諾和諾德 (NVO) 2002 Q3 法說會逐字稿

Good morning and good afternoon, ladies and gentlemen, and welcome to the Novo Nordisk conference call. I would like to hand over to the CEO, Lars Rebien Sorensen. Please go ahead, sir, and I will be standing by for questions.

Thank you very much. Welcome to this Novo Nordisk Conference Call regarding our 2002 nine months result which was released earlier today. I'm Lars Rebien Sorensen, the CEO of Novo Nordisk, and as usual, with me I have our Chief Financial Officer, Jesper Brandgaard, and Mads Krogsgaard, Chief Science Officer. Present are also our Investor Relations Officers, Peter Haahr and Rasmus Jorgensen, with us online from New York.

Today's earnings release is available on our homepage, novonorisk.com, along with the slides that we're going to be using for this conference call. The conference call is scheduled to last approximately one hour and, as usual, we'll start with the presentation as outlined on slide number one, the q-and-a session will begin in about 25 minutes.

Please turn to slide number two. As always, I need to advise you that this call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For further information on the risk factors, please see the earnings release and the slides prepared for this presentation. Also please note that this conference call is web cast live and the replay will be made available on Novo Nordisk's website after the conference call. Please turn to slide number three for a brief summary of the results of the first nine months of 2002.

Our first nine-month sales increased by 7 percent in Danish kroner and 10 percent in local currencies. The underlying growth is in line with our expectations from April this year. Operating profit was up 6 percent. In the third quarter alone, sales increase was 8 percent in Danish kroner and 13 percent in local currencies. Operating profit increased in third quarter the 9 percent as reported.

We're pleased to be able to affirm our outlook for the growing operating profit by 5 to 10 percent in 2002, although the growth will be at the lower end on the range if exchange rates do not improve from the present levels for the full year. Slide number four.

Looking at the nine-month figures, diabetes care was up 7 percent, while haemostasis management increased by 17 percent. Growth hormone sales were almost flat as weak sales in Japan was counterbalanced by sales increases in United States and in Europe. Our HRT business was negatively impacted by a parallel import and decreasing market growth in Europe.

In local currencies, the diabetes care sales increase was 11 percent in the first nine months of 2002, whereas haemostasis management showed a growth of 20 percent. For the third quarter alone, diabetes care realized growth in the mid-teens, whereas sales in haemostasis management was up more than 25 percent in local currencies. Total sales in the third quarter of 2002 compared with the third quarter in 2001 increased by 13 percent in local currencies.

Turn to slide five for an overview of sales by region.

Year-to-date, the growth in Europe is still impacted by the weak first quarter. North America continues to grow double digits, while the development in Japan is negative, primarily due to the depreciation of the Japanese yen, but the market development is also challenging.

We continue to see strong growth in our International Operations, even adjusted for the impact on the acquisition of Biobras in Brazil. Measured in local currencies, overall sales increase was 10 percent, predominantly due to the increased sales in North America and International Operations.

For the third quarter alone, sales measured in local currencies increased 13 percent relative to the third quarter of 2001, again due to good performance in North America and International Operations.

Slide six. Diabetes care increased by 8 percent as recorded. The growth was primarily realized in International Operations and North America followed by Europe. The rollout of NovoRapid and NovoMix continues and supports growth, especially in Europe and North America. Note that our insulin analog sales increased by 157 percent compared to the first nine months of last year, and our worldwide share of the rapid acting analog market continues to increase.

Slide seven. This slide is based on moving annual total market figures for the full quarter ending with June this year. We see solid volume growth in all regions, and our worldwide market share is stable at 46 percent. The worldwide volume growth of 6.2 percent continues to be slightly above our long-term guidance of 5 percent. It's also nice to see that the U.S. market has started to show solid volume growth figures again. Slide number eight.

In the first quarter of this year, we experienced a very low growth of insulin sales in Europe in reported numbers. However, this was due to the destocking amongst wholesales during that period. The in market external sales statistics confirm that we have been gaining market share in Europe, both in terms of volume and value year-to-date. This has partly been driven by the rollout of our rapid acting insulin analog, NovoRapid. As mentioned, NovoRapid now accounts for one-third of all rapid acting analogs being sold in Europe, corresponding to a market share of approximately 15 percent of all short-acting insulin in the European market. Slide number nine.

NovoSeven sales grew at 21 percent in the first quarter and, for the first nine months, the increase was 17 percent. Sales growth in the first nine months was primarily realized in North America, followed by Europe, International Operations, and Japan and Oceania.

Several factors contributed to the sales growth of NovoSeven in the first nine months of 2002. The largest segment for NovoSeven is the use of product for congenital bleeding disorders, and this segment is still delivering the predominant part of the sales growth. In addition, the increased awareness of the benefits of using NovoSeven in connection with acquired hemophilia has led to an increased use of NovoSeven in this patient group. Finally, sales have also perceived to have been positively affected by increased investigational use of NovoSeven.

