 kroner and 17 euro. Net profit is negatively impacted by the 5.7 billion Danish kroner impairment of Osudurna. Free cash flow realized in the first half of 2024 was 41.3 billion Danish kroner compared to 45.5 billion in the first six months of 2023. The lower free cash flow reflects increasing capital expenditure as well as acquisition of intangible assets. This is partially countered by net cash generated from operating assets. The impairment of the intangible asset of 5.7 billion Danish kroner has no impact on free cash flow. Capital expenditure for property, plant, and equipment was 18.9 billion Danish kroner compared to 10.6 billion Danish kroner in 2023. This was primarily driven by investments in additional capacity for API production and fill finish capacity for both current and future injectable and oil products. Please go to the next slide. A key priority for Nungnorsk is to ensure attractive allocation of capital to shareholders. For 2023, the total dividend per share increased 51.6% to 9 kroner and 40 euro. For 2024, the Board of Directors has decided to pay out an interim dividend of 3 kroner and 50 euro per share, which will be paid out in August of this year. We have returned more than 38 billion Danish kroner to shareholders through dividends and share buybacks in the first six months of 2024. Our ongoing repurchase program for the full year amounts to up to 20 billion Danish kroner, a reduction from 30 billion Danish kroner allocated last year. This allocation aligns with our strategic capital allocation strategy for NordNorsk. We prioritize investing in internal growth opportunities, returning capital to shareholders through dividends and business development activities. Finally, we look towards share-by-back program as a flexible measure contingent on the first three priorities to distribute excess cash. We continued the growth momentum in 2024 and have raised our sales growth outlook to between 22% and 28% at constant exchange rates. The updated sales outlook at constant exchange rates reflects higher fully expectations for both operating units. The guidance reflects expectations for sales growth in both North America operations and international operations, mainly driven by volume growth of GLP-1-based treatments for obesity and diabetes care. With the expectation of continued volume growth and capacity limitations at some manufacturing sites, The outlook also reflects expected continued periodic supply constraints and related drug shortage notifications across a number of products and geographies. NordNordisk is investing in internal and external capacity to increase supply both short and long term. Operating profit growth outlook is now expected to be between 20% and 28% at constant exchange rates. The updated expectation reflects the impairment loss reflected to us during the communicated in June of negative six percentage points. Excluding this impact, we now expect a positive four percentage point increase on operating profits growth expectations for the full year. This is driven by the updated increased sales outlook compared to previous expectations. Capsule expenditure is still expected to be around $45 billion in 2024, reflecting expansion of the global supply chain. Pre-cash flow is now expected to be between 59 and 69 billion Danish kroner, reflecting the sales growth, a favorable impact from rebates in the U.S., countered by investments in capital expenditure. The updated cash flow expectation mainly reflects the increased sales growth outlook. Income under the 340B program has been partially recognized. One ruling from the U.S. Court of Appeals for the Seventh Circuit remains pending. and along with the DC Circuit ruling may be subject to further discretionary appellate review before the U.S. Supreme Court. Depending on the outcome of any subsequent rulings and appeals in these matters, there may be a material impact on Norwalk's financial position, net sales, and cash flow. Financial impacts related to and following the expected closing of the Catalan transaction have not been included in the financial guidance. That covers the outlook for 2024. Now back to you, Lars.

Thank you, Carsten. Please turn to the final slides. We're very pleased with the sales growth in the first six months of 2024. The growth is driven by increasing demand for our G1-based diabetes and obesity treatments, and we're serving more patients than ever before. Within R&D, we're very pleased with the first phase three trial results with MyMate and its potential for people living with hemophilia, as well as the recommendation for label extension for cardiovascular risk reduction for Vigobi in the EU. With that, I'd like to hand over the word to Jacob.

Thank you, Lars. Next slide, please. 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, including sub-questions. Operator, we're now ready to take the first question.

Thank you. Once again, as a reminder, if you would like to ask a question, please 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 Emily Field from Barclays. Please go ahead.

