諾和諾德 (NVO) 2020 Q2 法說會逐字稿

Hello, and welcome to the Q2 2020 Novo Nordisk A/S Earnings Presentation.

(Operator Instructions)

Today, I'm pleased to present Lars Fruergaard Jørgensen.

Please go ahead with your meeting.

Thank you very much.

And I would like to start out by thanking Bank of America for organizing our virtual roadshow in London this quarter.

Hopefully, we can soon get together all face-to-face.

But we are pleased we have this opportunity during these difficult times.

So if we look at the slides, we will quickly go through what we presented yesterday, assuming that maybe not all, but many of you have participated in the conference call yesterday, but we'll just quickly recap the slides.

If we look, firstly, I have to remind you that we'll be making forward-looking statements, and that might not turn out to actually materialize itself.

So be aware of that.

Looking at our strategic aspirations for 2020.

We're very pleased with the progress we have made for the first 6 months.

If you look at purpose and sustainability, we have launched a new social responsibility, Defeat Diabetes.

We participated in the industry's anti-microbial resistance initiative.

And we are also very pleased with quite impressive 39% reduction in CO2 emissions this first half year compared to 2019.

Mads will get into innovation and therapeutic focus later on.

But a very, very strong second quarter, both in terms of product approvals, but also news flow from obesity pipeline, NASH, and we've also made what we believe is a quite interesting acquisition and exposure to a potential first and best-in-class opportunity in cardiovascular disease.

In terms of commercial execution, we have continued expanding our value market leadership position in diabetes.

We have also continued to see solid growth of our biopharm business.

And then, of course, we have seen an impact on new scripts in this COVID-19 period.

In terms of financials, we have maintained our top line guidance.

And with the lower cost spend, we're now able to lift the bottom of our operating profit range to 2% to 5%.

Very solid cash flow for the first half year.

If you take a bit the deeper dive into the COVID-19 pandemic, we're very pleased that we have managed to keep all manufacturing sites operational throughout the whole pandemic so far, and we are supplying the patients with the life-saving medicine they need.

R&D has been impacted in the sense that it's harder to recruit new patients.

But we're lucky in the sense that we have been able to keep all our late-stage programs running as they were fully recruited, and we do not see any major, say, delay in our overall clinical trial program, and gradually, recruitment is normalizing.

If you look at the commercial activities, we have all our reps in the field in the U.S., around 60% in international operations.

But they are all limited somewhat in the face-to-face interactions with doctors.

But we see an encouraging trend where we're gradually getting back to normal operations.

And that is actually reflected on the next slide, where you can see that we had a 30% to 40% reduction in new scripts when you look across our therapy areas.

And we have seen, say, half of that coming back.

So we now see that we have a growing trend in new scripts, and we are some, say, 15% to 20% below where we were pre-COVID.

So we are encouraged that gradually, during the second half, we can normalize the flow of business.

Sales growth of 7% was driven by a very solid sales growth in International Operations, where all reporting areas contributed with double-digit growth, very strong growth both from insulins and GLP-1.

U.S. growth was driven by our GLP-1 business.

And when you look at it, you all are aware that in the first quarter, we had a significant stockpiling where we grew 14% and we had more of a flat growth in second quarter, where we saw a gradual reversing of the stocks, and then an impact on reduced patient flow that overall, means that our underlying growth is close to what we are reporting here of 7%.

With that, I'll hand over to Camilla.

Thank you, Lars.

And on this slide, you see the sales growth driven by GLP-1 primarily, but then also a growth of 9% in obesity.

In insulin, we have globally a minus 3% growth.

But the very distinct differently dynamics in IO, where we grew 10% and minus 23% in North America.

Biopharm growth is 6%, primarily driven by Norditropin.

All of this leads to an increase in global diabetes value market share by 0.8%, but also an increase in insulin volume market share, and an increase in GLP-1 market share.

If you go to the next slide, you see here the increase in the GLP-1 market share now reaching 58.3% in NBRx and 49.2% in total scripts.

You see a continued increase in TRx for Ozempic, and Rybelsus is now at 11% NBRx and 2.8% in TRx.

So an overall expansion of our GLP-1 market share.

On the next slide, you see the dynamics in IO, where we have an increase in share of growth in the total diabetes market now above our total diabetes market share, and on the right-hand side, you see the growth coming from all of the regions in IO, all growing double digit, as you're shown here.

You also see the potential for GLP-1, which is making up various dynamics in EMEA versus other regions like China, where GLP-1 still holds great potential.

On the next slide, you see obesity sales and market share.

You would notice that in the last quarter, there is a lower growth of 9% compared to what we have normally reported.

This is impacted by fewer patients' initiations, as was just shown by last that were at an all-time low in April, but now have regained back to around index 85%.

We're still market leaders at a value of 61% globally.

But our efforts, as you know, are really focused not on market share, but on expanding the market.

And then on the next slide, you see our biopharm performance growing 6%, primarily driven by Norditropin, our growth hormone product, and then the launches of new hemophilia products that are making up for the losses in NovoSeven.

And all in all, that amounts to a 6% growth.

And now over to Mads about the R&D portfolio.

