諾和諾德 (NVO) 2005 Q1 法說會逐字稿

Thank you, ladies and gentlemen, and welcome to today's Novo Nordisk Q1 2005 results conference call. At this time, all participants are in a listen only mode. Later, there will be an opportunity to ask questions and instructions will follow at that time. As a reminder to all participants this conference is being recorded. I would now like to hand the conference over to Lars Rebien Sorensen. Please go ahead, Sir.

Thank you very much, ladies and gentlemen. Welcome to this Nordisk conference call regarding Q1 results for 2005 released earlier today. I'm Lars Rebien Sorensen, the CEO of Novo Nordisk. With me, I have our Chief Financial Officer, Jesper Brandgaard; Mars Krogsgaard Thomsen, Chief Science Officer and present are also Investor Relations Officers Mo Jensen, Palle Olesen, and (indiscernible).

Today's earnings release is available on our homepage, Nordisk.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 No. 1.

The Q&A session will begin in about 25 minutes. Please turn to slide No. 2.

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 the 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 webcast live and a replay will be made available on Nordisk's webpage after the conference call.

I would like to start this conference call with some of the highlights from the first quarter of 2005. Please turn to slide No. 3.

The continuing strong growth momentum is very satisfying. We are able to solidify our position as the world's leading diabetes care company. Our insulin marketshare continues to increase, driven by the portfolio of insulin analogues and by the strong U.S. performance in general.

The rollouts of Levemir continues and we are pleased with the marketshare development for the world's most predictable long-acting insulin in all the countries where it has been launched. We expect to launch Levemir in several new countries before the year end. Outside the diabetes area, the NovoSeven growth continues and also a growth level franchise is adding to growth supported by the launch of a new disposable delivery device, NordiFlex.

In the first quarter, the labels for Levemir and for NovoRapid were expanded to include pediatric coverage. The label extensions will support market penetration of both of Levemir and NovoRapid in Europe. We still expect to obtain U.S. marketing approval for Levemir mid this year.

We have a continued dialogue with EMEA and the FDA on the new indications for NovoSeven. The regulatory environment has become more challenging and based on preliminary feedback from EMEA and our trauma filing, additional data may be needed. (indiscernible) consultation with EMEA on this and we expect a conclusion in the second half of this year. To further support the filing, we have decided to initiate a conservatory clinical trial but (indiscernible) will come back to this later.

We are very pleased with the solid underlying financial performance. Sales grew by 11% as reported and by 13% in local currencies for the first quarter. Reported operating profit increased with 1% whereas underlying operating profit increased around 15% in the first quarter, highlighting the solid earnings momentum growth (indiscernible).

Turn to slide No. 4. In the first quarter of 2005, the diabetes care segment grew by 16% in local currencies and accounted for 86% of Novo Nordisk growth. Growth within the diabetes care is driven by a portfolio of insulin analogues, which accounts for more than 2/3 of overall growth.

Biopharmaceuticals grew 6% in local currencies in the first quarter. Sales of NovoSeven increased 10% in local currencies and it's the key growth driver within biopharmaceuticals. Our growth hormone franchise grew with a solid 10% in local currencies, supported by the disposable delivery device, NordiFlex. Other products which predominantly consist of our HRT franchise decreased 7%. The overall HRT market continues to be depressed.

Overall, we're satisfied with the growth rate seen during the first quarter and current market trend indicates the continuance for growth for the rest of 2005. Turn to slide No. 5 for an update on our analogue franchise.

In the first quarter insulin analogues grew by 67% in local currencies. The growth is driven by underlying market growth, as well as strong marketshare gains for both NovoRapid and NovoMix in all regions. In terms of regions, North America and Europe are driving growth whereas international operations -- Japan and Oceania -- are showing strong growth rates and increasingly adding to the overall growth of the analogue portfolio.

In the first quarter insulin analogue constituted more than 30% of our insulin sales. In North America more than 50% of the insulin sold on our analogues. Please turn to slide No. 6 for further insights into the dynamics of the analogue market.

The conversion to analogue continues steadily. And 37% of the global market is now being converted to analogues. The conversion from human insulin to insulin analogue is driven by all segments, supported by the ongoing conversion to especially disposable devices, the analogue conversion drives the value growth of the insulin market.

Novo Nordisk continues to gain marketshare within analogue market maintaining the solid performance since the first quarter of 2002. Novo Nordisk's marketshare in the analogue segment is now about 30%. Further supported by the continued rollout of Levemir. Novo Nordisk is the only company that markets a full range of insulin analogues with short-acting, premixed, and long-acting insulin analogues. Turn to slide No. 7 providing some insights into the drivers of our analogue marketshare gains.

NovoRapid is the best-selling short-acting analogue to both Europe and Japan. In the U.S., there is still some way to go; however the market trend is very solid. From a global perspective NovoRapid holds more than 40% of the short-acting analogue segment. NovoMix also continues the solid market share gains and now more than 50% of the premixed analogue segment. So our growth rates of NovoRapid and NovoMix are reflected in our overall insulin marketshare where Novo Nordisk now commands 52% volume share in the IMS world, in the twelve months ending February 2005 compared to 49% marketshare, the twelve months ending February 2004.

