Hello, and welcome to the Q4 2020 Novo Nordisk A/S Earnings Conference Call. [Operator Instructions]. Today, I'm pleased to present Lars Jørgensen. Please go ahead with your meeting..

Thank you very much. Welcome to this Novo Nordisk full year 2020 and outlook for '21 earnings call. I'm Lars Jørgensen, the CEO of Novo Nordisk. With me I have our Chief Financial Officer, Karsten Knudsen; and our Chief Science Officer, Mads Thomsen.

Also present and available for the Q&A session is Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Sylvest. Today's earnings release and the slides for this call are available on our website, novonordisk.com.

Please note that this call is being webcasted live, and a recording will be made available on Novo Nordisk's website. This call is scheduled to last for 1 hour. The presentation is structured as outlined on Slide 2. Please note all sales and operating profit growth statements will be at constant exchange rates, unless otherwise specified.

The Q&A session will begin in about 25 minutes. Please turn to Slide 3. As always, I need to advise you that this call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainty that could cause actual results to differ materially from expectations.

For further information on the risk factors, including the uncertainties around COVID-19, please see the company announcement for the full year of 2020 and the slides prepared for this presentation. Please turn to the next slide. Novo Nordisk has also been challenged in the last year from COVID-19.

During this period, our key priorities have been to safeguard our employees, continue the supply of life-saving medicines and support societies around the world. We believe we have successfully delivered on these priorities while also delivering on our strategic aspirations.

Novo Nordisk has taken important steps towards reaching our strategic aspirations for 2025 on all 4 dimensions. We launched our social responsibility strategy to Defeat Diabetes and raise the ambition on renewable power to include our direct suppliers. Later, Mads will elaborate on the successful year within innovation and therapeutic focus.

For commercial execution, we have increased our market share in diabetes and have progressed on obesity and biopharm aspirations. Lastly, on financials, both sales and operating profit grew by 7% at comparable exchange rates, and we continued to provide attractive capital allocation by returning DKK37 billion to shareholders. Please turn to Slide 5.

Before we move on to the particulars of this full year performance, I would like to update you on changes to executive management.

After more than 30 years with Novo Nordisk and 20 years as Chief Science Officer, Mads Thomsen, will retire from his current position by the end of February 2021 and take up a position as CEO at the Novo Nordisk Foundation.

This leaves the role as CEO -- sorry, Mads leaves the role as CEO at a time where Novo Nordisk's pipeline is strong and the entry into new therapeutic areas is on track.

As a consequence and in accordance with succession planning, as of 1st of March, R&D will be reorganized into 2 separate areas, one of which is research and early development, headed by Marcus Schindler, who is promoted to Executive Vice President and Chief Science Officer.

The other area is development headed up by Martin Lange, who is also promoted to Executive Vice President.

In a time where we're broadening our technology platforms and expanding our research into adjacent disease areas, Marcus will play a central role in bringing higher levels of innovation across all of therapy areas, thereby ensuring that our business continues to be sustainable in the decades to come.

Furthermore, with more projects and a broader strategic therapy area focus than ever before in our history, development is essential for ensuring that our portfolio of innovative drugs and devices progress and achieve competitive labels allowing us to bring better treatments to patients.

With that, I thank Mads for his outstanding contributions and wish him all the best in his future career. Moreover, I would like to welcome Marcus and Martin in Executive Management and congratulate them both with their promotions. Please turn to Slide 6.

The 7% sales growth at comparable exchange rates was driven by 10% growth in International Operations, where all areas and therapies supported growth and North America Operations growing by 3%. Sales growth was driven by growth across all therapy areas.

Diabetes care grew by 8% despite insulin sales decreasing by 3%, reflecting lower realized prices in the U.S. GLP-1 sales increased by 29%, driven by a 32% sales growth in International Operations and a 28% sales growth in North America Operations.

Obesity sales -- obesity care sales grew by 3%, driven by International Operations, partly offset by North America Operations. Sales growth was negatively impacted by COVID-19, driven by fewer patients initiating treatment. Biopharm sales increased by 1%, driven by International Operations. Please turn to Slide 7.

We aim to reach 1/3 of the global diabetes value market, and we are now at 29.3%. This increase is a reflection of GLP-1 market share gains. For insulin, we have increased our volume market share by 0.7 percentage point in the last 12 months, which was driven by market share gains in EMEA and Rest of World.

Since 2019, we have increased our GLP-1 market share by around 3 percentage points to over 50%. This is driven by market share gains in EMEA, Rest of World and the U.S. Further, it reflects the global uptake of Ozempic and launches of Rybelsus in 9 countries. Please turn to Slide 8. The U.S.

GLP-1 volume market continued to grow around 30%, driven by once-weekly GLP-1 products. With the uptake of Ozempic and the launch of Rybelsus, Novo Nordisk has new-to-brand market share leadership of 57.1% and is the market leader with around 50% market share measured in total prescriptions. Please turn to Slide 9.

Since the initial focus launch, Rybelsus uptake has been at par with that of select SGLT2 launches. In its first full financial year since broad launch, sales of Rybelsus was DKK1.9 billion.