Hi. Thanks for taking my questions, Alice. One on Mugabe pricing and one on Mugabe supply. The first question on pricing, in terms of the gross to net in the U.S. widening from 1Q to 2Q, can you help us understand the moving parts here? Is there a component of seasonality? How much due to competition or how much due to channel mix? As you talked about, more penetrating into the Medicaid channel, and you can now sell to the select population in Medicare. And then secondly, on supply, it's great to see the 0.5 and 1 meg doses of Wagobe coming off the FDA drug shortage list. Although it does seem like you're voluntarily keeping the 0.25 dosage capped in order to limit new patients, do you expect this cap to continue throughout the rest of the year, or could it be lifted before the end of 2024? Thank you.

Thank you, Emily, for those two questions. For the first question, I'll hand it over to Lars on overall pricing dynamics before turning to Doc on U.S.-specific dynamics pricing-wise and also on the supply situation. Lars?

Yeah, thank you, Emily, and thank you, Jareb. So I would say overall... the current market structure is one where we really compete and secure success based on ability to supply. So it's not one where say classical commercial tactics is dominating and you should see our commercial strategies in that perspective. You alluded to the channel mix and we also just had in our briefs that we are now expanding access in Medicaid, so we have 20 states adopting WeGoWe in Medicaid. Then, of course, with that expansion, as we know, from all drug categories, when you move into some of these channels, it comes at a lower, say, net price in these channels, which then has no all impact. But I would say we are encouraged with, say, a stable competitive dynamics, and our focus is really on on securing supply to make sure that we can serve as many patients as possible more than other, say, tougher commercial tactics.

Thank you, Lars. And with that, I'll hand over to you, Doc, on the U.S. specifics as well as on the supply situation.

Yeah, thanks, Lars, and thanks for the question, Emily. So overall, I'd start with, you know, we're pleased with the Wagovi performance, whether you look at the MBRX moving from roughly 5,000 new branded prescriptions at the beginning of the year to 35 currently, or the TRX, which moved from 100,000 at the beginning of the year to roughly 200,000 or doubling. We're pleased with that. We're serving more patients than ever before, as Lars mentioned earlier. And market access continues to be robust. As I had mentioned, there's over 50 million people with obesity and, importantly, around 10 million vulnerable patients that have access via Medicaid in around 20 states. So that's robust, and we're pleased with that. And in doing that, we're seeing that almost or above 80% of the patients are paying $25 or less. And that is our ambition. Our goal is to grow market access. And it's fair to assume as volume goes up, prices will come down. And we have seen lower will go be prices in the first half. I don't want to get into specifics there, but it is in line with expectations. Our focus remains in building even stronger access for AOM treatments across all channels. And again, I'd say that We are pleased with the overall performance, and we're serving more patients than ever before.

Thank you so much, Doc. And finally, also on the lower dose strength of Vigobi and the update there?

Yeah, and so we don't believe that the 0.25, that was a choice we made. Again, as we've said consistently quarter after quarter, continuity of care, is incredibly important to us and maybe what separates us. We think it's really important that patients are able to titrate through the appropriate doses. So we'll continue to dynamically manage that, but we're also confident in the levels that we see with all the other dose strengths. So you shouldn't anticipate that 0.25 changing throughout this year to the question.

Thank you, Doc, and thank you, Emily. We are now ready to take the next question, please.

Thank you. Your next question comes from the line of Louise Chen from Cantor.

Please go ahead. Hi, thanks for taking my questions here. So first one I had was just on manuniband. Wanted to see what type of efficacy and safety you expect to see or want to see to move forward with this product. And then second question was just on essence. Out of the 1,200 patients enrolled in the Phase III study, how many patients are expected to be part of the F2, F3 biopsy readout? Thank you.

Thank you, Louise, for those two questions. I'll hand both of them to you, Martin, first on Molunoban expectations as well as on patients enrolled in Essence.

