諾和諾德 (NVO) 2020 Q4 法說會逐字稿

Hello, and welcome to the Q4 2020 Novo Nordisk A/S Earnings Presentation. (Operator Instructions) Today, I'm pleased to present Lars Fruergaard Jorgensen, CEO. Please go ahead with your meeting.

Thank you very much, and thank you to Bernstein for hosting us today. I'm Lars Fruergaard Jorgensen, the CEO of Novo Nordisk. And with me, I have Chief Financial Officer, Karsten Munk Knudsen; and Chief Science Officer, Mads Krogsgaard Thomsen.

We'll do a very quick opening review of a few slides, and then we'll go over to your questions. The first slide is our forward-looking statements.

I have to remind you that we will be talking about the future today, which obviously involves risks and uncertainties, and results could turn out to be different from what we preach here today.

If you look at our strategic aspiration for 2025, we're very pleased with the progress we have made during the full year of 2020 on all 4 dimensions. We made significant progress on our sustainability front, both on affordability options put in place for the most vulnerable patients as well as how we have progressed on our environmental front now operating fully on renewable power in manufacturing.

Also on therapeutic innovation and focus, I think we've had a really, really great year with one of the strongest clinical readout. Yes. I can recall, and Mads will get back to some of this.

On the commercial front, we have seen a significant step-up in market share in diabetes. We're very pleased with that. And we also made progress in obesity and biopharm, although these are the areas where we have been somewhat impacted by COVID-19.

On financials, strong top line and bottom line growth and continued strong growth contribution from IO. And then we're pleased to see that the growth is picking up in our U.S. business and a continued strong cash flow and return to our shareholders.

We turn to the next slide. We have also announced that all good things, unfortunately, all comes to an end, and that also accounts for Mads Krogsgaard, our Chief Science Officer, during the past 20 years, an amazing contribution to Novo Nordisk. But a part of great leadership is also that you develop your successors. And I'm glad to announce that Marcus Schindler will be stepping up as Executive Vice President and Chief Science Officer, reporting to myself, leading research and early development; and Martin Lange is promoted also to Executive Vice President and leading development.

This is a continuation of both strategy and, to some degree, also organization, as these are the 2 gentlemen who has been running both a significant part of research and development in the past years. So thank you to Mads, and all the best of luck in his new job as CEO of the Novo Nordisk Foundation.

If you turn to the next slide, here's a review of our sales growth, which, as I mentioned, was driven by international operations growing 10%. And when you look at the regions in international operations, you can see that all areas are contributing with either double-digit or very close to double-digit growth. So very robust performance across the world.

3% growth in U.S. is an acceleration of our growth level. And if you take in also the affordability options and the remaining impact from the COVID-scape legislation, I think it's nice to see that the drag from growth coming from insulin is actually now declining in share, and we see a strong contribution from GLP-1s.

If you look at the right-hand side, here is the growth across therapies. Still a decline in insulin growth because of the U.S. pricing. But a strong growth coming from international operations, 9%. Strong growth in our GLP-1 business, both from international operations and North America. And then you see continued growth in obesity and international operations saw a decline in the U.S. because of the pandemic, and we see also biopharm continue growth in international operations, but also some competitive pressure in our U.S. business. Overall, we are very pleased with how both regions and the therapies are developing.

I'll just end with a perspective on Rybelsus uptake. We are very pleased with the launch of Rybelsus globally. Here, we have a snapshot on the U.S. new script developments. And you can see that we are faring on par with the best-performing SEO institution. This was our objective, you can say, initially, to do well in the oral category, and we're very pleased with the launch uptake.

You can also see that being a newly launched product, it is impacted by the ability of us to do face-to-face promotion. So there is an impact from COVID-19. But overall, we're very pleased with both the access we have, the approvals we have globally and how we are able to position and get traction of the product. So with that, I will hand over to Mads.

Thank you very much, Lars. And I'll focus initially here on the next slide on the once-weekly insulin icodec, where essentially we were surprised by the positive Phase II data, some of which are published in the New England Journal of Medicine and can be looked up via Googling.

But there are 6 onwards trials in the program as a consequence of us seeking to define a clinical differentiation of insulin icodec versus the world's most widely used insulin glargine U100. Five of the trials are type 2 diabetes and one of them is type 1 diabetes. Two of the trials up against insulin glargine are actually targeting superiority, and that's why they are sized to approximately 1,000 people, each of them. One of them is a pragmatic trial, ONWARDS 5, which actually is in a pretty much real-world evidence-like setting in that there are very few site visits to the clinical investigator, but it also adopts a newly developed electronic patient interaction device that also allows for algorithmic dosing via the smartphone, enabling, hopefully, the patients to get very close to the target, if not at target.

So we're excited that the ONWARDS program has kicked off and will -- my successors will keep you updated as these trial programs start reporting, mostly in '22.

