諾和諾德 (NVO) 2004 Q1 法說會逐字稿

Good morning and good afternoon ladies and gentlemen and welcome to the Novo Nordisk quarterly teleconference for quarter 1 2004. [Operator Instructions] and I would now like to hand over to today's Chairperson Mr. Lars Rabien Sorensen, CEO, please go-ahead sir.

Thank you very much, welcome to this Novo Nordisk conference call regarding our results for the first quarter of 2004, which was released earlier today. I am Lars Rabien Sorensen, the CEO of Novo Nordisk. With me we have our Chief Financial Officer, Jesper Brandgaard, Mads Krogsgaard, Chief Science Officer and present here our also Investor Relations Officers Peter Haahr and Palle Holm. With us on line from the US we have Christian Kanstrup.

Today's earnings release is available on our home page Novonordisk.com along with the slides that we will be using for this conference call. The conference call is scheduled to last approximately one hour. As usual we will start with the presentation as outlined on slide number 1. The Q&A session will begin in about 25 minutes.

Please turn to page number 2, as always I have to advise you that this call will be containing forward-looking and such forward-looking statements are subject to risks and uncertainties that could cause our 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 as usual this conference call is Web casted live and a replay will be made available on the Novo Nordisk's Web site after the conference call.

I would like to start this conference call with some highlights from this quarter. Please turn to slide number 3. First and foremost the underlying market trends in the insulin market continues to be strong. In terms of Novo Nordisk's products especially our insulin analogues as well as NovoSeven showed solid growth. However, more about these products later in the presentation. Late February the European Union Committee of Proprietary Medical product adopted a positive opinion on Levemir, recommending, granting, and marketing on various stages to this product. Following their positive opinion Novo Nordisk anticipate that the European commission will issue marketing authorization for Levemir in the European union within the coming month. Subsequent to the marketing authorization Novo Nordisk expects to launch Levemir in the second half for 2004 in key European markets.

On our available insulin project areas, Novo Nordisk has performed a plan 12 months interim analysis of the 24 months phase 3 safety studies. The data revealed that the device worked as planned but the meal related plasmal glucose regulations with the system entire one population but not satisfactory compared to Novo rapid delivered through injection. As a consequence Novo Nordisk has decided to change the study setup with consequence that the study will not continue for the full duration of 24 months. Next we will refer this issue later in the presentation.

Regarding our financial performance as I was mentioning that operating profit measured in local currencies increased by more than 20% while operating profit measured in Danish Kroner increased by 9% to 1.5 billion Danish Kroner. Earnings per share grew over 2% to 3 Kroner and 16 euro reflecting significant reduced income related to net financial. We are very satisfied with our solid performance throughout the quarter and have decided to initiate a new 5 billion Danish Kroner share repurchase program, which Jesper will refer to later in the presentation.

Please turn to slide number 4. Looking at the sales figure for the first quarter of 2004, diabetes care grew with 7% where as NovoSeven increased with 11%. Measured in local currency as a growth rate were 12 and 20% respectively. Growth hormone therapy was almost 10% and in local currencies the growth was 15%. These areas constitute more than 90% of total sales and I will get back to them on some of the following slides. Despite a stable market share performance of our low dose HRT portfolio, the HRT business continues to decline due to overall market contraction.

In the United States we have changed the distribution setup, as reason July 2003 have marked our product out sales now by Novo Nordisk now recording full sales value of the HRT sales. For the first quarter of 2004, total sales increased by 23% recorded and by more than 30% in local currencies. However, sales in the regions outside North America decreased by 22% reported probably inline with the contraction of the overall HRT market.

Please turn to slide number 5, which illustrates the significant impact the currencies had on the reported figures by therapy in the quarter. The chart illustrates the growth in all therapy areas was reduced significantly in the first quarter due to unfavorable currencies. Within diabetes care the negative currency impact corresponds to some 5-percentage point of growth primary due to the impact of a weaker US dollar. With respect to the NovoSeven, reported sales growth was reduced by half again due to the impact from the importance in US Markets. Looking at total sales, the currency impact was approximately 6 percentage points.

Please turn to slide number 6 for overview of sales by region. The local currency growth in Europe was 7%, which is primarily driven by diabetes care and NovoSeven. European insulin market continues to show volume growth in excess of our long-term target of 5%. On the other hand growth in Europe was negatively impacted by a decline of 24% in our HRT franchise. North America continues to show strong growth rate especially driven by our insulin franchise with increasing penetration of NovoLog but also NovoLog mix is driving growth. Total analogue sales increased by 200% in the first quarter 2004 measured in US dollars. Sales of NovoSeven were also supporter of the overall growth. Total sales in North America grew by 30% in local currencies.

International operation continues to show strong sales growth with 14% growth in local currencies. We continued to see solid growth in China, Brazil, and in Russia. In terms of sales, in terms of product the sales growth was driven by insulin NovoSeven and growth hormone. Sales in Japan and Oceania increased by 11% in local currencies primarily driven again here by insulin and NovoSeven. The growth in insulin sales is reported by the ongoing value upgrades of patient's to disposable devices.

