Novo Nordisk A/S (NVO) Earnings Call Transcript & Summary

Day, and thank you for standing by. Welcome to the Novo Nordisk to acquire at Akero Therapeutics, Inc. Webcast and Conference Call. [Operator Instructions] 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.

Thank you, and welcome to this conference call regarding the agreement to acquire Akero Therapeutics that we announced earlier today. I'm Jacob Rode and I'm the Head of Investor Relations at Novo Nordisk. And with me today, I have CEO of Novo Nordisk, Mike Doustdar; Executive Vice President, Products and Portfolio Strategy, Ludovic Helfgott; Executive Vice President Research and Development and Chief Scientific Officer, Martin Holst Lange. All speakers will be available for the Q&A. Today's announcement is available at our website, novonordisk.com. Please note that the call is being webcasted and a recording will be made available on our website. The call is scheduled to last for approximately 30 minutes. Today's presentation lasting for around 10 minutes will be followed by a Q&A session. We kindly remind you that the focus of the call today is on the agreement to acquire Akero Therapeutics. Next slide, please. Before I hand over to Mike, 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 our forward-looking statements and risk factors, please see the company announcement for the first 6 months of 2025, which was released on August 6. And with that, over to you, Mike.

Thank you, Jacob. Please turn to the next slide. Earlier today, we announced that we have entered into an agreement to acquire Akero Therapeutics. This is the largest research and development-related acquisition in the history of Novo Nordisk, reflecting the strong strategic and scientific fit to our core areas within diabetes, obesity and their associated comorbidities. The acquisition includes Akero's late-stage MASH asset, efruxifermin or EFX. Over 80% of MASH patients are overweight or obese, making this indication especially relevant for the strategy and the purpose of our company. Novo Nordisk is no stranger to the MASH space. In August, we firmly established our presence in this obesity-related comorbidity with the U.S. approval of Wegovy for the treatment of MASH in adults with moderate-to-advanced fibrosis. As Ludo will tell you, while there has been advancement within the space, there are over 250 million people who are impacted by MASH globally and, therefore, plenty of work to do in developing innovative treatments. The combination of Akero's robust R&D done to date with EFX as well as Novo Nordisk expertise in developing innovative medicines, including the deep knowledge of obesity-related comorbidities, makes this particular acquisition an exceptional fit. Integrating EFX into our portfolio supports Novo Nordisk's long-term strategy of developing innovative medicine and for treating millions of more people living with diabetes, obesity and their associated comorbidities. To further elaborate on the unmet need as well as the commercial opportunity that this will bring, I would like to pass it to Ludovic.

Thank you very much, Mike, and please turn to the next slide. This is indeed an exciting day for Novo Nordisk and Akero Therapeutics and, most importantly, for the millions of patients worldwide affected by MASH with limited treatment options. MASH is a serious progressive metabolic disease where advanced degrees of fibrosis are associated with four outcomes and a high economic burden on the health care systems. As Mike noted, over 250 million people globally are affected by MASH and prevalence is growing. The progression of disease is classified by stages of fibrosis from mild, F1, to a compensated cirrhosis, F4. Current available treatments, including Wegovy treat those who fall within the F2 to F3 space. With around 20% of F3 patients advancing to F4 within 2 years, there is a very narrow window for these patients to receive effective disease-modifying treatment. We're excited about the progress of Wegovy, the world's first GLP-1 receptor agonist approved for MASH, yet there remains a substantial unmet need for therapeutic interventions. And this need is particularly pronounced for patients with F4 cirrhosis, where there are currently no treatments available. And there remains an opportunity as well to treat nonresponders to the existing treatments in the F2 and the F3 stages. Efruxifermin is a potential means to that end. In addition to promising Phase II data in the F2-F3 segment, it is the only FGF21 analogue that has demonstrated fibrosis regression in the late-stage F4 segment in a long Phase II trial, which Martin will elaborate on shortly. We therefore believe that efruxifermin has the potential to become a leading treatment option within the treatment intensification segment of MASH with efficacy anticipated to outstrip that of incretins as monotherapy in late-stage fibrosis cases. Overall, the MASH market in its early stages and we aim to develop a portfolio spanning across the diseases stages of MASH. Now Martin, I'll turn it over to you.