In terms of errors of use, NovoSeven has traditionally been used in connection with acute bleeding episodes, and this is still the largest area and driver of growth. Use of NovoSeven in connection with elective surgery has been increasing of the past years and also, during the first nine months of 2002, this area contributed to growth.

Mads Krogsgaard Thomsen, our Chief Science Officer, will now provide you with an update on our R&D activities within diabetes.

Thank you, Lars. And on the next slide, where we have the diabetes pipeline, I'm happy to announce that Novo Nordisk has completed the clinical proof of concept studies on our Insulin sensitiser, NN2344. We're currently analyzing the data in detail and establishing the overall profile of NN2344, a process that will be completed by Q1 next year, at which time we can give you an overall update on the future development strategy on our insulin sensitisers.

Briefly, we obtained clinical proof of concept for the compound in Type II diabetes studies that showed dose-dependent fluctuates lowering and a safety profile that looks encouraging.

Regarding our Phase III diabetes portfolio, AERx Inhaled Insulin Preparation has, as you know, entered this phase through initiation of a two-year safety study. And the recruitment rate is good, I am pleased to announce, and progressing as planned.

NN304 is on track for filing, with the first of the regulatory files being submitted within the next couple of weeks. The rest of our diabetes projects are progressing according to schedule, which brings me over directly to the NovoSeven update that starts on the next slide.

Today, we are happy to say that, for the first time in a Novo Nordisk core trial, we have seen a significant affect of NovoSeven on acute bleeds, an indication outside of congenital bleeding disorders. The study was the trial investigating the efficacy and safety of NovoSeven in upper GI bleeds in patients with liver disease.

The patients were classified as being mild, moderate or severe cases of liver disease, according to the trial [Pugh] classification. Approximately three-quarters of the worldwide population of people affected with liver disease are moderate to severely ill, and this was also reflected in the composition of our upper GI and NovoSeven study.

The efficacy end points were as follows: Control of acute bleeding, rebleeding, and a composite endpoint consisting of these two parameters plus mortality. In both the placebo and NovoSeven groups, standard therapy with the basal active drugs and endoscopic therapy was given simultaneously with NovoSeven. Now to the data.

In the entire study population, a significant effect on acute bleeding was observed. When looking at the patients with mild liver disease, these were found to be well controlled on the under therapy; however, approximately one-fifth within the moderate to severe liver disease patient group were not adequately treated with standard therapy and, for these patients, addition of NovoSeven led to improvement in both haemostasis and a composite endpoint consisting of acute bleeding, rebleeding and mortality.

The study of such composite endpoint, looking at five-day outcomes, was made possible through a multi-dose regimen of NovoSeven, and we are happy that it results in a clear affect also on the rebleeding parameter in this group of patients. Safety-wise, the adverse events, including thrombosis, were distributed equally among the groups and we can thus conclude that we have an excellent basis for designing the next study in upper GI bleeds aiming at optimization of the dozing regimen.

Let's now take a look at the next slide that describes our first intracerebral hemorrhage, or ICH, study with NovoSeven. First, a few words about ICH. ICH represents the deadliest and most disabling form of stroke, a condition for which no proven therapy currently exists. Since we know that at least four out of every ten patients that a CT scan in the first three hours of onset of the hematoma exhibit further growth of the hematoma, there's a big unmet medical need among patients that are hospitalized within the window of opportunity. With this in mind, a multicenter, six-step dose escalation safety study in the range from 10 all the way up to 160 micrograms per kilogram of NovoSeven was performed in the ICH patients. The data indicate that NovoSeven has an excellent safety profile in ICH patients and, further, that the clinical setting in this study lends itself well to assessment of NovoSeven efficacy in the proof of concept study that is well underway in ICH patients, utilizing low, medium and high dose groups.

Please turn to the next slide that gives an overview of where we stand today with the NovoSeven expansion program. This slide shows that we now have positive safety data within four indication areas, and efficacy data in two indications. The trial on [epitectomy], also known as liver resection, in non-cirrhotic patients will be presented orally next week; more precisely, at noon on November the 3rd at the AASLD Liver Conference in Boston. Likewise, the ICH trial has been accepted for presentation at the ASA Stroke Meeting in Phoenix on February 13 next year.

Two important messages from this slide are, one, that we are well underway with expansion program for NovoSeven and, two, that a very different shaded approach has to be and is being taken when exploring this virgin area of haemostasis management with a drug like NovoSeven.

The oral anticoagular therapy area is not shown here because we realized that recruitment of patients was progressing too slowly; not because there are few patients, but rather because these acutely bleeding patients enter the hospital system through a number of different departments, depending on the nature of the bleeding episode. We have thus decided to redirect the oral anticoagular therapy resources in such a way that we can study all anticoagular bleeders as part of the ongoing and/or future expansion programs where quicker patient recruitment can take place.

It should be noted that several of the remaining studies in the NovoSeven expansion program will report next year, and all will have reported by the end of the first half of 2004. We consequently feel that we are on track to deliver on our promise of developing NovoSeven into the only drug within the pharmaceutical arena that acts as a general haemostatic agents. In this context, let us finally take a look at the next slide that describes the ambitious vision that we have for NovoSeven within general haemostasis.

