Novo Nordisk A/S

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.

Thank you. Hello, everyone, and welcome to this Normal Nordisk earnings call for the first half year of 2025. My name is Jakob Rode, and I'm the Head of Investor Relations at Normal Nordisk. And with me today, I have CEO of Novo Nordisk, Lars Frohgård Jørgensen, Executive Vice President, Product and Portfolio Strategy, Ludovic Helfgaard, Executive Vice President, US Operations, Dave Moore, Executive Vice President and Head of Development, Martin Holtz-Lange, Chief Financial Officer, Carsten von Knudsen, and finally, Executive Vice President, International Operations, as well as incoming CEO as of August 7th, Mike Duster. All speakers will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, novenoids.com. Please note that the call is being webcasted live and the 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. Next slide, please. 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 2025, as well as the slides prepared for this presentation. And with that, over to you, Lars, for an update on our strategic aspirations.

Thank you, Jacob. Next slide, please. In the first six months of 2025, we delivered 18% sales growth and 29% operating profit growth. As announced last week, NorNorge has lowered the full year outlook for 2025 compared to the outlook issued in May of this year. The change in sales outlook for 2025 is driven by lower growth expectations for the second half of 2025. This is related to lower growth expectations for Vigobi in the U.S. obesity market lower growth expectations for OSIMPIC in the U.S. GLP-1 diabetes market, as well as lower than expected presentation for we go in select IEO markets. Carsten will come back to this later in the call. I'd like to go 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 almost 46 million patients with our diabetes and obesity treatments. This is an increase of more than 3.5 million patients compared to the first six months of 2024. In R&D, Osempic received a positive opinion by the EMA for the treatment of peripheral arterial disease in people living with type 2 diabetes. Within obesity, we announced that subcutaneous and oral emicretin for weight management will advance into phase 3 clinical development. Further, we initiated a new phase 3B trial, Redefine11. The trial lasts for 80 weeks and investigates further potential efficacy and safety of CACASEMA. Finally, we have entered an exclusive collaboration and license agreement with Subterna to discover and develop all small molecules for the treatment of obesity, type 2 diabetes, and other cardiometabolic diseases. Now, I'd like to turn over the work to Ludovic for an update on our commercial execution in the first six months of 2025.

Thank you, Lars. And please turn to the next slide. In the first six months of 2025, our total sales increased by 18%. The sales growth was driven by both operating units. U.S. operations grew 17%, and international operations has grown 19%. Sales growth in the first six months of 2025 was positively impacted by growth to net sales adjustments related to prior years. Our GLP-1 sales in diabetes increased by 10%, driven by U.S. operations growing 9%, and international operations growing 10%. Sales growth in the U.S. includes an adjustment related to the 340B provision of around 3 billion DKK in the second quarter of 2025. Incident sales increased by 4%, driven by U.S. operations growing 17%. The sales increase was driven by gross to net adjustments related to prior years as well as channel and payer mix partially countered by a decline in volume. International sales, operating sales decreased 1%. Obesity care sales increased 58% driven by U.S. operations growing 36% and international operations growing 125%. The volume of compounding GLP-1s in the U.S. is estimated to have impacted the uptake of WigoV prescriptions, as well as the growth of the branded obesity market during the first half of 2025. Please turn to the next slide. Our rare disease sales increased by 15 percent. This was driven by a sales increase in the U.S. operations, 23 percent, and international operations, 10 percent. Cells of randocrine disorder products increased by 49% driven by nodotropin and sogroya launch uptake across U.S. and international. As a reminder, in 2024, cells of nodotropin were negatively impacted by a reduction in manufacturing output, which has now improved. Red blood disorder cells increased by 6% driven by an increased sales of Novo7 and Elimo in the U.S. and higher hemophilia B. and ELIMO cells in international operations. And with that, I'll hand over to Dave.

Thank you, Ludo. Please turn to the next slide. Sales of GLP-1 diabetes care products in the U.S. increased by 9% in the first six months of 2025. The sales increase was driven by continued uptake of Ozempic, partially countered by Victoza and Ribelsis. Ozempic sales in the U.S. were positively impacted by gross to net sales adjustments related to prior years. The weekly Ozempic prescriptions are currently around 690,000 in standard units. While the full impact of the chronic kidney disease indication has yet to be fully realized, this indication allows us to reach an additional patient segment within the type 2 diabetes population. And we will continue to invest in commercial activities and label updates towards driving further market penetration. This includes Ozempic in the cash channel, which we anticipate launching later this year. Please go to the next slide. Wegovy sales increased by 37% in U.S. operations in the first six months of 2025. The Wegovy sales growth was driven by increased volumes, partially countered by lower realized prices, and Wegovy has around 280,000 weekly prescriptions. As Ludo said, despite the expiration of the FDA grace period for mass compounding, on May 22nd, Novo Nordisk market research shows that unsafe and unlawful mass compounding has continued. Multiple entities continue to market and sell compounded GLP-1s under the false guise of personalization, and it is estimated to be around 1 million patients are on compounded GLP-1s in the U.S. Novo Nordisk is working to prevent unlawful and unsafe compounding of semaglutide in the U.S. while making sure patients have access to safe, legitimate semaglutide produced only by Novo Nordisk. As unsafe and unlawful mass compounding continues, the Wegovy penetration within the CASH channel has been lower than expected. Novo Nordisk launched NovoCare Pharmacy in March 2025 and the penetration of Agobi within the cash channel is now around 10 percent of total prescriptions. Novo Nordisk will continue to invest in the expansion of direct-to-patient initiatives, including Novocare Pharmacy, as well as telehealth collaborations. Within the insured channel, Novo Nordisk expects a volume contribution from changes to the CVS national template formula. This went into effect on July 1st, 2025, where Wagobe is now the only GLP-1 medicine covered for obesity. Although compounding persists, we do see positive early indicators in recent weeks of prescription data that we believe is driven by CVS formula decision, as well as recent commercial efforts. we remain focused on driving commercial execution, which includes refining our messaging, launching new initiatives, and pursuing additional indications over the course of this year. Our most recent WGOBI direct-to-consumer campaigns highlight real-world evidence that was presented at the ADA meeting in June with additional campaigns planned for the second half of the year. Furthermore, We continue to anticipate a regulatory decision regarding the Wigovi MASH indication in the third quarter of 2025. Now, I will turn it over to you, Mike, for an update on international operations.

