Earnings Call Transcript
NOVO NORDISK A S (NVO)
Earnings Call Transcript - NVO Q3 2020
Operator, Operator
Hello, and welcome to the Q3 2020 Novo Nordisk A/S Earnings Conference Call. Today, I'm pleased to present Lars Fruergaard Jorgensen. Please go ahead with your meeting.
Lars Fruergaard Jorgensen, CEO
Thank you. Welcome to this Novo Nordisk conference call regarding our performance for the first nine months of 2020 and our financial outlook for 2020. I'm Lars Fruergaard Jorgensen, the CEO of Novo Nordisk. With me, I have our Chief Financial Officer, Karsten Munk Knudsen; and our Chief Science Officer, Mads Krogsgaard Thomsen. Also present and available for Q&A sessions are Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Sylvest and our Investor Relations Officers. Today's earnings release and the slides for this call are available on our website, novonordisk.com. Please note that this conference call is being webcasted live and a recording will be made available on Novo Nordisk's website. The call is scheduled to last for one 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 20 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 first nine months of 2020 and the slides prepared for this presentation. Please turn to the next slide. In 2019, Novo Nordisk introduced our strategic aspirations for 2025, which consists of four dimensions: purpose and sustainability, innovation and therapeutic focus, commercial execution, and financials. In 2020, Novo Nordisk has progressed on both adding value to society and on our environmental footprint. During the course of 2020, Novo Nordisk launched a new social responsibility strategy, Defeat Diabetes, and as part of our access to insulin commitment, we have lowered the ceiling price of our human insulin in 76 low and middle-income countries. In the third quarter of 2020, Novo Nordisk set a target to ensure that all direct suppliers supply the company using 100% renewable power by 2030. In the third quarter we made progress within our innovation and therapeutic focus aspiration, particularly in the Phase 2b trial investigating ziltivekimab in cardiovascular disease, which successfully completed. Mads will share more on R&D a little later. Moving to commercial execution, diabetes care sales increased by 8% and we increased our diabetes value market share leadership by 0.8 percentage points to 29.2%. GLP-1 sales continue to perform well at 29% sales growth while obesity care and biopharm sales increased by 6% and 4% respectively. Within financials, total sales increased by 7% with international operations growing by 12% and North America operations growing by 2%. Operating profit increased by 7% to DKK 22.9 billion. As we disclosed on the 8th of October, we now expect both sales and operating profit growth of 5% to 8% mentioned at constant exchange rates for the full year 2020. Novo Nordisk like the rest of the world continues to be impacted by the COVID-19 pandemic. And like many other organizations, our commitment to employees, patients, and communities remains unchanged. For production, Novo Nordisk manufacturing sites continue to operate and products are being made available to patients throughout the world. Within research and development, trial recruitment is still below the pre-COVID-19 levels with some new trials being initiated. Commercially, there are fewer new patients initiated during the lockdowns. This has specifically impacted launched products and products with a short stay time. A gradual recovery of patient initiations took place in the third quarter. The COVID-19 pandemic continues to evolve differently across geographies and operations are running accordingly. In many markets, sales representatives are partially back in the field. As alluded to, the pandemic has increased the number of new patients using our products. For the US GLP-1 class, as seen on the right-hand side of this slide, new-to-brand prescriptions were substantially impacted by lockdown measures in Q2 of this year, but have since gradually recovered. However, total GLP-1 prescription growth has been relatively stable throughout this period. Please turn to Slide 6; for the first nine months of the year, total sales increased by 7%, driven by a 12% sales growth in international operations and a 29% sales growth for our global GLP-1 franchise. In International Operations, all geographies and all therapies continue to contribute to growth. Sales growth was negatively impacted by COVID-19 as fewer patients initiated treatment, partially offset by COVID-19 related stocking and timing of shipments. Sales in North America operations increased by 2% in both Danish kroner and comparable exchange rates. Sales growth was negatively impacted by COVID-19 as fewer patients initiated treatment and increasing unemployment in the US, partially offset by COVID-19 related stocking in the first quarter. Sales growth was primarily driven by GLP-1, although we did see growth across our diabetes, biopharm, and obesity franchises. Global insulin sales decreased by 3%, which is a result of a 22% sales reduction in the US, partially offset by a 10% sales growth in international operations. The US sales decline was driven by lower realized prices following rebate enhancements, unfavorable channel mix, changes in coverage gap legislation, and the launch of affordability programs. In International Operations, sales growth was driven by all insulin segments. GLP-1 sales increased by 29% driven by a 37% sales growth in International Operations and a 27% sales growth in North America operations. Obesity care sales grew by 6%, with both operating units contributing to growth. Sales growth was negatively impacted by fewer patients initiating treatment due to COVID-19. Biopharm sales increased by 4% driven by Norditropin. As part of our strategic aspirations for 2025, we aim to reach one-third of the global diabetes market. As previously mentioned, we have now reached 29.2%. This increase is a reflection of both the GLP-1 and insulin market share gains. For GLP-1, since 2019, we have increased our value market share by 3 percentage points to nearly 50%. A global rollout of Ozempic in its national operations and the uptake of Ozempic and Rybelsus in North America have been key to this. For insulin, since 2019, we have steadily increased our market share by 0.8 percentage points. This can be attributed to the launch of new generation insulins in international operations facilitated by our market bid approach. Please turn to Slide 8; as the US GLP-1 market continues to grow around 30% in volume