With the widespread use of NovoSeven that is taking place within hemophilia patients with inhibitors, we have established a platform of unsurpassed safety and efficacy compared to competing treatment modalities. This, coupled with strong science of efficacy from the investigational use of NovoSeven in general haemostasis, has led us to aim at proving that NovoSeven works in bleeding associated with both elective surgery and emergency situation.

Within elective surgery, we believe that proving efficacy within aspects of both soft tissue and orthopedic surgery will pave the road for widespread use of NovoSeven. You can say in a way that use of NovoSeven within surgery will in part be indication-driven, but also, and to a very large extent, data-driven. In this context, we're convinced that the data in liver surgery represents an important stepping stone in the right direction.

Likewise, the upper GI and ICH data presented today are important milestones in our quest to show the utility of NovoSeven in a variety of surgical and medical bleeds necessitating emergency treatment. Ultimately, it is our belief that NovoSeven in the future will allow for transfusion through surgery, fewer complications, and reduced mortality in a number of situations, and thereby meet a clear unmet need of today.

And now, let me pass the word over to Jesper, our CFO, for a financial update.

Thank you, Mads. Please turn to slide 15. Operating profit increased by 6 percent in the first nine months of 2002. In the third quarter alone, operating profit increased by 9 percent. In total, license fees and other operating income amounted to 711 million in the first nine months, compared to 688 million in the same period of 2001.

In the third quarter of 2002, license fees and other operating income was realized at 117 million, down from 231 million in 2001, which included a one-off payment from Novartis related to the now terminated distribution agreement for NN622 in North America.

Adjusted for non-recurring items in the third quarter of 2001, operating profit grew by 20 percent in the third quarter of 2002 compared to same period 2001. Net financial showed a net income of 123 million in the first nine months of 2002, compared to 334 million in the first nine months of 2001. Novo Nordisk recorded a net foreign exchange gains of 130 million, primarily related to the depreciation of the U.S. dollar and the Japanese yen, compared to a gain of 238 million in the first nine months of 2001.

The gain on foreign exchange hedging has, in 2002, positively been counterbalanced by currency losses on non-hedged positions in various currencies, primarily related to our International Operations.

The tax rate for the period was one percentage point lower than in 2001, hence net profit increased by 2 percent to 2 billion, 928 million. Please turn to the next slide for an update on our currency exposure.

I'll have to highlight that changes in currency rates can have significant impact on our resources. The development in the Japanese yen has in particular been a significant challenge for us during the last couple of years. If we look at the period since our last full-year guidance in August of this year, it should be noted that several of our major invoicing currencies have moved against us, both importantly as the Japanese yen depreciated some 4 percent, while the Brazilian Real is down by approximately 20 percent.

At the end of third quarter this year, Novo Nordisk had hedged the [unintelligible] to cash flows related to the U.S. dollar and the British pound, 13 and 7 month ahead respectively, whereas the Japanese yen was hedged 15 month ahead.

Please turn to the next slide for an updated outlook for 2002. Slide 17.

The negative development in important currency exchange rates since August 2002, primarily development in Japanese yen and Brazilian Real, has reduced our expected sales growth for 2002 by approximately one percentage point, and sales growth is consequently now expected at the lower end of the rage, 6 to 8 percent growth.

Our guidance regarding the cost levels for the year is more or less unchanged compared to what we said in August. Gross margin is expected to be up to 1 percent below the level of 2001 because of the negative currency development and because of the increased [manning] related to the ongoing investment in new insulin and NovoSeven manufacturing facilities.

Distribution costs are still expected at the level of 30 percent to sale. For R&D, it is expected to be in the range of 16 to 17 percent relative to sales, and Admin costs will be around 7.5 percent of sales. Other operating income is expected to exceed 900 million, leaving expected reported operating profit growth to be realized towards the lower end of the 5 to 10 percent growth range.

Despite the currency impact, Novo Nordisk reaffirms its expectation of growing operating profit by 5 to 10 percent in 2002, although towards the lower end of the range if exchange rates do not improve from present levels.

As Novo Nordisk has hedged all cash flows for the rest of 2002 in relation to U.S. dollar, Japanese yen, and British pounds, the negative influence from the depreciation of those currencies versus DKK on operating profit will be offset by currency hedging gains including in net financials. Net financial income is expected at the level of 250 million for the year. The expectations for sales growth, operating profit growth and net financials are all provided that currency exchange rates remain at the current levels for the rest of 2002.

Also for 2002, Novo Nordisk still expects the tax rates to be 35 percent, 1 percentage point lower than the tax rate realized in 2001. Novo Nordisk still expects to invest 4.5 billion in new production facilities in 2002, and depreciation and amortization for 2002 are expected to be realized at the level of 1.2 billion. Please turn to slide 18.

It is usually our policy to provide guidance on a given year in February in connection with the reporting of the full year results for the previous year. But given the negative development in currency exchange rates for Novo Nordisk, we've found it appropriate to provide you with some insight into the operating profit growth in 2003 already at this point in time.

