Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 Novo Nordisk A/S Earnings Conference Call. [Operator Instructions]. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speaker today, Lars Jørgensen. Please go ahead. Lars Jørgensen: Thank you very much. Welcome to this Novo Nordisk conference call regarding are for performance in the first 9 month of 2019 and our outlook for the year. I'm Lars Jørgensen, the CEO of Novo Nordisk. With me, I have our Chief Financial Officer, Karsten Knudsen; and our Chief Science Officer, Mads Thomsen. Also present and available for Q&A session are Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Sylvest; and Executive Vice President and Head of International Operations, Mike Doustdar; as well as our Investor Relations officers. Today's earnings release and the slides for this call are available on our website, novonordisk.com. The call is scheduled to last for 1 hour. The presentation is structured as outlined on Slide 2. Please note all sales and operating profit growth statements will be at constant exchange rate, unless otherwise specified. The Q&A session will begin in about 20 minutes. Please note that this conference call is being webcasted live and a recording will be made available on Novo Nordisk website. Please turn to Slide 3. As always, I need to advise you that this call would contain forward-looking statements. Such forward-looking statements are subject to risk and uncertainty that could cause actual results to differ materially from expectations. For further information on the risk factors, please see the earnings release and the slides prepared for this presentation. Please turn to the next slide. In the first 9 months of 2019, sales increased by 9%…

Thank you, Lars. Please turn to Slide 12. On the 20th of September, the U.S. FDA approved Rybelsus, the world's first GLP-1 in a tablet as an adjust to diet and exercise to improve glycemic control in adults with Type 2 diabetes. Rybelsus is approved for use in 2 therapeutic dosages, 7 and 14 milligrams. The Rybelsus approval was based on the cradle-to-grave treatment approach enabled by the complementarity of the many trials included in the PIONEER program, including almost 10,000 adults with early, mid- and late-stage Type 2 diabetes. Rybelsus demonstrated clinically meaningful and statistically significant reduction in HbA1c compared to the leading oral antidiabetic agents, sitagliptin and empagliflozin. In addition, Rybelsus showed an up to 4.4-kilogram reduction in body weight, more than seen with, for instance, the injectable GLP-1 comparator drug. Furthermore, Rybelsus demonstrated a self -- safe and well-tolerated profile with the most common adverse events being mild to moderate nausea which diminished over time consistent with the results from the injectable GLP-1 receptor agonists. The cardiovascular trial, PIONEER 6, supported a safe cardiovascular profile of Rybelsus with 61 major adverse cardiovascular events compared to 76 in the standard of care arm. In March 2019, a separate NDA for cardiovascular indication within Type 2 diabetes was submitted to the U.S. FDA with the regulatory feedback in the first quarter of next year, expectedly at the same time as for the CV indication for Ozempic. We're very excited that we can make the first oral GLP-1 receptor agonist available in the United States, and we're now initiating the specialist launch while the full commercial launch is expected as early as possible in 2020 pending commercial access. Oral semaglutide is currently being reviewed by the European and Japanese agencies with expected feedback in the first half and midyear of…

Thank you, Mads. Please turn to Slide 15 where you see the financial results for the first 9 months of 2019. As mentioned, sales increased by 9% in Danish kroner and by 5% at constant exchange rates to DKK89.6 billion. Lower realized prices in the U.S. and impairment of intangible assets negatively impact the gross margin, only partly offset by favorable product mix and currencies resulting in a gross margin of 83.6%. Sales and distribution costs increased by 5% reflecting resource allocation to growth markets in International Operations, promotional activities for the global GLP-1 and obesity franchises as well as prelaunch activities for Rybelsus in the U.S. Research and development costs declined by 6% explained by impairment of intangible assets, offset by reversal of write-downs on prelaunch inventory for oral semaglutide in the first quarter of 2019. The underlying developments reflects completion of the PIONEER program for Rybelsus and the head-to-head study between Tresiba and insulin glargine U300 in 2018, countered by the ongoing obesity clinical programs, STEP and SELECT. Administrative costs increased by 3% at constant exchange rate. All in all, the sales growth at constant exchange rates resulted in an operating profit growth of 5%. In reported numbers, operating profit increased by 11% to DKK40.6 billion. The tailwind from currencies on profit is countered by a loss of around DKK3.1 billion on net financial items driven by losses on foreign exchange hedges relating primarily to the U.S. dollar. Diluted earnings per share increased by 2% to DKK12.68. Please turn to Slide 16 for the financial outlook. The solid financial performance in the first 9 months has led us to adjust our full year outlook. For 2019, we now expect sales growth to be between 5% and 6% measured at constant exchange rates. The guidance reflects the expectations for…