Thank you very much, Camilla.

From the next slide, where we address the 4-STEP trials, you can actually conclude, based on STEP 1 and 3, that you achieved a 16% to -- or 17% to 18% weight loss regardless of whether or not you use intensified behavioral therapy, because the trials are similar, but one is with and one is without intensified therapy, and the achievements are the same.

So semaglutide overrules, apparently, at least the need for dietary intervention.

Importantly, STEP 4 addresses the same issue that you get 17% to 18% weight loss, albeit you need it as a chronic therapy, i.e., you have to adhere to therapy, not surprisingly, over a chronic period.

And that is a valuable element to address in the marketplace, where the stay time has been very short for today's anti-obesity medications.

STEP 2 really shows that we have a nice double-digit weight loss also in the type 2 diabetic setting.

On the next slide, we are addressing the combination product between semaglutide and the amylin once-weekly human analog 833, both on the left-hand side in the Phase II monotherapy dose range binding trial, where we can see that after only 26 weeks, we achieved a -- around 11% weight loss for the highest dose.

And importantly, on the right-hand panel, you can see that when you combine the 2 in the Phase Ib combination study, you actually managed to squeeze out a 17% weight loss after only 20 weeks.

That is the same weight loss as sema alone could do in 68 weeks, showing more or less additivity of the 2 medicinal products, which is also what we had hoped for based on the animal studies, yet the side effect was still reminiscent of that observed for semaglutide 2.4 milligram monotherapy alone.

And then on the last slide, there's a little bit of update for the rest of the year.

On the clinical side, we are happy to later on, announce the Phase IIb results from ziltivekimab, the first-in-class IL-6 antibody for cardiovascular disease protection.

But also the Phase II Gilead combo studies with the FXR compound and ACCi compounds, respectively, in combination with semaglutide 2.4.

And towards the end of the year, not to say, at the end of the year, the SUSTAIN FORTE program will also report.

In terms of initiation, we have 2 clinical initiations that's worthy of mentioning.

One is in Phase I. These are both insulins.

That is the glucose-sensitive insulin we will put into Phase I clinical trials during the course of this quarter; and insulin icodec, the first-in-class, once-weekly insulin will enter into Phase III trials during the course of the fourth quarter.

And finally, on the regulatory side, we are awaiting regulatory decisions on the once-weekly somapacitan for AGHD.

And obviously, we will submit sema 2.4 for obesity, the new drug application, in the United States around the turn of the year.

With that, over to Karsten for the financials.

Thank you, Mads.

So our financials for the first 6 months shows a local currency sales growth of 7% and an operating profit growth of 8%, around 1 percentage point positive impact from currencies.

In terms of our hedging, then we have a lower hedging loss at DKK 1.7 billion this year compared to DKK 2.3 billion last year, which, in consequence, leads to an increase in diluted earnings per share in the first 6 months of 14%.

The currency impact, we have seen -- the positive currency impact we've seen in the first 6 months of this year is mainly driven by a 3% increase in the average U.S. dollar to Danish kroner.

However, when we look ahead for the full year, then as a consequence of the U.S. dollar depreciating to the tune of 8% since our Q1 guidance, then we do see a negative evolution in the U.S. dollar, so 1 percentage point or so lower average U.S. dollar for 2020 compared to 2019.

And then in the bottom chart, you see the evolution in terms of emerging market currencies or side currencies, where we see some significant drops, be that the Argentinian peso or the Brazilian reais or the Turkish lira.

All in all, that leads to a financial outlook for the year, as Lars was talking to before, of unchanged local currency top line of 3% to 6% growth, but a negative currency impact going from a positive 1% to now 2% lower reported sales growth on a 2% negative impact on the reported sales growth.

Operating profit, we narrowed the range from the bottom.

So we raised the floor from 1% to 2%.

And again, currencies are expected to negatively impact our operating profit growth by 3 percentage points.

The flip side to that is that we -- our hedging losses are reduced by DKK 1.3 billion compared to our latest guidance to now DKK 1.2 billion.

Tax rate, unchanged, and free cash flow reduced -- the range is reduced by DKK 3 billion as a consequence of the Corvidia transaction that just closed a week ago or so where we paid an upfront of DKK 5 billion.

With that, over to you, Lars.

Thank you, Karsten.

So I'll now go through the last slide here.

I think we've touched on most of the aspects.

So in a very unusual first half, a very challenging environment, we are very pleased with our execution of our business.

So we're very pleased with where we are as a company, strong execution in the first half year, solid news flow on innovation, and we feel confident with our guidance for the year.

And with that, I would like to go over to the Q&A session.

(Operator Instructions) And our first question comes from the line of Sachin Jain of Bank of America.

It's Sachin Jain here.

Two questions for me.

So firstly, on IO growth.

We touched on it yesterday.

We're moving at 12% in 1H.

I wondering if you could dig into that in a little bit more detail as to what's the key driver of that in terms of specific products, territories, successful commercial strategy and thinking of the sustainability of that into next year.

The second question is for Mads on some data sets from year-end competition in the back half of the year.

So firstly, on sema high-dose obesity.