when measured quarter-over-quarter, driven by weekly tier-one products with uptake of Ozempic and the launch of Rybelsus. Novo Nordisk has neutral brand market share leadership of over 60% in this GLP-1 and is the GLP-1 market leader measured in total prescriptions with around 50% market share. Despite facing difficult launch conditions due to COVID-19, Rybelsus continues to take market share both for new-to-brand prescriptions and total prescriptions which are around 14% and 4% respectively. Please turn to Slide 9; Rybelsus has had a promising start in the US. You can see in the graph on the left that in the 20 weeks after launch new-to-brand prescription numbers were matching that of the SGL-2 class. Once the COVID-19 related lockdowns were implemented in March, we saw a substantial decrease in new-to-brand prescriptions. However, as lockdowns were lifted, Rybelsus uptake has picked up. This launch uptake development reflects the improved market access of Rybelsus which is now around 85% across commercial and Medicare. Furthermore, more than 80% of new prescriptions are new to the GLP-1 class and direct-to-consumer advertisement has begun. Outside of the US, Rybelsus has now been launched in eight countries. In International Operations, diabetes sales increased by double digits presented across all geographical areas. This growth has been driven by both insulins and GLP-1 across all geographical areas. The sales performance reflects our increased diabetes value market share in International Operations as indicated by the 30% share of growth. Business driven by a 0.5 percentage point increase in our market share, which is now at 22.7%. Please turn to Slide 11; obesity care sales increased by 6% to DKK 4.2 billion. Growth was driven by both International Operations and North America Operations. Sales growth was negatively impacted by COVID-19 as fewer patients initiated treatment. We have now launched Saxenda in 54 countries, and just yesterday the US National Institute for Health and Care Excellence recommended the reimbursement of Saxenda. All of this supports our strategic aspiration of more than doubling obesity sales by 2025. Please turn to Slide 12. Biopharm sales grew by 4% in the first nine months of 2020 driven by 8% sales growth in International Operations. Sales growth was driven by Norditropin. While hemophilia is declining, sales of 2% were a result of sudden sales decline, offset by Esperoct and Refixia launches. Norditropin sales increased by 13%, reflecting commercial execution as well as changes in inventories, COVID-19 related stocking, and additional demand driven by supply challenges for competing products in selected countries. With this, over to Mads for an update on R&D.
Mads Krogsgaard Thomsen, Chief Science Officer
Thanks, Lars. Please turn to Slide 13. In the next couple of slides I'll first share the results from the recently completed phase 2b RESCUE trial for ziltivekimab, and thereafter some recent and imminent R&D milestones. Ziltivekimab, referred to as 'zilti', is the first fully human anti IL-6 ligand and monoclonal antibody that we obtained as part of the Corvidia Therapeutics acquisition back in June of this year. At the time of the acquisition, the phase 2b RESCUE trial was well underway and now it is completed. We're happy to share the results. To start with a bit of context, our Head of Global Drug Discovery, Dr. Marcus Schindler, described Novo Nordisk's ambition to enter the cardiovascular disease space at our R&D investor event held in June. Within this therapeutic area, zilti seeks to address the residual inflammation related risk that exists despite today's state-of-the-art management of atherosclerotic cardiovascular disease, also known as ASCVD. In ASCVD, reduced inflammation within the heart and blood vessels, typically assessed clinically by measuring CRP, has been shown to correlate with a robust reduction in major adverse cardiovascular events in the follow-up analysis to the CANTOS trial with the anti IL-1 antibody Canakinumab. Thus, in the CANTOS trial, patients in whom Canakinumab treatment resulted in an end-of-treatment reduction in CRP and into-looking 6 levels below 1.65 nanograms per liter had an amazing risk reduction of no less than 36%. Patients who did not receive their IL-6 levels below this level at end of treatment correspondingly had no reduction in cardiovascular events. Encouraged by this, as well as the documented robust human genetic association between high IL-6 expression and ASCVD risk, we measured CRP and other surrogate markers of anti-inflammatory cardiovascular action in the RESCUE trial. We found immediate dose-dependent and sustained CRP reduction at all levels of zilti—in fact by 93% at the highest dose. Additionally, we saw reductions in a number of other cardiovascular inflammation biomarkers such as fibrinogen, serum amyloid A, and haptoglobin, as well as a decrease in the heart failure biomarker in terminal pro-BNP. The very encouraging data set we have for the zilti molecule in ASCVD should be seen in the light of zilti's ability to reduce inflammation in atherosclerotic patients at very low dose levels that is expectedly clinically safe. Thus, and unlike any other IL-6 blockers, we did not observe any clinically meaningful impact on neutrophils, platelets, liver enzymes, or cholesterol in the RESCUE trial. Currently, a Japanese phase 2 trial is ongoing, and a major pivotal phase 3 cardiovascular outcome trial is being planned for initiation in the second half of next year following phase 2 meetings with regulators. Please turn to the next slide. In the third quarter of 2020, several R&D milestones were reached, including the notion that we now have for the first time ever more than 40,000 patients active in clinical trials. Starting with our Semaglutide franchise, we've initiated a phase 3b trial investigating 1 milligram Ozempic in around 800 people with Type 2 Diabetes with Peripheral Artery Disease, also called PAD. The background for the trial is the finding of a significant 35% risk reduction in both peripheral and coronary vascular events in SUSTAIN 6. The PAD indication represents yet another example of how we seek continuous Semaglutide label expansions based on demonstration of efficacy and safety in areas of high unmet medical needs. Intriguingly, the first clinical trial has now been initiated for our first-in-class glucose-sensitive insulin. The trial investigates the safety, tolerability, pharmacokinetics, and dynamics of subcutaneously administered once-daily glucose-sensitive insulin. The