[Operator Instructions]. And the first question is coming from the line of Wimal Kapadia from Bernstein.

Wimal Kapadia from Bernstein. So could you just briefly give us more detail exactly what was driving the impairment this quarter? And how the DKK1 billion is split between R&D and COGS? And then tied to this, if I assume DKK500 million reduction for both, is it just an underlying R&D margin of 10% and a COGS margin of 15%? Is there any specific reason the spend was lower this quarter? Or should we think of these margins as a possibility moving forward even if only for a few quarters within a given year? My second question is on Saxenda. Clearly, the product is doing very well. Can you just talk a little bit about how long patients are staying on the drug and how this period has evolved since the launch? And then how long do you expect the average stay time on sema to be within obesity? Lars Jørgensen: Thank you, Wimal. Karsten, firstly on the write-down.

Yes. So we have had DKK1 billion in impairment in the third quarter, as you note, Wimal. Impairment in pharma and biotech is not unusual. I think it carries some interest with us because of the way we report our numbers in a transparent way, so we don't have the split between core and noncore earnings. So again, it's not unusual. We've also had impairments previously. What is slightly unusual in a Novo Nordisk context is that we have more impairments in the individual quarter, but that is a pure coincidence. You're perfectly correct in terms of the split between R&D and cost of goods. The -- you could split the DKK1 billion roughly 50-50 between R&D and cost of goods sold. As to the implied margins, then, of course, you get to 2 different margins. On our R&D margin, we're still guiding full year for an R&D margin of 12%. The reason behind that is that we're basically in the valley between ramp-down of trials in '18, primarily the PIONEER program, and then ramp-up of a number of trials, SOUL, SELECT, FORTE, FLOW, et cetera. So no changes to the R&D ratio outlook. And the same goes for cost of goods. We're still guiding a reported 1 percentage point reduction in cost of goods on our gross margin ratio for the full year. Lars Jørgensen: Thank you, Karsten. Camilla, can you elaborate a bit on stay time?

Yes. Thank you. Lars. So on Saxenda, our stay time differs a little bit between countries, but it's generally in the range between 4 to 5 months. There are a few countries that are slightly lower than that, but in the U.S., it's around 5 months. With regards to semaglutide in obesity, I think Mads would just like to just give a few words on the update of that.

Yes. Our understanding from the research and the investigations we do with the specialist in the area and our investigators and so on, that for semaglutide, there are these three factors that will contribute to a longer stay time. And the first and quite clear one is the greater efficacy. So when you have greater efficacy, the block compared to Saxenda is what we expect in the STEP program, this lessens the propensity of the individual patient to shy away or discontinue the product. The other one is, of course, the convenience element, that this is given once weekly instead of once daily, so it's less of a hassle in the patient's life. And the third one is that the trials are ongoing for 6 to 8 weeks. That includes a titration phase followed by 52 weeks of steady-state phase. And since we're in Phase II, so there was a constant and ongoing active weight loss even into the last week of the trial, that should also mean that the patient experience benefits for at least the first year or so of therapy. But it remains to be seen how long the stay time will be, but it will be longer than for Saxenda. Lars Jørgensen: Thank you, Camilla and Mads. And thank you, Wimal. Thank you very much.