Please turn to slide number 7, which illustrates the currency impact by region. As expected one of our key growth drivers in North America showing growth rate of 30% as I mentioned in local currencies, but this growth was cut in half measures in Danish Kroner. Also international operations have solid underlying growth, is reduced significantly due to the adverse currency development. As the slides illustrate, no significant currency impact for the first quarter was due to the US dollar and dollar related currencies.

On slide number 8, which provides you the highlight from our diabetes business, in the first quarter of 2004. Diabetes care sales increased with 7% as reported and 12% in local currencies in the first quarter. As mentioned, NovoLog, NovoLog mix are driving as well as market share gains in United States. In local currencies, insulin and insulin related products grew by 28% in North America in the first quarter of 2004 and sales of insulin analogues alone increased by 100%. In this region, the analogue constitutes more than 40% of our insulin sales. A local currency growth for 5% in Europe can to some extent be attributed to Health Care Reforms in some European countries, which continues to dampen growth. Further growth in the quarter was impacted by whole sale movement however, we are seeing a continued underlying market growth in the insulin European insulin market and a solid penetration of our insulin analogues underpinning our over all market share.

In Europe our insulin analogue sales grew more than 70% compared to the same quarter last year growth reported in the local currencies.

Our new longer-acting insulin Levemir was launched in Switzerland in March and initial performance is very promising. Obviously, its early days, but we are quite happy to see that Levemir in the first month has taken more than 5% of the longer-acting sales in volume and Levemir therefore penetrates faster compared to both insulin drop line and the NovoRapid launches. These initial performances make us excited about the expected launch of Levemir in key European markets in the second half of 2004. Sales of insulin and insulin related products with in international operations increased to 9% in local currencies compared to the first quarter of 2003. Strong performance was seen especially in China, but also in Latin America and the Middle East performed nicely. The sales growth was impacted by a negative currency environment especially for the Chinese Yen. In Japan and Oceania, insulin and insulin related product shows a 11% growth for the quarter in local currencies. Regarding the sales our key as I was mentioning that approximately half the growth can be attributable to whole sale buying in United States.

Please turn to slide number 9, which provides you with an overview of the insulin market. This slide is based on moving annual total markets figures for four quarters ending December 2003. We are pleased to see that the solid volume growth continues. 2003 overall insulin market grew with more than 7% in volumes because that would be above Novo Nordisk's long-term guidance of at least 5% underlying volume growth. Novo Nordisk is showing growth rate significantly above that of the market primarily driven by strong growth in United States. Also worth noting is the fact of Novo Nordisk growth in Japan as picked up and its now showing a growth rate almost inline with overall market. The result has been an increase in the overall volume market share to 49% of that 47% in the four quarters ending in December 2002. In the most recent markets statistics this positive development is continuing. Volume growth plays an important role for Novo Nordisk insulin business, but it is also important for us to realize obviously of the value upgrade both in terms of upgrading patient to insulin analogue and to more advanced delivery system. Message in terms of value, Novo Nordisk market share is off from 39 to 41% in the four quarters ending December 2003. This is especially due to our solid performance in United States where our value market share increased from 17 to 20%.

Turn to slide number 10, which provides some insights into the value upgrade process illustrated by analogue conversion rate in the insulin market and also Novo Nordisk performance in the analogue market. All in all the industry has now converted around 30% of the insulin to analogue. Novo Nordisk is continuing to gain markets share within the analogue segment maintaining the solid performance since the first quarter of 2002. In total Novo Nordisk analogue franchise increased by 83% to 893 million Danish Kroner in the first quarter and we now move to close to 24% of the analogue market. In the first quarter insulin analogue constitute more than 20% of our overall insulin sales.

Turns to slide number11, which provides some insights into the development of our analogue market shares. As can be seen from the slide NovoRapid now has almost 35% of the analogue market within the short-acting insulin segment. The market share gains optimal record in Europe are continuing strongly, now holding 19% of the total short-acting segment. Focussing on the two only analogues in the short-acting segment Novo Nordisk has almost 45% of the market in Europe. Almost half of the short-acting insulin market is now converted to insulin analogues and the trend is still solid. In the United States more than 60% of the short-acting segment is now converted to analogues and also in the Novo Nordisk short-acting analogue NovoLog continues to catch our market share. NovoLog had in the fourth quarter around 15% of the total short-acting segment and 1/4 of the analogue sold in the total short-acting segment in the United States today is sold by Novo Nordisk.

Please turn to slide number 2, which provides an insight into the development of our analogue market share in the premix segment. In the premix segment, the analog conversion is happening and its almost slower pace as seen in the short-acting segment, but the performance of our premix analogue NovoMix satisfying and the products holds almost 32% of the analog market within the premix segment.

Turn to slide number 13. By pharmaceuticals report a 13% growth in the first quarter of this year whereas sales increased to 21% in local currencies. Predominantly driven by NovoSeven, sales of growth hormones also showed a very solid development. Regarding HRT products development was distorted by the fact of our accounting setup (inaudible) US HRT business. The underlying market is still contracting and that is also impacted the performance of our products resulting in a negative growth of around 14% in local currencies, when adjusting for the changes in distribution setup.