target product profile for this molecule includes improved glucose control as well as the virtual elimination of hypoglycemic and other side effects seen with today's therapies. Another phase 1 trial that has just started investigates higher doses of oral Semaglutide with Type 2 Diabetes, aiming for oral Semaglutide to ultimately match the full efficacy level associated with even high-dose administration of injectable Semaglutide. Within biopharm, we've received approval of Somapacitan, now also known as Sogroya, in the US for adults with adult growth hormone deficiency. Also noteworthy within biopharm is the re-initiation of phase 3 clinical developmental activities for Concizumab, which is the subcutaneous prophylactic TFPI antibody treatment in hemophilia A/B patients regardless of inhibitor status. This follows the pausing of Explorer trials in March of this year related to the occurrence of non-fatal thrombotic events. A revised dosing regimen is now being deployed in the Explorer trials. Regarding the FVIII-mimicking antibody project, Mim8, we have, despite COVID-19 related fears of delaying phase 1, caught up with the timelines and are now in phase 2 in hemophilia patients. Within other serious chronic diseases, the NASH trial investigating Semaglutide in loose combination with the Gilead ACC inhibitor and FXR agonist has completed, and results will be communicated at scientific conferences during this call. Importantly within NASH, Semaglutide has recently been granted breakthrough therapy designation by the FDA. Breakthrough designation implies, among other things, that the FDA will work closely with Novo Nordisk to develop and hopefully approve Semaglutide expeditiously for the treatment of NASH. Looking towards the rest of the year and into 2021, we will soon initiate the phase 3 onwards program for once-weekly Icodec. Furthermore, there will be a number of exciting readouts—including sustained order, which is the investigation of Semaglutide 2.0 milligrams in Type 2 Diabetes. In obesity, we will be submitting Semaglutide 2.4 milligrams in both the US and EU. We accordingly expect the decision on the US submission by mid-2021 since we decided to use our priority review voucher for this application. So within obesity in 2021, we'll seek to have phase 3 initiation for our once-weekly combination product consisting of amylin 833 and Semaglutide, along with reporting of phase 1 results for the long-acting GDF-15 project. Lastly, within other serious chronic diseases, we will initiate phase 3 trials for both Semaglutide in NASH and the cardiovascular outcome trial for ziltivekimab.
Karsten Munk Knudsen, CFO
For the first nine months of 2020, sales increased by 6% in Danish kroner and by 7% at constant exchange rates. The gross margin was 83.8% compared to 83.6% in the first nine months of 2019. The increased gross margin reflects a positive product mix driven by increased GLP-1 sales and productivity improvements. This is partly countered by a negative impact from lower realized prices in the US. Sales and distribution cost increased by 4% in Danish kroner and by 5% at constant exchange rates. The increase in cost was driven by North American operations reflecting launch activities for Rybelsus and continued promotional activities for Ozempic. This is partly offset by lower promotional spend related to insulin. In International Operations, promotional spend is related to launch activities for Ozempic and Rybelsus and the continued rollout of Saxenda. The spend was impacted by COVID-19, resulting in lower activity and delays in promotional activities. Research and development costs increased by 12% in both Danish kroner and at constant exchange rates. The cost increase is driven by amortization of the product in review for Semaglutide and obesity in the third quarter of 2020. Increased activities within other serious chronic diseases are driving the cost increase following progression of the early pipeline within cardiovascular disease and stem cell projects. This is partly offset by lower spend within obesity care, driven by finalization of the Semaglutide obesity pivotal phase 3a program and COVID-19 impact on clinical trial activity. Administration costs remained unchanged in Danish kroner and increased by 1% at constant exchange rates, reflecting broadly unchanged spend across administrative areas. Operating profit increased by 6% in Danish kroner and by 7% at constant exchange rates. Net financial items showed a loss of around DKK 1.8 billion compared to a loss of around DKK 3.1 billion in 2019. Diluted earnings per share increased by 10% to DKK 14. Free cash flow was DKK 41.6 billion compared to DKK 32.7 billion in 2019. The increase was driven by higher net profit and favorable timing of rebate payments in the US. As Lars mentioned, our growth outlook for 2020 was updated on the 8th of October. Sales growth is expected to be between 5% and 8% at constant exchange rates. The guidance reflected expectations for continued global sales performance for the GLP-1 franchise, Ozempic, Victoza, and Rybelsus, the portfolio of new generation insulins, and the biopharm products. The guidance also reflects intensified competition within diabetes and biopharm, especially within the hemophilia inhibitor segments. Furthermore, continued pricing pressure within diabetes care as well as expansion of affordability initiatives, especially in the US, are expected to impact sales development. Given the current exchange rates versus Danish kroner, reported growth is now expected to be around 3 to 4 percentage points lower than at constant exchange rates with respect to sales and operating profit. The current COVID-19 pandemic causes uncertainty to the outlook regarding new patient initiations and societal impacts such as the unemployment rate in the US, which is impacting healthcare insurance coverage. The estimated annualized impact is now around 2% of US sales. Operating profit growth is expected to be between 5% to 8%. The updated outlook reflects savings due to COVID-19. The expectations for operating profit growth primarily reflect the sales growth outlook and continued investments in current and future growth drivers. Financial guidance is now expected to be a loss of around DKK 1.4 billion compared to a loss of DKK 1.2 billion in August 2020. This development mainly reflects losses from non-hedged currencies due to depreciations across several emerging market currencies. Lastly, we now expect free cash flow to be between DKK 34 billion and DKK 39 billion, reflecting higher net profits.
