Novo Nordisk A S (NVO) Q2 2024 earnings call transcript

Welcome to this NOVO NORDISK earnings call for the first six months of 2024. My name is Jakob Martin-Viborod, and I'm the Head of Investor Relations at NOVO NORDISK. With me today, I have CEO of NOVO NORDISK, Lars Froegård Jørgensen, Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Sylvest, Executive Vice President and Head of North America Operations, Doug Lange, Executive Vice President and Head of Development, Martin Holz Lange, and finally, Chief Financial Officer, Karsten Bunkklusen. All speakers will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, novenordis. com. Please note that this call is being webcasted live, and a recording will be made available on our website as well.

The call is scheduled to last one hour. Please turn to the next slide. The presentation is structured as outlined on slide 2. Please note that all sales and operating profit growth statements will be at constant exchange rates unless otherwise specified. Please turn to the next slide. We need to advise you that this call will contain forward-looking statements. These are subject to risk and uncertainty that could cause actual results to differ materially from expectations. For further information on the risk factors, please see the company announcement for the first six months of 2024, as well as the slides prepared for this presentation.

With that, over to you, Lars, for an update on our strategic aspirations.

Thank you, Jakob. Please turn to the next slide. In the first six months, we delivered 25% sales growth and 19% operating profit growth, both at constant exchange rates. The operating profit growth was impacted by the impairment loss related to orthodurinone.

We'd like to start this call by going through the performance highlights across our strategic aspirations before handing over the word to my colleagues. Starting with our focus on purpose and sustainability, we are now serving more than 42 million patients with our diabetes and obesity treatments. Our total carbon emissions rose by 31% as compared to the first six months of 2023.

This was primarily driven by our increased investments in capital expenditure to meet the high demand for our products. To uphold our commitment to being a sustainable employer, we expanded the number of women in senior leadership positions to 41%, compared to 40% in the first six months of 2023. Across all leadership positions, 46% are held by women. Within R&D, we had a number of exciting readouts this quarter, including the positive MyMate Phase 3 results. Martin will come back to this and our overall R&D milestones later. The quarterly sales growth reflects solid commercial execution across both operating units.

The performance in the first six months has enabled us to raise our outlook for the full year. Camilla and Doug will go through the details later. Carlton will go through the financials, but I am very pleased with our performance in the first six months of 2024.

With that, I will give the word to Camilla for an update on commercial execution. And please turn to the next slide.

In the first six months of 2024, our total sales increased by 25% at constant exchange rates. The sales growth was driven by both operating units, with North America operations growing 36%, and international operations growing 11%. In the U. S. , sales growth was positively impacted by gross-to-net sales adjustments related to prior years. Our GLP-1 sales increased in diabetes by 32%, driven by North America operations growing 39%, and international operations growing 20%. Insulin sales increased by 10%, driven by North America operations growing 36%, and international operations growing 3%. Obesity care sales increased 37%, driven by North America growing 35%, and international In international operations, we continue to roll out VGOVI gradually with volume cap launches to balance supply and demand.

In both geographies, growth was driven by VGOVI, partly offset by declining sex center sales as the market is moving towards once weekly treatments, where the C sales decreased by 3%. Please turn to the next slide. With 25% sales growth in diabetes care, we are growing faster than the total diabetes market. As a result, our global diabetes value market share increased to 34.1%. This is above our strategic aspiration of reaching one-third of the global diabetes value market in 2025.

The increase reflects market share gains in both North America operations and international operations. Please turn to the next slide. In international operations, diabetes care sales increased by 11% in the first six months of 2024, which was primarily driven by GLP-1 sales growing 20%. NOVO NORDISK is the market leader in international operations with a GLP-1 value market share of 69%.

OSEMPIC continues its GLP-1 market leadership with 46.6% market share. We are also pleased to see Rebels is increasing its market share to more than 16%, driven by solid uptake across geographies. And with that, I will hand over to Doug.