Then if we -- on the R&D milestone slide, look at what has happened in terms of regulatory milestones. Well, we are excited that sema 2.4 for obesity, but also the SUSTAIN FORTE trial, delineating the future role in intensification with 2 milligrams of Ozempic have been submitted to the major regulatory agencies. And we actually expect a midyear PDUFA action on sema 2.4. And in the second half of the year, action on the Ozempic high dose.

In terms of clinical trial activities, I'd just like to highlight that quite a few Phase III entries, actually in each and every therapeutic area of the company will happen over the next 12 months or so. We've talked about icodec in type 1 and 2 diabetes. In obesity, it's the hope that (inaudible) will move towards, and that was the former amylin 833 and sema and SEMA program, now denominated (inaudible) will move towards Phase III over the next year.

And in NASH, it's sema, with one remaining pivotal trial since the existing trial from Phase IIb was considered as one of the 2 pivotal trials. It's ziltivekimab in cardiovascular disease and not to forget the fact that we are also entering with 2 pivotal trials into the high risk, high-reward area of Alzheimer's disease with Rybelsus 14 milligram.

So without further ado, over to you, Kar.

Thank you, Mads. And when you look at the next slide on our financial results for 2020. And for the year, we reported 7% local currency sales growth which, in relative to the faster sales growth we've delivered as a company since 2015. So very solid growth levels stepping up from prior years.

Our gross margin is flat at 83.5%. That, in reality, also covers that we have a negative currency impact on our gross margin. So an improving gross margin at local currencies delivered through continued productivity improvements in manufacturing as well as a positive product mix contribution from our GLP-1 franchise.

We do continue to invest in our sales and distribution costs with the launch of Rybelsus and the global rollout of Ozempic as well as investment in our obesity business. R&D, as Mads covered, we have a record high number of patients on clinical trials. So a very high activity level as well as the expending of our priority review voucher linked to a sema 2.4 and obesity submission to the FDA.

Net-net, 7% operating profit growth. And then going through the lines, then we have hedging and all in all, resulting in a net profit growth of 8% and a diluted earnings per share growth of 10%. The resulting DKK 42 billion in net profit, we delivered for the year. We are more than fully delivering to shareholders since we had a high cash conversion adjusted for our acquisitions of Emisphere and Corvidia. So if we adjust for those 2 acquisitions, we had a 100% cash to earnings conversion.

As to shareholder capital allocation, we are returning DKK 37 billion to our -- to shareholders through share buyback of DKK 17 billion and a dividend payout of 50% of net profit. So a step-up in dividend per share of 9%, which also marks the 25th consecutive year of increasing dividends per share. For 2021, we will continue our current approach and intend to buy back up to DKK 17 billion worth in our share repurchase program.

Next slide, please. Outlook for 2021 is a continuation of the solid growth we saw in 2020. So a guidance range of 5% to 9% on top line, continued investments in the business as well as amortization of the Emisphere acquisition, resulting in an operating profit growth in local currencies of 4% to 8%. We do have currencies against us, most notably the U.S. dollar. Hence, a 4%, respectively, 6% negative impact on sales and operating profits. This is partially offset by hedging gains and all in all, we do expect free cash flow between DKK 36 billion and DKK 41 billion.

And then back to you, Lars, to moderate the Q&A session.

Thank you, Karsten, and thank you, Mads. We're now ready to receive the first questions. And please state your name. And then we answer some questions. Thank you.

(Operator Instructions) Our first question comes from the line of Wimal Kapadia from Bernstein.

Wimal Kapadia from Bernstein. So just the first one, for Mads, please. Mads, have you made -- has Novo made a decision on the amylin monotherapy in obesity for Phase III. And the reason I ask is that the product will be for Novo's first standalone obesity drug that was not tied to diabetes, and that has the potential to really demonstrate double-digit weight loss. Would this not be an opportunity for Novo to launch an effective obesity drug without reference price in diabetes so that you can make it more accessible to the wider population? Is there anything in the data that gives you hesitation to move forward in monotherapy?

And then just tied to that, can I ask about obesity pricing? And I know you cannot be specific. But given semaglutide is not priced per milligram, how should we think about the price of the 2-milligram dose in diabetes and the 2.4 milligram dose in obesity relative to the currently approved 1 milligram? Is it fair to assume similar pricing? And if not, how will Novo really determine the price points? Because wouldn't it be quite difficult to charge different prices for a 2-milligram and a 2.4 milligram dose? So your thoughts there will be great.

Thank you, Wimal. And first, Mads, on amylin monotherapy.

Yes. And Wimal, thanks for the question. I mentioned yesterday that we are now -- or 2 days ago, actually, that we are now receiving the name cagrilintide, so all the amylin compounds in the future will be lintides, like pramlintide, cagrilintide and together with sema, we call it (inaudible).

And it is true that we see the biggest potential within the combination product in as much as it may be able to drive those with morbid obesity down to near-normal BMI levels, if not normal BMI levels. So that's where we see the big potential. But since amylin or cagrilintide does have significant weight loss potential in its own right, then the FDA guidelines will simply mandate that during the conduct of Phase III, you have a matrix-like structure of your program, drug A, drug B and drug A plus B. So we will be getting safety and efficacy data on the cagrilintide monotherapy option.