Lars Fruergaard Jorgensen, CEO
Thank you, Karsten. Please turn to Slide 17. We are very satisfied with the performance in the first nine months of 2020 despite the negative impact from COVID-19. More patients use our GLP-1 treatments and our diabetes market leadership continues to expand. Within R&D, an important milestone was reached with encouraging results from the phase 2 trial in cardiovascular disease with ziltivekimab, the lead candidate from Corvidia Therapeutics acquisition earlier this year. With that, thank you and we're now ready for the Q&A, where I kindly ask all participants to limit themselves to two questions. Operator, we're now ready to take the first set of questions.
Operator, Operator
Wimal Kapadia from Bernstein. Please go ahead.
Wimal Kapadia, Analyst
So just a few for Mads, please. Can I ask about the balance, how do you think about the balance HbA1c control and tolerability for the GLP-1? So firstly, what in your mind what HbA1c level do you see incremental increase is less relevant given the impacts on vascular complications start to slow down, and you know the majority of patients under glycemic control? And then secondly what level of nausea, diarrhea, vomiting levels do you believe tolerability consensus outweigh incremental HbA1c control? So what I'm really trying to get is a sense of balance between these two prescribing drivers and both from the patient and the physician side whilst taking into account the compliance and adherence. And then my second question, you now started the glucose-sensitive trial which complements the weekly and insulin 965 which targets micro and macrovascular complications. But how should we think about these three novel incidents in the context of what we're seeing in the base market today. What gives you confidence that these products will actually raise the bar enough to make a difference in what is a very challenging market? How should we think about the return on investment of these products? And then just a very quick one, tied to that what is Insulin 147, I've never heard of that one before. Thank you.
Mads Krogsgaard Thomsen, Chief Science Officer
Well, Wimal, the last one, first. It was a hybrid molecule that had dual activities, but you shouldn't concern yourself about that one anymore for the time being. But more focused on the GSI insulin and the cardio-protective insulin and the, not the least of course, the Icodec insulin entering phase 3. But it's a longstanding debate the kind of correlation between A1c control and cardiovascular risk and what level is okay. And I think it's suffice to say that the most ambitious A1c guidelines, namely the American Academy of Clinical Endocrinology (ACE), have a 6.5% in A1c target, and they have derived that from the notion that when you go much beyond or below 6.5 in A1c, there is very little contribution of glycemia or hypoglycemia to the expected advent of major adverse cardiovascular events or macroangiopathy. Likewise for microvascular complications. So I would argue that for a patient who's anywhere in a range of 6.5%, you would have to weigh up against the tolerability profile any glucose decrement below that level. That being said, of course, if you can achieve normal glycemia such as for instance with glucose-sensitive insulin without any risk of GI tolerability or hypoglycemic issues, then that is a desired state—then you're basically having a diabetes-normalizing molecule. I would say that the balance between if you're talking about GLP-1 therapies and tolerability vis-à-vis the efficacy. I think we feel that at the tolerability levels we're seeing for our Semaglutide molecule, including what we're seeing at the 2.4 milligram dose in obesity in the STEP program, we've seen single-digit level dropouts because of GI tolerability concerns and very high satisfaction with the therapy. Health-related quality of life, as estimated by ACOLYTE or SF-36, was increased at 2.4 milligrams; hence, I can say here we have a good balance between GI tolerability and efficacy. If you go much beyond that, I'm afraid it starts to be a different situation because then the patients like might be too often troubled by nausea and the likes. But that's not what we've seen. So I think that more or less covers it. In terms of the selling glucose-sensitive insulin, if you can achieve better glycemic control, that will be put into the core and other models of health economic outcomes and actually drive greater efficacy and more bang for the buck for the payers, and if you're on top of that reduce the risk of side effects, you actually have a pretty interesting molecule also from a payer perspective.
Wimal Kapadia, Analyst
Thank you very much.
Lars Fruergaard Jorgensen, CEO
Thank you, Mads. Thank you, Wimal. Next set of questions please.
Operator, Operator
The next question comes from the line of Peter Sehested from Handelsbanken. Please go ahead.
Peter Sehested, Analyst
Thank you for taking my question. I've one on obesity and just a follow-up question. I mean now that you spend review onset. You're very close to launch so Camilla there, if whether you could provide some further comments on how many physicians are actually prescribing obesity drugs in the USA today and what is your target for year one post-launch and also year three post-launch and where you're in your preparations in order to - how have you prepared authorities in terms of reimbursement etc.? Just for us to gauge how fast the uptake could be, so that is the first question. If I have to select a second one, it would be respect to the glucose-sensitive insulin you are saying that you have phase 1 data next year. Typically you'll be in phase 1 quite some time from your previous molecule. Could you confirm that you're planning to start phase 2 relatively shortly after that? Should we expect that to take a little bit longer? Thank you very much.
Lars Fruergaard Jorgensen, CEO
Thank you, Peter. So first, Camilla on obesity and the level of disclosure we can and also, we can give targets about the number of prescribers after one or two years. But any comments on that? And Mads then on glucose-sensitive insulin speed of going to next phases.