Thank you, Camilla. Please turn to the next slide. Sales in North America is driven by market share gains and healthy prescription volume growth of the GLP-1 class above 10% in the second quarter this year compared to the second quarter last year. Sales of GLP-1 diabetes care products in the U. S. increased by 42% at constant exchange rates.

The sales increase was mainly driven by a continued uptake of Ozempic. Measured on total prescriptions, NOVO NORDIS expands its market leadership, now with around 56% market share. Note that the sales growth of Ozempic was negatively impacted by periodic supply constraints in the beginning of the year. Please go to the next slide. To safeguard continuity of care for Wagovi, we reduced the supply of the lower dose strengths in May of 2023, which continued throughout the remainder of last year.

In the beginning of this year, we gradually started increasing the supply of the lower dose strengths, and I am pleased to see that this has been reflected in prescriptions, and we are now seeing more than double the number of prescriptions in the market compared to the beginning of the year. Further, while demand is still expected to exceed supply, we grow more confident in our ability to supply. We will continue to dynamically manage supply, but only the initiation dose strength of 0.25 milligrams. WGOVI still has broad market access with coverage for more than 50 million people with obesity. And importantly, around 10 million vulnerable people with obesity now have access to WGOVI through channels such as Medicaid, which is now available in more than 20 states.

Ultimately, our focus is to reach more patients living with obesity. And as volumes go up, prices will come down. In the first six months of 2024, sales growth was driven by increased volumes partially countered by lower realized prices. Next slide, please. Our rare disease sales decreased by 3%. Sales in international operations declined by 14%. This was partly offset by a 13% sales increase in North America operations, reflecting the Sagroya launch and positive growth to net adjustments related to prior years in the U. S. Rare blood disorder sales decreased by 2%, driven by lower NOVO 7 and hemophilia A sales. This was partially countered by increased hemophilia B sales.

Rare endocrine disorder sales decreased by 8%. We are working on reestablishing full supply capacity of rare endocrine disorder products following a reduction of manufacturing output. Now, over to you, Martin, for an update on R&D.

Thank you, Doug. Please turn to the next slide. I'm very pleased to share the results of the Frontier 2 Phase 3 trial with my mate, which we provided headline results for back in May. The full dataset was also disclosed at the ISTH in June.

Before I walk you through the results, I would like to briefly remind you of the innovative clinical trial design. Frontier II was a pivotal, phase-free, 26-week, open-label, randomized, controlled, and multi-armed trial. The trial investigated the efficacy and safety of once-weekly and once-monthly subcutaneous mi-made versus no previous prophylaxis treatment or on-demand treatment and versus prior coagulation factor prophylaxis treatment. 254 people aged 12 years and older with hemophilia A with or without inhibitors were included in the trial.

The co-primary endpoint was mean annualized bleeding rate for treated bleeds for both once-weekly and once-monthly MiMADE versus on-demand treatment and versus prior coagulation factor prophylaxis treatment. Please turn to the next slide. Overall, in Frontier 2, mymades demonstrated superiority of mymade prophylaxis with both weekly and monthly doses. In the on-demand treatment population, mymade demonstrated superior reductions of 97 and 99% in estimated mean annualized bleeding rate for once-weekly and once-monthly treatment respectively. This was compared to those receiving continued on-demand treatment.

In the intrapatient comparison, in people with prior coagulation factor prophylaxis, MIMEN demonstrated superior reductions of 48 and 43% in estimated mean annual bleeding rates for once-weekly and once-monthly treatment respectively. Of note, in the population with prior on-demand treatment, 86 and 95% of people receiving once-weekly and once-monthly mymate treatment respectively experience zero treated bleeds. In the population with prior coagulation factor prophylaxis, 66% and 65% of people receiving once-weekly and once-monthly mymate respectively had zero bleeds. In the trial, MyMate appeared to have a safe and well-tolerated profile with no thromboembolic events observed and no evidence of neutralizing anti-MyMate antibodies. Further, only 5 to 12% of patients experience injection site reactions across all five treatment arms. In conclusion, we are very excited about the Frontier 2 results.

