Novo Nordisk A/S

Good day and thank you for standing by. Welcome to the Q1 2025 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 have the comments of your first speaker today, Jakob Rode, Head of Investor Relations. Please go ahead, sir.

Thank you. And welcome to this Novo Nordisk earnings call for the first three months of 2025. My name is Jakob Rode, and I'm the Head of Investor Relations at Novo Nordisk. And with me today I have CEO of Novo Nordisk, Lars Brugger Jørgensen, Executive Vice President, U.S. Operations, Dave Moore, Executive Vice President, International Operations, Mike Duster, Executive Vice President and Head of Development, Martin Holtz-Lange, and finally, Chief Financial Officer, Carsten von Klosen. All speakers will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, nominoids.com. Please note that the 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. Next slide, please. 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 announcements for the first three months of 2025, as well as the slides prepared for this presentation. With that, over to you, Lars, for an update on our strategic aspirations.

Thank you, Jakob. Next slide, please. In the first three months of 2025, we delivered 18% sales growth and 20% operating profit growth. 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. Starting with our focus on purpose and sustainability, we are now serving nearly 46 million patients with our diabetes and obesity treatments. This is an increase of almost 4 million patients compared to the first three months of 2024. Our total carbon emissions rose by 37% compared to the first three months of 2024. This was mainly driven by the acquisition of new production sites and capital expenditure activities related to expansion of manufacturing sites. These are also efforts to meet the high demand for our innovative treatments. To uphold our commitment to being a sustainable employer, we expanded the number of women in senior leadership positions to 42% compared to around 41% last year. In R&D, we completed the second and final pivotal trial, Redefine2, with our next-generation obesity treatment, Teclisema. We remain on track for submission in the first quarter of 2026. Recently, our application for Wegovi 2.4 mg for the treatment of metabolic dysfunctional associated sterile hepatitis, or MASH in short, was accepted by the U.S. FDA and granted priority review. In addition, the new drug application for weight management for all semaglutide, 25 milligram, or as our person will call it, with Gobi in a pill, has been submitted to the U.S. FDA. If approved, this will be the first all-GLP-1 treatment for obesity in the U.S. Lastly, we are in license two early stage assets that show promise in addressing obesity and other cardiometabolic diseases. Martin will come back to this and our overall R&D milestones later. The quarterly sales growth is driven by both operating units. Dave and Mike will go through the details later. In terms of financial details, we delivered sales growth of 18% in the first three months of 2025. However, we have reduced our full-year outlook due to lower-than-planned branded GLP-1 penetration impacted by the rapid expansion of compounding in the U.S. NorNoise is actively focused on preventing unlawful compounding as well as the efforts to expand patient access on our GP1 treatments. Carson will come back to this later. We will continue to drive attractive growth and expand patient access to our innovative treatments. In the U.S., this includes recent initiatives with Novocare Pharmacy, Taylor Health Collaborations, and the CVS formulary decision. In international relations, there remains a large unmet need for patients, and we're excited to continue focused commercial efforts in existing and future markets in 2025. Furthermore, we realize the significance of our global footprint, including those activities based in the U.S. Illinois has a strong presence in the U.S. with over 10,000 full-time employees across the value chain. This includes research and development and substantial manufacturing footprint. We have invested over 24 billion U.S. dollars in the U.S. over the past 10 years, including ongoing expansions and improvements to our manufacturing site in Bloomington, Indiana, and Clayton, North Carolina. The existing U.S. tariffs does not materially change our financial outlook for 2025. That being said, we are closely following potential tariffs on pharmaceutical products in the U.S. Before we move on to the particulars of the first quarter performance, I would like to update you on changes to executive management. Please turn to the next slide. After nearly 30 years with Novo Nordisk, Camilla Silvest decided to step down. Camilla played a pivotal role in establishing our GF1 and obesity franchises and spearheaded the development of our long-term social and environmental goals. I would like to thank Camilla for her meaningful contributions to Novo Nordisk and wish her all the best for the future. This development has triggered several organizational changes effective 3rd of April, aimed at enhancing the speed of decision-making and strengthening the execution focus within our operating units. Ludovic Hofgott, formerly Executive Vice President Rare Disease, now heads up Product and Portfolio Strategy. This is a newly established area designed to forge a closer connection between commercial strategy, medical affairs, and business development across all of therapy areas. Tilda Hommel-Böger becomes the newest member of Executive Management as Executive Vice President of Quality IT and Environmental Affairs. The restructure will also enable Daymore to focus exclusively on the U.S. operations, as well as Henrik Wolff, on CMC and product supply. I'd now like to give an update on our commercial execution in the first three months of 2025. Please turn to the next slide. As of January, North America operations and international operations were reorganized, and financial reporting has been divided into U.S. operations and international operations. More deal sales on the regions can be found in the company announcement. In the first three months of 2025, our sales increased by 18%. The sales growth was driven by both operating units, with U.S. operations growing 17% and international operations growing 19%. OGF-1 sales and diabetes increased by 11%, driven by U.S. operations growing 10% and international operations growing 13%. Infant sales increased by 3%, driven by U.S. operations growing 13%. The sales increase was driven by phasing rebates as well as channel and payer mix, partly counted by a decline in volume. Incidental operation sales increased 1%, obesity care sales increased 65%, driven by U.S. operations growing 40%, partly impacted by compounded GL1s, and incidental operations growing 137%. In both geographies, growth was driven by Wigobi, partly offset by declining Saxena sales, as the obesity care market is growing towards once-weekly treatments. Rare disease sales increased by 3%, driven by a 5% sales increase in international operations. Rare disease sales in U.S. operations grew 1% compared to last year. Please turn to the next slide. Today, NoNoise remains the global GLV-1 volume market leader, serving nearly two-thirds of all patients on GLV-1 treatments across diabetes and obesity. Our ongoing scaling efforts have supported close to a tripling of of GLP-1 patients reached over the past three years. We are dedicated to serving patients who need our medicines and increasing our capacity to meet their needs. By integrating the three required fill finish sites and expanding our existing capacities, we are ready to reach more patients with serious chronic diseases. With that, I'll hand over to Dave.