Turn to the next slide updating you on the performance of NovoSeven. NovoSeven sales has increased to 20% local currencies but due to the significance of the US dollar reported sales were up by 11% due to the weaker US dollar in the first quarter of 2004 compared to 2003. Sales growth in the first quarter of 2004 was primarily realized in Europe followed by North America. Underlying we are still seeing growth driven by increased awareness of the benefit of using those who have any connection which acquired in Syria (ph) and sales were also positively effected by increasing investigation on use of NovoSeven. We still expect NovoSeven to be able to grow low double digit local currency rate in 2004, as the sales growth in the first quarter of 2004 to some extent was positively impacted by some anesthesia patient's in Europe experiencing severe bleeding episodes and hence demanding a higher than normal usage of NovoSeven.

Please turn to the next line updating you on the performance within growth hormone. Our growth hormone franchise shows a solid underlying performance with 15% growth local currencies whereas the reported growth of 10%. Growth was driven by Europe and North America, the importance of the Japanese market as over the year has been reduced to not loess than 30% whereas North America now constitutes more than 10%. In Europe the growth is driven from increased market shares as well as new indications shorts up (inaudible) of AIDS coupled with a solid market growth. Furthermore we did see a minor positive impact from a changed inventory in some of the European countries.

In the United States growth derived from a very strong increase in the demands as well as an increase market share with Novo Nordisk now commanding more than 5% of the market. So much so for the sales performance in the first quarter of 2004, let's go to our Thomsen, our Chief Science Officer, who will now provide you with an update on our R$D activities.

Thank you Lars. As Lars has mentioned, we expect to launch the product longer-acting insulin analogue Levemir in key European markets in the second half of 2004. On the AERx iDMS insulin project, Novo Nordisk has performed a plan 12 month interim analysis of the two-year phase 3 study in type 1 diabetes. The primary end part of this study is an assessment of a long-term pulmonary safety in type 1 diabetic patients. The interim analysis showed a good pulmonary safety profile of AERx iDMS with a product showing though adverse effect on any measure of pulmonary integrity including a number of lung function tests and chest X-ray. This phase of legumin, the ARX iDMS produced a similar level of overall glucose control compared to NovoRapid over the 12 month period as mentioned by HB1C. However, the (inaudible) plasmic glucose regulation following insulin inhalation in this type 1 diabetes population was not satisfactory compared to the NovoRapid group. Furthermore, significant antibody formation occurred. As a consequence of the above, Novo Nordisk does not consider ARX iIDMS as a preferred treatment option in type 1 diabetes and we have decided to change the studies set up with the consequence that the study will not continue for the full 24 months. Previous findings within type 2 diabetes had demonstrated adequate neurulated glucose regulation. Novo Nordisk and his Aerodime partner will now work together over the coming months to conduct further analysis of the all the clinical data within both type 1 and 2 diabetes before initiation of additional clinical studies. Specifically, it does not appear that device function increase stability or a change in lump area can explain this proximal insulin action profile. Hence focus of the analysis will be another factor including the potential modifying rule of antibody formation on the formed co-kinetic profile.

In early April of this year, Novo Nordisk initiated the construction of new facility in Kalundborg, Denmark and after the choosing they have exercise, there were only one state (inaudible) analog for type 2 diabetes. Novo Nordisk still expects to initiate the phase 3 program for cirrhosis in the second half of this year.

Please turn to slide number17 for an update on the news from the Biopharmaceuticals pipeline. Result from study during the last few months have confirmed Novo Nordisk's objective of establishing NovoSeven as preferred hemostatic agent for critical bleeding. This aspiration is (inaudible) via the NovoSeven expansion program from which we expect to report the phase two study intracerebral hemorrhage mid 2004. The study has competed recruitment and is now in the nice day followup period for the most recently approved patients. Further to support the above objective Novo Nordisk has just initiated a new phase 2 study focussed on the use of NovoSeven in connection with variceal bleeding in patients with moderate to severe liver disease. This study in 260 patient multicenter randomized double (inaudible) control trial running in Europe and Asia and is set up on the back of the positive findings from the completed phase 2 study that was focussed on upper gastrointestinal bleedings in several categories of cirrhotic patients.

From this study you will recall that we saw a significant hemostatic effect of NovoSeven in variceal bleeding the moderate to severe cirrhotic patient groups. We have to decided to discontinue the current sten cell transplantations study due to slower than anticipated patient enrollment. Novo Nordisk is currently considering alternative study to science within chemotherapy induced bleeding. Following the successful completion of the page 2 trauma study, Novo Nordisk has been still aiming at starting a pivotal phase 3 study towards the end of the year. A study focusing on the use of NovoSeven in connection with spinal surgery will also start later this year. The Aces development project for treatment of acute respiratory distress syndrome has been discontinued due to unfavorable benefit risk profile observed in an expiatory phase 2 trials. Other areas of the use of Aces are being evaluated. No systemically acting drugs are available to accelerate healing of complicated fractures of long bones. Based on convincing growth hormone data in a preclinical fracture model Novo Nordisk first decided to conduct a phase 2 complicated fracture studies and is now being completed. The study shows that human growth hormone is able to accelerate fracture healing and (inaudible) to identify. Additional benefits of growth hormone treatment will be further investigated in a potential future study and further analysis are ongoing before moving forward. The target population for potential page 3 trial is under evaluation and so is the potential target market. With this I will now hand over the word to our Chief Financial Officer, (inaudible).