Yeah, absolutely. So we continue to be excited about the potential for Molunoban. We don't have a lot of news yet. We expect the readout from the dedicated obesity trial in Q3 of this year and from the diabetes kidney disease trial at the end of this year. Based on our modeling, we expect around a 15% weight loss, and obviously our focus is on demonstrating that together with an attractive safety profile. But we don't have a lot of news at this point. You have to wait a couple of months before that. On the essence trial, you'll probably recall we sort of have a two-tier trial. The first proportion of the trial includes 800 patients which will serve as the regulatory submission. We'll see the readout of those 800 patients this year. They will all have liver biopsies and they will be in the F2-2-F3 category. We then go to the full 1200 patients for a hard outcomes proportion of the trial. It will basically also be patients who have liver biopsies and be in the F2-2-F3 categories. But first step is to see the regulatory readout, which we will receive towards the end of the year.

Thank you, Martin. And thank you, Louise. We are now ready to take the next question, please.

Thank you. Your next question comes from the line of Evan Feigerman from BMO Capital Markets. Please go ahead.

Hi, guys. Thank you so much for taking my questions and for all of the color on the call today. A few from me, just on the cattle and transaction, maybe you just walk us through kind of the update there. And more specifically, as you think about billing out capacity, what other levers can you pull to kind of get your supply of incretins up to meet demand? I know that was a key theme on the call today. And then maybe you kind of walk us through some of the expectations for the CB1 inverse agonist data that's coming later in the third quarter. Thank you so much.

Thank you, Evan, for those two questions. Firstly, to Carsten on Catalan and overall supply chain strategy.

Yeah, thanks, Evan, for this question and good to connect. So on Catalan, it is still our expectation that the transaction closes towards the end of 2024. We're in active dialogue with the different regulators in terms of antitrust reviews. but reiterate closing towards the end of the year. And with Catalan, we're significantly expanding our fill-finish network with three additional sites on top of the sites we already have up and running and, by the way, also expanding. So our all-supply chain strategy is really one of scaling our API facilities in Kallenborg region on the peptide side and in Hilo, Denmark, on the antibody side, linked to our pipeline progression, and then scaling our filfinis sites on a global scale to be able to accommodate significantly many more patients than we've been able to do so historically. And that ties into our overall corporate strategy of being able to reach many, many more patients than we've ever done before. linked to the unmet need in the cardiometabolic space.

Thank you, Carsten. And secondly, on Molunoban expectations again for Martin.

Yeah, so again, not a lot of news. We're expecting two data readouts, one from obesity, one from diabetes later this year. That will be exciting. Our focus will obviously be on the efficacy in terms of the weight loss. Our current modeling is suggesting at least a 15% weight loss that will be an attractive oral monotherapy in and of itself, but also with the potential of being combined with semaglutide. But these are early days, these are model data, and we'll see the stronger readouts in Q3 and Q4 of this year.

Thank you, Martin, and thank you, Evan. We are ready to take the next question, please.

Thank you. Your next question comes from the line of Sachin Jain from Bank of America. Please go ahead.

I'll take my questions too, please. Firstly, a big picture one for Carsten, just on guidance. Midpoint, I believe, implies underlying acceleration in 2H relative to the underlying growth in the first half. Given there's a lot of moving parts, I wonder if you could just talk through some of the key drivers, pushes and pulls, particularly around Wegovy and Azembic. And then the second question is to try and get a bit more colour, Doug, Carsten, Lars, on the Wegovy price. around the commentary of those volumes go up, price comes down. If you would give us some sense of magnitude of price pressure short and mid-term. So I'm going to frame the question like this. You've loosely commented to around 10% price pressure per year for a ZENPIC. Should we think about where Govia is more or less than that? And can you give any specific color on 2H trends relative to 1H? Thank you.

Thank you, Sachin. For the first one on guidance building blocks, I'll hand that to you, Carsten.

Yeah, thank you for that question, Satyen. And as noted in our release, then we are upgrading our top-line guidance by a couple of points and narrowing the guidance range also, so really supporting the fact that we are off to a really strong start in this year and see strong trends both commercially as well as supply chain-wise. So that's a backdrop for our increasing in guidance. And then to the second half acceleration part of your question, yes, that is correct. And you could say the 25% growth we have in the first half of this year benefits from the rebate adjustments we've been talking to related to the U.S. both in the first quarter and in the second quarter. as well as to an easier comparator linked to the facing of rebates in 2023. So we delivered 25% with both the tailwind and an easy comparator, and then delivering that for the full year clearly entails an acceleration into the second half in terms of growth, despite the fact that the comparator is tougher linked to the rebate facing of last year. And that acceleration is really a function of continued trends of what you're seeing already in the marketplace today in terms of the Vigovi penetration in the U.S., where we doubled the number of scripts from the beginning of the year until now, weekly scripts. Also an acceleration in terms of Vigovi sales in international operations and the continuation of SEMPIC performance into the second half So underlying clear line acceleration during the second half compared to the first half.

