Novo Nordisk A S (NVO) Q2 2022 earnings call transcript

Welcome to this NOVO NORDISK earnings call for the first six months of 2022 and the outlook for the year. This call follows the early announcement and race guidance published today.

Due to Danish securities regulation, we advanced the release that was originally scheduled for tomorrow morning. My name is Lars Ruegaard-Jorgensen, and I'm the CEO of NOVO NORDISK. With me today, I have Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Silvest, Executive Vice President and Head of North America Operations, Doug Lange, Executive Vice President and Head of Development, Martin Holst Lange, and finally, Chief Financial Officer, Karsten Monk-Knudsen.

All of us will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, no-nordis. com. Please note that this call is being webcasted live and the recording will be made available on our website as well. This call is scheduled to last for 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. The Q&A session will begin in about 25 minutes. Please turn to slide 3. As always, I need to advise you that this call will contain forward-looking statements. Such are subject to risk and uncertainty that could cause actual results to differ maturely from expectations.

For further information on the risk factors, please see the company announcement for the first six months of 2022, as well as the slides prepared for this presentation. Please turn to the next slide.

In the first six months of 2022, we delivered double-digit sales and operating profit growth, which has enabled us to raise our outlook for the full year. I would like to start this call by going through the performance highlights across our strategic aspirations before handing over the word to my colleagues.

Within purpose and sustainability, we continue to make progress across all dimensions. Under our defeat diabetes strategy, we reached even more diabetes patients compared to the same period last year. In line with our aspiration to be a sustainable employer, we expanded the number of women in Senior leadership positions to 38% compared to 35% by the end of the second quarter of 2021. Concerning Russia's invasion of Ukraine, our priorities remain to safeguard employees and continue the supply of essential medicines. Monoist medicines are available in more than 90% of Ukraine, and we are collaborating with humanitarian organizations to make products available in the remaining areas. Within R&D, we are encouraged by the completion of five of the six phase three trials with once weekly insulin ICODEC.

The ONWARTS trial has shown that ICODEC has the potential to improve glycemic control with greater convenience and reduce treatment burden for people needing insulin treatment. The full ONWARTS program is an important step in support of our aspiration of further raising the innovation bar for diabetes treatment and our commitment to insulin innovation. Martin will come back to this and our overall R&D milestones later in this call. In the first six months of 2022, we delivered double-digited sales growth, reflecting solid commercial execution across geographies and our therapy areas. While both operating units contributed to sales growth, we saw particularly strong sales growth in North America, driven by accelerated demand for our GP1 treatments, We have a couple of questions about the financial details, but I'm very pleased with a sales growth of 16% and operating profit growth of 14% in the first six months of 2022.

With that, I give the word to Camilla for an update on commercial execution.

Thank you, Lance, and please turn to the next slide. In the first six months of 2022, our total sales increased by 16%. The sales increase was driven by both operating units with international operations growing 10% and North America operations growing by 24%. Our GFP1 sales increased 45%, driven by North America growing 41%, and international operations growing 53%. Insulin sales decreased by 8% driven by a 5% decline in international operations and an 18% sales decline in North America operations. The U. S. insulin sales declined by 19% driven by lower realized prices and a decline in volume. In line with expectations, insulin sales in international operations were impacted by the implementation of volume-based procurement in China as of May 22.

Obesity care sales grew 84% overall. In international operations, Saxenda sales grew 60%, and in North America operations, obesity care sales grew 102%. In the U. S. , obesity care sales grew 110%, driven by the Gobi. Total rare disease sales were flat, driven by a 1% sales increase in international operations, offset by a 1% decline in North America operations. Please turn to slide 6. Our 15% sales growth within diabetes care is faster than the overall diabetes market. That means we have improved our market share by 1.5 percentage points to now 31% and that we continue to be on track to reach one-third of the diabetes value market by 2025. The increase reflects GLP-1 growth of 45% and market share gains in both operating units.