The next question is coming from the line of Peter Verdult from Citi.

Peter Verdult, Citi. Two questions, pipeline in China. Mads, firstly on PCSK9, can you talk a little more about your plans here? I mean no one expects you to be developing a stand-alone injectable PCSK9 given the market dynamics, but is this about codeveloping with GLP-1 in terms of an oral format or using new technologies, like lumi and sonas [ph]? Any light you're willing to shed there would be appreciated. And then secondly, just -- you've talked about why you've terminated 2023. But can you just give us a little bit more detail on the progress you've made on next-generation oral sema in terms of bioavailability? Anything we can get a peek into would be helpful there. And then, Mike, on China, hot topic in light of some companies making hay enough, getting smacks by volume-based procurement. Can you just remind us how you assess the risk from BDP to your current 15% growth rate in China? And remind of the time lines you're working to, to getting products like Tresiba, Ozempic and Rybelsus approved and reimbursed on the NDRL. Lars Jørgensen: Thank you, Peter, for those great three questions. First, Mads, on pipeline.

Yes. I'll take the two half questions. The one on the PCSK9 peptide, Peter, it's been designed in such a way that it is very potent, meaning that it can, in principle, go into formulation with any product in the pipeline since also it has a neutral pH value. And you don't need to fear overdosing it because all it can do is soak up the circulating PCSK9. And as we know from the genetic experiments of nature in mankind, that's not associated with any risk. So in principle, the product options are legal as the Romans would have said, i.e., offering the opportunity to reduce LDL significantly in patients whether it's with diabetes, natural obesity, cardiovascular and so on. It basically just offers the added benefit of cutting the LDL cholesterol in half. And we'll investigate those options and talk more to them once we have the data from these studies as soon as possible. And the 2023, sorry, yes. 2023, that relates to the fact that we have seen really nice data. You do recall, Peter, that we had 2 ongoing trials in parallel. One was the enhanced formulations of oral semaglutide, that is completed; and the other one was the new analog 2023. And with the benefits that we've seen vis-à-vis the formulation's impact on bioavailability, we see no need to further develop 2023. So we actually view this as a sign of success of the strong collaboration between the R&D colleagues and the product supply colleagues who are able to constantly upgrade, you can say, the performance of oral semaglutide. Lars Jørgensen: Thank you, Mads...

Sorry. Lars. Can I just push you on the degree of improved bioavailability you're seeing?

Yes. You can do so, but you won't get much of an answer. Sorry, Peter. We'll get back to that in a later stage. Lars Jørgensen: So Mike, on the procurement practices in China?

Yes. So the so-called 4+7 public procurement, it has had a very large impact, I think, on some of our peers. But I would say based on the current scope of the program, there will be limited impact on us as insulin is out of the scope at least for the time being. So we have to wait and see what happens with that. We could eventually, at one point or time, in the near future, get impacted in our NovoNorm sales there. But that, of course, is a smaller part of our business there. On your second part of the question, Peter, with regards to bringing new products in. We are hard at work. We have, as you know, already registered Tresiba and got it into the National Drug List effective 1st of January 2020. Right now, we are in recruitment of additional sales force, getting ready for that launch and expansion of Tresiba. We will be launching -- we have a registration for Ryzodeg, and we'll be launching that product also hopefully before the end of the year. It's anyone's guess when the list opens up again and we'll be able to bring Ryzodeg into the National Drug List. But when it does, then hopefully we're ready with that. And Ozempic, will follow that also in some years to come. But right now, we're doing quite well with Victoza. Lars Jørgensen: Thank you, Mike. Thank you.

The next question is coming from the line of Seamus Fernandez from Guggenheim.

