Novo Nordisk - Earnings Call - Q1 2025

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the Q1 2025 Novo Nordisk Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Jakob Rode, Head of Investor Relations. Please go ahead, sir.

Jacob Rode (Head of Investor Relations)

Thank you, and welcome to this Novo Nordisk earnings call for the first three months of 2025. My name is Jakob Rode, and I'm the Head of Investor Relations at Novo Nordisk. With me today, I have CEO of Novo Nordisk, Lars Fruergaard Jørgensen, Executive Vice President, U.S. Operations, Dave Moore, Executive Vice President, International Operations, Maziar Doustdar, Executive Vice President and Head of Development, Martin Holst Lange, and finally, Chief Financial Officer, Karsten Munk Knudsen. All speakers will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, novonordisk.com. Please note that the call is being webcast live, and a recording will be made available on our website as well. The call is scheduled to last one hour. Next slide, please. The presentation is structured as outlined on slide two.

Please note that all sales and operating profit growth statements will be at constant exchange rates unless otherwise specified. Please turn to the next slide. We need to advise you that this call will contain forward-looking statements. These are subject to risk and uncertainty that could cause actual results to differ materially from expectations. For further information on the risk factors, please see the company announcements for the first three months of 2025, as well as the slides prepared for this presentation. With that, over to you, Lars, for an update on our strategic aspirations.

Lars Fruergaard Jørgensen (CEO)

Thank you, Jacob. Next slide, please. In the first three months of 2025, we delivered 18% sales growth and 20% operating profit growth. I'd like to start this call by going through the performance highlights across our strategic aspirations before handing over the word to my colleagues.

Starting with our focus on purpose and sustainability, we are now serving nearly 46 million patients with our diabetes and obesity treatments. This is an increase of almost 4 million patients compared to the first three months of 2024. Our total carbon emissions rose by 37% compared to the first three months of 2024. This was mainly driven by the acquisition of new production sites and capital expenditure activities related to expansion of manufacturing sites. These are also efforts to meet the high demand for our innovative treatments. To uphold our commitment to being a sustainable employer, we expanded the number of women in senior leadership positions to 42% compared to around 41% last year. In R&D, we completed the second and final pivotal trial, REDEFINE 2, with our next-generation obesity treatment, CagriSema. We remain on track for submission in the first quarter of 2026.

Recently, our application for Wegovy 2.4 mg for the treatment of Metabolic dysfunction-associated steatohepatitis, or MASH, in short, was accepted by the U.S. FDA and granted priority review. In addition, the new drug application for weight management for oral semaglutide 25 mg, or as I personally will call it, Wegovy in a pill, has been submitted to the U.S. FDA. If approved, this will be the first oral GLP-1 treatment for obesity in the U.S. Lastly, we are in-license two early-stage assets that show promise in addressing obesity and other cardiometabolic diseases. Martin will come back to this and our overall R&D milestones later. The quarterly sales growth is driven by both operating units. Dave and Mike will go through the details later. In terms of financial details, we delivered sales growth of 18% in the first three months of 2025.

However, we have reduced our full-year outlook due to lower-than-planned branded GLP-1 penetration impacted by the rapid expansion of compounding in the U.S. Novo is actively focused on preventing unlawful compounding, as well as the efforts to expand patient access on our GLP-1 treatments. Karsten will come back to this later. We will continue to drive attractive growth and expand patient access to our innovative treatments. In the U.S., this includes recent initiatives with NovoCare Pharmacy, telehealth collaborations, and the CVS formulary decision. In international relations, there remains a large unmet need for patients, and we are excited to continue focused commercial efforts in existing and future markets in 2025. Furthermore, we realize the significance of our global footprint, including those activities based in the U.S. Novo Nordisk has a strong presence in the U.S. with over 10,000 full-time employees across the value chain.

This includes research and development and substantial manufacturing footprint. We have invested over $24 billion in the U.S. over the past 10 years, including ongoing expansions and improvements to our manufacturing site in Bloomington, Indiana, and Clayton, North Carolina. The existing U.S. tariffs do not materially change our financial outlook for 2025. That being said, we are closely following potential tariffs on pharmaceutical products in the U.S. Before we move on to the particulars of the first quarter performance, I'd like to update you on changes to executive management. Please turn to the next slide. After nearly 30 years with Novo Nordisk, Camilla Sylvest decided to step down. Camilla played a pivotal role in establishing our GLP-1 and obesity franchises and spearheaded the development of our long-term social and environmental goals.

I would like to thank Camilla for her meaningful contributions to Novo Nordisk and wish her all the best for the future. This development has triggered several organizational changes effective 3rd of April, aimed at enhancing the speed of decision-making and strengthening the execution focus within our operating units. Ludovic Helfgott, formerly Executive Vice President, Rare Disease, now heads up product and portfolio strategy. This is a newly established area designed to forge a closer connection between commercial strategy, medical affairs, and business development across all our therapy areas. Thilde Hummel Bøgebjerg becomes the newest member of executive management as Executive Vice President of Quality, IT, and Environmental Affairs. The restructure will also enable Dave Moore to focus exclusively on the U.S. operations, as well as Henrik Wulff on CMC and product supply.

I'd now like to give an update on our commercial execution in the first three months of 2025. Please turn to the next slide. As of January, North America operations and international operations were reorganized, and financial reporting has been divided into U.S. operations and international operations. More details on the regions can be found in the company announcement. In the first three months of 2025, our sales increased by 18%. The sales growth was driven by both operating units, with U.S. operations growing 17% and international operations growing 19%. Our GLP-1 sales in diabetes increased by 11%, driven by U.S. operations growing 10% and international operations growing 13%. Internal sales increased by 3%, driven by U.S. operations growing 13%. The sales increase was driven by phasing of rebates, as well as channel and payer mix, partly countered by a decline in volume. International operations sales increased 1%.