Thanks, Dave. Next slide, please. Cells in IO grow by 19% in the first six months of 2025, driven by GLP-1 products. GLP-1 diabetes cells increased 10%. This growth was negatively impacted by periodic supply movements. Our GLP-1 diabetes cells in region China was also lower than expected, mainly because of the wholesaler inventory movements and timing. Having said that, obesity care sales grew in IO by a very strong percentage. We grew the sales by 125% to 13.9 billion DKK. And if you discount for Saxenda and look at the sales at Vigovia alone, we have now reached more than 12.2 billion DKK, growing at an impressive rate of 335% by all the regions. Please go to the next slide. Novo Nordisk remains the market leader in IO, with a total diabetes and obesity GLP-1 volume market share of 71%. Simply put, almost three-fourths of people that use GLP-1 products in I.O. are on a Novo Nordisk GLP-1 product. With improved supply for both Ozempic and Vigobi and connected to that increased investments and higher innovation, higher activations of commercial activities, we will accelerate our launches and further advance our GLP-1 leadership. Rebelsys is also available right now in 40 countries and will continue to gain market share in international operations. Meanwhile, Ozempic remains the leading GLP-1 diabetes product within I.O., having launched in around 80 markets. As supply has started to increase towards I.O. markets, we are now all in with our promotional activities to further expand the number of patients that we are reaching. That also includes an increased online presence and telehealth collaborations in our markets. We have now launched Vigovi in around 35 countries, including more than 15 new launches just this year. Furthermore, we continue to drive innovation with Vigovi, having submitted for regulatory approvals in Japan for the treatment of MASH in May, and a higher dose of Vigovi with the submission of semaglutide 7.2 milligram to the EMEA in July. The growth of Vigovi in IO is very encouraging, but there are still millions of people with obesity who need our medications, and we need to get to them soon. We will continue rolling out Vigovi in more countries during the second half of this year. Now over to you, Ludo.

Thank you, Mike. That's right, and please turn to the next slide. As you've heard from Dave and Mike, there is much work to be done when it comes to reaching the millions of people worldwide living with diabetes and obesity. Over 550 million people live with type 1 and type 2 diabetes globally, and over 900 million people live with obesity. In both cases, most of these people reside outside of the United States. Despite the prevalence of diabetes and obesity, more effort is required to help people get our innovative medicines. In diabetes, as an example, though a patient can have more than one prescription, only 7% of total estimated prescriptions are of GLP-1. Furthermore, less than 1% of people with obesity globally are treated with branded anti-obesity medications. This of course means that there is a vast unmet need that is yet to be addressed. Novo Nordisk will keep investing across the value chain. Our goal is to gradually expand the diabetes and obesity markets, reaching new patient groups and new physician segments. We also work to introduce new channels and treatments and reduce barriers to access so that our innovative treatments and devices can get patients who need them. Please turn to the next slide. As an example, and in continuation thereof, unlocking the full potential of the obesity market requires addressing diverse patient segments through a broad and strategically aligned portfolio of treatments. The obesity market today is based in magnitude of weight loss, and of course we respond to that need. However, we will widen the scope of our medicines, and we ensure greater relevance across varying BMI categories and patient preferences. Our portfolio reflects this diversity, targeted at offering both subcutaneous and oral delivery, and addressing comorbidities associated with obesity. This includes atherosclerosis, heart failure, matched with fibrosis, and also arthritis. With these differentiated treatment goals, whether patients desire rapid weight loss or rather gradual progress supported by tolerability and safety, Novo Nordisk remains focused on providing solutions to current and future segments. And now, over to Martin for an update on R&D.