The marketshare gains within the analogue segment also reflected in our valued marketshare, where the comparable figures are current market share of 43% versus 41% twelve months earlier.

Turn to slide No. 8, which provides you with an update on the development of our analogue marketshare in Europe as well as the ongoing launch of Levemir. Novo Nordisk continues to solidify its position as the market leader within the analogue segment in Europe, now holding a volume marketshare of more than 40%. This trend has been fortified by the European rollout of Levemir. Levemir is now launched in 10 countries in Europe and several more launches are scheduled for the remaining of 2005.

The feedback from the marketplace continues to confirm the findings from our clinical trials. Levemir is a very predictable insulin which reduces the risks of hypoglycemic event in the absence of weight gain.

In February, Levemir reached a European marketshare of more than 10% of the lower acting analogue segment in Europe. We look forward to the continued rollout of Levemir, and the expected FDA approval mid this year which is on track.

Turn to slide No. 9 for an update on the NovoSeven sales development. NovoSeven sales increase of 10% local currencies and 7% in Danish kroners in the first quarter. The growth in NovoSeven is primarily driven by North America, followed by international operations and Japan and Oceania. The number of factors contributed to the NovoSeven sales due to the high penetration within spontaneous bleedings from congenital inhibitor patients, the predominant part of the growth within the inhibitor segment has been generated by usage in NovoSeven in connection with elective surgery.

Treatment of spontaneous bleedings for congenital inhibitor patients remains the largest area of use. In addition, sales (indiscernible) ceased to have been positively impacted by increasing investigation or use of NovoSeven especially within trauma and surgery. However the sales growth in the first quarter has been negatively impacted by relatively few cases within acquired hemophilia.

Turn to slide No. 10 for an update of sales by region. North America continues to be the main growth driver and now constitutes 29% of Novo Nordisk sales. During the first quarter, North America contributed with more than half the overall growth for Novo Nordisk. We will refer to North America after a rundown on the development in the other regions.

Growth in Europe is negatively impacted by the price flow of its (indiscernible) carried forth in a number of countries. Healthcare reforms are impacting both volume growth and value growth in the market. However, we continue to see solid growth rates for our portfolio of insulin analogues. NovoSeven sales in Europe were impacted by fewer bleeding events and the acquired hemophiliac segment compared to the same period of 2004. Norditropin SimpleXx in Europe is showing a solid growth rate whereas our growth hormone -- excuse me -- our hormone replacement therapy sales continues to decline, due to the overall contraction of this market.

In Japan and Oceania, growth is driven by the insulin airlocks and NovoSeven with solid growth rates. Novo Nordisk has two insulin analogues on the market in Japan following the launch of NovoRapid 30 mix late 2003. This analogue -- together with fast-acting analogue NovoRapid -- is driving a strong penetration in Japan. The conversion to prefilled disposable devices continues, according to plan. In the first quarter of 2005, our growth hormone franchise supported by the continued penetration of the prefilled delivery device NovoMix (ph) since it was launched in July 2004.

Sales in international operations are driven by human insulin, insulin analogues and NovoSeven. A growth in insulin analogues is mainly driven by China, Russia, and Taiwan. Within human insulins, an insulin-related growth is mainly driven by China, Russia, and Saudi Arabia. In the first order, NovoSeven showed strong growth in international operations.

Turn to slide No. 11 for a more detailed update on the sales development in North America. In the first quarter, sales in North America grew a solid 27% in local currencies and by 21% in Danish kroner. The growth in North America is driven by insulin analogues, human insulins and by NovoSeven. In the first quarter, sales of insulin analogues in North America grew at more than 60% and now constitutes more than 50% of total insulin sales.

Novo Nordisk continues to see solid marketshare gains for both NovoLog, NovoLog Mix, and according to the latest market shares statistics, Nordisk holds 38% of the total insulin market measured in volume.

Sales of OADs in the first quarter were negatively impacted by lower shipments to (indiscernible) and wholesalers compared to the same period last year. In the first quarter NovoSeven showed solid growth, driven by congenital hemophilia, and also a high level of investigational use. North America is expected to remain the key growth driver for Novo Nordisk and all therapy areas are adding to growth.

With this I would like to hand over to Mads who give you an update on the development within our pipeline.

Thank you, Lars. Please turn to slide 12 for an update on the diabetes care pipeline. European Commission has extended the marketing authorization for Levemir to include treatment of diabetes in children and adolescents, aged 6 to 17. An extended EU authorization has also been received for NovoRapid to include treatment of diabetes in children aged 2 to 6. Together, these new approvals make Novo Nordisk the first company with analogues approved in pediatric (indiscernible) therapy.

Regarding the Lurectitide (ph) in Novo Nordisk's once daily human (indiscernible) analogue at least two clinical trials have been started in Japan with a total of 200 patients expected to be included. It remains Novo Nordisk's expectation to start Phase III clinical trials for the Lurectitide in the U.S. around the turn of the year.