Thank you, Lars. Please turn to the next slide. Sales of GLP-1 diabetes care products in the U.S. increased by 10% in the first three months of 2025. The sales increase was mainly driven by the continued uptake of Ozempic. Following the U.S. approval of the flow data earlier this year, Ozempic is now the only GLP-1 receptor agonist proven to reduce the risk of chronic kidney disease in people living with type 2 diabetes and chronic kidney disease. Novo Nordisk remains the market leader in the U.S., with more than 50% market share measured by total monthly prescriptions. Please turn to the next slide. Wigovi sales increased by 39% in U.S. operations in the first three months of 2025. The Wigovi sales growth was driven by increased volumes, which were negatively impacted by wholesaler inventory movements. This was partially countered by lower realized prices. Wigobi was around 200,000 weekly prescriptions. The total U.S. branded anti-obesity market more than doubled with a growth rate of over 160% in the last year. The volume of compounded GLP-1s in the U.S. is estimated to have impacted the uptake of Wigobi prescriptions and the growth of the branded obesity market during the first quarter of 2025. In February, the FDA removed semaglutide from the drug shortage list. As a result, it is now illegal under US compounding laws to make or sell compounded semaglutide drugs, except with rare exceptions. Novo Nordisk is working to prevent unlawful and unsafe compounding of semaglutide in the US while making sure patients have access to safe, legitimate semaglutide produced by Novo Nordisk. Following the resolution of the semaglutide shortage, we have a number of initiatives to support patients with obesity seeking treatment with Wegovy. In March, we introduced self-pay. It directed patient delivery of all doses of Wegovy at a reduced cost of 499 U.S. dollars per month through our Novocare pharmacy. Access to Wigovi for cash-paying patients was further expanded in April with the announcement of collaborations with three telehealth organizations. And last week, it was announced that CVS chose Wigovi to be the only GLP-1 medicine covered for obesity on its national template formulary as of July 1st, 2025. While Novo Nordisk is committed to providing patients with choices and did not pursue an exclusive formulary placement, we do believe the formulary decision by CVS speaks to the benefits of Wegovy. These include established cardiovascular benefits noted on the Wegovy label, and we await the FDA priority review of the promising data from the Essence trial for potential inclusion of MASH as a primary indication in the label in the second half of 2025. We will continue to identify additional ways to expand access to Agobi. Now, I'd like to turn it over to Mike for an update on international operations.

Thank you, Dave. If you can go to the next slide, please. Sales in international operations grew by 19% in the first three months of 2025, driven by GOP1 products. GOP1 diabetes sales increased 13%, driven by all regions. GOP1 diabetes sales growth was negatively impacted by periodic supply constraints. Obesity care sales grew by 137% to 6.5 billion DKK. Sales of Vigovi reached more than 5.5 billion DKK, growing at 392%. driven by sales across all regions. Next slide, please. Novo Nordisk remains the market leader in international operations with a total diabetes and obesity GLP-1 volume market share of over 72%. Diabetes remains a significant global health challenge, affecting more than 550 million individuals in IO. Rebelsis is now available in over 40 markets and continues to gain market share in international operations. Ozempic remains the leading GLP-1 diabetes product within IO, having launched in around 80 markets. With improved supply, we are now fully focused on our promotional activities to further expand the number of patients reached. Also, within obesity, we see a substantial unmet need, with more than 800 million people living with obesity in IO, and only a few million of these people being treated. We have launched Vigobi in around 25 countries, including three in just the last month, reflecting a greater supply availability and staying true to our commitment in reaching more and more patients. We look very much forward to rolling out the GOVI in many more markets as the year goes through. Next slide, please. Our rare disease sales increased by 3%. This was driven by sales increase in international operations of 5% and U.S. operations sales growth of 1%. Sales of rare endocrine disorder products increased by 14%, driven by norotropine, and improvement in manufacturing output as well as sogroil launch uptake in international operations. This is countered by a decrease of 5% in U.S. operations, mainly driven by norotropine. Rare blood disorder sales decreased by 1%, driven by lower sales of Novo7. Now over to you, Martin, for an update on R&D.