But that being said, as a company, we see the future with, let's say, 3 levels of pharmaceutical needs within the area of BMI lowering. The mild level where things like Saxenda and the likes of it can do the job if you're up in the early 30s; sema 2.4, if you're in the mid- to late 30s; and then something like (inaudible) if you're Class III obese, i.e. 40 or above, that will call for a 25% or even greater percent reduction.

So whether or not amylin or cagrilintide will play a role as a standalone monotherapy remains for the future management to determine.

Thank you, Mads. And Wimal, as you say, it's difficult for us to be very specific on obesity pricing. But a few perspectives, nevertheless.

First of all, when we look at it today, we do actually not see price as the major barrier for growing the obesity market. We even see in a number of markets where it's out-of-pocket pay that there's a willingness to pay for Saxenda with the profile it has, because it's a meaningful weight loss, because there's basically nothing else that works.

And we see that it's really the understanding of obesity as a disease that requires medical intervention, that's the biggest task for us at hand to build that. And when you get to that, you will see that the weight loss we can provide with sema 2.4 is actually very, very significant compared to the health challenge of living with obesity and also what is paid for bariatric surgery, et cetera, today.

So it's clearly a big opportunity. It's one where we have to obviously consider pricing, but it's actually building the market and making the clinical profile understood in the market that's most essential for us. And then we think with the formulations we have made, 2.0, 2.4, et cetera, that we have enough flexibility to pick price points and go-to-market approaches that makes it possible for us to manage that. Thank you, Wimal.

And the next question comes from the line of Peter Verdult from Citi.

Peter Verdult, Citi. Two questions. Quick one on China. Just the latest time lines you're working on to getting Ozempic and Rybelsus launched and on the NDRL. Sorry, it's a question of mine, but we'll be interested in any updates.

And then just, secondly, on obesity again. I mean you've got the products now that show meaningful durable weight loss. You got the docs generally excited and probably poised to significantly increase their prescribing habits. However, our recent survey were with payers paints a different story. I mean, you show them the data you generated last year, you tell them that pricing might be at parity to Saxenda, and it doesn't seem to make any difference as to their willingness to improve the current reimbursement or access that they afford Saxenda.

So just -- I'm not talking about pricing. I just want to talk about how you're approaching your payers, or more broadly, how you're approaching corporates, FedEx, GM, the big banks, to try and get the employers on board as they do with smoking cessation, to try and get obesity agents covered on their health care plans. I'm just looking to see how you're pushing on a couple of those levers to develop that obesity market.

Thank you, Pete. So Mads, maybe first, perspective on the clinical development of Ozempic and Rybelsus for China.

Yes. So Pete, the sustained China trial that reported out not 2 years ago, but more than 1.5 years ago and was really good. And so the problem is not about being able to launch Ozempic in China. It's about having the national reimbursement listing. And nobody knows exactly when that happens, but you can do a launch before then. Of course, it will be, be out of pocket, but it does have a strong label in China.

And when we look at the pioneer program, we are doing 2 different Chinese trials with the Rybelsus 14 milligram, and they are, despite the COVID-19 situation, recruiting well and according to schedule. So that will take some time, but we are doing it as fast as we can.

And China is a market that is also, like Japan, rather strong on the OAD side. So we believe in the Rybelsus potential. And we do have also, as you know, patent protection for that one in China.

Thank you, Mads. And then going to the payers' willingness to reimburse or pay for obesity treatment. I'm actually optimistic. When we see Saxenda today, it is possible to get both, say, public health care systems and private companies to pay for Saxenda with the price point it has and also the efficacy, we all know, which is significant below what we'll be bringing out later this year.

So if you look at one of the most, say, sophisticated public payer systems, namely the U.K., we have, with Saxenda, made an agreement with NICE for the segment of patients having a high BMI and comorbidities. So there is a willingness to pay for that.

In the U.S., we see that -- sorry, private payers opt in because they can see that if you're a large company, you're self-insured, you have long tenure for your employees, there's actually an attractive case in actually having anti-obesity medicine as an option for your employees.

So with the profile we bring out, hopefully, second half this year, I'm actually very enthusiastic about us being able to articulate the value story for payers. And that's one of the tactics we are pushing, which has to go hand-in-hand with the physicians' increased willingness to prescribe obesity medicines and patients' willingness to seek treatment. And so there are a number of technical strategies we need to move forward in parallel. But my view is that we can, indeed, lift the challenge of getting the payer story right with the profile we bring here. Thank you, Pete. Next?

The next question comes from the line of Michael Leuchten from UBS.

It's Michael Leuchten from UBS. Firstly, this is Mads' echoing from Wednesday, really sorry to see you go. All the best and your enthusiasm really will be missed.