Thank you, Ludo. Please turn to the next slide. I would like to start with a brief reminder of the amicretin phase 1b-2a data, which we presented at the ADA, in addition to the next steps for the compound. The primary endpoint of the phase 1b-2a trial with subcutaneous amicretin in people with overweight or obesity was treatment emergent adverse events. Overall, the trial demonstrated that the safety profile for amicretin was consistent with incretin-based therapies. The most common adverse events with amicretin were gastrointestinal, and the vast majority were mild to moderate in severity. People treated with amicretin in the dose-dependent part, sorry, in the dose-response part of the trial achieved an estimated body weight loss of 9.7%, 16.2%, and 22% after a 12-week maintenance period. This was in the 1.25 mg, 5 mg, and 20 mg doses respectively. In the multiple ascending dose part of the trial, people on the 60 mg amicretin dose achieved an encouraging estimated body weight loss of 24.3% at 36 weeks. Overall, we are very encouraged by the Phase I B2A data speaking to the potential of amicretin both on efficacy and on tolerability. After an end of phase two discussions with the regulatory authorities, we're now looking forward to initiating a broad phase three development program with emicretin for adults with overweight and obesity and associated comorbidities. Next slide, please. The comprehensive phase three development program will be called AMAZED and will start in the beginning of 2026. The program has decided to investigate the weight loss potential of amicretin while evaluating multiple maintenance doses, the subcutaneous and oral route of administration, as well as several obesity-related comorbidities. For example, atherosclerotic cardiovascular disease, heart failure, chronic kidney disease, knee osteoarthritis, and obstructive sleep apnea. We have plans to investigate additional comorbidities as well. We're excited about the potential that Amicretin holds, and the AMAZE program will be key to unlock this potential. Next slide, please. Turning to the upcoming R&D milestones, we are looking forward to the remainder of 2025 with a number of readouts and milestones. However, before speaking to these, I would like to highlight a few milestones from the past few months. Within obesity, We have initiated the Redefine11 phase 3 trial with Calcrisema to investigate further weight loss potential by exploring dose re-escalation and longer trial duration. Further, we have submitted semaglutide 7.2 mg for approval within the EU. Looking ahead, we also anticipate the internal triple GLP-1 GIP amylin phase 1 readout that will give for potential further development into phases 1, B, and 2. Within diabetes, as Lars noted, we received a positive EMA opinion regarding the Osempic label update for treating peripheral arterial disease in people living with type 2 diabetes. This supports the accumulating evidence of cardiometabolic benefits for semaglutide 1.0 mg in people living with type 2 diabetes. Notably, semaglutide 1.0 mg has demonstrated a 24% risk reduction in the risk of kidney disease-related events in the FLOW trial, and cardiovascular risk reduction of 26% in the SUSTAIN-6 trial, which is unsurpassed in the incretin space. This seems to corroborate what we have been speaking to for the last couple of years, namely that semaglutide appears to be unique in driving the magnitude of cardiovascular benefits in the class. In addition in diabetes, we are awaiting the readout of the re-imaging free trial, investigating the potential of cagresemma in diabetes. We also anticipate the Phase II results of the subcutaneous and oral amitretin in type 2 diabetes. Within rare disease, the FDA has now approved alhemo, as one's daily prophylactic treatment to prevent or reduce the frequency of bleeding episodes. The label covers adult and children 12 years of age and older with hemophilia A or B without inhibitors. We also received a positive opinion in EMA for Alhemo. Lastly, in RADc's, we expect to file MyMate for hemophilia A approval in the US and in EU in the second half of this year. Within cardiovascular disease and emergent therapy areas, we are excited to have submitted the ESSENCE Part 1 data with once-weekly semaglutide 2.4 mg for regulatory approval in Japan for the treatment of MASH. We also anticipate a U.S. decision on the Wigoe MASH indication later this quarter. In July, we successfully completed a Phase 2 trial with Coramituk, an antibody designed to deplete amyloid deposits in transthyresin amyloid cardiomyopathy. Detailed data are expected to be shared at a medical conference later this year. Following the successful completion of this phase 2 trial, Coramituk in ATTR cardiomyopathy is expected to initiate phase 3 during the course of 2025. We look forward to the regard of the Evoque and Evoque Plus phase three trials in patients with early Alzheimer's disease towards the end of this year. While we are excited about the potential for semaglutide in Alzheimer's disease, we must also highlight that this is a high-risk, high-reward opportunity. With that, over to you, Kasper.

