Thank you. Welcome to this Novo Nordisk conference call regarding our first quarter performance and our financial outlook for 2020. I'm Lars Fruergaard Jorgensen, the CEO of Novo Nordisk. With me I have our Chief Financial Officer, Karsten Munk Knudsen; and our Chief Science Officer, Mads Krogsgaard Thomsen. Also present and available for the Q&A session are Executive Vice President and Head of Commercial Strategy & Corporate Affairs, Camilla Sylvest; and Executive Vice President and Head of Product Supply, Quality & IT, Henrik Wulff; as well as our Investor Relations officers.

Today's earnings release and the slides for this call are made available on our website, novonordisk.com. Please note that this conference call is being webcasted live and a recording will be made available on Novo Nordisk website. This call is scheduled to last for one hour.

The presentation is structured as outlined on slide 2, we will begin by addressing Novo Nordisk response to the COVID-19 pandemic before moving into the quarterly performance. Please note, all sales and operating profit statements will be at constant exchange rates unless otherwise specified. The Q&A session will begin in about 25 minutes.

Please turn to slide 3; as always, I need to advise you that this call will contain forward-looking statements. Such forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations. For further information on the risk factors, including the uncertainties pertaining to COVID-19, please see the earnings release, press release and the slides prepared for this presentation.

Please turn to the next slide. The first three months of 2020 has been extremely unusual, given the COVID-19 pandemic. This crisis is, without precedent, in our lifetimes and each day it presents new challenges to government's healthcare systems and companies across the globe, as it does to all of us on a personal level.

Across our global organization, we are working hard to tackle the new challenges COVID-19 poses. We have prioritized three things in particular; ensuring the well-being of our employees, safeguarding the supply of our lifesaving medicines to the patients that need them, and doing our part to help society by supporting local authorities with resources and expertise. Across the value chain, the COVID19 pandemic has had an impact on how we go about our business within production, while we have been prepared giving the contingency plans established, colleagues at our global manufacturing sites are finding new ways of working to ensure that our supply of medicines is maintained. As a result, all manufacturing sites continue to operate and medicines are still available to patients worldwide.

Within research and development, we continue to conduct all ongoing clinical trials and do not expect significant delays for trials near completion. For trials that are currently recruiting, however recruitment of new patients has been negatively impacted. Consequently, some trials may be delayed. Further, to help limit the strain on the healthcare system, no new clinical trials are currently being initiated.

The majority of Novo Nordisk medicines are used for treating chronic diseases. However, during the period of social distance implemented in many markets, fewer new patients are temporarily expected to initiate treatment. This especially impacts launched products and products with a short stay time. Again, we also have a responsibility to support society as much as possible. We have set out to do this by - for example, donating free insulin to select humanitarian organizations, increasing affordability options for those in the U.S. who have lost their health insurance, as well as providing emergency relief donations in countries across the world. I sincerely hope that we'll soon gain the upper hand on COVID-19, but in the meantime, I'm proud to be part of an industry that is working around the clock to discover effective treatments and vaccines. Novo Nordisk will continue to support these efforts in any way we can.

Please go to slide 5; in 2019 Novo Nordisk introduced a comprehensive approach describing future growth aspirations of the company, under the headline Strategic Aspirations 2025. The strategic aspirations consist of four components; purpose and sustainability, innovation and therapeutic focus, commercial execution and financials.

Beginning with purpose and sustainability; as already mentioned during my introduction Novo Nordisk has focused on its purpose of being respected for adding value to society. We have engaged in numerous initiatives supporting patients, employees and society during this changing time. Additionally, in the first quarter, we reached our aspiration of sourcing 100% renewable power across all production sites. There are also multiple developments within our innovation and therapeutic focus aspiration. For diabetes, Rybelsus was approved in the European Union and the United Kingdom for the treatment of Type 2 diabetes. Also the Ozempic marketing authorization application was submitted in China.

For Biopharm, we unfortunately had to pause the development of Concizumab, as a result of three non-fatal thrombotic events occurring in the Phase III program. A potential continuation of the project is currently being evaluated. Within other serious chronic diseases, we have results of the Phase-II trial investigating semaglutide in the treatment of NASH. Mads will elaborate on that in a few minutes.

Moving to commercial execution and financials; diabetes sales increased by 13%, with Novo Nordisk seeing it's diabetes value market share leadership expand to trade 28.7%, and Tier 1 sales continue to perform well at 37% sales growth. Biopharm sales increased by 16%.

Total sales increased by 14%, with international operations growing by 19%, and North America Operations growing at 9%. When adjusting for the COVID_19 related to stocking effect, sales growth was around 7%. The stocking impact was distributed approximately equally between international operations and North America operations. The sales growth is reflected in operating profit, which increased by 12% totaling DKK16 billion. Operating profit was positively impacted by productivity improvements within manufacturing and administration.

Please turn to slide 6; before I discuss sales across the business, you will notice a different reporting structure for the areas in international operations. As of April 1, 2020, the international operations unit has been reorganized resulting in the following new way of reporting; EMEA, covering Europe, Middle East and Africa; Region China, covering mainland China and Hong Kong and Taiwan; as well of rest of the world, covering all of the countries except for the two within North America Operations. North America operations was not impacted by the reorganization. It still includes the U.S. and Canada.

Again sales increased by 14%, which was supported by growth across all areas and across all therapies. When adjusting for the COVID-19 related stocking, the sales growth was 7%. While stocking impact impacts were seen mainly as a result of increased patient prescription trends and wholesaler inventory levels, particularly in the U.S. and EMEA. Underlying growth was solid, particularly in international operations, where oral areas and oral therapies contribute to the continued growth.

North America operations increased by 9%, positively impacted by the COVID-19 related surge in demand, most driven by stocking at patient level as well as prescription refill policies, were adjusted. Sales growth also reflects the continued performance of the GLP-1, Obesity Care and biopharm segments. Insulin sales declined by 15%.