A question for you, just going back to the 2.4 milligram weight loss curves. They do look a lot better than what we've seen in the past. But obesity trials these days are a little bit different than a few years ago in terms of the patient monitoring in terms of the titration and the counseling.

So if you look at the continuous weight loss, is it possible to assess how much of that is coming from the longer titration? How much of it's coming from type of counseling and how much is the pharmacology behind it? Or is it a point of exercise to think about? And the reason I'm asking is I'm wondering if what Peter's asked, whether the payers are just able to wiggle out of reimbursement decisions because they can claim, well, it's not an apples-to-apples comparison.

And then a question for Karsten. On your CapEx spend, you mentioned on Wednesday that the big machineries of your Clayton plant. Is that plant slightly delayed? I thought that might have happened a little bit earlier. And why are you spending more CapEx in Denmark and not in and around Clayton, where the active ingredients are being produced for Rybelsus in the future generations. I would have thought that'd be a natural home for that CapEx in the U.S. as opposed to, in Denmark?

Thank you, Michael. Mads first on obesity trial design and then for payers.

Thanks for the kind words, Michael, and they are reciprocated. When we look at the 2.4 milligram sema trials, they are designed pretty much as we have done all the time. And the interesting thing is to watch the placebo response.

And we actually had 3 kinds of placebo responses. But before I go to those, so that you can estimate the actual treatment effect, the weight loss curves in step 1, 3 and 4, which are the 3 obesity trials, was achieving over the same time cost perspective of 68 weeks, i.e., 52 weeks at the steady state dose of the 2.4 milligrams, exactly the same shape and magnitude leading to a 16% to 18% response at the end of trial.

The only trial that encompassed a classic placebo group was step 1. And in step 1, the placebo response, as I recall, it was 2.3% or 2.4%. And since the actual response to sema 2.4 was 17%, it was a 15% placebo-corrected response.

So when you do the dietary counting to the level we do in these trials, that's what you see, 2% placebo response. Then there's the other one called step 3, where we actually go in and measure, obligate, intensified behavioral therapy, where people get a low-calorie diet. They get systematic dietitian counseling, et cetera. Very expensive to do. The fact of the matter is that it only accommodated a weight loss of around 5%. And in the group that received sema 2.4, they also got IBT, expensive as it is, but the weight loss was 18% similar to the other trials. So IBT per se has nothing more over and above just administering sema 2.4. Rather, sema 2.4 gives you more than 3x the effect of intensified behavioral therapy and probably at a cost that is very justifiable.

When it comes to step 4, it's actually also interesting to see that we have a real-world setting where people stop therapy after 4 to 5 months. What happens when you just continue without therapy versus if you do with therapy? And you do recall that, that one showed also a 5% response. So people do regain weight over the subsequent 40 weeks of randomization to placebo as compared to those who stay on sema and retain 17% weight loss.

So we haven't fiddled around with the -- neither the inclusion criteria nor the counseling, et cetera, as evidenced by the placebo response. In terms of the titration schedule, it's correct, Michael, that we go from 0.25 to 0.5 to 1 to 1.7 to 2.4. So the titration is longer than it was for Saxenda. But that's not a bad thing because it gives you, on the one hand, very good tolerability, and it gives you, the patient, the experience of an ongoing weight loss for more than a full year, basically boding well for adherence due to efficacy, but also stay time, driven by the continuous weakness observed on the weight scale by the patient favoring adherence to therapy.

Thank you, Mads. Kars, on Capex, Denmark versus North Carolina?

Yes. So Michael, on our Clayton API project that we initiated a few years back. In short, we are completely following the plan we laid out when we got the project planned and approved by our Board of Directors. So we are on track with the plan. No deviations there. And where we are now is that we have pretty much finalized the pure construction part of it with a lot of workers on site, et cetera.

So now we are into getting the factory approved by the health authorities. So it's a lot of documentation and quality systems that we're finalizing now for submissions to health authorities and, subsequently, approvals. So that's the story on Clayton.

Then the step-up in CapEx, Denmark versus Clayton. I think it's important to remember that for our GLP-1 API manufacturing with Clayton, now we have a dual supply chain. So we're both manufacturing GLP-1 API in Denmark as well as in Clayton. So the U.S. launch of Rybelsus is sourced from API manufactured in Kalundborg in Denmark.

So the step-up in capacity in Denmark is based on the fact that now we have a new plant in the U.S. that we are to ramp up with significant capacity. So to ensure that we have focused on that in the U.S., then we have opportunity to ramp up capacity in Denmark in our dual supply chain at the same time. So then we're kind of prioritizing our focus in the 2 different sites accordingly.

Thank you, Karsten. And Mads, you had a follow-up.

Yes. And the follow-up is to the preceding question, I got ahead of myself. It is absolutely correct that to launch sema, you do need an approval also in China. And if we assume Ryzodeg approval time, which was around 14 months, that would mean approval a couple of months from now.

But we are heading in that direction. And then all the things that I mentioned can take place.

