Novo Nordisk A/S (NVO) on Q3 2022 Results - Earnings Call Transcript
Keyur Parekh: Good afternoon all, and thank you for joining us. My name is Keyur Parekh and I cover Novo for Goldman Sachs. It's always a pleasure to have the team in London. It's even a better pleasure to have them the day after they're made new lifetime high from a stock price perspective. Congratulations to that. I'm going to pause it to you, Karsten, to make some opening comments, and then we'll go to Q&A from there. The floor is yours Karsten.
Karsten Munk Knudsen: Great. Thank you, Keyur, and thank you to Goldman Sachs for hosting our Quarterly London Launch Meeting and what an opening, right? So it's a tough act to follow, but clearly with the dream team like this with my good colleagues, Ludovic Helfgott from Rare Disease; Martin Lange from Development; and Camilla Sylvest from our Commercial Strategy area. Then I think we're set off for a great session today. We had kind of an unfortunate situation yesterday with our conference call that and some people would say did you plan for that and at least now we have a sample size of one. Martin will say it's not enough, but that we cut the conference call and then we get all time high on our share price. So I'm not sure if you can do any training on that, but hopefully there will be no trend at least and knocking on wood with all kinds of technical support today that that this is being webcasted and out there just for followers to be aware about that. So for today's presentation and we have brought not too many slides that we'll go through in the beginning and then in case there should be questions then we'll have time for that. And if not then we'll run off. But I would be surprised if there wouldn't be a few questions on or whatever the flavor of the day is. So jumping into our statements, then of course as usual our forward-looking statements that that there is a risk that the future doesn't pan out in line with our forward-looking statements. It could be better, it could be worse, but that is the risk that we all live under and enjoy. And then just one slide on our strategic aspirations, which is basically how we portray the progress in terms of our corporate strategy execution. And without taking too much out of my colleagues' presentations then briefly on each of the quadrants purpose and sustainability, this is a core area for us. This is ESG in Novo Nordisk language. We continue to progress on our carbon emissions. So we're down 18% in carbon emissions compared to pre-COVID 2019. And actually, 18% is even not where we'd like to be. We're more ambitious than that. We have some pressures from distribution of our products, so that's why it could have been even better, but it's something that we're really driving performance management on. In terms of adding value to society then as of today we are serving more patients than ever before in the history of the company. So, of course, the core premise and the core objective of a company like Novo Nordisk is to discover and develop innovative medicine and make it available to patients on a global scale. And therefore, it's not only a pleasure based on the financials and the share price that can you alluded to, but even more importantly with serving more patients than ever, ever before. And then we're progressing on our diversity and inclusion efforts and being a sustainable employer. Commercial execution, Camilla will go through, but 16% sales growth in an industry like the pharma industry. I don't know what the current run rate is, but at least the last few years when we've been looking at value at pharma run rate for the global industry is to the tune of 4%, 5% or something like that. So be having a clock speed at 16% is of course clearly competitive and in the top tier of the industry. And then pipeline, again, as I said before, this is why we are here as a company. This is to discover and develop innovative products for the benefit of patients. And it's just really a pleasure to see the progress we're making both in within diabetes care, progress within obesity and rare disease. So as you recall, we are pursuing a corporate strategy where we are expanding and diversifying our R&D pipeline and I think this is clearly a picture, and Martin will come back to it that â that we are stepping up investments in R&D to expand and diversify the pipeline. And then finally on financials 16% turns into 14% operating profit growth come back to the details, continued efficiency drive and very competitive cash to earnings conversion, and more than $40 billion return to shareholders. So â and when you look at our balance sheet then on an MAT basis we're around 100% return on invested capital. So a fast growing high margin company with 100% return on invested capital, I think at least finance folks like myself that's â that metrics . So with that I'll hand it over to you Camilla on commercial.
Camilla Sylvest: Yes, thanks a lot Karsten and let's just look at the 16% growth, how that's distributed among North America and international operations. You see 22% growth in North America. It's 62% of our share of growth and then we have 11% growth in IO that's driven mainly by growth in EMEA double digit and also in the rest of the world. We have, as you can see, a minus 5% in China. That's related to the volume based procurement, the VBP that was implemented as of May this year. And when we look at how that is distributed across the therapy areas, you'll see that GLP-1 one driving 44% growth and negative growth in insulin both in IO and in North America. And then obesity care growing 75%, interestingly 73% in IO without Wegovy but only from Saxenda and then in North America a combination of Saxenda and Wegovy growing 77%. Rare disease, Ludovic will come back to in a minute, growing 2%. And if we then look at the GLP-1 class, especially in the U.S., you see a significant step up in terms of the market growth. This is also what we've seen with previous launches into this segment that the market growth keep expanding, but now we are at a level where volume growth is above 40%. We can come back how that is being driven also by guidelines. But what you see is, of course, that Ozempic is still the leading brand in the class. But of course, with the market growing so significantly, volume growth becomes much more significant for sales than actual market share developments. And then on obesity here again, you see the 75% growth in the first nine months. You see in the middle also a very strong volume growth of 63%. And I'm sure we'll come back to how our rollout plans are in the rest of the world, and also that we are expecting to supply Wegovy make all doses available towards the end of this year. That's still the plan exactly as we also discussed last time when we met. And with that over to Ludovic for your update on rare disease.
