Novo Nordisk A S (NVO) Q4 2022 earnings call transcript

Welcome to this NOVO NORDISK earnings call for the full year of 2022 and the outlook for 2023. My name is Lars Fugard-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, Camila Stilvest, Executive Vice President and Head of North America Operations, Doug Lange, Executive Vice President and Head of Development, Martin Holtz Lange, and finally, Chief Financial Officer, Karsten Monknusen. 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, noanoise. com. Please note that the call is being webcasted live, and a recording will be made available on our website as well.

This 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 product growth statements will be at constant exchange rates unless otherwise specified. Please turn to slide 3. As always, I 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 maturely from expectations. For further information on the risk factors, please seek the announcement I will now turn to the next slide. In 2022, we delivered WG to sales growth and operating profit growth, and we continue to make progress on our strategic aspirations. I would like to go through the highlights before handing over the word to my colleagues.

We continue to make progress across all dimensions of purpose and sustainability. Our carbon emissions decreased by 29% compared to pre-pandemic levels in 2019, and we continue to reach even more patients and patients living with diabetes compared to last year.

In line with our aspiration of being a sustainable employer, we expanded the number of women in leadership positions to 39% compared to 36% in 2021. Within R&D, we are pleased that we now have initiated the first two Phase I trials based on the Dicerner Interference RNA Technology Platform that we acquired in 2021. Looking back at 2022, we have seen exciting trial readouts across all our therapy areas, and in 2023, we look forward to having an equally exciting year. Martin will come back to this and our We will see our overall R&D milestones later. In 2022, we delivered WGD sales growth reflecting strong 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 GDV1 treatments for both diabetes and obesity.

Camilla and Garson will go through the details per therapy area later. Garson will go through the financials, but I am very pleased with the sales growth of 16% and operating profit growth of 15% in 2022.

Lastly, I have a brief update on our strategic aspirations within financials. We have achieved the U. S. aspiration of converting 70% of sales to products launched since 2018, And IO sales growth has in the last couple of years surpassed the duration of 6 to 10% growth. Consequently, we have decided to remove these regional aspirations. Going forward, we will be focused on and committed to delivering solid sales and operating profit growth.

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

Thank you Lars, and please turn to the next slide. As last mentioned, our 16% sales growth for the full year of 2022 was driven by both operating units with North America operations growing by 21% and international operations growing 13%. The strong sales growth has unfortunately resulted in periodic supply constraints and related drug shortages notifications across a number of products and geographies. Our GLP-1 sales decreased by 42%, driven by North America, growing 36%, and international operations, growing 57%. Insulin sales decreased by 11%, driven by a 7% decline in international operations, and a 21% sales decline in North America operations. The U. S. insulin sales declined by 22%. This was driven by lower realized prices as well as a decline in volume.

Compared to 2021, the U. S. insulin volume market declined by 3%. Furthermore, insulin sales in international operations were impacted by the implementation of volume-based procurement in China starting in May 2022 and lower sales in EMEA. Obesity care sales grew by 84% overall. In international operations, sales grew by 82%, and in North America operations, obesity care sales grew 85%. In the U. S. , obesity care sales grew by 90%. Rare disease sales grew 1%, driven by a 5% sales increase in international operations, offset by a 5% decline in North America operations. Please turn to slide 6. Our 14% sales growth within diabetes care continues to be higher than the overall diabetes market. That means we have improved our market share by 1.8 percentage points to 31.9%.

We continue to be on track to reach one-third of the diabetes value market by 2025. This increase primarily reflects GLP-1 market growth as well as share gains in both operating units. Please turn to the next slide. International operations diabetes care sales increased by 10% in 2022, driven by GLP-1 sales, growing by 57%. NOVO NORDISK remains the market leader in international operations with a GLP-1 value market share of 64%. This is driven by share gains across geographies. Rufempec continues to expand its GLP-1 market share leadership in international operations with around 43% market share. While the GLP-1 class growth is more than 50%, GLP-1 penetration remains low at around 5% of total diabetes groups globally. Rebelsos sales more than doubled compared to 2021.

