Novo Nordisk - Q4 2023 London conference call

Transcript

Mark Purcell (Managing Director)

My name is Mark Purcell from Morgan Stanley. It gives me great pleasure to introduce you to the Novo Nordisk management team here at the London full year results investor presentation. We have everybody here, I think, and Lars, I'll hand over to you to start the presentation.

Lars Fruergaard Jørgensen (CEO)

Thank you, Mark, and thank you to Morgan Stanley for hosting us today. We're glad to be here, and we'll do a quick presentation upfront and then get into Q&A. I have to warn you that we'll be talking about the future, so please take due notice to the forward-looking disclaimer on this slide. So overall on performance, we're really pleased with how we exited 2023, making good progress on our strategic aspirations. 2023 was a year where we stepped up the number of patients by 5 million, and just in context, we're now serving in total some 42 million. So 5 million more is a very sizable volume in, I say, a scaling perspective. We did that without emitting more CO2 emission.

We actually kept lowering that also, despite the growth. So, from a sustainability point of view, we're quite pleased around that. I would also say that from a commercial execution point of view, we have reached two of the aspirations we set for 2025 in terms of diabetes market share and reaching more than DKK 25 billion in obesity sales. We keep plowing forward despite the fact we have achieved the targets. We were less fortunate in our rare disease business linked to some specific manufacturing issues on growth hormone. That is being remediated, and we hope that we can gradually get back during this year.

On the pipeline, we're very pleased with some very strong outcomes data, but we're also pleased that we are making progress both with our organic pipeline, and you can see that increasingly Novo Nordisk is also tapping into external innovation. So we'll get a bit more back to the details on that. And the strong execution from a commercial point of view obviously leads to a set of very strong financials, and that has also set us up to guide, I think, in a very nice, solid way for 2024, and we'll also get a bit more into that. So very strong year for Novo Nordisk, and we are equally excited about 2024 and sustained growth for our business and also some exciting pipeline news to come. With that, I'll hand over to Camilla for an update on commercial.

Camilla Sylvest (Chief Commercial Officer)

Thank you, Lars. We'll start with an overview of the sales per region and the sales per therapy area. As you see, 36% sales growth driven by both operating units, the North America growing 54% and IO growing 60%. In IO, growth is driven by all regions, as you see on the slide also. From a therapy area point of view, you see strong growth, primarily in GLP-1 in diabetes, but also in obesity. And, our primary brands are Ozempic, Wegovy, and Rybelsus, driving the vast majority of our growth. You also see, in obesity care, growth of 154%, for the full franchise.

In rare disease, we have negative growth, primarily driven by production issues in the Norditropin space. But altogether is 36% growth across all the franchises and operating units. If we zoom in on the 154% growth in obesity, you see here that it primarily consists of Wegovy in the U.S., but we have now launched Wegovy in nine countries, including the U.S. And of course, in the U.S., we have now also resumed the supply of the starter doses, and we continue outside the U.S. with launches in an adaptive fashion, where with a more restricted supply, to make sure that we can continue patients who start on the treatment to also continue on the treatment. We might get back to talk more about obesity later. So for now, I'll just hand over to Martin to give you an update on R&D.

Martin Holst Lange (EVP of R&D)

Thank you very much, Camilla. I'll start with a deep dive into IcoSema, I think. Here we go. As you know, we've announced the first piece of data for IcoSema. IcoSema is a combination drug between icodec, which is a once-weekly insulin, and semaglutide, which is obviously our once-weekly GLP-1. The IcoSema development program is consisting of three studies for the regulatory filing. The first two studies are primarily regulatory studies, demonstrating that IcoSema is superior to the monocomponents, namely semaglutide and insulin icodec, in terms of glycemic control, in terms of weight loss, and so on. The third study that we have actually, and that's a little bit of a paradox, reported on first, is comparing IcoSema to what we call insulin basal bolus treatment.