Obesity care sales increased 65%, driven by U.S. operations growing 40%, partly impacted by compounded GLP-1s and international operations growing 137%. In both geographies, growth was driven by Wegovy, partly offset by declining Saxenda sales, as the obesity care market is growing towards once-weekly treatments. Rare disease sales increased by 3%, driven by a 5% sales increase in international operations. Rare disease sales in U.S. operations grew 1% compared to last year. Please turn to the next slide. Today, Novo Nordisk remains the global GLP-1 volume market leader, serving nearly 2/3 of all patients on GLP-1 treatments across diabetes and obesity. Our ongoing scaling efforts have supported close to a tripling of GLP-1 patients reached over the past three years. We are dedicated to serving patients who need our medicines and increasing our capacity to meet their needs.

By integrating the three required fill finish sites and expanding our existing capacities, we are ready to reach more patients with serious chronic diseases. With that, I'll hand over today.

Dave Moore (EVP of U.S. Operations)

Thank you, Lars. Please turn to the next slide. Sales of GLP-1 diabetes care products in the U.S. increased by 10% in the first three months of 2025. The sales increase was mainly driven by the continued uptake of Ozempic. Following the U.S. approval of the flow data earlier this year, Ozempic is now the only GLP-1 receptor agonist proven to reduce the risk of chronic kidney disease in people living with type II diabetes and chronic kidney disease. Novo Nordisk remains the market leader in the U.S., with more than 50% market share measured by total monthly prescriptions. Please turn to the next slide. Wegovy sales increased by 39% in U.S. operations in the first three months of 2025. The Wegovy sales growth was driven by increased volumes, which were negatively impacted by wholesale or inventory movements. This was partially countered by lower realized prices.

Wegovy was around 200,000 weekly prescriptions. The total U.S. branded anti-obesity market more than doubled, with a growth rate of over 160% in the last year. The volume of compounded GLP-1s in the U.S. is estimated to have impacted the uptake of Wegovy prescriptions and the growth of the branded obesity market during the first quarter of 2025. In February, the FDA removed semaglutide from the drug shortage list. As a result, it is now illegal under U.S. compounding laws to make or sell compounded semaglutide drugs, except with rare exceptions. Novo Nordisk is working to prevent unlawful and unsafe compounding of semaglutide in the U.S. while making sure patients have access to safe, legitimate semaglutide produced by Novo Nordisk. Following the resolution of the semaglutide shortage, we have a number of initiatives to support patients with obesity seeking treatment with Wegovy. In March, we introduced self-pay.

It directed patient delivery of all doses of Wegovy at a reduced cost of $499 per month through our NovoCare Pharmacy. Access to Wegovy for cash-paying patients was further expanded in April with the announcement of collaborations with three telehealth organizations. Last week, it was announced that CVS chose Wegovy to be the only GLP-1 medicine covered for obesity on its national template formulary as of July 1st, 2025. While Novo Nordisk is committed to providing patients with choices and did not pursue an exclusive formulary placement, we do believe the formulary decision by CVS speaks to the benefits of Wegovy. These include established cardiovascular benefits noted on the Wegovy label, and we await the FDA priority review of the promising data from the ESSENCE trial for potential inclusion of MASH as a primary indication in the label in the second half of 2025.

We will continue to identify additional ways to expand access to Wegovy. Now, I'd like to turn it over to Mike for an update on international operations.

Maziar Doustdar (EVP of International Operations)

Thank you, Dave. If you can go to the next slide, please. Sales in international operations grew by 19% in the first three months of 2025, driven by GLP-1 products. GLP-1 diabetes sales increased 13%, driven by all regions. GLP-1 diabetes sales growth was negatively impacted by periodic supply constraints. Obesity care sales grew by 137% to DKK 6.5 billion. Sales of Wegovy reached more than DKK 5.5 billion, growing at 392%, driven by sales across all regions. Next slide, please. Novo Nordisk remains the market leader in international operations with a total diabetes and obesity GLP-1 volume market share of over 72%. Diabetes remains a significant global health challenge, affecting more than 550 million individuals in IO. RYBELSUS is now available in over 40 markets and continues to gain market share in international operations.

Meanwhile, Ozempic remains the leading GLP-1 diabetes product within IO, having launched in around 80 markets. With improved supply, we are now fully focused on our promotional activities to further expand the number of patients reached. Also, within obesity, we see a substantial unmet need, with more than 800 million people living with obesity in IO and only a few million of these people being treated. We have launched Wegovy in around 25 countries, including three in just the last month, reflecting a greater supply availability and staying true to our commitment in reaching more and more patients. We look very much forward to rolling out Wegovy in many more markets as the year goes through. Next slide, please. Our rare disease sales increased by 3%. This was driven by sales increase in international operations of 5% and U.S. operations sales growth of 1%.

Sales of rare endocrine disorder products increased by 14%, driven by Norditropin and improvement in manufacturing output, as well as Sogroya launch uptake in international operations. This is countered by a decrease of 5% in U.S. operations, mainly driven by Norditropin. Rare blood disorder sales decreased by 1%, driven by lower sales of NovoSeven. Now, over to you, Martin, for an update on R&D.