You've commented on a benign safety profile.

I just wanted to check whether that was based on discontinuation rates being low in comparable to low-dose GLP-1 or the actual adverse event profile also being similar?

The reason for the question is when I asked you a similar question at the ADA call, you referred to diarrhea rates being high single digit on a weekly basis, which I'm guessing could add up to a large number across the length of the study unless I'm missing something?

And then the second question was related to tirzepatide.

Historically, with Ozempic, you've managed GI tox through extended titration.

Is there anything you're aware of from a GIP perspective that suggests that's not possible with a very long titration, I think, 16 weeks that they've been using in Phase III?

Thank you, Sachin, and thank you for hosting us.

First, on IO, you're right, we see a very strong momentum in our International Operations business growing of around 12%.

And again, the stockpiling and the lower patient flow are of similar nature.

So we see a strong underlying growth.

When you look at it, it's really fueled by both our insulin business growing by 10%, and it's fueled by our GLP-1 business growing by 37%, and also biopharm is growing by 10%.

So we see a business cycle in a set of regions where we are launching a number of new products.

We have changed a bit our model to one where we ask the individual general managers to make sure that they beat competition and give them flexibility to use our portfolio of products because we have a very broad portfolio of both insulin products, obviously, but also GLP-1.

So it's really important that you have a market-fit strategy where you get close to the underlying, say, preferences in the individual markets.

And then we assess people on not meeting internal or no set budgets, but taking market share, beating competition.

And then you can say the demographics is also talking in favor of IO because we have an underlying demographics that's also more favorable than, you can say, in North America.

So it's demographics.

It's the product launches and doing that well across more than 90 markets creates a very solid momentum.

We guided at our Capital Markets Day of this 6% to 10%.

So we feel comfortable with where we are in terms of that.

Mads, I think there were actually a couple of questions to you, starting with sema high dose.

Yes.

Well, Sachin, the SUSTAIN FORTE 2.0 milligram semaglutide type 2 diabetes trial, a rather big one with around or more than 1,000 patients will report at the end of this year.

And important to mention is that we know that the benign tolerability profile of semaglutide has panned out in a way that we actually have a very nice and easy titration schedule for this trial in that we're actually able to go directly from today's Ozempic dose of 1 mg directly to the 2 mg target dose in that trial without further titration.

The reason why I am optimistic about the safety profile of semaglutide and tolerability profile of semaglutide 2.0 is that we have lots of data, as you are, of course, aware, from semaglutide, both in the STEP program, but also in the NASH program, plus in the combination programs with the AM833 molecule.

And what we are seeing is a benign GI adverse event profile.

So that when I look at nausea, there will be no weeks where more than 1 in 5 patients typically report nausea, for instance, in the STEP 1 trial.

And diarrhea-wise, we are down in the single-digit ranges.

And discontinuation rates are actually the lowest that we've ever seen in a large-scale obesity program, like the one we witnessed here.

So we have no reason to believe why SUSTAIN FORTE should not provide increased efficacy compared to Ozempic 1.0 with a more or less maintained GI tolerability profile.

With respect to tirzepatide, it's not really prudent for me to comment.

You should more address the questions to our colleagues at Eli Lilly.

I do note, however, of course, that the receptor distribution for the GLP-1 receptor and the GIP receptors is somewhat different in that there are quite a few colonic GIP receptors.

And whether they will undergo tachyphylaxis towards any diarrhea or genic effect or not and over what timeframe, I have no clue.

So we will have to see the titration data from the SURPASS study once we get there.

So that will, of course, be interesting.

Thank you, Mads.

Thank you, Sachin.

Our next questions come from the line of Keyur Parekh of Goldman Sachs.

Two, please, if I may.

One for Karsten and one for Mads.

Karsten, if you look at what you've delivered in the first half of the year and we look at the bottom end of your guidance both on the top line and on the operating profit side, you would essentially get to negative year-over-year growth for both of those.

So I'm just wondering if kind of -- obviously, how much of COVID-based conservatism is baked at the bottom end of your ranges?

And if patient flow was to get back to normal at the end or towards the 3Q, as you had originally planned for, then do we automatically think about the guidance being in the upper half of the ranges as opposed to the bottom half?

That's question #1.

Question #2, Mads, kind of we're now seeing you do PCSK9.

You've got an IL-6.

You got an ApoC3 kind of it seemed like that a concentrated effort to build kind of a third or a fourth leg of potential future growth for Novo on kind of the CV kidney disease side.

So just wondering if there is a single asset that you think kind of ties all of this together.

Or are you thinking of those as individual assets?

And if a collection of those work out, then that's great, but you don't need a single asset to be the mainframe of the franchise going forward.

Great.

Thank you, Keyur, for this question.

And clearly, the current environment we're in has more uncertainty than we would normally expect at this point of time in the year.

The way we've been doing our modeling in terms of the balance of year because that's, of course, also something we've been looking at, basically boils down to COVID because, as Lars was talking to initially, so our first half year performance there, destocking is largely offset by the reduced new patient starts in the first half year.

So we have underlying very, very solid momentum in our business, and you see that in our market share performance also.