You'll probably recall that two-thirds of Type 2 diabetes patients are on insulin, starting with basal insulin, but progressing, and this will go for a big proportion of Type 2 patients, progressing to what is basal bolus insulin. That's one basal injection per day, plus up to four mealtime injections per day. The average patient takes approximately three bolus injections per day. So for simplicity, we'll allow ourselves to say four injections per day compared to once weekly injection. That's obviously a tremendous convenience upside to patients if this pans out. And what we did was comparing once weekly IcoSema to four daily injections of insulin, 52 weeks, and in a setting where patients were recruited based on having Type 2 diabetes and being on basal insulin only, but in poor control. So the results you've already seen, they're quite staggering.

So we get on par glycemic control, with this which is currently the gold standard in treatment of late stage Type 2 diabetes, namely the basal bolus treatment. Actually, it's numerically a little bit better. At the same time, we see a weight loss with IcoSema, where the insulin-treated patients get a weight gain. The net difference was almost 7 kilograms, and obviously a substantial benefit to the IcoSema treated patients. Equally significant, we saw a factor of 10 times lower risk of hypoglycemia. In the IcoSema arm, we saw around 0.2 events per patient year exposed, but in the insulin-treated arm, we saw 2, namely, 10 times as more events per patient year exposed.

All of this obviously means better clinical benefit for the patients, good glycemic control, good weight management, and really, really strong hypoglycemia data in terms of a 10 times lower risk of hypoglycemia. At the same time, the IcoSema patients could look at 52 injections per year, whereas the insulin-treated patients on average had 1,450 injections per year. That is a dramatic increase, and normally we don't sort of do a lot in the convenience space, because we look primarily at the efficacy and safety. But I think even we have to say, going from 1,450 injections per year to 52, that is something that is incredibly meaningful for patients, for treating physicians and caregivers, and it's actually also really, really good for the environment because we can save a lot of devices in that space.

So, so far, we are super excited about what IcoSema has shown us. We'll continue that journey, and the next two studies, and these are the pivotal regulatory studies for the, from the IcoSema program, will read out during the first half of this year. If I take sort of the helicopter view, broadly speaking, we see really, really strong progress across both our research, but also our development pipeline in all of our therapy areas. We are really, really happy with that progress. And maybe if I allow myself to start just at looking a little bit back to fall. Obviously, we're very excited about the STEP HFpEF results. We now have read out from both STEP HFpEF in obesity and in diabetes.

Very, very consistent data showing that we can actually make a difference in a patient population that has a significant unmet need and is severely underserved. We have seen the readout from the osteoarthritis study, and obviously we've seen readout, and this has caught some attention from the oral amycretin study. Looking into what's gonna happen next, we are gonna see a very important readout from the phase III program from Mim8 in the not-so-distant future. We are gonna see the actual data from the FLOW study that we terminated mid-2023. We're gonna see the readout from SOUL, which is a big cardiovascular outcome study, is looking at the effect of Rybelsus in Type 2 diabetes.

Finally, we are gonna see at the end of the, around the end of this year, the readout from the CagriSema phase III trial, the pivotal CagriSema phase III trial. So while these are just some highlights, we are looking into a super interesting R&D year, and obviously really, really something to look forward to.

Karsten Munk Knudsen (CFO)

Thank you, Martin. Now on to financials. Good afternoon, all. So some of you might, might have seen this Yahoo Finance. I know it's more American, but there was a quote yesterday that my American colleague sent me. I'm not sure if even my colleagues saw it, but they took a quote from an interview where they said that, "Numbers like this will keep the CFOs smiling for a long time." So, 36% sales growth is just truly, truly spectacular, and it's historic in a Novo Nordisk context, both in relative size, but also in magnitude. So at current exchange rates, we added more than 60 billion DKK year-on-year.

So when Lars talks about scalability, I think the ultimate measure of scalability is, of course, top line growth, and I think these numbers really testify to that. So 36% top line growth translates into 44% operating profit growth, of course, since we have paid for the infrastructure. So while we grow so much, we are actually also able to invest significantly into supply chain. So we're really putting a lot of money into getting max out of our supply chain footprint that operates today. We are investing in R&D. You see how busy Martin is these days in terms of initiations and readouts, and it's also borne by the numbers, 37% growth at CER for R&D investments last year.