Martin Holst Lange (EVP and Head of Development)

Thank you, Mike. Please turn to the next slide. In March, Novo Nordisk released the headline results from REDEFINE 2, the second and final pivotal trial with CagriSema. The trial included people living with obesity or overweight, along with type II diabetes. REDEFINE 2 was a 68-week efficacy and safety trial with 1,206 people enrolled. People were randomly assigned to receive either CagriSema, a fixed-dose combination of Cagrilintide 2.4 mg and semaglutide 2.4 mg, or placebo. The mean baseline body weight was 102.2 kg. The REDEFINE 2 trial incorporated a flexible trial protocol similar to REDEFINE 1. After 68 weeks of treatment, assuming all people adhered to treatment, CagriSema resulted in a significant weight loss of 15.7% compared to 3.1% in the placebo group. In the trial, CagriSema appeared to have a safe and well-tolerated profile.

The most common adverse events were gastrointestinal, with the vast majority being mild to moderate and decreasing over time in line with the GLP-1 receptor agonist class. We have now completed the second and last pivotal CagriSema phase III trial for weight management. We look forward to sharing more data from REDEFINE 1 and 2 at the American Diabetes Association in June. We are on track with scaling of the CagriSema supply chain, and we still expect to file for the first regulatory approval in the first quarter of 2026. Next slide, please. Building on the learnings from REDEFINE 1 and 2 trials, we have extended the duration of REDEFINE 4, which is now anticipated to read out in the first quarter of 2026. Turning to REDEFINE 11, we expect the trial to be initiated during the second quarter of 2025.

The purpose of REDEFINE 11 is to investigate the potential for further weight loss by prolonging the duration of the trial to 80 weeks and focusing on dose re-escalation throughout the study. Next slide, please. In February, we submitted the oral Semaglutide 25 mg to the U.S. FDA as the potential first oral GLP-1 treatment for obesity. Oral semaglutide 25 mg demonstrates an overall efficacy and safety profile similar to once-weekly injectable semaglutide 2.4 mg. For context, I would like to revisit the OASIS 4 results. OASIS 4 was a 64-week efficacy and safety trial comparing once-daily oral semaglutide 25 mg to placebo in 307 adults with obesity or overweight with one or more comorbidities.

In the trial, adults with obesity or overweight who received oral semaglutide 25 mg experienced an average weight loss of 16.6% from a baseline body weight of 105.9 kg when assuming full adherence to the treatment regimen. Around one-third of participants achieved a weight loss greater than 20% or more. Secondary endpoints from OASIS 4 demonstrated improvements in cardiometabolic risk factors such as waist circumference, blood pressure, and inflammation in patients treated with oral 25 mg versus placebo. In addition, oral semaglutide 25 mg appeared to have a safe and well-tolerated profile on par with semaglutide 2.4 mg. The full publication of OASIS 4 is expected later this year. Altogether, oral and injectable semaglutide has been studied in robust clinical development programs with more than 43,000 semaglutide-exposed patients and exposure from post-marketing use of over 33 million patient years.

If approved, oral semaglutide 25 mg is expected to be the first oral GLP-1 receptor agonist for weight loss. The manufacturing of the active pharmaceutical ingredient, bulk tablet manufacturing, and packaging of oral semaglutide 25 mg are all carried out in the United States, and all manufacturing steps are up and running. We anticipate the U.S. FDA review will be completed around the turn of this year. Next slide, please. Turning to the upcoming R&D milestones, we look forward to a year with exciting trial readouts. Before speaking to the remainder of 2025, I would like to highlight some of the milestones from the last few months. In addition to the completion of REDEFINE 2 and the submission of oral 25 mg semaglutide for obesity in the U.S., Novo Nordisk continues to pursue the expanded treatment optionality for people living with obesity.

Although not shown in the slide, I would like to mention our newest agreements to in-license two early-stage assets for the treatment of obesity and other cardiometabolic diseases. These include a first-in-class oral non-incretin preclinical candidate in obesity and associated metabolic disorders, and a GLP-1 GIP glucagon triple receptor agonist. The latter triple G asset is the second tri-agonist in our pipeline, and we expect the phase 1 results from our internal tri-agonist in the second half of 2025. Within RADA-Cs, the main phases of two phase III-A trials, REAL8 and REAL9, were successfully completed with Sogroya for non-replacement indications and submitted for regulatory approval in the EU.

Within cardiovascular and emerging therapeutic areas, we are excited to have submitted the ESSENCE part I trial with once-weekly semaglutide 2.4 mg for regulatory approval in both EU and U.S. for the treatment of MASH and moderate to advanced liver fibrosis, namely F2 and F3. As a reminder, ESSENCE achieved both primary endpoints. By week 72, 37% of people treated with semaglutide 2.4 mg achieved improved liver fibrosis with no worsening of steatohepatitis, while 63% achieved a resolution of steatohepatitis with no worsening of liver fibrosis. To put this into perspective, the ESSENCE phase III trial results are the best phase III results within MASH to date. In the U.S. alone, around 13 million people live with MASH and currently have limited treatment options available.

We are excited that the U.S. FDA has accepted the supplemental new drug application and granted priority review for Wegovy to treat MASH in adults with moderate to advanced fibrosis with a decision anticipated in the second half of this year. Moving to upcoming milestones in 2025, I would like to start with a few data readouts in type II diabetes in the second half. Specifically, we expect the first phase III results from CagriSema from REIMAGINE 3, investigating CagriSema as an add-on to basal insulin in people with type II diabetes. Moreover, we expect results from the subcutaneous and oral amycretin phase II trial. Our upcoming readouts and clinical programs in obesity demonstrate the breadth of our pipeline in both modalities and mechanisms of actions to meet the needs of patients.