Thank you Mads. Please turn to slide 18, I am very pleased with the solid underlying sales growth of 14% for the quarter in local currencies. However, due to the continued weakness of our main invoicing currencies throughout 2003 and into 2004, sales and reported terms have been impacted negatively. For the first quarter of 2004, our reported sales growth was 8% and reported terms operating profit increased by 9% to 1.5 billion Danish Kroner in the first quarter of 2004. Measured in local currencies operating profit grew by more than 20% for the quarter. Net financial showed a net income of 87 million Danish Kroner in the first quarter of 2004, compared to 234 million Danish Kroner in 2003. Novo Nordisk recorded and net foreign exchange gain of 138 million Danish Kroner primarily related to the hedging of the US dollar, the Japanese yen and British pound. This is compare to a gain of 299 million Danish Kroner in the first quarter of 2003.

The tax rate for the first quarter of 2004 was 33% down from 34% in 2003. The lower level of financial income compared to 2003 shows a net profit being unchanged compared to 2003 while earning for share increased 2% reflecting an impact from the 2 billion Danish common share repurchase program completed in December 2003.

Please turn to the next slide for an update on our currency exposure. Give the recent change in currency rate, the impact on currencies on Novo Nordisk operating profit in 2004, is now expected to be lower than the previously forecasted in connection with our full year release in early February this year. However, the US dollar and related currencies and still be expected to impact operating profit negatively by around 5% compared to 2003. Currently Novo Nordisk has hedged future expected capitals related to the US dollar, 14 months ahead to the Japanese yen, one year ahead whereas the British pound has hedged eight months ahead.

Please turn to slide 20 for an outlook for 2004. Novo Nordisk still expects low double digit growth in sales for 2004 measured in local currencies based on the continued market penetration of the Novo Nordisk into the analogue portfolio combined with the expectations of increasing NovoSeven and Norditropin SimpleXx sales. This level of underlying sales growth leaves expectation for 2004 operating profit growth measured in local currencies and excluding the impact from non-recurring items to be inline with Novo Nordisk long term target of growing operating profit by 15%. However, reflecting a more positive, challenging currency environment and with the case at the time of the outlook provided in connection with the 2003 annual result announcement in February 04, Novo Nordisk now expects sales measured in Danish Kroner to grow close to 10% and reported operating profit to grow by around 5%. In February 2004, operating profit for 2004, was only expected to be at the same level as reported in 2o03. Given the appreciation of especially the US dollar, but also the Japanese yen since the outlook provided in connection with the full year announcement in February, Novo Nordisk now expects net financial expense for 2004, of 100 million Danish Kroner. This change in expectations also includes a negative impact from Novo Nordisk share of profit in associated companies. For 2004 Novo Nordisk still expects its tax rate to be 33%, 1 percentage point lower than the tax rate realized 2003. Novo Nordisk still plans to invest around 3 billion Danish Kroner in (inaudible) and depreciation and amortization of delinquency to be around 1.8 billion Danish Kroner. Free cash flow with delinquency should be around 3 billion Danish Kroner. All the above expectations are provided at the currency exchange rate remains at the current level for the rest of June course. Finally in order to allow the capital structure would be expected positive development in free cash flow and new share repurchase program of 5 billion Danish Kroner has been approved by the board of directors of which shares worth around 2 billion Danish Kroner expected to be repurchased in 2004. The repurchase shares will be kept as treasury shares. This concludes our presentation of the financial results, Lars Rabien Sorensen will now moderate the Q and A session.

Thank you Jesper, please note ladies and gentlemen again as I mentioned before that this conference is being taped and the replay will be made available on our Web site after the conference call. Operator we are now ready to take the first question please.

Thank you gentlemen. [Operator Instructions] and our first question comes from Annette Lykke, please go ahead and answer your company name.

Yes hello, its Annette Lykke from Carnegie. I have a few questions and thank you for taking the time for it. First of all I would like you to elaborate a little bit on the European development for your diabetes care, if you could break it down on your insulin products and your analogue that would be nice. Further more I would like Mads to update us on your plans for the phase 3 trial on trauma. How far would you plan with all your discussions with clinical investigators and have you any new use on composite endpoint visits and policy and whatever you have of new information in that area and then my third question will be on Norditropin, if you could tell us a little bit more about that study you have and how the results went and how many patients were involved in that kind of information. Thank you.