Thank you, Carsten. And secondly, on overall pricing dynamics, Lars?

Yeah, so thanks, Sachin. So we prefer not to get into very detailed comments on pricing because that turns into, say, a quarter-over-quarter storyline then. But I would like to say, underline what I mentioned in my opening, and also as Carsten just alluded to, This is a marketplace where we compete on bringing, say, volumes to the market, so it's not one where we feel that we are into, say, price competition. Having said that, there are different segments of the market, and we feel that it's relevant to also be present in the segments where we have the most vulnerable patients, and they are typically served by Medicaid funds, So we have now, as we mentioned, 20 states having adopted Bigobi. And we all know that for any product, when you go into Medicaid, it comes at a somewhat lower price point. So that should be factored in. So it's a stable competitive setting. And it's really for us about scaling the volumes to deliver on the demand. Sorry, on the access we have delivered volumes. And, you know, we can see the demand is there. So it's about scaling to meet the demand, I would say, more than any other tactics, so to say. And as Carson just mentioned, we have the capacity to scale and accelerate, you know, serving many more patients in the second half. And I think that's the encouraging part of our release here, that we upgrade to do that against a somewhat tougher comparator in the second half of the year. So I think that's a sign of strong momentum and also execution from a supply chain point of view. Thank you.

Last question, just after the clarification then. Where are you with Medicaid penetration? Should we expect a major uptick in 2H relative to 1H?

I don't have detailed insight into that, and I'm not sure we can comment specifically on that.

So if I can give one data point. So we have Medicaid coverage to the tune of 20 states. How exactly the volumes are going to fall out in the second half between Medicaid and commercial, of course, is very speculative. But we have actually a very strong Medicaid-based access of 20 states and around 10 million people with obesity covered that way around.

Thank you, Lars. Thank you, Carsten. And thank you, Sachin. And with that, we are ready for the next set of questions, please.

Thank you. Your next question comes from the line of Richard Foster, J.P. Morgan. Please go ahead.

Hi. Thanks for taking my question. Maybe one on Magovi in the U.S. as well. You know, based on the new patient, I know you've said that your 35,000 scripts a week, you'll limit those starter doses. But based on the new patients you've already accrued and that level of patients and your knowledge of the pull-through of patients to higher doses, how do you see the TRX developing? You've obviously doubled in the first half, but some idea of how that could develop, I think, would be helpful to people. And I suppose the question is, at what point do you expect TRX to exceed Scripps from Ozempic on a weekly basis? And then one other question just on Ozempic XUS supply is, I think you alluded to that that could improve in the second half, but just when can you anticipate supply being resolved there so that we can expect strong growth in the second half? When can we expect strong growth for Zempic to resume in IO? Thanks very much.

Thank you, Richard. On the first one, in terms of the strong TRX trends in the US, I'll hand it over to you, Doug.

Yep, thank you, Richard. And let me just clarify, we're not precisely limiting it to 35. We're dynamically managing that because, again, critically important to us is patient continuity of care. So that is the starting dose, as you know, and so that's the one we will manage. It's not to limit, and so you may see fluctuations in that. What I would anticipate is a steady, consistent TRX trend. I don't want to get into where that may go or where that may cross Ozempic. Again, we're pleased with the performance. As Karsten and both Lars alluded to, we've more than doubled that From the beginning of the year to currently, we're seeing strong MBRX, and we're serving more patients. So I don't want to get into predictions of when they'll cross.

Thank you, Doug. And on the gradual supply scaling, over to you, Carsten.