With regard to ERIX (ph) Novo Nordisk has not finalized the PK/PD analysis in connection with the Australian Phase III safety study which was conducted during 2003 and 4. We observed no negative impact on pulmonary function tests after 2 years and the PK/PD analysis shows that the formation of antigen antibodies did not impact the (indiscernible) profiles of AERx. Hence the lower than expected post-prandial efficacy is likely to be the result of the chosen compared to (indiscernible) which was NovoRapid.

Furthermore, the data shows that AERx treated patients over a two-year period obtained a similar level of long-term glycemic control as measured by HB1C (ph) to that of patients on an intensified treatment regimen that included prandial NovoRapid injections.

Based on this, Novo Nordisk expects to make the decision about the reinitiation of the Phase III clinical trials for AERx around the turn of the year.

Novo Nordisk has decided to stop further clinical development of NN2501 and all Glucagon Receptor Antagonists. This compound was in Phase I trials with the potential ability to inhibit excessive glucose production in the liver of Type II diabetic patients. However clinical data from the trial revealed that NN2501 did not have a competitive glucose lowering profile. No concerns for the regards of patients' safety were identified with the compound.

Novo Nordisk expects to launch a new and superior durable pen -- NovoPen 4 -- in the second half of this year. This additional offering will further strengthen the position as the leader in the area of innovative and use of friendly injection devices.

Please turn to the next slide for an update on our biopharmaceuticals pipeline. As part of the European regulatory process, Novo Nordisk is in ongoing dialogue with EMEA -- the European Medicines Agency -- following the filing in January of an application for marketing approval for the use of NovoSeven in blunt trauma. EMEA has requested additional information about the file data which were based on results obtained from a Phase II clinical study.

The preliminary feedback from EMEA suggests that additional clinical data may potentially be needed. Novo Nordisk will deal with the information request in a timely manner; however we do not expect a final conclusion from the agency until the second half this year. In order to further support the European trauma filing, Novo Nordisk will initiate a confirmatory clinical trial which will be conducted in the EU as well as other countries outside the US. This trial is expected to start around mid 2005.

With regard to the U.S., we are currently finalizing the details of the trial protocol for the use of NovoSeven in trauma. Based on our ongoing discussions with the FDA, we expect this pivotal clinical trial to include around 1,000 patients. The trauma trial which is pending final approval from the agency is expected to start in the USA in the third quarter of this year.

In Europe, Novo Nordisk expects to file an application in the third quarter of 2005 for marketing approval for the use of NovoSeven in connection with intracerebral hemorrhage. The European filing will be supported with additional safety data and efficacy data from a confirmatory clinical trial. We still expect this confirmatory trial to be initiated around mid 2005. In addition to supporting the European filing, the trial is also expected to generate the necessary clinical documentation for filing with the FDA for regulatory approval in the U.S. for the use of NovoSeven in connection with ICH.

The confirmatory trial is expected to involve around 450 patients and to involve patients in clinical centers located in the U.S., Europe as well as other countries.

Finally with a regard to NovoSeven. A filing for approval for the use of NovoSeven within acquired hemophiliac within the U.S. is still expected to take place in the first half of this year.

Within the HRT area, we've initiated at least 3 clinical trials in the U.S. with an ultralow dose version of Vagifem, Novo Nordisk topical estrogen product. The clinical trial will involve around 600 patients being treated for a period of twelve months. The result from this study are expected to support the move towards even low dose versions of HRT products.

Now over to Jesper for an update on the financial results.

Thank you. Please turn to slide 14 providing you with details on the financial results. The overall sales growth for the first quarter was 13% in local currencies. However, due to the continued weakness of our main invoicing occurrences primarily the U.S. dollar, the recorded sales were impacted negatively. In the first quarter our reported sales growth was 11%.

Reported operating profit increased by 1% in the first quarter whereas underlying operating profit grew by around 15%. License fees and other operating income in the first three months of 2 '05 were 67 million compared to 232 million in the same period last year where nonrecurring settlement payment from Pfizer was recorded, related to an early termination of the out license agreement for HRT products in the U.S.

Net financial showed an income of 276 million in the first three months of 2 '05, compared to 87 million in the same period of 2 '04. As previously reported, Novo Nordisk has recorded a gain of around 250 million concerning the disposal of shareholder in (indiscernible). Included in net financials are foreign exchange gains of 37, 39 million compared to a gain of 138 million in the same period last year. The results from foreign exchange hedging in the first quarter of 2 '05 were negatively impacted by the development of the U.S. dollar in related currencies.

Furthermore the marked-to-market valuation of foreign exchange options which is mandated by the IFRS also had a negative impact during the first three months of 2005. Please turn to the next slide for an update on our currency exposure.

Currencies remain a challenge to Novo Nordisk while the U.S. dollar, hopefully, is beginning to show signs of consolidation. 2005 looks set to be another year with currencies negatively impacting a solid underlying performance when converting the results into Danish kroner. For 2005, our estimate for the impact of currencies on operating profit is as follows.

A 5% depreciation of the U.S. dollar is expected to decrease operating profit by 280 million Danish kroner whereas a 5% depreciation of the U.S. dollar related currencies is expected to decrease operating profit by 70 million Danish kroner. For the Japanese yen, a 5% depreciation is expected to decrease operating profit by 130 million. And finally. a 5% depreciation of the British pound is expected to decrease operating profit by 80 million Danish kroner.

