Good day, and thank you for standing by. Welcome to the Q1 2025 Novo Nordisk A/S Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jacob Rode, Head of Investor Relations. Please go ahead, sir.

Thank you, and welcome to this Novo Nordisk Earnings call for the first 3 months of 2025. My name is Jacob Rode, and I'm the Head of Investor Relations at Novo Nordisk. And with me today, I have CEO of Novo Nordisk, Lars Jorgensen, Executive Vice President, U.S. Operations; Dave Moore, Executive Vice President, International Operations, Mike Doustdar, Executive Vice President and Head of Development, Martin Holst Lange; and finally, Chief Financial Officer, Karsten Munk Knudsen. All speakers will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, novonordisk.com. Please note that the call is being webcast live, and a recording will be made available on our website as well. The call is scheduled to last 1 hour. Next slide, please. The presentation is structured as outlined on Slide 2. Please note that all sales and operating profit growth statements will be at constant exchange rates unless otherwise specified. Please turn to the next slide. We need to advise you that this call will contain forward-looking statements. These are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For further information on the risk factors, please see the company announcement for the first 3 months of 2025, as well as the slides prepared for this presentation. With that, over to you, Lars, for an update on our strategic aspirations.

Thank you, Jacob. Next slide, please. In the first 3 months of 2025, we delivered 18% sales growth and 20% operating profit growth. I would like to start this call by going through the performance highlights across our strategic aspirations before handing over the word to my colleagues. Starting with our focus on purpose and sustainability. We are now serving nearly 46 million patients with our diabetes and obesity treatments. This is an increase of almost 4 million patients compared to the first 3 months of 2024. Our total carbon emissions rose by 37% compared to the first 3 months of 2024. This was mainly driven by the acquisition of new production sites and capital expenditure activities related to the expansion of manufacturing sites. These are also efforts to meet the high demand for our innovative treatments. To uphold our commitment to being a sustainable employer, we expanded the number of women in senior leadership positions to 42% compared to around 41% last year. In R&D, we completed the second and final pivotal trial REDEFINE 2 with our next-generation obesity treatment, CagriSema. We remain on track for submission in the first quarter of 2026. Recently, our application for Wegovy 2.4 milligram for the treatment of metabolic dysfunction associated steatohepatitis or NASH for short was accepted by the U.S. FDA and granted priority review. In addition, the new drug application for weight management for oral Semaglutide 25-milligram or as a person will call it, Wegovy in a pill has been submitted to the U.S. FDA. If approved, this will be the first oral GLP-1 treatment for obesity in the U.S. Lastly, we have in-licensed 2 early-stage assets that show promise in addressing obesity and other metabolic diseases. Martin will come back to this and our overall R&D milestones later. The quarterly sales growth is driven by both operating units. Dave and Mike will go through the details later. In terms of financial details, we delivered sales growth of 18% in the first 3 months of 2025. However, we have reduced our full-year outlook due to lower-than-planned branded GLP-1 penetration impacted by the rapid expansion of compounding in the U.S. Novo Nordisk is actively focused on preventing unlawful compounding, as well as efforts to expand patient access to our GLP-1 treatments. Karsten will come back to this later. We will continue to drive attractive growth and expand patient access to our innovative treatments. In the U.S., this includes recent initiatives with Nova Care pharmacy, telehealth collaborations, and the CVS formulary decision. In International Operations, there remains a large unmet need for patients, and we're excited to continue focused commercial efforts in existing and future markets in 2025. Furthermore, we realized the significance of our global footprint, including those activities based in the U.S. Novo Nordisk has a strong presence in the U.S. with over 10,000 full-time employees across the value chain. This includes research and development and substantial manufacturing footprint. We have invested over USD 24 billion in the U.S. over the past 10 years, including ongoing expansions and improvements to our manufacturing sites in Bloomington, Indiana, and Casa, North Carolina. The existing U.S. tariffs do not materially change our financial outlook for 2025. That being said, we are closely following potential tariffs on pharmaceutical products in the U.S. Before we move on to the particulars of the first quarter performance, I would like to update you on changes to executive management. Please turn to the next slide. After nearly 30 years with Novo Nordisk, Camilla Sylvest decided to step down. Camilla played a pivotal role in establishing our GLP-1 and obesity franchises and be ahead of the development of our long-term social and environmental goals. I would like to thank Camilla for her meaningful contributions to Novo Nordisk and wish her all the best for the future. This development has triggered several organizational changes effective 3rd of April, aimed at enhancing the speed of decision-making and strengthening the execution focus within our operating units. Ludovic Helfgott, formerly Executive Vice President, Rare Disease, now heads our product and portfolio strategy. This is a newly established area designed to forge a closer connection between commercial strategy, medical affairs, and business development across all our therapy areas. Till Ludovic Helfgott becomes the newest member of Executive Management as Executive Vice President of Quality, IT, and Environmental Affairs. The restructure will also enable focus on U.S. operations as well as Henrik Wulff in CMC and Product Supply. I'd now like to give an update on our commercial execution in the first 3 months of 2025. Please turn to the next slide. As of January, North America Operations and International Operations were reorganized, and financial reporting has been divided into U.S. operations and International Operations. More details on the regions can be found in a company announcement. In the first 3 months of 2025, our sales increased by 18%. The sales growth was driven by both operating units, with U.S. operations growing 17% and International Operations growing 19%. Our GLP-1 sales in diabetes increased by 11%, driven by U.S. operations growing 10% and International Operations growing at 13%. Interest sales increased by 3%, driven by U.S. operations growing 13%. The sales increase was driven by phasing rebates as well as channel and payer mix, partly countered by a decline in volume. Rare disease sales increased by 1%. Obesity care sales increased 65% and driven by U.S. operations growing 40%, partly impacted by compounded GLP-1 and international ratio growing 137%. In both geographies, growth was driven by Wegovy, partly offset by declining Saxenda sales, as the obesity care market is growing towards once-weekly treatments. Rare disease sales increased by 3%, driven by a 5% sales increase in International Operations. Rare Disease sales in U.S. operations grew 1% compared to last year. Please turn to the next slide. Today, Novo Nordisk remains the global GLP-1 volume market leader, serving nearly 2/3 of all patients on GLP-1 treatments across diabetes and obesity. Our ongoing scaling efforts have supported close to tripling of GLP-1 patients reached over the past 3 years. We are dedicated to serving patients who need our medicines and increasing our capacity to meet their needs. By integrating the three acquired fully finished sites and expanding our existing capacities, we are ready to reach more patients with serious chronic diseases. With that, I would hand over to Dave.