Ludovic Helfgott: Absolutely. Exactly, very quickly, just rare disease franchise grew 2% in this year-to-date, with a great growth on the rare blood disorder franchise, RBD driven by hemophilia A, hemophilia B and Novo-7, as you can see, still a growth of 6% of Novo-7. Just to give an example for a product that has been there for 26 years. So, itâs still a growing franchise. And then a decrease on the endocrine disorder side, mostly driven by pricing, essentially from the volume perspective the brand is clearly leader across the world, more than 60% of market share in the U.S. around 36% worldwide. So overall this price decline mostly in the U.S. which expanded the 3% sales decline in North America, one is in IO. It's a 4% sales growth. So we are on our sort of long-term trajectory with this 2% growth in a year-to-date 2022. Shall we move to the rest of the pipeline.
Martin Holst Lange: So you heard from Karst we are investing more than ever in R&D and that is leading to a very nice progress of our pipeline in the early research phase, but certainly also in a super-nice progress in in our clinical pipeline and in the development space more than ever patients in clinical trials, more than ever active clinical trials in more than ever disease areas. And we are seeing nice progress across the board. So going from the 50,000 patients that we actually have in clinical trials as we speak, I want to talk about 92. And that's basically because you heard of us talk about CagriSema in the obesity space. We think that we have an asset that will lead to a 25% plus weight loss in the obesity space. That's exciting in and of itself. Hopefully you will also noticed that we initiated Phase 3 for CagriSema this week, which is going to be super, super exciting. We did not know what to expect from CagriSema in the space of Type 2 diabetes and glycemic control, and therefore we conducted a very small Phase 2 study. 90 patients being equally randomized by either CagriSema, semiglutide and monotherapy or cagrilintide and monotherapy. Super excited after 32 weeks of treatment to observe that we saw not only a substantially numerically better reduction in hemoglobin A1c for CagriSema as compared semaglutide, that was maybe not so surprising cagrilintide, but equally excited about seeing the weight loss. Most of the rules that seeing and accruing weight loss in Type 2 diabetes is actually more difficult than what we see in non-diabetes. So, both with semaglutide, but also whatever else is out there, you see somewhat less weight loss in Type 2 two diabetes than what you see in non-diabetes patients. But combining cagrilintide and semaglutide, that leads to a 15% weight loss in 32 weeks. If we extrapolate that to our usual 68 weeks, it's a 20 plus percent weight loss. And that is better than anything we have seen in the Type 2 diabetes space. I'm now looking at a different slide than what I promised. Maybe I should just look at my slide. But that is okay. Now you heard all of my stories about CargiSema. That is super exciting. And I could do it without looking at the slide. It is because it's actually some easy number to remember because this gives me a great opportunity to also talk about what we've seen with icodec in ONWARDS 5. It's still 0.4 percentage point difference in HbA1c as superior reduction as compared to whatever is out there that is also super exciting. We have the vast majority of our patients of â sorry of our diabetes patients on insulin treatment, still, more than 30 million across the board. And imagine that you can show a 0.4% difference in this space. This is actually, if I extrapolate UK PDs, I can start talking about reduction in cardiovascular mortality, reduction in all-cause mortality, 20% reduction in risk of amputations that makes it meaningful for the individual patients, obviously, but actually also for peers. And I think when Camilla has to start to do pricing negotiations for icodec that will make it super exciting. So obviously the progress of icodec and as a mission during the course of first half of next year is going to be super exciting. I do want to call out in the obesity space we also â we'll see the readout of high dose semaglutide. In that space, 50 milligrams of semaglutide we also have a 25 milligram story ongoing. In the rare disease space Ludovic has already touched on that, but suffice it to say, super exciting to see the progress of Mim8. So we initiated Mim8 actually last week. And that basically means that we will, and I hope you can agree with me that is an impressive record. We will spend approximately four years of clinical development. This is to be compared with the normal eight years in hemophilia that we spend in clinical development specifically for Mim8, we've progressed it very fast. We are now in Phase 3 and you should expect a readout from the trial during the course of 2024. And then back to you, Karsten.
Karsten Munk Knudsen: Thank you, Martin. Financial outlook, so you've seen our nine months numbers, 16% sales growth really amazing push on GLP-1 and diabetes as well as our obese franchise as Camilla was alluding to. So that has enabled us to raise our outlook for the year from 12% to 16% to now 14% to 17% sales growth at same currencies. And then you layer in currency impacts, another 10 percentage points mostly from the strengthening U.S. dollar. So all, when you look at the magnitude of growth for the company, then of course in absolute terms, this is the biggest absolute sales growth ever, ever in the history of the company at local exchange rates. And then you add in currencies. So the sheer size of step up in growth is really remarkable in a historic setting. That of course, goes true to our operating profit performance where we are raising our numbers correspondingly, then we lose the currency step up in hedging that's to be expected. I think when you do our net numbers on hedging without going into details, then our hedging performance this year, our net currency performance this year is very, very attractive even after hedging costs. And then finally, our cash flow to be clear, how can you raise your outlook for the year in terms of sales and op and then lower free cash flow. And there's a very simple explanation to that because the reason is that we lower our free cash flow guidance by 3 billion the range. But that is a function of the fact that we close the Forma Therapeutics transaction in the fourth quarter at around DKK5 billion impact to our free cash flow and then underlying benefit of DKK2 billion. So that's how we get to the net minus three on free cash flow. So excluding BD, a step up in free cash flow generation, which we of course allocate to shareholders according to the classic principles around 50% dividend payout ratio and then the remainder done through share buyback program as we covered before so no changes on capital allocation. So these are aspirations for 2025, you've seen them before, so I'm not going to reiterate that. I think we're ready to get into a Q&A and I think we have a long tradition of having the host shoot of the first couple of questions. And if we could just restrain two questions each and then we do the rounds as we move forward.