Please turn to slide 7. In the quarter, sales growth was driven by all therapy areas. The stocking impact came mainly from insulin and GLP-1 and to a lesser extent from the biopharm and Obesity Care franchises. Global insulin sales increased by 2%, despite a percent sales decline in the U.S. The U.S. sales decline was driven by lower realised prices, due to the unfavorable channel mix, higher rebates, the launch of affordability - additional affordability programs and changes in coverage gap legislation. The decline was offset by a 14% increase in international operations, where are all insulin categories contributed to growth.

GLF-1 sales increased by 37%, driven by 55% sales growth in International Operations and percent sales growth in North America Operations underlying growth reflects the continued penetration of Ozempic, along with the launch of Rybelsus. Novo Nordisk has expanded both its global insulin volume market leadership, as well as its GLP-1 market leadership. This has resulted in the previously mentioned, expansion of Novo Nordisk global diabetes market leadership, now at 28.7%.

Obesity care sales grew by 30%, with both operating units contributing to growth. Biopharm sales increased by 16% driven by both Norditropin and hemophilia products.

Please turn to slide 8; in the U.S., the GLP-1 market continues to grow more than 30% in volume, driven by once a week GLP-1 products. With the uptake of Ozempic and the loss of Rybelsus, Novo Nordisk has new-to-brand market share leadership of nearly 58% and is the GLP-1 market leader, measured on total monthly prescriptions, with around 48% market share. The early uptick of Rybelsus in the U.S. was encouraging prior to COVID-19. The weaker in new-to-brand prescription market share for Rybelsus is 9% with the total prescription share around 2%. Additionally, market access is progressing, now with more than 50% unrestricted access. Ozempic continues to increase its market share in the U.S. In terms of new-to-brand prescriptions, Ozempic is close to 37% and in terms of total prescriptions, Ozempic market share is slightly more than 24%. Furthermore Victoza continues its declining market share, for both new-to-brand prescriptions and total prescriptions.

Please turn to slide 9; Novo Nordisk is increasing its diabetes market share in International Operations as indicated by the near 23% share of growth versus a market share of around 22%. Market share increases in International Operations is driven by both insulin and GLP-1. In all reporting areas, both franchises sales are growing. In International Operations, the diabetes franchise represents nearly 80% share growth, with the insulin share of growth at 44% and GLP-1 share growth at 35%.

Please turn to slide 10; obesity sales care increased by 30%, driven equally by North America Operations and International Operations, reflecting continued uptake in EMEA and rest of the world. We are committed to driving change in Obesity Care, with Saxenda having been launched in 46 countries globally and continuing investments in market development activities.

Please turn to slide 11; biopharm sales grew by 16% in the first quarter, driven by a 17% sales growth in international operations and by 14% sales growth in North America Operations. Sales were impacted by COVID-19 related stocking and changes in inventories and timing of shipments. Sales development was driven by growth across both the hemophilia and growth disorder franchises. The 9% hemophilia sales growth was supported by increased NovoSeven sales, as well as the continued rollout of the portfolio of innovative products, with Refixia and Esperoct.

Norditropin sales increased by 28%, driven by changes in inventory, COVID-19 relate stocking, as well as an additional demand resulting from changes in the competitive landscape in selected countries.

With this, over to Mads, for an update on R&D.

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

Thank you, Lars. Please turn to slide 12. On the next couple of slides, I will discuss our commitment to develop the semaglutide molecule in two additional therapy areas, beginning with the Phase II results in NASH and then moving onto the Phase III program for semaglutide in obesity. In April the Phase IIb trial investigating semaglutide in the treatment of non-alcoholic steatohepatitis, also known as NASH was completed. This was a 72-week blinded biopsy based trial, compared the effects of subcutaneous semaglutide administered once daily versus placebo, in achieving histologic resolution of NASH stages F1 to F3. The trial enrolled a total of 329 patients, that were randomized trial 0.1, 0.2 or 0.4 milligram doses of semaglutide or to placebo. The primary endpoint was the proportion of patients achieving NASH resolution, without worsening of fibrosis after 72 weeks.

At trial completion, there was a statistically significantly higher proportion of patients meeting the primary endpoint for semaglutide, with an impressive 59% achieving NASH resolution at the high dose versus 17% for the placebo arm. There were also a number of secondary endpoints in the trial and while there was not a statistically significant difference in the proportion of patients achieving histological improvement in liver fibrosis with no worsening of NASH, there were a number of endpoints showing a statistically significant and dose-dependent reduction in the progression of fibrosis, as assessed by biopsy histology, biomarker panels, as well as elastography using fiber scan imaging. Additionally, marked improvements were seen in liver enzyme levels and the use of metabolic endpoints with Type 2 diabetes patients reaching HbA1c of around 6.0%, accompanied also by double-digit percent weight loss.

The tolerability and safety profiles were good, with only two patients discontinuing due to GI side effects at the highest dose. In total, only four patients in each of the high dose and placebo arms respectively discontinued due to adverse events. The next steps will now be discussed with the regulatory agencies.