Please turn to the next slide. In international operations, diabetes care sales increased by 10% in the first six months of 2022, driven by GLP-1 sales that grew by 53%, and especially by OTHEMPIC. NOVO NORDISK remains the market leader in international operations with a GLP-1 value market share of 61.3%. This is driven by share gains across geographies, and I'm happy to share that USEMPIC has become the GLP-1 market leader in international operations with a 39% market share. In region China, the 83% sales growth of the GLP-1 products was driven by the update of USEMPIC following the launch in June 2021 and the inclusion on the national reimbursement list as of January 1, 2022.

And with that, I will hand over the word to Doug.

Thank you for that update, Camilla. Please turn to the next slide. The U. S. GLP-1 market volume grew by more than 35%, comparing Q2 of 2022 to Q2 of 2021, with once-weekly injectable GLP-1s and Rebelsis as the main drivers. From an NBRX perspective, we have seen a step up in volume growth in 2021 that has accelerated further since the beginning of 2022. Measured on total prescriptions, NOVO NORDISK has expanded its market leadership to 56.4% market share.

In other words, we continue to take share in a fast-growing market. Additionally, we are thrilled that Ozembeck has now surpassed dual advertise, taking the lead in the TRX market with a 40.7 market share. The global rollout of Revealthis is progressing, having now been launched in 39 countries. It remains one of the key contributors to growth in NOVO NORDISK. Please go to the next slide. Obesity care sales increased by 84%, with 102% growth in North America operations and 60% growth in international operations. Furthermore, the obesity market expansion continues with a volume growth of the global branded obesity market of more than 60%. We are encouraged by the performance of sex-tenda in international operations. That was especially driven by the EMEA region that grew 78% in the first half of 2022.

The growth was especially strong in countries that had some level of reimbursement, such as the UK and Norway. In the U. S. alone, obesity care sales grew 110%. Following the previously announced Logovi supply issues in the U. S. , our focus remains to ensure continuity of care in the patients that have already initiated treatment. In line with expectations, this has negatively impacted Logovi prescription trends.

Positively, sex end of trends have picked up and are now at all-time high levels. Regarding WGOVI supply, commercial production at the CMO was reinitiated in the second quarter of 2022, and inventory building is ongoing. We expect to make all doses of WGOVI available in the U. S. toward the end of the year. Now, Camilla, back over to you for an update on rare disease.

Thank you, Doc. And our rare disease sales were unchanged in the first six months of 2022. This was driven by a 1% sales growth in international operations, offset by a 1% decline in North America operations. Rare blood disorders grew by 3%, driven by NOVO 7, as well as its launch products Esporoct and Rafixia. Specifically, hemophilia A products grew by 1%, hemophilia B sales by 6%, and NOVO 7 by 3%. Rare endocrine disorder sales declined by 5%, the declining sales were driven by international operations, The sales decline was negatively impacted by lower realized prices in the US and timing of shipments. And now over to you, Martin, for an update on R&D.

Thank you, Camilla. Please turn to the next slide. For the past month, it has been exciting to share the results from the five trials in the ONGOTS program for once-weekly insulin ICODEK. I would like to spend some time just summarizing the results that we've seen so far. Now, ONWOTS 1 and 2 established that insulin icodec appears to have some of the best insulin data that we've seen with superiority on HbA1c control as compared to both insulin glasium and insulin declatec respectively. This was no significant risk of hypoglycemia, and at the same time, an improved quality of life. We are very excited to see the results from ONWARDS 1 and 2 confirmed in ONWARDS 3. ONWARDS 3 was a double-blind, double-dummy, 26-week trial comparing once-weekly insulin ICODEC with once-weekly insulin DECLODEC.

The objective of the trial was to assess the efficacy and safety of insulin ICODEK in 588 insulin-naive people with type 2 diabetes. The trial achieved its primary endpoint of demonstrating non-inferiority in reducing A1c at week 26 with insulin ICODEK as compared with insulin DECODEK. From an overall baseline A1C of 8.5 percentage points, once weekly insulin icodic achieved a superior reduction in estimated A1C of 1.57 percentage points compared to 1.36 percentage points for insulin decodic.

Thus, again, demonstrating superiority with an estimated treatment difference of 0.21 percentage points. Also in this trial, there was no statistically significant difference in estimated rates of severe or clinically significant hypoglycemia, and once weekly, insulin ICOVEG appeared to have a safe and well-tolerated program.