Within the differing needs of people living with Haemophilia A at once weekly or a once monthly dosing provides optionality and flexibility for people living with Haemophilia A with and without inhibitors. We now expect to file for first regulatory approval of MiMED during the first half of 2025. Next slide, please. Coming to diabetes, I would also like to share the results from the COMBINE-1 trial, which investigated the use of once-weekly icosema, a combination of once-weekly insulin icosema and once-weekly semaglutide in people with type 2 diabetes. The objective of the 52-week trial was to assess the efficacy and safety of switching to once-weekly ICOSEMA compared to once-weekly insulin ICODEC alone in people with type 2 diabetes inadequately controlled on a daily basal insulin with or without oral antidiabetic drugs.

The trial achieved its primary endpoint with ICOSEMA demonstrating superiority in reducing A1C at week 52 with one sweetly ICOSEMA compared with insulin ICOTEC. From an overall HbA1C baseline of 8.2%, ICOSEMA achieved an estimated reduction in A1C of 1.6 percentage points compared to 0.9 percentage points for insulin ICOTEC. People in the trial had a baseline body weight of 84.5 kg. Free treatment with IcoSema achieved a superior change in body weight with a weight loss of 3.7 kg compared with a 1.9 kg weight gain with Insulin IcoDeck. The estimated treatment difference was 5.6 kg. In the trial, the rate of clinically significant or severe hypoglycemia was statistically significantly lower with icosemma at 0.14 events per patient years of exposure versus 0.63 events per patient year of exposure with once weekly insulin icodec.

In the trial, once weekly icosemma appeared to have a safe and well-tolerated profile. Now that the third and last pivotal phase 3 trial is completed, we expect to file for regulatory approval of ICO-SEMER during the second half of 2024. Next slide, please. Now I would like to highlight some of the additional exciting R&D news, including trial readouts and initiations anticipated for the rest of the year. Within diabetes, insulin ICODEK under the brand name of a weekly has been approved in multiple countries. In the US, however, we are disappointed to have received a complete response letter from the FDA for insulin ICODEK. The letter outlined requests related to the manufacturing process and the type 1 diabetes indication before the application review could be completed.

We are evaluating the content of the CRL and will work closely with the FDA to fulfill the requests. We do not expect to be able to fulfill the request during 2024. In the first half of this year, the flow data were submitted as a label expansion application to the FDA in the US and to the European regulatory authorities. Submissions to regulatory authorities in Japan and China are expected in the second half of 2024. Additionally, in the second half of this year, we are expected to see the readout of the STRIDE outcomes trial with OCEMPEG 1.0 mg in peripheral artery disease. Further, we also expect readout of the SOL-cardiovascular outcomes trial with the Rebelsos 14 mg.

Both trials are expected to further strengthen the comprehensive cardiometabolic evidence that we have for semaglicide. Also in the second half of the year, we look forward to initiate a Phase 2 study for imitretin, demonstrating our commitment to continuously raising the innovation behind diabetes.

Moving to obesity care, in the second quarter, we successfully completed the OASIS-4 trial. OASIS investigated once semaglutide 25 mg for weight management in adults with obesity or overweight with one or more comorbidities The trial achieved its primary endpoint with oral semaglutide 25 mg demonstrating superiority compared to placebo with respect to change in body weight From a baseline body weight of 105 kg oral semaglutide 25 mg achieved a 13 reduction compared to 2 reduction with placebo The global launch of all-symanglutide 25 mg is contingent on portfolio prioritization and manufacturing capacity. For WIGOE, we received regulatory approval for the treatment of obesity or overweight in China, and in the EU, the EMA adopted a positive opinion for an update of the WIGOE label to reflect data from the SELECT trial.

The SELECT cardiovascular outcome trial demonstrated that WIGO has statistically significantly reduced the risk of major adverse cardiovascular events by 20% compared to placebo. The label update will also include select data showing a numerical risk reduction in cardiovascular death by 15%, a significant risk reduction of death from any cause by 19%, as well as a significant risk reduction of 18% in heart failure composite endpoints. Last for VGOE, based on interactions with the FDA, we have decided to withdraw the results from the STEP-FPEF trials for regulatory review in the US and EU to further substantiate the likelihood of getting hard endpoints into the label update. We now expect to resubmit the file in the beginning of 2025 with additional relevant data.