Thank you very much, Ludovic. Please turn to the next slide. As already alluded to by Mike and Ludovic, we are very pleased to announce the agreement to acquire Akero and efruxifermin, a once-weekly subcutaneous long-acting FGF21 analogue with potential to be not only first but also best-in-class in the F4 segment. Efruxifermin complements a strategic position in Novo Nordisk's MASH pipeline with MASH being one of the most prevalent and underserved obesity-related comorbidities. Efruxifermin has to date demonstrated a positive top line Phase IIb results with the regression of fibrosis and MASH resolution in patients with F2 to F3 as well as F4. Furthermore, efruxifermin appeared to have a safe and well-tolerated profile in its Phase III program. The HARMONY Phase II trial evaluated efruxifermin in an F2-F3 population, where 49% of patients achieved fibrosis improvement of at least one stage with no worsening of MASH and 37% achieved MASH resolution without worsening of fibrosis. Over 96 weeks, 29% of the F4 patients in the SYMMETRY Phase IIb trial achieved fibrosis improvement of at least one stage with no worsening of MASH. In addition, the trial showed that 42% of the F4 patients reached MASH resolution without worsening of fibrosis. This marks efruxifermin as the first and also only treatment to demonstrate statistically significant fibrosis regression in F4 patients in a Phase II trial. Please turn to the next slide. The ongoing Phase III SYNCHRONY program is built upon the promising Phase IIb studies of efruxifermin, examining its effects across all MASH stages. The first readout of SYNCHRONY real world is anticipated as early as next year. This is expected to be followed by the pivotal SYNCHRONY histology trial in F2 and F3 in the coming years and SYNCHRONY outcomes for the F4 population around the turn of the decade. As a result, efruxifermin has the potential to be the first-in-class FGF21 analogue targeting these four population as well as play a role in F2 to F3 patients, including people who are not responsive to existing treatments. We look forward to leveraging our capabilities to further optimize the SYNCHRONY program trials, assess the potential combinations with our current GLP-1 portfolio, explore opportunities for additional indications and ultimately aim to bring the first pharmaceutical treatment to market in the F4 segment. With that, I would like to hand it over to Mike for final remarks.

Thanks, Martin. Next slide, please. As we have mentioned throughout this call, the acquisition of Akero and its lead asset is a tremendous strategic fit to our current offering and portfolio, where Novo Nordisk is uniquely positioned to unlock its full potential. MASH represents a patient segment that's closely linked with those of our core therapy areas. While it is one of the most prevalent comorbidities in obesity and diabetes, it's also one of the most underserved. FGF21 agonists are emerging as the most promising non-incretin mechanisms action in the clinical development within MASH. More importantly, efruxifermin is the only one to demonstrate reversal of fibrosis in the F4 stage, which represents the most challenging yet urgent disease segment to treat. On a personal note, this marks the first acquisition since I took over as the CEO of Novo Nordisk. While many external factors are challenging us on a day-to-day basis, part of my job is to ensure the progress of our long-term aspiration of ensuring leadership in diabetes and obesity and their related comorbidities. We can only do that by raising the innovation bar to bring innovative medicines to the market and, thus, impact millions of patients worldwide. Today's acquisition further strengthens the possibility to do so, which I truly am excited about. And with that, back to you, Jacob.

Thanks a lot, Mike. Next slide, please. And with that, we're now ready for the Q&A session. [Operator Instructions] I remind that the focus of this call, including the Q&A session, is on the agreement to acquire Akero Therapeutics announced earlier today. And with that, operator, we are now ready to take the first question, please.

[Operator Instructions] We will now go to the first question. And your first question today comes from the line of Harry Sephton from UBS.

So clearly, this wasn't the only FGF21 asset for sale over the last couple of months. And you paid a bit of a premium to what we've seen with the others. So I wanted to get a sense from yourselves whether your own failure in FGF21 with Zalfermin gave you any learnings that makes you confident in the potential differentiation for this asset versus Boston and 89bio. Or would you say that the premium that you've paid more simply reflects the derisked opportunity in F4 and the fact that it's further ahead in development.

Harry, thanks a lot for that. I'll give that to you, Martin, on Zalfermin learnings and the competitiveness of efruxifermin.

Absolutely. Thank you very much. So first of all, Harry, I think you've heard at least me talk about from -- in the GLP-1 space. GLP-1 is not just a GLP-1. We see differences across the different offerings in the GLP-1 space. And based on our own learnings from Zalfermin, we tend to see the same in FGF21. So as you know, we have discontinued our own internal program. And we saw a clear differentiation between that and efruxifermin, but we also tend to see a superior efficacy and potentially also safety tolerability profile with efruxifermin compared to what we've seen out there so far. So we believe that with this acquisition, we not only have healthy potential to be best-in-class, but also, and this is obviously a timing perspective, first in class because it is a more progressed program and, to your point, then also somewhat more derisked.

Thanks a lot, Martin. That is very clear. And also thank you to you Harry for dialing in up for the question. And with that we are ready for second set of questions please.

Your next question comes from the line of Simon Baker from Rothschild & Co Redburn.