Thank you, Mads, thank you, Karsten and thank you, Michael, for the questions.

The next question comes from the line of Trung Huynh from Credit Suisse.

Just 2 for me. So both around the kind of performance of Rybelsus and obesity during COVID. So they both seem to be quite sensitive to COVID. You showed a really good chart of Rybelsus, where if you drop off your promotion, you saw this drop in prescriptions. And similarly, for obesity, you have a lack of new patient starts here.

So my question is, is do you expect the same kind of depressed trends for both these products as the pandemic and lockdown continues? Or is there anything that gives you sort of increased confidence that you won't see these dips as you saw in that initial lockdown? And simply, and I might have missed it on the call, is when is your assumption in your guidance when things get back to normal?

So Trung, it's clear that when you launch a new product, face time with the physician is important. So in the case of Rybelsus, anything else equal, there will be an impact when we now have our reps out of the territory again since some time in November.

Obviously, what we have learned since the first lockdown is how to leverage our digital infrastructure. So we have more -- we have sometimes up in terms of digital interaction with physicians this lock down compared to the first lockdown. So we have more activity level going, but face time is still tough.

When you look at obesity, it's slightly different because Saxenda is somewhat better established in the market. So there is the flow of patients going to the physicians. And you noticed, day time is relative short, some month on Saxenda, which means that the inflow of patients is less. You could hope, potentially, that as it has been speculated that COVID-19 leads to a lifestyle leading to more obesity, that there will be some extra, say, patients to serve coming out of this. So that will help.

But it is to be expected that there'll be a continued lower obesity flow of new patients as long as the lockdown lasts. And Karsten, maybe some comments on what we have assumed in terms of reopening and getting back to normal business?

Yes. Clearly, COVID-19, an impact on our outlook is something we evaluate as part of our planning. And I think a key starting point is to look at our performance during 2020 and as a company. And you've seen that in our quarterly results, especially for the second half of the year, we have, basically, a very resilient business when you look at our diabetes business.

So our diabetes care business grew 8% last year, in a year of COVID. So for the big parts of our business, we are very resilient, vis-a-vis, COVID. And then we have the impacts, as you know, on Rybelsus and obesity and perhaps had some impact also on our on-demand hemophilia franchise.

So we have not been out guiding on a specific date or a specific set of assumptions. You read the same in the media around the vaccines and the different waves of COVID, but we have more guided based on the trends we have seen during the second half and the resilience of our business. That, of course, also entails that the guidance we issued, it can be better and it can be worse, and that's why we have a guidance range.

So of course, if COVID turns significantly more sour than what we are seeing, then it could be a negative. And the opposite, if vaccines are having a big impact early on, and then there could be a slight positive to parts of our business.

And of course, with the rollout of the vaccines, the benefit we see the first is in the health care systems, and that's where we need time and capacity. So I think the first part of society that will ease up is the burden on the health care systems, and that's a positive for us. Thank you, Karsten. Thank you, Trung.

The next question comes from the line of Keyur Parekh from Goldman Sachs.

Mads, again, echoing what everybody has said more broadly. Thank you very much for all the wonderful memories over the years. Three questions, please. First, if we look at your illustrative slide on R&D success rates, kind of historically, what you have achieved and where you think the direction of travel is. What's quite noticeable there is you don't expect the direction of travel to change on Phase III's pace. So I'm just wondering if that is exactly what you are trying to say? And if so, given the some of the riskier studies you are embarking on today, how we should think about the risk parameter around that.

Secondly, obviously, a lot of investment focus -- investor focus on expectations around SURPASS 2.0 so would love to hear your thoughts on how you would interpret any data coming out of that study.

And then lastly, Karsten. I think previously, the company said that if you had to spend more on GLP-1 production, that would be a very, very bullish outcome. So given you are increasing your CapEx range around for 2021, wondering if you would want to categorize, should we think of this as for a single year increase? Should we think of it as a 2-, 3-year increase and correspondingly, what does -- how should we interpret that to your strategic expirations for 2025? Shouldn't they be adjusted concurrently?

Thank you, Keyur. And first, Mads, a couple of questions on you on R&D success rates, historical versus today. And you can say you contributed with the historical rates, and you can feel free to talk about the future one without being here and SURPASS 2.0.

And then Karsten, a few comments on R&D. Sorry, CapEx linked to GLP-1 and how to see this in context of 2025.

Thanks, Keyur, for the kind words. In terms of the illustrative industry success rates we've had, it is true that we've been very high. We've topped our peer group in terms of success rates and the strategy we have going forward is to use much more biomarker-based readouts much earlier in the clinical development phase, implying that you should expect to see Phase I and potentially Phase II success rates to come down somewhat because we're going to have so many shots on goal, and we want to make sure that we invest in a -- when we invest in a pivotal trial program, we are very likely to succeed.