Thank you, Lars. Please turn to the next slide. Sales of GLP-1 diabetes care products in the U.S. increased by 10% in the first 3 months of 2025. The sales increase was mainly driven by the continued uptake of Ozempic. Following the U.S. approval of the FLOW data earlier this year, Ozempic is now the only GLP-1 receptor agonist proven to reduce the risk of chronic kidney disease in people living with type 2 diabetes and chronic kidney disease. Novo Nordisk remains the market leader in the U.S. with more than 50% market share measured by total monthly prescriptions. Please turn to the next slide. Wegovy sales increased by 39% in U.S. operations in the first 3 months of 2025. The Wegovy sales growth was driven by increased volumes, which were negatively impacted by wholesaler inventory movements. This was partially countered by lower realized prices. Wegovy was around 200,000 weekly prescriptions, the total U.S. branded anti-obesity market more than doubled with a growth rate of over 160% in the last year. The volume of compounded GLP-1s in the U.S. is estimated to have impacted the uptake of Wegovy prescriptions and the growth of the branded obesity market during the first quarter of 2025. In February, the FDA removed semaglutide from the drug shortage list. As a result, it is now illegal under U.S. compounding laws to make or sell compounded semaglutide drugs, except with rare exceptions. Novo Nordisk is working to prevent unlawful and unsafe compounding of semaglutide in the U.S. while making sure patients have access to safe, legitimate semaglutide produced by Novo Nordisk. Following the resolution of the semaglutide shortage, we have a number of initiatives to support patients with obesity seeking treatment with Wegovy. In March, we introduced self-pay, direct-to-patient delivery of all doses of Wegovy at a reduced cost of USD 499 per month through our NovoCare pharmacy. Access to Wegovy for cash-paying patients was further expanded in April with the announcement of collaborations with 3 telehealth organizations. And last week, it was announced that CVS chose Wegovy to be the only GLP-1 medicine covered for obesity on its national template formulary as of July 1, 2025. While Novo Nordisk is committed to providing patients with choices and did not pursue an exclusive formulary placement, we do believe the formulary decision by CVS speaks to the benefits of Wegovy. These include established cardiovascular benefits noted on the Wegovy label, and we await the FDA priority review of the promising data from the ESSENCE trial for potential inclusion of NASH as a primary indication in the label in the second half of 2025. We will continue to identify additional ways to expand access to Wegovy. Now I'd like to turn it over to Mike for an update on International Operations.