Currently, Novo Nordisk has hedged future expected cash flows related to the U.S. dollar 14 months ahead, Japanese yen 11 months ahead, whereas the British pound is hedged nine months ahead. Hence, some of the currency impact on operating profit due to currencies will be recovered in the mid financial line.

Please turn to slide 16 for an outlook for 2005. For 2005, we still expect sales growth of 10 to 15% measured in local currencies with reported sales expected to grow around 10%. Our expectations for underlying operating profit growth are unchanged at 15% in line with our long-term financial target. And we expect reported operating profit to grow by around 5%.

For 2005 Novo Nordisk now expects a net financial income of 150 million due to the non-recurring income, related to the disposal of shares in (indiscernible). Expectations for mid financial income has increased by 250 million, compared to the guidance provided late January this year. For 2005, Novo Nordisk now expects tax rate to be around 31%, 1 percentage point lower than previously expected as a consequence of the tax-exempt status of the gains related to the Faroshane (ph) divestment.

In addition if a proposed change of Danish Corporation tax law is approved during 2005, Novo Nordisk expects a recurring reduction in the income tax rate of 1 percentage point. And furthermore a recalculation of the deferred tax liability in 2005 will lower income tax for 2005 by another 1 percentage point. Consequently if the Danish tax laws are changed then Novo Nordisk expects the tax rate for 2005 to be approximately 29%.

As a consequence of the non-recurring income from the divestment of shares in Faroshane, net profit is now expected to increase by around 5% for the full year. In addition, provided the change of the Danish tax laws is approved the total growth in net profit could be forecasted to be around 7%. Novo Nordisk still plans to invest close to 4 billion Danish kroner in (indiscernible) whereas depreciation and amortization is expected to be around 1.9 billion kroner.

The free cash flow for 2005 is now expected to be around 2.5 billion kroner, 500 million higher than previously communicated. All the expectations provided that currency exchange rate remain at the current level throughout 2005.

Novo Nordisk expects to accelerate the ongoing 5 billion share repurchase program, which was originally communicated to Lars, until 2006. As a consequence of the solid free cash flow generation in 2004, as well as the improved expectations for brief cash flow generation in 2005, Novo Nordisk now expects to repurchase shares with a market value equivalent to the remaining 3 billion under this program during 2005.

This concludes our presentation of the financial results. Lars Rebien Sorensen will now moderate the Q&A session.

Ladies and gentlemen, please note that this conference is being taped and the replay will be made available on our website. Operator, we're now ready to take the first question, please.

(OPERATOR INSTRUCTIONS) Paul Leckersfeld (ph).

ABN Amro. Couple of questions please. Regarding the hospitals' (ph) request for further supplementary studies in the U.S. and by EMEA, can you tell us in terms of timeline and possible delays, what is the best and the worst case in terms of delay we are looking at? Second question is, what is it which the EMEA is interested in?

And I would like to ask about how a possible study will impact your R&D costs in 2005 and 2006?

And, lastly, in terms of the impressive increase in the U.S. in the diabetes area, how do you expect the -- how do you expect that to continue onwards? Would you continue and how do you think the dynamics will be affected by Aventis launching Apetra (ph) in the U.S. later this year?

Jesper, I would like to defer the first three questions to you. What are the timelines' worst case based on the presumption that additional data will be required. What are the concerns highlighted by EMEA, which has prompted us to change strategy as we need to know NovoSeven and trauma? And is it likely and what are the impacts in 2005 and 2006 on your cost and then I will revert on the U.S. Apetra expectations.

Right, Paul. Regarding the issue of exactly what information they have requested and we are in the ongoing dialogue with EMEA and we are not willing to elaborate in great detail these issues. However the preliminary feedback from the EMEA does suggest that additional data related to efficacy/safety may potentially be needed to support the filings. So what you can say is that in the best case, the data that we will submit and go into a dialogue and all explanation and so on to discuss with them is something that will have no impact on the timelines and the worst-case scenario is that it will call for a complete future study which will take somewhere to the tune of two to three years so that was the best case and the worst case.

If you look at the overall guidance, regarding the financial impact on the R&D line for a study in Europe, then the situation is that we are using 15 to 16% of our revenues on R&D. And, basically, that is sufficient to keep within that frame. Also the European trauma study that we've announced today that we will start mid this year.

Thank you and Mads, this is Lars Rebien here. About the U.S. diabetes situation and its dynamics going forward. Obviously there are a number of issues that will be impacting the U.S. market. The potential launch of Agenocite (ph) will have an impact on the U.S. (indiscernible) market but as you mentioned the more immediate thing is an expected launch of Apetra. Right now Novo Nordisk has primarily been competing in the U.S. market with Eli Lilly. We have been gaining market share, based on NovoMix and NovoRapid from Eli Lilly, where a dentist has had a (indiscernible) where, of course up until now we've not had Levemir approved in the U.S.