Yeah, so talking about ex-US and scaling there, then first of all, I'd just like to allude to the performance in SNAP operations where rebalances are... all semaglutide is doing really well in the first half, growing 66%, so actually contributing as much as OSIMPIC in international operations. And then looking at IO between the first half and second half, then clearly our ambition and what's implied in guidance is an acceleration from the 11% we delivered in the first half, and that acceleration... will come from the stemmer franchise. But as you see, we have now launched in 12 markets with Wegovy in international operations. So clearly, you should also expect to see some pickup there driving higher sales growth in the second half in IO.

Thank you, Carsten. And thank you, Richard, for those two questions. We are now ready to take the next set of questions, please.

Thank you. Your next questions come from Peter Fedult from Citigroup. Please go ahead.

Thank you. Peter Fedult, Citi. Two questions. Doug, just to be obligatory, any latest data or intel in terms of average duration of use on WeKovi? And then secondly, Carson, on the 340B, when we last spoke, my understanding was Novo has been very conservative in revenue recognition from 340B, leaving risks very much to the upside. And I think when we last discussed this, and I wrote on this, should the rulings go your way, there could be quite a material uplift to the tune of 5%. So can I just check in with you whether that is still the case, or have you any updated thoughts there? Thank you.

Thank you, Pete. On the first one, on the go with stay time, I'll give that to you, Doug.

Yep. Thanks, Pete, for the question. So in the U.S., we're still seeing around six months, and that's, you know, given the periodic supply constraints, and we have to work through that. But I would tell you this. We are confident that over time, the stay time will improve more towards 12 months and beyond, which would reflect the clinical profile of the product and what we saw in some of the clinical trials. So Still around six months. We're working through that. More to come as we see more stability in supply over time.

Thank you, Doug. And over to Carsten on 340B.

Thanks, Pete, for that comment. And first of all, I'd just like to refer also to our company announcement and the update on 340B that we included on the legal matters there. And I would say the only new item compared to when we discussed in connection with Q1 is that there's one additional ruling that has come out in this case complex, which is a DC circuit ruling, which ruled similarly to the ruling we had in our case. So all supporting our case, but we still have one key ruling outstanding in the seven circuits, And then as to our accounting, I don't remember us discussing it being conservative. I remember us discussing it being prudent and aligned to the accounting standards of revenue recognition, where revenue recognition has to be highly probable in order to book it as revenue. So that's how we do it. But we also call out that there is a scenario that could have a material impact on our financial position, and that's what we call out in our announcement. And then let's see how the Seventh Circuit rules and what level of appeals we'll be looking at in the coming months. It could be any day that could be news, but I don't know anything further as of today.

Thank you. Thank you, Carsten. And thank you, Pete, as well. We're now ready to take the next question, please.

Thank you. Your next questions come from James Quigley from Goldman Sachs. Please go ahead.

Great. Thank you for taking my questions. I've got two, please. So firstly, on some of the obesity portfolio considerations, you've got a number of obesity readouts in the second half of the year. But how are you thinking of the relative positioning and weight loss expectations for StepUp? So the 7.2 milligram SEMA and obviously Cagri SEMA then as well. Will it be an either-or approach from a commercial perspective, or will it be purely data-dependent? And could SEMA 7.2mg potentially be more desirable, given the known CV benefits from SEMA across all the trials we've seen, and we haven't necessarily seen that with CAGRI yet? And then second question on oral therapy. So obviously there's been some competitive data, some early competitive data that's been out in the market recently. But in terms of your oral offering, so Oasis 4, how would you characterize the competitiveness of the data you've seen so far for the 25 milligram dose and how are you thinking about positioning in the market? or even a market fit approach on the launch. And then maybe also related to that on the oral snack technology, can you remind us where you are in terms of the latest generations and at what point you'll be able to have a peptide-based oral with the snack technology that could be as convenient as a typical small molecule? Thank you.

Thank you, James. I think I counted a little bit more than two questions there, but first over to Camilla on the overall obesity portfolio, and after that we'll turn to Martin on the snack enhancer.