Thank you, Dave. If we can go to the next slide, please. Sales in international operations grew by 19% in the first 3 months of 2025, driven by GLP-1 products. GLP-1 diabetes sales increased 13% and were driven by all regions. GLP-1 diabetes sales growth was negatively impacted by periodic supply constraints. Obesity care sales grew by 137% to DKK 6.5 billion. Sales of Wegovy reached more than DKK5.5 billion, growing at 392%, driven by sales across all regions. Next slide, please. Novo Nordisk remains the market leader in international operations with a total diabetes and obesity GLP-1 volume market share of over 72%. Diabetes remains a significant global health challenge, affecting more than 550 million individuals in IO. Rybelsus is now available in over 40 markets and continues to gain market share in international operations. Meanwhile, Ozempic remains the leading GLP-1 diabetes product within IO, having launched in around 80 markets. With improved supply, we are now fully focused on our promotional activities to further expand the number of patients reached. Also, within obesity, we see a substantial unmet need, with more than 800 million people living with obesity in IO and only a few million of these people being treated. We have launched Wegovy in around 25 countries, including three in just the last month, reflecting greater supply availability and staying true to our commitment to reaching more and more patients. We look very much forward to rolling out Wegovy in many more markets as the year goes through. Next slide, please. Our rare disease sales increased by 3%. This was driven by sales increase in international operations of 5% and U.S. operations sales growth of 1%. The sales of rare endocrine disorder products increased by 14%, driven by Norditropin and improvement in manufacturing output as well as Sogroya launch uptake in international operations. This is countered by a decrease of 5% in U.S. operations, mainly driven by Norditropin. Rare blood disorder sales decreased by 1%, driven by lower sales of NovoSeven. Now over to you, Martin, for an update on R&D.

Thank you, Mike. Please turn to the next slide. In March, Novo Nordisk released the headline results from REDEFINE 2, the second and final pivotal trial with CagriSema. The trial included people living with obesity, overweight, along with type 2 diabetes. REDEFINE 2 was a 68-week efficacy and safety trial with 1,206 people enrolled. People were randomly assigned to receive either CagriSema, a fixed-dose combination of cagrilintide 2.4 milligram and semaglutide 2.4 milligram, or placebo. The mean baseline body weight was 102.2 kilograms. The REDEFINE 2 trial incorporated a flexible trial protocol similar to REDEFINE 1. After 6 weeks of treatment, assuming all people adhere to treatment, CagriSema resulted in a significant weight loss of 15.7% compared to 3.1% in the placebo. In the trial, CagriSema appeared to have a safe and well-tolerated profile. The most common adverse events were gastrointestinal, with the vast majority being mild to moderate and decreasing over time in line with the GLP-1 receptor agonist class. We've now completed the second and last pivotal CagriSema Phase 3 trial for weight management. We look forward to sharing more data from REDEFINE 1 and REDEFINE 2 at the American Diabetes Association in June. We are on track with scaling of the CagriSema supply chain, and we still expect to file for the first regulatory approval in the first quarter of 2026. Next slide, please. Building on the learnings from REDEFINE 1 and REDEFINE 2 trials, we have extended the duration of REDEFINE 4, which is now anticipated to read out in the first quarter of 2026. Turning to REDEFINE 11. We expect the trial to be initiated during the second quarter of 2025. The purpose of REDEFINE 11 is to investigate the potential for further weight loss by prolonging the duration of the trial to 80 weeks and focusing on dose re-escalation throughout the study. Next slide, please. In February, we submitted the oral semaglutide 25-milligram to the U.S. FDA as the potential first oral GLP-1 treatment for obesity. Oral semaglutide 25-milligram demonstrates an overall efficacy and safety profile similar to once-weekly injectable semaglutide 2.4 milligram. For context, I would like to revisit the OASIS 4 results. OASIS 4 was a 64-week efficacy and safety trial comparing once-daily oral semaglutide 25-milligram to placebo in 307 adults with obesity or overweight with comorbidities. In the trial, adults with obesity or overweight who received oral semaglutide 25 milligram experienced an average weight loss of 16.6%, from a baseline body weight of 105.9 kilograms, when assuming full adherence to the treatment regimen. Around 1/3 of participants achieved a weight loss greater than 20% or more. Secondary endpoints from OASIS 4 demonstrated improvements in cardiometabolic risk factors such as blood pressure and inflammation in patients treated with oral 25 milligrams versus placebo. In addition, oral semaglutide 25-milligram appears to have a safe and well-tolerated profile on par with semaglutide 2.4 milligrams. The full publication of OASIS 4 is expected later this year. Altogether, oral and injectable semaglutide has been studied in robust clinical development programs with more than 43,000 semaglutide-exposed patients and exposure from post-marketing use of over 33 million patient years. If approved, oral semaglutide 25-milligram is expected to be the first oral GLP-1 receptor agonist for weight loss. The manufacturing of the active pharmaceutical ingredient, bulk tablet manufacturing, and packaging of oral semaglutide 25-milligram are all carried out in the United States, and all manufacturing steps are up and running. We anticipate the U.S. FDA review will be completed around the turn of this year. Next slide, please. Turning to the upcoming R&D milestones. We look forward to a year with exciting trial readouts. Before speaking to the remainder of 2025, I would like to highlight some of the milestones from the last few months. In addition to the completion of REDEFINE and the submission of oral 25-milligram semaglutide for obesity in the U.S., Novo Nordisk continues to pursue expanded treatment options for people living with obesity. Although not shown in the slide, I would like to mention our newest agreement to in-license two early-stage assets for the treatment of obesity and other cardiometabolic diseases. These include a first-in-class oral non-incretin preclinical candidate in obesity and associated metabolic disorders and a GLP-1, GIP glucagon triple receptor agonist. The latter asset is the second tri-agonist in our pipeline, and we expect the Phase I results from our internal tri-agonist in the second half of 2025. Within Rare Disease, the main phases of two Phase 3a trials, REAL 8 and REAL 9, were successfully completed with Sogroya for non-replacement indications and submitted for regulatory approval in the EU. Within cardiovascular and emerging therapeutic areas, we are excited to have submitted the ESSENCE Part 1 trial with once-weekly semaglutide 2.4 milligram for regulatory approval in both EU and U.S. for the treatment of NASH and moderate to advanced liver fibrosis, namely F2 and F3. As a reminder, both primary endpoints were achieved. By week 72, 37% of people treated with semaglutide 2.4 milligrams achieved improved liver fibrosis with no worsening of hepatitis, while 63% achieved a resolution of CO2 hepatitis with no worsening of liver fibrosis. To put this into perspective, the ESSENCE Phase 3 trial results are the best Phase 3 results within NASH to date. In the U.S. alone, around 13 million people live with NASH and currently have limited treatment options available. We're excited that the U.S. FDA has accepted the supplemental new drug application and granted priority review for Wegovy to treat NASH in adults with moderate to advanced fibrosis, with the decision anticipated in the second half of this year. Moving to upcoming milestones in 2025. I would like to start with a few data readouts in type 2 diabetes in the second half. Specifically, we expect the first Phase 3 results from CagriSema from REIMAGINE, investigating CagriSema as an add-on to basal insulin in people with type 2 diabetes. Moreover, we expect results from the subcutaneous and oral Amycretin Phase 2 trial. Our upcoming readouts and clinical programs in obesity demonstrate the breadth of our pipeline in both modalities and mechanisms of action to meet the needs of patients. In addition to the initiation of REDEFINE 11 with CagriSema in the first half of 2025 that I mentioned earlier, we also expect the Phase 2 readout from the once-weekly GIP, GLP-1 co-agonist in the second quarter of 2025. We're also very excited to initiate the Phase 3 program for cegilentide in monotherapy in late 2025. Within Rare Disease, we expect U.S. submission for Sogroya in non-replacement indications in the second quarter of 2025, as well as regulatory submissions for MyMate in the U.S. and EU in the second half of 2025. Lastly, we look forward to the readout of the EVOKE and EVOKE+ trials in patients with early Alzheimer's disease. With that, over to you, Karsten.