In addition to the initiation of REDEFINE 11 with CagriSema in the first half of 2025 that I mentioned earlier, we also expect the phase II readout from the once-weekly GIP-GLP-1 co-agonist in the second quarter of 2025. We are also very excited to initiate the phase III program for Cagrilintide in monotherapy in late 2025. Within RADCs, we expect U.S. submission for Sogroya in non-replacement indications in the second quarter of 2025, as well as regulatory submissions from PenMate in the U.S. and EU in the second half of 2025. Lastly, we look forward to the readout of the evoke and evoke+ trials in patients with early Alzheimer's disease. With that, over to you, Karsten.

Karsten Munk Knudsen (CFO)

Thank you, Martin. Please turn to the next slide. In the first three months of 2025, our sales grew by 19% in DKK and 18% at constant exchange rates, driven by both operating units. The gross margin decreased to 83.5% compared to 84.8% in the first three months of 2024. The decrease mainly reflects amortizations and depreciations related to Catalent, as well as costs related to ongoing capacity expansions, partially countered by positive product mix driven by increased sales of GLP-1-based treatments. Sales and distribution costs increased by 12% in DKK and by 10% at constant exchange rates. In U.S. operations, the cost increase is mainly driven by promotional activities related to Wegovy and Ozempic. In international operations, the increase is mainly related to Wegovy launch and promotional activities. Research and development costs increased by 20% in DKK and 19% at constant exchange rates.

The increase in cost is mainly driven by obesity care and reflecting increased late-stage clinical trial activity, as well as increased early research activities. Administration costs increased by 5% both in DKK and at constant exchange rates. Operating profit, as a consequence, increased by 22% measured in DKK and by 20% at constant exchange rates. EBITDA increased by 23% in DKK and by 21% at constant exchange rates. Net financial items showed a net loss of DKK 1.8 billion compared with a net gain of DKK 72 million last year. This primarily reflects losses on head currencies and financing costs related to the funding of the Catalent transaction. The effective tax rate was 21.6% in the first three months of 2025 compared to 20.4% in 2024. Net profit increased by 14% and diluted earnings per share increased by 15% to DKK 6.53.

Free cash flow in the first three months of 2025 was DKK 9.5 billion compared to DKK 5 billion in the first three months of 2024. Free cash flow is reflecting higher net cash generated from operating activities, partially countered by increased capital expenditure. Capital expenditure for property, plant, and equipment was DKK 13.4 billion compared to DKK 8.4 billion in 2024. This was primarily driven by investments in additional capacity for API and filled finish capacity for both current and future injectable and oral products. We have returned DKK 36.7 billion to shareholders, mainly as dividends in the first three months of 2025. Following the step-up in CapEx investments in 2025, Novo Nordisk is not conducting a share buyback program.

An authorization to the Board of Directors to buy back shares was, however, in line with previous years adopted at the annual general meeting on 27 March 2025, should the initiation of a share buyback program later be deemed relevant. For 2025, the range for sales growth is now expected to be 13%-21% at constant exchange rates. Given the current exchange rate versus DKK, sales growth reported in DKK is expected to be 3% points lower than constant exchange rate growth. The new range reflects lower than planned penetration of branded GLP-1 treatments in the U.S. impacted by compounded GLP-1s. The outlook reflects expectations for sales growth in U.S. operations and international operations, mainly driven by volume growth of GLP-1-based treatments for obesity and diabetes.

Following the U.S. FDA removal of semaglutide injectables from the drug shortage list, the sales outlook assumes a reduction in patients on compounded GLP-1 treatments during the second half of 2025. The updated guidance reflects several efforts already underway, as mentioned by Lars, Mike, and Dave. Operating profit growth is now expected to be 16%-24% at constant exchange rates. Given the current exchange rates versus Danish kroner, growth reported in Danish kroner is expected to be around 5% points lower than at constant exchange rates. The updated expectation for operating profit growth primarily reflects the lower sales growth outlook, partially countered by reduced spending. Novo Nordisk expects net financial items to show a gain of around DKK 0.9 billion.

This is mainly driven by expected gains on head currencies, primarily the U.S. dollar, partially offset by interest expenses related to funding of the debt-financed Catalent transaction. The effective tax rate for 2025 is still expected to be between 21% and 23%. Capital expenditure is still expected to be around 65% in DKK in 2025, reflecting expansion of the global supply chain. In the coming years, the capital expenditure-to-sales ratio is still expected to be low double digits. Free cash flow is now expected to be DKK 56 billion-DKK 66 billion, reflecting the lower-than-expected sales growth, mainly driven by lower volume growth of GLP-1 treatments in the U.S. All of the 2025 expectations are based on assumptions that the global and regional macroeconomic and political environment will not change significantly business conditions for Novo Nordisk during 2025, including changes in tariffs and duties.

The announced tariffs currently in effect do not materially change our financial outlook for 2025. However, a potential expansion or increase of tariffs may have a negative impact on Novo Nordisk and our industry. That covers the outlook for 2025. Now back to you, Lars.

Lars Fruergaard Jørgensen (CEO)

Thank you, Karsten. Please turn to the final slide. The performance in the first three months of 2025, with 18% sales growth, reflects that nearly 46 million people are now benefiting from our treatments. Further, we progressed our R&D pipeline, including completing the final pivotal trial for next-generation obesity treatment, CagriSema. We have reduced our full-year outlook due to lower-than-planned GLP-1 penetration, which is impacted by the rapid expansion of compounding in the U.S. I'm confident in our recent initiatives in the U.S to support patients to seek the benefits of our GLP-1 treatments. Furthermore, the obesity opportunity remains large in international regions, and we look forward to reaching more patients with the additional rollout of Wegovy globally.