Despite a challenging launch environment where, on several occasions, we have had to stop face-to-face interactions between our sales force and doctors, we are pleased with the Rybelsus performance. In the U.S., Rybelsus market share -- sorry, in the U.S., Rybelsus market access is now around 90%.

Furthermore, the 80% of new prescriptions are new to GLP-1 class with direct-to-consumer advertisement continuing. Outside of the U.S., Rybelsus has been launched in 8 countries and has obtained around 5% volume market share in the modern noninsulin antidiabetic market, in select launch countries.

Additionally, in the first quarter of '21, we plan to launch Rybelsus in Japan where the OAD class represents around 8% of the total diabetes market. Please turn to Slide 10. In International Operations, diabetes care sales increased by 11%, supported by all geographies and therapy areas.

The sales performance reflects our increased diabetes value market share as indicated by the 37% share of growth. This has driven a 1 percent point increase in our market share, which is now at 23%. Please turn to Slide 11. Obesity care sales increased by 3% to DKK5.6 billion, negatively impacted by COVID-19 as fewer patients initiated treatment.

In International Operations, sales grew by 11%. In North America operations, sales declined by 1%, impacted by channel mix. Of note, we have submitted marketing authorization application in both the U.S. and EU for semaglutide 2.4 milligram for the treatment of obesity. Please turn to Slide 12.

Biopharm grew sales by 1% in full year 2020, driven by 5% sales growth in International Operations as well as the launch of new hemophilia products and growth disorders. For hemophilia, the 4% sales decline reflects declining NovoSeven sales, while the hemophilia A and B franchises grew driven by Esperoct and Refixia.

Norditropin sales increased by 8%. Sales growth was positively impacted by additional demand following supply challenges for competing products in select countries. With that, over to Mads for an update on R&D..

Thank you, Lars. Please turn to Slide 13. In the next few slides, I'll share with you our progress within both GLP-1 and insulin innovation as well as within the rest of the pipeline. Starting with semaglutide.

We were very pleased with the results from the SUSTAIN FORTE 2-milligram Ozempic trial, including the greater than 2% HbA1c reduction that was accompanied by a benign safety and tolerability profile, thereby establishing an attractive benefit/risk ratio in type 2 diabetes.

Across the sustained program, semaglutide 1 milligram has demonstrated that up to 80% of patients have achieved an HbA1c level below 7%.

With a statistically significant increase in the percent of patients reaching the A1c target on semaglutide 2 milligrams versus 1 milligram, the trial demonstrates the potential of 2 milligrams weekly to further improve glycemic outcomes for patients in poor control.

This is seen despite the low rate of gastrointestinal adverse events observed in SUSTAIN FORTE that were actually similar between both doses of semaglutide. We've now submitted regulatory applications for label expansion in both the EU and the U.S.

Furthermore, we've now begun the Phase III trial with oral semaglutide, 25 and 50 milligrams in type 2 diabetes. As you can see, the higher doses will be compared to the currently approved Rybelsus dose of 14 milligrams. The trial has been designed to confirm superiority of the higher doses versus the 14-milligram dose.

Similar to high-dose subcutaneous semaglutide, the high doses of oral semaglutide aim at providing additional options for those needing oral treatment intensification over time. Please turn to the next slide. 2021 marks the 100-year anniversary of discovery of insulin in Toronto.

Despite the long history, Novo Nordisk's diabetes pipeline still showcases our continued focus on delivering improved treatment including potentially preventative treatments. In the fourth quarter of 2020, we initiated the Phase III program for insulin icodec, poised to become the first-in-class once-weekly insulin.

As you can see, the program will consist of 6 trials collectively known as the ONWARDS program. The ONWARDS program comprises multiple trials of varying designs to demonstrate icodec's efficacy and safety approval in different settings.

We believe that icodec's improved pharmacodynamic profile, along with enhanced convenience and adherence, can drive improved patient outcomes, thus providing a differentiated profile versus the currently most used once-daily insulin.

In this regard, one of the type 2 diabetes trials, ONWARDS 5, sets out to prove the above in the pragmatic setting with sampling a real-world evidence trial while also deploying app-based dosing guidance. Additionally, the first clinical trial for our first-in-class glucose-sensitive insulin has been ongoing since the third quarter.

The target product profile for this insulin includes improved glucose control as well as the elimination of hypoglycemia and other side effects of today's insulin therapies. In Q4, we initiated a Phase I trial for the so-called ideal pump insulin.

This insulin seeks to deliver better glycemic control and improved convenience in general, including its use in closed-loop insulin pump systems. This is principally achieved by avoidance of the lag time from insulin infusion to insulin action.

Last but not least, we initiated a Phase I trial investigating DNA plasmid-based immunotherapy as a potentially preventive treatment for people at high risk of encountering type 1 diabetes. This potentially disease-modifying treatment uses a subcutaneous tolerogenic DNA plasmid injection to prevent the onset of overt diabetes in high-risk subjects.

Please go to the next slide. The upcoming year will prove particularly exciting as we plan to initiate new Phase III programs and have them running in each of our therapeutic areas, including the new ones. Starting with the fourth quarter of last year, several R&D milestones were reached.