Thank you, Martin. Please turn to the next slide. In the first 3 months of 2025, our sales grew by 19% in Danish kroner and 18% at constant exchange rates, driven by both operating units. The gross margin decreased to 83.5% compared to 84.8% in the first 3 months of 2024. The decrease mainly reflects amortizations and depreciations related to Catalent as well as costs related to ongoing capacity expansions, partially countered by positive product mix, driven by increased sales of GLP-1-based treatments. Sales and distribution costs increased by 12% in Danish kroner and by 10% at constant exchange rates. In U.S. operations, the cost increase is mainly driven by promotional activities related to Wegovy and Ozempic. In international operations, the increase is mainly related to the Wegovy launch and promotional activities. Research and development costs increased by 20% in Danish kroner and 19% at constant exchange rates. The increase in cost is mainly driven by obesity care and reflecting increased late-stage clinical trial activity as well as increased early research activities. Administration costs increased by 5%, both in Danish kroner and at constant exchange rates. Operating profit, as a consequence, increased by 22% measured in Danish kroner and by 20% at constant exchange rates. EBITDA increased by 23% in Danish kroner and by 21% at constant exchange rates. Net financial items showed a net loss of DKK 1.8 billion compared with a net gain of DKK 72 million last year. This primarily reflects losses on hedge currencies and financing costs related to the funding of the Catalent transaction. The effective tax rate was 21.6% in the first 3 months of 2025, compared to 20.4% in 2024. Net profit increased by 14%, and diluted earnings per share increased by 15% to DKK 6.53. Free cash flow in the first 3 months of 2025 was DKK 9.5 billion compared to DKK 5 billion in the first 3 months of 2024. Free cash flow reflects higher net cash generated from operating activities, partially countered by increased capital expenditure. Capital expenditure for property, plant, and equipment was DKK 13.4 billion compared to DKK 8.4 billion in 2024. This was primarily driven by investments in additional capacity for API and fill-finish capacity for both current and future injectable and oral products. We have returned DKK 36.7 billion to shareholders, mainly as dividends in the first 3 months of 2025. Following the step-up in capital expenditure in 2025, Novo Nordisk is not conducting a share buyback program. An authorization to the Board of Directors to buy back shares was, however, in line with previous years adopted at the Annual General Meeting on 27th of March 2025. Should the initiation of a share buyback program later be relevant, for 2025, the range for sales growth is now expected to be 13% to 21% at constant exchange rates. Given the current exchange rate versus Danish kroner, sales growth reported in Danish kroner is expected to be 3 percentage points lower than constant exchange rate growth. The new range reflects lower than planned penetration of branded GLP-1 treatments in the U.S., impacted by compounded GLP-1s. The outlook reflects expectations for sales growth in U.S. operations and international operations, mainly driven by volume growth of GLP-1-based treatment for obesity and diabetes. Following the U.S. FDA removal of semaglutide injectables from the drug shortage list, the sales outlook assumes a reduction in patients on compounded GLP-1 treatments during the second half of 2025. The updated guidance reflects several efforts already underway, as mentioned by Lars, Mike, and Dave. Operating profit growth is now expected to be 16% to 24% at constant exchange rates. Given the current exchange rates versus Danish kroner, growth reported in Danish kroner is expected to be around 5 percentage points lower than at constant exchange rates. The updated expectation for operating profit growth primarily reflects the lower sales growth outlook, partially countered by reduced spending. Novo Nordisk expects net financial items to show a gain of around DKK 0.9 billion, mainly driven by expected gains on hedged currencies, primarily the U.S. dollar, partially offset by interest expenses related to funding of the debt-financed Catalent transaction. The effective tax rate for 2025 is still expected to be between 21% and 23%. The capital expenditure is still expected to be around DKK 65 billion in 2025, reflecting the expansion of the global supply chain. In the coming years, the capital expenditure to sales ratio is still expected to be low double digits. Free cash flow is now expected to be DKK 56 billion to DKK 66 billion, reflecting the lower-than-expected sales growth, mainly driven by lower volume growth of GLP-1 treatments in the U.S. All of the 2025 expectations are based on assumptions that the global and regional macroeconomic and political environment will not change significantly, and business conditions for Novo Nordisk during 2025, including changes in tariffs and duties. The announced tariffs currently in effect do not materially change our financial outlook for 2025. However, a potential expansion or increase of tariffs may have a negative impact on Novo Nordisk and our industry. That covers the outlook for 2025. Now back to you, Lars.