Camilla Sylvest, Executive Vice President, Head of Commercial Strategy and Corporate Affairs
Thank you, Lars. So what we can share is that in terms of progression for the launch and for obesity in general, we're looking at the number of prescribers and it is very clear that for obesity, of course, to be realizing the significant potential that it has for the future, we need to be looking at more prescribers than we have today, so that's a clear focus of ours and we can support with a lot of education in the area. Another focus area of ours is of course the number of people seeking treatment. So here we know that with 650 million people suffering from obesity, only a fragment of those actually seek treatment. We estimate around 10%. So in both of these areas, the significant potential is basically now when we will be launching Semaglutide 2.4, which has twice the benefits in terms of weight loss as Saxenda.
Lars Fruergaard Jorgensen, CEO
And I think it's also encouraging to see that we actually now have this new, nice endorsement of Saxenda in the UK. So I think we're making progress and actually being able to articulate the value of treating obesity and obviously, this is based on Saxenda; then one can only believe Semaglutide can do. Mads, over to you on glucose insulin.
Mads Krogsgaard Thomsen, Chief Science Officer
Yes, so what you do, Peter, is the usual story. You start with single ascending doses and then you move onto multiple ascending doses. You typically in an insulin trial will always meet a comparator, and that comparator, if it's a glucose insulin intervention, what you want to document that is truly glucose sensitive—you have to go up against the comparison with least documented hypoglycemia risk to prove even further benefits, and that in this case is insulin degludec. And the way that you can assess, for instance, the risk of hypoglycemia is by forcing the patients with tripling the insulin dose into what could be severe hypoglycemic conditions had they not been in a hypoglycemic clamp situation where you can save them at any pre-defined glucose level and then you can simply measure, do they go down there or do they level off at a safe level without risking your therapy. This is the kind of trials we're doing, they're ongoing as we speak, and of course moving into phase 2 from thereon, we'll do as fast as possible.
Lars Fruergaard Jorgensen, CEO
Thank you, Camilla. Thank you, Mads, and thank you, Peter. Next set of questions, please.
Operator, Operator
The next question comes from the line of Martin Parkhoi from Danske Bank. Please go ahead.
Martin Parkhoi, Analyst
Two questions, first on IO. One of your competitors mentioned yesterday that there was some weakness in out-of-pocket markets outside North America. Is that really visible in your IO numbers on the safe? Are you seeing small signs of that and is this something that we should expect to escalate going into 2021? And then just on GLP-1 pricing, US economy standard you will not give any hard numbers on where the pricing are this year, next year. But just conceptually if we look at what Lilly said earlier this week and if I look at, I guess that your net pricing, if you adjust for a bit closer true up, then it's maybe down 10% in the third quarter, that is slightly more than Lilly. Can you maybe discuss conceptually why is that given that it appears that your segment mix changes are much more favorable than Lilly?
Lars Fruergaard Jorgensen, CEO
Thank you, Martin, for those two questions and let me try to give it a shot. In IO, we're not really seeing anything that is a measurable impact of lower out-of-pocket pay. You know we have good momentum both with the insulin and GLP-1 and we have the market set strategy that's still pulling through. So we’re encouraged by the growth levels we see in IO. To the US GLP-1 pricing, what we see in Q3 is a continuation of what we have seen in the first and second quarter of this year, so we don't really see much change. It's a market with very attractive volume growth. We're down to 8% of patients using GLP-1. We see differentiation in the market, so it's really a market that's driven by the launch of new products, which is fueling growth and preference. And the pricing impact from year-over-year enhancing rebates levels a bit to stay on an open formula, there's legislative impact we see in Medicare now. And then getting to your point about channel mix and maybe portfolio being unchanged for us, as a function of the differentiation of products in the market, you of course have dynamics where brands, as they grow older in the categories, have broader access and get into lower price points. And as new products are launched, typically they start at the high end of the market. You of course have different players who will have different quality of a book of business over time, and that dynamic will probably change a bit between the competitors, but we don’t see any significant over the quarters. So what we communicate here is a stable situation compared to what we've seen in prior quarters. Thank you, Martin. Next set of questions, please.
Operator, Operator
The next question comes from Simon from Exane. Please go ahead.
Unidentified Participant, Analyst
I've got two; I think they're mainly for Mads. But you didn't discuss it in the presentation, but I'm just wondering if you could maybe give us an update with respect to your intention or otherwise whether or not you learn back on the phase 3 program for semaglutide in Alzheimer's. With that, with the data is set to be published next Friday, I believe would you like to urge caution to over interpret that what we should see and just what your view is around that would be very helpful. Thanks. And then the second one is, just a broader discussion on obesity. Obviously, you got the recommendation from NICE which is positive, but still in the US it remains somewhat elusive. I'm just wondering if you could help us understand how negotiations are going there with the authorities, and if it does remain elusive the rationale to really use your product to review voucher for semaglutide obesity. Thank you.
Lars Fruergaard Jorgensen, CEO
Simon, first Mads on potential start of phase 3 in Alzheimer's.