With the ONWARTS program being a truly global program, I'm also excited that ONWARTS really will cater for a potential Chinese approval. As already discussed in NOVO 6, we met the primary endpoint of demonstrating noninferiority in reducing A1c with insulin ICODEC compared to insulin DECDEC in people with type 1 diabetes. We do, however, also recognize that managing type 1 diabetes is complex and that we still have work to do on the hypoglycemia risk.

Finally, as also shown at this year's ADA, it's important to call out that the risk of hypoglycemia was similar for once-weekly insulin icodec and daily insulin enlargen in people with type 2 diabetes, as shown in a dedicated hypoglycemia trial, thus underlining the safety profile of insulin icodec.

Now let's take a closer look at ONWARTS 4. Next slide, please. Onwards 4 was a 26-week efficacy and safety trial comparing one's weekly insulin iacodact to one's daily insulin glaring, both in combination with insulin aspart. The trial included 582 people with type 2 diabetes on a basal bonus regimen. The primary objective of the trial was to demonstrate a non-inferiority of insulin ICODEK versus insulin LATIN in reducing A1C at week 26. This treat-to-tire trial achieved its primary endpoint by demonstrating non-inferiority in reducing A1C at week 26 with insulin ICODEK as compared to insulin LATIN. But from an overall baseline A1C of 8.3 percentage points, once weekly insulin ICODEG achieved a reduction in estimated A1C of 1.16 percentage points compared to 1.18 for insulin glatin, with an overall estimated treatment difference of 0.02.

In addition, we observed similar rates of severe and clinically significant hyperglycemia, and in the trial, once-weekly insulin icodic appeared to have a safe and well-tolerated profile. In conclusion, we remain very excited about the attractive profile of once-weekly insulin icodic based on the results from the ONWAR trials that have read out to date. These have underlined the icodic's potential as an ideal starter insulin for people with type 2 diabetes.

Further, also as an attractive option in combination with mealtime insulin, as shown in ONROS 4, thus covering the full spectrum of type 2 diabetes. We look forward to sharing the results from the final trial ONROS 5 during the second half of 2022. Next slide, please.

Now turning to the SELECT trial and the interim analysis. As a reminder, Select is a double-blinded, randomized placebo-controlled trial in patients with overweight and obesity and established cardiovascular disease. Previously stated, the Independent Data Monitoring Committee will be evaluating an interim analysis of the trial during Q3 of this year, with the potential for terminating the trial earlier than planned. The interim analysis has now been conducted, and based on that, the recommendation received from the Independent Data Monitoring Committee, we have decided to continue the SELECT trial. It important to remind you that NOVO NORDISK has not seen the data As an additional reminder the SELECT trial is powered for 17 This is the trial design and given the cardiovascular reduction seen in Pioneer 6 as well as sustained sex both trials in type 2 diabetic populations we remain confident about the semaglotype and what a semaglotype can do for people in obesity The SELECT trial is now expected to complete in the middle of 2023.

Next slide, please. Let's turn to the high-level RNG milestones. We've already touched upon the ONWAT program and SELECT, so now I would like to highlight some of the other trial readouts and initiations across our therapy areas during the course of 2022. Within diabetes, we expect results from the exploratory phase 2 trials with Cacosem for people with type 2 diabetes during the third quarter of 2022. In addition, we also expect to start a phase 2 trial in the same quarter to explore the potential of higher doses of injectable semaglutide for the treatment of type 2 diabetes. Within obesity, we have initiated a Phase I trial with once daily oral amicretin, a combination of amylin and GL2-1 analogs, and expect to start Phase III with cacrosemid during the fourth quarter of 2022.

Within RADITES, we've initiated a Phase II trial with NDEG, previously known as Eclipse, in 84 adults with sickle cell disease. I am also very excited about the recent U. S. approval of once-weekly repinine prophylaxis for people with hemophilia B. Furthermore, the results from the primary analysis of the BROS 7 with concisumab were presented at the ISTH Congress in London recently, and we expect to submit concisumab for regulatory approval in the hemohibogen segment during the third quarter of 2022.