As you can see from this slide, a number of currency exchange rates have moved against us and are currently significantly below their expected average for the year 2002. This will make it a significant chart of comparison for next year.

Preliminary plans for 2003 indicate the growth in operating profit in local currency will live up to the long term objective of growing operating profit by 15 percent. However, if the present currency exchange rate prevailed through the full year of 2003, this will reduce the growth in operating profit for 2003, measured in days forma, by around 5 percentage points. As always, please bear in mind that our outlook is based on current exchange rates and are subject to risks and uncertainties.

This concludes our presentation of the third quarter results. Lars Rebien Sorensen will now moderate the q-and-a session.

Thank you, Jesper. Please note, ladies and gentlemen, that this conference call is being taped and a replay will be made available on our website, and we are ready to take questions now please. Do we have an operator?

Thank you. We will now poll for questions using our quick-queue polling feature. If you have a question, please press the number "1" on your telephone keypad, plus the hash or pound sign to cancel. Once again, that's the number "1" on your telephone keypad to ask a question. The first question today comes from Paul Lykkesfeldt. Please go ahead, announcing your company name.

Poul Lykkesfeldt with Alfred Berg. Good afternoon. In relation to your expectations for next year, if we assume, give or take an EBIT of around 6 billion Danish kroner for 2002, then about 300 million Danish kroner would make the difference between a 10 percent and a 15 percent increase in EBIT. Now, you've earlier indicated that the ongoing development cost of NN622 would be roughly 300 million Danish kroner a year. Could you tell us, what are the assumptions you have in your budget for next year as to the development of 622? Are those included or not included, and what would be the difference in the event that the product is or is not included?

Secondly, in the diabetes care area, you mentioned International Operations and the U.S. as primary drivers of the increase, and we can see that you increased your market share in the U.S. from 26 to 27 percent. Could you inform - what is the segment in which you have primarily increased your business in the U.S., and also the driver in International Operations, what kinds of things are those and where do you see increases taking place [unintelligible] or so.

And lastly, you mentioned an increase in the diabetes sales in the U.S. offer 14 percent in local currencies. What would that percentage be if you adjust for the wholesaler buildup, which you mentioned in your press release? Thank you.

Thank you very much, Poul. This is Lars Rebien. The first question you asked us is about the guidance for 2003 and whether or not, if I understand correctly, that we have taken into consideration the fact that we might or might not be conducting clinical studies on 622. We're giving preliminary guidance for 2003 now at a point in time when we have not finalized our operation plans for next year, and therefore, I think it would be inappropriate for us to comment on whether or not we're going to conduct clinical studies in 622. What we are aiming at doing is we're aiming at investing in a similar level that we've historically done in R&D also in 2003 so that you can expect that, if indeed we end up concluding that we will not be conducting clinical studies on 622, then an increment amount of resources would be brought into other development or discovery programs which we find interesting for the company. But as I said, we've not finalized our operational plans yet, so those discussions will be taken when we have the full year result and when we have an approved budget which has been approved by our Board of Directors.

Then the second question deals with our insulin business and, in particular, the fact that we are gaining market share in general, and especially in United States and International market. In the United States, we are seeing a general growth in our market share, especially in the short-acting segment because of the launch of NovoLog. It is so that, in the United States, we're not seeing a cannibalization after the launch of NovoLog by cannibalizing our own Rapid patients; however, it's a sort of an addition new patients on NovoLog has added to our market share.

We are also seeing a growth in our market share in the premix segment. Overall, we are seeing, therefore, growth also in the retail segment of the market, which is a positive thing for Novo Nordisk because that's a prime segment for us.

With regard to International Operations, we are gaining share in International Operations with the strong, healthy growth of our business there. We are gaining share both in regular business and as well as in tender business.

Then there was one more question, which you just have to repeat for me, Poul. This was about an inventory buildup in the third quarter in the U.S. Is that correct?

Yes, you mentioned a growth in the local currencies in the U.S. in diabetes care, 14 percent. And you also mentioned that some of the increase was related to a wholesaler buildup and I just wondered whether you had the percentage increase adjusted for this wholesaler buildup.

Jesper Brandgaard will take care of that one, Poul.

There, you've got to bear in mind, Poul, that also in the third quarter of 2001 we launched the NovoLog in the U.S., and so there was also in the third quarter of last year an inventory effect. So if you'd adjust these two inventory effects and net them out, you would probably have a growth in our U.S. adjusted to that of around 10 percent and compared to the 14 percent.

Perfect. Have a nice day. Thank you.

Thank you. Next question please.

Thank you. The next question comes from Martin Parkhoj. Please go ahead, announcing your company name.

Martin Parkhoj at Danske Securities. A couple of questions. Firstly for Jesper, with regarding 2003, you are very kind to forecast your effect from currencies on operating profit, but what will the effect be on the net financials from gains on hedging contracts in 2003?