Mads Krogsgaard Thomsen, Chief Science Officer
Yes, well, I'll essentially repeat I think what I also may have answered last time, being Novo Nordisk is looking at the aggregated burden of evidence of lack of such in terms of favoring entry with Semaglutide into a phase 3 trial in Alzheimer’s Disease/Mild Cognitive Impairment. In that regard, one has to look at whatever exists out there, including the lab study. But by no means do I think the lab study is the solution to all questions in that field for one of the reasons. But it will be, of course, interesting to see those data, which I believe is next weekend. One also has to look at the aggregated data sets that exist from meta-analysis, as you know we have done from registry-based studies and from pre-clinical studies and then make up one’s mind about such a decision. It is, of course, a big decision to go phase 3. But that also means that one has to have all the pertinent considerations ahead of that decision.
Lars Fruergaard Jorgensen, CEO
Thanks, Mads and Camilla on obesity.
Camilla Sylvest, Executive Vice President, Head of Commercial Strategy and Corporate Affairs
In the US in general, there is 70% access in the commercial segment to obesity care. But what we're really focusing on is to make sure that also employers opt into this because in reality the real access is only 20% when we take this into account. So this is, of course, where we're putting our focus. For the longer term, we will also be focusing on the TROA, Treat and Reduce Obesity Act; of course, that potential will give access to Medicare over time. But this small related on political decisions. Right now, of course with semaglutide having, as we talked about before, twice the effect of Saxenda, there is also sustained potential for longer stay time as we see that the weight loss continues up until 60 weeks, as we see from our STEP program. So in terms of that, the earlier we can get Semaglutide 2.4 to the market, the earlier we can realize the potential of the obesity franchise.
Lars Fruergaard Jorgensen, CEO
Thank you, Camilla. Thank you, Mads and thank you, Simon. Next questions please.
Operator, Operator
The next question comes from the line of Simon Baker from Redburn. Please go ahead.
Simon Baker, Analyst
Two for Mads from me. Firstly on zilti, the lipid profile or lack of negative effect is impressive and unusual, Mads. So I just wondered if you had any thoughts on why you're not seeing a negative effect where others have. And secondly, there was an interesting case report in the New England Journal a couple of weeks ago about the use of ruxolitinib for essentially reversing type 1 diabetes. I'm interested in your thoughts generally about the potential for JAK inhibition in type 1, is this something that you looked at before whether you think there's any mileage in this? Thanks so much.
Mads Krogsgaard Thomsen, Chief Science Officer
In relation to zilti and the favorable biochemical profile we've observed in the RESCUE trial, there are two key factors to consider. First, since it acts as an IL-6 ligand without interfering with the IL-6 receptor signaling complex, we are not disrupting other cytokine signals. Additionally, we have identified a dose as low as 50 milligrams, corresponding to a daily dose of 0.5 milligrams due to the monthly dosing schedule. This low and potent dosage seems to produce intravascular and cardiovascular anti-inflammatory effects without allowing a significant number of antibodies to penetrate peripheral target tissues and the immune system, potentially resulting in less impact compared to other IL-6 blockers. While I can't guarantee this will be validated in phase 3 trials, the data we currently have suggests an encouraging benefit-risk profile for this compound. We are pleased with both the acquisition and the project's progress. Regarding JAK inhibitors and treatments for type 1 diabetes, although we've invested significant effort in this area, including anti IL-21 antibodies with promising phase 2 data, we've chosen not to advance at this time. Any treatment aiming to reverse the autoimmune process that attacks beta cells must be quite powerful, which inevitably introduces the risk of side effects. Thus, the benefits will accompany risks. I believe the next significant advancement in type 1 diabetes is likely to come from regenerative medicine, such as beta cell replacement, which is actively being pursued in late-stage research by our team and several other companies.
Lars Fruergaard Jorgensen, CEO
Thank you, Mads. Thank you, Simon. Next question, please.
Operator, Operator
The next question comes from the line of Steve Scala from Cowen. Please go ahead.
Steve Scala, Analyst
I have two questions, both for Mads. Mads, when you see the first Lilly phase 3 data later this quarter, what specific aspects will you be most interested in, and could you share any statistical methods Lilly might use to present the data positively? My second question is related to our tracking of clinical trial activity during the pandemic, which indicates that Novo trials currently recruiting are down 20% year-to-date. This decline is twice as severe as the next closest companies and ten times worse than the average company. What do you think is causing this? Is it due to the therapeutic areas you are involved in, geographical factors, or something else? Thank you.
Mads Krogsgaard Thomsen, Chief Science Officer
I can't provide insights on how Eli Lilly conducts their physical analysis related to specific conditions. That discussion will involve regulators and other relevant parties. As a clinician, my focus is on the balance between efficacy and side effects. It's clear that one can achieve various outcomes with a medication, but if it results in severe side effects like constant vomiting, which might mimic fasting, that's not an acceptable way to reach positive health outcomes. We need to define the overall benefit-risk profile, which we've addressed previously, and I believe we've achieved that with Semaglutide in both its injectable and oral forms at previously discussed dosages. We'll need to await further data to make more informed speculations, particularly for our interests. Regarding clinical trials, I don't fully agree with your assessment. We're following various therapeutic areas, including diabetes, and have currently engaged over 40,000 patients in active trials. The longest delay we've encountered in any ongoing trial is a maximum of three months based on current evaluations. We've implemented several remote contact tools for effective communication between investigators and patients, as well as methods for remote source data verification through newly developed applications. We're proud of our ability to enhance our portfolio and patient involvement despite the challenges posed by COVID-19. One reason for this success is our team of 2,000 clinical research associates worldwide, who are dedicated and collaborate closely with our headquarters to adopt these innovative remote tools, allowing us to conduct virtual trials, potentially even next year, while navigating the ongoing pandemic and progressing our pipeline.