At Novo Nordisk, we'll continue to focus on commercial execution, the progression of our R&D pipeline, and expansion of our production capacity in the pursuit of treating more people living with serious chronic diseases. With that, I would like to hand over the word to Jacob.

Jacob Rode (Head of Investor Relations)

Thank you, Lars. Next slide, please. With that, we're ready to take the Q&A. We kindly ask all participants to limit her or himself to one or maximum two questions, including sub-questions. With that, operator, we are now ready to take the first question.

Operator (participant)

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We'll now take the first question. Your first question comes from the line of Richard Vosser from JPMorgan. Please go ahead.

Richard Vosser (Managing Director)

Hi. Thanks for taking my questions. Two, please. First one on the compounders in the U.S. You've obviously done a partnership with Hims, but Hims themselves are suggesting that they will continue to personally compound and have a significant contribution to their business from personal compounding. That seems to be at odds with the partnership and at odds with your commentary of trying to reduce compounding and it being only allowed in rare circumstances. Could you just talk about how you expect that to go and how you expect to deal with that in the second half? A second question, if I can, please. Just on the competitive effects from Mounjaro you're seeing on IO and how easy you expect to be able to grow Ozempic once the supply constraints in IO are removed, how ready is the sales force?

How confident are you on strong growth in IO? Thanks very much.

Jacob Rode (Head of Investor Relations)

Thanks a lot, Richard. Two questions for Dave and Mike respectively. Let's start with the first question on compounding and next steps, and hand it over to you, Dave.

Dave Moore (EVP of U.S. Operations)

Thank you. Thank you for the question, Richard. To be clear, we do not support unlawful compounding. We are against the illegal importation and the continuation of compounding in the U.S. As you mentioned, we did announce collaborations with telehealth providers. The reason for this is increasingly people living with obesity are seeking health care through telehealth companies. We need to be where patients are and to have an offering for the real Wegovy. These collaborations allow a link to NovoCare Pharmacy, where the real Wegovy can be available through these telehealth companies. As we have mentioned, on May 22nd, we fully expect the FDA to enforce the law. At that time, we will continue to fight against unlawful compounding, for example, mass personalization. Thank you. Over to you, Mike.

Maziar Doustdar (EVP of International Operations)

Thanks very much, David. Richard, I think to answer your question, I'll split it in between Ozempic and Wegovy. We have Ozempic since 2019, launched and now in 80 markets across IO. A very decent footprint, I would say, in many, many countries. We have been launching Wegovy a bit due to the supply constraints, not at the speed we wanted to, also partially because we were servicing and maintaining, of course, the patients that were on Ozempic. Now, starting from this year, as the supply constraints are lifted, we have seen an acceleration like you would not have seen before. Just in the last couple of months, six new launches and more to come as we go forward.

In terms of share number of prescriptions and volumes, if I just give you a couple of data points, we have currently 64% volume market share on injectable GLP-1, so on the back of Ozempic and Wegovy. That 67% market share is rather stable. It is not going down. We, of course, hope to be able to continue fueling that with these so-called new launches, as well as, of course, getting back to promoting Ozempic much more assertively than we have been during the constraint period.

Jacob Rode (Head of Investor Relations)

Thank you, Mike. Thank you, Dave. Thank you to Richard. With that, we are ready for the next set of questions, please.

Operator (participant)

Thank you. Your next question comes from the line of James Quigley from Goldman Sachs. Please go ahead.

James Quigley (Executive Director)

Great. Thank you for taking my question. One on the guidance and one follow-up on the compounding pharmacy. On the guidance, if we sort of assume a similar second quarter as in the first quarter, then the scenarios for progression in the second half are quite wide, with around 8% growth at the bottom end and 22%-23% growth at the upper end. Could you reconcile the potential outcomes? What are the most important variables there? What are the key assumptions for both ends of those variables? Secondly, on compounding, you mentioned there's having a significant impact, but have you got any more details of what the drag is on Wegovy market share? Have you done any surveys of what you think, how many patients might drop off versus switch to branded, and within the branded, switch to Wegovy versus switching to Zepbound?

Because you mentioned you have factored that into the guidance. Just wondering how much that is factored into the guidance. Thank you.

Jacob Rode (Head of Investor Relations)

Thanks a lot, James. On the first one on guidance, we'll go to you, Karsten.

Karsten Munk Knudsen (CFO)

Yeah. Thank you, James, for that question. Yes, I think for the dynamics we see in our business, then we delivered 80% growth in the first quarter. Of course, our aim is to continue to drive attractive growth. That entails increasing script trends in the U.S. and continuing to drive our GLP-1 franchise in IO. Specifically to the guidance ranges, this means in terms of the main drivers that a lot of patients on compounded products will go to branded products in the second half of this year. We will be able to enable that through the Cash channel and NovoCare and the telehealth collaborations. We also do have a label update with MASH we spoke to before, classic commercial tactics, and then, of course, the CVS collaboration.

The acceleration to deliver our guidance is mainly in the second half of the year when we talk about U.S., while in international operations, we'll see a continued step up over the coming quarters in terms of sales growth. That takes us to kind of the basic fundament of our guidance range. I would say on compounding specifically, given that the data quality on number of patients on compounding is not very high, then it's based on market research where we're looking at 1 million or more patients on compounded GLP-1 today. We've made estimates based on how many patients will either be able to benefit from the personalized exception or will drop off treatment. As a consequence, the rest will go to a branded product.

A number of assumptions, but we have a lot of tactics in place to be able to capture patients that will no longer be able to have a compounded product with effect from the second half of this year, given some patients will also have inventories in place personally and therefore the second half comments. Thank you, James.