Q - Keyur Parekh: Thank you, Karsten. Keyur Parekh, Goldman Sachs, if I could start with two please. The first one is in the unfortunate circumstance that Catalent wants to receive a warning letter kind of for the Belgium facility between now and your relaunched date in kind of end of December, early January. How confident are you of maintaining kind of that date and how is that going to be a function of supply from other parts of the manufacturing network or would you reconsider kind of pushing that date out? So that's kind of question number one. And then separately, Karsten, Lars and you both kind of yesterday mentioned a few times about confidence in maintaining current trajectory of growth and having supply kind of from a GLP-1 perspective to kind of continue doing that. How should we think about the timelines associated with that? Was that kind of a fourth quarter comment? Was that a 2023, 2024 outlook so just kind of any context around that? Thank you.
Karsten Munk Knudsen: Thank you, Keyur. On the first question vis-Ã -vis Catalent, we do appreciate the sensitivity around the Catalent situation in the capital markets. And as a consequence, it's not a comment that we take likely and put into our company announcements. So of course, the comment we put in is based on a careful assessment around the current level of inventories, the fact that Catalent is producing for inventory of commercial product as we speak and then an assessment based on from our quality organization in terms of the quality situation at our CMO. So of course, there are no guarantees in this work, but we would not put this statement into our company announcement unless we're confident that we'd be able to resupply the U.S. market in December with Wegovy. Then to the second point in your question around our forward-looking commentary so we put a statement in our outlook section where basically saying that we're continuously expanding our supply capacity and our assessment is that at a potential that we have the supply capacity to supply, according to the current growth trajectory of the company. And the reason why we put it in, just to be clear, was that in the beginning of that section, we're talking about supply chain limitations including for Ozempic. So this was just to avoid, keep becoming only concerns that we are not able to supply at all or we are kind of kept at our current level of supply. So this is a comment intended as a forward-looking statement that we're scaling and that we'll be able to cater for the current â pretend if that materializes based on demand, the current level of growth. Well, I think we have enough questions today, I think actually just to make it simple for me so it's not a speed contest. And then we start here at Intron.
Naresh Chouhan: Thanks. Naresh Chouhan, Intron. Just couple of questions on the Ozempic 2 mg launch. It looks like it got to almost 10% of total Ozempic scripts and looked like a phenomenal launch in four months. So two things. One, how could some of the drives of that, is there a big bolus of patients that need data intensify and therefore, should we expect that growth to slow down when you can resupply? And the second thing is, is there any reason to think that this isn't 25%, 30% of the total Ozempic scripts in the years to come as patients progress to from the 0.5 mg to the 1 mg to the 2 mg and it becomes a big part of the business. Because it's not something that I've felt that you guys are focused on massively, but it feels like it could be a very big opportunity.
Karsten Munk Knudsen: All right, Camilla, I think that's for you.
Camilla Sylvest: Yes. So absolutely right, that we've seen a great uptake with 2.0 so far. And of course, this opportunity is in place to make sure the patient can continue on Ozempic treatment over time. We also know from our initial data and that not everyone is progressing to the 1.0 from the get-go. So some people are at 0.5 and approximately half are progressing to 1.0. So you can imagine that over time, people would be able to stay on Ozempic still intensifying the treatment and being very good control both with their blood sugar, their weight, and of course also with the cardiovascular protection that Ozempic is giving them. So you are right that over time the individual person is likely to upgrade. But of course, as we see more and more patients coming onto Ozempic with both of the market, then it's likely that there will be a ratio of people on 2.0, but with many more coming in, it's not so that this ratio is going to significantly differ from, I would assume a quarter or 25% of the total ballpark, right. But that of course, time will show, but it's really an intensification on the same product. That's the whole purpose of it.
Karsten Munk Knudsen: Thanks Camilla. And I think we'll go to Mark Purcell.
Mark Purcell: Thank you, Karsten, it's Mark Purcell from Morgan Stanley. So two questions, the first one is going back to oral sema and the SNAC technology. So obviously moving once weekly into clinical development. So could you help us understand where you are with the various generations of SNAC as you try to eliminate food and water interactions, you work on the cost component and give us an idea of the advantages and disadvantages versus a capsule peptide where thereâs competitors entering the market as well as the oral small molecule as well. We see a lot more data over the next six months or so. Thatâs the first question. And the second question is kind of going back to what Russia was talking about as well. The message around sema is becoming increasingly complex. Youâve got outcome trials such as FLOW and STRIDE and focus on 1 milligram injectable. Youâve got obviously 2 milligrams going to 8 milligrams, going to 60 milligrams, then you have Rybelsus AD study, but then youâre going to 50 milligrams, and then the obesity dose, I presume is going to go up as well. So how do you take all this complexity and trying to bridge accumulative evidence into the molecule to create a simple message given that some of your competitors have far more simple messaging when it comes to doses, which theyâre using consistently for diabetes, for obesity, for sleep apnea, et cetera, et cetera.