Starting with semaglutide in type 2 diabetes, we had both a successful completion and regulatory submission of the Phase III SUSTAIN FORTE data. Moving to obesity, we have now submitted the new drug application in the U.S.

and the marketing authorization application in the EU for semaglutide 2.4 milligrams as a once-weekly treatment for people with obesity. In the U.S., a priority review voucher was used, reducing the expected review time from 10 to 6 months. This gives the opportunity for U.S. approval mid '21. An EU decision is expected around the turn of the year.

In biopharm, we just received a positive opinion in the EU and approval in Japan for Sogroya, the once-weekly treatment for adult growth hormone deficiency, also known as. somapacitan. Sogroya Is currently being investigated in the REAL 4 Phase III trial for children and adolescents, and these pivotal results are expected around year-end.

As we continue into '21, there are a number of exciting clinical developments. In the first half of this year, we expect to read proof-of-concept -- receive proof-of-concept data for Mim8, a bispecific antibody for subcutaneous prophylaxis treatment in people with hemophilia A.

In other serious chronic diseases, we also expect several Phase III initiations during this year, namely, for semaglutide 2.4 milligrams weekly in NASH and oral semaglutide once-daily in Alzheimer's disease as well as ziltivekimab in atherosclerotic inflammatory cardiovascular disease.

On a personal note, I would like to round off my last roadshow, out of many, by mentioning that our wonderful company, including [indiscernible] with stakeholders like yourselves, has been both my passion and my job for 30 years.

It will luckily remain so in my new role as CEO of the Novo Nordisk Foundation from where I expect to follow the future innovation-driven growth of Novo Nordisk very closely. I have treasured our many years of interactions and I will miss them going forward. Good luck, stay safe. And now over to you, Karsten..

Thank you, Mads. Please turn to Slide 16. In 2020, sales increased by 4% in Danish kroner and by 7% at constant exchange rates. The gross margin was unchanged at 83.5%. Sales and distribution costs increased by 3% in Danish kroner and by 6% at constant exchange rates.

The increase was driven by global launch activities for Rybelsus and continued promotional activities for Ozempic as well as rollout of Saxenda in International Operations. R&D costs increased by 9% in Danish kroner and 10% at constant exchange rates.

The increase is driven by amortization of the priority review voucher for semaglutide in obesity and a higher activity level within other serious chronic diseases following progression of the early pipeline as well as patient recruitment for the ongoing cardiovascular outcome trials, SOUL and SELECT.

Administration costs decreased by 1% in Danish kroner and increased by 1% at constant exchange rates, reflecting broadly unchanged spend across administrative areas. Operating profit increased by 3% in Danish kroner and by 7% at constant exchange rates, resulting in an operating margin of 42.6%.

Net financial items showed a loss of around DKK1 billion compared to a loss of DKK3.9 billion in 2019, driven by foreign exchange hedging contracts. I'll come back to this in the following slides. Net profit increased by 8% and diluted earnings per share increased by 10% to DKK18.

Free cash flow was 28.6% -- DKK28.6 billion compared to DKK34.5 billion in 2019. The decrease reflects business development investments of DKK16.3 billion from the acquisitions of Corvidia and Emisphere. Please turn to Slide 17. In 2020, Novo Nordisk returned approximately DKK37 billion in the form of dividends and share buybacks to shareholders.

At the Annual General Meeting on 25th of March 2021, the Board of Directors will propose a final dividend of DKK5.85 for a total 2020 dividend of DKK9.10, a 9% increase from 2019. In addition to the dividend, DKK17 billion was used for the repurchase of shares.

Novo Nordisk has consistently returned its free cash flow to investors through both share buybacks and dividends with the dividends per share increasing for now 25 consecutive years. For 2021, the Board of Directors has approved a new share repurchase program of up to DKK17 billion to be executed during the coming 12 months.

The total program may be reduced in size in case of significant business development transactions during 2021. Please go to Slide 18. In 2021, we continue to focus on top line growth with sales expected to grow between 5% and 9% at constant exchange rates.

The guidance reflects expectations for continued sales growth in International Operations in line with the strategic aspiration of 6% to 10% growth as well as growth in North America operations. On a therapy level, the guidance reflects continued sales growth within diabetes care, mainly driven by Ozempic and Rybelsus and growth within obesity care.

The guidance also reflects intensifying competition in diabetes and biopharm and continued pricing pressure, mainly within diabetes in the U.S. Operating profit is expected to grow between 4% and 8%, reflecting the sales growth outlook and continued investments in current growth drivers as well as pipeline assets to secure future growth.

As previously mentioned, following the strengthening of the Danish kroner versus our main currencies, reported sales and operating profit growth is expected to be 4% and 6% lower than at constant exchange rates, respectively.

The current COVID-19 pandemic causes uncertainty to the outlook regarding new patient initiations and societal impacts, such as the unemployment rate in the U.S., which is impacting health care insurance coverage. Financial items is now expected to be a gain of around DKK0.7 billion.

I'll get back to the impact from currency movements in the next slide. Capital expenditure is expected to be around DKK8 billion in 2021, primarily relating to investments in additional capacity for API production following the progression of R&D pipeline projects based on the oral technology platform.