Thank you, Mike. Please turn to the next slide. In March, Novo Nordisk released the headline results from Redefine2, the second and final pivotal trial with chagrissima. The trial included people living with obesity or overweight, along with type 2 diabetes. Redefine2 was a 68-week efficacy and safety trial with 1,206 people enrolled. People were randomly assigned to receive either chagrissima fixed-dose combination of cagrelentide 2.4 mg and semaglutide 2.4 mg, or placebo. The mean baseline body weight was 102.2 kg. The REDEFINE-2 trial incorporated a flexible trial protocol similar to REDEFINE-1. After 68 weeks of treatment, assuming all people adhered to treatment, cagrezema resulted in a significant weight loss of 15.7%, compared to 3.1% in the placebo group. In the trial, chagrysema appeared to have a safe and well-tolerated profile. The most common adverse events were gastrointestinal, with the vast majority being mild to moderate and decreasing over time in line with the GLP-1 receptor agonist class. We've now completed the second and last pivotal chagrysema phase three trial for weight management. We look forward to sharing more data from Redefine 1 and 2 at the American Diabetes Association in June. We are on track with scaling of the Cagri-Semmer supply chain, and we still expect to file for the first regulatory approval in the first quarter of 2026. Next slide, please. Building on the learnings from Redefine 1 and 2 trials, we've extended the duration of Redefine 4 which is now anticipated to read out in the first quarter of 2026. Turning to Redefine11, we expect the trial to be initiated during the second quarter of 2025. The purpose of Redefine11 is to investigate the potential for further weight loss by prolonging the duration of the trial to 80 weeks and focusing on dose re-escalation throughout the study. Next slide, please. In February, We submitted the oral Tamaglutide 25 mg to the US FDA as the potential first oral GLP-1 treatment for obesity. Oral Tamaglutide 25 mg demonstrates an overall efficacy and safety profile similar to once-weekly injectable Tamaglutide 2.4 mg. For context, I would like to revisit the OASIS-IV results. OASIS-IV was a 64-week efficacy and safety trial comparing once daily oral semaglutide 25 mg to placebo in 307 adults with obesity or overweight with one or more comorbidities. In the trial, adults with obesity or overweight who received oral semaglutide 25 mg experienced an average weight loss of 16.6% from a baseline body weight of 105.9 kg when assuming full adherence to the treatment regimen. Around one-third of participants achieved a weight loss greater of 20% or more. Secondary endpoint from OASIS-4 demonstrated improvements in cardiometabolic risk factors, such as waist circumference, blood pressure, and inflammation in patients treated with oral 25 mg versus placebo. In addition, oral semaglutide 25 mg appeared to have a safe and well-tolerated profile, on par with semaglutide 2.4 mg. The full publication of OHS-4 is expected later this year. Altogether, oral and injectable semaglutide has been studied in robust clinical development programs with more than 43,000 semaglutide-exposed patients and exposure from post-marketing use of over 33 million patient years. If approved, Oral semaglutide 25 mg is expected to be the first oral GLP-1 receptor agonist for weight loss. The manufacturing of the active pharmaceutical ingredient, bulk tablet manufacturing, and packaging of oral semaglutide 25 mg are all carried out in the United States, and all manufacturing steps are up and running. We anticipate the US FDA review will be completed around the turn of this year. Next slide, please. Turning to the upcoming R&D milestones, we look forward to a year with exciting trial readouts. Before speaking to the remainder of 2025, I would like to highlight some of the milestones from the last few months. In addition to the completion of Redefine2 and the submission of all 25 milligrams of magnetite for obesity in the U.S., Novo Nordisk continues to pursue the expanded treatment optionality for people living with obesity. Although not shown in the slide, I would like to mention our newest agreements to in-license two early-stage assets for the treatment of obesity and other cardiometabolic diseases. These include a first-in-class oral, non-increted preclinical candidate in obesity, and associated metabolic disorders, and a GLP-1, GIP, glucagon triple receptor agonist. The latter triple G-acid is the second triagonist in our pipeline, and we expect the phase one results from our internal triagonist in the second half of 2025. Within RADECES, the main phases of two phase three A trials Reel 8 and Reel 9, were successfully completed with Sucroia for non-replacement indications and submitted for regulatory approval in EU. Within cardiovascular and emergent therapeutic areas, we are excited to have submitted the Essence Part 1 trial with once-weekly semaglutide 2.4 mg for regulatory approval in both EU and US for the treatment of mesh and moderate to advanced liver fibrosis, namely F2 and F3. As a reminder, Essence achieved both primary endpoints. By week 72, 37% of people treated with semaglutide 2.4 mg achieved improved liver fibrosis with no worsening of steatohepatitis, while 63% achieved a resolution of steatohepatitis with no worsening of liver fibrosis. To put this into perspective, the Essence Phase 3 trial results are the best phase three results within MeSH to date. In US alone, around 13 million people live with MeSH and currently have limited treatment options available. We're excited that the US FDA has accepted the supplemented new drug application and granted priority review for Uiguri to treat MeSH in adults with moderate to advanced fibrosis with the decision anticipated in second half of this year. Moving to upcoming milestones in 2025, I would like to start with a few data readouts in type 2 diabetes in the second half. Specifically, we expect the first phase 3 results from calcruzema from Reimagine 3, investigating calcruzema as an add-on to basal insulin in people with type 2 diabetes. Moreover, we expect results from the subcutaneous and oral emicretin phase 2 trial. Our upcoming readouts and clinical programs in obesity demonstrate the breadth of our pipeline in both modalities and mechanisms of actions to meet the need of patients. In addition to the initiation of Redefine11 with calcosema in the first half of 2025 that I mentioned earlier, we also expect the phase two readout from the once weekly GIP GLP-1 co-administ in the second quarter of 2025. We're also very excited to initiate the phase three program for coagulantide in monotherapy in late 2025. Within rare disease, we expect U.S. submission for SIGROIA in non-replacement indications in the second quarter of 2025, as well as regulatory submissions for MIMATE in the U.S. and EU in the second half of 2025. Lastly, we look forward to the readout of the EVOKE and EVOKE-PLUS trials in patients with early Alzheimer's disease. With that, over to you, Kasper.