So just a couple here. So for Mads, Mads, can you just give us a general sense of when and what we are likely to see from your novel incretin portfolio as well as kind of the combinations? My sense is, is that we're anticipating second half of 2020 to see data from your long-acting amylin, so just was hoping to get an update there as well as kind of what you're hoping to see in those trials to advance them into Phase III. And then the second question is on just the prospects for Rybelsus and timing of launches in international markets. The U.S. makes a lot of sense for Rybelsus, but pricing dynamics are quite different in international markets. Just hoping that you could give us a better sense of how you think about the opportunity for Rybelsus in areas like Japan, Europe. And I know that there were some discussion of China there as well. So just wanted to get a better understanding of the U.S. versus international opportunity for Rybelsus. Lars Jørgensen: Thank you, Simon. Mads, first.

Yes. So on the injectable portfolio of incretin-like projects, if we start with the most advanced first, that is obviously the combination between semaglutide and the amylin 833 compound. And those data out, as you correctly state, in the first half of next year. And based on what I know from preclinical experiments and the monotherapy over 7 weeks with amylin compound, they should be hopefully showing really good weight loss data since this is in obese people is taking place. So we'll get back to that next year. Then we have two agonist, a triple and a dual agonist ongoing in multiple dosing in Phase Ib, and that is, of course, the GIP/GLP-1/glucagon triple agonist and it's the GIP/GLP co-agonist. And those data are actually available later this year. And then finally, we're gearing up for using sema, which we perceive to be both the anchor drug in several diseases but also the anchor drug partner in new to-be combination products. And therefore, we also combining that expectedly with the once-weekly human GIP to optimize the ratio between these 2 incretins in the event that GIP actually turns out to play a role in human biology. That's still a bit uncertain at this point. Lars Jørgensen: Thank you, Mads. And Mike?

Yes. I can get the Rybelsus question. So we're awaiting regulatory approvals, both in Europe and Japan and hoping to get that done by next year. And there's no secret that we're also preparing ourselves for launches in both of these geographies, first and foremost. And I do hope that we will get a number of countries in Europe as well as Japan, hopefully, within the next 12 to 18 months' time. There is a huge potential for us regardless of which geography you look at as we are moving into an area we have not been competing before and the whole GP segment for us is going to be extremely keen to capture, so we are very excited about that. On the question on the pricing, I will not give you an answer today as we are too far away. And of course, here, we have to wait and see post approvals how each country negotiations will go, so more to that later on. Lars Jørgensen: Thank you very much. Next two questions, please?

The next question is coming from the line of Matthew Weston from Crédit Suisse.

It's Jo Walton from Crédit Suisse. Two questions, please. Firstly, we know that the 2019 changes in the donut hole were around DKK2 billion impact. Could you help us on what the impact will be for the known legislative changes for 2020? Presumably it will be slightly less, but still incrementally negative. And secondly, I wonder if you could comment on the ICER statement that came out today where they said that -- they somewhat changed their tune having previously said that oral sema would be cost effective. They now say that based on the list price and presumably their view, I don't know how educated that might be of discounts, but it was no longer cost effective relative to the SGLT-2s or not as cost effective as the SGLT-2s. Lars Jørgensen: Thank you, Jo. So first, Karsten, on the 2020 impact on known legislation.

Yes. So the known legislation related to the donut hole, which we have been public about earlier. The impact is 1% on group sales in 2020. And then, of course, it's also important to note that this will have an impact in terms of patient affordability, so the American government, they are actually pushing more cost to patients with this change. Lars Jørgensen: Thank you, Karsten. Mads, on the ICER?

Yes. First of all, Jo, let's just remind each other of the differences between a classic health economic outcome research analysis taking into account all the big landmark trial data that have emerged over time that typically predict what the societal cost of the burden of diabetic-linked complications will be over decades, 2 decades, 3 decades and so on. And those analysis are the ones that we have done with the impact -- metabolic impact of Rybelsus showing that over decades, this is clearly cost effective for society to use the product. This element is not really integrated in the ICER research, which just looks at the mere data as they are and the metabolic outcomes here and now. But as I understand the report, having not had really time to study it today, it is still the perception that I have that when it comes to sitagliptin and liraglutide, there seems to be cost effectiveness of Rybelsus. And then it's only when you look at the empagliflozin that they claim that not to be the case. But all that is said then, by the way, the discussions that our American team have ongoing with the PBMs, they're ongoing, and we'll keep you updated as they come to conclusion over time. Lars Jørgensen: Thank you, Mads. Thank you, Karsten. Thank you, Jo.