Jacob Rode (Head of Investor Relations)

Thank you, James. I think that also covered part of question two. Anything from you to add, Dave, on what we see currently in terms of magnitude of compounding, potentially split on branded GLP-1 treatments as well?

Dave Moore (EVP of U.S. Operations)

Yeah. Thank you, Jacob. I will share that the market research that Karsten mentioned also gives us an idea that certainly semaglutide is overweight. We estimate 70% of compounding is of semaglutide. I'd like you to focus on three things, three actions that we're taking to ensure that we're effective in this transition as compounding starts to wind down. Number one, we expand the cash offering. The $499 via NovoCare Pharmacy was purposeful and planned at the time when compounding would start to diminish, as well as the collaborations with telehealth companies. That cash offering will soon be available in all 9,000 CVS stores. Number two, we continue to expand better coverage for Wegovy. This helps for some of those patients that may be on compounding that have insurance and would have access to Wegovy for a low copay.

Number three, as Karsten mentioned, we have targeted commercial efforts aimed at patients and health care practitioners so that we can focus on the safety of real Wegovy versus compounding, as well as the availability and the affordability. Thank you.

Jacob Rode (Head of Investor Relations)

Thanks a lot, Dave. Also, thanks to you, James. With that, we're ready for the next set of questions, please.

Operator (participant)

Thank you. Your next question comes from the line of Peter Verdult from BNP Paribas. Please go ahead.

Peter Verdult (Managing Director of Pharmaceuticals Equity Research)

Thank you, Peter, from BNP Paribas. Lars, Karsten, two quick ones. I suppose I'm still struggling just to understand where the disconnect has been with respect to your messaging given at February's CMD in London about commercial execution being management's top priority and the prescription trends we've seen since then, especially when you have, as you said, 40 million commercial lives where most patients apparently only have to pay $25 a month to get access to Wegovy, and you've been smashing it with DTC and reps. Is it really only about the compounders, or do we have to consider your nearest branded competitor doing a better job? More quickly, and secondly, just your thoughts on the recent orforglipron diabetes data, especially given scalability doesn't seem to be an issue there. Thanks very much.

Jacob Rode (Head of Investor Relations)

Thanks a lot, Pete. I think both of those go to you, Lars. Let's start with the first one on commercial execution as a priority.

Lars Fruergaard Jørgensen (CEO)

Yeah. Thanks, Pete. You are right. This has been our focus for some time. I think it's important to say that when you assess that based on script trends, it is really, really difficult as there is a significant share of the business turning into being compounded. We estimate that there's a similar amount of business as what we have in the U.S. on GLP-1. I think Dave outlined our tactics, and we feel, honestly, very confident that this is the right moment for us to make a serious change in the market. That's baked into our guidance for the second half of the year. I think also the point that CVS actually chose our brand without us paying for exclusivity is a sign that there is a very, very strong perception around Wegovy in the market.

The added benefits we have on top of the real-world experienced weight loss is great. That is just getting even better, assuming we get the MASH indication as well. What you get in one product here is just very, very attractive. In terms of oral, I think there's been a lot of interest in how the oral category will develop. It's clear for us all along that we have the head start here. We have not pushed it as hard as we do now until we have ramped up manufacturing. We have seen significant scaling and efficiency step up in our API facility in the U.S. When we submit the data to FDA, you can assume that we have what it takes to do a full launch in the U.S.

Bear in mind, as was also alluded to previously, this is a molecule with tremendous safety data, so more than 30 million patient lives. I think we should not be late with that point as physicians and patients make choice on a trusted product. Of course, efficacy is similar to what we have with Wegovy. Really, Wegovy is in a pill. I think it is a very, very attractive offering and assuming positive outcome with agency, we are ready to give this a big push. Also on this point, show a very strong commercial execution. Thank you, Pete, for that.

Operator (participant)

Thanks a lot, Lars. Thanks a lot, Pete, as well. With that, we are ready to the next set of questions, please.

Thank you. Your next question comes from the line of Martin Parkhøi from SCB. Please go ahead.

Martin Parkhøi (Head of Equity Research)

Yes. Good afternoon, Martin Parkhøi, SCB. Just two questions, just Lars coming back to CVS again, because one of the buzzwords that you have used for many years now is optionality. I can understand that CVS is a win for Novo, win for Wegovy. Do you think it's a win for patients in the U.S. to lose optionality and exclude another obesity product? Secondly, also back to oral sema 25 mg, I just understand that you said that you can run with full steam when you launch. What kind of opportunity do you see? How big a part of the market would actually like to have Wegovy in a pill instead of Wegovy as we know it today?

Jacob Rode (Head of Investor Relations)

Great. Thanks a lot for those two, Martin. I think, again, both will go to you, Lars. Firstly on the CVS one.

Lars Fruergaard Jørgensen (CEO)

Yes. Thank you, Martin, for the questions. You are right that we support optionality and open access to products. We believe it's in the best interest of patients and physicians that they can make the choice for the patient. Different patients have different needs. We support that. This is a situation where it's not a decision made by us. We have not made, say, a bid on an exclusive contract, but it's a choice that CVS has made. We appreciate the partnership we have with CVS over many years. As Dave also alluded to, it's a partnership that now also includes our cash program in the 9,000 CVS outlets. It's their choice. It's not really something we have a say in. Of course, we do appreciate the perception around the product and what it can.

I think it talks to the real-world experience of Wegovy. Of course, also for our payer, what is the tangible value of reducing the risk of cardiovascular disease and hopefully also near-term, say, the best MASH profile you can think about? Getting all of that in one product is very, very attractive from a payer perspective. In terms of the oral opportunity, I think it's important to note that this is about competition within a category of those who prefer an oral. We believe a majority of patients would still benefit the best from being on injectable therapy. That's where you get typically efficacy. Also, we have learned over the past few years that weekly injection is actually very, very convenient. Having to deal with your disease once a week in a very simple device solution is very convenient for patients.