And if you look at the ongoing Phase III trial programs, icodec, NASH, soon to come. I would consider these as ones where we have a really high likelihood of success, more or less in line what you have witnessed historically with Novo Nordisk. We also have to acknowledge that when we go into a high-risk, high-reward area, a future unmet need like Alzheimer's disease, then by definition, there's a much higher risk of attrition, but that, the market is already aware of.

On the other hand, if we succeed, we have a mechanism that is totally complementary to an additive will be, you can say, amyloid plaque blockers from Lilly and Biogen.

So overall, expect that we put attrition early on in development and try to avoid attrition later on in development where the going gets very costly. In terms of the SURPASS 2.0 trial, I think a fair statement is that we don't know. We'll have to wait and see the data. Because as Lars correctly stated, I'll be watching that from my CEO job in the foundation. So I'm not really the one to make too many forward-looking statements right now.

I would suggest that it looks as if tirzepatide probably has the fixed level somewhat in the tune of what we see for sema, 2 milligrams. But I also do believe that we might be lucky that our tolerability profile, being a pure pay GLP-1 agonist, might be on the positive side. But let's see the data when they come in the second quarter.

Thank you, Mads. Karsten?

Yes. So on CapEx, yes, that is exactly what we said, and that is also what is playing out. So the reason why we step up our CapEx from the DKK 6 billion level or so to DKK 8 billion, that is a function of our confidence in our pipeline and you saw us going into Alzheimer Phase III based on Rybelsus. And you saw the all-sema high dose trials going into Phase III. And of course, even if Mads stops, then we still have other good ideas in the pipeline based on our oral platform.

So this is a pure capacity play to deliver on pipeline success or pipeline progression. So that is the positive. In terms of how long you should anticipate it, I would say it's not a 1-year play. It's perhaps more so a 2- to 3-year play. And the step-up is mainly related to our oral platform progression. And then I didn't get the last part of your question, can you -- around 2025 and patents?

Karsten, just quickly, obviously, you are investing more, given the increased confidence, so how should we read across the strategic expirations for 2025, i.e., obesity sales kind of doubling. Should we now think of it as typically what group link kind of as being a more realistic strategic aspiration as opposed to it just doubling?

So the way you should look at this, and just -- also given the time line of getting this capacity online, getting the design in place and the construction going and the capacity approved by the health authorities, you should see this as pipeline success, which will cater for a growth period more in '25 to '30 range more so than towards 2025.

Thank you, Karsten. Clearly, investments based on opportunities. So that's good. Thank you, Keyur.

Next question comes from the line of Naresh Chouhan from Intron Health.

Two on Rybelsus and on Ozempic, please. So on Rybelsus, are we seeing -- you see some slowdown in the uptake with patients first starting on Rybelsus? Or is there kind of slight softness due to COVID? Or can you distinguish between the 2?

And then, secondly, can you give us some sense of how many Rybelsus patients have come from an SGLT2 and how many have come from other orals?

And then on the Ozempic 2 mg, do you expect any of the GLP-1 skippers to use the 2 mg dose? Or are most of these not eligible for GLP-1 due to black reimbursement or insufficient beta cell function or some other reason why they just wouldn't use GLP-1?

So if I start on the first question. So if you look at uptake, I think I touched a bit upon it that we see that it's a new brand, so it takes some face-to-face promotion to really drive it to the max.

I don't know if you're referring to the latest NBRx scripts in the U.S., where we see a bit of a change. This is normal in the beginning of the year, where you see that there is change in plan and some change between deductible plans, et cetera. So that impacts script development in the beginning of the year. In terms of source of business, do we have the details on that, Karsten?

Yes. Yes. And just add to Lars' comment on the launch experience with the product. So all, we are very happy with the Rybelsus launch, and it's persistent exactly as planned and expected.

As to stay time, we don't have good longitudinal data at this point in time. And do bear in mind, we've not been in the market for a very long time. And generally speaking, stay time on the GLP-1 is 3-plus years. So we haven't seen any negative signal in that respect. It's exactly as we expected.

Then in terms of source of business, what we are seeing is that we see mainly -- we've seen earlier source of business compared to that of Ozempic. So more treatment naive and metformin and [some deeply force] and I'll say, less sourcing from SGLT2s.

And maybe I can just add to what Karsten is saying. The feedback from the market or at least the feedback we're getting in terms of what are the A1c reductions and, i.e., the efficacy of the drug, we have repeatedly said that the more evidence we get, the more it is clear that we have at least the same real-world efficacy as injectable GLP-1s, if anything, nominally slightly better. So there's nothing to suggest that Rybelsus is not performing as well as in the Pioneer program in the real-world setting.

So in our view, it's -- we're succeeding with the persisting of the 2 products and the so-called sema synergy strategy, where there's a clear segment for the oral version and there's a clear segment for the injectables. Then could I please ask you to repeat your second question?

Sure. On the Ozempic 2 mg, do you expect the patients who just completely skipped GLP-1s, they might be -- might use the 2 mg dose because given the higher efficacy? Or are those patients -- or do you consider most of the patients not to be eligible for GLP-1s, either because they haven't got reimbursement or they have insufficient beta cell function? Because that's quite few -- the people -- the patients that missed GLP-1s in timing and straight to instant. So potentially, the 2 mg might help open up some of that market.