The next question is coming from the line of Sachin Jain from Bank of America.

Just two questions. Firstly, on U.S. GLP-1, the 15% delta between roughly what scrips are doing and your sales growth of 35% to 20%. How do we think about that delta into next year? And then second, just to pick up on Mads' last comment on Rybelsus payer access, just wonder if you could set expectations for CMD in a couple of weeks as to what level of granularity you'll be able to give us on Rybelsus payer access progression? Lars Jørgensen: Thank you, Sachin. Karsten, first on U.S. GLP-1 pricing.

Yes. So on U.S. GLP-1 pricing and the spread between the volume you see in the market data reporting and our reported net sales, It's important to note that the starting point that we have a category or segment, GLP-1 segment where we're growing 20% and a size to segment with the leading product portfolio. So that's, of course, attractive. The dynamics in 2019 between the volume and net are unchanged compared to what we're reporting in prior quarters. The only slight delta is explained by timing of list price increases between the years. So that's the dynamics. As to specific 2020 guidance, we'll provide that come February. Lars Jørgensen: Thank you, Karsten. And in terms of giving update on Rybelsus access, bear in mind that it's -- we're just now 1, 1 month plus into discussing this with payers, and so we're not going to be very elaborate on that on the Capital Markets Day. This is something that takes a bit of time to finalize. And we're having good discussions, but you shouldn't have expectations about something that's very granular when we come to the Capital Market Day. Thank you, Sachin. Next set of questions, please?

The next question is coming from the line of Michael Novod from Nordea Markets.

It's Michael from Nordea. One question to hemophilia, and just a bit of clear elaboration on NovoSeven and also how you see it going forward. Because your original guidance, taking into account HEMLIBRA was sort of the minus 50% over time and now seems to be stabilizing. So maybe you could just give a bit more flavor to how we could envision this development over the next couple of years? And then secondly, are you able now to start being more active on sort of direct marketing on Saxenda in obesity? Not thinking about the national TV commercials but more in terms of, say, select media, et cetera, where you go out and push more for this? Or are you still waiting to get your product on the market with better figures to really kickstart this? Lars Jørgensen: Thank you, Michael. On hemophilia, we are pleased with the development of our hemophilia franchise. We see that NovoSeven is slightly more resilient vis-à-vis HEMLIBRA than we probably had modeled. Part of that is that the inroad product takes a bit longer for HEMLIBRA. But we also see that there are still breakthrough bleeds that makes risk of treatment. And there's counterindications for FEIBA so that then NovoSeven is the choice. So NovoSeven holds up better, but we still believe that, over time, there'll be an erosion, potentially slightly lower than what we initially forecasted, but it's coming slower than expected. And I think it's important to note that our portfolio of hemophilia products is doing really very well, so Refixia being launched with nice uptake within the world. With NovoEight, we come from a, say, a low base, no base so to say, so it's additive to our business. And when you look at biopharm, Norditropin has also done very well in 2019, so we're quite encouraged with our ability to keep driving growth organically in hemophilia. And then Camilla, on Saxenda and ability to market that?

Yes. And I think the question also when -- whether we would do a DTC. Right now, with obesity in general and with Saxenda in the U.S., we are focused on a number of opportunities, but also barriers. So one of those, the first ones is, of course, the patients are actually seeking care. So actually, we noticed we have initiated a number of opportunities to collaborate with the companies that do behavior modification. That also should inform patients about how they can, of course, seek care for obesity like Saxenda, but also how they can improve their well-being in general. So combining these two things has shown us in pilot studies that they are, in 4,000 patients, that they are good results to achieve. And we will share some of these results also at our Capital Markets Day. That also means that the market is yet not mature enough for us to do direct-to-consumer marketing because of the barriers that we see still see in the system. So we are focused also rather than that to make sure that we can inform the health care professionals about obesity as a chronic disease. And when we have got momentum in both of these areas, so patients seeking care and the providers being able to provide the care, then the market will be more mature for DTC activities, but not at this point. Lars Jørgensen: Thank you, Camilla. Thank you, Michael.