It's kind of slipping Harry's question around. If one looks at consensus for efruxifermin, you've either got the bargain of the century or you have more measured expectations and assumptions for the role of efruxifermin in MASH. So just wondered if you could sort of talk us through qualitatively where you really see the opportunity here. You've obviously got semaglutide in F2-F3, efruxifermin definitely in F4. But in your thinking and how you see the Akero acquisition, where is the overlap? And where do you really see efruxifermin fitting in?

I'll hand that to you, Ludo, on the complementarity to the portfolio.

Absolutely. Thank you very much for the question. I think the real objective here is to be able to cover a wide range of patients with MASH across the portfolio. And I think you rightly point out that semaglutide, we believe, has the best data to date on F2 and F3. But we also know that two things are important in order to really complete the treatment of these patients. First is the F4 and the absence of any alternative in the F4 but transplants, which we know have a huge burden on the patient but also on the health care system. So there's definitely here the core of the value proposition. I would also say that you have some patients in F2 and maybe even more in F3 that are either poor responders to the incretin world or that are fast progressers. And these patients need a treatment as well. So if you sum up the ESSENCE data that was shown by Wegovy and MASH and the data that could be shown here with the Akero efruxifermin compound in this subpopulation of F2-F3 that are either nonresponding as much as we want to incretin or fast progressers, and the core of it, the Fc, you can clearly see the continuum of patients being covered. That's where we believe we can make a difference by this portfolio play.

Martin briefly adding a few comments.

Yes. I think it's important to add that we have data from the efruxifermin Phase IIb trials where a number of patients, 1/3 of patients were on a baseline GLP-1 treatment, that we see added effect when efruxifermin is introduced, so suggesting additivity in the space, which obviously excites us a lot.

Your next question comes from Pete Verdult from BNP Paribas.

Pete Verdult, BNP Paribas. Just one question to Mike, Ludovic or Martin, just my question is on the future development plans. Is there any rationale to open new studies exploring the combination of GLP-1 and FGF21 in either the F2, F3, F4 segments? And could that start before EFX gets approved? And I think Martin, you hinted at taking FGF beyond MASH. So any further comments there would be appreciated.

Yes. Thanks very much, Pete. I think I've alluded to both. We have early data suggesting that combining GLP-1 and FGF21 potentially is additive in terms of efficacy, and we will definitely explore that. We will also get some data out of the ongoing trials as a number of patients already are on GLP-1s in those trials. But specifically, obviously, we want to leverage the full portfolio of what we do. . There is already an ongoing trial, and you can actually see that in ALD. And we are currently exploring potentially additional indications, but I don't want to go into that at this point in time.

Thank you, Martin, and thank you to Pete Verdult. Let's move on to the next question, please.

Your next question comes from Evan Seigerman from BMO Capital Markets.

This is Conor MacKay on for Evan. I guess maybe two quick ones from us. Maybe sticking with the theme of MASH, is there any early feedback you can share on the recent launch and approval Wegovy in MASH. And kind of building on sort of that offering, how you're thinking about the positioning of Wegovy versus Akero's asset in that indication? And then sort of secondarily following today's deal, what would be your appetite to do additional deals? And kind of what would those look like in terms of deal size and therapeutic area focus?

Thank you for those, Conor. On the first one with Wegovy uptake in MASH in the U.S., it's still early days and for an update on that, we will revert after the Q3 call. For the topic of this call, we'll turn it to Akero, and we'll turn to Ludo on potential for future deals.

[indiscernible]23:00 Absolutely. I think that Mike said it earlier on, we are committed to help patients with diabetes, obesity and their comorbidities. And as long as you see comorbidities with a strong overlap with the core patient populations we're targeting in diabetes and obesity, we'll, of course, be open to deals if they are innovative, if they really change the games, if you really have the potential to have a leader in the market. So there's absolutely willingness to continue being in the forefront of the race to innovation both internally and externally and in obesity, diabetes and their associated comorbidities.

Your next question comes from the line of Mike Nedelcovych from TD Cowen.

My question is on the broader competitive landscape. We're not too far away from some late-phase readouts of incretins that incorporate glucagon receptor agonism in MASH. So I'm curious how you think FGF21 plus or minus GLP-1 will ultimately stack up against an incretin that incorporates glucagon receptor agonism across the different fibrosis stages?

Thanks a lot, Mike. Martin, on different mode of actions within MASH, I'll turn it to you.

Thank you very much. So I think it's clear, given the glucagon mechanism of action, we expect to see an impact on steatosis. Exactly how that will read out in fibrosis and outcomes, I think it's too early to say. We are obviously also curious to look at the safety and tolerability profile. I think vis-a-vis potential combination, but also, to be honest, in monotherapy, FGF21 or FGF21 plus GLP-1, we do believe that there is a potential to be best-in-class as we communicated, and this is why we strongly pursue these combinations.

Your next question comes from the line of Michael Leuchten from Jefferies.