Karsten Munk Knudsen: Thanks, Mark. Martin, fill the first one on Alzheimer and the SNAC technology and then branding?
Martin Holst Lange: Yes. So I think youâre exactly right. Weâre focusing a lot on the SNAC technology because we want to and we need to increase the bioavailability basically to reduce the API amount needed for the efficacious and safe treatment. We are currently in clinical trials and fourth generation and have made some substantial upgrades to the bioavailability that weâve seen. Without going into too much details goes without saying that will give us a good leverage on the FMC part. Our clear aim is actually also going a little bit to your question number two. The efficacy and the safety has to be on par with what we see in subcutaneous. And actually what we have currently right now with Rybelsus is probably from an efficacy perspective, somewhere between 0.5 and 1 milligram of subcutaneous Ozempic. Our aspiration is for 25 and 50 milligram to be able to par with 2.0, 2.4 milligram of Ozempic and Wegovy, goes without saying, if we substantially increase the bioavailability, there will be a little bit of a regulatory complexity in the discussion the actual sort of doses because all of a sudden what was 50 milligram could then in the next generation correspond to something lower. But I think that falls at that point in time will be a luxury problem. When you talk about other formulations, I think what weâve seen so far, and we are carefully monitoring this SNAC technology is by far the most attractive in terms of securing bioavailability of peptide or protein comparing to the small molecules. I think my position on this, I think they will be reasonably good when it comes to efficacy. I think they will â we still have to evaluate the safety. Thereâs always some unknown with small molecules. My understanding is actually from an FMC perspective, thereâs not really a big difference. And therefore, I think and Camilla can also talk to this, the small molecules that will help their place, but they will not be sort of super competitive from an efficacy, safety of â on efficacy perspective. So we welcome them as a vehicle to maybe also broadening the field.
Karsten Munk Knudsen: Thanks, Martin. Camilla?
Camilla Sylvest: Yes. On the SNAC side, molecule is clear that we are, of course, optimizing the impact that this molecule can have on different patient populations. And that also caters for the fact that some of these disease areas are very different. For example, diabetes very often driven by the physician in terms of specialist and primary care physicians then you have the obesity segment that is to a large extent also driven by demand from patients. Itâs easy to diagnose. Then you have NASH that we are looking into, that is very difficult to diagnose at the moment requires a biopsy. And then of course we are exploring it at Alzheimerâs also, that is yet a completely different target group. So the reason that Iâm mentioning all of this is actually that it can sound complicated when you look at it across, but if you look at each of the disease areas and the target groups, both in terms of patients and physicians. We are actually able with different brands as we have it also now to cater for a specific group, a specific key message that relate to that particular target population. And we are also able from a rebating structure point of view to actually work with different segments. So there are some advantages of doing this plus at the very end, we are able to confirm and detail and promote directly on label, which is of course very important for us to do, so that we make sure that we stay very strongly on our business ethics with regards to what gets promoted to whom, especially the target groups of doctors and this actually gives us a very flexible approach.
Karsten Munk Knudsen: Thanks, Camilla. Then weâll move Richard Vosser.
Richard Vosser: Thanks. Sorry, excuse me. Richard Vosser, JPMorgan. One question on five looked very, very strong, but the type one hypos was not non-inferior. It wasnât non-inferior. What needs to happen for that? And does that have any commercial implications when youâre talking to payers from a pricing standpoint? And then second question, just on CagriSema and GIP combinations, maybe, CagriSema looks pretty good and on weight loss, but the HbA1c was not really at . It was better than as . What can you do to further enhance the HbA1c control? Thanks.
Karsten Munk Knudsen: Martin?
Martin Holst Lange: So we â if I can take the last question first. CagriSema is investigated in a 32-week study and specifically on glucose control part of the effect is seen by the weight loss, and that basically means that if we extrapolate that weight loss over time into, what I would say regulatory grade timeline 68 weeks actually up to two years in type 2 diabetes. Our extrapolations are indicating that CagriSema on glycemic control will on a normal day be on and on a good day could actually also turn out to be superior. And if you combine, so to speak, the base case or even the offsite with the weight loss that weâve seen, this will be the most attractive offering that we would have in type 2 diabetes. Also because as weâve discussed previously, the safety profile of CagriSema appears to be very, very attractive. So from that perspective, you had to factor in the timing of treatment. And thatâs why we are fairly confident, weâll be able to show superiority of the mono components, but potentially also of potential competitors. On â I could take â I think the type 1 diabetes is obviously something where we have to go into a dialogue on the risk of hyperglycemia. As weâve also discussed, even though â we did see more hyperglycemia with that we did with other basal insulins. It was still at a fairly low level. And therefore, the risk benefit discussion that I will have will regulate us. I think we are still in a reasonably good place. I donât want to speak to the commercial and the pricing negotiation thatâs for Camilla, but overall, the type 1 population is sort of the minority in this space. And my sense is that that pricing discussions will be based on phase â sorry, type 2 diabetes patients, and this is where we see the superiority with on par risk of hypoglycemia.