Thank you, Karsten. Please turn to the final slide. The performance in the first 3 months of 2025 with 18% sales growth reflects that nearly 46 million people are now benefiting from our treatments. Further, we progressed our R&D pipeline, including completing the final pivotal trial for the next-generation obesity treatment CagriSema. We have reduced our full-year outlook due to lower-than-planned GLP-1 penetration, which is impacted by the rapid expansion of compounding in the U.S. I'm confident in our recent initiatives in the U.S. to support patients to see the benefits of our treatments. Furthermore, the obesity opportunity remains large in International Operations, and I look forward to reaching more patients with the additional rollout of Wegovy globally. At Novo Nordisk, we will continue to focus on commercial execution, the progression of our R&D pipeline, and expansion of our production capacity in the pursuit of treating more people living with serious chronic diseases. With that, I would like to hand over the word to Jacob.

Thank you, Lars. Please advance to the next slide. We are now prepared to start the Q&A session. Operator, please go ahead and take the first question.

And your first question comes from Richard Vosser from JPMorgan. Please go ahead.

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

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

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

Thanks very much, Dave. Richard, I think to answer your question, I'll split it between Ozempic and Wegovy. So, we have Ozempic since 2019 in launch and now in 80 markets across IO, so a very decent footprint, I would say, in many, many countries. We have been launching Wegovy a bit slower due to the supply constraints, not at the speed we wanted to, also partially because we were servicing and maintaining, of course, the patients that were on Ozempic. But now starting from this year, as the supply constraints are lifted, we have seen an acceleration like you would not have seen before. Just in the last couple of months, 6 new launches and more to come as we go forward. In terms of the share number of prescriptions and volumes, if I just give you a couple of data points, we have currently 64% volume market share on injectable GLP-1, so on the back of Ozempic and Wegovy. And that 67% market share is rather stable. So, it's not going down. And we, of course, hope to be able to continue fueling that with these so-called new launches, as well as, of course, getting back to promoting Ozempic much more assertively than we have been during the constraint period.