Lastly, free cash flow is expected to be between DKK36 billion and DKK41 billion. Please go to the next slide. The negative currency impact in 2020 reflects the Danish kroner appreciation versus most foreign exchange rates. This had a negative impact on operating profit, but it was partially offset by gains on foreign exchange setting.

We are expecting similar developments in 2021, given the current spot rate, and we are expecting a negative impact on operating profit of around DKK3 billion. We expect hedging gains of DKK1.1 billion, mainly related to the U.S. dollar with a hedging period of 11 months and associated hedging costs. And now over to you, Lars, for final remarks..

Thank you, Karsten. Please turn to Slide 20. We are very pleased with the progress on our strategic aspirations in 2020 despite the challenges of COVID-19. The financial results reflect sales growth in both International Operations and North America Operations, driven by more patients using our GLP-1 treatments.

Within R&D, key milestones in the fourth quarter were the regulatory submission of semaglutide 2.4 milligram, which has potential to redefine the treatment of obesity.

In 2021, we'll continue our focus on commercial execution, while conducting more late-stage clinical trial programs than ever to meet the unmet needs of people living with diabetes and other serious chronic diseases. We're now ready for the Q&A [Operator Instructions]. Operator, we're now ready to take the first questions..

[Operator Instructions]. Our first question comes from Peter Verdult from Citi..

Peter Verdult here from Citi. Two big picture questions for Mads, given it's his last quarterly conference call. Firstly, can you just remind us, Mads, on the sort of broader technologies and time lines Novo is working to with respect to your stem cell therapy efforts in diabetes.

Asking the question in light of other companies beginning to talk more about this area.

Just want to know or going to gauge how you're feeling whether Novo's in the vanguard of developments and how you handicap the technologies you are using versus the competition? And then, secondly, usually, when you ask your Head of R&D to name their most promising pipeline assets, you get a very bland and boring answer about loving all their children equally.

Now given that you're heading off to a well-deserved retirement from being CSO and perhaps can talk more openly, could you maybe just call out what you believe to be the most interesting and exciting early stage pipeline assets in the Novo portfolio. Thank you, and all the best going forward..

Thank you, Peter. Mads, that was two questions for you. Stem cell and then your darling [Technical Difficulty]..

I'll start all over because I was muted. Sorry, Pete. No, of course, I'm still CSO for the remainder of February month, so there are limitations to how much I can be specific on my pet projects.

I would say, though, that our oral biologics leadership position now that we also have made the Emisphere acquisition allows us to broaden out into very, very exciting target areas in many different therapeutic arenas. And you can do things with all biologics that are not amenable to classical small molecules.

I'm very excited there without singling out 1 project.

But you can imagine that if you take the combination of amylin and semaglutide, and I can now tell you that amylin is called cagrilintide, we are achieving WHO approval of the name cagrilintide so if you can take cagrilintide and sema and deploy that more or less in an oral version, you're standing in a unique position.

So these are kind of the exciting things that you should be looking out for in the future. But in terms of the stem cells, well, the ambition that management has approved for the Transformational Research Unit doing stem cells is 1 new clinical IND that is an investigation new drug application every year starting this year.

The first indication will be in Parkinson's disease and not in diabetes. Diabetes is going to come in the second place. This also means that you should imagine an IND towards the end of next year or thereabouts depending on the progress.

I have to make the comment that the Semma Therapeutics company that was acquired by Vertex in the not-too-distant past, they have announced that they are deploying initially a nonencapsulated raw injection of stem cell-derived beta cells that will call for the use of an immunosuppressive cocktail.

So this kind of approach is nice for them to show proof of principle, you might argue, but it's highly unlikely to deliver a product to the market, which is also why they themselves are stating that their next-generation product is using encapsulation.

And I may remind you Pete that we did a development -- a research agreement with Professor Papas and the Procyon company for having the most elegant encapsulation device available for our beta cells, and they are the ones that are now taking into toxicology trials aiming at the second indication being type 1 diabetes for the company.

And we hope that maybe celebrate that at the 100-year anniversary, not of insulin in Toronto, but of the Novo Nordisk company..

Our next question comes from Wimal from Bernstein..

Wimal Kapadia from Bernstein. Firstly, just congrats to Mads on the great success at Novo. You'll be missed and best of luck in the new role at the Novo Foundation. So my first question is just on the ONWARDS program for weekly insulin icodec.

Now I kind of always assumed that you would run a relatively tight Phase III program that was quite cost effective, ensuring quick speed to market. So it looks like quite a robust program is planned.

So just your thoughts if anything has changed on the potential role of a weekly insulin and the role it can play in the basal market? And if so, was there any data that's driven that change? And then my second question is just one on the guidance and obesity.

Clearly, this is the most impacted franchise within your portfolio from a COVID perspective given it's highly discretionary. So I'm just trying to get a sense of how Novo think about the next 6 months for Saxenda and then the launch of sema in obesity.

Should we be expecting a strong uptake in the second half even in a COVID world given it's significantly superior to Saxenda? So just your thoughts on the launch, there would also be helpful..