Thank you very much, Annette Lykke this is Lars Rabien. I would like to refer the last two questions to Mads Krogsgaard and asking him to start that and then I would refer talking about the European diabetes market but the first question Mads phase 3 clinical trial expectations and trauma how is that coming about and then after that could you elaborate a little bit on the set up perhaps of the Norditropin trials in complicated fractures.

Thank you Annette, the whole situation with the NovoSeven trauma trial preparations is that it is fully on track i.e. we have scheduled meetings with the trauma (inaudible) and other key countries in Europe so that we can meet with the regulatory bodies to compete or to have the discussions and complete the discussions on the exact layout for the phase 3 peoples who will trial and that we expect to be able to update you on at the half year release. In the US the situation is that you know is a little bit different in as much as we have now scheduled meeting with the FDA, but there we have adopted to (inaudible) because we have in clinically un hold, so that the aim is to have the clinical role lifted and as quickly as possible initiate traumatize in the US. We said the end points that associate undetermined, but I can tell you that at least outside the US, our ambition is to with the excellent data we have from the 2159 trauma trial the patient starting then we will seek a non mortality a transfusion end point based where people were trilled making it highly feasible to conduct as quickly as possible and with high quality. On the phase situation, I will also which loop he update you at the half-year (inaudible).

Thank you with regards to the European diabetes market we are recording sales compared to first quarter of 2003, which is slightly down. This is compensation of some of the movements which is related to the Health Care Reforms in the European markets were we saw a reaction in the German market, in the Polish market to Health Care Reforms leading to stocking effect in the fourth quarter of 2003 and consequently, these stocking and less sales of Novo-Nordisk in the first quarter for these reasons. There were other movements as this distributional areas which impacted the our sale, but the underlying trend it is mentioned in the overall market model were we moving in about 7% goals in terms of volume. If we look at the compensation of the analogs we have seen strong progress of our analog process was about 70% and our Human/insulin market is slightly down and this what we would be expecting in the future that we would see as stagnation of Humulin/insulin market with the conversion as all the goals are starting from analogs.

You had another question on Norditropin.

Exactly, I forgot to answer the Norditropin, but that's just study question, it is a study that is serious size that were around 400 patients that were randomly assigned either to the placebo all different doses (inaudible).

And that is what I can say this stage and the complicated fractures are as you defined as one that can be either closed or open fractures and typically need either internal external fixation and we will get back to you once with analyzed what to these rather exiting days and in terms of how we can potentially go forward.

Thank you very much, next person please.

Thank you. Next question cause some Poul Lykkesfeldt. Please go ahead in the answer company.

Poul Lykkesfeldt of ABN Amro. Good afternoon and otherwise there is find the quarter's one dark spot and that was the findings in his insulin area. Could comment on this well and perhaps speak a little bit on the different scenarios as to the future for this project and it is detailed as to the time lines what you will be investigating. Will it cause any delays compared to what you have otherwise indicated earlier for findings and what that if could remind me and could we see you possibly files are only type 2 patients and not type 1 patients and how to dupe on the public knowledge on the competitive profiles visa vis (inaudible) that is one questions, secondly of the increased investigation, you should have spotted on NovoSeven could you comment as to what affect you get in to the trauma effect and having that and that lastly could you comment on the details in terms of the launch program for the (inaudible) a little bit more on timing and main market fall for the second half as you have indicated.

Thank you Paul Lewis, this is Lars Rabien any comments on scenarios, time lines, potential delays at the (inaudible) to file for partial indications such as type 2 and type 1 and actually based on the findings that we have seen in internal report.

Yes, well I see since the situation is that these are very, very recent data and the data analysis was an analysis unexpectedly showed the less good finds a glucose regulation in the Eric's group. This will naturally incur delay because we are now growing into mode where we are analyzing the reason behind these findings. I have to say that there is a inert difference between type 1 diabetes on one hand and type 2 on the other hand in as much as type 1 diabetes are cloned to antibody formation because they hold to cease this (inaudible) addition where antibodies are already preformed against insulin. So you are absolutely right when you state that there could be one scenario where this product is simply only suitable for type 2 diabetes who had less prone to develop antibodies.

This is the purpose of the overall analysis for our stand to data if it's so that this lets say reduced to find a glucose regulation with ARX only pertains to type 1 diabetes and the industrial area it could still be ready selling product in the type 2 area. You also then asked about the Exubra comparison and had to say Ian that it is not that easy to do that comparison because not much data is available on Exubra visa Vis the different glucose profiles over the daytime. So, I cannot really comment that on that at this stage. Only to say that, we will be able to update you at the half-year release because we have done much more analysis by that time.

As to the delay what are we talking about in delay and what would be the most recent of the filing date at the moment?

Well, we have actually never compensated on the filing date, only that we have one phase to hand files and that still is the case. Once we have done the analysis, then by August of this year at the hockey release I will be more specific on how we see the delay.