Thank you, Martin. Please turn to the next slide. In the first six months of 2025, our sales grew by 16% in Danish kroner and by 18% at constant exchange rates, driven by both operating units. The gross margin decreased to 83.4% compared to 84.9% in 2024. The decrease mainly reflects amortizations and depreciations related to Catalan, as well as costs related to ongoing capacity expansions. This is partially countered by a positive product mix driven by increased sales of GLP-1-based treatments. Sales and distribution costs increased by 15% in both Danish kroner and at constant exchange rates. The increase in cost is driven by both U.S. operations and international operations. In U.S. operations, the cost increase is mainly driven by promotional activities related to Viguvia and Osempec. while in international operations, the increase is primarily related to Vigovi launch and promotional activities. R&D costs decreased by 11% in both Danish kroner and their constant exchange rates. The decrease is driven by the impairment loss related to oseduranone of 5.7 billion Danish kroner and other impairments of intangible assets in 2024. This is partially countered by increasing investments within obesity care and reflecting increased late-stage clinical trial activity as well as increased early research activities. Administration costs increased by 10% in Danish kroner and 11% at constant exchange rates. Operating profit increased by 25% measured in Danish kroner and by 29% at constant exchange rates, while EBITDA increased by 16% measured in Danish kroner and 19% at constant exchange rates. Net financial items showed a net loss of 1.4 billion Danish kroner compared with a net loss of 530 million Danish kroner last year. This primarily reflects financing costs related to the funding of the Catalan transaction. The effective tax rate was 21.6% in the first six months of 2025 compared to 20.6% in 2024. Net profit increased by 22% and diluted earnings per share increased by 23% to 12 kroner and 49 øre. Free cash flow in the first six months of 2025 was 33.6 billion Danish kroner compared to 41.3 billion in the first six months of 2024. The reduction in free cash flow is driven by increased capital expenditures partially countered by higher net cash generated from operating units. Capital expenditure for property planning and equipment was 28.1 billion Danish kroner compared to 18.9 Danish kroner in 2024. This was primarily driven by investments in additional capacity for API production and finished capacity for both current and future injectable and oil products. For 2025, the Board of Directors has decided to pay out an interim dividend of 3 kroner and 75 øre per share, an increase of 7% compared to August 2024. The interim dividend will be paid out in August this year. We have returned 36.5 billion Danish kroner to shareholders mainly as dividends in the first six months of 2025. Please go to the next slide. The updated financial outlook for 2025 was announced last week where the key highlights and drivers were described in the company announcement and investor call. Sales growth is now expected to be 8-14% at constant exchange rates and operating profit growth is now expected to be 10-16% at constant exchange rates. Sales and operating profit growth reported in Danish krona is now expected to be 3.5% lower than at constant exchange rates, respectively based on exchange rates from 31st of July 2025. The lower sales outlook for 2025 is driven by lower growth expectations for the second half of 2025. This is related to lower growth expectations for Vigovi in the US obesity market, for Sympec in the US GLP-1 diabetes market, as well as Vigovi in select IO markets. The updated guidance reflects several efforts already underway, as mentioned by Mike and Dave. No one always expects net financial items to show a gain of around 1.6 billion Danish kroner. This is mainly driven by anticipated 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 billion Danish kroner in 2025, reflecting expansion of the global supply chain. In the coming years, the capital expenditure to sales ratio is still expected to be low double digits. Pre-cash flow is now expected to be 35 to 45 billion Danish kroner, reflecting the lower than expected sales growth, mainly driven by lower volume growth of GH1 treatment in the U.S., That covers the remaining details on the outlook for 2025. Now back to you, Lars.

Thank you, Carsten. Please turn to the next slide. The performance in the first six 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 initiating the Calculus Semaphase 3B trial, Redefine 11, in people living with overweight and obesity. We have reduced our full year outlook compared to the guiding issued in May. While we have had to adjust expectations for the second half of 2025, the organization is clear on what it needs to do going forward. I am confident that with Mike at the helm, Novo Nordisk is equipped to continue to unlock the potential to treat more people living with serious chronic diseases. It is with that that I would like to share my gratitude to the Board, my team and all Novo Nordisk employees for allowing me to lead this incredible organization. I'll continue to follow NOVA Nordisk, and I'm excited for the organization's next chapter. With that, I'd like to hand over to Mike for a final comment. Thank you, Lars.

Please turn to the next slide. As of tomorrow, August 7th, I'm excited to be taking over as president and CEO of NOVA Nordisk. As we shared last week, there have been additional changes to the executive management team that I would like to highlight now. Markus Schindler, executive vice president of research and early development and chief scientific officer, is retiring after seven and a half years at Novo Nordisk and four years in his current role. Markus has been instrumental in discovering and advancing early scientific innovation across therapeutic areas and technologies. Novo Nordisk research and early development and development areas will be combined. The new research and development organization will be overseen by Martin Lange, currently Executive Vice President of Development. Martin has been appointed chief scientific officer and will resume responsibility for research and development starting tomorrow, August 7th. As CSO and head of unified R&D organization, Martin will leverage his deep scientific expertise, strong leadership, and longstanding experience at Novo Nordisk to ensure efficiency and continued innovation. We'll be focused on raising the innovation bar within diabetes and obesity, bringing new and better medicines to patients with serious chronic diseases. Lastly, Emil Larsson, currently Senior Vice President of Europe and Canada Region, will succeed me and assume the responsibility of Executive Vice President of International Operations. Emil currently leads Region UCAN, spanning 40 countries, accounting for about 20% of Novo Nordisk global sales. I would like to congratulate Martin and Emil on their promotions and thank Marcus for his significant contributions and dedication to the company. Lastly, I would like to thank you Lars for your dedication and many years of service in Novo Nordisk. I consider it a privilege to have worked under you for so many years and I appreciate your support in passing the responsibility over to me. Looking ahead, We must act with greater urgency, building on our company's strength while sharpening our focus on commercial execution and operational efficiency. By fostering innovation and making thoughtful investments, we will be having the greatest impact, and we can ensure steady progress together. With that, over to you, Jakob. Thank you, Mike. Next slide, please.

With that, we're 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. Then we're ready for the first set of questions, please, operator.

Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 on your telephone keypad. We will now go to the first question. And your first question today comes from the line of Michael from TD Cowan. Please go ahead.