We remain excited about the potential of semantinatide 2.4 mg in this population, given the data that we've seen from the two completed STEP-HAT PET trials. Looking ahead, we are in the second half expecting Phase 2 trial results for Monlunaband, as well as Phase 3 results for the STEP-UP trial with semantinatide 7.2 mg around the turn of the year.

Lastly, we anticipate first phase 3 results for Redefine 1 with Cagru Sema in obesity. With all of this activity, we are confident with the progress we are making towards developing superior treatment solutions for people with obesity. Within cardiovascular and emerging therapy areas, we in June 2024 announced that the CLARIAN The NGKD phase 3 trial involving osiduronin was terminated. This was based on an interim analysis performed by an independent monitoring committee that concluded that the trial met the pre-specified futility criteria, meaning that the trial unfortunately did not meet its primary endpoint. We have initiated a randomized and placebo-controlled phase 3 cardiovascular outcomes trial called the ARTMS. The trial will assess the efficacy and safety of Siltivecumab 15 mg in an acute myocardial infarction.

Lastly, we look much forward to the phase 3 readout of the ESSENCE trial, investigating semaglutide 2.4 mg in MASH. With that, over to you, Karsten.

Thank you, Martin. Please turn to the next slide. In the first six months of 2024, our sales grew by 24% in Danish Krona and 25% at constant exchange rates, driven by both operating units. In the U. S. , sales growth was positively impacted by gross-to-net sales adjustments related to prior years. The gross margin decreased to 84.9% compared to 85.1% in 2023. The decline is mainly driven by increased costs related to ongoing capacity expansions.

This is partially countered by a positive price impact from gross-to-net adjustments related to prior years in the U. S. , in addition to positive product mix reflecting increased sales of GLP-1-based treatments. Sales and distribution costs increased by 5% in Danish krona and by 6% at constant exchange rates. The increase in sales and distribution costs is impacted by adjustments to legal provisions in the second quarter of 2023.

In North America operations, the cost increase is mainly driven by promotional activities related to Vigobi. While in international operations, the increase is mainly related to promotional activities for rebelses, as well as obesity care market development activities.

Research and development costs increased by 79% measured in Danish corona and by 78% at constant exchange rates. The increase in cost is mainly driven by increased late-stage clinical trial activity and increased early research activities, as well as the impairment related to osodyronon of 5.7 billion Danish kroner and other impairments of intangible assets. Administration costs increased by 8% measured both in Danish kroner and constant exchange rates. Operating profit increased by 18% measured in Danish krona and by 19% at constant exchange rates. Operating profit is impacted by the impairment loss related to Osadurinon of 5.7 billion Danish krona. Net financial items showed a net loss of 530 million Danish krona compared to a net gain of 96 million Danish krona last year, mainly reflecting hedging losses on the US dollar.

The effective tax rate was 20.6% in the first six months of 2024 compared to 19.9% in the first six months of 2023.

Net profit increased by 16% and diluted earnings per share increased by 17% to 10 kroner and 17 euro. Net profit is negatively impacted by the 5.7 billion Danish kroner impairment of Osudoran. Free cash flow realized in the first half of 2024 was 41.3 billion Danish krona compared to 45.5 billion in the first six months of 2023. The lower free cash flow reflects increasing capital expenditure as well as acquisition of intangible assets.

This is partially countered by net cash generated from operating X. The impairment of the intangible asset of sodorinon of 5.7 billion Danish kroner has no impact on free cash flow.