Yeah, thanks a lot. First of all, I'd just like to say that we are very encouraged about the progression of our pipeline in obesity, and of course we look forward to the readouts that we are having in the second half of this year. It's going to be an exciting second half from a number of Phase 3 readouts that we have, and we're both in the oil and also in the injectable space. And I think let's await those readouts. And then later on, of course, when we get closer to launches, we can talk about positioning and how we are going to commercially utilize the strong pipeline that we have.

Thanks a lot, Camilla. And over to you, Martin, on SNAC.

Yeah, so specifically in the clinical space, we've been testing, obviously, generation one, two, and three, as you know. And in the research space, we continue to evolve this goes without saying will not take any new generation into the clinic unless we see a potential for step change in terms of bioavailability, and this is an ongoing journey and an ongoing effort for us. With respect to the sort of dosing restrictions, we actually don't see them as limitations, but I also have to say we don't see a potential of removing those limitations anytime soon.

Thank you, Martin. And just a reminder in the company announcement, James, you will also see the approval in EMA of the new doses related to all subaclutides in the EU. Thanks a lot, Martin, and thanks a lot, James. We are now ready for the next set of questions.

Thank you. Your next question comes from the line of Emanuele Papadakis from Deutsche Bank. Please go ahead.

Thank you for taking the question. Maybe a question on SEMRA ahead of central inclusion in 2027 IRA price negotiation. Perhaps you could just enlighten us as to what magnitude of price cut you've assumed in your midterm planning and your latest perspectives on potential impact in the commercial channel from reduced pricing in Medicare. And then on CAGRIS SEMRA ahead of the first redefined results. Just talk to us a little bit about your device capacity for the dual chamber PEN device at launch. Would that be enough to switch a significant proportion of patients from Sema to Cagri-Sema over that 2026, 2027 timeframe? Or indeed, is there any reason why you wouldn't expect the majority of patients to start switching over? Thank you.

Thank you, Emmanuel. The first one on the IRA and the latest there. That goes to you, Doug.

Yep. Thanks, Emmanuel, for the question. Maybe as a starting point, I'd like to say that, you know, we fundamentally disagree with the principles of price setting. It hurts innovation. It potentially creates higher out-of-pocket costs for seniors and less choice. So that's not good. What I would say is that we're not going to comment on price, but, you know, we've worked through the first negotiations on Novalog and FIASP. And as you know, that's a minor part of our business. So we expect limited impact there. And then I would say, as it relates to a read-through to semaglutide, it's just way too early. This has been a new process for both us and the government. We're learning a lot. I'm sure they learned a lot. But I don't want to speculate on what that may mean for a semaglutide read-through.

Thank you, Doc. And for the second question on Kekrisema and capacity, over to you, Carsten.

Hi, Manuel. Thank you for the question. For Kekrisema and supply chain strategy, Then, of course, we learned a lot from Vigovi, and we are full speed in terms of scaling our capacities linked to Kagoshima. It is a dual-chamber device, so scalability is different compared to multi-use devices that we have in other parts of our portfolio. But we are rapidly scaling the Kagoshima device. We are exploring a co-formulation also to improve scalability It's not without risk, and that's why I say we're exploring the opportunity to do so. And then bear in mind, behind Cactosema in our pipeline, we have amicretin in a subcutaneous version, which we'll report out in the first quarter of next year, which is another offering together with the step-up. And then as my last comment, I would say, given the clinical profile of semaglutide, we believe that we will be selling semaglutide for many, many years to come, and we are building the infrastructure to compete on that at a global scale for many years to come.

Thank you, Carsten, and also thanks for the questions. With that, we are ready for the next set of questions, please.

Thank you. Your next questions come from the line of Simon Baker, Redburn Atlantic. Please go ahead.

Thank you for taking my questions, too, if I may. Firstly, going back to the obesity pipeline, you announced that you terminated the development of the once-monthly injectable GLIP-GIP. due to portfolio considerations. I wonder if you could elaborate on that and also update us on your appetite for a monthly injectable obesity treatment. And then a question on iCodec in the U.S. Given the complete response letter and leaving aside the questions on manufacturing, is a type 1 vaccine carve out from the application a possible solution to expediting this because I assume that one mustn't just think about ICADEC but also ICASEMA which is potentially the bigger opportunity and obviously held up by this. Any thoughts on that would be much appreciated. Thank you.