Thank you for the questions. I have two. My first is on Wegovy's formulary position with CVS. The deal looks to already be having an impact on prescription volumes in the U.S. Lilly has suggested that the sum total of lives covered that might be affected by the formulary update is roughly 200,000. Does that align with your thinking as well? And how many of those people do you expect will actually make the switch to WeGoV? So that's my first question. And my second question is on compounding. Our understanding is that the statutes that compounders use to support their marketing of so-called personalized GLP-1 dosing are not clearly defined and that a broad court decision may be needed to get this practice fully shut down across the country. One could even imagine the Supreme Court needing to weigh in. So my question is whether Novo has initiated any litigation that could possibly serve that purpose. Thank you.

Thank you, Mike, for those two questions. I'll hand both of them at the start to you, Dave, and we'll start with the question on the CVS formulary, please.

Yes. Thank you, Mike, for the question. We are pleased with what we're seeing so far on the CVS formulary conversion. That conversion is going according to plan at this point. We won't comment on the specific number of lives and what the actual percentage of conversion is, but to tell you that we are seeing things that are largely in line with what we expected and what was in the plans. On the compounding side, thank you for that question as well. You know, this is something that, as you heard in our remarks in the beginning of the call, this is a priority for our company. This is a priority to protect patient safety. This is a priority to ensure that the laws are followed. And as we mentioned, as of May 22nd, compounding is illegal in the U.S. except for rare circumstances. And the APIs that are being imported into the U.S. are illegal. And they are not coming from approved facilities. Not to comment directly on any litigation, but I will let you know that there is nothing categorically that is off the table. You saw earlier this week that we gave some more insight in terms of the legal actions that we are taking. And certainly, our viewpoints on that are broad. And we have updated or increased our recent dialogue with FDA, and we will continue that ongoing dialogue, and we continue to think that there should be pressure that's put on these entities that are false advertising misleading patients with a legal API.

Thanks a lot, Dave, and also thank you to you, Mike, for the set of questions. With that, we'll move on to the next set of questions, please.

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

Thank you, Peter Fedult, BNP Paribas. Two for Mike, please. Can we discuss China, Mike, before you move up to CEO, just in a little more detail? Just interested to know why there's been so much to stock in Q2 and how confident you are about the growth outlook in China given the arrival of BNP next year. And then secondly, I just wanted to come back to a question posed to you on last week's call about the go-forward strategy changes you intend to make. I mean, should we issue major changes in R&D focus? And can I just push you, you know, what exactly you can do differently with respect to commercial strategy that hasn't already been tried by the company yet today? Thank you.

Thank you, Pete. And for those two questions, they'll go to you, Mike.

Thanks very much, Pete. Let me start with China. let me start by saying what it's not the reason for lower growth. We are not losing market share in China. Actually, the opposite. We're gaining market share. We're basically, as you know, a bit left alone. Competition is not yet present. So that is not the reason for the lower growth. As I've mentioned to us, the reason for the lower growth, I would say, is one and a half things. The one thing is Comparing it to last year, where we basically, in anticipation of Vigobi launches, built some large stocks. We now, of course, need to make that adjustment for this quarter. So it's a timely event, and that's what the definition behind the sentence is. The other issue is that we need to accelerate the GLP-1 market growth, both, I would say, still in diabetes, but certainly also in obesity. We know that from our diabetes leadership and being in China for a long time, that you start somewhere in the center and you reach your customers, then you need to start going into the broader China in covering Tier 2 and Tier 3 and Tier 4. And we need to do that both offline as well as, of course, nowadays online. And that is, of course, what we are doing, and we're increasing investments and people behind our GLP-1 sales force, which gives me, of course, partially the confidence for the future. I am very confident for China's future. And the reason I am is because it has a huge amount of unmet need and populations that are within diabetes and obesity where we serve. 200 million people living with obesity, 100 million people living with diabetes is what I get my confidence from. And then we have some of the best people, the best team on the ground to maximize on that.

Thanks for that, Mike, for covering the China question. And there was a follow-up question in terms of strategic building blocks.

Yeah, so I cannot give you much more than what I gave you last week because not much has changed and I'm still not the CEO. I have one more day to go. But I can repeat what I said last week, Pete. We're going to focus more. We're going to focus more on diabetes and obesity as this is our main core and has always been. And I have a belief that when you focus on anything more, you increase the speed, increase the agility, and you get more out of that as we go forward. I think I've been put into this position because I execute and I out-compete my competition, at least in IO I've done that, and I plan now to do more of that for the rest of the company. So execution, execution, execution is what we said also last time. And then when I think about the future and the huge opportunities that we have, we need to be able to finance that and not fall behind the competition. To finance that, we need to reallocate and re-look at our cost base and really put the money where the growth is. So those are the three things I said last week, and they're still very valid today.

Thanks a lot, Mike, and also thanks to you, Pete. Then we're ready for the next set of questions, please.

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

Hi there. Two questions, please. One for Dave and then one for Castlinger. So firstly, on the Wigovi recent TRX dynamics, you flagged in the presentation the Novocare contribution. Just to follow up to prior, any sense of how much the increase outside Novocare is CVS versus remaining underlying growth? I'm just trying to get a sense of how much more CVS has to go and what the growth rate looks like once the CVS bolus is done. That's the first question. The second question is, I guess, a repeat of a question for Castle from last week. So it's on 26 pushes and pulls. If you want to provide some high level, I know you didn't last week, but if consensus is corrected dramatically, or it's a big share price, we've wondered whether you wanted to assess whether you think we collectively are thinking about this correctly. Consensus has fallen out at about 9% to 10% sales. Thank you.