Camilla Sylvest: Exactly. You could work in commercialâ¦
Richard Vosser: Okay, thank you. Thatâs always good to know.
Karsten Munk Knudsen: Thank you, Martin. Thank you, Richard. And weâre on to Jo.
Jo Walton: Jo Walton, Credit Suisse. I wonder, Camilla, if you could give us an update on the reimbursement sort of attitude of people and payers given thereâs so much publicity about these drugs. Are payers thinking, good god, if I donât put some restrictions, Iâm going to have unfettered demand. And perhaps within that you could say whether youâre seeing any â the longevity of people on Wegovy, it was sort of five months or so on Saxenda. Are people showing their enthusiasm for Wegovy by staying on it for much longer? And my second question is just a broad one on U.S. pricing. So now that you should only raise your prices in line with CPI, and CPI is so high. Is there an opportunity in 2023 to have your list prices higher than you materially youâve had historically? Because CPI will be 8 or 9 perhaps, which is most unusual? Thank you.
Camilla Sylvest: Thanks. So maybe Iâll start with the first one, and then I think Karsten would like to speak to next year. Reimbursement attitude towards Ozempic is of course generally very strong in markets that traditionally reimburse. When it comes to weight loss products like Saxenda and Wegovy, then we have now 15 markets in international operations that have reimbursed Saxenda. Of course, it comes at a BMI normally around 30 or 35 with comorbidities. In the U.S. we have about 30 million lives covered. So a very good starting point in general to continue prescribing for more patients with reimbursement. The attitude of course with â towards Wegovy and Ozempic to make sure that itâs not prescribed off label. Itâs increasing the awareness, increasing here, of course, we have the advances that we have two different brands, so it easy â easier to understand and document. And we have been looking back at, can we see a change in the Ozempic patients that have been prescribed to naïve to treatment patients before and after the Wegovy launch. And so we took 1.5 years before the launch up until July last year 2021 and then up until now. And there has been an increasing trend of prescribing TLP1 products in type 2 diabetes earlier. That trend continues. I guess, accelerated a bit after the launch of Wegovy, but not significantly. So I just want to say that the trend of prescribing TLP1 products earlier to type 2 patients has increased a lot coming from guidelines from both EASD and ADA also. And of course, we also learn how well it works, especially with Ozempic with the three benefits it has, including the cardiovascular risk profile. So thatâs just a great understanding of that. Then when it comes to stay time on Wegovy, we donât have new numbers to share with you, but we are following up on that. And as soon as we have more to share, we will share that. But we do know from Saxenda in the countries where that has now been reimbursed, that the stay time of course, is significantly extended. Plus that we have seen in our data from Wegovy that people continue to lose weight beyond 60 weeks. So that also gives us an indication that stay time is likely to be much longer and Wegovy than it has been traditionally on Saxenda. Yes, and then to the priceâ¦
Karsten Munk Knudsen: Thanks, Camilla. On inflation terms in the U.S. and the most recent legislation where it takes a baseline back to 2021, as you know, and consequently, we will face a minor negative impact already here from the fourth quarter on products where weâve taken price increases on above the inflation since 2021. As to our list price increases in 2023 thatâs a multitude of factors that that goes into our decision on list price increases. First of all the benefits of the products weâre providing and the clinical data supporting that for patients, the competitive situation and of course, the old pricing environment. So this is not the primary factor. But of course, we take all factors into account when we make that decision, so no further comments around that because thereâs also a certain level of competitive on that front. Thank you. Yes, Jeffrey?
Jo Walton: Can I just come back to Wegovy, but a different question, which is if the facility were to have to temporarily close for any reason, would that in any way impact your timeline? And have your thoughts on the amount of drug you need for the lodge changed at all since the start of the year? Or are you still aiming for the same like volume at the different doses by the end of the year before you make that decision to launch it? And then can I just ask with next year then, when you bring on the other fill finish. Should we think about the first half with the second CMO and then the second half with the second Catalent facility? Is this a sort of step function given weâre talking about fill finish, weâre not talking about sort of ramping up API, if you like. So essentially it comes online or is this a gradual increase we should think in fill finish capacity coming during the course of 2023?
Ludovic Helfgott: Yes. So resupply in the U.S. market towards the end of the year as I said before, this is based on our combined knowledge and the fact that that the CMOs is producing as of today and the required inventory levels to launch that theyâre viable. Of course, there are 100 scenarios in the world that can impact any parts of the business. But we would not put into our company announcement the fact that that we are resupplying them out unless we believe thatâs relevant scenario, speculating in all kinds of hypothetical items, I don't think that adds any value, then we would â then we've not put this wording in. As to next year, and capacity as you state the second CMO will go online in the first half and online means that they'll be supplying to a marketable product. And then the second site will get online in the second half of 2023 and consequently we will have four different sites supplying, fill, finish â sorry, filling for Wegovy. So that that will be step changes in filling capacity and of course, additional backup capacity in that sense.
Karsten Munk Knudsen: Sachin?