That will, of course, change with the approval in the U.S. and the subsequent following launch of Levemir in the U.S. When we look at Apetra so far the experience that we can gauge and compare it to impact from is the launch in Germany where we can see that the penetration of Apetra has been relatively modest. This is the third short-acting insulin analogue with no significant unique selling points. It does not have the preferred device like the flash pen. So we also after that, the fact that we have a very strong sales force in the U.S. and of course that we are gearing up our activities and they need be already to add to the sales force should that be necessary. Because we also know that we are going to launch Levemir.

So I would say, of course, there might be an impact. But right now I would assess this as being moderate.

You're not waiting to comment any further on the efficacy safety issues regarding EMEA's request?

No. I will only say, Paul, that we have submitted based on a Phase II study. What you can basically say is that it would be a discussion of if it's a question of a new study, it would be confirmation of what we've seen because we did see a very nice safety profile and measured on the endpoints that we were looking at also could effect us in the Phase II trial. But I will not go into more detail.

Understood. One last thing can we hope for (indiscernible) focusing on your diabetes research activities during the course of 2005?

I think it's obvious last time we had a captive market we focused on biopharmaceuticals that it is indeed a possibility that we will look into the diabetes market as the next topic, including other things that may be relevant. When that will take place is still undecided. So we will come back to you on that. But that is of course an excellent suggestion.

Annette Larsen.

HSH Gudme. I have three questions, if I may. First of all regarding price increases in the U.S. on insulin. Could you comment on how much the price increase is and when it took place? And then, secondly, on Levemir if you could give us status on which of the 10 countries that you rolled out and maybe give a flavor of how many additional countries we could expect to (MULTIPLE SPEAKERS) throughout the remainder of the year and then my third and last question regards to -- does your guidance for 2005 present include any competition from Xinitide or don't you believe on an approval right now?

First was the U.S. pricing situation on insulins and which countries that we launched Levemir and what are the plans for the future and finally Xinitide. Is that included in our guidance. Yes but I would like to draw attention to the last question then I will deal with the two first questions. In terms of pricing developments in the U.S. market on insulins, we can see that in the first quarter that we have seen the price increase of around 7% on insulin analogues. We have seen, also, the price increase in Prandin. And in addition to that there have been some moderate price increases on Norditropin (ph) in our HRT portfolio but no price increases on human insulin.

When we look at Levemir, we are talking about countries that are launched right now is the Nordic countries, Germany, UK and Benelux. So the countries that are in the pipeline for launch imminently would be France and Spain. Other major countries of that sort.

So that's what you should be looking for for the remainder of this year. All in all, 10 countries in 2005. As far with regard to impact of Xinitide in Europe. Has that been factored into the (MULTIPLE SPEAKERS)

I think Anita was (indiscernible) U.S. where we expecting it first and the impact in 2005, on our overall numbers will be somewhat limited and a launch is anticipated in the guidance that we've given. So a launch will not change the topline guidance we have given of 10 to 15%. There will probably be a limited impact on the level of insulin growth in the U.S. following from a launch but we would expect it to be modest.

You have to bear in mind that the compound is currently a twice daily product that has to be refrigerated and it's not a human version. Hence, there is a risk for antibody formations so we believe the risk, currently, is limited. But we would have to see a bit more what that launch strategy will be before we can give some more precise guidance but for 2005, there's no impact.

Next question, please.

Martin Pacoy (ph).

From Danske (ph) Bank. I also have three questions. Firstly, if we assume that the (indiscernible) is delayed by two to three years does it have any impact on your long-term projections of your EBIT growth? I understand in the short term you're still safe by very strong insulin growth but if you look at the long-term, will it have any impact on the 15% growth rate you are targeting right now?

Then, secondly, the healthcare authorities now in Europe is requesting a more efficacy and safety data on trauma medication. Does that change anything to the studies that you are now doing in other indications? Would you make studies larger, or some (indiscernible)? And then finally a question for Mads as well.

We have seen over the last couple of years that several products are exiting your pipeline. Either due to failure or due to their getting launched but that doesn't (indiscernible) that many products entering the pipeline. How are you seeing your pipeline in five years? How will you strengthen your United States pipeline?

Two questions to Mads Krogsgaard, one. The (indiscernible) where the EMEA have any impact on other indications in terms of number of patients in terms of the way we are dealing with these indications. And the second one is a pipeline question. Yes, certain projects have exited (indiscernible) analogues, and now recently the (indiscernible) antagonist. How do you see the pipeline development? How do you see new entries to the pipeline in the midterm? Do you think first whether or not the day or potential work case today, of your approval would have any impact on our guidance on EBIT?

Yes. Thank you. The guidance we have given is 15% growth in EBIT year on year. We stick to that and it's really linked to very much to the organic growth rate that we've been able to demonstrate; and I think it is now 12 quarters in a row, where we have seen at least double-digit growth in our topline. And when we look towards 2005 and 6 we still believe that this is indeed very achievable for Novo Nordisk.

Do bear in mind from (indiscernible) that what we're impacting now is the European part of our NovoSeven sales and the U.S. part actually constitutes more than 15% (ph). We are seeing solid growth in North America and we continue to see growth opportunities in Japan and IO which will also add to growth within the NovoSeven segments. So when we look the next two, three years ahead, do I see a significant change from these delays with trauma in Europe on the overall growth opportunities for Novo Nordisk on our EBIT line? The short answer is no.