Thank you, Martin. Please turn to the next slide. In the first three months of 2025, our sales grew by 19% in Danish kroner and 18% at constant exchange rates, driven by both operating units. The gross margin decreased to 83.5% compared to 84.8% in the first three months of 2024. The decrease mainly reflects amortizations and depreciations related to gasoline, as well as costs related to ongoing capacity expansions. partially countered by positive product mix driven by increased sales of DLQ1-based treatments. Sales and distribution costs increased by 12% in Danish kroner and by 10% at constant exchange rates. In U.S. operations, the cost increase is mainly driven by promotional activities related to Vigovi and Osempic. In international operations, the increase is mainly related to Vigovi launch and promotional activities. Research and development costs increased by 20% in Danish kroner and 19% at constant exchange rates. The increase in cost is mainly driven by obesity care and reflecting increased late-stage clinical trial activity, as well as increased early research activities. Administration costs increased by 5%, both in Danish kroner and at constant exchange rates. Operating profit as a consequence increased by 22% measured in Danish kroner and by 20% at constant exchange rates. EBITDA increased by 23% in Danish kroner and by 21% at constant exchange rates. Net financial items showed a net loss of 1.8 billion Danish kroner compared with the net gain of 72 million Danish kroner last year. This primarily reflects losses on its currencies and financing costs related to the funding of the Catalan transaction. The effective tax rate was 21.6% in the first three months of 2025 compared to 20.4% in 2024. Net profit increased by 14% and diluted earnings per share increased by 15% to 6 kroner and 53 euro. Free cash flow in the first three months of 2025 was 9.5 billion Danish kroner compared to 5 billion Danish kroner in the first three months of 2024. Free cash flow is reflecting higher net cash generated from operating activities, partially countered by increased capital expenditure. Capital expenditure for property planning equipment was 13.4 billion Danish kroner compared to 8.4 billion in 2024. This was primarily driven by investments in additional capacity for API and fill finish capacity for both the current and future injectable and oil products. We have returned 36.7 billion Danish kroner to shareholders mainly as dividends in the first three months 2025. Following the step up in CapEx investments in 2025, Novo Nordisk is not conducting a share buyback program. An authorization to the board of directors to buy back shares was however in line with previous years adopted at the annual general meeting on 27th of March 2025, should the initiation of a share buyback program later be deemed relevant. For 2025, the range for sales growth is now expected to be 13% to 21% at constant exchange rates. Given the current exchange rate versus Danish kroner, sales growth reported in Danish kroner is expected to be 3% point lower than constant exchange rate growth. The new range reflects lower-than-plan penetration of branded GLP-1 treatments in the U.S., impacted by compounded GLP-1s. The outlook reflects expectations for sales growth in U.S. operations and international operations, mainly driven by volume growth of GLP-1-based treatments for obesity and diabetes. Following the U.S. FDA removal of semaclutide injectables from the drug shortage list, the sales outlook assumes a reduction in patients on compounded GIP1 treatments during the second half of 2025. The updated guidance reflects several efforts already underway, as mentioned by Lars, Mike, and Dave. Operating profit growth is now expected to be 16% to 24% at constant exchange rates, given the current exchange rates versus Danish kroner growth reported in Danish kroners expected to be around 5% lower than at constant exchange rates. The updated expectation for operating profit growth primarily reflects the lower sales growth outlook partially countered by reduced spending. Nordisk expects net financial items to show a gain of around 0.9 billion Danish kroner This is mainly driven by expected gains on hedge currencies, primarily the US dollar, partially offset by interest expenses related to funding of the debt-financed Catalan transaction. The effective tax rate for 2025 is still expected to be between 21% and 23%. Capital expenditure is still expected to be around 65% in 2025, reflecting expansion of the global supply chain. In the coming years, the capsule expenditure to sales ratio is still expected to be low double digits. Free cash flow is now expected to be 56 to 66 billion Danish kroner, reflecting the lower than expected sales growth, mainly driven by lower volume growth of GF1 treatments in the U.S. All of the 2025 expectations are based on assumptions that the global and regional macroeconomic and political environment will not change significantly business conditions for Nord-North during 2025, including changes in tariffs and duties. The announced tariffs currently in effect do not materially change our financial outlook for 2025. However, a potential expansion or increase of tariffs may have a negative impact on Nord-North and our industry. That covers the outlook for 2025. Now back to you Lars.