Please turn to slide 13; the semaglutide in obesity Phase III Step program, represents an important part of our strategic aspiration to develop a leading portfolio of superior obesity treatment solutions. The obesity program will begin to report results soon, starting with Step 4. Let me go into a little bit of detail. Step 4 is a 68 week safety and efficacy trial of semaglutide versus placebo in 900 overweight or obese adults. The trial displays an unusual so called withdrawal design, implying that after 20 week running period for semaglutide in all patients, they will be randomized or were randomized to either stay on semaglutide or switch to placebo treatment, hence withdrawing active drug therapy. Based on this, the trial seeks to investigate the weight difference between the one ARM continuing versus the other ARM discontinuing semaglutide therapy from randomization at week 20 to the end of trial at week 68. This will provide meaningful data on the consequences for patients to discontinue obesity therapy after five months, as compared to she or he continued on Diabesity therapy for more than a year. Step 4 will also investigate other endpoints, including weight change after six to eight weeks of semaglutide. Step 4 will be followed by readouts from the classic obesity Step 1 trial, the Diabesity step 2 trial, and the combined intervention step 3 trial in the upcoming months. Overall the Step program has enrolled approximately 4,500 adults with either overweight and comorbidities, or obesity as defined by BMI above 30. Obesity is a chronic disease that has been shown to require long-term management, with both pharmacological and behavioral therapy. It is associated with many serious health consequences, decreased life expectancy, and great societal cost. Semaglutide is expected to treat obesity, while offering the patient powerful weight loss, mediated by well-defined mechanisms in the brain, causing decreased appetite and increased feeling of satiety.

Please turn to slide 14; in the first quarter of this year, a number of R&D milestones were reached. As mentioned by Lars, Ozempic was submitted for marketing authorization in China, Rybelsus received approval in EU and the UK, and Phase II for semaglutide in NASH completed highly successfully. Additionally, the once weekly combination of semaglutide and the novel GIP analog initiated in Phase I. Furthermore, the quarter also brought with it, Phase I initiation of a novel insulin hybrid molecule that combines basal insulin action with PCSK9 inhibition.

In biopharma, the once weekly growth hormone, Somapacitan was submitted for marketing authorization in Japan in adults. The submission was based on data from the pivotal Phase III,trial REAL 1 and supported by data from the local Japanese trial, REAL Japan which enrolled 60 previously treated patients with growth hormone deficiency, They were adults. We have announced that two clinical trials in the concizumab Phase III program have been paused due to the occurrence of non-fatal thrombotic events in three patients. A potential reinitiation of the program will modify dosing regimens, will now be discussed with the regulatory agencies. The remainder of the year promises a number of important milestones starting with doses approval in Japan expectedly this quarter, along with multiple trial readouts, and significant product approvals across the portfolio.

With that, over to Karsten for an update on the financial results.

Karsten Munk Knudsen - Executive Vice President and Chief Financial Officer

Thank you, Mads. Please turn to slide 15; in the first three months of 2020, sales increased by 16% in Danish kroner and by 14% at constant exchange rates. The gross margin was 84.1% compared to 83.8% in the first quarter of 2019. The increase in gross margin reflects a positive product mix, driven by increased GLP-1 sales, productivity improvements in manufacturing, and a positive currency impact of 0.2 percentage points. This was partly countered by a negative impact from lower realized prices in the U.S.

Sales and distribution costs increased by 9% in Danish kroner and by 7% at constant exchange rates, reflecting increased investments in GLP-1 and obesity, partly countered by lower promotional spend for 18 [Phonetic] products in the U.S. The cost increase was driven by global promotion activities for Ozempic, global launch efforts to build and expand the obesity market, as well as launch activities for Rybelsus in the U.S. and promotional activities for insulin, in places such as China.

Research and development cost increased by 41% in Danish kroner and by 40% at constant exchange rates. The cost increase is impacted by the reversal of write-downs of oral semaglutide prelaunch inventory in the first quarter of 2019 and a low level of spending in the first quarter of 2019. The underlying R&D cost increase is driven by high activity level within other serious chronic diseases, mainly for the NASH and cardiovascular disease projects. Administration costs increased by 2% in Danish kroner and by 1% at constant exchange rates, reflecting broadly unchanged, spent across administrative areas.

Operating profit increased by 40% in Danish kroner and by 12% at constant change rates, when adjusting for increased sales due to COVID-19 related stocking and the 2019 reversal of oral semaglutide prelaunch inventory, operating profit increased by around 4%. Net financial items showed a loss of around DKK1.3 billion, which is compared to a loss of around DKK1 billion in Q1 2019. This development reflects losses on commercial positions, mainly due to declines in the emerging market currencies in March 2020. Diluted earnings per share increased by 16% to DKK5.05. Free cash flow increased by 50% to DKK7.7 billion.

Please turn to slide 16; for 2020, sales growth is still expected to be between 3% and 6%. The guidance reflects an expectation for a robust performance of the GLP-1 based diabetes care and Obesity Care products, as well as positive contributions from the new generating insulin portfolio and key biopharm products. The guidance also still reflects intensified competition within diabetes and biopharm, continued pricing pressure within diabetes care, as well as the expansion of affordability initiatives.

Given the current exchange rates versus the Danish kroner, growth reported in Danish kroner is expected to be around 1 percentage points higher than at constant exchange rates. The current COVID-19 pandemic causes uncertainty to the outlook regarding patient flow and societal impact, such as the unemployment rate in the U.S., which is impacting healthcare insurance coverage. The sales expectation is based on a number of assumptions related to the severity and duration of impacts from COVID-19, including a gradual normalization across geographies of the patient flow in the third and fourth quarter of 2020, as well as a gradual reversal during 2020 and 2021 of the increased stock levels experienced in March 2020.

Operating profit growth is still expected to be 1% to 5%. The guidance primarily reflects the sales growth outlook, continued focus on efficiency and resource allocation, and continued investments in current and future growth drivers across the operating units. Growth reported in Danish kroner, is expected to be around 1 percentage point higher than at constant exchange rates.

Financial items is now expected to be a loss of around DKK2.5 billion. The higher loss mainly reflects losses associated with foreign exchange hedging contracts, primarily related to the U.S. dollar versus the Danish Kroner, and losses from non-hedged currencies due to the depreciation across most emerging market currencies. We still expect a free cash flow between DKK36 billion and DKK41 billion in 2020.