Sachin Jain: Yes. Sachin Jain, Bank of America. I'm going to kick off with a comment you made on Ozempic yesterday with people trying to gauge off-label usage and how much this switches. You made a comment around 40% of Ozempic being naïve to diabetes treatment, I think. Was that NBRx or TRx? Could you give a sense of what that number was pre-Wegovy and are you indicating this is a potential switch population to Wegovy? I just want to be super clear what the message was around that, if that's okay. And then the second question, Iâm apologies going back to Wegovy supply, I just had a really simple question on process. So having had before it, and you've been a receipt of it, is there any FDA inspection or process you're aware of that could drive a decision chain between now and launch? Or is it just status quo either facilities operation until you hear otherwise. The background to the question is, I'm trying to understand if there is a risk, the timeline of when that risk would emerge for you and for the market. And as part of the confidence, you don't know about an FDA inspection, therefore you can bridge the gap to your second facility? Thank you.
Karsten Munk Knudsen: Right, So, if we start with the, so my specific comment was related to a question at the conference call around Ozempic source of business. So, source of business is basically new starts going onto Ozempic and that was my comment as to the 40% and then the evolution on that metric Camilla?
Camilla Sylvest: Yes. So, we tried to look at the 18 months ahead of the Wegovy launch for Ozempic and see what, how was the evolution in that. And that basically moved with a delta that is very close to similar with the 12-months after the Wegovy launch. So it's just to say that we are now at the, as Karsten said, close to 40%. It started one and a half year about around 17%. And in the middle of around the Wegovy launch just below 30% or more around 28%, 29%. So it's just to say, if you look at those deltas, this of course doesn't give us the full answer, but these are new to treatment patients on Ozempic. And so there is an increase in the trend, but not a significant increase in that trend. What we're trying to say before was that all along Ozempic started with having a lot of GLP-1 source of business, and then it moved gradually to less and less of that. So it's natural that moves early and early in the treatment cascade because the guidelines is now also recommending that.
Karsten Munk Knudsen: Good. And then a simple answer to a simple question on Catalent. So we would not say that that we plan to resupply the U.S. market in December in case there was major uncertainty based on our perception of the ongoing regulatory or quality process. So, I don't think it â itâs any value to get into more speculative around regulatory sections and so on. This is based on our best assessment of the situation, and I don't think we can give more on then.
Sachin Jain: Can I take one follow of, Camilla? So that increase in NRx starts of naïve from mid teens and that you said 17 to 40, I understood that correctly. How much does that's translated into total TRx? So what percentage of TRx do you think is naïve to therapy post we go as an increase relative to four that you would say this is a percentage of existing Wegovy business that we're not quite sure why it's there in may switch?
Camilla Sylvest: Yes. I wouldn't know exactly, how that translated. It's quite difficult to get into that. But of course, if you look at the graphics that we showed before, you will see that the number of patient has increased significantly just due to the underlying market growth. Whenever there's a new launch into the segment, we've seen and you've been following this for many years, ever since Victoza, Trulicity, Ozempic and now to semaglutide launch keeps growing the underlying market. So of course, this translation from NBRx to TRx is a bit of a over time, it's difficult to compare directly. I think, I won't speak a later on that from here.
Karsten Munk Knudsen: Thank you, Camilla. Then it's Simon.
Simon Baker: Thank you. Simon Baker from Redburn. Two questions. Looking, firstly looking forward, we've obviously had quite a big development this year in Alzheimer's. So, I just wanted to get your perspectives on the impact of lecanemab on Alzheimer's. More from the point of view of, given the reaction to that data, has it changed what you feel you need to do with semaglutide in Alzheimer's? And related to that, is there any preclinical data on combinations of anti-amyloid and GLP-1. And then sticking with the pipeline on CagriSema. We can't, the data looks really impressive. We can't quite see from the slide because we no confidence intervals. So is it additive or is it genuinely synergistic? And if the latter, what's the reason? Thanks so much.
Karsten Munk Knudsen: Martin?
Martin Holst Lange: So specifically on Alzheimerâs, I think the recent development has made us even more sort of enthusiastic of what we have on our hands. Itâs increasing the awareness of potential treatment in this space. Obviously, we have to see, donât misunderstand me. Regulatory approval of what comes next. The data so far looks good. But they also have to be able to stand to regulatory scrutiny. I see this sort of, as we just discussed with obesity. I mean, thereâs no real treatment out there as we speak. So, being more than one player building, establishing the market is actually plus. We have a complementary mechanism of action to what is in other companies pipeline. And that allows us to â if we establish the efficacy part of this and we would expect to have similar efficacy to what weâve seen from other companies coming out, then with a drug that has a well-established safety profile will be a really, really attractive offering. So I think you see as more enthusiastic than ever. And we obviously full speed ahead in terms of our development. Now you have to remind me of the other two questions.
Karsten Munk Knudsen: So the second part of that was, is there any preclinical data on the combination of anti-amyloid and GLP-1? And the second one was on CagriSema. Is it additive or genuinely synergistic and if the latterâ¦
Martin Holst Lange: Right. Iâll give you two floppy answers to that one. So yes, they are preclinical data. Theyâre not published. We have them in-house and we have them both on amyloid and on top and it seems as if GLP-1 treatment has impact on central inflammation, neuroplasticity, potentially amyloid and that obviously gives us some confidence in that there is a reasonable mode of action in addition to what weâve seen in the clinical space. And then on CagriSema, as a big, big caveat in trying to doing that kind of interpretation based on 90 patients, 30 in each treatment arm. And if we just take the numbers and also look at what we call these speculative plots of the individual patients. There could be a potential for synergy. But right now, we will settle with adaptivity because that again will show superiority versus anything else out there.