Secondly for Mads, with respect to the NovoSeven trials. Now we have seen a lot of different trials and you have said that some of it will be data-driven, some of it will be indication-drive, but could you be a bit more specific in when should we expect you to go into new trials in some of the clinical studies, for example, to Phase II-B trial?

And then finally, for Mads, if we look at the abstract for these - the [unintelligible] for next week on the [unintelligible] in non-cirrhotic patients, we can all see you only show formalized statistics significant, although this is in a 8 or 9 gram [unintelligible] group, how do you see the possibility of increasing the dosage in this specific trial after you've seen so good safety studies in the trials you now today would have higher dosage?

Thank you very much, Martin. The first question goes to Jesper Brandgaard, whether or not he likes to comment on how the currency impact is going to be further down in the P&L and then Mads Krogsgaard on the [unintelligible].

Thank you, Martin. Your question regarding what is the impact on our net financials going to be for 2003 from the hedging of our currency positions in U.S. dollar, yen and British pounds. And as these amounts, basically the last couple of days have been changing, I would say by the hour, I think to give you a ballpark figure would probably be in the range of 150 million, but these are variable all the time.

Thank you, Jesper. Mads Krogsgaard, could you be more specific as to when you're going to go into actual Phase II-B studies, and also what your assessment of the partial [hypotechtomy] studies on using 18 milligram dose with the current data you have on hand, with high safety margins which has been demonstrated, for instance, in the ICH studies?

Yes, thank you, Martin. It was a kind of - spit response to your question will go into some detail in as much as for the ICH study. We are in a situation where we have already kicked off the Phase II-B studies and are doing proof of concept trials as we speak, with the relevant doses, low, medium and high dosing, in order to achieve a concept in the ICH population. So that's ongoing.

Vis-à-vis the liver resection and the upper GI bleeds, the first comment on the liver resection. You mentioned, of course, that the borderline significance of the finding. That is true. However, for pectile volume, also known as the amount of red blood cells or [hemetoquid] there was indeed statistical significant affect of the 18 microgram dose, which is one parameter of the status of the patient. I have to say though that the 18 microgram dose given to these patients was done prior to the first incision into the skin and, hence, a substantial amount of time before the surgery of the liver took place. This is very important to know because it means two things; a, that we can up the dose in the next study; b, that we can elect to give the shot of NovoSeven intravenously just before the cutting into the liver, giving more of the peak effect of NovoSeven during the surgery. Hence, we can play around not only with the dosing per se, but also the dose timing. And it is indeed so that we are discussing with agencies how to proceed with the trial program.

Vis-à-vis the upper GI bleeds, we are in a situation today, as you've seen, that we for the first time have seen acute hemostatic effects of NovoSeven in controlled, placebo and double-blinded trial outside of hemophilia. Implying that we also here will seek to do a Phase II-B dose optimization trial pending negotiations with authorities and so on and so forth.

So, yes, these are things that we will strongly strive towards having on the label for NovoSeven. When I said that a number of situations, sales, would be data-driven rather than labeling-driven, this is reflecting the fact that there's no such thing as a label called "this compound X on surgical bleeds." If only there were, it would be fantastic. The situation is rather that you get approved labeling for soft tissue surgery, you then give an indication for orthopedic surgery, then give an indication - and this is very important to notice because what it means is that, once you have a label for that soft tissue indication and that orthopedic surgery indication, you will see data-driven views outside of those particular areas. That's what I meant, not that we will not seek to get on the labeling the - some of the indications that I actually have described to you. So thanks for allowing me to clarify that.

Thank you, Mads, for that short comment. Next question please. Could we have the next question please?

Thank you. The next question comes from John Reeve. Please go ahead, announcing your company name.

Good afternoon. It's John Reeve at BNP Paribas. One or two quick questions. Firstly in terms of foreign exchange hedging. You've given this repeated number of 250 million kroner for the full year. Can you comment on what the losses are so far this year and maybe for the full year in terms of non-hedged currencies, to get a better feel of the balance against the hit on operating profit? And can you also, leading on to NovoSeven, make a comment about the second upper GI bleeding study and when data from that might be being delivered? Thank you.

Thank you, John. This is Lars Rebien. Jesper, as far as the full-year impact, 250 million, what is the comment on the non-hedged impact of what we call side-currencies, which are becoming increasingly important for Novo Nordisk.

On the year-to-date numbers, you will see an effect, which approximately is equivalent to the effect that we've had so far in the year. So that the net effect of our hedging is being offset by what we have realized in those non-hedged currency, leaving the net year-to-date of the 125 million.

Thank you, Jesper. Mags, when are we going to hear about the second planned studies on upper GI bleeds?

Yes, right, John. Regarding the indications where we have provided you with some data from Phase II studies, then I mentioned that the ICH second studies, the Phase II-B is already ongoing, even at the proof of concept. Vis-à-vis, liver resection and upper GI, the same situation prevails for both, mainly that we are discussing with the agencies how to proceed and which kind of study to do. And once we've done that, of course, the studies will be kicked off as soon as possible.

Okay, I misunderstood you. I thought you had a second upper GI bleed study running in parallel.