Finally, with another serious chronic diseases, we have initiated a phase 2 trial with the anti-amyloid immunotherapy acid we acquired from Procena in 2021. The trial includes 99 people with a rare heart disease, transtriurethin amyloid-carter myopathy.

With that, over to you, Karsten.

Thank you, Martin. Please turn to the next slide. In the first six months of 2022, our sales grew by 25% in Danish Krona and 16% at constant exchange rates, driven by both operating units. The gross margin increased to 84.4% compared to 83% in 2021, driven by a positive product mix due to increased GLT-1 sales, a positive currency impact of 1.4 percentage points, and productivity improvements. These effects are countered by lower realized prices in the US. Sales and distribution costs increased by 29% in Danish krona and 22% at constant exchange rates. The increase is driven by launch activities and promotional spend for Rebelsos and OSMPIC, as well as market development activities for obesity. The cost increase is also reflecting low activity levels in 2021 due to COVID-19, as well as higher distribution costs.

Research and development costs increased by 31% in Danish corona and 26% at constant exchange rates. The increase is driven by higher clinical activity levels within other serious chronic diseases and GILD1, As well as the operating costs and amortizations related to the acquisition of Dyserner Pharmaceuticals in the fourth quarter of 2021.

Administration costs increased by 7% in Danish krona and 3% at constant exchange rates. Operating profit increased by 26% in Danish krona and by 14% at constant exchange rates. Net financial items for 2022 showed a loss of around 2.8 billion Danish krona compared to a gain of around 1.1 billion in 2021. This mainly relates to losses following the appreciation of the US dollar, which is also reflected in the favorable currency impact on operating profits. The effective tax rate for the first six months of 2022 was 20.7% compared to 19.8% in 2021. Net profit increased by 11% and diluted earnings per share increased by 13% to 12 kroner and 8 euro.

Free cash flow was 42.7 billion Danish kroner compared to 32.7 billion Danish kroner in 2021. Next slide please. The cash conversion in the first half of 2022 is positively impacted by timing of rebate payments in the US, including provisions related to the revised 340B distribution policy in the US. Income under the 340B program has been partially recognized. Next slide please. A key priority for NOVO NORDISK is to ensure attractive allocation of capital to shareholders. In line with our strategy, we have returned 28 billion Danish kroner to shareholders through dividends and the ongoing 24 billion kroner share by back program. For 2022, the board of directors has decided to pay out an interim dividend of 4 kroner and 25 euro per share, which will be paid out in August this year.

This is an increase of 21% compared to the 2021 interim dividends. Please turn to the next slide. We continue 2022 with a solid growth momentum and now expect the sales growth to be between 12 and 16% at constant exchange rates. This is based on a number of assumptions as described in the company announcements. The race guidance reflects expectations for sales growth in In both international operations and North America operations and across therapy areas, but it's mainly driven by diabetes and obesity care. The guidance update incorporates an accelerated NBRX volume trend within injectable GF1 in the U. S. , favorable obesity market expansion, and the expectation of making all the Gobi dose drinks available in the U. S. towards the end of the year.

Following a continued higher than expected volume growth of GF1-based products, including Osympec, the outlook also reflects expected periodic supply constraints.

We now expect that operating profit will grow between 11% and 15% at constant exchange rates. This primarily reflects a sales growth outlook and continued investment in current and future growth drivers. We are also allocating additional resources to both early and late stage R&D pipeline activities. As mentioned before, our acquisition of Dacernus Pharmaceuticals is negatively impacting operating profit growth by around 3% due to higher operating costs and amortizations of insangible assets. Given the current exchange rates, most notably strengthening of the US dollar, we now expect a positive currency impact for 2022.

Our reported sales are now expected to be 9 percentage points higher than at constant exchange rates, and operating profit growth is now expected to be 14 percentage points higher than at constant exchange rates. The positive currency impact on operating profits of 14 service points is partly offset by a net loss on financial items. For 2022, we now expect that financial items will amount to a net loss of around 5.5 billion Danish Krona, mainly reflected losses associated with foreign exchange hedging contracts. The capsule expenditure is still expected to be around 12 billion Danish kroner in 2022, which mainly relates to investments in additional API production capacity at existing manufacturing sites. Our free cash flow is now expected to be between 57 and 62 billion Danish kroner.