Thank you Mads, with regard to know NovoSeven, I will remind you that we were around the courses when we estimated that the performance of the NovoSeven today because we could see over the previous quarter at the time in your growth rate of NovoSeven and therefore caused a notable that the sales came in as well as strongly as they did in the first quarter. However when analyzing the goals rate in the first quarter we notice that the largest growth rate that has been seen is in the European market and here we know as there are some specific segments which has both more in first quarter of this year in particular in the UK, which relates to hemophilia treatment high bleeds and some additional surgery in these patients as a consequence when we also compare then to the growth rates that we have seen in the United States and we see more or less an extension of the Darco pattern that we think it is famous to ridden out to the conveyance that there has been a step change in the growth rates going forward on NovoSeven we would due to the trauma data.

We of course kind of it be walking this overtime and only when we see realized sales, we will going to be a different goals they will be able to conclude that we have seen and expanded investigational use. Because you will have to remember that sales in NovoSeven is primarily taking place to the hemophiliac departments of the hospitals were the products have been kept and therefore their form being recommended either to hemophilia treatment let the surgery of hemophiliac or as to trauma and we have no way really of finding out in separating these uses. So right now we are cautious, we are of course happy to see the first quarter sales and we of course are very optimistic but we are cautious for this year whether or not we will see as that change in the growth rate. With regard to the launch plan for 11 year let me first say that we are of course extremely pleased to see the stronger performance in Switzerland. But Switzerland is of course the country where the exception is the rule, it is a special country but I will also hope that you will bare with us that we will not be for competitive reasons disclosing which markets we have done subsequently ruled out but I don't think I am disclosing anything simply by saying we will be rolling and every may out as soon as possible in the main market in Europe as soon as we get the labeling and type line editing to the appropriate languages and as soon as we did the pricing and reimbursement issues say (inaudible) we would be ready roll out this quickly as we can get these administrative issues result.

I will there for you. Have a good day.

Thank you, next question please.

Thank you or next question comes from Louis Siebert (ph). Please go ahead and announce your company name.

Thank you it's Louis Siebert from Lehman Brothers. Starting with NovoSeven. could you just tell us a bit more about the phase two in variceal bleed I think Mads mentioned 260 patients anything more on end points and the timing of the study and if you could also explain just briefly why you stopped the study in stencils and second question were there any price rises in the third quarter and if I could just be one more on growth hormone just what your expectations are for Omnitrop the Novo Nordisk connect version which has been filed in the US that seems to be delayed in Europe?

Yes thank you very much. Mads says two clinical (inaudible) variceal bleed to have any comments on the improvising timing and why we have decided at least for the moment to stop further as themselves try for NovoSeven.

Yes first of all the easy one first is the stem cell transplantation trial which we assumed to terminate because the recruitment was too slow and we take that as an indication that the target market is simply not attractive for now for us pursue this over longer times based on the recruitment rates we are seeing rather we are looking into other (inaudible) in chose to bleeding situations to further propagate the work development.

Visa Vis NovoSeven initials is also showing the (inaudible) of the eye treatment we are speaking of rather large trial to around 260 patients that are equally allocated to three different groups, one receiving either 200 micro grams of NovoSeven followed by 100 micro grams at different time points after the first administration. Plus co-standard therapy and then we also have a similar group that is receiving basic mode is the same but just at the different points in time and then also Placebo kicking in leavos (ph) so that it sort of extended treatment period. Then we have a group show placebo group so these are the study ongoing in sharp huge plus AIDS patients that is modern (inaudible) patients and these are the ones that responded favorably with the hemostatic action in the first phase 2 and we are studying specifically the (inaudible) bleeding in the oesophageus and measuring the usual perhaps as we have also done in the previous communicated trial.

Yeah I have actually luted to the notion that we terminate that because of slow recruitment but we will be looking at potential other Chemotherapy induced bleeds.

OK then on the human growth hormone Novo Nordisk is of course in terms of sales expectations we leave giving sales expectations to Novartis, I would have ever note that the launch of a Novo achievement growth hormone product doesn't really make any significant difference to the market and then last is the price increases in the US--

Yeah, in US diabetes market we have actually seen price increase in US up trend on (inaudible) in HRT areas of course completely confused with the new distribution trade off in regards to a hell of the health centre price increase on (inaudible) in United States above that human insulins have not been increased in the US and in Europe -- European market that we have seen some downward pressure on the pricing in the European market for insulin sales in general. So that those would be my comment on the price developments. Can we have the next question please?

Thank you. Our next question comes from Rachna Upadhya please go ahead and announce you company name.

Hello Rachna Upadhya from Merrill Lynch. Just a couple of quick questions, you mentioned chemotherapy in chest bleeding is an opportunity for NovoSeven. Can you just give us an idea of the market opportunity and sort of high severe epidemics the bleeding effect of study so there any (inaudible) of patients and the second question was if you could just clarify some may these phase 3 design for the trauma study for NovoSeven I believe if that mortality wasn't a primary end point, but this one is to find out whether mortality or survival is part of the composite primary end point and if you could clarify that to me the other question was that can you give us any idea as what you think the bleeding aspect with a severe in your and NovoSeven in first quarter especially in the UK just out of interest. Thank you.