And now back to Lars for closing remarks.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Karsten. Please turn to slide 17; societies are severely impacted by the COVID-19 outbreak and during the pandemic, our key priorities are to safeguard our employees, continue the supply of our lifesaving medicines and use our expertise, resources and global reach to help societies around the world fighting the pandemic. COVID-19 relate to stocking at the patient level significantly impacted our results. However, we are satisfied with the underlying commercial performance as well as the progression of our pipeline, with the approval of Rybelsus in the EU, and the encouraging Phase II data for semaglutide in NASH.

Lastly, please take care of yourselves and those around you during these challenging times. Together, we can and will overcome this crisis. Thank you very much.

With that, we are now ready for the Q&A, where I kindly ask all participants to limit him or herself to two questions please. Operator, we're now ready to take the first question?

Question & Answers

Questions and Answers:

[

Operator

[Operator Instructions]. Our first question is from Emmanuel Papadakis from Barclays. Please go ahead, your line is open.

Emmanuel Papadakis - Barclays - Analyst

Thanks for taking the question, Emmanuel Papadakis from Barclays. Maybe I'll kick off with one on payer mix, we're obviously seeing some significant unemployment figures in the U.S., perhaps you could help us think through the lag on timing and magnitude of potential impact in terms of your business in the U.S., in particular across both insulins and perhaps more importantly, GLP-1 commercial book of business? Any comments could may be helpful. And then, maybe I'll take one on Norditropin, pretty stellar Q1, you had a couple of good quarters now, is that part of a more sustainable trend, what kind of impact should we anticipate from a potential competitor launch? Or are you seeing this in the second half of the year, do you think it can remain a growth asset this year and beyond? Thank you.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

So thank you Emmanuel. Karsten actually, I'll give both questions to you, if you can cover please. So firstly the payer mix impact on insulin is the one, and then, our outlook for Norditropin.

Karsten Munk Knudsen - Executive Vice President and Chief Financial Officer

Yeah. So Emmanuel, thank you for those questions. One of the consequences of COVID-19 crisis, as you allude to, impacting the economy across the world and more specifically, in the U.S. where we've seen incremental unemployment increasing by some 30 million people. When modeling unemployment data like that, then you have to take into consideration that - first of all, some of the 30 million, where do they come from, and what is the transition onto what other forms of health insurance, and to what extent do they have dependence, also that you have to have to account for. And then finally, you have to also include that the American economy is moving faster than you would say, some of the economies in terms of, people losing on employment and then when the economy improves, then they rapidly get employed again in some of these employments.

So we have included an impact in our guidance. So we believe it's covered in our guidance. The channel mix and the exact magnitude and modeling, there are too many moving parts and uncertainties to go into specifically on that. But needless to say you can say, patients who are previously on commercial insurance and then moving on either uninsured or moving on to Medicaid insurance, will have a negative impact on our business during the latter part of this year and also into the coming years, and hence a negative channel mix.

In terms of share of growth hormone and the growth we are seeing there, then you can say all the the backlog of the growth hormone market is that we have a rather mature market in terms of no - or global volume market growth and a rather competitive nature of the market, with a number of players in the market and hence, a relatively low value market growth as well. The reason for our sizable sales growth in the first quarter of this year, has a couple of complements; one being, the the destocking we saw in the U.S. last year, an easier comparator in terms of inventory levels in the first quarter this year when comparing to last year, as one factor. And then also, we've seen - in some geographies we've seen impacts from supply challenges from one of our competitors. So those are the main factors, and hence you should see our Q1 sales growth for Norditropin as in all outlier and growth coming down in the future quarters.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Karsten. Thank you, Emmanuel for that set of questions. So next question please?

Operator

Our next question is from Wimal Kapadia from Bernstein. Please go ahead, your line is open.

Wimal Kapadia - Sanford Bernstein - Analyst

Great, thanks you very much for taking my question. Wimal Kapadia from Bernstein. So if we just start with NASH, clearly the headlines are very strong, but how does Novo differentiate between obesity and NASH, given most NASH patients are obese, will the driver of treatment actually be obesity, given there is no need to biopsy deliver? So what I'm really asking is, is NASH really just obesity in your mind? And then tied to that, can you provide a little bit of color on the efficacy in patients who lost less weight? I'm trying to get a good understanding of benefit independent on weight loss, if there was any? My second question is just on Saxenda, NBRX is down pretty big, I think around 40% in the U.S., and given the average data is around four to five months. I'm just curious if you could provide a little bit more color on what you're assuming for the rest of the year from an obesity perspective? And then tied to that, we are entering a recession, how do you think about the obesity potential longer term, given it remains quite an out-of-pocket market, meaning the O-U.S. Thank you.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Wimal. That was at least a couple of questions. So Mads, you start on on NASH and then Karsten, you could talk a bit to the guidance on Saxenda.

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

Yes, absolutely Lars. And these are good questions. First of all, just - you need to understand Wimal, if we look at the study population here, its probably pretty symptomatic of what is happening in the real world. We actually had 60% of the patients coming in with the diabetes, Type 2 diabetes and varying degrees of overweight and obesity. Some of them actually not being that obese, but rather just overweight, around 20% or so. The remaining 40% of the patients were simply obese patients without pre-existing diabetes. So I think the metabolic derangements associated obesity and/or Type 2 diabetes, together cater for what's happening in the liver, or for people in NASH, and you can say, the patients we are treating, many of these were actually pre-patients and these are actually on the verge of progressing to F1, which is liver cirrhosis, and to me, one of the most important hallmarks of a therapy in this field, is actually to be able to arrest the progression to irreversiblity, NASH cirrhosis. So I think these are really exciting data and to me, it's the first time that a metabolic agent actually shows that secondarily to the metabolic improvements, you see reduced hepatocellular death as assessed by the ballooning element of the NASH score, and that has been followed by reduced scarring of the tissue, which is the body's reaction to ballooning in the cells.