Thank you, Wimal. Mads, first on the ONWARDS program..

Yes. So Wimal, originally, we were anticipating a very slim program, realizing that this was, in all likelihood, an undifferentiated, clinically speaking, insulin, but with an attractive convenience and thereby adherence profile because it was once weekly, instead of once daily.

What we came to learn in the data that were published, for instance, in the New England Journal of Medicine recently for one of the most critically important Phase II trials was that we actually exceeded our own expectations for the molecule.

This means that the coupling of a molecule that we believe is clinically differentiated compared to, for instance, insulin glargine, while at the same time, being more convenient.

And the advent of new technology, if you look into the ONWARDS 5 trial, we have done a real-world evidence-like study with very few clinical interventions, quite few site visits. It resembles very much a real-world evidence trial.

And that means that you get an impression of how this is performing in the real-life setting and integrating that with some new technology where we have an electronic patient interaction device, which enables both dose guidance, but also easy interaction remotely between physician, patient and even the company collection of data for that matter, has allowed us to do a slightly broader program than originally anticipated.

But we are recruiting and there's high enthusiasm we can see from the investigators. And part of it, of course, is based on high-impact publications with good data such as in the New England Journal of Medicine. So we're excited. It's slightly broader program than we originally anticipated.

We apologize for that, but it will also mean that we'd get a more attractive late review..

Thank you, Mads.

Camilla, some perspectives on obesity?.

Yes. Thank you, Lars. So on obesity, there is no doubt that we will continue our efforts on developing the market. As you recall from when we discussed last time, there are 650 million people suffering from obesity, but only 10% of those are actually seeking care.

And when they seek care, it's only a fragment of those that are being treated with anti-obesity medication. So from the 650 million down to less than 1 million being treated with Saxenda. So there's still a lot to do on market development in the coming 6 months.

And hopefully, that will also pave the way for a much more efficacious product in semaglutide 2.4 with almost twice the efficacy of Saxenda.

So the awareness building, the physician support and then, of course, also the digitalization are some of the efforts that we are working on right now that hopefully will also be useful in a COVID-19 context, meaning that online care for obesity is something that we're also embarking on..

Our next question comes from Simon Baker from Redburn. We'll proceed to our next question from Martin from Danske Bank..

Martin Parkhoi, Danske Bank. Two questions. First one, maybe it's Lars or Camilla. Just on the market growth because you have talked a lot about your growth this year are hurt by less treatment starts on GLP-1 and so forth.

But the reality is that if you look at the reported growth for all the diabetes companies in the world, there has actually been a quite strong growth rate. I think that it's at the tune of 6% for the global diabetes market in 2020.

And I remember back at your Capital Markets Day in 2019, you are looking for long-term growth rate at the tune of 4% adjusting for the Januvia patent expiry.

So what are your thoughts on why we have seen this strong growth? Is this due to better compliance? And how do you look into the overall market going into 2021? And then the second question, of course, have to be for Mads. I just had a question to the slide on Slide 13 and on the higher doses of oral semaglutide.

Can you comment a little bit because it's a little bit like comparing apple with oranges because the 14 milligram are based on the old formulation and the 25 and 50 milligram are based on a new formulation. So in reality, the efficacy of 50 milligram on the new formulation is properly corresponds to more than 60 milligram on the old formulation.

Is that correlation correct? And then what do you actually think this will match? This is something will match the currently approved Ozempic dose? Or do you think that it can be all the way to the 2.0 milligram that we have the data on the same slide?.

Thank you, Martin. First, Camilla, some perspectives on what we believe of GLP-1 growth..

It's actually for the -- not GLP-1, it's for the whole diabetes market..

Okay. Whole diabetes market, yes. Thank you..

Thanks a lot. So on the whole diabetes market, it's important when we talk about less treatment starts, of course, we need to separate between existing treatments and also new treatments.

It's very -- in the light of COVID-19, so it's also important to understand that as we add new and better treatments to a segment like we've seen in GLP-1, there will be -- we have seen increased growth rates and as more and better treatment becomes available.

However, when we talk about less treatment starts, it mainly reflects on new launches, whereas for existing products, we see a continuation of the existing trend. But the simple facts are that for new launches, it just is more difficult to get to the same awareness level when, for example, the sales force is grounded.

So I just think we have to separate between 2 things. But more and better treatment options, of course, will drive a better underlying growth as we've seen in the GLP-1..

Thank you.

And Mads, perspective on high-dose oral sema?.

Yes. Well, Martin, it's a very smart and crisp observation you've made because we hate to waste too much time in R&D. So we actually decided to embark on a very rapid onset Phase III trial for these high doses.

And it is also true that so-called Type 9 Rybelsus tablet, which is on the market, represents the 14 milligram, whereas we are into one of the newer generations with the other ones.

These studies are rather long, as you can see, because we have a full 52-week on treatment in the maintenance period at steady-state, making it a rather long trial and also a relatively big trial.

So when we get data, which is happening during the course of the next month, on these new properties of these new tablet formulation, we are actually able to correct for that before we have -- you can see the completion of such a trial.