Thank you very much and Mad two questions for you, what is on chemotherapy indications any comments as to the market size of this stem cell application and in phase 3 design whether or not mortality is part of the composite end point and then we have any comments to (inaudible) I will take of the new --.

Right stem cell transportation is one specific way and talk chemotherapy into (inaudible) where you basically wipe out the bone marrow including all sort of platelets and that causes topper side of bleeding at the cells. In that area we state that it's around I would say less than 10,000 episodes ongoing in the year. If we look into chemotherapy associated with the other malignant cells such as hematological malignancies that protect the solid tumors we are speaking still in the bull park of 20 to 40,000 patients on an annual basis. So this is not a huge area compared to things that though the one in the trauma that I just delude upon because in the trauma area we are basically seeking to have a design that is pretty closely resembling the one that we have all done in the phase 2. I am looking into dosing machine like the one that we have conducted in the existing all completed trial with the potential of if needed adding a one further dosing arm having said that this also means that transfusion end points will be critical and of course in the composite end points will be included mortality as it was to get the remark and us in the phase 2 study and we will also building in measure of measures of pharm co-economic out looks in the trial such as stay in the ICU, stay on the ventilator and so on and so forth.

Thank you Mads and then in regard to the first quarter European sales of NovoSeven in Europe sales growth was primarily driven by the first quarter in the UK, France and in Italy in descending aura due to an increased number of surgeries general consulting due to some high dose episodes on individual patients and also high tax rates within the year and also we have to see expect that there has been an increase in the investigational use in but those are the comment and the countries where we saw the greatest shares in consumption in the first quarter. Next question please.

Thank you our next question comes from Mark Purcell. Please go ahead and announce your company name.

Thanks for taking my question. This is Mark Purcell from Deutsche Bank. I have five questions, the first one just return the European insulin market. A volume growth for 7%, sales growth for 4%, I will say there was about 75 million Danish Kroner of de-stocking gain from Q4 to Q1 that you also mentioned positive stocking say I wondered out of the (inaudible) 7 and 4% points of growth if you could give us a breakdown of the impact of price stocking and mix. The second question I guess is for Mads, it's on the ARX products and whether the antibodies are initializing whether that's a difference from the (inaudible) study where I believe they have seen antibodies but I have pain mutualizing and then second question on ARX is whether this resolved affects the timing of your studies to begin in type 2 diabetes towards end of this year.

The next question is just on the 11 year (inaudible) so the 11-year NovoLog stall, which was recently published. I wondered if you could just discuss the implications of the results which suggest that you can get better HBA won't see outcomes as well as lower hypoglycemia combining those two analogs together what do you plan for the large studies and when such an point and when such an end point or one such days will be included in your labeling and then lastly I suggest one of you could remind me of how big the opportunity in variceal bleeding is for patients with advanced specifically.

Thank you very much Mark and it's Lars Rabien. Here again I would like to excuse me Mads. Start with you again while we have a look at the components of the European entrant market. How do you believe that the end of product is (inaudible) in terms of timing of the commencement of studies in type 2 as when do you expect and - are you expecting there is a recent disclose findings on (inaudible) NovoLog controls of the included in the enabling or impacting market activities and comment on variceal bleeds?

Right Mark visibly the situation that is a very good question I would say overall to preliminary insulin but as you know that the consensus is that antibodies formed in these insulin studies are not mutualizing. This is one of the things that we will be investigating in PGL looking of the as the insulin profiles as they evolve overtime and potentially as a consequence of being modified by antibodies. You might recall that in the eighties studies were done when we issued to animals with human insulin where one could see that sometimes antibodies did have a modifying action on the profiles by for instance which harding the action profile. This is of course more severe in (inaudible) I repeat is you have many antibodies generally speaking to and this is exactly what we are going to look into whether or not that, if this is the case at all has any repercussions for the type 2 diabetes situation. In terms of the timing of the onset of further type 2 diabetes yes it will affect the timing, it will mean of the day because we will do this analysis before we progress further clinically. So we will get back to you on that one at the half-year release. These as the diabetes should (inaudible) rapid action asserting rapid publication came out in the papers two weeks ago. This was indeed the first time that a variceal analog machine has ever been show to have all 4 important tasks you can say of the ancient jig-saw puzzle come together mainly that you are on the one hand win on HP 1C reduce to (inaudible) was at the same time having so much increased predictability that as a third strong point I able to see which is high promising by that the improved A1 C and when you then on top of that significantly reduced body weight gain ie body weight neutrality I think this is a kind of mini land mark study that for the first time shows that you can actually almost have the cake and eat it, you can at least get all the benefits of the intensified regiment in and the same study. This is not which we opted for. Yes we will of course plot on that's going forward and do studies. We actually haven't initiated that I'll be happy to talk about a few months from now but it is still it would be in early days.