No, that's not the case. What we - in terms of ICH, there we have a new study ongoing, which is a proof of concept study, using low, medium and high dose for intracerebral hemorrhage. That's already ongoing, based upon the first dose escalation study that I showed you the data from today. Sorry about that miscommunication.

Okay, thank you.

Thank you, John. Next question, please.

Thank you. The next question comes from Andrew Baum. Please go ahead, announcing your company name.

Good afternoon. It's Andrew Baum from Morgan Stanley. If I could just press Mads on NovoSeven. I mean, these are phenomenally difficult trials to do. I'm sure the negotiations and discussions with the agency are gonna be fairly complex and potentially lengthy. I wonder whether you could share with us your anticipated timeline for any of the indications you're pursuing, for how long it will take before you actually get an indication for those? In addition, regarding ICH, given that you've only got a three-hour window, and this would seem that some of the stroke drugs - how realistic a commercial opportunity do you think this is, providing you can find sufficient numbers of patients in order to trial the drug?

Thank you, Andrew. This is Lars Rebien here. And Mads Krogsgaard, you're on again. Given the difficulties of developing drugs like this, when - would you give the market any guidance on when we could expect to have a labeled indication in any one of these new indications outside of end of the year, and also, given the short time window of opportunity in ICH, how realistic do you see this opportunity and how large would you speculate that it is?

Yeah, thank you, Andrew, for that question because then I can clarify a little bit. You would have to get things on the label. First of all, of course, consider us discussing with the agencies the outcomes of the trials that follow the ones that are already ongoing or have been ongoing. So it's difficult to give any firm prediction, but we will be speaking 2005 or beyond is my guestimate.

Now, when you say that it's normally difficult trial planning is the case for these indication areas, I guess in a way you're right when we talk about some of the indications, such as trauma. In other indications, I would say this is not quite the case because we are very happy that, when we look at intracerebral hemorrhage, the CT scanning technology, which is now present at most hospitals throughout the westernized world, has allowed us to show that, in contrast to 10 or 15 years ago, we're actually getting the patients into the hospital setting during the CT scan on average within the first two hours after the onset of the bleed. This is a point in time where the patient is still lending him or herself to a truly lifesaving treatment, in as much as they have not been turned into intellectually impaired people or personalities at this time. So what I can inform you is that in the first study we have actually on average also initiated NovoSeven treatment within three hours after the onset of the insult. And normally, as you know, we speak about a window of opportunity of four hours in people who have no [unintelligible] but ICH, was people have [unintelligible] in ICH we will dose longer.

Thank you, Mads. Next question please.

Thank you. The next question comes from Iben Jordan. Please go ahead, announcing your company name.

Yes, hello. It's Iben Jordan from Carnegie. I have a couple of questions, please. Now you have given us a bit of guidance of 2003, I would like to ask you what do you see as the most important risk factors for your business currently, and this should not include currency.

Then, about your Japanese franchise. It looks like it continued to be under pressure also if you adjust for the currency development. Can you tell us, what are you doing to protect this lucrative business of yours?

And my last question is on your insulin franchise. We heard earlier today that Advantis expect to finalize the rollout of Lancers in Europe in the Q3 next year. Can you tell us what you can do to reduce a negative impact on your home markets in Europe?

Thank you very much, Iben. Lars Rebien here. Jesper, would you care to comment on the major risk factors that we see for the development of our business in 2003, if you discount currencies, which have already been alluded to in our release?

Yes, one of the prime factors, of course, is the continued growth of our insulin franchise, and that's a key driver there, is our ability to convert into analogs. We have seen a very healthy development in the penetration of our NovoRapid sales. And a key risk factor for us in 2003 is also achieving success with the rollout of NovoMix, which has just been initiated in the U.S. in this third quarter.

So success for NovoMix is a key factor and then, of course secondly, the International Operation, we continue to see about 20 percent growth - that we are able to continue to see growth from our developing countries, despite the challenging currency environment - the challenging global economic environment that we're seeing. And then finally, growth in NovoSeven, that we continue to pursue the NovoSeven indications and, through that, continue to grow the overall market for NovoSeven, as we have done in previous years. I'd say that, in terms of risk factors for our top line, they would be the main one.

In terms of our cost structure, I would say that, given the cost containment program that we implemented in April of this year and that we've been focused on delivering on since then, I would say I do not see any major risk factors in our cost structure. And we believe that the control we have on our cost structure bodes well for an acceptable risk in terms of cost expansion going into 2003.

Thank you, Jesper. With regard to our Japanese franchise, just a few comments from me. We've seen in the past year or so a very tough situation for our Japanese business due to three factors. One is the mandatory price reduction by the Minister of Health and Welfare, which is impacting everybody. Then there is the currency situation, which is impacting everybody. And then there is the share loss that we have seen due to the launch that they had in advance of our launch of analogs in the Japanese market, and some competitive situations in the growth hormone sector.