Thank you, Sachin, for those two questions. I'll give the first one to you, Dave. I think you covered part of it firstly, but on CVS and then also Novocare, please.

Yeah, thanks, Sachin. It's still early days with respect to CVS and the conversion. We have a couple of data points in July. So most of those obviously show up in the first case in MBRX. And as I mentioned, we're seeing that largely in line, but there's still... data points to come, right, and some time to go. The increases that we are seeing in our uptick, they are partly due to CVS, but they're also partly due to our other commercial efforts. As I had mentioned in the previous quarter, we have a new campaign that we launched and focused on the weight loss of Wigovi as the primary message. So it's a mix of both. And then with respect to Novocare Pharmacy, we will continue to expand that channel. It is a focus for us. Certainly the early days of Novocare Pharmacy have been impacted by the continuation of compounding. But we think there's a real opportunity to continue to expand that channel. We are encouraged in terms of what we're seeing in our overall cash business. And we think there's certainly an opportunity to partner with more organizations telehealth included, and other entities to expand the CASH channel. And as I mentioned, we will in the second half of the year be offering another product, which is Ozempic and Novocare Pharmacy as well. Thanks, Sachin.

Thank you, Dave. Another question, second question on looking ahead and pushes and pulls. I'll turn to you, Casper.

Thank you for that question, Sachin. And I'd just like to take us back to the starting point around what we're pursuing as a company. And we're pursuing innovation-based growth. And what we see in terms of unmet need, as Ludo covered in the prepared remarks, we're looking into two significant markets in diabetes and obesity where our penetration with our current portfolio of products is still very, very low. And what you saw in our reporting today, you saw 19% growth in international operations. It's a big portfolio of markets, and we are not even done in terms of rolling out in all markets, with Vicovia as an example. And GLP-1 penetration in diabetes is also very low on a global scale. So we believe that we have a substantial volume opportunity with our current portfolio, and that's what we'll be continuing to drive on the basis of... of what we're delivering this year. And then like any year, there are pushes and pulls between new launches like Ultimate Obesity in the U.S., build of new channels, cash channels in the U.S. and elsewhere. And of course, then there are a few headwinds also, LOE, in a few select markets in IO. And to kind of size that in rough terms, as we've also done historically on specific items of discretionary nature. Then our assessment on LOE in the specific I.O. markets in terms of impact to group growth next year is to the tune of low single digits of group sales. So that's what we're looking into next year, but clearly focused on driving growth with our portfolio and then continue with the Gobi launches as well as all SEMA in the U.S.

Thank you, Karsten, and also thanks to you, Sachin. With that, we're ready to move on to the next set of questions, please.

Thank you. Your next question comes from the line of Michael Novot from Nordea. Please go ahead.

Thank you very much, Michael Novot from Nordea. Maybe you can comment a bit on how you stand in terms of capacity also for accelerating IO also going into next year because, of course, there has been lack of capacity. But how are you positioned now? And also in the same question, obviously, how well positioned do you believe you are for a sort of an expansive launch of Alzheimer's 25 milligrams for obesity? And then just lastly, a small note to Rebelsys. We've seen you sort of comment on a deprioritization. Is that something that we should just factor in? Will it mean that Rebelsys will be more sort of flattish going forward?

Thank you, Michael. On the first question on capacity, I'll turn that over to you, Carsten.

Yeah, Michael, thank you for that question. I think the best forward-looking indicator on capacity you can get is our current run rates. And when you look at Vigovi in I.O. year-to-date compared to last year, it's up four times. So we are scaling really fast in terms of both in-market penetration and number of launches. And as to number of launches, if you just take over the last roughly six months, then we started the year in around 20 markets, and now we're in around 35 markets and still counting. So the pace of launches is high in international operations and you should expect that to continue to be the case. And then for capacity on the altimeter for obesity, you should expect us to launch that come next year in the US in a non-supply restricted way.

Thank you, Karsten. Very clear.

And on the second question on rebalances mainly in the U.S., I'll turn it over to you, Dave. Yeah, thank you for that question.

Yeah, I think you have it right, Michael. The priority certainly is continuing to expand with Ozembic and the type 2 diabetes market. The priority is with Wigovi. In the obesity market, and as Karsten mentioned, you know, with a MASH launch coming up as well as the oral semaphore obesity. So I think the terms of, you know, flattish trends with rhabelsis is really just a signal in terms of, you know, where our priorities are. This is, you know, on our commercial investments and execution in Ozempic and Mugobi. Okay, thank you very much.

Thank you, Dave, and thanks to you, Michael. With that, we're ready to go to the next question, please.

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

Hi, guys. Thank you so much for taking my question. I wanted to touch on one of your development assets. We noticed you discontinued your development of South Furman and MASH. Can you walk us through kind of the rationale and what you saw in that trial to drive this decision? And do you still have interest in the FGF21 target? Thank you.

Hi, Evan. Thanks for that. On the question on sulfuramine and FGF21, I'll turn that to you, Martin.