It is actually possible near bioequivalence and those kinds of simulations and data to actually exchange one tablet with another. So you have the go-to-market tablet ultimately generating the crucial data.

Another option is, of course, if you're very bold, I think the 25 milligram in the new formulation does fantastic stop, you might not need to go above that one. We're just investigating a full dose response range, you can argue.

And by the way, Martin, the ambition is, as you stated very correctly, to go all the way to the 2-milligram Ozempic SUSTAIN FORTE efficacy level. That is actually the target for this tablet..

Can I just follow up because I don't think that you answered my first question, maybe I didn't express myself. I was just looking at the overall diabetes market and not GLP-1.

We have seen, if I would look at the overall diabetes market reported by all diabetes companies, it looks like we have had actually acquired good diabetes growth of around 6% reported, which is more than the 4% that you have put into your long-term aspirations.

So I'm just thinking how -- is this driven by a higher compliance rate? You can see the insulin growth in International Operations has been much higher than historic growth rates.

So have you seen a higher compliance meaning that people have been -- because diabetes is a risk factor due to COVID -- if you are infected by COVID-19, so people better -- maybe have been more compliant.

And does that mean that 2020, on a market perspective, maybe actually served as a top comparison?.

So thank you, Martin. I know you do some detailed research in this area and I know that Karsten has it in detail. So he would like to make a comment on it..

Yes. So Martin, first of all, all -- now we talked about comparing apples and oranges. So the 4% we presented at our Capital Markets Day that was an IMS or IQVIA-based value market growth. And what you have here is company reported and one is CAGR and another one is for 1 year.

So just to say that there are a couple of differences in data, as I'm sure you understand. That said, then you're correct. There's a solid diabetes market growth and we're growing faster than the market, as you see it at 8% and despite COVID. So we have also been surprised around how resilient our diabetes care business is.

And of course, it's a function of we're talking about chronic therapy. So patients are on treatment. When we look at adherence data -- on therapy adherence data in terms of impacting the usage, we have not been able to prove statistically that it has increased during COVID.

And then the final comment is that as Camilla said, so where we do see the main impact is on launch brands.

And then you could say as a physician and when you're initiating treatment and you are not too familiar with the new brand because you've not had too much education from sales reps on the product, then you will start the patients on a different, more kind of classic product, be that or simply go Victoza..

And I guess, in particular, around 2020, it also plays in that there was some stock building in the beginning of the year and part of that is still sitting with patients. I'm not sure how big a share that is, but that probably also plays in..

Our next question comes from Sachin Jain from Bank of America..

Sachin Jain here from Bank of America. Firstly, just to echo prior comments, Mads, thanks for all the insights over the years and best of luck with the next ventures. Actually financial questions first, if I may, so for Karsten.

Firstly, what are the key deltas within the guidance range, which is slightly wider than usual? And I guess investors this morning have gravitated at the top end, given your usual conservatism at this time of year. So wondering if you could just outline some of the factors within that range? And then related, the guide seems to imply U.S.

growth in a sort of mid-single-digit range versus commentary, obviously, almost 1.5 years ago for this year to be around 2%. So can you give us some color on variables within that? And I guess most importantly, what have you assumed for 340B and risk of that benefit being realized? And then just one for Mads, if I may.

Mim8 Phase I/II data this year, expectations for that data set? Where you see differentiation? And how quick could a Phase III program be run there?.

Thank you, Sachin. First, Karsten, on guidance for '21, the range, U.S.

growth and potential clarity on 340B?.

Yes. So thank you for that question, Sachin. So first of all, on the ranges, you could say our top line range is one not wider than a year ago, but given COVID, I don't think that is unusual or anything like that. And historically, we've also had 4 points.

So I think you should just consider that in the current environment, that's kind of a normal range given COVID uncertainty. As to your question on U.S.

growth, so with 5% to 9% in our range and you take 7% as the midpoint, then the starting point we take is that we have indicated in our strategic aspirations that we aim at IO growing between 6% and 10%. And for the last couple of years, we've been in the high end of that range or even slightly above in '19.

So if you assume IO somewhere in that range, then implicitly, that would entail that U.S. growth for next year will be higher than U.S. growth was in 2020. So we do see a step-up in U.S. growth in 2021 compared to 2020. The building blocks on the step-up in that growth is, first of all, we have a couple of drags in our 2020 performance.

That will be in the base in 2021 being donut hole and a step-up in our affordability offerings in the U.S. as one key point. Then we do see a continuation of our underlying performance in GLP-1 business and in our insulin business. And then, specifically, to 340B. Yes, we have included in our guidance a positive effect from 340B.

We have changed our 340B shipping principles as of 1st of January 2021. And as you know, historically, then when we have been being more explicit around specific impacts to our business, be that U.S. business, we have commented specifically when we've had impacts, I would say, 3% or greater, you remember the historic donut hole or mid last year U.S.

unemployment at 3%. So since we're not calling out specifically 340B positive impact next year, you can assume that, that's because it's less than 3% positive impact on growth next year..

Thank you, Karsten.

And Mads, some perspectives on Mim8?.

Yes. Absolutely. So thanks for the kind words, Sachin. A couple of comments on the technology.