So the reason of the somewhat lower growth rate in the second half, if I take those points, basically boils down to one, destocking.

So we still have DKK 1.5 billion in patient level inventories that we expect to destock.

So what percentage you put on that, but that would be a drag to, say, to the tune of a couple of percentage points if we look at that for the balance of the year.

And then on the patient initiations or the NBRx impact.

While you see a second quarter where we have flat sales and if destocking is a couple of percentage points, and then we are around the 4%, 5% mark on patient initiations and hemophilia procedures.

There, I'd say, that's where we're coming from.

And we're somewhat halfway back in terms of the trough of the impact.

But of course, there's an area under the curve.

So the patients we had expected to start in the second quarter, we don't have those patients in Q3 and Q4.

So we will have new patients to start, but we still lack that set of patients from the second quarter.

So that's kind of mathematically just in the numbers.

And then the question is the new starts.

So everything coming down to it, we believe this is the most realistic.

I think destocking is uncertain.

But of course, if patients are not destocking to the same extent, then we get closer to the high end of the range.

And if they destock as we anticipate, then we are more kind of in the center range, and then we're more talking about a resurgence of COVID-19 in the second half, that would take us to the bottom end of the range.

Thank you, Karsten.

Comments, Mads, on PCSK9, ApoC3 and how we look at that?

Yes.

I think your -- the 2 elements have driven Novo Nordisk towards becoming much more of a cardiometabolic company.

One is the fact that's spearheaded by our GLP-1 franchise, in particular, semaglutide but also liraglutide.

We have witnessed that the pleiotropic action of GLP-1 has provided us with so many cardiometabolic benefits, whether it's on the cardiovascular system, the MACE benefits, whether it's on the liver, whether it's on adipose tissue or obesity and so on.

And that, in its own right, has given us expertise in developing drugs within the cardiovascular domain, as you can see from the way we've executed our 4 different cardiovascular outcome trials.

When that is said, we started mapping if sema could reduce MACE risk by 26% in diabetes, what are the remaining 74%?

Well, that's what we call the residual risk, and that's on top of statins.

It's on top of GLP-1.

So there's still a huge residual risk, bearing in mind that 70% of type 2 diabetics die from cardiovascular disease.

So we mapped out what we needed to do in order to become a cardiovascular player with a more holistic approach to this beyond GLP-1.

And the residual risk is composed of some lipid elements, whereby we know that LDL-cholesterol and triglycerides are the most important, and they are addressed by our PCSK9 peptide and the anti-ApoC3 antibody, respectively, LDL and trigs -- respectively.

But then we also know that from the cancer study and from human genetics, that the immune system and, in particular, the inflammatory part of the immune system is highly involved in the plaque aggravation and rupture.

And to that end, the most genetically validated cytokine that emerged from the analysis was IL-6.

And that coincided with the cancer study showing that the effect of blocking IL-1 is related predominantly to IL-6 lowering, as we know from some analysis that have been done.

And that led us to pick up this unique opportunity, Corvidia, that is the only safe -- apparently safe way of lowering at very low levels of drug concentration IL-6 in the circulation.

So that is our approach to bringing.

And also, we need, strategically, to bring a cardiovascular product to market that is not a diabetes product, we believe, but a pure-play cardio product around or just after the turn of this decade in order for us to become a serious player and justify the investments.

And that's some of the thinking behind the Corvidia acquisition.

Thank you, Mads.

Thank you, Keyur.

Our next questions come from the line of Wimal Kapadia of Bernstein.

Wimal Kapadia for Bernstein.

Mads, now that we've seen some of the small data -- some more data from the small molecule GLP-1 at ADA this year, have your thoughts changed at all on the potential for small molecule GLP-1 in diabetes?

Or are you still pretty confident that peptides are the way forward?

And then tied to that, just any color on next steps for your next-generation or GLP-1?

When could the product realistically be on the market?

I know Rybelsus just launched, but just some long-term comments will be really helpful.

And then, secondly, can I ask why it's taking until '21 -- and correct me if I'm wrong, but I think it's second half of '21 before you start the amylin sema combination Phase III trials in obesity.

Is it because of the device?

Is it because you're looking to reformulate?

Any comments will be great.

Thank you, Wimal.

Mads?

Yes.

So Wimal, it is absolutely true that the Pfizer data that were presented on their twice-daily small molecule compound at the ADA provide evidence that it appears to be possible probably due to a direct auto-steric mechanism of action contrary to what belief everyone has had, including myself, seems to be possible.

However, we can also see from the data, as you are aware, as the rest of us are, that even if they do make a sustained release preparation and they do make more subtle titration, they have the GI issues that were witnessed in the publication or in the presentation.

Yet, we are clearly of the opinion that there is potentially a way forward for small molecule GLP-1 agonist.

I do not necessarily believe they will have the full array spectrum of activities as the native peptide or the modified peptide semaglutide.

But we will see that as time goes by.

For us, it's important to continue innovating, and we actually believe that the next generation, which is your next question, of Rybelsus or oral semaglutide is something that we will bring out there as fast as possible.