Yeah, absolutely. Thank you for the question. I think you've heard me talk to before. We do not progress assets that are not differentiated in a meaningful way. We conducted a trial comparing sulfuramine or FGF21, both in monotherapy to semaglutide, but also in combination with semaglutide. And we did not see, from an efficacy perspective, a dramatic improvement neither in monotherapy nor in combination above and beyond what we know already now semaglutide can do in F2 and F3 and actually also in F4. This largely speaks to the power of semaglutide. We have some very strong data and mass that are currently under FDA review. As you know, FDA granted priority review because of the data package and we expect the readout of that this quarter. semaglutide is difficult to beat in this space. It doesn't mean that we are necessarily done with the FGH21 biology, but specifically in a head-to-head comparison, it just didn't substantially differentiate from semaglutide.

Thank you, Martin, and thank you for the question, Evan. Let's move on to the next set of questions, please.

Thank you. Your next question comes from Richard Foster from JP Morgan. Please go ahead.

Hi, thanks for taking my questions. One question just to follow up on pricing. We talked a lot about volume in the second half, but just the thoughts on the price, a little bit more on that colour. I know we covered it last week, but price around Wagovi and Azenpic in the second half and into 26 as well. And then secondly, I just wondered if I could get your thoughts on surpassed CVOT and how you think that will impact the competitive dynamics in the diabetes market with the Zempic. Thanks very much.

Thanks a lot, Richard, for those two questions. First, on the pricing question, I'll turn it over to you first.

Thank you for that question, Richard. And as we've said consistently, then do be careful in terms of working too much with the pricing on a quarterly basis. There are fluctuations with the inventories at wholesalers, gross to net and the likes. So what I would say is that directionally, when we talk about the Gobi pricing, then the price erosion is more skewed towards the second half of the year linked to the fact that we're building the cash channel and hence there's a channel mix element to it. And then we're also investing in reducing friction in the access we have in place in the insured channel so patients can get better access to reimbursed Vigobi in the U.S. marketplace. So more skewed to the second half in terms of price erosion. but, of course, something we do in a very disciplined, thoughtful manner.

Absolutely. Thanks, Carsten. And on the second question on the competitor trial, I'll turn it over to you first, Martin, and then you add, if anything, Ludo, afterwards.

Yeah, absolutely. Thank you for the question. Of course, we've only seen headline data, so it's difficult to go into details. Looking at the headline, however, it was clear that based on the primary analysis, T-sepidotide was inferior to, sorry, non-inferior to dulaglicide, which means basically it did not demonstrate a benefit versus dulaglutide. Dulaglutide that in the Rewind study demonstrated a 12% CV risk reduction versus placebo. This despite of a better weight loss and better glycemic control. I remind you that semaglutide by comparison through SUSTAIN-6 has shown a 26% CV risk reduction, which is to date unsurpassed in the increase in space. This does seem to confirm that semaglutide stands out on the magnitude of CV benefit among the incretin-based drugs, and it also a little bit appears to be driven by more than just weight loss. So for CV benefit, for also other comorbidities, semaglutide appears to stand out at this point. Ludovic, any comment from you?

Absolutely. I think you're right. I think that we have with semaglutide an agent here that has an unsurpassed CV profile. And of course, as we discussed earlier on, as this market is expanding, we're going to have to target new populations, new groups of patients, new physicians. And it's extremely important to make sure that for those patients for which beyond the weight, the comorbidities are important in their journey, we make sure that the quality, the CV quality and CV profile of semaglutide are being heard. And that's true with the endocrinologists, the GPs, the cardiologists. It's also true for those patients who decide maybe to learn by themselves which product they want to get. And we have to make sure that this profile is known and renowned for what it gives. I think it's actually very interesting and a validation of what I think Martin was saying all along. Not all GLP-1s are the same.

Perfect. Thank you, Ludo, and also thank you to you, Martin, as well, for the question, Richard. Let's turn to the next set of questions, please.

Thank you. Your next question comes from the line of Martin Pakoi from SEB. Please go ahead.

Yes, Martin Pakoi, SEB. Also, two questions. Karsten, first, a question on you on CapEx. Now that the that there's a little bit less gold than it turns more to a value case. And then it would be interesting to hear your more long-term thoughts on cash flow development And that's, of course, capex, which are very high right now. When should we actually expect a more maintenance level? And what kind of level are we actually looking at a very long term? And then the second question, Justin, Dave, also on the all-we-go loans, and maybe already talked a little bit about it, but now there's a US decision in Q4, according to your table. how will that immediately be launched in the cash channel and how important do you actually think that could change the trend of of the uptake in the in the cash channel hi martin thanks for those questions for the first one on the the the capex part uh we'll give it a go yeah so uh thank you for that uh question martin and uh

And the level of CapEx we're pursuing is directly a function of the opportunity we see in unmet need, I was talking to before, in both diabetes and obesity, as well as our other assets that we're investing into. So I would say in terms of CapEx at risk, I do believe that we're investing in the core of the company and to the long term, both marketed assets as well as pipeline assets. And then in terms of the shape of the CAPEX curve and how to get to a maintenance level and the magnitude of that, then I would say that we're actually starting to see some of our bigger CAPEX project announcements in API getting very, very close to delivering to market and to regulatory approval. So of course that then ties into the spending of those projects coming down. But then we have finished projects that are slightly delayed compared to that. So I would say we are fairly close to the peak. And then as we conclude on the assets, then you'll see a gradual decline. I won't guarantee from next year, but we're getting close to it at least. And then for the maintenance level of CAPEX, then at least what we've seen historically, then the maintenance level has been around 5% to sales, CAPEX to sales. And now we're in the low double digits. But of course, hopefully CapEx will be higher in the case of growth outlook and pipeline coming to fruition. But I would say on our peptide fill finish platform, with what we have going now, we will be able to cater to many millions of patients in the coming decades. So we have a solid installed footprint in place there.