Two questions, please. Could you please comment on your IP assumptions around the protection for EFX. And then secondly, on manufacturing, EFX has made in E. coli. I don't believe that's one of your existing capabilities. Just how do we think about investments into capacity?

Thanks for those, Mike, stretching a lot with two questions. But otherwise, I'll turn to you, Ludo. On IP first, we can't share too much for IP and then on manufacturing.

No. On this one, we're not sharing. On the manufacturing side, you're very right. It's not in the existing platform, but we don't expect to have any CapEx investment from that perspective. They are, we believe, in the market today players with which we could work and CMOs which we could transact in order to make sure to get the product to patients. But we're not forecasting any CapEx on the e.coli platform.

Absolutely. So that's a capacity and nothing on IP concern. So thanks for that, Michael. And let's move to the next question, please.

Your next question comes from the line of Seamus Fernandez from Guggenheim.

So I wanted to just clarify the definition of F4 for the CVR or at least the approval dynamics in the CVR itself. Is that an accelerated approval by 2031 for compensated cirrhosis? Or is it a full approval that's required? And can you just remind us what the requirements are at FDA for accelerated approval in F2, F3 versus full approval? And then maybe you can just remind us what you think or what's encompassed in the CVR in that regard?

Thanks a lot. I think on the CVR, we don't go into specific details. You're right on the data indication tiering. And I think maybe I'll turn it to you, Martin, to speak about the SYNCHRONY trial in F4 overall.

Yes. So you're right. As you know, the FDA has a setup, and we know that also from F2 and F3. And we are currently following that setup in F2 and F3 also for the ESSENCE trial for Wegovy, where we get a, so to speak, conditional approval or accelerated approval based on histology, that's fibrosis and steatosis. But then you have to also generate outcomes data. That's a composite of liver-related endpoints, liver-related death and CV death. And that's where you see these longer studies.

Thanks a lot, Martin. And thank you also to you, Seamus. And let's move to the next question, please.

Your next question comes from the line of Thibault Boutherin from Morgan Stanley.

Just a question on the co-formulation or potential for co-formulation of EFX and semaglutide. Is that something you're interested in? Do you see any technical challenge in doing that? And could it be done with something simple like a bridging study?

Thanks a lot, Thibault. And for that, I'll give it to you, Martin.

Yes. Thank you very much. Very relevant question, but too early for us to speculate in. Sorry.

Thanks a lot Thibault and let's move to the next question, please.

The next question comes from the line of Florent Cespedes from Bernstein.

A quick one on the financial aspects. Maybe could you give us a little bit more color on how do you see the impact of this acquisition in the coming years? Is it fair to assume that we should have a kind of low single-digit dilutive impact on earnings in the coming years, if I'm referring to what you stated on the press release on the 3% impact on operating profit for next year?

So thank you very much for the question. And I would start by saying that, first of all, this is an investment for our -- in our portfolio. So it's, for me, something which is important for the future of our overall development of our franchise. And that should be maybe the leading thought when coming into that. We -- if you look at '25, we're not expecting any change in the OP outlook for '25. We might have a minor cost in Q4 linked to the R&D line and the transaction cost, but it's nearly nothing. In '26, as you saw rightly, we're expecting a negative sort of -- sorry, minus 3% impact on the [ EOP ] growth driven by the increased R&D cost. This is really again an investment on the R&D cost for the Phase III trials that Martin was alluding to earlier on. So that's what we are right now planning.

Thanks Ludovic. There is R&D investments in potential future growth. That's very clear. And thank you also to you, Florent. Then with that, I think we are ready for the last question, please.

Your final question today comes from the line of Mattias Häggblom from Handelsbanken.

A question for Mike. So it's no more than 2 months since you took over as CEO. So how did the BD team have time to apply your strategic lens on how to allocate capital to business development in this short period of time? I guess, said differently, how could you find confidence this was the best use of capital this early in your tenure?

Thanks very much, Mattias. So we have been looking at a number of assets for long period of time. Things didn't start with me taking over as a CEO. But of course, it reflects the fact that, as Martin and Ludovic said, that we are continuously in the outlook for best-in-class and possibly first-in-class assets within our strategy. And today's announcement was a confirmation of what we have figured out that we have actually something in our hand that we could be very proud of, hopefully help develop it and bring it to the market. And I think it's extremely exciting because it is an asset that not only will help millions and millions of patients very closely connected to the strategy and the leadership we would like to sustain and grow, but also I think it's a very important building block for strengthening our top line as we get closer to the LOE of semaglutide. So I'm super excited about today's news.

Thanks a lot, Mike, that's very clear. And also thanks for the question. Then with that, we are ready to conclude the Q&A session. We'd like to thank you for calling in and participating. And as always, please contact Investor Relations with any follow-ups that you may make. Thanks a lot, and have a good day.

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