The growth was mainly driven by new launches and increasing volumes, making Rebelsos the second largest growth contributor in 2022 after USAMPIC. The increased momentum in international operation is driven by launches in key markets such as Japan, Italy, and Spain. 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 around 50%, comparing the fourth quarter of 2022 to the fourth quarter of 2021. The recent competitor launch in GLP-1 has supported the continued acceleration in market growth, and from an NBRX perspective, we continue to see all-time high levels of new patients starting on our portfolio of GLP-1 products during the end of 2022.

Measured on total prescriptions, NOVO NORDISK has maintained its market share leadership with a market share of more than 50%. Please go to the next slide.

Obesity care sales increased by 84%, with 85% growth in North American operations and 82% in international operations. The global branded obesity market expansion continues with a volume growth of more than 50%. We are excited that WGOVI is now launched in Denmark and Norway, the first two markets outside of the U. S. But we also remain encouraged by the performance of Saxenda in international operations.

Region EMEA is the key growth driver with 96% growth in 2022. In the U. S. , obesity care sales grew 90%, with both WGOVI and Saxenda contributing to growth. All dose strengths of LGOVI were made available in the U. S. again in December of 2022. And in only a few weeks, LGOVI prescription trends have accelerated and already reached all-time high levels.

The uptake underlines this significant unmet need for patients with obesity. Many patients have been waiting for all doses of LGOVI to be available again, which has created a pent-up demand. We are now looking forward to continuing the relaunch of LGOVI. Now back to Camilla for an update on rare disease.

Thank you, Doug. And next slide, please. Our rare disease sales increased by 1% in 2022. This was driven by a 5% sales growth in international operations, offset by a 5% decline in North America operations. Where blood disorders grew by 7% driven by NOVO 7, as well as the launch product Esporob and Refixia. Specifically, hemophilia A products grew by 6%, hemophilia B sales by 16%, and NOVO 7 by 6%. Where endocrine disorder sales declined by 6%, the declining sales were driven by international operations decreasing 1%, and by North America operations decreasing by 18%. The sales were negatively impacted by lower realized prices in the U. S. as well as supply constraints in the fourth quarter of 2022.

And now over to you, Martin, for an update on R&D.

Thank you, Camilla. Please turn to slide 11. Firstly, I'm very happy to be able to share that we have initiated two Phase I trials within NASH. This is particularly exciting because the two assets are both based on the small interfering RNA technology I will now turn the call over to management for the NORDISK A SINGLE. This is a testimony to the successful integration and fast progression of the RNA-based research and development in NOVO knowledge. As mentioned at our Capital Market Day in March of last year, our ambition is to generate an annual average of free first human doses across therapy areas based on the RNA technology over the next 10 years. Please turn to the next slide.

We are looking forward to a very exciting 2023 with many important phase 3 trial readouts across our therapy areas. I would like to briefly go through a few highlights. With N-TAP2 diabetes, we expect to see results from the phase 3 trial Pioneer Plus with once daily all semaglutide 25 and 50 mg respectively during the first half of 2023. The primary endpoint of the 68-week trial is to confirm superiority of oral semaglutide 25 and 50 mg versus oral semaglutide 14 mg on A1c reduction. The expectation is to reach an efficacy and safety profile comparable to that of Osempic. Also on diabetes, we expect to initiate the Phase III program with Kegosemma in the second half of 2023, Following the very exciting phase 2 results that we shared last year.

Furthermore, we have completed the 26-week safety extension phases for the ONWARDS 1 and 6 trials with Insulin ICODEK. The results confirm that Insulin ICODEK has the potential to be the ideal starter insulin for people with type 2 diabetes, while there are still more assessments to be done in type 1 diabetes. We expect to submit insulin I-CODEK for regulatory review in the first half of 2023. In obesity, we look forward to sharing the phase 3 results from once-daily oral to maculatide 50 mg, where our expectation is to reach a level of efficacy and safety comparable to that of OE. Pending the results, this would add to our portfolio of obesity treatments to address the significant unmet need This is a great challenge that remains for many patients with obesity.