Thank you Carsten. Please turn to the final slide. The performance in the first three months of 2025, with 18% sales growth, reflects that nearly 46 million people are now benefiting from our treatments. Further, we progressed our R&D pipeline, including completing the final pivotal trial for Next Generation Obesity Treatment . We have reduced our full year outlook due to lower than planned GLB1 penetration, which is impacted by the rapid expansion of compounding in the U.S. I'm confident in our recent initiatives in the U.S. to support patients to seek the benefits of our newborn treatments. Furthermore, the obesity opportunity remains large in its naturations, and we look forward to reaching more patients with the additional rollouts of B. coli globally. At No Noise, we'll continue to focus on commercial execution, the progression of our R&D pipeline, and expansion of our production capacity. In the pursuit of treating more people living with serious chronic diseases, with that, I would like to hand over the word to Jakob.

Thank you, Lars. And next slide, please. And with that, we're ready to take the Q&A, where I kindly ask all participants to limit her or himself to one or maximum two questions, including sub-questions. With that, 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'll now take the first question. And your first question comes from the line of Richard Foster from J.P. Morgan. Please go ahead.

Hi. Thanks for taking my questions. Two, please. First one on the compounders in the U.S. You've obviously done a partnership with HIMSS, but HIMSS themselves are suggesting that they will continue to personally compound and have a significant contribution to their business from personal compounding. That seems to be at odds with the partnership and at odds with your commentary of trying to reduce compounding and it being only allowed in rare circumstances. So could you just talk about how you expect that to go and how you expect to deal with that in the second half? And then a second question, if I can, please. Just on the competitive effects from Monjaro, you're seeing an IO and how easy you expect to be able to grow a Zempic once the supply constraints in IO are removed? How ready is the sales force? How confident are you on strong growth in IO? Thanks very much.

Thanks a lot, Richard. Two questions for Dave and Mike respectively. Let's start with the first question on compounding and next steps and hand it over to you, Dave.

Thank you, and thanks for the question, Richard. To be clear, We do not support unlawful compounding. We are against the illegal importation and the continuation of compounding in the United States. As you mentioned, we did announce collaborations with telehealth providers. The reason for this is increasingly people living with obesity are seeking healthcare through telehealth companies. And we need to be where patients are and to have an offering for the real Wegovy. These collaborations allow a link to Novocare Pharmacy, where the real Wegovi can be available through these telehealth companies. As we've mentioned, on May 22nd, we fully expect the FDA to enforce the law. And at that time, we will continue to fight against unlawful compounding, for example, mass personalization. Thank you. Over to you, Mike.

Thanks very much, David. Richard, I think to answer your question, I'll split it in between Ozempic and Vigobi. So we have Ozempic since 2019 launched and now in 80 markets across IO. So a very decent footprint, I would say, in many, many countries. We have been launching Vigobi a bit due to the supply constraints, not at the speed we wanted to. also partially because we were servicing and maintaining, of course, the patients that were on Ozempic. But now, starting from this year, as the supply constraints are lifted, we have seen an acceleration like you would not have seen before. Just in the last couple of months, six new launches and more to come as we go forward. In terms of sheer number of prescriptions and volumes, if I just give you a couple of data points, we have currently 64% volume market share on injectable GLP-1, so on the back of Ozempic and VGOVI. And that 67% market share is rather stable, so it's not going down, and we, of course, hope to be able to continue fueling that with these so-called new launches, as well as, of course, getting back to promoting Ozempic much more assertively than we have been during the constraint period.

Thank you, Mike, and thank you, Dave, and also thank you to Richard. With that, we are ready for the next set of questions, please.

Thank you. Your next question comes from the line of James Quigley from Goldman Sachs. Please go ahead.

Great. Thank you for taking the question. So one on the guidance and one follow-up on the compounding pharmacy. So on the guidance, if we sort of assume a similar second quarter as in the first quarter, then the scenarios for progression in the second half are quite wide with around 8% growth at the bottom end and 22%, 23% growth at the upper end. So could you reconcile the potential outcomes? What are the most important variables there? And what are the key assumptions for both ends of those variables? And secondly, on compounding, you mentioned those having a significant impact, but have you got any more details of what the drag is on Wegovy market share? Have you done any surveys of what you think how many patients might drop off versus switch to branded and within the branded switch to Regevi versus switching to Zepatide? You mentioned you have factored that into the guidance. Just wondering how much that is factored into the guidance. Thank you.

Thanks a lot, James. And on the first one on guidance, we'll go to you, Karsten.

Yeah. Thank you, James, for that question. Yeah. Yes, I think for the dynamics we see in our business, then we delivered 18% growth in the first quarter. And, of course, our aim is to continue to drive that attractive growth. And that entails increasing script trends in the U.S. and continuing to drive our GLP-1 franchise in IO. So specifically to the guidance ranges, yes, This means, in terms of the main drivers, that a lot of patients on compounded products will go to branded products in the second half of this year, and we will be able to enable that through the CASH channel and Novocare and the Taylor Health collaborations. We also do have a label update with MASH we spoke to before, Classic Commercial Tactics, And then, of course, the CVS collaboration. So the acceleration to deliver our guidance is mainly in the second half of the year when we talk about U.S., while in international operations we will see a continued step up over the coming quarters in terms of sales growth. So that takes us to kind of the basic fundament of our guidance range. And I would say on compounding specifically, given that the data quality on number of patients on compounding is not very high, then it's based on market research where we're looking at 1 million or more patients on compounded GH1 today. And then we've made estimates based on how many patients will either be able to to benefit from the personalized exception or will drop off treatment, and as a consequence, the rest will go to a branded product. So a number of assumptions, but we have a lot of tactics in place to be able to capture patients that will no longer be able to have a bulk compounded product with effect from the second half of this year, given some patients will also have inventories in place personally, and therefore the second half comments. Thank you, James.