So that pretty much marks a doubling of R&D investments over only like a 3-4-year period, investing DKK 45 billion, if we include, BD, in this number, DKK 45 billion of R&D investments in 2023. So really significant step up in investments into the future of the company. All in all, 52% growth on our earnings per share, which is then being returned to shareholders through as a corresponding step up in dividend per share, as we announced. Then just one note on CapEx. Last year we announced CapEx project investments to the tune of DKK 75 billion. We spent last year, measured at cash flow, DKK 26 billion, which is a doubling from the year before.

And now we're guiding DKK 45 billion in CapEx spend for 2024. So this is, of course, a huge investment into the future of the company also, and really making us competitive in the cardiometabolic market and really scaling our capacity, both in diabetes, obesity, and adjacent areas. And of course, our investments are going both into API. The picture you see up here, it's a few months old, but this is one of the up-and-coming big API facilities in Kalundborg, Denmark. And I could have brought a lot more pictures and videos. So many efforts going into CapEx scaling. And how does that then look for 2024 in terms of our financial outlook?

We're guiding for the full year between 18% and 26% top-line growth, which you should basically see as a continuation of the growth momentum we delivered in 2023. It's the same drivers in terms of geographies and products. Then we continue to invest into R&D, into supply scaling, and into building our obesity commercial infrastructure. But even though we are leaning in on those investments, we still manage to get leverage and hence the bottom line guidance of between 21% and 29% CER growth. Then I covered the CapEx, and of course, with the elevated CapEx, then free cash flow is impacted by that.

But we still manage to deliver share buyback also in 2024, this year, to the tune of DKK 20 billion. So a very attractive financial profile, really focused on driving growth and investing in R&D and growth for the future. So that concludes the financial part, and then I'll just get back to this, and then we have asked Daniel Boesen, our head of investor relations, to be the master of Q&A. So I'm sure he'll do extremely well.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

I'll do my best. Thank you, Karsten. And, as always, please state your name and institution, and let's start with one question per person, and then we will, we'll maybe do several rounds. And we'll start with Mark Purcell from Morgan Stanley.

Mark Purcell (Managing Director)

Thank you, Daniel. I appreciate it. A big picture question maybe for you, Lars, just to begin with. Can you sort of help frame the sort of scale of the investment, the DKK 75 billion CapEx investment you're making, and help us translate that maybe into product volumes or patient volumes or however, whichever metric you believe will be helpful for us to understand the sort of scale of the investment?

Lars Fruergaard Jørgensen (CEO)

Thank you, Mark. I started by mentioning that we have added 5 million patients during one year, which is a significant step up. If you look at the guidance we have made for 2024, it's a similar step up. So it's actually quite massive added volumes of patients. And to do that, we obviously first need to ramp up the API. That's where we started. So we had a large API facility coming in line in the U.S. a couple of years back. We started one of the factories in Kalundborg in 2017 that will kick in with API in a couple of years, and we already started the next. So very significant step up in API capacity.

We do, you know, fermentation-based API with continuous harvesting, so we believe we can produce cheaper than anyone else when it comes to API. And then what we're focusing on now is the fill finish, because with much more API coming in, obviously, we need to either make that into tablets or to do a fill finish. So you saw that in Chartres, France, we announced a large project to expand fill finish, and we have a global network of some five strategic sites where you can imagine that we'll be adding fill finish capacity. In addition to that, we also work with contract manufacturing organizations. So now it's really the focus on, you know, getting the fill finish up to match that API.

We don't guide in terms of number of patients or business volume on the long term, but the pool nature we see for our products right now and the ability to scale, say, 5 million patients on a yearly basis, then you can start adding up where that gets us in terms of really having huge societal impact in treating many more patients. And obviously, there's a very significant commercial opportunity in that. Thank you.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you, Lars, and thanks, Mark. So we're ready for the next question. I think we take Emily and then we move down this way.

Emily Field (Director)

Hi, thanks. Emily Field from Barclays. A financial question. So, you know, we've seen operating margin sort of steadily expand over the last few years in a supply-constrained environment. So maybe if you could just give some high-level thoughts on margin progression over time, given that as supply comes online, that top line will be growing at pace.