Furthermore, we look forward to sharing the results from the ongoing SELECT cardiovascular outcomes trial in the middle of 2023. Within Rare Disease, we are looking forward to a decision from regulatory authorities on once-weekly SUGROYA for the treatment of growth hormone deficiency. We will offer a reduced treatment burden compared to daily nortotropin, and a device that is easy to use for patients.

Finally, we expect to initiate a phase 3B trial with SiltiVecumab for the treatment of heart failure with preserved ejection fraction in the first half of 2023. Altogether, we are looking forward to a very exciting year with clinical trial initiations as well as results across our therapy areas.

With that, over to you Karl.

Thank you, Martin. Please turn to the next slide. In 2022, our sales grew by 26% in Danish kroner and 16% at constant exchange rates, driven by both operating units. The gross margin increased to 83.9% compared to 83.2% in 2021, driven by a positive product mix due to increased GLP-1 sales, a positive currency impact, and productivity improvements. Lower realized prices, particularly in the US and China, partially offset these effects.

Sales and distribution costs increased by 25% in Danish Krona and 16% at constant exchange rates. The increase is driven by launch activities and promotional spend for Rebelsis and OSEMPIC, as well as market development activities for obesity. The cost increase is reflecting low activity levels in 2021 due to COVID-19 and higher distribution costs. Research and development costs increased by 35% in Danish Krona and 29% at cancer exchange rates. The increase is driven by higher clinical activity levels within other serious chronic diseases and GLP-1, We acquired Dicerna in the fourth quarter of 2021. Administration costs increased by 10% in Danish krona and 6% at constant exchange rates. Operating profit increased by 28% in Danish krona and by 15% at constant exchange rates.

Net financial items for 2022 showed a loss of around 6 billion Danish krona compared to a gain of around 0.4 billion in 2021. This mainly relates to losses following the appreciation of the US dollar as reflected in the favorable currency impact on operating profits As per the end of December 22 a positive market value of financial contracts of approximately 1 billion Danish kroner has been deferred for recognition in 2023 The effective tax rate in 22 was 19.6% compared to 19.2% in 21, mainly reflecting non-recurring impacts from acquisitions.

Net profit increased by 16% and diluted earnings per share increased by 18% to 24 krona and 44 euro. Free cash flow was 57.4 billion Danish krona compared to 29.3 billion Danish krona in 21, supporting the strategic aspiration to deliver attractive capital allocation to shareholders. The cash conversion in 22 is positively impacted by timing rebate payments in the U. S. , including provisions related to the revised 340B distribution policy in the U. S. Income under the 340B program has been partially recognized. Please go to the next slide. In 2023, we expect to increase our capital expenditure to around 25 billion Danish kroner. This is a significant step up compared to 2022 and reflects the innovation-based growth strategy that we are pursuing in NOVO NORDISK.

The increase in capsule expenditure mainly relates to investments in additional capacity for active pharmaceutical ingredient production and fill-finish capacities for both current and future injectable and oil products across therapy areas. In the coming years, the capsule expenditure to sales ratio is expected to be low double digits. The investments will gradually add capacity, flexibility, and resilience in our manufacturing setup, while also accommodating for potential upsides to forecast.

Next slide, please. In 2022, we returned more than 49 million Danish kroner to shareholders via dividends and share buybacks. NOVO NORDISK has consistently returned its free cash flow to investors through both share buybacks and dividends. At the annual general meeting on March 23, 2023, the Board of Directors will propose a final dividend of 8 kroner and 15 euro for a total 2022 dividend of 12 kroner and 40 euro, a 19% increase compared to 2021, making it the 27th consecutive year with increasing dividends.