Thank you, James. And I think that also covered part of question two. Anything from you to add, Dave, on what we see currently in terms of magnitude of compounding, potentially split on branded GLP-1 treatments as well?

Yeah. Thank you, Jakob. I will share that the market research that Karsten mentioned also gives us an idea that Certainly, semaglutide is overweight. We estimate 70% of compounding is of semaglutide. But I'd like you to focus on three things, three actions that we're taking to ensure that we're effective in this transition as compounding starts to wind down. Number one, we expand the cash offering. The $4.99 via Novocare Pharmacy was purposeful and planned at the time when compounding would start to diminish, as well as the collaborations with telehealth companies And soon, that cash offering will be available in all 9,000 CVS stores. Number two, we continue to expand better coverage for Wigovi. This helps for some of those patients that may be on compounding that have insurance and would have access to Wigovi for a low copay. And number three, as Karsten mentioned, we have targeted commercial efforts aimed at patients and healthcare practitioners, so that we can focus on SEMA, the safety of real regulatory versus compounding, as well as the availability and the affordability. Thank you.

Thanks a lot, Dave, and also thanks to you, James. With that, we're ready for the next set of questions, please.

Thank you. Your next question comes from the line of Peter Fadolt from BNP Paribas. Please go ahead.

Thank you, Pete, here from B&P Paribas. Liza Carson, two quick ones. I suppose I'm still struggling just to understand where the disconnect has been with respect to your messaging given at February CMD in London about commercial execution being management's top priority and the prescription trends we've seen since then, especially when you have, as you said, 40 million commercial lives where most patients apparently only have to pay $25 a month. to get access to Wegovy, and you've been smashing it with DTC and Rep. So is it really only about the compounders, or do we have to consider your nearest brand and competitor doing a better job? And then more quickly and secondly, just your thoughts on the recent Orphoglipron diabetes data, especially given scalability doesn't seem to be an issue there. So thanks very much.

Thanks a lot, Pete. I think both of those go to you last, but let's start with the first one on commercial execution as a priority.

Yeah, thanks, Pete. You're right. This has been our focus for some time. But I think it's important to say that when you assess that based on script trends, it is really, really difficult as there is a significant share of the business turning into being compounded and we estimate that, you know, that's a similar amount of business as what we have in the U.S. on GLP-1. So I think Dave outlined our tactics, and we feel honestly very confident that this is the right moment for us to make a serious change in the market. And that's baked into our guidance for the second half of the year. I think also the point that CVS actually choose our brands without us paying for exclusivity is a sign that there is a very, very strong perception around Wegovi in the market. The added benefits we have on top of the real world experienced weight loss is great, and that is just getting even better, assuming we get the mass indication as well. So what you get in one product here is just very, very attractive. In terms of Orfu, I think there's been a lot of interest in in how the all categories will develop. It's clear for us all along that we have the head start here. We have not pushed it as hard as we do now until we have ramped up manufacturing. We have seen significant scaling and efficiency step up in our API facilities in the US. And when we submit the data to SDA, you can assume that we have what it takes to do a full launch in the U.S. And bear in mind, as was also alluded to previously, this is a molecule with tremendous safety data, so more than 30 million patient lives. And I think we shouldn't belabor that point as physicians and patients make choice on a trusted product. And, of course, efficacy is similar to what we have with Gobi. So really, We go in a pill. I think it's a very attractive offering and assuming positive outcome with agency. We're ready to give this a big push and also on this point show a very strong commercial execution. So thank you, Pete, for that.

Thanks a lot, Lars, and thanks a lot, Pete, as well. And with that, we are ready to the next set of questions, please.

Thank you. Your next question comes from the line of Martin Parkhoi. from SEB, please go ahead.

Yes, good afternoon, Martin Parker, SEB. Just two questions, just last coming back to CVS again, because one of the buzzwords that you have used for many years now is optionality, and I can understand that CVS is a win for Novo, a win for Vigobi, but do you think it's a win for patients in the U.S. to lose optionality and exclude and other obesity products. Then secondly, also back to all SEMA 25 milligrams, I just understand that you said that you can run with full steam when you launch, but what kind of opportunity do you see? How big a part of the market would actually like to have Vigovi in a pill instead of Vigovi as we know it today?

Great. Thanks a lot for those two, Martin. And I think, again, both will go to you, Lars. So firstly on the CDS one.