Capital expenditure for property, plant, and equipment was 18.9 billion Danish kroner compared to 10.6 billion Danish kroner in 2023. This was primarily driven by investments in additional capacity for API production and fill finish capacity for both current and future injectable and oil products. Please go to the next slide. A key priority for NOVO NORDISK is to ensure attractive allocation of capital to shareholders. For 2023 the total dividend per share increased 51.6% to 9,40 kroner. For 2024 the board of directors has decided to pay out an interim dividend of 3,50 kroner per share which will be paid out in August of this year. We have returned more than 38 billion Danish krona to shareholders through dividends and share buybacks in the first six months of 2024.

Our ongoing repurchase program for the full year amounts to up to 20 billion Danish krona, a reduction from 30 billion Danish krona allocated last year. This allocation aligns with our strategic capital allocation strategy for NOVO NORDISK. We prioritize investing in internal growth opportunities, returning capital to shareholders through dividends, and business development activities.

Finally, we look towards share-buy-back program as a flexible measure contingent on the first three priorities to distribute excess cash.

We continued the growth momentum in 2024 and have raised our sales growth outlook to between 22% and 28% at constant exchange rates. The updated sales outlook at constant exchange rates reflects higher full-year expectations for both operating units. The guidance reflects expectations for sales growth in both North America operations and international operations, mainly driven by volume growth of GL4-1-based treatments for obesity and diabetes care.

With the expectation of continued volume growth and capacity limitations at some manufacturing sites, The outlook also reflects expected continued periodic supply constraints and related drug shortage notifications across a number of products and geographies. NOVO NORDISK is investing in internal and external capacity to increase supply both short and long term. Operating profit growth outlook is now expected to be between 20 and 28 percent at constant exchange rates. The updated expectation reflects the impairment loss reflected to Osdoranon communicated in June of negative 6 percentage points. Excluding this impact, we now expect a positive 4 percentage point increase on operating profit growth expectations for the full year. This is driven by the updated increased sales outlook compared to previous expectations.

Capital expenditure is still expected to be around 45 billion Danish kroner in 2024, reflecting expansion of the global supply chain. Free cash flow is now expected to be between 59 and 69 billion Danish kroner, reflecting the sales growth, a favorable impact from rebates in the U. S. countered by investments in capital expenditure. The updated cash flow expectation mainly reflects the increased sales growth outlook. Income under the 340 program has been partially recognized. One ruling from the U. S. Court of Appeals for the Seventh Circuit remains pending and along with the DC Circuit ruling may be subject to further discretionary appellate review before the U. S. Supreme Court. Depending on the outcome of any subsequent rulings and appeals in these matters, there may be a material impact on NOVO's financial position, net sales and cash flow.

Financial impacts related to and following the expected closing of the Catalan transaction have not been included in the financial guidance. That covers the outlook for 2024. Now back to you, Lars.

Thank you, Karsten. Please turn to the final slide. We are very pleased with the sales growth in the first six months of 2024. The growth is driven by increasing demand for our G1-based diabetes and obesity treatments, and we are serving more patients than ever before. Within R&D, we are very pleased with the first Phase 3 trial results with MyMate and its potential for people living with hemophilia, as well as the recommendation for label extension for cardiovascular risk reduction for VGOVI in the EU.

With that, I'd like to hand over the word to Jakob.

Thank you, Lars. Next slide, please. With that, we're now ready for the Q&A, where I kindly ask all participants to limit her or himself to one or maximum two questions, including sub-questions. Operator, we're now ready to take the first question.

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

Yeah, thank you, Emily, and thank you, Jareb. So I would say overall, the current market structure is one where we really compete and secure success based on ability to supply. So it's not one where, say, classical commercial tactics is dominating, and you should see our commercial strategies in that perspective. You allude to the channel mix, and we also just had in our briefs that we are now expanding access in Medicaid. So we have 20 states adopting Vigovie in Medicaid. And of course, with that expansion, as we know from all drug categories, when you move into some of these channels, it comes at a lower, say, net price in these channels, which then has no all impact.

But I would say we are encouraged with, say, a stable competitive dynamics, and our focus is really on securing supply to make sure that we can serve as many patients as possible more than other, say, tougher commercial tactics.