It hinges upon our ability to either deliver a, you can say, higher bioactivity, i.e., increased bioavailability at the same dose and/or you can say, tablet versions that are even more affordable.

But predominantly, we would like to move the same way as we've done for Ozempic, i.e., towards increased efficacy.

That goes without saying both on glycemic control, body weight and whatever we may decide to do in that field.

With respect to the amylin 833 and sema Phase III, yes, it is true that there is work to do.

Because once you know what is the dose of the AM833 that you want to partner up with semaglutide, only at that point in time, which is around now-ish or soon, then you can start doing all the formulation work, doing the relevant multiple dose pharmacokinetics studies that are needed and make sure that you have the right formulation and drug delivery system approach to Phase III.

What I can promise you is that when we enter into Phase III in the second half of next year, as you correctly state, that will actually be in a way that no patient or doctor will be able to see as any different from a standard injector with a single or an easy shot into the subcutaneous compartment.

Thank you, Mads.

Thank you, Wimal.

Our next questions come from the line of Michael Leuchten of UBS.

Two questions.

One, just going back to the implied second half costs and I think that's something that yesterday was a little bit missed that the ramp of new patients into the second half will have an impact.

Would you be able to quantify how much growth the lack of the NBx -- so the NBx decline in the second quarter is going to impact the second half.

Any number on that would be helpful to put a piece of the puzzle together.

And then, Mads, going back to your commentary around the AM833 data.

Just now looking at the curves, I'm looking at 1.2 and 2.4 milligrams.

Is that -- so when I look at the 1.2 milligram curve, is that the one, effectively, that looks like that's the one to go forward?

Or will you have to do some modeling work here that you had to do with sema before you went into Phase III?

Yes.

Michael, it is -- when we do the modeling, and I think the best starting point to explain the carry-forward into the second half is to look at the impact in our Q2 growth rate.

So as I start out, if we were flat, and we had a couple of points from destocking and then to the tune of 4%, 5% from biopharm and patient initiation.

So if you call biopharm out by a percentage point or so, then we have 3 to 4 percentage point of impact in the third quarter linked to new patient initiations.

And do bear in mind that, that impact is a mix of a reduction in new patients.

So call it, let's say, that as Lars showed on his graph, let's say that new patients were down by to the tune of 25% and NBRx to TRx is 10%, then perhaps you can explain a couple of percent on that accounts.

But -- so already there, we see the impact in Q2 of continuing scripts to get to 3% to 4%.

So if you call it 2% plus, and then you will have to add in 1% or so on the continuing scripts.

And that's basically the effect that we then see in the carryforward.

So 1% to 2% impact on the continuing scripts that will carry forward, both in Q3 and Q4.

Thanks, Karsten.

Mads?

And on the dose selection for Phase III for AM833 as a partner for sema, Michael, I have to remind you that in the Phase Ib study that you have on your right-hand panel, do bear in mind that it's a 20-week study.

But up until week 16, all patients only received 1.2 milligram.

So the 2.4 milligram dose that gives you slightly more bang for the buck is actually only administered for 4 weeks.

So before we jump to the conclusion that 1.2 can do the job, our pharmaco mathematical modeling has to tell us what does this kind of 4-week difference, what would it translate into over a 68, for instance, week period?

There might be, from a bang for the buck perspective, more to be had at 2.4, or in principle, even 4.5.

That is a cohort that has not reported yet, as you're probably aware.

But it all has to also then be seen in the context of us wanting a very well tolerated product.

So these are things that we'll get back to you as soon as we've made a dose selection.

Thank you, Michael, for those questions.

Our next questions come from the line of Mark Purcell of Morgan Stanley.

It's Mark Purcell, Morgan Stanley.

Three quick ones.

First one, the net price of Rybelsus in the United States.

I think last year, you said, by the middle of the year, we may be able to have a kind of guess of where it's heading.

But it appears like that the list price, obviously, about 11% below Ozempic, the net price appears to be 30% below Ozempic at the same point of the launch.

So I wondered if you could help us understand roughly if that's the net price reduction ballpark.

Secondly, in terms of just housekeeping.

Norditropin, there was a positive impact from the low inventories in Q2 and human incident, a positive impact from the timing of shipments.

Karsten, I wondered if you could just help us understand roughly those amounts that can we -- that can help us quantify those and model in the quarters yet to come this year.

And then lastly, I've received a number of questions on this since yesterday's call.

But for the North American growth in 2021, is that still expected to be in the flat to low single-digit range on a CER basis?

Obviously, you helped us yesterday in terms of thinking about the impact or potential impact of U.S. unemployment being a 3 percentage point drag over this year next year, and that could be interchangeable by a similar incidence in the U.S. next year.

I'm not aware of any other important swing factors beyond the organic growth of your business, which has been very positive.

So could you sort of help us -- if that's still the case, given that consensus is expecting, it appears double-digit North American CER sales growth in 2021?

Mark, I can start on Rybelsus net pricing.

We -- when you launch a breakthrough innovation like this, you spend the first time on really making sure that the positioning is clearly understood based on the clinical differentiation.

So all the medical work and that leads into the contracting.

And we are very pleased with the level of access we have achieved and also the pricing.