So I think NASH is to be seen as something that is big - part of a bigger cardiometabolic syndrome and not simply just - obesity or for that matter, diabetes. Some people call it a lifespan indication that's been discussed, but that maybe a bit premature to speculate on. I think you should witness a more holistic treatment modality going forward and semaglutide is probably the kind of hallmark of such therapies that address the different needs that follow with aging.

There was also a question of the differentiation between bodyweight that impact on NASH. The best way I can address that is pricing at 0.1 milligram dose that corresponds to 1.7 mgs of sema per week, that corresponds to 1.8 milligram Victoza. So, there you see with a modest weight loss of three kilos or so, that 40% in this trial had an extra solution in the LEAN study published by Philip Newsome five years ago, it was 39% Victoza. So 39%, 40% that's similar, the drop doses are bioequivalent, so that fits and then you can add that what we are seeing more at the high dose, the 0.4 milligram is more potent effects on weight loss, double digit weight loss also in those with diabetes, plus significant impacts on a variety of biomarkers ranging from apoptosis biomarkers, interleukin-1 receptor antagonist, lipid parameters, etc, etc, etc, all pointing towards a improvement in the natural solution rate, as compared to what you achieve with the standard GLP-1 therapy.

So weight drive some of it, but anti-inflammatory and other mechanism of action, infection clearly drive other elements of it.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Mads. Very exciting. Karsten, Saxenda performance in this current environment?

Karsten Munk Knudsen - Executive Vice President and Chief Financial Officer

Yeah. So Wimal, you're spot on. When we look at COVID-19 impact on Saxenda, and if we take the U.S. market as a proxy for that, then NBRx scripts are down to the tune of 40% in April, compared to a pre-COVID-19 NBRx script levels. And as you point out then, as day time is recounting in months for Saxenda. So you should expect Saxenda to be hit more than some of our other products and therapies for the company. That doesn't change the fact that we are still pursuing to double our obesity franchise as we laid out in our strategic aspirations. We believe the patient potential with - potentially 650 million people globally in scope for treatments, is relevant. With the Step program reporting out in Q2, we believe that we have a pipeline with sema in obesity and potentially, let's see also on Amylin coming even later. So we believe we have the pipeline for this population. So we still see strategically, the obesity business as as a growth investment and something that we see doubling over the coming years.

And then on a small final note then, we actually also did get reimbursement in Switzerland. Just as a small example, but we are still continuing to progress on on reimbursement in obesity.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Karsten. Thank you very much. Next set of questions please?

Operator

And our next question is from Peter Verdult from Citi. Please go ahead, your line is open. Might be muted sure.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Sorry Peter, we cannot hear you.

Operator

And our next question is from Simon Baker from Redburn. Please go ahead, your line is open.

Simon Baker - Redburn - Analyst

Thank you for taking my questions. Two questions and I have a quick request. Firstly, I just wonder if you could update us on the outlook for Ozempic in China, which is starting February, wondering if you could give us expectations for when you would be looking to launch and how you will launch? I'm assuming this will be different to Victoza cannibalization strategy, given the more nascent market over there? So any thoughts there would be would be useful? And then going back to Wima's question on obesity. Clearly, there were some challenges now, but flipping it around. We've seen a lot of early evidence that obesity is a negative prognostic factor in COVID-19. Do you see longer term, that focusing minds perhaps more on, looking at initiating obesity therapies? And the quick request, you very kindly gave us the restated sales numbers for 2019, I wonder if you could also give us the growth rates for those new regions? Thanks so much.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Simon, and Mads, while I think it's maybe too early to go into commercialization strategy for Ozempic in China. I think you can talk a bit to the clinical development. And then I think Simon brings up an interesting a hypothesis on the link between obesity and COVID-19, maybe talk a bit to that?

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

Yeah. Thank you, Lars and thank you Simon. Vis-a-vis Ozempic approved in China, with the CFDA there, as you recall, historically there has been very long regulatory timelines. They have committed to change that and seek to get more close to classic Western Europe, U.S. standards and in principle, there are two groups of approval, one is called the expedited review, where you can expect approximately, give or take, one year approval time and the others, the more standard, where even today, you should still expect around two years and we simply do not know at this point. We of course, hope for fast approval, but we will keep you posted on that one.

And then you are very interesting remark and albeit, this is still extremely speculative, this is a forward-looking disclaiming statement. However, it is so that in today's Journal Obesity, there was a publication by U.S. and German researchers, that people with fat-loaded adipocyte fat cells, they expressed more ACE2 protein, which just by chance is the receptor for the the SARS-COV2 virus, and that implies that people who are adipose or obese, sorry, they will be - try to maybe uptake more viral particles that might even serve as a reservoir of the virus infection, giving a more permanent infection in obese individuals. At least, we know this epidemiology.

We also know, that in certain alveolar cells, in the lung compartment, there are cells that also get loaded with fat droplets, and they also express more ACE2. You have a big situation where cytokines down in the lungs might pick up. So agents that reduce obesity, agents that reduce blood pressure, agents that reduce Hba1c so that the immune system is less impacted by hypoglycemia and so on so forth, should all be seen as a relevant remedies in the future, and mean term, also to reduce risk of COVID-19 in the susceptible individuals.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Mads.

Karsten Munk Knudsen - Executive Vice President and Chief Financial Officer

Thank you, Mads. On the request - on the composite data, we will be happy to provide those.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Simon. Next set of questions please?

Operator

And our next question is from Peter Sehested from Handelsbanken. Please go ahead, your line is open.

Peter Sehested - Handelsbanken - Analyst

Hi. It's Peter from Handelsbanken. Thank you for taking my questions. I have two, one for Mads, one for Karsten. Mads on the…

Lars Fruergaard Jorgensen - President and Chief Executive Officer

We cannot hear you. Could you speak up please?

Peter Sehested - Handelsbanken - Analyst

Is it better now?