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

Yeah, thanks, Lars, and thanks for the question, Emily. So overall, I'd start with, you know, we're pleased with the Wagovia performance, whether you look at the NBRX moving from roughly 5,000 new branded prescriptions at the beginning of the year to 35 currently, or the TRX, which moved from 100,000 beginning of the year to roughly 200,000, or doubling. We're pleased with that. We're serving more patients than ever before, as Lars mentioned earlier. And market access continues to be robust. As I had mentioned, there's over 50 million people with obesity and importantly around 10 million vulnerable patients that have access via Medicaid in around 20 states. So that's robust, and we're pleased with that. And in doing that, we're seeing that almost or above 80% of the patients are paying $25 or less.

And that is our ambition. Our goal is to grow market access. And it's fair to assume as volume goes up, prices will come down. And we have seen lower WGOVI prices in the first half. I don't want to get into specifics there, but it is in line with expectations. Our focus remains in building even stronger access for AOM treatments across all channels. And again, I'd say that we are pleased with the overall performance, and we're serving more patients than ever before.

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

Yeah and so we don believe that the 0 that was a choice we made Again as we said consistently quarter after quarter continuity of care is incredibly important to us and maybe what separates us We think it really important that patients are able to titrate through the appropriate doses So we continue to dynamically manage that but we also confident in the levels that we see with all the other dose strengths So you shouldn anticipate that 0 changing throughout this year to the question Thank you, Doug, and thank you, Emily.

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

Yeah, absolutely. So we continue to be excited about the potential for Molunoband. We don't have a lot of news yet. We expect a readout from the dedicated obesity trial in Q3 of this year and from the diabetes kidney disease trial at the end of this year. Based on our modeling, we expect around a 15% weight loss, and obviously our focus is on demonstrating that together with an attractive safety profile. But we don't have a lot of news. At this point, you have to wait a couple of months before that.

On the ESSENCE trial, you'll probably recall we sort of have a two-tier trial. The first proportion of the trial includes 800 patients, which will serve as the regulatory submission. We'll see the readout of those 800 patients this year. They will all have liver biopsies, and they will be in the AF2 to a free category. We then go to the full 1,200 patients for a heart outcomes proportion of the trial. It will basically also be patients who have liver biopsies and be in the F2 to F3 categories. But first step is to see the regulatory readout, which we will receive towards the end of the year.

Thank you, Martin, and thank you, Luis.

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

Thanks, Evan, for this question and good to connect. On Catalan, it is still our expectation that the transaction closes towards the end of 2024. We are in active dialogue with the different regulators in terms of antitrust reviews, but reiterate the closing towards We are significantly expanding our fill finish network with three additional sites on top of the sites we already have up and running, and by the way, also expanding. So our overall supply chain strategy is really one of scaling our API facilities in Kalenburg on the peptide side and in Hillelwood, Denmark, on the antibody side linked to our pipeline progression, and then scaling our filthinicides on a global scale to be able to accommodate significantly many more patients than we've been able to do so historically.

And that ties into our overall corporate strategy of being able to reach many, many more patients than we've ever done before, linked to the unmet need in the cardiometabolic space.

Thank you, Karsten. And secondly, on Molunaban expectations again for Martin.

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

Thank you, Martin, and thank you, Evan.

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

Yeah, thank you for that question, Sachin. And as noted in our release, then we are upgrading our top-line guidance by a couple of points and narrowing the guidance range also. So really supporting the fact that we are off to a really strong start in this year and see strong trends both commercially as well as supply chain wise.

So that's the backdrop for our increasing guidance. And then to the second half acceleration part of your question. Yes, that is correct, and you could say the 25% growth we have in the first half of this year benefits from the rebate adjustments we've been talking to related to the U. S. both in the first quarter and in the second quarter, as well as to an easier comparator linked to the phasing of rebates in 2023. So we delivered 25% with both Tailwind and an easy comparator, and then delivering that for the full year clearly entails an acceleration into the second half in terms of growth, despite the fact that the comparator is tougher linked to the rebate facing of last year.