Karsten Munk Knudsen: Thanks, Martin.
Simon Baker: Just a question on Ozempic supply constraints, is the constraint or is it API as well?
Karsten Munk Knudsen: Yes, so Iâll take that one. So on Ozempic supply constraints as we have seen in a number of markets and weâve issued drug shortage notification, which is something a pharma company has to issue when demand is greater than supply, itâs not that weâre not supplying, itâs just demand is greater than supply. And weâre not going into any details about where our constraints are. But again, coming back to that weâre scaling our manufacturing platforms and weâll be able to cater for the growth trajectory weâre currently on when we look forward.
Simon Baker: The guidance and the supply shortages would stop at some point in 2023, or it would continue growing at current rate?
Karsten Munk Knudsen: So, the guidance is as I said before, the current growth trajectory and then we are doing everything we can, of course on our side. It is frustrating that weâre not able to meet the patient demands and some patients will have to go with our product. So, weâre not holding back and as you see right now on Ozempic, we are growing year-to-date, weâre growing 70% in value, which means almost double up in volume. And so we are already scaling as we speak and weâll continue to do that into next year. And then whether we meet full demand in all geographies, thatâs of course also functioned about how the demand picture will look into next year, but the significant scaling also next year. Then yes, letâs go ahead.
Unidentified Analyst: for Morgan Stanley, I just wanted to get your latest thoughts on glucagon agonist, particularly given your competitors here have shown increasingly encouraging data. Thank you.
Martin Holst Lange: Yes, so we were actually also had glucagon agonist in our pipeline. And you may have seen a publication that we should recently talking to potential safety issues, specifically obviously on our agonist, but potentially also in sort of a broader class. In fact, I canât speculate to that obviously, but I mean that at least was our thinking that this could be a potential. And in that space, we will looking at reasonable efficacy. We actually saw good efficacy with our tri-agonist, but we did also see the safety issues. And then having both the GLP1, GLP, but more specifically CagriSemain our pipeline. The risk to benefit was not really in support of continuing our glucagon approach. I really have to stress we did see efficacy, it looked good. It did not look as good as CagriSema does. And therefore, our confidence is based on the fact that CagriSema appears to have the superior efficacy profile and probably also superior safety profile.
Karsten Munk Knudsen: Thanks Martin. Then we have Michael Leuchten and then Wimal, if you can get ready after Michael.
Michael Leuchten: Thank you. Two questions for Martin, please. Just on the ultra high dose Sema in the Phase 2, that's a step change in dose that's quite different from what you tried before. Just wondering where that came from to go that aggressive on the dose range? And then on CagriSema, the tolerability in the Phase 2, I think at the 60 something percent on tolerability, and I think discontinuation is up to 20%. Lilly has managed to get that down in Phase 3 just wondering what you can do in Phase 3 to get a better tolerability.
Karsten Munk Knudsen: So super questions. First of all any GI tolerability issues is a function of titration in this space? So that would go to both of your questions, specifically and going to higher doses we are actually following our normal step of more or less doubling the dose. We've shown that we can do that without introducing more tolerability issues. And based on what we know already now, we feel confident that these column step increases will not introduce more tolerability issues that what we've seen. Obviously we have to show that that's why we do the clinical trials. Our assumption is that when we get to that level if tolerability has already been built and you can going to actually do the next step without introducing more GI side effects. The other part of it is actually, and you see that from us and from our competitors; GI side effects reporting in terms of proportions and rates is more often, they are not a function of how often do you ask? How many visits do you have? And that's why you see higher rates in early development and lower rate as you progress because you have few side visits as you progress. We also become wiser on how to titrate and specifically for CagriSema, it â don't misunderstand me I don't think we should look at the actual rates because they are function on how did we â how many visits do we have in the study, but more looking to the comparison to semaglutide and liraglutide. And in that specific story we actually saw a similar rate between semaglutide AND liraglutide and therefore we are fairly confident that when we do titration right, we'll actually have a super attractive GI tolerability profile of CagriSema.
Operator: Right. Thanks Martin. Then over to you Wimal.
Wimal Kapadia: Wimal Kapadia from Bernstein. Thanks for the question. So first can I just ask on what Wegovy price please? I know Karsten, you don't like to talk about net price, so I'm going to ask anyway. Just first of all, is it fair to assume there was no copay volumes in the third quarter? And if the answer is yes, the net price looks at about 28 bucks a day. Is that a fair estimate for the net price of Wegovy; and then maybe if you could just comment on the mix between cash and commercial volumes? And then my second question one for Martin is, at obesity week this week there's been a bit of discussion around the type of weight loss. So there's a competitor drug that has shown quite a nice fat loss, but actually you saw an increase in lean mass. So I guess my question really is â and if you look at step one, I should say you saw a reduction in also lean mass. So I guess how much of this is considered by physicians today? And as we think about that increase in weight loss with CagriSema does the quality and the type of weight loss really matter to outcomes? Thank you.