Thanks a lot, Carsten. That was question one on the CapEx part. And for the second question, Oral Vigobi in the U.S. Let's turn that to you, Dave, please.

Yes. Thank you for the question, Martin. We are anticipating the approval, as you mentioned, towards the end of 2025. We are excited about this potential approval and launch. And as you can imagine at this point, Martin, All of the typical launch readiness activities are fully underway and are building momentum. I won't comment on exact timing of launch, but certainly expect that we will launch the product as close to approval as possible and having the organization ready to do that. No specific comments on pricing strategy. However, since you mentioned it, having a cash channel option exists and that's different in the way that we thought about launching products previously. Launching Novocare Pharmacy is a very long-term view from our perspective, and we think obesity products certainly lend themselves to the cash channel. So it's an option that we have, and we certainly look forward to making sure that we can meet patients you know, wherever they are in terms of their access needs, whether that's through insurance or other forms that we can make available to them. Thank you. Thank you both.

Thank you for that, Dave. Thank you for that, Dave. And with that, we are approaching the turn of the hour, so we're ready for the last set of questions, please.

Thank you. Your final questions for today come from the line of Emmanuel Papadakis from Deutsche Bank. Please go ahead.

Thank you for taking the questions. Maybe I'll come back to guidance, if I may, for the second half of this year even, let alone next year. So now that we actually have the full set of Q2 results, perhaps you could just enlighten us on what set of assumptions would lead us to arrive at the bottom end of the range for this year in particular. What assumptions did you make around the outlook, for example, can we go via an H2 that led you to believe we may have zero group revenue growth in H2 and a high single-digit decline? And then maybe a question on R&D for Martin. Thanks for the Kagrisema single chamber update. You talked about further clinical development next year, but it's unclear. Would a simple bridging stress study be enough to then bring that to the market, or would you actually require a full phase three? And would successful development here enable you to make use of all your existing installed single chamber device manufacturing capacity for Zempic and Mugazi, or would you actually require additional investments in new facilities for that device? Thank you.

Thank you, Emmanuel, for those two questions. The first one on guidance clearly goes to you, Carsten.

Thank you for that, Emmanuel. Let me be clear. Our guidance, we didn't build it for the low end. Clearly, we are closer to the center in terms of our base case, which is based on the trends we are seeing in terms of script numbers as well as the run rate in IO markets and launches there. Now you have the product and geography splits beyond what you had last week. So that's our base case. And of course, everyone at Novo, we're pushing to deliver at least that and hopefully even more than that. And then the reason why we have the guidance range and the low range is basically to cater for unforeseen events beyond what the trends we're seeing right now. And these events could be, for instance, gross to net adjustments in the U.S., given that we have a rebate provision of more than 100 billion DKK, if you look in our reporting this quarter. So just the forecast uncertainty on that number, positive or negative, could move the numbers up or down in the range. And then as we've seen, the obesity market is somewhat volatile. So we can have a scenario where trends are stronger, and we can have a scenario where trends are softer and that's basically what the way we constructed our guidance range.

Thank you Carsten for answer on question one in terms of guidance. For the second one on cacosema co-population that goes to you Martin. Thank you very much for the question.

So you're absolutely right. We have established pharmacology equivalence which is obviously very gratifying We do not expect to need to do a full phase reprogram, but we do have to establish what we call clinically equivalent, showing a little bit of the same efficacy and safety potential as we see for the dual chamber device. So that is in progress from a manufacturing perspective. I guess I could say this does not require new builds to finish.

Thank you, Martin. Thank you, Carsten. And also thank you to you, Emmanuel. And with that final question, that concludes our Q&A session. I would like to thank you for participating and urge you to contact Investor Relation in case of any follow-up questions. Before formally closing the call, I would like to hand over to you, Lars, for your final, final remarks.

Thank you, Jaro. Let me just reiterate that we don't take our guidance reduction light. We treat that with utmost seriousness. We have strong conviction in our ability to drive commercial execution and get to many more patients that are currently treated than what is treated with our products today. But we also acknowledge that we need to show that in real-heart data, and we look forward to doing that over the coming period of time. We're also excited about the pipeline readouts we have for the rest of the year and also looking into next year. And finally, I would like to again congratulate Mike with his appointment. I'm confident that With Mike and the team, we have said we have the execution power needed to deliver on our expectations. And a final, final remark. Thank you all in the investment community for the many injections we've had over the years. I have truly appreciated your challenging questions and support over the years. And I wish all the best of luck as I leave the company as of today. With that, we will close the call. And again, thank you all for your attention. Bye-bye.

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