The next question is coming from the line of Michael Leuchten from USB.

It's Michael Leuchten from UBS. So 2 questions. One, just going back to the impairment charge, please. If I look at the trend line of R&D, I don't really see R&D. In Q3 breakout, it's roughly 50% of the impairment charge, so I'm just trying to understand if DKK500 million or so are booked in that line, why we didn't see more of a step-up in the quarter? And then the second question for Mike. I think IO has outperformed expectations or the market expectation for quite a few quarters. It was driven partly by shipment and phasing in Q1 and Q2. Can we look at Q3, the 9% growth, as an underlying growth number? If there were shipments early in the year, what does that mean for Q4? And is Q3 then a good proxy for how we should think about 2020 onwards, and then plus, obviously, Rybelsus launch on top of that? Lars Jørgensen: Thank you, Michael. I think, Karsten, you had a quite elaborate answer on the impairment, but there was this underlying question on R&D spend. What can you...

Yes. So I think it's always tricky to go into the quarterly trending on the cost lines because there's so many factors going into it between trial initiation and trial close down and patient recruitment. So I would say compared to Q3 '18 -- and I'm sure you've got that, but do note that we have some DKK300 million in Q3 '18 in the comparator as the main outlier. I think just when you look at the first couple of quarters in '19, you see big volatility between Q1 spending and Q2 spending. So I wouldn't focus too much on Q3 versus Q2, but that's a quarterly fluctuation. And then we're into trial ramp-up come Q4. Lars Jørgensen: Thank you, Karsten. Mike, growth potential in IO?

Yes. So Michael, I think firstly, it's not doing justice to say timing is the reason why IO is doing well. I think we have said that the timing has been part of the reason for the underlying growth. I think when you try to see how IO and why IO is growing, then there's the good old underlying demographics, which we always have had and continue to have strong demographic growth and volume growth in IO. We have had improved commercial execution, which I have spoken to a number of times, where we simply are doing better, closing the calls and commercially improving on every single geography. And then that has come at a very good time where we're launching new products. So we have been blessed by getting really good products and then doing well with them in various different markets in different ways. And as a result of that, of course, we have had good results. I have spoken to two other elements: a, a bit of a quarter-by-quarter timing issues, that we have little bit of that; and then also no disruptions and no major disasters that has not happened to us and so on and so forth. So that is a little bit the reason for the growth having gone above historical numbers. If you take a look at the quarterly growth, then you also see that we started a little bit the year strong. And then as quarters go -- pass, then we have lower number growth rates per quarter, and you see that also in this quarter. But I would say that I do feel comfortable with a few percentage points, so around 9%, 9.5%, 10% growth, underlying growth for the full year this year. And as the rest of my colleagues don't speak to 2020, I cannot also speak to 2020. But it's going to be a pretty good year, and then we'll see what happens next. Lars Jørgensen: Thank you, Mike. And thank you, Michael, for the questions.

The next question is coming from the line of Richard Vosser from JPMorgan.

Two, please. Firstly, on the U.S. insulin market, basal and short acting. Perhaps you could highlight how you're seeing formulary access for next year. And how we should think about the pricing environment, whether it's similar to 2019, for 2020? And then secondly, just going back to the Tresiba opportunity in China. Perhaps you could give us some framing of that opportunity over the next couple of years relative to the sort of declines you're seeing in the U.S. market for basal insulin. Lars Jørgensen: Thank you, Richard. So for the U.S. insulin market, we expect roughly same access for Novo Nordisk going into 2020 as we have for this year. We're not, at this point in time, comment about pricing. That will be part of our full year release and our guidance for 2020. But it's clear, you can see that we have price pressure this year. When you add up all the 3 manufacturers, you see that the value of the insulin market declined double digit. So we have price pressure. We had that for some years, and that will also be the case for next year. Then, Mike, on the second question?