Okay. Thank you. Mads?

Yes. Well, actually not, because as you know, GLP-1 is only being used globally by a single-digit percent of the patient population. And the reason for 90-plus percent not being on GLP-1 is more that it is a molecular class that is still undergoing, you can say, volume and market share expansion in the total diabetes market in many years to come. So it is not as if a patient who skips GLP-1 does so because he or she is afraid of not getting the efficacy.

It's well acknowledged by physicians who have ever prescribed GLP-1 that it is the most efficacious non-insulin product available. So we see the 2-milligram dose essentially as an ability to escalate above and beyond Ozempic 1 milligram in those patients who after as daytime of maybe 4 years or whatever the standard daytime is nowadays, will have the ability to stay at the guideline level of control with A1c below 7 for even longer by going from 1 milligram Ozempic to 2-milligram Ozempic, pretty much as we're also doing with the Rybelsus by developing doses over and above the 14-milligram that we have today.

Thank you, Mads.

The next question comes from the line of Sachin Jain from Bank of America.

A few, please. Firstly, back to obesity. You obviously talked about a lot of the factors that play into the launch. But I wonder if you just comment on how you think sema obesity launch curve will fare versus Saxenda and how we think about it as being additive versus some cannibalization.

The reason for the question is very simply that consensus assumes a very similar launch curve for sema obesity to Saxenda and being additive as sort of DKK 4 billion to DKK 5 billion in year 2. So any thoughts there, obviously not on after-peak sales or sales expectations, but just any directional commentary.

Secondly, on Rybelsus and the Japanese launch, you obviously highlighted that on the call a couple of days here. I wonder if you could just go into a bit more detail there, bigger OAD market. But if you could frame the size of that market in absolute terms versus the U.S. and if you achieved matching the SGLT2 type launch metrics, what does that just mean from a financial perspective?

And then last one for Mads on the next Phase III data set, I guess, icodec. With Tresiba, there was a lot of backwards and forwards with the FDA on labeling and hyper definitions, et cetera. So I just wanted to just drill this down from a Phase III perspective. In a best case scenario, what type of label are you gunning for icodec? And if you get that, what's the ambition regarding this asset?

The question was asked, but just to go back over it. Do you think this can return insulin to an attractive growth rate? Or is this about gaining share in a declining market?

Thank you, Sachin. So if I start out on sema obesity and perspectives on the market additive cannibalization, vis-a-vis, our current product. So it's clear that today, we have a situation where we are -- most people fall short on the real expectation in terms of weight loss, which when you ask physicians or patients, they are looking to get to above 10%.

Some do on Saxenda, but not all. And it's clear that it does, from, say, a response rate point of view, we have a challenge with Saxenda. And you know the stay time is some month. So when we come with products like semaglutide 2.4 and you get patients to -- clearly above the 10% expectation level, you have to at most respond to it. You have the long-stay time mass alluded to before because you have a continued weight loss throughout the Phase III trial program. We see that relative fast, we should be able to move patients to the more efficacious product.

But of course, that you also get an additive effect, both from the experienced physicians will have the product and move more patients on it. But also just the stay time, the longer stay time will mean that you soon move to a higher level than what you have today. So I think there'll both be cannibalization, but clearly also additive sales. And I cannot guide you to what that leads to. But for sure, in my view, a step change in how that should look.

In terms of Rybelsus launch in Japan, which is taking place now. Today, actually, we know that 80% of the Japanese diabetes market is actually OAD. I don't know -- I don't have from top of my head, sizing of that compared to the U.S.. Mads, I don't know, my colleagues, have that -- Karsten look like he has some data.

No. But I would say, when you look at our overall business, then in Japan. Japan is some 5% of our global business. So I think we have to put it in that context that Japan is more of an oral market-all, as Lars was just covering.

So -- but still in magnitude, Japan with some 120 million inhabitants then in magnitude, then perhaps you're looking at the potential of perhaps to the tune of 10% of overall Rybelsus potential overall, globally.

Thank you, Karsten. Mads, on icodec?

Yes. Yes. So very briefly, the target product profile we have for icodec is that it should be the first and preferred once-weekly insulin for basal insulin initiation, in particular, in type 2 diabetes, and by being simpler to use and more convenient, with the target product profile also delineating efficacy superiority versus today's once-daily insulin glargine, this should not only enable people to get back to a normal life, but also to a happy life. Because with the added adherence and the potentially added efficacy that we have seen signs of in Phase II, that should differentiate it, not only in terms of convenience and compliance, but also in terms of outcomes.

And to add further to that, we've come to realize that people who don't titrate on a daily basis, but only get an injection per week, they might need further help to get into the habit of titration. So we've even developed and will be seeking approval for a very smart electronic titration tool that will make it easy for people to, using their smart devices, actually get closer to target, if not at target, with a very simple algorithm that is dictated to them via their smartphones.