In addition to the dividend, 24 billion Danish kroner was used for repurchase of shares. For 2023, the Board of Directors has approved a new share repurchase program of up to $28 billion to be executed during the coming 12 months. Next slide, please.

We continue 2023 solid momentum and expect the sales growth to be between 13% and 19% at constant exchange rates. This is based on several assumptions as described in the company announcements. The guidance reflects expectations for sales growth in both international operations and North American operations, mainly driven by GLP-1-based treatments for diabetes and obesity care.

The sales growth within diabetes and obesity care is expected to be partially countered by declining sales in rare disease due to supply constraints. The guidance ranges for sales and operating profit growth reflect the level of volume growth of GLP-1-based diabetes treatments. They also reflect the inherent uncertainty of the pace of obesity care market expansion following the relaunch of Vigo in the U. S. and expected gradual rollout in international operations.

The outlook includes an expectation of continued periodic supply constraints and related drug shortage notifications in 2023 across a number of products and geographies. This is driven by higher than expected volume growth for GLP-1 based products such as olympic and temporary capacity limitations at some manufacturing sites. We are gradually increasing our supply capacity. We expect that operating profit will grow between 13 and 19 percent at constant exchange rates.

This primarily reflects a sales growth outlook and continued investments in current and future growth drivers within research, development and commercial. Commercial investments are mainly related to the relaunch of VEGOV in the U. S. , obesity care market development activities in international operations, as well as promotional activities for Ozympic and Rebelsis.

The acquisition of formal therapeutics is negatively impacting operating profit growth due to higher operating costs and amortizations. Finally, the guidance also reflects inflationary impacts on the cost base. Given the current exchange rates, most notably a weakening of the US dollar, we expect a negative currency impact for 2023. Our reported sales are expected to be 4 percentage points lower at CER, and operating profit is expected to be 5 percentage points lower at CER.

The negative currency impact on operating profit of 5 percentage points is partially offset by a net gain on financial items. We expect that financial items will amount to a net gain of around 2.4 billion Danish krona, mainly reflecting gains associated with foreign exchange hedging contracts.

Capital expenditure is expected to be around 25 billion Danish krona in 2023, as I outlined earlier in this presentation. Our free cash flow is now expected to be between 60 and 68 billion Danish kroner, reflecting the sales growth and investments in capital expenditure. That covers the updated outlook for 2023. Now back to you, Lars, for final remarks.

Thank you, Karsten. Please turn to the final slide. We are very pleased with doubling the sales growth for the full year of 2022 and that we continue to reach even more patients. 2023 is a truly significant year in the history of NOVO NORDISK as we celebrate our 100 year anniversary. In this period we have grown from a small Danish company into a global one, developing life-saving medicines for millions of patients around the world. In 2023 we look forward to continuing our focus on commercial execution, expanding our pipeline, and investing significantly in expansion of production capacity for current and future products. For 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, Harry. So, Doug, a perspective on how we look at pricing in the U. S. first?

Yeah, thanks, Harry, for the question. We had a commitment back in 2016 around price, and we've held that commitment, and I don't want to give any forward-looking statements on price moving forward.

Thank you. So on Europe, we don't anticipate any single event to be material. We have over the years seen various countries operating with different reforms, sometimes in the form of something that looks more like a tax. So we are used to operating in this environment, and you should expect that for now our guidance incorporates what we anticipate in this.

Thank you, Harry.

Thank you, Pete. So, Doc, first on first, GLP-1 trends, pair discussions, and, you know, the patient access we have.

Yeah, thanks Pete for the question, and I would say that certainly first thing to recognize is that the volume of prescriptions in the GLP-1 category is still only about 10%, so there's a lot of runway there. Secondly, what I would say is that the payers do take notice to categories that are growing. This one is certainly growing at double digits, but they also recognize the need for this product, and again, it's only 10% of the prescription volume.

Did I miss something over there, man? 30 million. 30 million. Oh, yes, Pete, I'm sorry. Importantly, we guided in Q3 of 30 million. We're now at approximately 40 million lives. So it's overall 80% access, and that equates to the effective access or number of lives is approximately 40 million. And that's comprised of commercial, Medicaid, and some federal business.