Yes. So the basal opportunity in China, I think if you take a look, we have had -- most of our growth historically in China due to insulin and primarily, of course, the premix insulin. NovoMix and before that, Mixtard, are two of the leading products in China, and we've done really, really well. What I think most people don't realize is that China has a very large basal market. So according to IQVIA, the Chinese insulin market is around DKK14 billion. The basal market is DKK5 billion, what I -- at least IQVIA covers. And then you can perhaps double that to get to the real numbers. Within the premix segment, which is only DKK4 billion, we have 77% market share. So we are really in a defensive mode trying to make sure that we can defend that and hoping then, of course, we get Ryzodeg eventually into the market and keep the defense on that high market share. Within the larger DKK5 billion market, then we only have 15% market share. And it's no secret that with now having Tresiba into the market with good access, we see a very large opportunity for us to capture market share in that large segment. So I'm very hopeful with the basal market share. And that's why we're also expanding our sales force in that front. Lars Jørgensen: Thank you, Mike. Thank you, Richard.

The next question is coming from the line of Charlie Pitman from Redburn.

It's Charles Pitman from Redburn. I have two, please. On Saxenda, how should we think about the sustainability level of strong underlying growth for the rest of FY '19 and going forward into 2020? And then secondly, what are your capital allocation priorities post the completion of your DKK15 billion share repurchase program? Are you thinking about initiating some more buybacks, M&A, dividend or product launches, or just supporting your product launches? Lars Jørgensen: Thank you, Charles. Camilla, overall on Saxenda growth?

Yes. Overall, on Saxenda growth, we still see continued strong growth, both in the U.S. but also outside the U.S. As you know, we're not guiding for next year at this point in time. But we do see, also in the U.S., that the general market, of course, is not developing as positively as our Saxenda is. And that means we keep taking share, of course, with Saxenda, but our focus also remains to build the market and grow the market. Lars Jørgensen: Thank you. Capital allocation, Karsten?

Yes. On capital allocation, then we are returning the free cash flow we generate this year more or less 1:1 to our shareholders between dividends to the tune of DKK19 billion and share buyback of DKK15 billion, so DKK34 billion in total. We have traditionally updated our -- or renewed our share buyback approach in connection with our full year results. And I will also cover our capital allocation approach at our Capital Markets Day. So rest assured that we'll be very focused on returning free cash flow to investors. Should we -- or when we will have M&A or BD activities? Then given our balance sheet, we do have the option to use our balance sheet to do some leverage and continue to be a strong cash-returning company. Lars Jørgensen: Thank you, Karsten. Thank you, Charles.

The next question is coming from the line of Jordan McConnell from Deutsche Bank.

This is Jordan McConnell from Deutsche Bank. So just the first question. Just coming back to GLP-1 franchise price in the U.S. I'm wondering if you can just talk about your ability to take future list prices increases here just given the current political environment. And then secondly, I was wondering if you could just talk about your -- show the investment priorities in the fourth quarter just given some of the base effects in the prior year and also your guidance for the full year. Lars Jørgensen: Thank you, Jordan. So on GLP-1 price and ability to take price increase, I do not really want to comment on that. We -- the ability in the industry in general to take price increase is lower in this environment where there's lot of focus on pricing. But it -- I think it differs largely, of course, the type of products, therapy areas and what exposure that is. So I can unfortunately not be more explicit on that. And then the second question was on -- was that for you, Karsten?