Thank you, Martin, for the questions. You are right that we support optionality and open access to products. We believe it's in the best interest of patients and physicians that they can make the choice for the patient, and different patients have different needs, so we support that. So this is a situation where it's not a decision made by us. We have not made, say, a bid on an exclusive contract, but it's a choice that CVS has made. We appreciate the partnership we have with CVS over many years, and as Dave also alluded to, it's a partnership that now also includes our cash program in the 9,000 CVS outlets. So it's their choice. So it's not really something we have a say in. But, of course, we do appreciate the perception about the product and what it can. And I think it talks to the real-world experience of Wegovi. And, of course, also for our payer, what is the tangible value of reducing the risk of cardiovascular disease and hopefully also near-term, say, the best mesh profile you can think about and getting all of that in one product. is very, very attractive from a payer perspective. In terms of the all-opportunity, I think it's important to note that this is about competition within a category of those who prefer an all. We believe a majority of patients would still benefit the best from being on injectable therapy. That's where you get typically efficacy. And also, we have learned over the past few years that weekly injections is actually very, very convenient. Having to deal with your disease once a week in a very, you know, simple device solution is very convenient for patients, and I think physicians are nowadays very, you know, comfortable in prescribing injectable. Having said that, there are patients who prefer an all, and we are pleased that we can compete very well in this segment we believe will be, you know, way smaller than the injectable segment. and being first to the market with a known molecule, known efficacy, known safety, and also a very, you know, some try to say that it's not as convenient. In our view, it is very convenient. You wake up in the morning, you take your tablet with some water, and you're ready for your day. So we believe we can play very well in a smaller segment compared to the overall injectable category, and we'll be first. Assuming a positive regulatory outcome. Thank you, Martin.

Thank you, Lars. And thank you, Martin. And then we're ready to move on to the next question, please.

Thank you. Your next question comes from the line of Michael Niedelkowicz from TD Cowan. Please go ahead.

Thank you for the questions. I have two. My first relates to potential political risk. The current administration in the U.S. has at times singled out GLP-1s when it raises the issue of apparent price disparities between the U.S. and other countries. Novo is presumably deep into negotiations with CMS about the IRA price discount for semaglutide starting in 2027. Do you sense any risk if the administration plans to take this as an opportunity to make an example of GLP-1s and demand a particularly severe price cut? That's my first question. And then my second question relates to the pipeline and specifically amacretin. I believe Novo has been in discussion with the FDA about phase three planning for an obesity trial, but the R&D milestone slide does not include a trial start in 2025. Can you tell us whether a phase three trial for amacretin could yet start this year? And when a phase three obesity trial does start, has a decision been made as to whether the oral or subcutaneous formulation would be advanced first? Thank you.

Yeah, thanks a lot for those two, Mike. Again, I think for the first one, we'll go to you, Lars, on GLP-1 price negotiations. Yeah. Thank you, Michael.

So when you look at it, if you take WeGovi first, we have very limited WeGovi exposure in Medicare so far. And if you take some of the other, say, overall governmental funded channels like VA and Medicaid, those are channels with somewhat lower price point, and I think more comparable to what we see in other geographies. If you look at OSEMPIC, obviously there's a bigger share of business in Medicare, and that's then what's being discussed under the IRA. And I cannot go into specifics around it because it's still relative early days. but I think there is an established mechanism in dealing with that. So I would actually say from an overall political risk point of view, I actually think we're in a good spot because our book of business pricing exposure is either lower or is already in ongoing price negotiations compared to perhaps other products that sit in in parts of Medicare with higher price point or has not yet been opened up for negotiation. So I see a relative limited, say, additional risk compared to what we're already facing. Having said that, it is still early days and an ongoing process.

Thanks for that, Lars. And for the second one on amicrotin, we'll hand it over to you, Martin.

Yeah, thank you very much for the question. So not a lot of new to add from last quarter. As you know, the process is to submit an end of phase two package specifically to the FDA, but also to other regulatory authorities. We are in that process and respect an outcome within the next couple of months. Then we will know, and this is what we plan for, this is what we expect, if we can progress into phase three. And that phase three program will be initiated with current timelines into one of next year. And the focus for the phase three program will be both all and injectable.

Thank you, Martin, and thank you, Mike. And then we are ready to take the next set of questions, please.

Thank you. Your next question comes from Sachin James, Bank of America. Please go ahead.

I'll take my questions. I'm just going to try and push our cast and Dave into the topics if there's any more colour you're willing to give. So firstly, on the compounded SEMA sort of patient funnel, Castle, if you could just give us any colours to what you're seeing for inventory in the system. We've heard estimates of anywhere between three and 12 months. And then any colour on what percentage you expect to shift to branded, given that they're on compound because they can't afford it or it's not covered. And then I'm going to be provocative on the branded capture. Some of what we hear is these patients come off compounded SEMA. Cash patients may prefer Lilly given a cheaper syringe and vial strategy. And Z-bound perception efficacy safety is beginning to edge with Gobi. So I know that's provocative, but I wonder if you could just touch on that. And then finally, a lot of what we've discussed has been the obesity market. But I wonder if you could touch on Ozempic. I'd assume limited compounding impacts. Markets slowing down, you're losing shares to Monjaro, so it's not exactly clear to me what changes there second half. Thank you.

Thank you, Sachin, for those two questions. On the first on compounding, we'll hand it to Carsten, and then we'll hand it over to Dave with anything to add before Dave goes on to the second question on SEMPIC. But firstly, over to you, Carsten.

Yeah, thanks, Sachin. And I wish I could give you, like, razor-sharp data points based on high-quality market data, but this is a fairly young segment in terms of data and market research. So you're correct that within telehealth, the setup is more towards a subscription basis on three, six, nine, even 12 months, where patients get the incentive through a lower subscription rate if they sign up for a longer period of time. So yes, most likely there'll be some patients sitting with inventory on May 22nd. We don't have really good data on that, but that's also why we're cautioning in our outlook section of our company announcement that the market should expect a step up mainly in the second half of this year from compounding and, of course, the CVS contract. As to brand and drop-off to different solutions, price sensitivity, et cetera, I'll hand that over to Dave on the in-market understanding of that one.