Thank you, Doug. And Karsten, on we go with capacity versus what we see in the market now, I know you're not going to tell the whole story. What can you say?

Yeah, so it's of course a key question that we spend a lot of time on also internally to ensure that we're not disappointing our customers when we launch products in different markets. And my starting point to answering the question is, is the guidance I just covered before? So it's 13 to 19 percent top-line growth guidance, which in itself is very competitive industry-wise, is, of course, very attractive. And a large chunk of that growth comes from Vigobi. So we will not be able to get to this level of guidance without a significant step up in Vigobi. And as I'm sure you can appreciate, then it's important for us to say that we can supply to our guidance, so both the top end and the low end of the guidance.

So that's what we commit to in terms of our investor communication. Then in terms of additional scenarios, then what I would say is that 19% is not a magic ceiling in terms of our guidance. It's basically a function of products and geographies and timing. And then, yes, we continue to scale our manufacturing capacity of Vigovi. As you know, we have one line in-house, we have one CMO up and running full speed, and we have one line on track to be online first half of this year, and then another line on track to get online second half this year. So we have significant step up in VGOVI production capacity. And then I'd say just at a final note, of course, we do not have unlimited capacity.

And so trending on a vertical TRX uptake is impossible. And that's why we've been out saying be careful with the first data points because they are impacted by the pent-up demand that Doc was talking to.

Thank you, Gertens. So, to summarize, clearly, a significant flexible market from a market access point of view, and also capacity coming in so we can go after that opportunity. So, very encouraging indeed.

Thank you, Pete. Next question, please.

Thank you, Michael. I think Marcin, those are both to you.

GOOGLE BIRDLEMENZER Yeah absolutely So with regards to select as we already discussed we had one look before the expected final outcome of the trial That was done by a DMC, so we are not privy to the data. The DMC is looking at the totality of the data, and there was a pre-specification for when they could recommend to stop DCRB very convincing superiority for semaglutide, I. e. more than 20% difference between semagrotide and placebo. They recommended us to continue the trial, which makes us believe that we are probably still in the realm of the 17% that we have sample size for. But they look at everything, and they can recommend to stop the trial should they feel to do so.

So, with regards to all semaglotype, both in diabetes and obesity, the trials are designed and the doses are picked so that we expect to get exposure similar to that of subcutaneous semaglotype, both 2.0 mg and 2.4 mg. And we would therefore aim to have full efficacy and full safety profile comparable to those two formulations. So, various types of product profiles from what we can tell from the commercial opportunity perspective.

Thank you, Martin, and thank you, Michael. Next question, please.

Thank you, Sachin.

If I try to address the first question on the goal, we pent up demand and sizing of that, And then, Karsten, you can get to the G4-1. So we know for a fact that patients have been lined up. We have had some 60-plus patients on notice for when products would be available. That's a quite unusual situation to have. So we know for a fact that there is pent-up demand. It's really difficult for us to size it, to be honest. We are obviously encouraged by the trend line we see, but we also do believe that there will be a normalization of that as we have gone through that bolus. But it's really, really difficult for us to give any meaningful sizing of it.

We would be looking at the first, say, couple of months, say Q1, to really understand how that looks. So, but the first data points are really exciting. So, you know, we feel we're in a really, really good place.

Carson, on growth rates, I recall we have been saying in prior years that we thought the growth rate was going down. It didn't happen. So, any crystal ball now?

Yeah, thanks for reminding me on that one. So, I would say for, you know, first of all, that's one of the reasons why we have a forward-looking statement in our announcements. That is when we start to come down on future market growth rates. And I'll say secondly, that's also one of the reasons why we are rolling with an unusually broad guidance range this time around. When we look at the market growth, I can start out with the US. MAT-wise, based on the latest monthly data points or the latest data points overall, we are around 40%, and that would be the same ex-US also. So a global volume market growth, MAT-wise, around 40 being the latest data point.