That covers the updated outlook for 2022. Now back to you Lars for final remarks.

Thank you, Carson. Please turn to the final slide. We are very pleased with the double-digit sales growth in the first half of 2022. In particular, the sales growth was driven by an increasing demand for our portfolio of GLB-1 treatments for diabetes and obesity care, and we continue to reach even more patients. While both operating units continue to drive growth, we did see a very strong sales growth in North America.

The strong financial performance in the first six months of 2022 has enabled us to raise our outlook for the full year. From an R&D perspective, we have now successfully completed three trials with one squeaky insulin ICODEC. I believe the results underline that we are still committed to further raising the innovation bar in diabetes. We look forward to share results from the final trial in the UNBARCH program in the second half of 2022.

With that, we are now ready for the Q&A where I kindly ask all participants to limit her or himself to one or maximum two questions. Operator, we are now ready to take the first question.

Thank you, Pete. First, Martin on the select interim.

Thanks very much, Pete. I very much agree. We're not disappointed with having to continue the trial because, as you also alluded to, you've designed the outcome trial to, at the finalized date, having a power of showing 17% difference between semanglacide and placebo on the primary endpoint on MACE. If we were to stop at the interim analysis, 17% would actually be statistically significant at those meeting the primary endpoint. But as any sponsor, we want to be very, very certain that stopping at an interim analysis is basically a very secure bet. And therefore, we had agreed with the DMT, obviously, to look at a primary endpoint point estimate substantially above And obviously, that was an upside. Our base has always been to continue the study to the end.

I think it's also important to call out if we see 17% differential between semaglutide and placebo at the end, thus 17% cardiovascular reduction, that would from a clinical perspective, a medical perspective, also from a commercial perspective, be very, very attractive.

Karsten, the 340B-related litigation and potential impact.

Yeah, so this is kind of a complicated issue, but as you know, we changed our distribution policy under the 340B program beginning in January 2021. And part of that policy change has meant that we are paying less rebates under the 340B program. So we have a positive cash flow impact compared to what we had previously. On the other hand, the benefit we have in our P&L in 2021 as well as in 2022 is limited. And recall last year we said that we have a benefit which is less than 3% of US sales, and that still holds for this year.

So a number of scenarios to play out. But I would say in terms of revenue recognition, as you also described in our company announcement on page 14 on the cash flow, We are recognizing income under the program partially, and income, according to the accounting rules, is that it has to be highly probable. So I would say in terms of an adverse ruling, I would expect limited impact on our P&L, whereas there would be a one-off impact in terms of financial resources or cash flow linked to the delta between income recognition and cash flow benefits. The exact magnitude I would not want to go into at this point in time.

Thank you, Carson, and thank you, Pete.

Thank you, Riemal. So Martin, first on the level of MACE benefits and maybe also talk to the many other benefits of these treatments.

Yeah So absolutely and obviously from a clinical from a medical perspective it goes without saying any reduction in MACE MACE being obviously myocardial infarction stroke and cardiovascular death is a positive 10% has previously been shown to be okay-ish. 12-15% has been shown to be positive. Anything beyond 12-15 and obviously beyond that is seen as a positive from a clinical perspective. I think also from a payer perspective. That being said, and obviously Camilla and Dr. may speak to that, but given the takeoff, I think it's very clear that we see a very nice reception even without the cardiovascular data, but goes without saying with the cardiovascular data that that will not be a downside, to put it like that.

I think it's important to also call out beyond cardiovascular, we look at other comorbidities of obesity in this electron. Obviously, we look at quality of life. We look at risk of developing dementia, so we have a dementia score. We look at osteoarthritis. So a number of other obesity-related comorbidities are in this electron. I may have been spoken on the dementia score. I actually think that's the sole trial, so I apologize for that. But overall, we actually also look for dementia in this specific trial as a net resident. On the Kegrysema, as we alluded to in the first quarter of this year, we took a sort of time hit in terms of initiating Kegrysema because we wanted to prioritize U. S. supply for Wigoi.