What we did was to license the so-called DuoBody technology from the Genmab company in Denmark and then we've used it in our own discovery efforts to come up with what we call an optimized second-generation Factor VIII-mimicking bispecific antibody of the IgG 4 subclass. And we've optimized on 3 horizons, one being potency.

And why is potency interesting? It's interesting because with emicizumab, for instance, you have to have rather high injection volumes calling for some injection site reactions and rather thick needles, et cetera, et cetera.

But with the high potency, we can deliver low volume and that will lend itself to a single-use, thin needle ready-to-use a device with a very simple administration.

We then also optimized it for efficacy and you might have read the paper in the Circulation journal, where we actually, I believe, in that paper, have shown that in severe bleeds in animals that are anesthetized where you actually have a rather severe tail bleeding, emicizumab showed to -- show efficacy but this one did.

And it's probably because Mim8 has the ability to very potently stop tissue factor-induced bleeding episodes, which is a very unusual parameter. And efficacy-wise, there might be an upside.

This might be difficult to call out in the Phase III trial because the HAVEN studies by the Roche company were done in a very smart way vis-à-vis how bleeding was registered and so on.

So that means that we are also planning to do some early real-world evidence insights into actually showing real-world differences between emicizumab and our new Mim8 molecule. But more about that a couple of years from now.

The final thing we have tried to optimize for safety in that we have designed a molecule that can only really bind when you are having an activated platelet service. So if you have circulating Factor IX and X in the free state, there will be no binding of the antibody and hence no risk of intravascular coagulation.

So we actually believe that, at least based on animal and lab data, we have a very strong offering and we are targeting proof-of-concept this summer, and if that looks good, we will then initiate Phase III immediately..

Can I just come back to the first question, Karsten, the question on the guidance range is more what are the key factors we've seen top and bottom, if you are able to comment on that?.

Yes. Okay. Sorry then, I misunderstood you, Sachin. So the key factors, I would say, they're fairly the classic ones.

So IO growth is, of course, something that, given potential health care reforms in different geographies, which can -- if nothing happens can pull it up; and if we have significant health care reforms, can pull down compared to our base case.

Then we have our launch products, which for this year mainly will be the global rollout of Rybelsus, which can impact our guidance. There's always an uncertainty on launch products. And then COVID-19. You read kind of the same media, I'm sure, as we do in terms of expectations around a vaccine and the second, third wave and all that.

So there will be some uncertainty related to COVID-19. And I think that would be kind of the main uncertainties, and 340B is perhaps the last one I would call out since it's kind of -- there are some uncertainties regarding the legal situation as to 340B and some legal proceedings ongoing..

Our next question comes from Trung Huynh from Crédit Suisse..

It's Trung from Crédit Suisse. First question is simply on the timings of the data of that high-dose oral sema study. If we have a look at ClinicalTrials.gov, it's slated for early 2023.

But could this come a bit earlier with some faster recruitment because presumably this is pretty key to compete with things like the Pfizer's oral GLP-1 and tirzepatide, which are on the horizon. Second question is on Rybelsus.

So can you perhaps talk about the coverage of Rybelsus that you have within Europe in terms of the price and access? And then on the U.S., is the level of patient assistance support required coming down as you start 2021? And then finally, just Mads, we wish you the best for the future.

Jo, who's tied up with some other results, who's known you the longest on this team would like me to pass on her thanks, specifically for the analyst discussions on oral insulin over the last 20 years even if you are retiring before Novo finally succeeds in that..

Thank you, Trung. Mads, first, on the timing of oral sema as well, getting too excited on the way out..

Yes, I promised my boss not to be too excited. By the way, I say hello to Jo and remind her that my former boss, also called Lars, and I, we had perpetual discussions about what most likely to happen, oral GLP-1 or oral insulin. And one of them happened and one of us supported that one. So -- but do say hello to Jo from me.

When it says early '23 on ClinicalTrials.gov, we have to remind ourselves, this is a rather big trial. We want to have these as pivotal data for a new dosage indication. And we are living in COVID-19 times even though recruitment is going quite well across our pipeline, it is, of course, hurt a little bit by COVID.

And also bear in mind that it's a long treatment study. We have a full 68-week period plus some end-of-study follow-up. So I think you should, for now, follow the guidance seen in ClinicalTrials.gov and then there are pluses and minuses to that.

But we realize we want to be out in the marketplace with the high-efficacy oral biologic, whatever the dose becomes, that is superior to what we could expect to see from competition and we'd rather do it sooner than later. So it's a high priority project..

Thank you, Mads. And Camilla, some perspectives on Rybelsus launch, EU and U.S.

access?.

Yes. So in EU, the coverage is, in general, on par with injectable GLP-1 and that means that in most of the countries where we have launched now, we do have access at fully reimbursed levels prices on par with GLP-1 roughly.

In the U.S., we are now at a stage where the majority of the Rybelsus scripts reimburse -- reflecting the broad market access level we have, which is around 19% -- 90% now. So that's the short status. And then, of course, we're excited to launch in Japan very soon where we have also obtained access and full reimbursement..