Karsten Munk Knudsen (CFO)

Yeah. So, first of all, the classic structure is, of course, the faster a company grows, the more opportunity for margin expansion. That's what we see already in 2023, with margin expansion, and that's what you see in 2024 also. But it's important to note that margin expansion is not a target on its own merit in Novo Nordisk. It was in the old days when we were subpar compared to the industry. But now being around 45% in margin, we do believe that we create much more value by investing in driving top line, scalability and manufacturing, and building pipeline in R&D. So, yes, at high growth rates, there will be margin expansion, everything else equal.

But the margin expansion is kind of the residual. It's not the primary objective, if that makes sense. Thank you.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you, Emily. Thanks, Karsten. So, let's go to Kerry here.

Kerry Holford (Head of Global Pharmaceutical Equity Research)

Thank you. Kerry Holford from Berenberg. Another question for you, Karsten. Capital allocation. Thinking about clearly very strong top-line growth, again, predicted for this year, margin expansion, but yet returning, planning to return less in terms of share buybacks than you did last year. So can you just talk us through how you come to that number? Should we therefore take away that this is a year that you'll pursue more external investment and basically using your cash outside rather than inside the company? Just your thoughts on capital allocation will be really useful. Thank you.

Karsten Munk Knudsen (CFO)

Yeah. Thank you for that question. So, first of all, when we look at and we just had at our board meeting this week, we had a review of our capital allocation strategy. And I don't think it differs a lot from other pharmaceutical companies. So priority number one is, assuming attractive investment cases we want to invest in the company. So that's priority number one: organic investments in the company. Then, of course, the next priority is, we also expect it to deliver us a return to our shareholders. So that's why we're very consistent in delivering a payout ratio around 50%.

Now, our dividend per share is up 52% over last year, which marks our 28th consecutive year of increasing the dividend per share. From there, we are, of course, also looking at what we can buy from the outside within our therapeutic categories that complements our own internal pipeline, so licensing primarily of early-stage assets within our therapeutic categories. At the very end comes our share buyback program. Between our share buyback program and the cash we carry on our balance sheet, that's defined by a so-called financial reserve requirements, which we agree with our board of directors, what's the financial reserve requirement in terms of how much cash and financial reserves should we have in the company to ensure resilience in the company in adverse situations?

So that's, that's the overarching logic. And then more specifically, why is share buyback down from 90 in 2023 to 20 this year? It's a super simple question. It's higher operating cash flow, more than offset by CapEx stepping up by DKK 19 billion. So if you take the delta there, then you get exactly to the 20 billion of share buyback. So beyond that, no signaling vis-à-vis priorities for BD, etc.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you, Kerry. Thank you, Karsten. We are ready for the next question. We have one there, yeah.

Ben Jackson (VP of Equity Research)

It's Ben Jackson from Jefferies. Perhaps more of a specific question, with regards to thoughts around the oral obesity and diabetes space. Have you had any change in thoughts in how you're thinking about the, the peptide versus small molecule, area in there? And then more specifically, whether there's any update with timings to OASIS 4 and the high-dose oral filings.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Yeah, thanks for that. So, maybe Lars, you take it from the strategically, and then Martin, I don't know if you have any comments on the OASIS 4.

Lars Fruergaard Jørgensen (CEO)

Yeah. So, we can see—you can address the oral versus injectable in different ways. You can look at convenience, scaling, et cetera. I think from a patient convenience point of view, I think we have the view that a weekly injection is a very attractive way to treat patients. We do have an oral option in Rybelsus, and we can see that in the markets where we have injectable therapy, there's actually very strong momentum in injectable therapy, even though you can get, let's say, also strong efficacy in terms of Type 2 diabetes treatment on oral. Having said that, it's also clear that we talk about high volume, complex molecules when we talk about peptides, comes in a device.

So if you are to scale, you know, big time, I think we are doing that, but if you have to scale even above that, it's an obvious thing to consider a small molecule, whether that can work. And in doing that, I think you need to get through in its essence a small molecule, because if you get into, you know, a significant number of synthetic steps in making a small molecule, it actually ends up being a relatively large molecule, and it might not scale. And then you can get also into considerations around what is required in terms of getting both, say, efficacy, full day coverage and an acceptable safety profile, and how does receptor binding and off-target binding work for different mechanisms?