I think physicians are nowadays very comfortable in prescribing injectable. Having said that, there are patients who prefer an oral. We are pleased that we can compete very well in this segment. We believe it will be way smaller than the injectable segment. Being first to the market with a known molecule, known efficacy, known safety, and also some try to say that it is not as convenient. In our view, it is very convenient. You wake up in the morning, you take the tablet with some water, and you are ready for your day. We believe we can play very well in a smaller segment compared to the oral injectable category. We will be first, assuming a positive regulatory outcome. Thank you, Martin.

Martin Parkhøi (Head of Equity Research)

Thank you.

Jacob Rode (Head of Investor Relations)

Thank you, Lars. Thank you, Martin. We are ready to move on to the next question, please.

Operator (participant)

Thank you. Your next question comes from the line of Michael Nedelcovych from TD Cowen. Please go ahead.

Michael Nedelcovych (Director of Equity Research in Pharmaceuticals)

Thank you for the questions. I have two. My first relates to potential political risk. The current administration in the U.S. has at times singled out GLP-1s when it raises the issue of apparent price disparities between the U.S. and other countries. Novo is presumably deep into negotiations with CMS about the IRA price discount for semaglutide starting in 2027. Do you sense any risk if the administration plans to take this as an opportunity to make an example of GLP-1s and demand a particularly severe price cut? That's my first question. My second question relates to the pipeline and specifically amycretin. I believe Novo has been in discussion with the FDA about phase III planning for an obesity trial, but the R&D milestone slide does not include a trial start in 2025.

Can you tell us whether a phase III trial for amycretin could yet start this year? When a phase III obesity trial does start, has a decision been made as to whether the oral or subcutaneous formulation would be advanced first? Thank you.

Jacob Rode (Head of Investor Relations)

Yeah. Thanks a lot for those two, Mike. Again, I think for the first one, we'll go to you, Lars, on GLP-1 price negotiations.

Lars Fruergaard Jørgensen (CEO)

Yeah. Thank you, Michael. If you take Wegovy first, we have very limited Wegovy exposure in Medicare so far. If you take some of the other, say, overall governmental funded channels like VA and Medicaid, those are channels with somewhat lower price points. I think more comparable to what we see in other geographies. If you look at Ozempic, obviously, there's a bigger share of business in Medicare. That's then what's being discussed under the IRA. I cannot go into specifics around it because it's still relatively early days. I think there is an established, say, mechanism in dealing with that.

I would actually say from an overall political risk point of view, I actually think we're in a good spot because our book of business pricing exposure is either lower or is already in ongoing price negotiations compared to perhaps other products that sit in parts of Medicare with a higher price point or has not yet been opened up for negotiation. I see a relatively limited, say, additional risk compared to what we're already facing. Having said that, it is still early days and an ongoing process.

Jacob Rode (Head of Investor Relations)

Thanks for that, Lars. For the second one on amycretin, we'll hand it over to you, Martin.

Martin Holst Lange (EVP and Head of Development)

Thank you very much for the question. Not a lot of news to add from last quarter. As you know, the process is to submit an end-of-phase II package specifically to the FDA, but also to other regulatory authorities. We are in that process and expect an outcome within the next couple of months. We will know, and this is what we plan for, this is what we expect if we can progress into phase III. That phase III program will be initiated with current timelines in Q1 of next year. The focus for the phase III program will be both oral and injectable.

Jacob Rode (Head of Investor Relations)

Thank you, Martin. Thank you, Mike. We are ready to take the next set of questions, please.

Operator (participant)

Thank you. Your next question comes from Sachin Jain, Bank of America. Please go ahead.

Sachin Jain (VP)

Hi, there. Thanks for taking my question. I'm just going to try and push Karsten and Dave on some of the topics if I may, if there's any more color you're willing to give. Firstly, on the compounded semaglutide sort of patient funnel, Karsten, would you just give us any color as to what you're seeing for inventory in the system? We've heard estimates as anywhere between three and twelve months. Any color on what percentage you expect to shift to branded, given that they're on compound because they can't afford it or it's not covered. I'm going to be provocative on the branded capture. Some of what we hear is, as these patients come off compounded semaglutide, cash patients may prefer Lilly given a cheaper syringe and vial strategy. Zepbound, perception, efficacy, safety is beginning to edge Wegovy.

I know that's provocative, but I wonder if you could just touch on that. And then finally, a lot of what we've discussed has been the obesity market. I wonder if you could touch on Ozempic. I'd assume limited compounding impact, market slowing down, you're losing share to Mounjaro. It's not exactly clear to me what changes there second half. Thank you.

Jacob Rode (Head of Investor Relations)

Thank you, Sachin, for those two questions. On the first on compounding, we'll hand it to Karsten. Then we'll hand it over to Dave if he has anything to add before Dave goes on to the second question on Ozempic. Firstly, over to you, Karsten.

Karsten Munk Knudsen (CFO)

Yeah. Thanks, Sachin. I wish I could give you razor-sharp data points based on high-quality market data. This is a fairly young segment in terms of data and market research. You're correct that within telehealth, the setup is more towards a subscription basis on three, six, nine, even 12 months, where patients get the incentive through a lower subscription rate if they sign up for a longer period of time. Yes, most likely there'll be some patients sitting with inventory on May 22nd. We don't have really good data on that. That's also why we're cautioning in our Outlook section of our company announcement that the market should expect a step up mainly in the second half of this year from compounding and, of course, the CVS contract.

