Lars Rebien Sorensen - CEO Mads Krogsgaard Thomsen - Chief Science Officer Jesper Brandgaard - CFO Jakob Riis - EVP, China, Pacific & Marketing Lars Fruergaard Jorgensen - EVP & Chief of Staff

Michael Leuchten - Barclays Capital Michael Novod - Nordea Richard Vosser - JPMorgan Sachin Jain - BofA Merrill Lynch Tim Race - Deutsche Bank Peter Verdult - Citigroup Vincent Meunier - Morgan Stanley Florent Cespedes - Societe Generale

Thank you very much. Welcome to this Novo Nordisk A/S Conference Call regarding our performance in the first six months of 2015 and the outlook for the Full Year. I’m Lars Rebien Sorensen, CEO of Novo Nordisk A/S. With me, I have our Chief Financial Officer, Jesper Brandgaard and Mads Krogsgaard Thomsen, our Chief Science Officer. Also present and available for the Q&A sessions are our Executive Vice President for China, Pacific and Marketing, Jakob Riis; Lars Fruergaard Jorgensen, Executive Vice President Corporate Development and Vice Chair of our Operations Committee. Present are also our Investor Relations Officers, so you can imagine the room is full. Today’s earnings release and the slides for this call are available on our website, novonordisk.com. The conference call is scheduled to last one hour. As usual, we'll start with the presentations outlined on Slide #2. The Q&A session will begin in about 25 minutes. Note that the conference call is being webcast live and a replay will be made available on our website. Turn to Slide #3. As always I need to advise you, that this call will contain forward-looking statements, those forward-looking statements are subject to risks and uncertainties that could cause the 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. Turn to Slide #4. Sales growth in the first six months of ‘15 was 25% in Danish kroner and 9% in local currencies. The growth was primarily driven by North America and International Operations. Sales growth was realized both in diabetes care and biopharmaceuticals with a highest contribution coming from Victoza and Levemir. The rollout of our new generation insulin and especially Tresiba is progressing well. In the first six of this year, new generation insulin is accounted for 10% of growth. Within R&D we successfully completed the first Phase 3a trial for semaglutide and new GLP-1 administered once weekly. Today, we also announce encouraging results from one of two Phase 3a studies for the use of liraglutide in ADJUNCT TWO insulin therapy in people with type-1 diabetes. Finally, the three-year extension of the SCALE obesity pre-diabetes trial was completed as we announced in May. Turning to the financials, operating profits grew 57% in Danish kroner when adjusting for the successful partial divestiture of the IT Services and Consulting Company NNIT, operating profit grew 16% in local currencies. Diluted earnings per share increased 38% to 7 kroner and to adjusted for the partial divestment of NNIT, the diluted earnings per share was 6.2 Danish kroner 22% higher than in 2014. The outlook for 2015 sales, growth is remaining 7% to 9%, whereas the outlook for operating profit growth is increased to around 19% both measured in local currencies. Turn to the next slide. In the first six months of 2015, North America accounted for 56% of growth followed by International Operations and Europe accounting for 28% and 10% of growth respectively all measured in local currencies. Japan, Korea grew 5% in the first six months, whereas growth in Region China decelerated to 3% during the same period both measured in local currencies. Sales growth in North America was 35% in Danish kroner and 10% in local currencies. Victoza is the largest growth driver primarily due to the underlying growth of the GLP-1 market. Levemir and NovoLog remain key growth drivers reflecting continued underlying volume growth as well as market shares gains for both products. Sales within International Operations grew 26% in Danish kroner and 17% in local currencies. Growth in IO was driven by two modern insulins NovoRapid and NovoMix, a positive impact from human insulin sales and the continued rollout of Tresiba as well as NovoSeven. Moreover, sales growth is positively impacted by timing of shipments, wholesale stocking in the number of IO countries. Sales in Region Europe grew 5% in Danish kroner and 4% in local currencies the growth here was driven by Victoza and the penetration of Tresiba as well as positive contribution from NovoRapid, NovoEight and Xultophy. European growth is partially offset by the contracting premix market segment and declining human insulin sale. Furthermore, sales are affected by a net negative impact from the implementation of pricing reforms in several European countries. Japan, Korea grew 10% in Danish kroner and 5% in local