Lars Fruergaard Jorgensen - President and Chief Executive Officer

A bit better.

Peter Sehested - Handelsbanken - Analyst

Just hold on, i mean, I will just turn up the volume here.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Please go ahead Peter. We are ready for your question Peter.

Peter Sehested - Handelsbanken - Analyst

OK, thank you. So for Mads, on SELECT, the study population here is not that good described in the literature. Could you give us some update on what we should expect in terms of background CV risk, and also this study which sort of has some kind of secondary prevention characteristics, similar studies with the PCSK9 inhibitors have aimed at a 15% benefit relative to placebo, is that what we should look for here as well? And otherwise, any sort of flavor on the design of the study would be appreciated? And for Karsten, in terms of what you're seeing in terms of trends in the U.S. with respect to, you know, the drop or change in patients, new patients coming into the clinic, how much that has dropped? And also in terms of the refill rates, could you give us some data on those two parameters, and also some sort of you know - sense for how we should expect this for the duration of these two impacts on prescription behavior? Thank you.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Peter. So Mads, firstly, on the start the population in the SELECT?

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

Yes. So, very briefly, these are patients who are obese and at high risk of cardiovascular disease. Typically, because of prior event. They are quite prevalent, for better or worse, there are millions and millions of those, and we have included, not people with diabetes, because we want to show that semaglutide has got protective properties in a non-diabetic environment. However, there will be people with glycemia, i.e. pre-diabetic conditions included, and you're absolutely correct, one element in looking into secondary endpoints, is the progression towards Type 2 diabetes, pretty much as we did in the SCALE pre-diabetes and obesity trial, as you recall, whether it was 80% reduction in the onset of Type 2 diabetes, when people were treated with Saxenda. So that is an element. The major element of course is, the major cardiovascular event occurrence, and event rate, I cannot tell you exactly what it will be, but it's not going to be 5% as it in a classic LEAD or SUSTAIN 6 kind of setting, because these are not people with diabetes, it's more likely to be around half of that. And since you have 17,000 patients, you should imagine 300 to 400 major events per year, when the trial is fully enrolled, and then you could do your own math on the timing of the trial.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Mads. And Karsten, on patient flow?

Karsten Munk Knudsen - Executive Vice President and Chief Financial Officer

Yeah. So on patient flows, Peter then kind of as - if we take the simple data points, where we look at - as a proxy for patient flows, what percent to new-to-brand scripts, so NBRx, pre-COVID and now in April. Then in rough terms, what we've seen is that insulin NBRx is down 20%. GLP-1 NBRx down 30% and as we discussed before, Saxenda NBRx down 40%. Then as to your question on stay time, we do not have detailed data on that, but one could speculate that in the current situation and focus on health, that adherence to therapy would be going up. So people would be less likely to be giving doses in an environment like this, but we do not have data supporting that at this point in time.

In terms of that duration for the impact on patient flows, what we put into our announcement is, that we expect patient flows to normalize during the third and fourth quarter, but of course, all of that hinges on society opening back up and if we take kind of a global tour on that logic, then we see China gradually opening up with reps out, visiting doctors to some extent now, with hospitals opening up and for patients. So we see China and some Asian countries opening up, and we see some gradual signs in other geographies as well, in terms of opening up. And in the U.S. also, there is not one size fits all, but there are different approaches in the different states in the U.S., but I think more and more, the dialog is around how and when to open up, and less about closing down and containing. So we believe it is likely that patient flow should normalize during the second half of this year.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Karsten. Thank you, Mads. And next set of question please. And thank you to you also, Peter.

Operator

And our next question is from Peter Verdult from Citi. Please go ahead, your line is open.

Peter Verdult - Citigroup - Analyst

Thank you. Good afternoon. Can you hear me?

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Yes.

Peter Verdult - Citigroup - Analyst

Yes, sorry about earlier. Its Peter Verdult here from Citi. Two questions please on the pipeline, Mads, just on the go-forward strategy on NASH, could you just clarify that you would happily take the 0.4 mg dose forward into Phase III, given the profile that you've seen in the data, should you decide to do that? And in terms of the gating factors around that Phase III, go, no-go decision, will you be waiting for the combo data with the Gilead assets later this year, and data in the F4 patients I think is coming end of next year, before making that Phase III go-no-go decision? So question number one on NASH? And then secondly, just switching gears to GLP-GIP, yeah, the data we've seen in the commentary from you, the commentary from KOLs, there is a growing belief that high dose sema can be competitive, with tirzepatide on A1c and probably superior weight, and there is an ongoing debate in the community about what GIP actually brings to the table? So with that sort of in mind, I'm interested to hear the reasoning why Novo, starting December GIP Phase I, are we entering this sort of GLP-GIP arena, could you just describe what - can you make that decision?

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Peter. I counted three questions, and the first one on NASH approach, noting that its still early days, we are considering how to go about that. And then the second one, why pursue combinations, when we have high dose sema, so Mads, what can you tell on that?

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

I think Peter, when I see the data coming out from this Phase IIb trial, they are very compelling indeed and actually point towards a disease mechanism, which has the potential to arrest the progression of the disease, including the fibrosis. Obviously, the way that a Phase III trial will have to be conducted according to the draft guidance from the Food and Drug Administration, is that you can get your drug approved based on showing NASH resolution without worsening of fibrosis, and then you need to continue the trial, after you have launched the product, until you have some hot outcomes. And based on what we have seen today, there is good reason to believe that achievement of improvement in heart outcomes over time, should be should be doable. However, as to which dose, our company management will decide to take into Phase III. I will not speculate on that, but it's quite clear to me, that our numerous biomarkers, including also some hardcore ones, there is a clear dose response relationship, implying that our pharmacomathematical moleculars, suggest us to go towards higher, but still very safe doses of this agent. But we will get back to - I don't unfortunately decide all these things alone, it's the whole executive management and the Board of Directors who end up concluding on this. But we are not having to await the Gilead readouts by any means and measures, because with the data we have today, semaglutide looks to be able to become also a standalone entity and maybe anchor drug in the field of NASH. So we're not depending on other readouts, we can make decisions based on of this readout in the future. There was a question about - oh yeah I try to avoid the deep question. So yes, the SUSTAIN FORTE trial will hopefully show that - what you said Peter. So fingers crossed for fourth quarter on the readout for SUSTAIN FORTE.