And that acceleration is really a function of continued trends of what you're seeing already in the marketplace today in terms of the Vigovie penetration in the U. S. , where we doubled the number of scripts from the beginning of the year until now, weekly scripts. Also an acceleration in terms of Vigovie sales in international operations and a continuation of Sempic performance into the second half. So, underlying clear land acceleration during the second half compared to the first half.

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

Yeah, so thanks, Sajjan. So, we prefer not to get into very detailed comments on pricing because that turns into, say, a quarter-over-quarter storyline then. But I would like to say, underline what I mentioned in my opening, and also as Karst just alluded to, this is a marketplace where we compete on bringing volumes to the market. So it's not one where we feel that we are into, say, price competition. Having said that, there are different segments of the market, and we feel that it's relevant to also be present in the segments where we have the most vulnerable patients, and they are typically served by Medicaid. So we have now, as we mentioned, 20 states having adopted to be Gobi, and we all know that for any product, when you go into Medicaid, it comes at a somewhat lower price point, so that should be factored in.

So it's a stable competitive setting, and it's really for us about scaling the volumes to deliver on the access we have delivered, and we can see the demand is there. So it's about scaling to meet the demand, I would say, more than any other tactics, so to say. And as Carson just mentioned, we have the capacity to scale and accelerate, you know, serving many more patients in the second half. And I think that's the encouraging part of our release here that we upgrade to do that against a somewhat tougher comparator in the second half of the year. So I think that's a sign of strong momentum and also execution from a supply chain point of view.

I don't have detailed insight into that, and I'm not sure we can comment specifically on that. So if I can give one data point. So we have Medicaid coverage into the tune of 20 states. How exactly the volumes are going to fall out in the second half between Medicaid and commercial, The general, of course, is very speculative, but we have actually a very strong Medicaid-based access of 20 states and around 10 million people with obesity covered that way around.

Thank you Lars, thank you Karsten, and thank you Sachin.

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

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

So I don't want to get into predictions at 1-0 cross.

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

Yeah, so talking about ex-US and scaling there, then first of all, I'd just like to allude to the performance in international operations where Rebelsis, Our ultimacritide is doing really well in the first half, growing 66%, so actually contributing as much as OSEMPIC in international operations. And then looking at IO between the first half and second half, then clearly our ambition and what's implied in guidance is an acceleration from the 11% we delivered in the first half. And that acceleration will come from the SEMA franchise. But as you see, we have now launched in 12 markets with Vigovi in international operations.

So clearly, you should also expect to see some pickup there driving higher sales growth in the second half in IO.

Thank you, Carsten, and thank you, Richard, for those two questions.

Thank you, Pete. On the first one, on Vigobi State Time, I'll give that to you, Doug.

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

And over to Carsten on 340B. Thanks, Pete, for that comment. First of all, I'd just like to refer also to our company announcement and the update on 340B that we included on the legal matters there. And I would say the only new item compared to when we discussed in connection with Q1 is that there's one additional ruling that has come out in this case complex, which is a DC circuit ruling, which ruled similarly to the ruling we had in our case. So all supporting our case, but we still have one key ruling outstanding in the Seventh Circuit.

And then as to our accounting, I don't remember us discussing it being conservative. I remember us discussing it being prudent and aligned to the accounting standards of revenue recognition, Where revenue recognition has to be highly probable in order to book it as revenue. So that's how we do it. But we also call out that there is a scenario that could have a material impact on our financial position.

And that's what we call out in our announcement. And then let's see how the Seventh Circuit rules and what level of appeals we'll be looking at in the coming months. It could be any day that could be news, but I don't know anything further as of today.

Thank you. Thank you, Kastner. And thank you, Pete, as well.

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

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

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

Yeah, so specifically in the clinical space, we've been testing obviously generation 1, 2, and 3, as you know, and in the research space, we continue to evolve this. Goes without saying, we'll not take any new generation into the clinic unless we see a potential for step change in terms of viability, and this is an ongoing journey and an ongoing effort for us. With respect to the dosing restrictions, we actually don't see them as limitations, but I also have to say we don't see a potential of removing those limitations anytime soon.