So, I think there is a role to play for all medicines, but with safe and efficacious medicines being available, I think there's a low, say, appetite for products that comes with some kind of safety caveats that is often known from small molecules. Having said that, I think there is a potential play there. We actually have one in terms of Inversago. We have acquired that recently. And interestingly enough, it's a non GLP-1 approach, so you can say it works in addition to GLP-1. I think there's a lot of hype on small molecule GLP-1, because it's a GLP-1. But what if you have a world where you're actually adding a small molecule on top of injectable GLP-1?

I think that could be really, really interesting. That opportunity we have Inversago, where we'll start getting some data, you know, during this year. So that's been our perspective. And in all scenarios, I would say there's a lot of patients to go for. There's room for many approaches to address these unmet needs. And then perhaps Martin.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Yeah, Martin on OASIS 4.

Martin Holst Lange (EVP of R&D)

Yep. That's gonna read out during the course of this year. My recollection is first half of this year.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you. Ready for the next question. We have one down here, Frederick.

Araceli Strassburger (Head of Research)

Thanks. Good afternoon. Araceli from Ananda Asset Management. I just wanted to come back to the CapEx. You've given this guidance of DKK 45 billion for this year. How should we think about the future? I think in the release you talk about coming back to kind of low double digits. But if we're thinking about, you know, the opportunity set, and the fact you've been growing at 25%, and this could continue for several years, I mean, shouldn't that make sense to kind of roll, like, the DKK 45 billion for, like, several years in a row? And attached to that, I mean, for every dollar of CapEx that goes into the business, how much revenues can you generate? Is there like a rule of thumb?

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Karsten?

Karsten Munk Knudsen (CFO)

So, in terms of our CapEx guidance, then, what we've said for the last, I don't know, year plus or something like that, is low double digit CapEx to sales. And, some people have translated that into low low-teen, but it was actually intentional already from the get-go that we've been talking about low double digits. So, and now we're around the 15% mark, and that is also to indicate in the coming years we'll be rolling at a relatively high CapEx level. Of course, we're not guiding for 2025, 2026 at this point in time, but yes, you can safely assume that we'll be running at a fairly high CapEx levels in the medium term also. Then could you just remind me of the second question?

Lars Fruergaard Jørgensen (CEO)

The second question was related to if there's a rule of thumb for when you put $1 into CapEx, what you output-wise get?

Karsten Munk Knudsen (CFO)

Yes, but that's not for public consumption.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you, Karsten. Thanks for the question. I think we'll go back to Mark Purcell.

Mark Purcell (Managing Director)

Thank you, Daniel. Maybe for Martin. Martin, can you help us understand, for the GLP-1 GIP you have, if, if this is different from tirzepatide and what those differences are? But then clearly one of the differences is this monthly formulation. So in your mind, how important could monthly be as an option for patients? And is this a technology or a set of technologies you can roll out across the rest of your pipeline, including amycretin, CagriSema, et cetera? Thank you.

Martin Holst Lange (EVP of R&D)

Thanks very much. These are still early days for our GLP-1 GIP. Our aspiration is to be on par with everything else that is out there from an efficacy safety perspective. That's interesting in and of itself. Obviously, when it comes to the monthly format, that is even further interesting. Very, very clear, patients prefer infrequent dosing. We've now moved from once daily to once weekly. That has moved the needle quite substantially, but obviously, if we can move to once monthly, that would be attractive. We are pursuing several different avenues in terms of infrequent dosing. We are currently testing one in phase I that could potentially be applied to different molecules, which is also why it's interesting. But still early days, and again, we're testing several different modalities.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thanks, Martin. Thanks, Mark. We have a question down here.