Lars Fruergaard Jorgensen, CEO
Thank you, Mads. Thank you, Steve, for those questions. Next questions, please.
Operator, Operator
The next question comes from the line of Peter Verdult from Citi. Please go ahead.
Peter Verdult, Analyst
Three questions, Lars, regarding potential US drug price reform. We're all aware that net pricing is off the table, which is disappointing considering the health committee's efforts. The one bill that almost passed this year was about co-pay caps. Regardless of the outcome next week, I would like to hear Novo's perspective on co-pay caps as a possible solution to the fundamental problem of reducing antibody costs. Camilla, I apologize for shifting to commercial strategy. I won’t ask for an internal year one forecast. However, I would like to understand how you view the opportunities. The numbers are substantial, the data is promising, but the prescriber base and reimbursement are lacking. We haven't addressed that Saxenda's daily list price exceeds $50, which is not ideal. I'm curious if you believe that with a drug known for its significant efficacy, you might be able to price it in a way to develop this market. Furthermore, considering you have a single-dose device, does this provide an opportunity to quickly grow the prescriber base and improve reimbursement by introducing lower prices? What are your general thoughts on maximizing the commercial potential in obesity? Thank you.
Lars Fruergaard Jorgensen, CEO
Thank you, Pete. So I'll refrain from going into much detail about the US elections and what could happen. I can only observe that a lot of ideas have been on the table, but it's quite difficult to make significant intervention in a rather complex and gridlocked US healthcare system. We are launching a portfolio of competitive products. We have an inhibition of converting incentives in our business to innovative products, and as such conduct business based on clinical differentiation and real need and demand in the market. I think that's the strongest position to have in any market, and I'm not saying we'll be immune to all kinds of interventions. But that means that there'll be an underlying way to use our innovative products, and I feel comfortable that we can compete and also be successful from a financial point of view in most of these potential interventions. So we have to wait and see what the political system can agree on, in a market that's largely private and hence not that prone to regulation.
Camilla Sylvest, Executive Vice President, Head of Commercial Strategy and Corporate Affairs
Yes, so just to reiterate, we have on the general market expansions, we're working on four dimensions, so one is about having obesity recognized as a disease, and this of course will be extremely important for reimbursement down the road. We're also working on the number of patients seeking treatments. Just before, I mentioned that right now, only 10% of patients living with obesity seek treatment. But when they then go to the physician to get treatment, actually the big majority of those are sent back without any treatment other than exercise and eating suggestions. So both on these dimensions, we can work on, with education and with that hopefully also get some more persistent prescribers of obesity medication. It's clear that many of the people suffering from obesity also have a number of comorbidities that from a health economic point of view give rise to us discussing with payers like we've just done with NICE in terms of the cost-effectiveness of better treatment, and it is in this perspective that Semaglutide 2.4 of course has an even bigger impact than what we've been used to with Saxenda. So these are the dimensions that we are working on to realize our long-term strategic aspiration that we've communicated at our last Capital Market's Day. Of course, reimbursement is important, but it is also a very patient-driven disease that we're talking about here. So it is not a pre-reconceived for us to realize our ambition. But of course it is something that we keep working on. When it comes to the price, as you know from other launches we've done, we will only communicate around the price by the time that we launch.
Steve Scala, Analyst
Thank you.
Operator, Operator
And the next question comes from the line of Michael Lofton from UBS. Please go ahead.
Unidentified Participant, Analyst
Two questions please. One, just bigger picture patient footfall. Lars, I assume the last couple of quarters you given us some steer on what your underlying assumption was for normalization of patient footfall. I guess we all thought we were going to get back to normal this year. But we had lockdowns coming again. So what's your assumption on the shape of the footfall, the patient footfall recovery as we head into the end of the year and then early next? And then my second question is, on Rybelsus sequentially third quarter, the product was light relative to where consensus was. I guess we've all been sitting here trying to use the prescription data and assume realized price, and it came in a little bit light. So as we look at Q3 over Q2, other than the COVID impact and the area under the curve, is there anything else we should keep in mind as we think about the fourth quarter and trajectory into 2021? Thank you.
Lars Fruergaard Jorgensen, CEO
So first Karsten on what to expect in terms of or what we have assumed in terms of patient flow or patient normalization.
Karsten Munk Knudsen, CFO
Yes, thanks for that question, Michael. And as you know, predicting a pandemic and how it rolls across the globe has proven to be difficult, around first, second, third wave. I think what has been encouraging for us to see is the resilience of our total script based and I would say the slightly smaller impact from a lower indirect space and lower indirect impact, and you saw from the initial slide that Lars showed on COVID, that we see a direct trend improving over the past quarters. What will build into a modeling is that we see a continuation of our direct transfer, but needless to say there is uncertainty around how COVID will impact our business over the coming quarters until a vaccine is generally available. So that's why we're also operating with a broader range at this point than we normally do.
Lars Fruergaard Jorgensen, CEO
Thank you, Karsten and just initially on Rybelsus performance, we're very pleased with the launch we're making and the reception of the product. The trend we see in terms of scripts. So let me just make that comment upfront, and then Camilla, maybe a bit more caveat on that.