If we take shorter data points in the US, we're closer to the 50% mark. Then in terms of what that implies going forward, that's of course a function of our activities and competitive activities, as well as supply capacity for the players in the markets. So I say we have built our guidance based on continued strong market growth. Of course, I cannot give you our assumptions, but more than to say continued strong market growth and GLP-1 in diabetes being a key driver for NOVO NORDISK also in 2023. Maybe just adding that when you have a category where you have efficacious products competing against each other, it typically leads to market growth more than share gain.

And that's what we see in type 2 diabetes, and I think that's also what we would expect to see in the obesity category, that efficacious products drives market growth more than share play.

Thank you, Karsten. Thank you for touching. Next question, please.

Thank you, Richard. So let me try to give a perspective on CapEx and then, Martin, you can get to the onwards trials. So for us, this is to create, obviously, ability to supply in a market that we believe will have a very attractive growth, creates strategic flexibility. And I think in the GL4-1 space you will have the potential of having one of the biggest, say, drop categories ever seen. So really being able to build that capacity and serve the markets, I believe, creates a competitive advantage that is very, very attractive. So, we also have pipeline products coming that will be using the same type of capacity. So, both from an API and Philfinish perspective, we have a lot of optionality in the footprint we have.

And being able to build this and drive efficiencies is something that's required to play longer term in this category. So, you should take it as a sign of confidence and trust in the existing business we have and the pipeline we have coming. Martin, on ONWARTS and the latest dates, and what does that mean for the potential?

Yeah, absolutely. So, first of all, it's important to recall that both ONWARDS 1 and ONWARDS 6 were originally 52- and 26-week studies. This was the regulatory intent, and in the 52-week period of the ONWARDS 1 study, as you know, we showed a superior A1C reduction with a good and flat and stable hypoglycemia profile. We then, for regulatory reasons, have to do extensions of those two studies in both type 2 and in type 1 diabetes, basically because we need to show safety exposure. So the focus of the extension is safety assessment and establishing the long-term safety profile of insulin hypodic in both type 1 and type 2 diabetes. If I stay with ONW1, over the additional 26 weeks, we actually saw a completely flat A1C curve, so a maintained glycemic control over time.

We lost the statistical significance, but again, in an open-label extension, you also lose a little bit of rigor and power, and we sort of have to expect that. But it certainly confirms the efficacy profile of insulin ICODEK. With regards to hypoglycemia, first of all, it's important to recall already at 52 weeks, we saw very, very low hypoglycemia rates. There was a numerical difference between the two insulins, and that difference actually remained completely stable throughout the trial. So, when we then see statistical significance, it's a function of more events rather than all of a sudden seeing a difference between the two treatment arms. And it's also important, if we put that into a clinical context, to recall with the rates that we've seen, a patient on insulin I could take in this setting would have to wait two to three years to experience an event of not severe hypoglycemia.

And in that context, I also want to call out that the risk of having severe hypoglycemia with insulin ICODEK in ONWARD 1 was almost a factor of 10 lower than with insulin ICODEK. So again, confirming the safety profile of ICODEK in this setting. So we remain very, very confident from a clinical perspective that ICODEK is the perfect starter insulin for type 2 diabetes. And obviously, when looking at ONWARD 6, we have to acknowledge that we have some work to do with type 1 diabetes.

And Camilla can maybe talk to the commercial potential of both type 2 and type 1 diabetes. Yeah, thanks a lot, Martin. So based on the totality of the data that you just went through and from the total ONWARD program, we are very confident in the efficacy and the safety profile of one's weekly IQDAQ, And also the potential to become standard of care and insulin of choice for people with type 2 diabetes.

And once weekly, insulin, of course, represents a whole new way of managing insulin that gives a lot of benefits to people as just described, but also on the convenience part. It, by the way, also has a very positive environmental profile. And to your question about type 1 diabetes, we would estimate that that is to the tune of potentially 7% of the total potential. So that doesn't change our overall profile of IQDATE potential.