Before I turn to Jesper Brandgaard, I would just like to add that it is important to note that the regulatory relationship to FDA and, hence, to the largest market for NovoSeven has not been impacted by this recent discussion with EMEA. On the contrary we are moving ahead, getting common understanding with FDA on how to proceed on trauma which -- in the past -- has been on hold for Novo Nordisk.

We are also moving ahead with an ICH study which will give a license for (indiscernible) ICH in the U.S. so that we have to distinguish between the European regulatory situation and the U.S. regulatory situation. And with that -- other indications, whether they have had any impact on the indications.

It's important to understand that in the trauma situation it was based on at least two studies that we entered into a dialogue with EMEA (indiscernible) countries. And they were at that stage favorably inclined towards a submission of a march-in (ph) authorization efficacy which is what we have done and now we will see what will happen as we go in the dialogue. But we have updated you on that one. Regards other indications, typically what you do is after Phase II you do a pivotal trial. So that you end up submitting based on that one. Now this is not the (indiscernible) where we believe the efficacy data we generated where very compelling indeed as we discussed previously and ICH as such is not interlinked with trauma. I don't see any link between the trauma and the ICH situation but outside of those two if we take for instance upper GI bleeding, you are aware that we've done one previous Phase II trial and Europeans told us to one more trial and if that was good -- and that's ongoing as we speak -- that could form the basis for submission.

So it is a case-by-case approach but in the standard situation we would do Phase II followed by pivotal trial. If you then look at the efficacy situation we expect three to four new monocules (ph) this year to enter Phase I clinical trials i.e., to go into clinical development. And on top of that we realized that in early stage development, there is some gap. I.E., the possibility to fill in new projects via end licensing activities; and these are things that we are looking at as we speak in the areas of diabetes and biopharmaceuticals, of course.

Annette Lykke.

Carnegie. I just have a question about this conservative study again to do on blunt trauma. Is there any hopes or chances that you can do it faster than you did with your first Phase II study on trauma? I. e., due to the reason that you may only include blunt trauma or the number of patients will be lower?

The other question is about ICH. I know, Mads, you said you don't see any links between those two. But do you think that the fact that EMEA has asked for more data on trauma also could just be a general thing that they've also asked for more data and to see your conservatory trial on ICH as well.

And then my last question will be, is there any reason why you shouldn't have started that trauma study fairly shortly after the first results you had in December 2003?

Again that's -- as expected, a number of questions relating to the speed with which this new study can be initiated and completed. Are there any ways which we can segment the patients and thereby increase the speed? What are if any -- is there a link here between ICH revenue and the trauma start -- what was the last question? Why didn't we start it, yes, please?

First of all there are two approaching factors on trauma trial compared to the previous one. One is the end point might be a somewhat more hard or composite end point compared to the (indiscernible) fusions in the first trial. This will on the one hand mean more patients than in the first trial, which was 283 patients. On the other hand, we now have documented safety and it might be possible to recruit patients at an earlier point in time to the dramatic lead, meaning that we can include a bigger fraction of the trauma population.

So these two opposing factors basically mean that I think we are more or less on a par with the other trial in terms of time and duration. It's in the ball park of around probably 600 patients or so we're discussing. Why have we not already started the trial? Well since we were in this constructive dialogue where they actually were inclined to say we could file based on the data that we had, then it would not from an integral perspective be a logical thing to initiate a clinical trial with placebo comparison when you actually are arguing and submitting that you have now shown that this should be given to patients who have trauma.

So that was the reasoning behind not starting the trial at that point in time. That being said, when you mentioned ICH, there we have actually decided to initiate a global trial because the FDA already -- months ago -- informed us that they would like to see a confirmatory study because of their overall safety precautions that they have within all drugs for review. So that is the reason why we have decided at a very early stage to make a global confirmatory ICH trial. That will be initiated at a point in time that will potentially allow us to have some let's say interim assessments in the dialogue with the EU which is not the case here in the trauma situation where the trial has not been initiated.

Next question please.

Paul Mann.

Morgan Stanley. I have a quick question on the ICH. I remember, months ago about a year ago, you showed a slide that 100,000 patients eligible for NovoSeven -- you started a patient population of (indiscernible) thousand used to via patients here get at the ICU and those who are unable to get a CT scan within three hours. Could you talk to us about the thrombotic events those 100,000 patients may have seen. Because in your original protocol, you excluded patients within 30 days from (indiscernible) event. However you then, later, adjusted that study to exclude any patients who had ever had a thrombotic event so could you just talk that whether that changed in definition of patient changes that patient population?

Tell us about the evolution of the potential segment of eligible patients for the ICH that has emerged over time?

Very briefly. The overall safety situation as you recall, there was significant effect on mortality and functional and neurological outcomes as well as the hematoma (ph) expansions so that was the efficacy. On the safety, the total number of either severely disabling or lethal thrombotic events was similar between placebo and NovoSeven namely 2% in both groups. That said, though, there was more material typically moderate or only low-level in myocardial thrombotic events that typically waned over time. So basically the outcomes were not at all impacted by (indiscernible) genesis occurring. If you look at the amendment that was made to the protocol you are absolutely right it was amended, because at a certain point, we were worried about the issue.