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

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

I have two questions, one regarding guidance and another about the compounding pharmacy. For guidance, if we assume the second quarter will be similar to the first, the potential growth scenarios for the second half range from about 8% at the lower end to 22% or 23% at the higher end. Could you clarify these potential outcomes? What are the key factors influencing them, and what assumptions drive each end of the range? On the topic of compounding, you indicated it has a significant impact. Can you provide more specifics on how it affects Wegovy's market share? Have you conducted any surveys to estimate how many patients might drop Wegovy in favor of a branded alternative, and what you anticipate in terms of switching between branded products and Wegovy versus appetite suppressants? I'm curious about how much of this you have incorporated into your guidance. Thank you.

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

Thank you, James, for the question. We achieved 18% growth in the first quarter, and our goal is to maintain strong growth moving forward. This involves increasing prescription trends in the U.S. and advancing our GLP-1 franchise in IO. Regarding our guidance, we anticipate that many patients using compounded products will transition to branded options in the latter half of this year, facilitated by our cash channel, Novocare, and telehealth partnerships. We also have a label update concerning NASH, traditional commercial strategies, and our collaboration with CVS. The acceleration to meet our guidance primarily occurs in the second half of the year in the U.S., while in our international operations, we expect consistent sales growth over the next few quarters. This summarizes the foundational aspects of our guidance range. On the topic of compounding, the quality of data concerning compounded patients is not very strong, and our insights are based on market research indicating over 1 million patients currently on compounded GLP-1. We have estimated how many patients may benefit from personalized exceptions or may discontinue treatment, leading to a shift towards branded products. There are several assumptions involved, but we have multiple strategies in place to attract patients who will not continue with bulk compounded products starting in the second half of this year, especially since some patients have personal inventories. Thank you, James.

And I think that also covered part of question 2. Anything to add, Dave, on what we see currently in terms of magnitude of compounding potentially split on branded GLP-1 treatment as well?

Yes. Thank you, Jacob. I will share that the market research that Karsten mentioned also gives us an idea that certainly, semaglutide is overweight. We estimate 70% of compounding is of semaglutide. But I'd like you to focus on three things, three actions that we're taking to ensure that we're effective in this transition as compounding starts to wind down. Number one, we expand the cash offering. The $499 via Novocare pharmacy was purposeful and planned at the time when compounding would start to diminish, as well as the collaborations with telehealth companies. And soon, that cash offering will be available in all 9,000 CVS stores. Number two, we continue to expand better coverage for Wegovy. This helps for some of those patients that may be on compounding that have insurance and would have access to Wegovy for a low co-pay. And number three, as Karsten mentioned, we have targeted commercial efforts aimed at patients and healthcare practitioners so that we can focus on sema safety of real Wegovy versus compounding, as well as the availability and the affordability.

Thanks a lot, Dave. And also, thanks to you, James. With that, we are ready for the next set of questions, please.

Your next question comes from the line of Peter Verdault from BNP Paribas. Please go ahead.

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

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

Thank you, Pete. You are correct that this has been our focus for some time. However, it's important to note that evaluating this based on script trends is quite challenging, as a significant portion of the business is becoming compounded, and we estimate this volume to be similar to what we have in the U.S. for GLP-1. As Dave outlined our strategies, we feel very confident that this is the right time for us to make a significant change in the market, which is reflected in our guidance for the second half of the year. Additionally, CVS selecting our brands without exclusivity payments indicates a strong market perception of Wegovy. The added benefits we offer on top of real-world weight loss experiences are substantial and are set to improve further, provided we receive the mass indication as well. The attractiveness of this product is undeniable. Regarding diabetes data, there has been considerable interest in the development of oral category sales. We have always recognized that we have a head start in this area. We have not aggressively pursued it until now due to ramping up our manufacturing. We have achieved significant scaling and efficiency improvements in our API facility in the U.S. When we submit data to the FDA, you can count on us being prepared for a full launch in the U.S. Moreover, it's worth noting that we have excellent safety data for this molecule, covering over 30 million patient lives, which should reassure physicians and patients when making choices about a trusted product with efficacy comparable to Wegovy. Essentially, we are offering a version of Wegovy in pill form, which is very compelling, and assuming a positive outcome with the agency, we are prepared to push this significantly while ensuring strong commercial execution. Thank you, Pete.

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

Your next question comes from the line of Martin Parkhoi from SEB. Please go ahead.