There is, even within Novo Nordisk, big discussions about the role, if any, of keeping - adding further bang for the buck GLP-1 receptor agonism and that remains uncertain and I have to admit that. Personally I maybe a strong believer in the additivity between GLP-1 receptor agonism and Amylin receptor agonism, in both weight and potentially other indication areas, because some of the preclinical data are more supportive, but there we have to derive clinical data, and hopefully we can come with those to you, later on in the season.

So this is kind of out of the state of the cautionary principle, that we've decided to take, once weekly GIP put together with sema. And see [Indecipherable].

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Mads and thank you, Peter. Next set of questions please.

Operator

And our next question is from Jo Walton from Credit Suisse. Please go ahead, your line is open.

Jo Walton - Credit Suisse - Analyst

Thank you. Jo Walton from Credit Suisse. A question surrounding Rybelsus and a question on the P&L. So starting with Rybelsus, I wonder if you could tell us a little bit about the sources of the new patients that you are getting. Are you seeing them coming from of the GLPs? Are you seeing them trading up from other orals, and if you could also help us with typical level of co-pay, is it more expensive for a patient to move to your oral from other oral? So a little bit of background, given that we've had a quarter now worth of strong growth for Rybelsus> My second question would be on the face of the P&L, you had 7% extra sales from COVID. Now, I would imagine that they came through with a very high contribution margin, and therefore I was quite surprised that the profitability of the firm wasn't more impacted, than it appeared to be, where I appreciate that there was the one-time R&D aspect, but I think we've all adjusted for that, the write-back of the oral sema. So if you could just tell us a little bit if they were - it was anything else in terms of, I don't know, extra costs to a patient assistance, that kept the profitability down when the sales were up so strongly. Thank you.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Jo and Camilla, first on Rybelsus, what we see so far, although it's early days?

Camilla Sylvest - Executive vice president and head of Commercial Strategy & Corporate Affairs

Yeah. So on Rybelsus, we see on Rybelsus businesses, that more than 70% comes from outside the GLP-1 class and here primarily for the oral segment. It is still early days and while we also cannot see is, what patients would have started on an injectable GLP-1, that is of course, I think that we'll will be able to give more detail in the future.

With regards to co-pay, we have a very competitive solution, meaning that the co-pay for Rybelsus is reduced to $10, and that is the same - as for other orals. So all in all, we are very happy with the uptake of Rybelsus before COVID-19 and we see they are very encouraging. We also now, as Lars mentioned earlier, have a combined formulary access of more than 50%, and we also expect that this will gradually increase over the year. So that's the status on Rybelsus for now.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Camilla. And then Karsten, on P&L and flow-through from top line to bottom line?

Karsten Munk Knudsen - Executive Vice President and Chief Financial Officer

Yeah, so on P&L. So the cost of goods associated with additional stocking is 15%. So actually slightly less than our Group gross margin. So apart from that, nothing really special on on the gross margin and contribution margin. No additional cost on selling and distribution further down the P&L. Only the roughly 15% cost of goods on the DKK2 billion extra sales.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Karsten. Thank you, Jo. Next set of questions please?

Operator

Our next question is from Richard Vosser from JP Morgan. Please go ahead, your line is open.

Richard Vosser - JP Morgan - Analyst

Hi, thanks for taking my questions. Just going back to NASH. I wondered if you could give us some more detail on the side effects? Was there a dose-dependent high level of nausea, and do you think you would have to titrate the product more slowly in the future to resolve that? And also on the lines of that, I know Peter asked on the dosing, but why wouldn't you move to a weekly injection from a daily injection, given your previous modeling around the obesity and you went that way? Second question, just on NASH as well, just thinking about the fibrosis level, could you just confirm - you said no statistical improvement in fibrosis, does the highest dose get quite a nice numerical trend on fibrosis, or could you clarify on that? And may be if I sneak one more, just on Rybelsus, just whether you've seen any improvement in the willingness to prescribe and take up the product from doctors, as the U.S. starts to open up in the last sort of week or so or the last bit? Thanks very much.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Richard. And Mads, if we bundle that into one long question, side effects, weekly injection versus daily, and what we saw in terms of fibrosis?

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

Yes. Well, first of all, let me clarify one thing Richard, in the old days that we had this idea about once daily semaglutide, it has not born out to have any merits. So by definition, Phase III will be conducted with the application of once-weekly semaglutide, at whatever reasonable dose, and in terms of dose selection, I would just repeat what I said, the fact that you're going to have 80 patients in the high dose arm, and 80 patients in placebo, and in both arms, there are only four patients, i.e. 5% who discontinued due to adverse events and only two of these four related to GI side effects, and all four of the placebo related to non-GI side effects. That tells you a story of benign, safety and tolerability profile, that will not be prohibitive for any kind of dose selection. The titration regimen that we have deployed in the STEP program, let me just remind those of you who have forgotten it, it's 0.25 to 0.5 to 1 to 1.7 and 2.4, and that's the kind of dosing titration regimen that you should foresee, also in a NASH setting, depending on the final dose, of course.