I can tell you however that we dig into those 400 patients and look at those who were enrolled prior to the amendment and those who enrolled post amendment, there's absolutely no difference in the occurrence of thrombotic events so that is actually making no change.

But you originally defined the patient population as being 100,000 patients worldwide. Is that definition of 100,000 patients under the original protocol or the change protocol? Because, clearly, there is a basic definite difference between those who have had a thrombotic event within 30 days of the ICH occurring and those that never had a thrombotic event before.

I can tell you that in the trial that we are starting as we speak or at least mid this year we have a situation where we are enrolling patients within a larger range than we've done in the first trial. So don't be worried about the guidance we are giving in those 100,000 patients. They should be eligible at the point in time where at least the -- of course what you're saying is that if we get the approval now, based on this file where we have limited the inclusion of the patients, there could of course be a two-step process. But we basically believe that is 100,000 patients that are eligible i.e., that are scanned and dosed within the first four hours.

But how many of those will have ever had a thrombotic event previously? Do you have any data on that?

Yes we do. Oh my God. I think it's 10 to 15%. I'm not actually sure. I have the data somewhere, yes.

I would kindly ask you to call the investor relations after the conference. We can dig that information out for you and relay that to you. Thank you very much.

Sebastien Berthon.

Exane BNP Paribas. Two quick questions. One on the Glucagon Receptor Antagonist. Is it the end of your research in that area? Because there's not a vaccine not efficacy enough? Or are you still looking at other ways of using this kind of target? Also a quick question on the Levemir sales and HRT sales. Are you ready to give us for Q1 if possible?

The exit of the 25 '01 Glucagon Antagonist Project have implications that we are seizing it, for the research and development in this area.

First of all the short answer is, if you're talking about all antidiabetics (indiscernible), then the answer is no. Among those 3 to 4 molecules that will interface 1 this year there is actually an all anti diabetic so we are in that field but if you're talking about Glucagon Antagonist per se, yes, you should always expect to see more Glucagon Antagonist coming to the pipeline because we did not see a commercially attractive glucose production.

To what level will you comment on specifics as it relates to HRT and Levemir?

Sebastien, you have a 50% (ph) hit rate. Because on the specifics or on the HRT sales, you should go to Page 11 of the press release and there you see a split between HRT sales and other products. So that's actually broken out specifically for you. Whereas the details on the analogue sales we prefer and present to provide them as one group and detail and I should also still comment that the Levemir sales out of the total are not very significant at this point in time. But it will increase as time moves on and penetration greatly, gradually builds up in your currently and then later U.S.

(technical difficulty)

Louisa Brax (ph). Lehman Brothers. The first question is just on the, again, strong U.S. insulin growth. The 46%. You've given us an idea of the price component there. Can you give any more details on how that splits up? Share gains? Market growth? Rebates? Pipeline filling? And then looking at the pipeline on inhaled insulin and the GOP1 analogue we seem to be waiting until the end of the year for entry into Phase III. Can you tell us what the decision is like why are you waiting on the inhaled insulin? And what is it that is still delaying the GOP1 analogue? And the first question I would like to defer to Mads Krogsgaard about inhaling insulin and Phase III. What is keeping us back from reinitiating Phase III clinical studies and then I will (indiscernible) U.S. as growth rates.

That's 2 different things. On AERx, we had just communicated today that the good news is that efficacy as measured by HB1C is on par actually with the (indiscernible) injections and also the antibodies did not interfere with the international profile. And finally that pulmonary function testing was not affected so this means that it is now a question of going into the dialogue about the remaining part of the program with agencies and getting all the strips, the patches, the devices and so on so forth all ready and validated prior to the reinitiation position. For the Replitide it is slightly different. There we have communicated that we were actually do in the clinical trial to get a larger patient exposure both on safety and efficacy at the chosen clinically recommended dose and that will finish in the second half of this year so that we can start Phase III 3 in the U.S. around the turn of the year.

With regards to the U.S. (indiscernible) market I can comment that there has been no pipeline building in the first quarter 2005. I already indicated the price development and, consequently, the rest of our growth is volume growth. If you look at the U.S. insulin market growth for the first quarter, my assessment is that it will be around 3 to 4% volume growth in the U.S. for the rest of the gain of market share.

Henrik Simonsen.

Enskilda. Good afternoon. A question on NovoSeven. You announced the two additional indications (indiscernible) surgery and traumatic brain injury (indiscernible). When do we expect the results to come up from these studies? And, secondly, I would like to follow-up to the question that was raised previously to Lars. How he assesses the non-insulin diabetes pipeline which has weakened -- I think considerably over the last 2 to 3 years. What are you doing to improve that situation?

Henrik. Mads, will you kindly remind the audience about the cardiac surgery and traumatic brain injury? When we will see some data from these ongoing in terms of trials and then I will revert with the non-insulin pipeline.

I think you should expect to see the last patient in the study and out of the study again within the next year. Probably GBI coming before cardiac so that's the only guidance I will give at this stage. We will update you as soon as we have data from the trials over the next four quarters or so.