currencies much like Europe, Tresiba, Victoza and NovoEight contributed strongly to growth in Japan and Korea. The growth is partially offset by declining Japanese insulin market volume. Turn to the next slide, sales in Region China increased 25% in Danish kroner but only 3% in local currencies. Sales growth in the first six months was driven by continued market penetration of all three modern insulins. However, the decelerating growth in the Chinese market reflected a negative impact of timing of shipments to distributors, as well as decline in the growth of the overall diabetes care market reflecting cost containment measures in the healthcare system including restrictions on access to healthcare professionals as well as intensified competition in the diabetes market. .: Furthermore with the continued rollout of the degludec portfolio new generation insulin contributed 10% to the growth in the first half of 2015. Decline in other diabetes and obesity care reflects declining sales of needles in Europe and North America as well as negative impact from the timing of NovoNorm shipments to distributors in 2014 in China, which more than offset the positive contribution from the US launch of Saxenda. The growth within biopharmaceuticals was primarily driven by Norditropin which grew 15% in local currencies and accounted for 12% of total growth. This growth was primarily derived from North America and reflects favorable pricing and adjustments to provisions for rebates. Moreover, the prefilled FlexPro device as well as support programs have contributed to increasing Norditropin demand. Haemophilia sales amounted 6% of the total growth which was primarily driven the rollout of NovoEight in Europe, Japan and United States as well as NovoSeven in International Operations. Turn to Slide #8. Victoza sales increased 41% in Danish kroner and by 22% in local currencies. Sales growth was primarily driven by North America and Europe. In North America, the Victoza sales increased 52% in Danish kroner and 24% in local currencies. The sales reflect an acceleration of the underlying prescription volume growth followed by the launch of competing products in GLP-1 class, while Victoza despite increasing competition only has experienced the modest market share loss. Victoza remains a clear market leader with 69% of the prescription volume. Turn to the next slide. Our three modern insulins perform in the US market particular in the expanding market for long-acting insulin analogues where Levemir continues to gain market share. And now hold the volume market share of 28% of total prescriptions. NovoLog has contributed to growth by achieving a modest market share gain in the US rapid acting insulin analogue segment. Finally, NovoLog mixed maintains a market share of 58% in the analogue mix segment the premix segment also remains by far the smaller segment, and the volume continues to decline slowly. Turn to the next slide for an update on the rollout of the degludec portfolio. Tresiba has now been launched in 30 countries. In Japan, where Tresiba was launched in March of 13th, Tresiba has reached 30% of the basal insulin market measured by volume value market shares on monthly value market share. Similarly Tresiba has shown solid penetration in other markets where the reimbursement are similar as insulin glargine. Ryzodeg has been launched in Mexico and India and Bangladesh and the feedback from these countries are positive. Xultophy has now been launched in Germany, UK and Switzerland, in Switzerland, the first country to launch Xultophy the market penetration measure in value of the long-acting insulin market continues the same trajection as the one achieved with Tresiba. Turn to the next for an update and development of Saxenda in the United States. Saxenda was launched in the US in May and the initial uptick is encouraging with Saxenda obtaining 3% volume market share in the total anti-obesity prescriptions three months after launch. Market access for anti-obesity medication in the US remains restricted compared to other therapeutic categories such as diabetes. This is due to the fact that anti-obesity medication is not covered by Medicare Part D, leaving access opportunities limited to the commercial channels. Novo Nordisk has secured coverage across -- covered access for Saxenda for the remaining of ‘15 were two main -- major PBMs, CVS and ESI. In 2016, Saxenda will be on CVS lowest branded copay tier on their national formulary. And at ESI, Saxenda will remain covered as tier 3, with access to those employers that opt to cover obesity medication. Meanwhile, launch activities are progressing as planned, and the early feedback received from physicians and patients are encouraging. With this, over to Mads for an update on the R&D.