And I cannot go into talking about what the net price is.

But it's a price that's determined by the quality of the product, and we're pleased with that price point.

Karsten, on Norditropin and then 2021 North American growth perspective.

Yes.

Yes.

Thanks, Mark.

So on Norditropin and human insulin, you're perfectly correct.

We've seen some, I'd say, reasonably unusual growth rates for those 2 products.

So if we take human insulin first where we've seen a couple of quarters of 10% growth, which, as you allude to, is mainly driven by timing of tenders and shipments in IO.

There, if you look at it historically, then for human insulin, we've seen a, I would say, a flattish development over quite a number of quarters.

So the fundamental level for human insulin is more flattish.

And actually, for growth hormone, also at 18% growth in the first half.

There are basically 2 factors or 2 discretionary factors going into that.

One factor is a competitor supply shortage that has helped our business in certain geographies, including in Japan.

And then, we've had an inventory movement, especially in the first quarter in U.S. So I'd say our growth hormone business, in terms of when you look at the fundamental market with a, I'd say, low single-digit global volume growth in that market and a, call it, 33%, 34% market share, we would see fundamentally a, I would say, low positive growth for Norditropin compared to the underlying.

But then, we've been good at capturing competitor business, as I spoke to, and then we had the supply chain movements.

In terms of 2021 and the outlook for the U.S. or for North America, then do recall at CMD, we said 7% conversion and said this 0 to 2% growth level for 2020 and 2021.

Now we've seen a number of factors play out over the last 10 months.

And what we're looking at is 1% growth rate for the first half year, including impact, both from affordability programs and donor toll in the first half, and -- which will not be that to the same extent, we expect in '21.

On the other hand, then we have the U.S. unemployment with an annualized 3%.

So that means it's not the full 3% you'll see in '21 because some of it will phase in over the remainder of 2020.

And then you put on top of that very positive GLP-1 dynamics and the launch of Rybelsus.

And then, of course, still a continued drag on the insulin business.

So we're not guiding on a specific range into 2021.

But I think you have pretty good building blocks based on this to do the modeling.

Our next question come from the line of Jameel Bakhsh of Barclays.

Jameel Bakhsh from Barclays.

Just 2 questions from me.

So firstly, on ziltivekimab, your Corvidia acquisition there.

So where do you see just that molecule itself sort of fitting into the current treatment paradigm for advanced -- chronic renal disease?

And could you talk further about the current treatment options available to patients there?

And then, secondly, could you share any insights from anything on your PK/PD or safety observations from your early stage Mim8 hemophilia study?

And when would you expect data to read out and would the next steps for that program be to a Phase III one?

Okay.

Right.

On zilti, first of all, the colleagues at Corvidia Therapeutics have done a really marvelous job in terms of defining the population they have designed the Phase IIb trial for in that it is atherosclerotic cardiovascular disease in patients who have some element of chronic kidney disease, many of whom have diabetes, but many of whom do not have diabetes.

So it is a true cardio product.

And what has happened here is they basically increased the level of inflammation because chronic kidney disease is followed by significant systemic inflammation in the body also driven, as we can see, by IL-6.

And that means that they've targeted a population that is expected to respond clearly favorably to this kind of intervention.

And it is, of course, a first-in-class in that it doesn't block the IL-6 receptor with all the downstream side effects that, that could entail because other cytokine members of the family will signal to be at that receptor.

It rather leaves the receptor alone and only at low doses, is able to soak up the circulating IL-6 ligand and thereby dampen inflammation, hopefully, in what looks to be a very safe way.

So it fits into the grand scheme of cardiovascular protection as being the first -- unless you believe sema is an anti-inflammatory, then it is indeed the first anti-inflammatory mechanism to hit the market and reduce cardiovascular disease.

And if I look at cardiovascular residual risk in people with ischemic heart disease and other CBDs or atherosclerotic problems, then inflammation is probably at least half of the residual risk.

So this is a very significant element to treat.

And it fits in nicely, as we discussed earlier during this call, with semaglutide, but also a lipid-lowering agents.

So that's actually very nice.

On the Mim8, well, we are, of course, held back a little bit by the German clinic that was running the trial having to undergo lockdown for a period in COVID-19.

But they managed to do the first cohort before the lockdown and now they're up to full speed down there, which is really nice.

So we have early PK/PD modeling, and it is looking, let me just put it this way, encouraging.

And yes, it is the intention to move into Phase III once we have done, first, a single ascending dose followed by a multiple ascending dose Phase I, which will then be followed directly by Phase III.

So that's the intention.

Our next question comes from the line of Jo Walton of Crédit Suisse.

One general and a couple of quick R&D ones.

On the general one, I just wondered if we could explore a bit more this 3% negative impact from unemployment that you're thinking of.

Is this, you think, people will -- who are on commercial insurance now end up with no insurance, and therefore, a proportion of people just won't get treated?

Or do you expect people to move from commercial insurance to Medicaid or Medicare insurance?

And just for exactly the same prescription, you're just going to get less revenue.

So same volume, lower price.

So just to explore that a bit more.