Then, with regard to the pipeline. It is obvious that in the business part of our strategic redirection that it has become increasingly difficult to identify very interesting OAD (ph) target that we could pursue. Obviously if we look at OAD targets that are likely to emerge are the DPP flaw inhibitors. They are a number of megaconsumer medical (ph) companies pursuing these. We have our own view on it and we think they're monitored in efficacy. We think they're nonspecific. Hence, may have a side effect profile which may impact its file-ability and approvability. In addition to that, we know that there are still a number of companies that are working on insulin sensitizers. We have had, if you want three go at this category ourselves. Find that whole category to be complicated. But that does not mean that new (indiscernible) sensitizers will not be approved so that is an area where one might, if one has strong nerves, look at finding a compound.

In addition to that, if we look at the borderline insulin pipeline, we can talk about the pump development which can strengthen the business but in certain areas, we are looking to see if we can strengthen our business but that would be more in the area of insulins. So basically our attention is to continue to scout the market for new targets. We believe that we as a Company should identify new targets where the innovation level is relatively high in order for us to engage in new OAD compounds in the future.

As Mads mentioned previously you will be considering end licensing as you've done previously with Dr. Reghe (ph)?

Yes, correct. We have done end licensing both on (indiscernible) and in the area of all antidiabetics but also we have had a research collaboration with (indiscernible) obesity which is another area that might enter into the study relatively soon for us. Also an area that you could characterize as a diabetes area where, of course, (indiscernible) is getting very close to filing. So collaborations liable to -- even acquisitions could be a potential avenue for us.

We are getting close to the end of the conference.

Tim Rice.

ING. One quick question on the tax rate. First of all, could you just talk me through the Danish tax situation -- as a nonDane, I am not familiar with it, particularly. And then could you explain what we should expect for the tax rate going forward into '06, please?

Thank you. We are familiar with the Danish tax rate.

Yes, both the personal tax rate and the corporation tax rate. The current corporation tax rate in Denmark is 30%. And that is now being -- supposed to be lowered with the (indiscernible) from the income year 2005 to 28%. As a significant portion of the overall value generation in Novo Nordisk gets rated and exposed to the Danish tax rate, that's why you see a significant impact of this 2% reduction in tax rate on the overall corporate tax rate and that was where it hinted at that it would have a recurring effect of a 1% going forward. And that was why I noted that the tax rate would drop from the guidance of currently from 31 to 30 and then addition of course, there will be a calculation effect on the deferred taxes which will be a once off if they can 2 '05 by another percentage point.

But do also note that we have in 2005 a non -- a tax exempt income related to a divestment of shares so you can say, the underlying level of tax currently is at 32%. We will reduce it by 1% with the lower Danish corporate tax rate if approved. And then you get to 31% going forward for the 2006. That would be the best guidance.

Ladies and gentlemen, I would like to take one last question. Please.

(indiscernible)

Merrill Lynch. Three questions on the (indiscernible) if I may. Firstly on the extra trial I just wanted to check that the EMEA is not asking for any endpoints from the new trial. Secondly are the full results from that (indiscernible) indicated that potentially the publication of maybe a 7 day period (indiscernible) may aid or flavor usage. And there's the decision from EMEA that may affect sentiment of physicians. And finally on the U.S. trauma trial, you suggested you are coming toward the end of discussions there.

I just want confirmation on that primary endpoints that the U.S. is not looking for a mortality end point.

(indiscernible)

A lot of different things there. On the end point discussion, that is something where in the Phase II you typically look at simply transfusion endpoints. (indiscernible) transfusions and so on. You would be aware had we just presented at the (indiscernible) meeting in Brussels just a few weeks ago actually, data showing significant effect in the 48 survivors on things such as complications, multiple organ (indiscernible) and so on. And there will clearly be endpoints looking at that kind of endpoints. Not mortality, as such. But that kind of endpoints. This is why I said the trial is expected to be bigger than the Phase II trial that was only powered for transfusion unit production. If we look at the off label sales, the sentiment.

There is no sentiment change whether it's approved by the EMEA. The medical doctors, they have their own opinion about Luvacin (ph). I can tell you from having talked to dozens of them. So that you should not face anything on whereas the doctors read the papers. They do read, for instance, they make their own opinion about the trial and that is published in the next few months. There, they have their own opinion about the efficacy level that has been seen but they don't listen in that regard to regulators. They give their own experiences typically. If you then -- what was the one?

(MULTIPLE SPEAKERS)

In the U.S., it is actually (indiscernible) in their guidelines mention mortality in patient compilations of this kind. That does not mean that it's going to be a mortality study in terms of the numbers we mentioned, 1000 patients in that (indiscernible). 1000 patients are not sufficient for powering a (indiscernible) study. So it's a moderation on that theme that I will be able to talk more about as soon as we completed the negotiations.

Thank you, ladies and gentlemen. This was first quarter release and conference call. Please be aware that a replay of this conference call will be made available on our website and I will encourage you to call on the investor officer and the person who had a specific question please call him. We will be able to dig out the information you requested. Thank you very much.

Thank you. That concludes today's conference call.