Will Rose (Managing Director of Medical Technology)

Hi, Will Rose here, Canaccord Asset Management. I was wondering whether, given the obesity care market, the sort of consumer awareness of the brands, which is maybe very different, to what you've experienced before, whether that's gonna require any change in sort of attitude towards marketing? Maybe not now, but certainly in sort of 2, 3 years' time, and whether that's an area that could be sort of a real point of differentiation for you in sort of securing your position in the market.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Camilla, it sounds like right down your alley, so—

Camilla Sylvest (Chief Commercial Officer)

Yes, absolutely. There is, for sure a difference in the, patient behavior when it comes to diabetes and obesity. One of the more remarkable differences we've seen, especially with the launch of Wegovy, is that there's a different, patient dynamic in terms of asking and driving the demand, going to see the physicians, knocking on the door, asking for that treatment. Whereas historically, in diabetes, we have seen, that it has often been the specialist or the GP that would have to initiate the discussion about additional treatment. So that is different, and, the way that we, of course, also plan our marketing also takes that into account. All subject to all business ethics, requirement, of course. But, informing also about obesity, why is it important to treat obesity?

Because of the serious chronic conditions that are related to obesity. And, of course, that is something that is both important to understand for people living with obesity, but also for payers and providers. So yes, there is certainly a difference, and we have also in our approach internally, organized ourselves in two different, you can say, marketing units because of that difference.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thanks, Camilla, and thanks for the question. We have one up here.

Nadim Rizk (CEO & CIO)

Nadim Rizk from PineStone. So do you have a sense of what percent of patients taking obesity drugs are actually, you know, either severely obese or diabetic or pre-diabetic versus what I call casual users, that are maybe my shape, but they wanna lose 15 pounds before they go on vacation to Greece? And also, the second part of that is, would you be eventually concerned about an FDA kind of crackdown to say: "Okay, any drug has significant side effects, and I'm gonna be either changing labeling or kind of cracking down and saying, 'Okay, yes, the drug is very efficient at high efficacy and has limited side effects, but it has to be prescribed only to patients that actually should be taking that, that drug.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thanks for these questions. So maybe, Camilla, you can talk about some of the data we have, and Martin, you can potentially add a comment on safety afterwards, too.

Camilla Sylvest (Chief Commercial Officer)

Yeah. So on the data that we know from, especially from our launch in the U.S., we see from our real-world evidence data, that the average BMI of the people that are treated with Wegovy is approximately around BMI of 37. This has also been confirmed in additional countries where we have launched in Europe. So that is sort of the average BMI, well above the label that we have, that is twenty-BMI of 27 with comorbidities, or above 30. What is very important to us, and also in our communication, is that Wegovy is used for people that are living with obesity and no one else. So we also have collaborations with regulators to inform about this, to keep making sure that we stay within that label, and that it's prescribed for the right population.

That is something we do across the world, and that also goes, by the way, for Type 2 medication, like Ozempic, that is prescribed for people with Type 2 diabetes. Having said that, we know that, of course, there is a strong correlation between diabetes and Type 2 and obesity, and that obesity is the leading cause of diabetes. We've seen even in the SELECT data that we've just published a short while ago, that we see that the relative risk reduction, when it comes to onset of diabetes for people living with obesity, is very strong when they're using semaglutide 2.4, so above 72% risk reduction.

Martin Holst Lange (EVP of R&D)

I don't think I can add a lot to that. I mean, given that the average patient have a BMI of 37 in U.S., they actually also have 2-3 comorbidities on top of that. Those are the data that we have right now, and that is also what the FDA gets to look at. Both we, obviously, but also the FDA, discourage off-label use, and that communication can be strengthened. But based on our current data, we actually see a large level of adherence to the label, and we'll continue to monitor that.

Nadim Rizk (CEO & CIO)

Thank you, my friend. I know a lot of people that are definitely a BMI way below 30, that are either on Ozempic or they're more so on Ozempic, because it's easier to find, and they take it, not casually, but they just wanna lose a little bit of weight. And I understand it's a lot easier, but I was more concerned that, you know, eventually this kind of a market will not exist.

Martin Holst Lange (EVP of R&D)

Again, we can only relate to the numbers that we have. And actually, I mean, don't misunderstand me, I don't wanna rule out that some of us will see people who take this, not as intended. That should be discouraged. I think also it's maybe fair to say it's a small, small minority, even though you know them. And therefore, we can only look at if the average BMI is 37, that indicates that the vast, vast majority are actually with either BMI of 37, but also higher. So I think we are in a reasonably good place, but we will continue to monitor it.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you, Camilla. Thank you, Martin. Thanks for the question. We have one more from Kerry over here.