We really appreciate you giving this sort of view because you're one of very few companies that have done that.

My second question is beyond just on R&D.

On the amylin combo product, do you need to get the amylin product approved as a monotherapy from a contribution of components point of view?

And then one area we haven't heard anything about in our Q&A today is NASH.

Just wanting to ask Mads, what makes him feel confident that you can show some improvement in fibrosis here?

If you can't, would that be an issue for approvability?

Yes.

Thanks, Jo.

And I appreciate your feedback on the 3% impact.

Needless to say, an estimate like that is surrounded by quite a big uncertainty.

So I would say, in simple terms, we see unemployment going from 4% in January to now around 11%.

So clearly, millions of Americans will move from being employed to being unemployed and hence, lose their employer-sponsored health plans.

Then how we estimate the impact is -- I can give you building blocks to it.

So first of all, we look at the demographics of the population being exposed, which is also driven by different sectors and geographies and et cetera.

Then we look at their prior health insurance.

Are they on employer-sponsored health plans or on the exchanges or what are they on?

Then we look at number of dependents.

And then, finally, we look at where do they go.

And clearly, some will go to Medicaid.

Some will have temporary COBRA insurance.

Some will go to being uninsured.

Some will move to be coming to the exchanges, and some will go to our patient assistant programs or other cash-based programs.

So it's so many different assumptions with so high uncertainty that at this point, it would be meaningless to give more hard data than what we've already given.

Thank you, Karsten.

Mads, on amylin combo, whether monotherapy approval is needed, and then on NASH and fibrosis?

Yes.

So thank you, Jo.

On the amylin combo, it is absolutely true that when you have an agent that has significant pharmacological activity, then the FDA and other guidances are that you need to have exposure and show safety and efficacy in the Phase III situation with that entity.

There are certain rules about how many patients have to be exposed for how long, and that is easy to do either in a factorial design, where you have Drug A, Drug B and Drug A plus B. And then if Drug A is the amylin component, then you just need to make sure that, that arm of the study is big enough and long enough to satisfy regulators.

It doesn't mean to say that you have to launch the monotherapy component alone, but you do need absolutely, as you correctly state, exposure in the Phase III setting.

And since we saw double-digit weight loss, we cannot argue that there's no activity with this agent.

So that is the base case for Phase III.

In terms of semaglutide in NASH, well, actually, we deployed a multitude of actually, an array of assessments also to assess fibrosis.

And when we look at fibroscan elastography, we actually saw fibrosis improvements.

When we look at the ELF, which is a fibrosis score using P3NP TIMP-1 and hyaluronic acid in a very sophisticated formula, we also saw fibrosis reduction.

When we look into the biopsies, we did not see a improvement in those who reduced their fibrosis score without NASH resolution changes.

But what we did see was a significant reduction in the progression of fibrosis such that in the placebo arm, 1 in 5 patients would either progress from F2 to 3 or F3 to cirrhosis.

And that number, instead of 1 in 5, it was only 1 in 20 in the semaglutide NASH arm.

So I have to say, Jo, we have a multitude of lines of evidence that suggest that we're actually halting disease progression, and that should work fine with the regulators.

But of course, we are discussing this with the regulators, as you can imagine.

And can I just ask very briefly as a follow-up, given that the first thing you do with the NASH patient is to try and make them lose weight, and given that a GLP is a great way to do that, what proportion of NASH patients do you think out there don't take a GLP already at some point in their treatment?

Unfortunately, way too many.

Because you're absolutely correct that they should be taking a weight loss agent like a GLP-1.

But today, if you take the U.S., despite the very nice talks we're having about GLP-1, I think, today, in diabetes, it's like 6% -- 8%, we're up to now, it's going well, 8% of the population.

That means 92% are not being treated with the GLP-1.

And in obesity for Saxenda, I mean, the number is below 1% of the obese population who's taking Saxenda.

So it should not be like this, but it is.

So there's a lot of patients to go for.

And of course, you can see NASH in the context of obesity, of diabetes, et cetera.

Thank you, Jo.

Our next questions come from the line of Peter Verdult of Citigroup.

Pete Verdult, Citi.

A few, please.

Mads, Lars made some opening remarks about clinical trial programs being or timelines being maintained during COVID.

Just drilling down specifically the SOUL and the SELECT CVOT studies?

Anything that you can say about enrollment rates, event rates, time lines would be helpful.

Secondly, on NASH, I mean, I think no one denied there is a -- there's promise with there in NASH.

We've got this combo study coming up with the Gilead assets where the monotherapy data for the FXR and ACC weren't particularly promising.

So how hopeful or not -- can you frame your expectations or level of excitement for this upcoming combo data?

And then lastly, for Camilla or Mike, if he's on the line, is it too early to ask you about Tresiba in China?

Basically, obviously, you haven't been able to yet get on the front foot and promote your new products such as Ozempic, Rybelsus.

Tresiba is probably the first of the recent products that you've been able to launch in China.

I realize COVID is a rather big disrupting factor.

But is it too early to ask you how that launch is progressing in China for Tresiba?

Thank you, Pete.

Mads, first on the clinical trials.

Yes.