That's for me, that's on implied Q4 for the remainder of this year. And if we take on sales then our year-to-date sales growth is around 5.5%, and our guidance for the full year is between 5% and 6%, so that's very much spot on. In terms of operating profit growth and the items in the comparator base, then do recall that in Q4 last year, we expensed a priority review voucher that we used for Rybelsus, and then we had some severance costs. So in round numbers, we had roughly DKK1 billion in nonrecurring cost in Q4 last year. So that is, of course, an easier comparator on that front. This year, going into Q4, the -- some main components where we're consciously continuing to invest in our business. So first of all, we talked about Ozempic, so still investing significantly in rolling out Ozempic and penetrating the market that we're in. Apart from that, then I also talked about our R&D spend and the ramp-up of trials before, so R&D cost will be ramping up, which is also implied in hitting a 12% R&D ratio for the full year. Then Mike talked about Tresiba, reimbursement come January in China. So we have hired 400 reps in China. And then the last big item in Q4 this year is, I'd say, a sizable investment going into launching Rybelsus in the U.S. Lars Jørgensen: Thank you, Karsten. Thank you, Jordan. I think we have time for a few more questions.

Next question is coming from the line of Peter Welford from Jefferies.

Firstly, just on the CV, the, I guess, PDUFA date coming up in January. I wonder if you can confirm that there is no notice from FDA of an AdComm or perhaps you've notification that there will definitely not be an AdComm for either oral or injectable sema. And then just on the financials, just curious. A point of clarity again on the impairment, just whether or not be the DKK500 million has been booked roughly in the COGS line. I wonder what that related to given you say these are all related to R&D projects. I guess I'd be curious if you can give us some greater insight into the asset that was impaired there. And just on the tax rate. Does that now reflect the benefit from the Canton Zurich change? Or is this change in tax rate for the outlook for the full year reflective of another factor you've yet to reflect the Zurich change? Lars Jørgensen: Okay. Thank you, Peter, for those three questions. I think, Mads, firstly, on CV?

Yes. So the two supplemental NDAs for Rybelsus and Ozempic cardiovascular indication in type 2 diabetes, the review of those are ongoing in parallel. We have had no notification that there will be an AdComm. But on the other hand, that does not mean to say that I can confirm that there will be never be one. In principle, it is the prerogative of the agency to call one if need be. But I see no signs to suggest that, that is going to happen at this point in time.

Yes. And then on the other two questions on COGS impairment, yes, we're talking about IP on the commercial assets. So that would otherwise have been expensed as a royalty in cost of goods over the patent life of the assets. We're not going into any specifics around what assets. But it is assets that would otherwise be expensed as royalty over the patent term. As to the tax rate then, you're correct, the reduction in tax rate in the third quarter relates to the implementation or the adoption of the Swiss tax reform that was adopted in Canton Zurich in the third quarter. Lars Jørgensen: Thank you, Karsten.

The last question is coming from the line of Naresh Chouhan from Intron Health.

This is from Naresh Chouhan from Intron Health. Two questions, both on Rybelsus, please. Our research suggest that Rybelsus' commercial access is around 40% already, and that seems to be ahead of where Ozempic was. And around half of that don't require prior authorization or step edits. Can you confirm that that's kind of where we are and whether or not that's ahead of your expectations? And then secondly, now you started negotiations on Rybelsus, is there any risk that you see with respect to step edits that require using an SGLT-2 before patients being given access to Rybelsus? Lars Jørgensen: So thank you for those questions, Naresh. We cannot comment on level of access now and also whether there'll be step edits. Really, that's not our objective. We are still early in the progress -- process of negotiating this access, so I cannot comment on either the number you indicate nor to the degree the payers request step edits. It's not something we want to pursue. So unfortunately, not a very detailed answer there. So with that, we will close our Q&A session. Thank you very much for the interest in Novo Nordisk. We look forward to hopefully see many of you at the Capital Markets Day. And if you have any questions before then, please feel free to reach out to our Investor Relations officers. Thank you, and have a good day.

That does conclude our conference for today. Thank you for participating. You may all disconnect.