Thank you, Lars. Please turn to Slide 12. In July, we announced the results from SUSTAIN 1 the first of six Phase 3a trials for semaglutide, a new GLP-1 analogue administered subcutaneously once weekly. The trial investigated the efficacy and safety of 0.5 milligrams and 1 milligrams semaglutide as monotherapy, compared with placebo in people with type-2 diabetes. The trial achieved its primary objective by demonstrating that people treated with these doses of semaglutide achieved superior reduction in HbA1c of 1.5% and 1.6%, respectively compared to no change in the placebo group. Furthermore, nearly 75% of people treated with either of the two doses achieved the treatment target of an A1c below 7% compared with only 25% of those treated with placebo, should be noted that the population was early stage treatment-naive patients, which may in part explain the lack of a clear HbA1c dose response. People treated with an half and a whole milligram semaglutide also experienced a greater weight loss of 3.8 kilograms and 4.6 kilograms respectively, compared with 1 kilogram -- 1.0 kilogram for people treated with placebo. Finally, semaglutide showed a safe and well tolerated profile in the trial. The most common adverse events were related to the gastrointestinal system, and were comparable to Victoza in similar trials and diminished over time. As you can see, discontinuation rates due to adverse events were low in the mid single-digit percent range suggesting that classical GLP-1 mediated gastrointestinal side effects have been reduced through a well-functioning titration scheme. We expect to announce headline results of the five remaining SUSTAIN trials within the next nine months. Please turn to the next slide. Today we announced the headline results from ADJUNCT TWO the first of two Phase 3a studies for the use of liraglutide as adjunct to insulin therapy in people with type-1 diabetes. Since type-1 diabetes patients lack endogenous insulin secretion, GLP-1 is expected to improve the condition via mechanism such as glucagon and appetite suppression. The ADJUNCT TWO trial investigated the efficacy and safety of daily doses of 0.6 milligram, 1.2 milligram and 1.8 milligrams of liraglutide compared with placebo as adjunct to insulin treatment. In order to investigate the additional impact of liraglutide on glucose control, the insulin dose in this trial was kept in both treatment arms, with a maximum dose corresponding to the daily total insulin dose when entering the trial. The results showed, that people treated with liraglutide as adjunct to insulin therapy achieved an improvement in A1c of between 0.2% and 0.3% compared with 0.0% change for people treated with placebo. The A1c improvements occurred at a lower insulin dose in the liraglutide treated patients, and a significantly higher proportion of patients met the ADA target of an A1c below 7%. Furthermore, people treated with liraglutide as adjunct to insulin therapy experienced a weight loss between 2 kilograms and 5 kilograms, whereas people treated with placebo experienced a stable weight development. Since the average BMI was in the high 20s, this is a clinically meaningful benefit in this population. There was no difference in severe or nocturnal hypoglycemia for any of the doses, but one of the three doses of liraglutide 1.2 milligram more symptomatic hypoglycemia was observed. Generally, liraglutide appeared to have a safe and well tolerated profile in this population. The results of the final and pivotal Phase 3a trial ADJUNCT ONE are expected to be reported shortly. Please turn to the next slide. In May, we announced the headline three-year results from the extension of the SCALE obesity and pre-diabetes trial that has just been published in the New England Journal of Medicine. The trial was conducted in [technical difficulty] in adults with obesity, or who were overweight with comorbidities and had pre-diabetes at baseline. The trial that is the three-year extension trial, met its primary endpoint as it demonstrated that following Saxenda treatment in combination with behavioral modification, the time to onset of type-2 diabetes was 2.6 times longer than with placebo treatment. This was also reflected in an 80% reduced risk of developing type-2 diabetes over three years in the Saxenda Group. As in previous trials, Saxenda appeared to have a safe and well tolerated profile and the most frequently reported adverse events were gastrointestinal in nature. Please turn to Slide 15. Now moving on to DEVOTE, the cardiovascular outcomes trial for Tresiba, based on the most recent, more robust MACE event rate estimate, we now expect to have accumulated the pre-specified number of MACE events by mid-2016, compared to the previous expectation of the second half of 2016. In terms of the ongoing review of the class 2 resubmission for Tresiba and Ryzodeg, including the pre-specified interim analysis of DEVOTE, we still expect this to be completed around the 1st of October this year. Within insulin development, we have initiated the first Phase 2a principle trial with the tablet version of the long acting insulin analogue OI338GT. The blinded trial investigates the glycaemic effect and safety of once-daily OI338GT in combination with subcutaneous placebo compared to once-daily insulin glargine in combination with once-daily oral placebo. In June, we also initiated the first Phase 1 trial with OI320GT, a new oral insulin analogue. The trial will investigate the safety, tolerability, pharmacokinetics and pharmacodynamics of OI320GT in approximately 80 healthy volunteers. Please turn to Slide 16, for an overview of our expected pipeline news flow. The last six months have provided news flow from significant R&D events. However, as shown on this slide, there are multiple important trials yet to report in 2015. As mentioned, the results of the second and final Phase 3a trial ADJUNCT ONE for liraglutide in type-1 diabetes, are expected to be reported soon and so are the results from SUSTAIN 3. A few months later, SUSTAIN 2, 4 and 5 will report, followed by the final SUSTAIN cardiovascular trial, SUSTAIN 6, the LEADER trial and the two degludec SWITCH studies in the first half of 2016. With that, over to Jesper for an update on the financial.