Well, so what has happened, Pete, is that we, as I might have explained previously, have been ahead on the recruitment curves, for instance, for SELECT, but also spot on for SOUL.

And while the COVID-19 situation has, to some extent, paused the recruitment for a period, we're back up and running, not at full speed, but clearly above 50% recruitment rate.

So we are doing well and expecting that those mega trials will have recruited more or less by year-end.

And in terms of event rate, the best guesstimate I can give you, because it's early this so I don't have the exact numbers, they might be a bit volatile in the early parts of a long-term study, is that looking into SUSTAIN LEADER and PIONEER 6 trials or outcome studies, the event rates were 3.5% to 4% in the diabetic ASCVD population.

So this is the same population.

So consider that a reasonable number.

And then you can do your own maths on the accrual of MACE events over time.

I know you can do that.

And then there's, of course, the NASH Gilead, where the ACC and the FXR compounds were not so promising in the standalone Phase II studies from Gilead.

But we do believe that sema adds so much more that it will be interesting to see that these complementary modes of action might well come in handy together.

We will develop semaglutide NASH even without these agents.

But if they offer something more, for instance, the FXR on the fibrosis component, we will see.

That could, of course, be interesting.

So we'll get back to you with data later on, and we'll follow it closely, but there's no data yet.

Thank you, Mads.

And Camilla, what can we tell about Tresiba performance in China?

Yes.

Thanks a lot.

So Tresiba in China, as you said, has been reimbursed as of the last year.

And after that, we need to work on the hospital listings, which is also in progress now and doing well.

So Tresiba in China in the last year on MAT has gained 0.9% market share and is growing to the tune of 17%.

So going really well and is starting for us into the basal segment, of course, where we traditionally have not had a high market share, but more have been very dominant in the premix segment.

Thank you.

Thank you, Pete.

Our next questions come from the line of Peter Sehested of Handelsbanken.

Most have been asked.

I have 2 left here.

One is on obesity strategy on commercial side.

Looking sort of back to sort of the one of the most successful drugs albeit only short-lived was fen-phen.

And that was basically a consumer-driven product, also in light of the times back then.

But nevertheless, is it also that kind of strategy that you sort of would be looking for sema in order to sort of bridge until you have the next-generation of compounds on the market, i.e., perhaps pursuing a more consumer-driven strategy.

And in that regard, should we look at obesity as potentially your most ambitious and also most expensive launch?

Second question is on the strategy for your biopharm business.

You have now been talking for 2 years about the acquisitions within biopharm.

You announced an acquisition within metabolism CV, and the stock market really didn't seem any surprised about that.

In fact, the stock market seemed to appreciate that way forward.

So in that respect, do you still intend to waste -- sorry, not waste, spend resources on biopharm?

And what is the overall strategic view of the biopharm business from now on?

Thank you, Peter.

Camilla, first, on our obesity strategy.

Yes.

So it's clear that with obesity right now, it is in many parts of the world still out of pocket.

But there are improvements in this space.

So when we are preparing for semaglutide obesity launch, we will be preparing for both reimbursed markets, but also for out-of-pocket segments.

We do see some development in recognizing obesity as a disease, and we are working on the infrastructure elements of that.

So just as late as yesterday, we saw the Canadian Physician Organization recognizing obesity as a disease.

We see in the German Bundestag looking at also doing the same.

And then we have seen also in Australia, as we understand, that they now established sort of a code for expensing costs related to obesity, which was not even there before.

And finally, in Switzerland, we've also seen a reimbursement of Saxenda.

So when we will be preparing for sema obesity, we will be looking at preparing for both segments out-of-pocket and reimbursed.

Thank you, Camilla.

And then in terms of our biopharm strategy, our overall goal is to get our biopharm business back to growth, which we have managed to do by focusing more on the assets we have.

And then obviously, to sustain growth, we also need to have a pipeline that can drive new launches, et cetera.

So our strategy here is to both build -- it is to build a strong pipeline, and we do that by leveraging our in-house capabilities.

We have a number of technology platforms, we believe, that can also be leveraged against our biopharm disease universe.

We are looking into that.

And then we are like -- we are in diabetes, obesity, cardiovascular disease, et cetera, looking for external assets that can complement that.

But our goal is not to acquire.

Our goal is to build a strong pipeline, and we're not going for anything, but something that has a very strong profile and can get us to a leading product.

So it's quality over volume.

So we will stay disciplined in our acquisition strategy.

And in the recent acquisition, we found something we think was quite attractive.

It happened to not be in biopharm, but it could as well as been in biopharm had the quality of science in that space been there.

So with that, we'd like to -- sorry?

Can I just correct one thing?

I think I mentioned before on Pete's question on China with Tresiba, to say, growth, 17% growth.

Of course, I meant share of growth.

So just to make sure there are no misunderstandings.

Share growth it is.

So that -- thank you for taking time to listen to us.

We appreciate that very much.

And we hope that in the near future, we can actually meet again face-to-face.

Until then, please stay safe and have a fantastic weekend when you get to it.

Thank you very much.

This now concludes our call.

Thank you for attending.

Participants, you may disconnect your lines.