Martin Parkhoi, SEB. I have two questions related to CBS. First, you've talked about optionality for many years. While I see that CVS is focusing on Wegovy, do you think that losing optionality and excluding another obesity product is a disadvantage for patients in the U.S.? Secondly, regarding the oral semaglutide 25-milligram, I understand you mentioned that you can fully commit once you launch. However, how significant do you believe the market will be for Wegovy in pill form compared to its current form?

Great. Thanks a lot for those too, Martin. And I think again, both will go to you, Lars. So firstly, on the CVS one.

Thank you, Martin, for the questions. You are correct that we support the flexibility and open access to products. We believe it's essential for patients and physicians to have the choice that meets different patients' needs. This is not a decision we make. We have not pursued an exclusive contract; it is a choice made by CVS. We value the long-standing partnership with CVS, which now also includes our cash program available in 9,000 CVS locations. Ultimately, this is CVS's decision, and we recognize the importance of the product and its benefits. This highlights the real-world experience with Wegovy and its value in reducing cardiovascular disease risk, which is appealing to payers. Regarding the oral opportunity, it's key to understand that this involves competition among those who prefer oral therapies. While we believe most patients will still find injectable therapy more beneficial, we have learned that weekly injections are quite convenient, allowing patients to manage their condition simply once a week. Physicians are increasingly comfortable prescribing injectables. Nonetheless, there are patients who prefer oral options, and we are excited about our competitiveness in this smaller segment, even though we anticipate it to be less extensive than the injectable market. Being the first to market with a proven molecule that has demonstrated efficacy and safety is advantageous. There is a perception that oral options may not be as convenient; however, we believe they are. Taking a tablet with water each morning allows patients to begin their day effortlessly. We expect to perform well in the smaller oral segment compared to the overall injectable market, assuming we receive a positive regulatory outcome.

Thank you, Lars, and thank you, Martin. And then we're next question, please.

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

Thank you for the question. I have two. My first relates to potential political risk. The current administration in the U.S. has, at times, singled out GLP-1s when it raises the issue of apparent price disparities between the U.S. and other countries. Novo is presumably deep into negotiations with CMS about the IRA price discount for semaglutide starting in 2027. Do you sense any risk that the administration plans to take this as an opportunity to make an example of GLP-1s and demand a particularly severe price cut? That's my first question. And then my second question relates to the pipeline and specifically in CagriSema. I believe Novo has been in discussion with the FDA about Phase 3 planning for an obesity trial, but the R&D milestone slide does not include a trial start in 2025. Can you tell us whether a Phase 3 trial for CagriSema could yet start this year? And when a Phase 3 obesity trial does start has a decision been made as to whether the oral or subcutaneous formulation would be advanced first?

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

Thank you, Michael. So, when you look at it, if you take Wegovy first, we have very limited Wegovy exposure in Medicare so far. And if you take some of the others, say, overall governmental-funded channels like VA and Medicaid, those are channels with somewhat lower price points. And I think more comparable to what we see in the geographies. If you look at Ozempic, obviously, there's a bigger share of business in Medicare. And that's then what's being discussed under the IRA. I cannot go into specifics around it because it's still relatively early days. But I think there is an established mechanism in dealing with that. So, I would actually say from an overall political risk point of view, I have to think we're in a good spot because our book of business pricing exposure is either lower or is already in ongoing price negotiations compared to perhaps other products that sit in parts of Medicare with higher price points or have not yet been opened up for negotiation. So, I see relatively limited additional risk compared to what we're already facing. Having said that, it is still early days in an ongoing process.

Thanks for that, Lars. And for the second one on CagriSema, we will hand it over to you, Martin.

Thank you for the question. There's not much new information to share since last quarter. The process involves submitting an end-of-Phase 2 package to the FDA and other regulatory authorities. We are currently in that process and expect to receive an outcome in the next couple of months. If all goes as planned, we anticipate progressing to Phase 3, which we aim to initiate in the first quarter of next year. The Phase 3 program will focus on both oral and injectable forms.

Thank you, Martin, and thank you, Mike. And then we are ready to take the next set of questions, please.

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

I'm just going to try and push Karsten and Dave to topics if I may, there's any more color you're willing to give. So firstly, on the compounded smart of patient funnel, Karsten, if you could just give us any color as to what you're seeing for the inventory in the system. We've heard estimates as anywhere between 3 months and 12 months. And then any color on what percentage you expect to shift to branded given that there on compound because they can't afford it or it's not covered. And then I'm going to be provocative on the branded capture. Some of what we've heard is as these patients come off compounded Sema, cash patients may prefer Lilly given a cheaper syringe vial strategy and perception and efficacy safety is beginning to edge with Wegovy. So, I know that's provocative, but I wonder if you could just touch on that. And then finally, a lot of what we've discussed has been the obesity market, but I wonder if you could touch on Ozempic. I'd assume limited compounding impact, markets slowing down, you're losing share from Mounjaro. So, it's not exactly clear to me what changes that second half.