Kerry Holford (Head of Global Pharmaceutical Equity Research)

Thank you. Question for Martin, please, on amycretin. I guess we had lots of debate yesterday about your relative excitement or not, on oral, but nonetheless, it's clear that you're starting now the weekly phase I. So my question would be, when, if at all, will we see the data, phase I data? If you are progressing with weekly, what do you see as the key differentiation for weekly injectable amycretin versus weekly injectable CagriSema?

Martin Holst Lange (EVP of R&D)

So right now we have availability of some phase I data that are oral. That's very early days. This is also why we typically do not disclose the data. And if we decide to disclose the data at one point, that's typically the prerogative of Karsten and Daniel, and you have to talk to them about that. We have been encouraged by the data that we've seen, and that basically means that we have taken the decision to not only go oral, but also subcutaneous and take that potentially into further development. When it comes to the differentiation, for example, to CagriSema, again, too early days. The potential that we've seen has been encouraging, potentially on par with CagriSema, but we can't go further into that because we need to see the data, basically.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you, Martin. Thank you, Kerry. So we have time for two more questions, I think. So we'll take Emily first.

Emily Field (Director)

It's kind of a follow-up on a couple of questions. On the call today, when asked about sort of the bar for amycretin, I believe you said that it, it's likely CagriSema, given that it's a GLP-1 and amylin, so that makes sense. But sort of as you're thinking, and then the answer to the previous question about the GLP-1 GIP, you said the goal is to be sort of the best out there from an efficacy and safety perspective.

Just one question that we're getting is that as more assets come to market, you know, are you, are you targeting potentially longer down the road, maybe assets that have less weight loss, like lower than on the scale of that, that maybe have a better side effect profile for those patients on the lower BMI spectrum, and thinking about more of a portfolio of assets to serve across the BMI spectrum, rather than going for bariatric-like surgery weight loss?

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Martin?

Martin Holst Lange (EVP of R&D)

So the short answer is we look at everything. We see obesity as not just one simple disease where one size fits all, but actually a quite complex disease. And already now we can see different patient categories with different needs. So you described the low BMI patients that may or may not have comorbidities. So let's assume you have BMI 30, for example. That's borderline between obesity and severe obesity or overweight and obesity, sorry. And they may have one need, where a patient BMI 40, with or without comorbidities, may have other needs. In reality, I've just described four categories of patients that we intend to develop drugs that will cater to their needs.

We will look at all of the modalities, and obviously for some patients who are either overweight with comorbidities or obese, but in the lower end of the spectrum, a reasonable weight loss without side effects would also be attractive.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you, Martin. We'll take the last question from maybe the last two, if they're quick, from over here.

Araceli Strassburger (Head of Research)

Yes. I had a question on your assumptions behind Eli Lilly's ramp of Mounjaro and Zepbound. Just to understand what you have assumed in terms of like market share loss, possibly this year. And when do you think that, you know, the kind of ramp in capacity from you and them starts, like, you know, adding pricing pressure into the system?

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Lars, I think I'll give that to you.

Lars Fruergaard Jørgensen (CEO)

Yeah.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Big supply question.

Lars Fruergaard Jørgensen (CEO)

Yeah. So, I hope you think it's fair that we don't want to comment on assumptions about competitors, because we actually have limited insight to their tactics. In terms of your second question, in terms of ramping and when there's enough capacity to supply the market, that could well take some time. If you consider the number of patients, if you consider that here we have actually patients asking to be on treatment, it's a completely different dynamics we see compared to other medicines, where it's the reverse. We have to convince physicians to give it to patients. That means that it's just, I think, a very large commercial opportunity.

If you consider the number of years we have had Wegovy out there and how few countries we have still launched in, and I think it's similar for competition, that talks to that here we're dealing with high volume, complex products. Typically, when you scale fast, you're talking often about smaller volumes and less complex products. This inherently also talks a bit about the entry barriers to this, because there are very few categories where you see as high volume as diabetes and obesity. We think that for foreseeable future, this will be addressed by complex molecules in complex presentations. We're building that whole capacity to cater for that, and I think there's tremendous commercial opportunity in it, but I think there's also a tremendous opportunity in terms of driving population health outcomes.