Thank you, Martin. And just a reminder in the company announcement, James, you will also see the approval in EMA of the new doses related to all tabaculatides slash repelsis in the EU. Thanks a lot, Martin, and thanks a lot, James.

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

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

Michael, to read through.

Thank you, Doug. And for the second question on Kagrisema and capacity, over to you, Karsten.

Yeah. Hi, Manuel. Thank you for the question. For Kagrisema and supply chain strategy, then of course we learned a lot from Vigobi, and we have full speed in terms of scaling our capacities linked to Kagrisema. It is a dual chamber device, so scalability is different compared to multi-use devices that we have in other parts of our portfolio.

But we are rapidly scaling the Kegosema device. We are exploring a co-formulation also to improve scalability. It's not without risk, and that's why I say we're exploring the opportunity to do so. And then bear in mind, behind CACROSIMA in our pipeline, we have emicretin in a subcutaneous version, which we report out in the first quarter of next year, which is another offering together with the step up. And then as my last comment, I would say, given the clinical profile of semaglutide, we believe that we will be selling semaglutide for many, many years to come, and we are building the infrastructure to compete on that at a global scale for many years to come.

Thank you, Karsten, and also thanks for the questions.

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

Yes, absolutely. So I just want to iterate, I think we all along stated that the once monthly GLP-1 GIP study that we conducted was an exploratory study, more assessing the concept of a once monthly technology than the actual GLP-1 GIP component. And it was exploratory, and while we definitely can use the data, the current profile was not something that we would take into further clinical development. So basically, we still have this focus. We do see once monthly as convenience more than anything else. Our primary focus is efficacy and safety. And as we already discussed there, we have a very competitive pipeline and portfolio. But we will maintain this focus with either the next generation of this technology or alternative technologies.

Specifically on iCODEC, we are in ongoing dialogue with the FDA, so I don't want to speculate too much. But obviously part of this is a potential cover out of the type 1 diabetes. You should not see this impact the ICOSEMBA dialogue.

Thank you, Martin. And also thank you, Simon, for those two questions.

Thank you, Mark. And both of those two to you, Martin. Firstly, semaglutide in HFPEF, and secondly, within Iversargo, the INV3447.

Yeah, thank you very much, Mark, for those questions. First of all, on HFPEF, as you recall, we conducted two dedicated HFPEF trials in patients with established HFPEF, one in diabetes and one in patients without diabetes but with obesity. When we do the meta-analysis of the two trials, we see a 69% decrease in risk of CV death or hospitalization for heart failure, so absolutely very strong data and something that has encouraged us a lot. This was also why the FDA granted us breakthrough destination. As we discussed last quarter, we had fairly few events in these two reasonably small studies, and through our dialogue with the FDA, it was very clear that if we could sort of increase the volume of events to further substantiate this, the likelihood of getting hard endpoints into the U. S. label would increase.

Given that we have had and will have some strong readouts in the not so distant future, it was a reasonably easy decision to say we can accept a small delay and then increase our likelihood of getting hard endpoints into the label as compared to the more functional test. So we saw that as a really good bargain.

On monolunaband, second generation is still early days. There is a potential for a longer half-life, so a potential for less frequent than one's daily dosing, which is obviously attractive, and further, a potential for even less brain penetration. Again, we are quite confident with the safety profile of Monolunaband, but again, if second generation could have an even lower likelihood of potential adverse events, that would be attractive.

I don't think you will see anything surpass our progress of Monolunaband. We see this as a really, really strong lifecycle management opportunity.

Thank you, Martin. Thank you, Mark.

Before we close the call, I'd like to hand it over to you, Lars, for any final remarks.

Thank you, Jakob. I hope it comes across that we are very pleased with the momentum in our business, in particular our GLP-1 business in diabetes and obesity, not least the strong growth for Vigobi script trends in the U. S. , which is really fueling the upgrade we have communicated today, Thank you.