Thank you, Sachin, for those two questions. On the first one compound, we'll hand it to Karsten, and then we'll hand over to David, anything to add before Dave goes on to the second question on Ozempic. But firstly, over to you, Karsten.

Thanks, Sachin. And I wish I could give you sharp data points based on high-quality market data. But this is a fairly young segment in terms of data and market research. So, you're correct that within telehealth, the setup is more towards a subscription basis on 3 months, 6 months, 9 months, even 12 months, where patients get the incentive through a lower subscription rate if they sign up for a longer period of time. So yes, most likely, there will be some patients sitting within inventory on May 22; we don't have really good data on that, but that's also why we're cautioning in our outlook section of our company announcement that the market should expect a step up mainly in the second half of this year from compounding and of course, the CVS contract. As to brand and drop-off to different solutions, price sensitivity, et cetera. I'll hand that over to Dave on the in-market understanding of that one. Over to you, Dave.

Thank you, Karsten. We believe the strong label of Wegovy as well as the brand awareness of Wegovy and the fact that the semaglutide compounded is overweight. We think that there is certainly a focus with healthcare practitioners to maintain that continuity of care. We have heard that the availability of branded Wegovy through these new channels, meeting the patients where they are, is a very important step in terms of that transition and the funneling of patients. As Karsten mentioned, of the total number of compounded patients today, some will drop off. But certainly, as you mentioned in our guidance, we do expect to capture and see real interest in patients coming over to the real Wegovy. And then I'll shift over to Ozempic, Sachin. As we're seeing this year so far, the growth of the GLP-1 class does continue. It's lower than what we've seen in years past at 15%, but that still leaves plenty of opportunities and runway for future growth. This continues to be a game around NBRx and our commercial leverage. So here are the things that we're focused on in the U.S. with Ozempic. First of all, our overarching commercial focus is leveraging the Ozempic label, the broadest of any GLP-1 label in the market and continues to be the most widely known GLP-1 as well. Our commercial efforts during this year include the launch of a new campaign called the Ozempic era campaign we are in the Ozempic era, and our patients are experiencing that, and the understanding of the broad label is something that now both patients as well as physicians understand. Lastly, we continue to focus on decreasing the outflow, meaning maintaining longer stay time and having patients have the full effect in getting to the 2-milligram dose.

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

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

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

Thank you. You've talked a lot about pricing and your strong commercial focus. Could you give us an idea of what you think a typical price point would be for a compounded semaglutide? And how far a drift that is from the $500 that you're charging? The reason that I ask is I assume that this is a price-sensitive market. And yet the starter dose from your competitor is only $350. I wonder whether people just can't move step-up from whatever they're paying today, up to that $500 and the $350 is a very compelling starting point for the compounder. Could I also just ask if you could tell us what the average stay time is now that you've got less of a supply constraint, whether you're seeing that obesity stay time get longer or whether you're still having to reacquire patients every few months. If nobody minds, I'd also just like to take this opportunity to let people know that after 40 years as an analyst, this is my last purely pharma sulfide call. Novo was one of the first companies outside of the U.K. that I covered back before the merger of Novo and Nordisk. So, I really am that old. But it will soon be time for me to move on. I have a couple of projects I need to complete before I leave the UBS team fully in Matthew's very capable hands. But I want to say it's been an enormous privilege to watch the development of many life cycles of drugs and to work with so many people in Novo and other companies, clients, and competitors, many of whom I'm very proud to count as friends.

Thank you, Jo. First of all, congratulations to Team Novo on a remarkable career. Regarding your questions, let's start with Dave about GLP-1 pricing for Wegovy and compounded versions, and then we'll move on to Karsten.

Yes. Thank you for the question, and also congratulations to you. There is a range of prices that we hear in the marketplace. It really does depend on whether or not that is a bundled price with a telehealth company, in terms of offering their telehealth services as well as medicine. As you pointed out, it is less over the compounded GLP-1 than what we're seeing in terms of the cash prices, no question. When we think about the funnel and when we talked about the guidance and expectations, as Karsten mentioned, certainly, we do expect some patients not to transition, meaning they may be on a compounded GLP-1, and they may not transition over to a branded medication. One of the things that's important for us, though, is to ensure that we are educating around the availability of Wegovy through commercial insurance. We have over 55 million Americans that have coverage for Wegovy, where they would receive the medicine for a low branded copay. Many patients on compounded GLP-1 do have insurance, so educating them and doing insurance verification as part of our commercial efforts is also important. And then to answer your question on stay time, the current 12-month average stay time is around 7.4 months. That continues to increase as the brand grows and more and more patients continue with their therapy over time. Thank you.

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

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

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