That has already been accrued, and we are still confident that we'll initiate Kegrysema in Q4 this year. So to kind of wrap up, we see a very, very strong demand for antidepressant medicine, and the market is opening up now at a time where there's no cardiovascular data. And so we are very bold on the market itself, and we also, I would say, bold on still the prospects of the CIDI-X trial. And I think that's the prior, the first question alluded to, and I think we've been quite clear about that all along, that a case where we have to continue the trial is still a very good outcome for us.

Thank you, Rima.

Thank you, Matthew.

First on what we know, and I think that's quite easy to answer, Marge. That's the easiest question, but it's also an important question because, as we also said in the presentation, basically we know nothing in terms of the data. I received a phone call saying the DMC recommends that you continue the trial, and that's basically all the interaction and all the data that I have received. In response to Pete's questions, we simply wanted to clarify for us having designed a study to be looking at a 17% differential, it's absolutely a positive thing to continue because if we should have stopped for the interim, the data on the primary input should have been substantially beyond 17%.

Again, there we are speaking in hypotheticals because we haven't seen the data.

Thank you, Martin.

On supply of GFP1, I will start by saying if you look at our GFP1 business, today, OCMPIC is the best-selling diabetes medicine in the world. In the first six months of 2022, it grew by 73%. I think we all know that we're not getting price increases. We're actually seeing modest price decreases, so the volume growth is higher. So I think that speaks its clear language that from a high base, we are significantly increasing manufacturing as we go, and we have plans that are on track to further expand volumes produced in our facilities. We have major new facilities coming in line as we speak, state-of-the-art approved facilities.

So we are on a journey of driving growth, and we're ramping up manufacturing capacity to cater for that. But it's clear that we are in a situation now where there is a very, very strong demand for our medicines. So we guided after Q1 that we would see periodic supply shortages here and there. And now we raise our guidance further while also increasing capacity. So that's also what we're facing now. But it's not that we don't have supply. We keep growing supply to meet a demand that also keeps growing. So from time to time we'll have issues in certain markets, but there are products coming in a continuous manner, and we try to manage this the best we can.

And we have capacity expansions coming in line, so we will eventually get to a state where we believe we have also excess capacity. So it's a challenging situation, but it's from a very, very positive starting point of a very strong and large platform that's showing tremendous growth.

Thank you, Matthew.

Thank you, Sachin. So interesting number of interpretations of what Pete said. Maybe we have to get Pete back on the line.

Martin, I guess there are I'm not privy to the data monitoring committee deliberations. Obviously, we have a data monitoring charter, and in that we specifically stated that in order to stop for the interim analysis and without going into numbers, it was important that we had safeguarded ourselves, and therefore specifically on the primary endpoint, we needed to be I will be substantially beyond 17%. Based on the fact that we are being recommended to continue the trial, I'm not privy to speculate what the DMC has seen, what kind of data they have seen. And that also means that we are as confident as we have ever been in terms of reaching the primary endpoint and the purpose of the SELECT trial, because basically all of our assumptions still hold true.

And our base case has always been to continue the trial until the end. Doing the interim analysis was an interesting upside. But again, I really don't like to speculate on the data that the DMT has seen because I'm simply not privy to that.

Thank you, Martin.

And let me try to address the WGOI supply. As you recall, during our Q1 release, we communicated our expectation of making all dose strength available in the U. S. during the second half of the year. And also, as Doug also just mentioned, that the CMO had reinitiated manufacturing. And we also mentioned that we had stopped supplying the too low starter doses as we experienced really, really strong demand that was hard to control, and we wanted to ensure that patients starting treatment with the goalie could stay on treatment. So what is new now is that we have experienced a bit lower ramp up versus plan and hence volumes coming from the CMO.

And that's why we now explain that we expect all those things to be available towards the end of the year, hence the couple of months delay you alluded to. And this is really because we want to make sure that we have sufficient inventory levels, not to disappoint patients and physicians, again, you can say. We'd also like to underline that in parallel with this, we are tracking well on establishing the second and the third manufacturing site for Wigobi, which will result in a significant step up in supply availability already in 2023. And as such, we remain really confident in the potential of Wigowi being a game changer in a very significant obesity market currently opening up.