Our next question comes from Simon Baker from Redburn. We move on to our next question from Michael Novod from Nordea..

It's Michael Novod from Nordea. First of all, a question to the CapEx expansion. So it comes rather soon after you sort of complete the expansion in -- the large expansion in the U.S.

So how sort of comfortable are you with the current expansion plans and what you sort of put into your demand schedule for semaglutide going forward? How far does this take you in terms of your projections on the demand for oral sema across the different indications? And then, secondly, on icodec and also circling back to previous question regarding market growth.

How do you see icodec going forward, also bearing in mind the larger Phase III program? Is this more a market share gain globally? Is it also a market volume growth game Rest of World? Is it even a potential market expansion game in the U.S. and also on the value side, whether it can drive additional value to the U.S.

insulin market?.

Thank you, Michael. First, Karsten, on CapEx, oral sema and how far that will get us..

Yes. Thanks, Michael, for this question. So as we've said historically then, if we have to upgrade our CapEx from the, I would say, around DKK6 billion per year, as we discussed at the Capital Markets Day, if we had to up it from there, then it would be based on a positive pipeline progression and that's in relative what we're seeing here.

So the current status on our CapEx projects is that we are in the final phases in -- before we get -- move to a regulatory site submission to the FDA of a site in the U.S. So all the main construction and construction companies are pretty much off the side.

So it's quality approvals that are currently outstanding before we can start producing from the first parts of the factory being purification and then later on we'll be able to go live with fermentation and recovery also. So that project is following the plan that we laid out.

What we are now contemplating and the reason why we are upping our CapEx forecast is that with the pipeline projects that we have told about, now we just talked about high-dose oral sema and you heard about our Alzheimer's Phase III trial late last year that we intend to initiate.

Then the reason why we are upgrading our capacity is basically to meet the potential demand on some of these pipeline projects and also potential pipeline projects on the same platform, which are not publicly disclosed at this point in time..

Thank you, Karsten. And I should give some perspectives on icodec. It's clear when you see the dynamics in the diabetes market today, the swing we've seen in GLP-1 category going from weekly to -- sorry, from daily to weekly.

If you think about the physician setting where you have a patient that's looking for intensified treatment, it's clear that if you can develop a product that gives a clear benefit in terms of weekly profile, but also higher timing range, this is a significant opportunity.

Add to that, the lower need for glucose monitoring, I think we have potential to actually make a significant step-up in how insulin is used and still insulin is the most efficacious way to treat diabetes, and there's significant unmet need today if you ask people using insulins. So I think we have a great opportunity.

Obviously, we need to see the Phase III program, but I think we have an opportunity in both enlarging the market for use of insulin and obviously also taking share because this is a -- hopefully, a differentiated product, both from a convenience and a clinical profile point of view. So it's a project that I'm really glad we have.

And I strongly believe there is a role for insulin in the future, and that we can significantly increase innovation height and redefine that market. Add to that, our glucose-sensitive insulin program..

Our next question comes from Richard Vosser from JPMorgan..

Just going back to the Rybelsus launch in Japan.

Perhaps you -- can you hear me?.

Yes. Now, we can..

Okay. Excellent. Sorry, about that. So just going back to the Rybelsus launch and think out the launch in Japan and how we should think about that relative to the uptake in the U.S.? Clearly, there's not much COVID in Japan. But also the OAD market in Japan, maybe give us some idea of the sizing of that relative to the GLP-1 market in the U.S.

and what opportunity you see there? And then second question, just thinking about if we could have an update on the PCSK9 and other options there to add on within the SNAC technology with semaglutide, maybe how many things can you co-formulate? And maybe an update on the PCSK9?.

Thank you, Richard.

Camilla, first, some perspectives on launch of Rybelsus in Japan?.

Yes. So we're quite excited about the launch of Rybelsus in Japan because the OAD market, as you know, is 80% of the diabetes market in Japan. The GLP-1 market in Japan is still in a size of less than 10%. So there's a big opportunity here, of course, to expand the treatment of GLP-1 with Rybelsus.

And we are planning for, of course, launching very soon from now. And we are, of course, also building on many of the experiences we've had in other markets.

But we have also co-teams out with Merck, MSD to make sure that they can help us co-promote Rybelsus in the primary care space where they have a lot of experience where we primarily, up until now, have had experience in the injectable segment..

Thank you, Camilla. Very exciting. And then Mads, ending up on [indiscernible] PCSK9..

Yes.

And I think maybe, Richard, I'd rather take general perspective on the oral platform with SNAC and other enhancers we are deploying because, at this point in time, we have a great many options for peptides up to the size of approximately 10,000 Dalton, i.e., 10 kD that seem to lend themselves to varying degrees to being available vis-à-vis the newest generations of our SNAC technology.

We are actually onto the fourth generation in that regard. And PCSK9 is one option, we have many. And we'll keep you updated as we, one by one, enter them into the clinic or -- not we -- as the company enters them into the clinic one by one over time. Thanks..

And I can confirm we will update you once we have progress. So this concludes our earnings call. Thank you for participating and feel free to contact our Investor Relations officers should you have any follow-up questions. Thank you very much, and have a good day..