Thank you, Camilla. Thank you, Martin. A clear sign of our commitment to raising the innovation height. Also in a classical area, we marked the 100-year ratio of NOVO NORDISK. We're still innovating in insulin, and I think we can drive tremendous value for patients and physicians here, still 100 years in.

Thank you, Richard.

Thank you, Richard. First, Camilla, on the Olympic trends after we go, he's in the market. Then, Doug, you can talk a bit to payers with a U. S. perspective.

Yes, so on OSEMPIC we see a continued increase. We are back to TRX and NBRX leadership. When it comes to how much of the Vigovie sourcing that is from diabetes, then we can say that the up lift in the Vigovie trends in the U. S. is basically from primarily the 0.25, the starter dose, and that basically means that these are patients that are new to GLP-1, And of course, looking forward, that means that we expect that there is a potential for both of these two classes to coexist and to continue increasing as we see both unexplored potential for GLP-1 treatment in diabetes as well as in obesity.

Dr. Michael Muehl, Doug, on the payer's perspective, multiple years of treatment. Dr. Michael Muehl, thank you. I think it's important to note that we're pleased with the level of access that we have Overall 80 access is something that we proud of and the team has done a nice job Effective access we been hard at work at As you know this requires opt But again we pleased with the overall 40 million lives that can have access And how the payers are treating this there no stopping rules in place today And I think the payers recognize that this is a chronic treatment and that important for not only stakeholders payers but all the work that we doing is to realize this is a serious chronic disease and it a chronic disease that needs long treatment Thank you, Camila.

Thank you, Doug. Thank you, Richard.

Thank you, Michael. So first, Carsten, on value versus volume dynamics for GIP 1 for us.

Yeah, so Michael, first of all to your Q4 questions versus 22 or all, then there are no changes vis-a-vis 22. So as you know, normally for 24, then we give the lack of scripts, and then there will be two ops normally in Q4 that can impact the value to volume equation. So I think the more appropriate way to look at it is for the full year. And then I would say on top of that, given the supply situation on OSMPIC, there might be also some noise in that calculation from changes in inventory levels on OSMPIC specifically. From there, moving into 2023, while not guiding for volume-volume for 2023, then I would say the dynamics remain the same between 2022 and 2023.

Thank you, Karsten. And Martin, on SELECT, why are you not talking about SELECT?

So first of all, we are still very excited and very confident about SELECT. The issue is obviously that we have no results to share. We have no data to share. And therefore, the only thing I can call out, which hopefully you also saw in my part of the presentation, is that we are looking very much forward to the data coming out around mid-2023. And that will be incredibly exciting. So we still think SELECT is very important and very exciting.

Thank you. That's very clear. Thank you, Michael.

Thank you, K. You have two very clear questions. So first, Karsten, on CAPEX versus what we said at CAPEX in the perspective on existing products, new areas, and then, Kamila, you can talk to the iCodec commercial opportunity.

Thank you, Lars. So CAPEX, of course, quite a significant step up compared to our capsule market. And again, that's why we're focused on statements, so the world has a tendency to change these days more than usual. I would say this step up in CAPEX to me comes on a very positive background. I can unfortunately not kind of separate how much is what because we have both facing and different shared platforms. So it's a little bit fine to separate hot and cold water, unfortunately, but I would say the main drivers to it is, first of all, stronger volume uptake than what we had built into our initial CAPEX modeling, clearly. And the stronger volume of tech impacts both on the API side of our marketed products as well as the fill finish that we're scaling more so than the NISD plans.

And then as to the pipeline, I'd say there are two main drivers to step up. And you could say in a historic perspective where we were like called between 5% and 10% CAPEX to sales, and now we're more in the called between 10% and 15% CAPEX to sales ratio towards 25%. The delta is that historically it was injectable peptide-based CAPEX investments we were doing. And we continue to do that through the volume scaling I just spoke about, but on top of that, we are building to cater for the all platform that just requires significantly higher amounts of API, whether it's for Rebelsis, all-sema, obesity, or some of the earlier all compounds. As you know, we have all amicretin in phase 1, and we have an all-GLP1-GIP also.