What we - we're on par in the Japanese market for insulin's at the moment with our analogs launch. We believe that we have superior devices. We are launching new devices and rolling new devices out into the marketplace. We are following the trend and pushing the market towards disposable solutions for diabetes therapy, which is going to improve hopefully the margins and the price picture of the Japanese business since really did launch the analogs without a major price premium, which is seen as an aggressive price move in the Japanese marketplace, whereas in other places we usually see price premiums of our analogs of some 20, 30, and even some places 50 percent.

So moving the marketplace towards the disposables, we've had a benefit for the patients. It's easier to teach the patients more safe use, and has benefit for the companies producing these in as much as the price is higher. This will also be a situation which is very attractive for Novo Nordisk because we have a strong range of new disposable devices.

With regards to growth hormone, we have some tactical activities that we are going to implement, which I would like not to comment on for competitive reasons. But it is clear that we're going to fight back in growth hormone because that market is a significant market for us. And then likewise, we are going to focus on NovoSeven, where we have seen quite strong rolls of our business in Japan very recently, even though it's been - on an absolute level, it has been relatively modest.

So even though we're seeing that a drop in the situation, we are still optimistic that we can return our Japanese organization to a growth pattern. Of course, with the currency, it is a soft situation.

With Advantis, continued rollout of Advantis, it is correct that we've also noted that we've also noticed that Advantis claims that they will be fully rolled out in Europe in Q3 2003. Our competitive counter strategy to this is, in the short-term as we mentioned in our last conference call, NovoMix. NovoMix is doing well initially, and we hope that this will be the immediate answer to the large population of people with the Type II diabetes. And then what we will be doing is we will be pre-marketing our low acting insulin analog, [DataMere], which will follow very shortly after, given a normal regulator process, which of course is beyond our control, will follow shortly after the full roll-out of Advantis.

So, all in all, we believe that we will be able to minimize the commercial impact for Novo Nordisk for this rollout and will bear the brunt of the impact in the U.S. market.

Thank you very much. Next question please.

Thank you. The next question comes from Stuart Harris. Please go ahead, announcing your company name.

Yeah, good afternoon. It's Stuart Harris at UBS Warburg. I apologize. I've got a few questions. First of all, in terms of the - your estimates of [unintelligible], it may be appropriate for - in GI it may be appropriate for the NovoSeven therapy. I think previously you had given 120,000 population size [inaudible] about 20,000 [inaudible].

Secondly, looking at the [unintelligible] trial. If I read it correctly, then it required eight doses of 100 micrograms or kilograms, and I'm just wondering how much of that.

I guess the next question would be Novo Nordisk Prandin in the U.S. seems like being a very great big number. I know you mentioned [unintelligible]. I just wondered if you could quantify that.

And finally question, the other healthcare sales number. If you take out, you know, my estimate of what the [unintelligible] it dropped quite dramatically. And if that's the case, if so, why? Thank you very much.

Okay. This is Lars Rebien. I think I should - Mads Krogsgaard, you're first on here. Upper GI please. If one makes some certain assumptions on the population going from 120,000 to 20,000, how are you setting the commercial potential and how do you see the pharmaco-economic cost implications of the dosing regimen, if that were to be used in the final setting, which I believe is not properly used the way it was designed in these studies. Would you please comment on that and then, Jesper, would you have a look at the Prandin situation in the U.S. and the drop of sales in other healthcare products?

Yes, Stuart, basically you're absolutely right in your numbers. We have stated that there are approximately 120,000 people bleeding from upper GI regions on an annual basis. What we are seeing is that at least 75 percent of those are Group E and C, i.e., moderate to severely affect liver disease patients, meaning that if 20 percent have uncontrollable bleeding in spite of standard therapy, we are speaking around 20,000 patients. So that's true.

Now, the important issue is that, first of all, if we seek a labeling for this, the health economics are ones that, if you can show the affect on the composite endpoint, including mortality, you're in a good position to also help economy wise. But as Lars alluded to, you should not imagine that we're using eight injections. The reason why we did so in this study was also to look at five-day repeating phenomenon and the likes.

I have to mention that there has been approximately ten investigational cases of upper GI bleeds from academic research, where he has used one or two doses of NovoSeven and seen very much the same affects on acute haemostasis as we've done in this dosing regimen. So this is what you should expect on acute haemostasis, one to two doses, not the multi-dose regimen that we have used to see the overall composite in point of fact that we have shown. And then again, our data-driven, this is something that once it's shown it works, you could imagine that it will go into other emergency treatments among the same departments that that [unintelligible] patients do.

Okay, thank you very much, Mads. Jesper, have you got some input on Prandin in the U.S. and other health development of other healthcare things?

I think you got to be a little bit careful reading the Q3 numbers from Prandin alone. As we mentioned last year, we had an unusual rebate situation in the third quarter of last year. So when you compare the growth Q3 against Q3 alone, then things look a little bit positive on Prandin, and that's why these new numbers is slightly too high. So that may have added around 10 percent of growth because of that situation. Oh, sorry, yeah, added 10 percent to growth.