Camilla Sylvest, Executive Vice President, Head of Commercial Strategy and Corporate Affairs
Yes, so today we have over 33,080 new prescriptions in Rybelsus and we're actually back to the number of new 80-piece prescribing Rybelsus as we were before COVID-19 impacted us all. So we have more than 900 new prescribers per week on Rybelsus. We also have all districts in strike mode and as you know our access is around 85%. So also our expansion of the classes is working as we had planned for, meaning that more than 80% of the new scripts are coming from outside the GLP-1 class. And then you would also notice that the most recent numbers on our Rybelsus scripts are—where we estimate that approximately half of those are still impacted like our co-pay or voucher offering. So just to keep that in mind when you do the numbers. And then on the 21st of September, we launched our new campaign, 'Wake up to the possibilities with Rybelsus,' and we saw that there was an immediate increase to business on our rybelsus.com website following this. So at last we are very encouraged by the launch of Rybelsus.
Lars Fruergaard Jorgensen, CEO
Thank you, Camilla. Thank you, Karsten and thank you, Michael. So next set of questions please.
Operator, Operator
The next question comes from the line of Sachin Jain from Bank of America. Please go ahead.
Unidentified Participant, Analyst
It's actually Mark, thanks for taking my questions. To start off for Karsten, I'm thinking about 2021. While there's no official outlook for next year yet, could you discuss at a high level the drivers for sales growth compared to the current 6-7% run rate? You previously mentioned coverage affordability initiatives impacting the existing 12% run rate, so any updates or insights there? Also, can you provide any directional commentary regarding margins for next year, particularly on how we should consider an SG&A cost rebound following the COVID savings this year and potential R&D growth due to several phase 3 starts? My second question is about semaglutide for NASH. Have there been any early regulatory discussions that may have changed your view on using surrogate endpoints for faster filing, and when could the earliest filing occur? Lastly, regarding Elad and your earlier comments on decisions progressing to phase 3, have you convened an advisory board to discuss the options? When do you expect to make a decision and how will you communicate that to the market? I understand we might not hear anything next week. Thank you.
Lars Fruergaard Jorgensen, CEO
Thank you, Sachin. First, Karsten, while we do not guide for next year, some high-level comments.
Karsten Munk Knudsen, CFO
Thank you, Sachin, for your question. As Lars mentioned, we will provide our 2021 guidance alongside our full year results in February. Our starting point, reflected in our current numbers, indicates an underlying run rate of about 6% to 7% in our base business. The main drivers for this performance are expected to remain consistent. We anticipate ongoing strong tier 1 performance globally and solid growth from IO, while the US continues to transition to recently launched products. As discussed during our Capital Markets Day, we are aiming for a growth range of 6% to 10% over the next five years in IO. This year, we have seen good traction, even exceeding that range. We hope to maintain a solid performance in IO within the same range next year. Regarding the US market, while we will not face some of the challenges we encountered this year, there are still factors impacting sales, including a modest effect on channel mix and an annualized 2% downturn in US sales. And finally, we observed that sales this year in our growth business were influenced by supply issues with competitors, but we do not expect this to persist into next year. Additionally, factors like COVID-19 and potential segment challenges add more uncertainty to our outlook. Regarding margins and profit and loss, with over 40,000 patients currently in clinical trials and approaching the 50,000 mark, we will be investing more in research and development while also implementing various efficiencies in this area, including running our clinical trials. Our investment in R&D will increase and align with what we communicated a year ago at our Capital Markets Day. In sales and distribution, we will continue launching new products, including Ozempic, which is currently in about 50 markets, and Rybelsus, which is in roughly 10 markets. Therefore, we have a significant number of upcoming launches. Concerning savings this year and into next year, we do expect some savings based on lessons learned, especially since COVID-19 has not been fully resolved in 2021. Lastly, regarding gross margins and the cost of goods, we are scaling up our manufacturing facility in Clayton, North Carolina for Semaglutide. With initial volumes at 100, you can anticipate a negative mix impact from Rybelsus compared to this year's performance.
Lars Fruergaard Jorgensen, CEO
Good, thank you, Karsten. Then you can do all the modeling, all of you. Mads, quickly on Semaglutide NASH.
Mads Krogsgaard Thomsen, Chief Science Officer
First, the last question is quietly yes, we've had advisory board meetings. We have discussed the potential profile of GLP-1 Semaglutide in that disease and no, we're not connecting any kind of potential communication in the area to the presentation as we have described previously. It's a multitude of data gatherings that will form the basis of such a potential decision. In regards to surrogates for NASH, I'm a strong believer in a combination of using, for instance, FibroScan, and one of the other biomarkers in conjunction to actually diagnose and follow the prognosis of NASH treatment; however, as it stands today with the FDA and with the EMA, with whom we've had meetings, otherwise you cannot be granted a breakthrough designation. There we have actually agreed that it will be biopsy-based in phase 3. However, it may not be in the trial that the entirety of the population has to have reported 72-week biopsy results at the time of the NDA submission. So there are some gives and takes there. But we think we're on the way to a very robust trial design with a single pivotal trial and a 72-week readout followed by an extension where you seek to gather benefits of the drug post-marketing.
Lars Fruergaard Jorgensen, CEO
Thank you, Sachin. This concludes our conference call. Thank you for participating and for your interest in Novo Nordisk, and do feel free to contact our Investor Relations officer should you have more questions. Thank you and have a great day.
Operator, Operator
This now concludes the conference call. Thank you all for attending. You may now disconnect your lines.