So we will try to get a strong label for icodec. We have had really good dialogues with FDA and other agencies, and we are not doing open-label extensions like the ones we did in the old days for Tresiba. So don't worry about the February 13 situation, [that won't be necessary].

Thank you, Sachin.

(Operator Instructions) Our next question comes from the line of Simon Mather from Exane.

And congratulations once again. Mads, on a great career. Maybe if I could just start off to kind of elaborate or rather continue on from Sachin's question. Obviously, good clinical differentiation hoped for icodec. I'm just wondering if you could maybe share us your enthusiasm that payers are willing to pay for this level of innovation, or more to Sachin's point, do you think this can invigorate growth in that -- in the insulin space? Because we saw with Tresiba, it didn't really get where we wanted to. So that's the first question.

And then, secondly, just further on tirzepatide, I know we need to wait for data. You resurrected your program in Phase I for a GIP/GLP. Can you maybe talk to a profile of that drug or your aspirations? Because I noticed your comments, Mads, on tolerability. And the reason for the question is really, do you think you need to further differentiate your product offerings in the GLP-1 space? I'm just thinking about this, maybe it's a bit unfair, but ahead of the customer exploration of Trulicity in 2026.

And then, finally, a question for Mads. Obviously, you've overseen a huge amount of innovation in your career. Just wondering if you potentially could share with us anything that you may be seeing in early-stage research development that excites you that we should be maybe focusing on for the next 5 years?

Thank you, Simon. First, Karsten, some perspectives on payers' willingness to include a product like icodec?

Yes. So one should be careful when we look at icodec. And I think the markets, over the past couple of years, have focused a lot on insulin price development in the U.S.

But I'm just, like, again, to point your attention to our insulin business in international operations, which grew 9% last year. So clearly, a big opportunity there. So the way we look at icodec is, when the opportunity for patients, so first of all, as Mads was covering before, what we are pursuing is to look for superiority and look for once-weekly insulin compared to once-daily insulin. And the segment we're targeting since it's both type 1 and type 2, then we're talking around to the tune of 20 million patients on basal insulin therapy today or perhaps even more. And the market segment, which in magnitude today based on competent reported numbers is perhaps in the $10 billion magnitude.

So it's a big market. It's a lot of patients that can benefit both convenience and efficacy-wise. And then you can say from a shareholder and company point of view, then, of course, we have the added benefit from patent and regulatory data exclusivity that will be moving into the mid-30s on protection on our patents and our data.

Thank you, Karsten. Indeed, very exciting. Mads, I know this is not a Lilly conference call. But we get many questions on tirzepatide, and I guess, what we can talk to is our products, vis-a-vis, tirzepatide. And there was also a question on, on the way out here, what's the exciting early stuff?

Yes. So Lars, I'll take the last one first. And I won't be specific because we never are at the early stages. But I think there are 3 new technology platforms that are emerging almost as I leave through the front door, and one of them is the oral pipeline that is unfolding as we speak, and my successors will speak a lot more to that.

And then the other one is the stem cell technology platform, where we have actually promised you and ourselves, by the way, to open up one new IND in a new disease area per year starting with this year with the Parkinson's disease, by the way, being the first. So the stem cells, look out for that as well.

And then we're really happy about our strategic alliance with Dicerna. We have picked the first 2 clinical development candidates together with our alliance partner, Dicerna, as small interfering RNA in totally new first-in-class targets. Please follow that one closely because we can pick up to 30 projects every year that align.

So a lot of things are happening above and beyond the classical injectables that Novo Nordisk has thrived on for about a century. I won't put any more words on tirzepatide, but rather say that Novo Nordisk is firing on all cylinders or on full batteries, whatever we say nowadays, in that when we look at our GLP-1 franchise going forward, we will both try to make even more convenient and more efficacious -- and/or more efficacious offerings available both within the GLP-1 CM space per se.

But also, for instance, if the GIP/GLP combo gives promising data, we could progress the most attractive ratio of our GIP/GLP combo now in Phase I development, if we so decided or we could say that the optimal partner for a GLP-1 like semaglutide, might not necessarily be a GIP compound, which adds maybe modest benefit, but also a bit of side effect potentially, whereas something like cagrilintide or the amylin class had quite a big benefit in terms of further weight loss and might have also potential of additivity with semaglutide when it comes to type 2 diabetes, you can say, remission or treatment as well as NASH, for that matter.

So we actually think we have quite a few offerings, both in the clinical pipeline like icosema, but also in the future emerging pipeline, where we can build molecular constructs on the basis of the semaglutide skeleton. And you will hear more about that, I guess, going forward.

Thank you, Mads. Thank you, Simon. With that, we'll close today's conference call. Thank you all for your interest in Novo Nordisk, and have a great day. Thank you.

This concludes the conference call. Thank you all for attending. You may now disconnect your lines.