In terms of fibrosis, well, actually when we look at fibrosis using elastography according to Hyperscan imaging, the ELF test, combining the TIMP, hyaluronic acid with PIIINP biomarkers, we actually see improvements in fibrosis, as we also do in the biopsies, in terms showing the post - decrease in the progression of fibrosis. But it is true that in the categorization of people who improved one step in fibrosis, that was only trending. But the trends are positive, and when I look at the overall elasticity of the liver, the ELF biomarker, TIMP, etc, it's a very compelling story of a secondary effect on fibrosis that is beneficial, but driven by the metabolic and inflammation related improvements.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

So more time will be needed to show that?

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

Yes, and that's why you would have to see it as a part of the extension trial in a Phase III situation, where you get the approval according to FDA, based on NASH solution improvements, but then it is true that you continue the trial. Absolutely Lars.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Mads. And Camilla again, on Rybelsus and willingness to prescribe?

Camilla Sylvest - Executive vice president and head of Commercial Strategy & Corporate Affairs

Yes. So as we just talked about, we expect Rybelsus to pick up again when the patient dynamics is less impacted by COVID-19, and it's too early, since reps are not in the field yet to conclude on to what extent that is already the case.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Yeah. But we saw maybe strong performance of the product before COVID-19 and we have no reason to believe that it will not pick up, as soon as we are in the field again. Thank you, Camilla and Richard. And next set of questions please?

Operator

Our next question is from Mark Purcell from Morgan Stanley. Please go ahead, your line is open.

Mark Purcell - Morgan Stanley - Analyst

Yes, thank you very much. It's Mark Purcell from Morgan Stanley. Two questions, firstly on Rybelsus U.S. dynamics, we've been following the dynamics. Endocrinologists, the NWA share was 19% in December and fell to 7% in March, whereas PCPs was 14% in March. So do you have any further thoughts in terms of whether endos just simply prefer Ozempic over Rybelsus or whether there is any other reasons why you saw a reduced use of Rybelsus by endocrinologists, ahead of the COVID impact in March, whether that would be treating a bolus of patients who were on injectable GLP-1, but were struggling, or anything else in terms of clinical experience? And then secondly, doubling down on NASH, Mads, could you give us your thoughts on on diagnostics, both internal, external efforts and whether you're waiting for any new developments on the diagnostic side to incorporate them into Phase III trials. So we'll get data on the genset assay this year obviously, Roche have got a number of efforts ongoing in their diagnostics panels to try and look at diagnosing the various key aspects of NASH, and whether you could look to double down on your pipeline as well, beyond just tapping the FGF21 product in Phase II in NASH? Thanks very much.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Mark, and starting will Camilla speak on endos and primary care?

Camilla Sylvest - Executive vice president and head of Commercial Strategy & Corporate Affairs

Yes. So, yet again, it's still early days. But what we do see is that, as expected results as compared to Ozempic at the time of launch, Rybelsus is, to a much larger extent, driven by primary care. And that is of course to be expected, as this is an oral compound and easy to initiate and that's why you see a different distribution in terms of who is driving the majority of the scripts.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you. And Mads, on diagnosis for NASH?

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

Yes. So it's a really good point, Mark and just for information, is a member of the Liver Forum, the LITMUS and NIMBLE consortia, which are U.S. and European based consortia, all seeking to define non-invasive diagnostic tools for the diagnosis and follow-up on NASH. And the FDA, EMA, and other agencies are also present in some of those consortia. So we are working closely with them and it is important for us, based on these data to move forward.

I would say that with what we know today, the predictability for given person in terms of absolute signs of combining elastography imaging together with for instance, the ELF biomarker panel, is fully on par with the biopsy histopath diagnosis and categorization of the fibrosis stage. But the regulators at this point do not find that these biomarkers have been fully validated yet. So a part of the process is to ensure full validation. But I can tell you we have probably around 40 or so biomarkers, that didn't have time to go into in this trial and some of them are highly predictive of different elements. For instance, CK18 apoptosis biomarker is highly predictive of [Indecipherable] cell fit, and we saw a very strong a nice dose-dependent effect on that marker.

So we're learning as we're going along and we will share this with the regulators and find a path forward towards validation of some of this non-invasive tool. We see it as a pre-competitive effort, we want to anyone, including Roche, who has an interest in the field.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Mads. Thank you, Mark. We will take one last quick set of questions.

Operator

And our next question is from Steve Scala from Cowen. Please go ahead, your line is open.

Steve Scala - Cowen - Analyst

Thank you so much. How would you characterize the expected unwinding of stock in 2020? Is the bulk of the unwinding expected to occur in the second quarter, and did you already start to see that during the month of April? And then on semaglutide in NASH, what were the rates of fibrosis improvement in the semaglutide group and the placebo group? Many thanks.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

OK. Thank you, Peter. So Karsten quickly on stocking unwind?

Karsten Munk Knudsen - Executive Vice President and Chief Financial Officer

Yeah, so the DKK2 billion in stocking. As we say, we expect inventories to reverse during 2020 and 2021, and the reason for that statement is that the majority of the stocking we are seeing is at patient level. So you would expect a quick destocking, if there's mainly wholesalers. But that's not the case. So that's why it's hard to predict accurately, but we expect to take some time before it reverses.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Then over to you Mads.

Mads Krogsgaard Thomsen - Executive vice president and Chief Science Officer

Yeah, we don't discuss specific data on all endpoints. But the numeric difference in favor of semaglutide was to the tune of 10% more patients experiencing fibrosis improvement, i.e. going down in graduation. But we released data set at conferences that hopefully will be up and running one way or the other in the months or quarters to come.

Lars Fruergaard Jorgensen - President and Chief Executive Officer

Thank you, Mads. Thank you, Peter. So this rounds off our conference call today. Bear in mind that we will have to conduct our roadshow virtually this quarter. We hope to be back on the road soon. There is another conference call virtually tomorrow. So there is another chance for you to dial in and ask questions to us. So thank you for the interest in Novo Nordisk and have a great day. Thank you. Bye-bye.

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Q1 2020

Earnings Transcript

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