Over to you, Dave. Thank you. Thank you, Carson. We believe the strong label of Wegovy, as well as the brand awareness of Wegovy, and the fact that the semi-compounded is overweight, we think that there is certainly a focus with healthcare practitioners to maintain that continuity of care. And what we've heard is the availability of branded Wegovy through these new channels, meeting the patients where they are, is a very important step in terms of that transition and the funneling of patients. As Carson mentioned, of the total number of compounded patients today, some will drop off. But certainly, as you mentioned in our guidance, we do expect to capture and see a real interest in patients coming over to the real week-by-week. And then I'll shift over to Ozembe Sachin. As we're seeing this year so far, the growth of the GLP-1 class, it does continue. It's lower than what we've seen in years past at 15%, but that still leaves plenty of opportunity, still runway for future growth. And this continues to be a game around NBRX and our commercial leverage. So here are the things that we're focused on in the U.S. with Ozempic. First of all, our overarching commercial focus is leveraging the Ozempic label, the broadest of any GLP-1 label on the market, and continues to be the most widely known GLP-1 as well. Our commercial efforts during this year include the launch of a new campaign called the Ozempic Era Campaign. We are in the Ozempic Era, and our patients are experiencing that, and the understanding of of the broad label is something that now both patients as well as physicians understand. And then lastly, we continue to focus on decreasing the outflow, meaning maintaining longer stay time and having patients have the full effect in getting to the two milligram dose. Thank you.

And just building on Dave's comment before we hand it back to Jacob, For Osempic, also our market research indicates a certain level of compounding, not a lot, but potentially in the mid-single digits of GLV-1 diabetes treatment in the U.S. So after May 22nd, there might also be an uplift there to go for and benefit from with the tactics Dave just covered. Over to you, Jakob.

Thank you, Karsten. And with that, I think we are ready for the final set of questions, please.

Thank you. Your final set of questions come from the line of Joe Walton from UBS. Please go ahead.

Thank you. You've talked a lot about pricing and your strong commercial focus. Could you give us an idea of what you think a typical price point would be for a compounded semaglutide and how far adrift that is of the $500 that you're charging. The reason that I ask is I assume that this is a price sensitive market and yet the starter dose from your competitor is only $350 and I wonder whether people just can't move, step up from whatever they're paying today up to that $500 and the $350 is a very compelling starting point for the compounder. Could I also just ask if you could tell us what the average stay time is now that you've got less of a supply constraint, whether you're seeing that obesity stay time get longer or whether you're still having to reacquire patients every few months. And if nobody minds, I'd also just like to take this opportunity to let people know that after 40 years as an analyst, this is my last purely pharma sell-side call. Novo was one of the first companies outside of the UK that I covered back before the merger of Novo and Nordisk. So I really am that old. But it will soon be time for me to move on. I have a couple of projects I need to complete before I leave the UBS team fully in Matthew's very capable hands. But I want to say it's been an enormous privilege to watch the development of many life cycles of drugs and to work with so many people in Novo and other companies, clients and competitors, many of whom I'm very proud to count as friends.

Thanks a lot, Jo. And first and foremost, from Team Novo, thanks and congratulations on a very impressive career. On your two questions, let's move to Dave. Dave, first of all, on GOP1 pricing for the real Vigobi as well as for compounded ones, and then on stay time.

Yeah, thank you for the question, and also congratulations to you. There is a range of prices that we hear in the marketplace, and it really does depend on whether or not that is a bundled price with a telehealth company in terms of offering their telehealth services as well as medicine. As you pointed out, it is less for the compounded GLP-1 than what we're seeing in terms of the cash prices, no question. When we think about the funnel and when we talked about the guidance and expectations that Karsten mentioned, certainly we do expect some patients not to transition, meaning they may be on a compounded GLP-1 and they may not transition over to a branded medication. One of the things that's important for us, though, is to ensure that we are educating around the availability of Wigovi through commercial insurance. We have over 55 million Americans that have coverage for Wigovi where they would receive the medicine for a low-branded copay. And what we've learned is many patients on compounded GLP-1 do have insurance. So educating them, doing insurance verification as part of our commercial efforts is also important. And then to answer your question on stay time, the current 12-month average stay time is around 7.4 months. That continues to increase as the brand grows. and more and more patients continue with their therapy over time. Thank you.

Thank you, Dave, and thank you, Joe. And with that, we are done with the Q&A, please, and I'll hand it over to Lars for a set of final remarks.

Thank you, Jakob. We delivered 18% growth in the first quarter driven by our innovative treatments, and we had to lower our guidance for the year because of COVID. how big compounding has been of semaglutide. I hope you feel we have a clear plan for how to counter that, close that down, and really use our Croatia taxes outlined today to gain a fair share of those patients. We remain very confident in the market opportunity, the number of people with obesity willing and interested in seeking care. And as we scale capacity and progress with our R&D pipeline, not least all SEMA, 25 milligram, and I would also say upcoming data for CACASEMA. We feel really excited about our opportunity in this space. So I'll close with that and also thank Joe and wish you best of luck for the future. And thank you all for participating in this call. Thank you. Bye-bye.

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