And we have a lot of focus on the U. S. , but if you look at the IO data, you can really see that obesity is taking up. So, strong confidence in our ability to build capacities and also drive that into patients and into filling patient demands in the coming period.

Thank you, Sachin.

Thank you, Simon.

So let me try to talk to the U. S. healthcare reform. Obviously, we don't have a lot of details around it. We know some of the elements. We support elements that would overall improve, say, affordability for patients. And so reforms perhaps like what could be coming out of a Medicare Part D redesign that could help patients, we think are welcomed. In terms of, say, what is being labeled as renegotiation or ability to directly negotiate with the industry, We're more worried about that because it sounds more like, say, government pricing mandates. It's too early for us to speculate when it would and how it would impact us, but I would say that overall we believe that there would be rather limited impact short term, so it's It's more in a medium, longer term impact than you could be expecting.

But it's a bit difficult for us to be very precise and quantify what impact it would be.

And then, Martin, again and again on select, could there be anything about dropout rates that impacts this global brain?

Martin Blaser- It's actually a super important question, and it's something that we've been focusing on for many years. Patient dropout missing data is a scientific and regulatory headache. So therefore, we've spent the last 10 years refining our approach to outcomes trials. And one of the success parameters in doing these trials is actually to secure that we don't have dropout in either treatment arm. So we predefined a very, very small single digit percentage number that is allowed to, so to speak, drop out from trials. And so far, both in select and soul and flow and our other outcomes trials, we are very, very happy with the retention rate, including on the placebo arm. Just to give you an example that I can actually share, for example, for the entire ICOTEQ program, we are looking at retention rate in excess of 95 percent, and that's something similar that you have to imagine for this next one.

Thank you, Martin.

Thank you, Martin.

Camilla, can you maybe talk a bit to what has, you know, if anything happened over the year we've been on the market? I will now turn the call over to management for the next question. So, there is no doubt that there is, if we take the big picture, there is a big overlap between the number of people living with. And of course, having Vigovia on the market for a year has This is a report that has underlined the importance of the significance of treating people with obesity. It is also clear that many people living with diabetes, they are also suffering from overweight and obesity. So, of course, with the benefits of USEMPEG, the proven cardiovascular profile, the A1C profile, and also the weight loss profile, it's clear that this will benefit, of course, also people living with obesity.

So we've seen that whole connotation around how important it is to also treat obesity and also treat overweight. The number of people with diabetes has simply just increased. And this, of course, has been underlined. We see that effectively by the growth both in the diabetes segment and the strong unmet need in obesity and the demand for VGOVI. And I said that it's of course also important to us to just underline that we promote in each segment the benefits of the VGOV and of course of Sempik in the diabetes segment and hope to cater for each of those two groups of patients.

But basically the understanding and the perception of Tf1 in general has really taken off, and Lars was just talking to the significant growth rate that we have seen underlying the profile of the Tf1.

And maybe picking up on that and trying to address supply, you can say we see really, really strong dynamics now with Ozympic. We have Repulsus as well. We have Wigobi. And we have further combinations and all formulations as well. So it's important for us to build a medium-long-term flexible manufacturing setup that can produce all products, so to say, because, to be honest, our ability to precisely forecast which presentation and which administration of a molecule like semaglutide is delivered in can be hard. So to your point, it's a priority for us to build flexibility both in our API, but also you can say in our, say, filling setup.

And you're well aware that we have for years been investing in a significant API facility in the US, which is now coming in line. So we have a huge capability there, and obviously also out of Denmark, where we have an ongoing significant investment in building more API. And then you can say it's relatively easier and faster to scale up with different types of filling lines, be that for different types of devices.

So yes, flexibility across presentations and dosing forms is important.

And then finally, Martin, on a new trial.

Yeah, without going into too much detail, we are continuously upgrading our formulations of not only Ocempic, but also Rebelsos and other drugs. And obviously, we had to generate clinical data to support that.

Thank you, Martin.

Yes, thank you, Michael.