Karsten Munk Knudsen: Great. Thanks Wimal. So as to net price I know you like to talk about that more than I do in â at these meetings, then, and when you look at the third quarter then what I can say is that as to our early experience program, what we call the bridge program correct, there's nothing of that in third quarter numbers, but clearly there would be copay support program so buying down copay that that will also be in the third quarter. That's a normal U.S. tactic. So as to your reflection about the net pricing you can say it's clean from the bridge program but it's impacted by copay and classic rebate structures in the U.S. And as to the cash share, its 10%. And then Martin?
Martin Holst Lange: I think you're exactly right. Healthy weight loss is, I don't want to call it the next frontier but it is certainly important. It's also important for me to call out that that when what we call lean body mass is a function of water and muscle mass. And the way that we assess it unless we are careful, it doesn't really allow you to distinguish and that also means that that when we discuss either increases in the body mass or losses of lean body mass it's not always one-to-one fat mass is fat mass. No matter how you look at it. What we always made with that was actually a modest decrease in lean body mass and substantially bigger decrease in fat mass. I think that is as good as it gets right now, but we also have a clear focus on obviously preserving as much lean body mass as we can. While obviously introducing a substantial fat mass loss, itâs too early to say what we will see with CagriSema obviously, we will look into this. I think itâs fair to say in our research effort, we are looking very much into this also. I think itâs also important going, actually back to Michaelâs question and how you titrate, how fast to introduce the weight loss. There is a risk if you do introduce a very fast and dramatic weight loss, you will lose almost 50/50 lean body mass and fat mass. So the tempered, but consistent body weight loss could potentially be healthier than a very dramatic fast weight loss. All of these factors â something that we and I think all those are looking very actively at.
Karsten Munk Knudsen: Thanks, Martin. And we have questions back here.
Emily Field: Hi, Emily Field from Barclays. Youâve talked about in the past about the inflation cap component of the IRA is being a limited negative. I was just wondering if you could run any more color or context on the expected and impact of the U.S. business.
Karsten Munk Knudsen: Yes, so the function is, as I was covering before, it is basically for the products where weâve taken this price increases on above inflation compared to the base of 1st of Jan, 2021. Those products and then you can look at our list price history. See, itâs mainly focused on our GLP-1 based products in diabetes. Those products will be exposed to an inflationary permanency, so and so to say already in the fifth quarter. Since weâve not called it out more specifically, then itâs not big enough to justify that normal. Weâve been talking about anything beyond 3% on the U.S. business. Weâve be calling out and since weâre not specifying it, then it means that it weâre below that threshold. All right, then I need a time take. One final question is anyone who hasnât asked a question then we go all the way. Sorry, this is good exercise, all the way to the other end.
Richard Parkes: Yes, itâs Richard Parkes from BNP Paribas Exane. I just wondered, could you update us on where you think we are now in terms of penetration of GLP-1 in diagnosed diabetics in the U.S. And then secondly on, I know itâs been talked about indirectly, but off-label use of Ozempic at the moment in obesity. How much real visibility have you got around how much of that is happening in the U.S. and if that visibilityâs low, how do you factor that into your planning assumptions? Obviously thereâs a lot less certainty around how long patients will stay on drug for an off-label prescription versus diabetes prescription for Ozempic? Thank you.
Karsten Munk Knudsen: I think weâll go to Camilla.
Camilla Sylvest: Yes. So today around 10%, our GLP-1 treatment is around 10% of U.S. volume and, of course in diabetes. And then and when we talk about the potential off-label use, I think we talked to it earlier, itâs difficult to estimate exactly the size of that, but we have, of course looked at the trend on the NBRx as we talked about earlier. So thatâs the closest we can get to giving you an estimate of that. There is no significant change in the trend that was already there before the launch of once weekly GLP-1 in obesity. But there is an increase in the trend, but not a significance step up. Yes.
Karsten Munk Knudsen: And then thereâs this, the modeling of the switching between Ozempic and Wegovy.
Camilla Sylvest: Yes. So, when we look at international operations, and I know youâre asking about the U.S. but when we look at international operations, you see an increase of 73% in Saxenda and you also see a very steep increase in Ozempic save. So you have those two products in parallel growing significantly. And of course, thatâs not, thatâs the best sort of one to one picture we can imagine. What would also happen when we now start to supply, Wegovy in the U.S. we are supplying Saxenda now that also, so the obesity franchise growth also in the 70s in the U.S. as of now, while we also see a continued growth of Ozempic that Karsten mentioned also 70%. So those two franchises are able to actually coexist at very high growth rates because the underlying demand is very, very big. More than 700 million people living with obesity in the world and more than 500 million living with diabetes. And we are all together treating, including insulinâs, just around 35 million patients right? So itâs fair to say that thereâs still unexplored potential for better treatment for patients.
Karsten Munk Knudsen: Thanks, Camilla. I think that was the perfect way to, to end on a high note. Lots of potential for treating patients without the advance in many years to come. So thank you for attending the Novo Nordisk Q3 launch meeting in London, and thanks to Keyur Parekh and Goldman Sachs for hosting this fantastic result at a fantastic venue. And looking forward to see you all, if not before then 1st of February when we come with our full year results and 2023 guidance. Thank you.
Martin Holst Lange: Thank you.