So clearly for the all platform, and then for the non-protein peptide platforms, I would say we're looking at what are we doing to cater for pipeline assets like MyMate and silcivecumab, and our ATTIs as well, which is on an antibody platform. So that's why we're looking at expanding our capacity on the monoclonal antibody sites. So I hope that provides a little bit of color, but not fully able to hold on the cold warm.

Thank you, Karsten. Exciting pipeline leads to need for CAPEX. So, Camilla, how excited are you on iCODEK based on the recent data?

Thank you, Lars. And as we just discussed before, we remain very confident in the efficacy and safety profile of iCODEK that given as a once-week insulin has the potential to become standard of care for people with type 2 diabetes. And to your question, this has not changed our perspectives in terms of a global rollout of iQoDeck. We remain equally confident in the U. S. and in the rest of the world for how this can help people with type 2 diabetes. And keep in mind that the potential of this is that the basal segment approximately includes 30 million patients with a value of around 8 billion U. S. dollars. So that's a place where we today have a market share in the ballpark of one-third.

So there's ample potential to increase that.

Thank you, Camilla. Thank you, Kajua. Next question, please.

Thank you, Simon. I don't know if you have those data, Doug, from the top of your head.

What I would say is this, that insulin, as you saw, as we just reported, continues to be under pressure, pricing pressure, so payers still continue to take value there. And as I mentioned earlier, there's still only approximately 10% of the prescription volumes coming out of GLP-1, so we still think that there's opportunity there. And you can add that the DPP4 price decline and soon to come STLT2 will also bring some space to fund innovation.

So, yeah, Karsten on Datserne, ING 1-off versus continued effect.

Simon, as we've been communicating all along in terms of our overall strategic resource allocation, Then we are highly focused on allocating additional resources towards R&D to expand and diversify our pipeline. And that you've seen throughout the year with a significant step up in R&D spending, you know, ending at 29% for the full year. You're right that in the fourth quarter, we have an extraordinary step up also when you do the quality trending. It's not due to DICERNA because we had DICERNA all along. So it's basically due to two factors. One being a minor impairment on incentive for assets, and another piece being cost related to the former therapeutic transaction and restructuring. And as you recall, then here at NOVO we are reporting clean numbers.

So where other companies would have been adjusting this into core earnings or adjusted earnings, then here you get what you see is what you get. As to a specific number for Q4, in round terms between the two impairments and the former, around half a billion DKK.

Thank you, Simon.

Thank you, Matthias. So, to you, Martin, high dose, same obesity, why now?

So, first of all, we see emerging data suggesting that it is possible to max out on GLP-1 biology, and it's very, very clear based on some of our recent studies that we could potentially increase exposure and thereby accruing more weight loss than what we see with the current doses. This, obviously, we have to pursue, we have to investigate because there is an opportunity to, without compromising on safety, to accrue even more weight loss, specifically in obesity and potentially also improve glycemic control in diabetes. We aim to conduct these studies very, very fast, and that also means that they will be available to patients if the data I will now turn the call over to management and support it in a not so distant future and still well within the relevant time period for some medical time.

Then there was a question on timeline from select data to reimbursement, so ballpark without going into too much detail. So some of you have heard about us bragging about being able to obviously handle our clinical data in a reasonable way. I would not be looking at a one to two year timeline. Obviously, we will close down the study. We will have the results around mid this year. We'll do a regulatory file and then we'll have the regulatory interactions. And then it's in the US up to Doug and his team to discuss with payers and others on how that will impact the dynamics.

Thank you, Marcin, thank you, Matthias, and thank you all for participating in our earnings call. Please reach out to our investor relations officer if you have more questions and look forward to meet you and talk to you in the end.