Thank you Simon. Both of those go to you Martin. Firstly on the once monthly GLP-1 GIP and secondly on ICADEC. Yep.

Absolutely. So I just want to iterate. I think we all along stated that the once-monthly GLP-1 GIP study that we conducted was an exploratory study, more assessing the concept of a once-monthly technology than the actual GLP-1 GIP component. It was exploratory, and while we definitely can use the data the current profile was not something that we would take into further clinical development. So basically we still have this focus. We do see once monthly as convenience more than anything else. Our primary focus is efficacy and safety. And as we already discussed there, we have a very competitive pipeline and portfolio. But we will maintain this focus with either next generation of this technology or alternative technologies Specifically on Icodec, we are in ongoing dialogue with the FDA, so I don't want to speculate too much, but obviously part of this is a potential curve out of the type 1 diabetes. You should not see this impact the Icosema dialogue. Right.

Thanks so much. Thank you. Thank you, Martin, and also thank you, Simon, for those two questions. Then we have time for one final set of questions, please.

Thank you. Your final questions come from the line of Mark Purcell from Morgan Stanley. Please go ahead.

Yeah, thank you very much for taking my questions. We'll go via heart failure. Could you help us understand the additional data you're looking to file and whether you're going for a CV death and heart failure endpoints, sort of hard endpoints in terms of the claim from the studies? I guess, you know, the pooled analysis of the STEP-HF programs, showed a strong 69% risk reduction in CV death and heart failure events, but there's significant numbers of patients in select and slow, which I guess could be relevant. So an understanding of what you're aiming to achieve there would be great. Thank you. And then the second one, just as a follow-up to INV202, could you help us understand, Martin, how INV347 differs compared to INV202 in terms of PK and CNS distribution and selectivity of the CB1 versus CB2 receptors, just trying to understand whether this could actually leapfrog melanoband into phase 3.

Thank you, Mark. And both of those to you, Martin. Firstly, semaglutide in HFPEF, and secondly, within Inversargo, the INV347.

Thank you very much, Mark, for those questions. First of all, on HFPEF, as you recall, we conducted two dedicated HFPEF trials in patients with established HFPEF, one in diabetes and one in patients without diabetes but with obesity. When we do the meta-analysis of the two trials, we see a 69% decrease in risk of CV death or hospitalization for heart failure, so absolutely very strong data. and something that has encouraged us a lot. This was also why the FDA granted us breakthrough destination. As we discussed last quarter, we had fairly few events in these two reasonably small studies. And through our dialogue with the FDA, it was very clear that if we could sort of increase the volume of events to further substantiate this, the likelihood of getting hard endpoints into the U.S. label would increase significantly. Given that we have had and will have some strong readouts in the not so distant future, it was a reasonably easy decision to say we can accept a small delay and then increase our likelihood of getting hard endpoints into the label as compared to the more functional test. So we saw that as a really good bargain. On monolunar band, second generation is still early days. There is a potential for a longer half-life, so a potential for less frequent than once daily dosing, which is obviously attractive, and further, a potential for even less brain penetration. Again, we are quite confident with the safety profile of monolunar band, but again, if second generation could have an even lower likelihood of potential adverse events, that would be attractive. I don't think you will see anything surpass our progress of Mon Luna Band. We see this as a really, really strong lifecycle management opportunity.

Thank you, Martin. Thank you, Mark. And thank you to everyone else who has asked questions during the session. This concludes the Q&A session. Thanks a lot for participating and feel free to contact Investor Relations regarding any follow-up questions you might have. Before we close the call, I'd like to hand it over to you, Lars, for any final remarks.

Thank you, Jakob. I hope it comes across that we are very pleased with the momentum in our business, in particular our GLP-1 business in diabetes and obesity, and not least the strong growth for Vigovi script trends in the U.S., which is really fueling the upgrade we have communicated today, which also means that our supply is on track in being able to serve many more patients, both short and longer term. We are also excited about our pipeline. News we have announced recently but also what we have coming up later in the year. So with that, thank you also from my side for your questions and attention today. With that, we close the call. Thank you.

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