And then the other comment would be, as for the other healthcare sales, the [unintelligible] impact on the other healthcare is very limited, so I don't think you should read anything significantly into the development in other healthcare sales, although I should - I would comment that our Glucogon sales used for morbidity inhibition patients have been slightly lower in the third quarter, but there we have a distributor set up, which is one where you will see fluctuation fourth quarter. We do not read any general trends here in our other sales, apart from just being probably not the area where you should see growth in sales in 2003.

Thank you very much, Jesper. Next question please. We have time for another two questions, I believe.

Thank you very much. The next question comes from Jill Walton. Please go ahead, announcing your company name.

Jill Walton from Lehman Brothers. You mentioned that there is increased off-label usage of NovoSeven as one of the growing things. I wonder if you could quantify that for us. I wonder if you could also tell us a little bit about what you think the European Health Care Reforms will mean for your sales next year. We hear about reference pricing in France, we hear about concerns in Italy and Germany. So could you just tell us a bit about your background expectations for the market please?

Thank you very much, Jill. This is Lars Rebien. Mads Krogsgaard, any comments on the off-label, or what we would rather call investigational use of NovoSeven?

Yes, basically it's so, Jill, that we say that outside of congenital bleeding disorders, where we actually include the equine hemophilia sales, so they are in a way off-label or investigational in the U.S. for instance. But outside of that area, we are guestimating around 5 to 10 percent range of investigational use. Maybe getting closer to the upper end of that range as we see progress on these investigational uses.

Thank you, Mads.

So not a significant change from previous quarters?

This is incremental. We are seeing it as probably a steady curve, with a slope upwards.

And then with regards to the European Health Reform, with our current discussions about changes in local legislation in Europe. We will be commenting on these as we present our financials and our assumptions for next year. But as we've already indicated that we're currently working on plans, which are living up to our long-term growth and local currencies, you can appreciate that we're not seeing major dramatic impact from these local reforms. But we'll be in a better position to give you more detailed comments on this in connection with the full-year result and where we are discussing in more detail the outlook for 2003 on February 7th.

Thank you.

Thank you. Last question please.

Thank you. The last question today comes from Lars Hevreng. Please go ahead, announcing your company name.

Yes, good afternoon. Lars Hevreng, Enskilda. On - first, [unintelligible], could you confirm the - you said regarding a new filing date within the next couple of weeks, essentially both to Europe in filing and also U.S. filing. And then following up on that, will it really be a once daily formulation or three or four, or will you file for a second - twice that formulation? And also, since it has taken [Novartis] some three years to launch - or it will take them three years to launch Advantis throughout Europe, would you target less than three years' roll-out to - once 304 is on the market in Europe? And just finally, on market share in Europe, you say that you have better than - better sales growth in the market. Since you're clearly losing market share in Germany, could you just remind us in where you're gaining market share in Europe? Thanks.

Thank you. This is Lars Rebien here. Mags, I think you should comment on the first two questions, which deals with 304, and then 304, [unintelligible] filing Europe, U.S. And what are you expecting or hoping for in the labeling with regards to the injection regimen? Then we have another question about capacity and margin development in Europe. Mads first.

Right. Regarding - Lars, regarding the filing strategy, yes we are here getting very close to filing in EU and that will be followed very swiftly thereafter with the U.S. filing of [DataMere]. And what we will be seeking is a labeling that says when insulin - when basal insulin is needed, once or twice daily as needed by the patient. As you know, we have seen 20-hour coverage in some studies that were recently published, and this means that in quite many patients, once daily will suffice. But basically, we expect to say once or twice daily as needed. And that basically is it for [DataMere]. As you know, being positioned for very intensive therapy.

Thank you very much, Mads.

With regards to capacity in general, I have previously made statements to the effect that we normally see in our part of the industry that there is a certain roll-out phase when we introduce new products, such as analog. However, we are expecting that this lack phase, in terms of building of capacity, is being shown. You saw a very gradual rollout of [humalor], you've seen a relatively gradual but faster roll-out of NovoRapid, NovoLog. You've seen a gradual rollout of [Lantis] and we'll also expect to see a gradual rollout of 304. And depending on the labeling that we are getting, and the positioning of [Novartis], the comparative situation, the comparativeness in each individual market. So there is going to be an access, and I cannot, at this point in time, of course, disclose where we intend to launch the product first. That would be proprietary information for our competitors.

With regards to the European insulin market, I need to correct a sense which may be out there. We are not losing market share in Germany. Lantis is taking market share in the basal segment, but Novo Nordisk is gaining market share in the premix segment and in the short acting segment. So overall, Novo Nordisk market share is stable. Might even say that it's slightly growing in German. So therefore, there is not a situation where we are losing market share in the German market and, in such, the general European market, we are gaining market share and now finally are also gaining share in value, which is the area where we have been losing share. It's when market loyals have been converted to value that we have been losing share and that seems to be changing now and we've very please with that.

So thank you very much, ladies and gentlemen. These were the questions, these were the numbers, and these were the results. We will be coming back with our full year results February next year and we're looking forward to talking to you again. Thank you very much.

Thank you. That concludes today's conference call. You may disconnect your lines. Thank you. Goodbye.