I spoke to our investments in API capacity, some kicking in shorter term, some kicking in medium term. And even within the API capacity we have now, we have extra, say, capacity available for next year. So we believe we have capacity to start rolling out the GOWI in the outside of U. S. countries starting significantly next year. We are already active in France, and we expect to have a couple of launches later this year. So 23 will see a broader launch plan for the Gobi in international relations. And of course, with the dynamics we see for Saxenda, that is also based on that we believe there will be significant volumes there. We have built flexibility on, say, device platform, which gives some optionality.

So back to also the question from before, it is a lot about with the dynamics we see now, which are, you know, it's massive volumes. We are expanding year over year. So the more we build flexibility, the more we can cater for these demands. But that's, you know, a pleasure to do when you see the demand we are experiencing now. So we have a lot of happy colleagues in product supply working really hard and doing a great job.

Thank you, Michael.

Thank you, Richard. I think those were two questions to you, Martin.

Yeah, I think if I'm maybe sorry about not seeing an interim analysis on TLECT, it could be because I'm not allowed to see the data. And obviously, I am, as you, curious to not only cardiovascular outcomes, but also other aspects of the trial. And specifically on the weight loss, again, I'm not privy to any data, including the weight loss. What we do know, obviously, is that we've conducted a two-year trial where we've seen a sustained weight loss over those two years with a similar weight loss as we've seen in our previous trials.

So based on what we know so far, at least a two-year semaglutide is able to maintain the weight loss accrued. On the prevention of diabetes, basically this doesn't delay anything in the sense that the regulatory requirement and potentially also the PAIR requirement is to observe patients of treatment for a specific period of time and still see a differential to the comparison. We will be able to engage in dialogue with not only regulators, but also the other ones that we have to do with the first readout, we will be able to engage in dialogue with not only regulators, but also the other ones that we have to do with the first readout. We will continue to follow up and we will do that after one and two years, up to ten years.

As soon as we have the first readout, we will be able to engage in dialogue with not only regulators, but also payers on the potential, should the data support us in that.

Thank you very much, and thank you, Richard.

Thank you, Kerry.

Again, Martin, to you. So thank you very much for the question on cat reshema. From a regulatory perspective, in diabetes, we're obviously primarily looking at glycogen control. We are also looking at weight loss, but the primary purpose is to look at glycemic control. In that space, we need to be able to show a differential between the combination therapy and the individual monocomponents.

Now, the important comparison here is obviously semagnotide, and that basically means that we need to have a statistically significant but also clinically relevant differential to semagnotide on HbA1c. So that's basically what we're looking at, and given that we have virtually no data in this space, it's also obviously important to call out that the study is exploratory, and this is specifically why we do it before we potentially initiate phase three. On the select, the answer is easy. We are now looking towards the planned finalization of the trial, and no more interim analysis will be conducted.

Thank you, Martin.

Thank you, Mark. So on resupply, you can rest assured that we are eagerly awaiting driving with Goldwy when we can make all those lengths available. I would like to refrain from getting into the specific tactics. I think we are in an institution where we are talking a lot to the details about how we run our business, and it's a very competitive space. So I hope you respect that we would prefer not to get into all the details of that. Having said that, we are very confident in the product. We know that it does a trick for both physicians and patients, and we expect that we can get back strongly when we have the products in the market.

Martin, on the high-dose SIMA trial. So in the space of diabetes, again, the purpose has to be showing primarily a differential on glycemic control and subsequently on weight loss. Increasing the doses of semaglutide is something that is interesting for us because based on data that we've seen also from the outside world, But it appears that we have not with semagrotide reached sort of the maximum effect potentially in glycemic control, potentially also on weight loss.

And we have seen other data from the outside where the ceiling appears to have been sort of reached. And therefore, it's relevant for us to see if we can achieve more with semagrotide. And doing a phase two trial, looking at both obviously safety and efficacy vis-a-vis the different doses is a proven approach and can potentially save us time and efforts in the other end.

Thank you, Martin, and thank you, Mark. This concludes our earnings call. Thank you for participating, and please feel free to reach out to our Invest Relations colleagues regarding any follow-up questions you might have. Thank you, and have a great day.