As to brand and drop-off to different solutions, price sensitivity, etc., I'll hand that over to Dave on the in-market understanding of that one. Over to you, Dave.

Dave Moore (EVP of U.S. Operations)

Thank you, Karsten. We believe the strong label of Wegovy, as well as the brand awareness of Wegovy, and the fact that the sema compounded is overweight, we think that there is certainly a focus with healthcare practitioners to maintain that continuity of care. What we've heard is the availability of branded Wegovy through these new channels, meeting the patients where they are, is a very important step in terms of that transition and the funneling of patients. As Karsten mentioned, of the total number of compounded patients today, some will drop off. Certainly, as you mentioned in our guidance, we do expect to capture and see a real interest in patients coming over to the real Wegovy. I will shift over to Ozempic, Sachin. As we're seeing this year so far, the growth of the GLP-1 class, it does continue.

It's lower than what we've seen in years past at 15%. That still leaves plenty of opportunity, still runway for future growth. This continues to be a game around NBRx and our commercial leverage. Here are the things that we're focused on in the U.S. with Ozempic. First of all, our overarching commercial focus is leveraging the Ozempic label, the broadest of any GLP-1 label on the market, and continues to be the most widely known GLP-1 as well. Our commercial efforts during this year include the launch of a new campaign called the Ozempic Era Campaign. We are in the Ozempic era. Our patients are experiencing that. The understanding of the broad label is something that now both patients as well as physicians understand.

Lastly, we continue to focus on decreasing the outflow, meaning maintaining longer stay time and having patients have the full effect in getting to the 2 mg dose. Thank you.

Karsten Munk Knudsen (CFO)

Just building on Dave's comment before we hand it back to Jacob, for Ozempic, also our market research indicates a certain level of compounding, not a lot, but potentially in the mid-single digits of GLP-1 diabetes treatment in the U.S. After May 22nd, there might also be an uplift there to go for and benefit for with the tactics Dave just covered. Over to you, Jacob.

Jacob Rode (Head of Investor Relations)

Thank you, Karsten. With that, I think we are ready for the final set of questions, please.

Operator (participant)

Thank you. Your final set of questions come from the line of Jo Walton from UBS. Please go ahead.

Jo Walton (Pharma Analyst)

Thank you. You've talked a lot about pricing and your strong commercial focus. Could you give us an idea of what you think a typical price point would be for a compounded semaglutide and how far adrift that is of the $500 that you're charging? The reason that I ask is I assume that this is a price-sensitive market, and yet the starter dose from your competitor is only $350. I wonder whether people just can't move a step up from whatever they're paying today up to that $500. The $350 is a very compelling starting point for the compounder. Could I also just ask if you could tell us what the average stay time is now that you've got less of a supply constraint, whether you're seeing that obesity stay time get longer or whether you're still having to reacquire patients every few months?

If nobody minds, I'd also just like to take this opportunity to let people know that after 40 years as an analyst, this is my last purely pharma sell side call. Novo was one of the first companies outside of the U.K. that I covered back before the merger of Novo and Nordisk. I really am that old. It will soon be time for me to move on. I have a couple of projects I need to complete before I leave the UBS team fully in Matthew's very capable hands. I want to say it's been an enormous privilege to watch the development of many life cycles of drugs and to work with so many people in Novo and other companies, clients and competitors, many of whom I'm very proud to count as friends.

Jacob Rode (Head of Investor Relations)

Thanks a lot, Jo. First and foremost from Team Novo, thanks and congratulations on a very impressive career. On your two questions, let's move to Dave. Dave, first of all, on GLP-1 pricing for the real Wegovy as well as for compounded ones, and then on stay time.

Dave Moore (EVP of U.S. Operations)

Thank you for the question. Also, congratulations to you. There is a range of prices that we hear in the marketplace. It really does depend on whether or not that is a bundled price with a telehealth company in terms of offering their telehealth services as well as medicine. As you pointed out, it is less for the compounded GLP-1 than what we are seeing in terms of the cash prices, no question. When we think about the funnel and when we talked about the guidance and expectations that Karsten mentioned, certainly, we do expect some patients not to transition, meaning they may be on a compounded GLP-1, and they may not transition over to a branded medication. One of the things that is important for us, though, is to ensure that we are educating around the availability of Wegovy through commercial insurance.

We have over 55 million Americans that have coverage for Wegovy where they would receive the medicine for a low branded copay. What we've learned is many patients on compounded GLP-1 do have insurance. Educating them, doing insurance verification as part of our commercial efforts is also important. To answer your question on stay time, the current 12-month average stay time is around 7.4 months. That continues to increase as the brand grows and more and more patients continue with their therapy over time. Thank you.

Jacob Rode (Head of Investor Relations)

Thank you, Dave, and thank you, Jo. With that, we are done with the Q&A, please. I'll hand it over to Lars for a set of final remarks.

Lars Fruergaard Jørgensen (CEO)

Thank you, Jacob. We delivered 18% growth in the first quarter driven by our innovative treatments. We had to lower our guidance for the year because of how big compounding has been of semaglutide. I hope you feel we have a clear plan for how to counter that, close that down, and really use our commercial tactics outlined today to gain a fair share of those patients. We remain very confident in the market opportunity, the number of people with obesity willing and interested in seeking care. As we scale capacity and progress with our R&D pipeline, not least all semaglutide 25 mg. I would also say upcoming data for Cagrisema, we feel really excited about our opportunity in this space. I will close with that and also thank Joe and wish you the best of luck for the future.

Thank you all for participating in this call. Thank you. Bye-bye.

Operator (participant)

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.