That's really what the regulators are looking for, and many of those are also those who set the prices for our products. So there's this dynamic journey of establishing obesity as a disease, acknowledging the burden that follows living with obesity in terms of number of comorbidities, and the whole value point in treating that for the payer and for the healthcare systems. While we establish that, we actually scale supply, and I think this goes hand in hand, and I'm very optimistic about the long-term opportunity and for what we can do for patients.

And then the return to society, which is ultimately what makes a sustainable company, that there are products that deliver so much benefit for society, not only the individual citizen, but also healthcare systems, that you will continue paying for them. So I think it's a great opportunity.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you so much, Lars. Thanks. Just one final question here before we round off.

Nadim Rizk (CEO & CIO)

Yeah, it's okay. You already kind of answered half the question. So my question was two parts: The recent strong pricing that we've seen is, I'm guessing, due to the 3D supply being constrained. Is that a fair statement?

Lars Fruergaard Jørgensen (CEO)

I think we, we launched Wegovy at a more or less established price point for Saxenda, our first-generation product, then we come with a way more efficacious product. And when you then look at short-term pricing, I think there are some true ups across quarters, so we have to be a bit careful about that. But we believe that the price point is actually very meaningful for the value of the products, and it's a price point that has previously been accepted in the market, also for a significantly less efficacious product. Then, of course, when you see many patients starting treatment, this becomes a large ticket for payers.

So we see that for some payers, this is a challenge, and I think we see as many opting in, and I think that talks to this dynamic phase we're in now, where the disease is being acknowledged, and also the value of treating obesity is being established. So we'll see some flocks of payers coming in and out in this dynamic journey, but I'm quite confident that it ends up in a situation where the value of the product is established. And of course, when there's a shorter product, there's also less incentive to drive down price.

Nadim Rizk (CEO & CIO)

Yeah.

Lars Fruergaard Jørgensen (CEO)

That obviously also plays in, but it's actually more to say, the longer term destiny that we're focused on.

Nadim Rizk (CEO & CIO)

And also similar to the question on CapEx, just to understand, I'm not looking for numbers, but given that there's obviously a lot of demand and there's capacity constraint, in theory, you want to build unlimited CapEx. Like, forget about dividend and the share buyback and all that. And again, this is theory. Is the limitation on CapEx a question of capital? Is it a question of technology? Is it a question of just the system is complex, so even if you had unlimited money, you could still not ramp up CapEx? Just help me understand what's the limitation.

Lars Fruergaard Jørgensen (CEO)

Sure. It's when you saw the picture from before, you can... It's easy to build, say, the building, but these are highly complex manufacturing systems, and there are, you know, a defined number of vendors who can consult on that. The machinery that goes in, if you take fill finish machines, most pharmaceutical companies in the world would be shopping among the same manufacturers. So there's not an unlimited say amount of machinery and people to build it. Of course, we also have to handle it, so there is a bit of a rate in terms of what you can handle from a complexity point of view. So it's not the CapEx amount that's constraining us, it's more the whole say execution of it.

So of course, if there are ways to accelerate that, that is attractive. So, I mentioned before that we try to expand on our different sites, which means that it's different vendors, it's different people who have to lead it, more than building everything in one place. So it's not the money as such, it's handling the complexity of it that plays in.

Daniel Bohsen (Corporate VP and Head of Investor Relations)

Thank you, Lars. Thanks for the question. So this concludes the Q&A session. Thanks for watching the webcast. For those of you in the room, management will stay around for a bit of time, so should you have any final question, you can come up, and I'm sure they will be happy to chat. And before we finally close, Lars, any final words from your side?

Lars Fruergaard Jørgensen (CEO)

I hope it has come across that we are hugely excited about where we are as a company, the opportunity we have for ramping our business, continue the scaling. Some say that we are manufacturing the challenges. I say these are, you know, opportunities, and we are delivering significantly more products already. So I think we're executing quite well, and we look forward to continue that journey and serve more patients, and make a strong business trajectory based on that. So thank you all for your attention.