Then finally, the one on the (inaudible) we believe that lets say the number of patients that are immutable to this kind of therapy variceal bleeding for the Char Q, B and C (ph) patients, is in the ball park of 20 to 30,000 on an annual basis giving a mark up potential that is not huge is in the ballpark of a billion kroner or slightly less. And, it of course can be depending on whether the - with two shots only suffices or whether we need several shops of therapy. These are the two arms included plus of course of the placebo arm. It will be pretty much contributing upon the outcome of (inaudible) and how it spends it would be and hence peer willing.

OK, thank you. Yes, we can call it on the (inaudible) instant sales in the first quarter in US -

Yeah the 4% growth in Europe was impacted through a slight decrease by stocking movements wholesaler and patient related. We noted in our full year release that we saw some unusual patient buying behavior in markets like Germany and Poland basically due to healthcare reform and these two consists and that have had an impact of extraordinary sales in the fourth quarter of last year of around 100 million. In this quarter we've seen some stocking effect due to a change in our distribution set up to the tune of 50 million. There are numbers of well effects as that they basically need each other off so you are seeing a negative impact due to stocking movements in the first quarter to the tune of 50 million net. And there is also in the European market, some pricing effects which is the rest of the difference, the pricing effect coming from the price reforms in Germany and also we are seeing a pricing reform in the Hungarian market.

Thank you, Jesper. Lets have one or two questions more. Thank you ladies and gentlemen.

Thank you and our next question comes from Para Vickluff (ph). Please go ahead and announce your company name.

Good afternoon. My remaining question is about the statement profitability. If you could elaborate a little bit on the bio-pharmaceuticals. And the diabetes care profitability, do you mean that the bio- pharmaceuticals the EBITDA margin is year on year up and also compared to full year last year, but in that EBITDA sales, the margin is slightly little bit boring and would you also tell how much of that impact came from the new sales reps in the US were not still or were not yet working but when the -

Thank you, this is Lars Rabien. It is correct that we are now for the first time in connections and also with the annual result producing segments and information on the margins of our business and is also correct that you note the bio pharmaceutical phases compared to the diabetes business is a various track business and when we look at the (inaudible) division have to remember that in the past pharmaceutical business we have both the growth hormone and (inaudible) any HRT business and the changes in the HRT market seeing with a de progressing activities on HRT actually improves the profitability of the HRT business in a situation where the market contracts. Of course also going forward as we expand significantly our NovoSeven franchises it is perhaps the highest profitable -- the most profitable product the company has. I want to say that the margin development of the diabetes business's point. Yes this is a good business where we have invested significant improving occupancies but the tradition in line business, and Jesper, you have any further comments on -

Yeah, when you do this straight forward comparison between third quarter, 2 or 3 in first quarter to 4, you got to be careful looking just at the diabetes number in the first quarter last year, we had included approximately 50 million in income from the Aventis pattern settlement and there is no income from that in the first quarter this year. So that really explains why you are seeing a flat profit development in diabetes care and within the bio pharmaceutical segment as the larger was alluding to HRT is included and in the first quarter of this year, you are having more than 100 million included from our settlement with Pfizer regarding the HRT distribution in the US and hence when you adjust with that, you are back to a more normal level of a profitability and also development between the two segments and very much in line with the general trends we saw in terms of profitability reported in connection with the full year 2003.

And this is Lars Rabien here, that we have to - we are expecting in the margins on the diabetes business we have eventually go off slightly because we are making rest in the US sales force, we are making the conversion all this up and till now relatively small volumes as of analogs. But as the analogs go in volume, then we should start to see the margins coming through. Thank you very much. This is the last question please.

thank you, the last question will be from Martin Haul. Please go ahead and announce your company name.

Hi, good afternoon. It's Martin Haul, from HSBC. It appeared to the number of your products benefitted from wholesale buying patterns in the first half of the year and what do you estimate the overstocking or the other stock pipeline is as a part of that 14% underlying growth rate, and my second question is - I m sorry if I missed the first part of the - I understood the Pfizer settlement to be about a 100 million DKK. Is there any residual land to settlement included in the first quarter or did that finish at the end of Q4 last year?

Thank you very much, Jesper. The first question is what parts of the sales thought of 14% is attributable to wholesale movement and we can then confirm that the Pfizer settlement was in the area of a 100 million Danish kroner and that there was no significant lenses income in the first quarter this year so, the tax correction of wholesale of buying that on in first quarter.

I commented that when I commented on Europe, I said that there was approximately 50 million in wholesale of stocking at the end of first quarter this year which will go within a negative offset in the second quarter of this year regarding your well in addition there is a minor stocking effect regarding our trend in business the HRT business in the US. In totality, you would probably be looking at any impact on our sales just in excess of 1% on the line growth rate. And just a comment on the lens settlement we have previously announced that we expect ot include this year income related to the patent settlement on lens and that will be to the tune of 150 million but that income, you should expect ot see coming into our groups in the fourth quarter of 2004.

Ladies and gentlemen, that's the close of this conference call on the first quarter as for Novo-Nordisk and I only encourage you to call our Investor Relations people if you have more detailed questions which we have not been able to answer during this call and we would like to thank you for your attention and we look forward so we report to you on our half-year results in August. Thank you. Bye, bye.