Thank you, Mads. Please turn to Slide 17. During the first six months of 2015, sales increased by 25% measured in Danish kroner and by 9% in local currencies to 52.3 billion kroner. Reported gross margin improved by 220 basis points to 85.2%, driven by a positive impact from currencies and product mix. Sales and distribution costs increased by 25% in Danish kroner and by 10% in local currencies to 13.3 billion Danish kroner. The increase is driven by launch costs in relations to Saxenda in the US, sales force investments in selected countries in International Operations as well as adjustments to legal provisions. Research and development costs increased by 1% in Danish kroner and decreased by 5% in local currencies to 6.3 billion kroner. The decline in costs reflects the discontinuation of activities within inflammatory disorders in September 2014 adjusting for the costs in relation to inflammation, R&D costs increased by 6% in local currencies. The underlying increase reflects the progression of the late-stage diabetes care portfolio and is primarily driven by the DEVOTE trial and the Phase 3a program SUSTAIN for the once-weekly GLP-1 semaglutide. The increase in costs is partly offset by lower costs related to faster-acting insulin as part following the completion of the Phase 3a development program, onset, in March of 2015. Other operating income net was 3.2 billion kroner compared to 419 million Danish kroner in 2014. The increase is driven by the non-recurring proceeds from the Initial Public Offering of NNIT, as well as non-recurring income related to the out-licensing of assets, incentives for inflammatory disorders. Operating profit increased by 57% in Danish kroner and by 30% in local currencies to 26.3 billion. Adjusted for the income related to the partial NNIT divestment, the growth in operating profit was 16% measured in local currencies. Net financials showed a net loss of around 3.3 billion kroner compared to a net income of 524 million kroner in 2014. The foreign exchange result was an expense of 3.3 billion kroner compared to an income of 543 million kroner in 2014. This result reflects losses on foreign exchange hedging contracts especially for the US dollar due to the continuing appreciation of the US dollar versus the Danish kroner. Please turn to Slide 18. Overall there was a significant positive impact from currencies and operating profit during the first six months of 2015. The development related to the appreciation of all key currencies versus the Danish kroner with the majority of the impact resulting from the significant appreciation of the US dollar. The average US dollar rate for the first six months of 2015 was 23% higher than the average rate in the first six months year. Similarly the average exchange rate in the first six months of the year for the Chinese yuan and the British pound were 22% and 12% higher than last year respectively. The positive impact from key invoicing currencies on operating profit of around 4.5 billion kroner were to a large degree countered by the loss just mentioned from forward hedging contracts which resulted in a foreign exchange loss of 3.3 billion kroner. Please turn to the next slide for the financial outlook. Sales growth for 2015 is still expected to be 7% to 9% measured in local currencies. Given the current level of exchange rate versus the Danish kroner, the reported sales growth is expected to be around 14 percentage points higher, equivalent to a sales growth of 21% to 23% reported in Danish kroner. Operating profit growth is now expected to be around 19% in local currencies and around 23 percentage points higher for reported growth, equivalent to a growth of approximately 42% reported in Danish kroner. The expectations for higher operating profit growth, reflects increased expectations for non-recurring license income. Reflecting the appreciation of the US dollar versus the Danish kroner, we now expect a net financial loss of around 5.7 billion kroner. This primarily reflects losses associated with foreign exchange hedging contracts. This loss will partly will offset the growth in reported operating profit and is consequently expected to result in a pretax profit growth rate of around 28%, all of the above assuming that the exchange rate for Novo Nordisk key invoicing currencies remains at the current level for the remaining part of 2015. The effective tax rate for 2015 is expected to be around 21%, partly reflecting an net income effect from the tax-exempt net income rising from the partial NNIT divestment. The free cash flow for 2015 is now expected to be between 33 billion kroner and 35 billion kroner. Please turn to Slide 20.

Alright. Thank you very much Jesper, then I’ll take the closing remarks. To summarize, we’re very pleased with the performance of the first six months of this year. Our key products continue to perform well. And uptake of Tresiba as well as the early feedback on Xultophy and NovoEight and Saxenda are encouraging. Last but not least, we’re happy to successfully have passed a number of critical milestones for our late stage diabetes care development projects and look forward to the upcoming results for the other key R&D projects. We’re now ready to take the Q&A. We as always kindly ask you all participants to restrain themselves to ask two questions. Operator, we’re now ready to take the first question please.

Thank you, sir. [Operator Instructions] We will now take our first question from Michael Leuchten from Barclays. Please go ahead, your line is open.

Thank you very much. Two questions, please. One, on pricing, Lars, there’s been some comments or you have been quoted on newswires in terms of what you saw in terms of pricing in H1 and what you expect in terms of pricing for the rest of the year and then into 2016. So, if I could ask you to clarify what exactly you were saying, both in terms of pricing and whether that means price and mix effect and also the time period. And then also, which part of the portfolio that relates to, because comparing the growth rates in North America to the volume growth, that doesn’t seem to be any pricing headwinds for Levemir and NovoMix, so which part of the portfolio is really seeing price pressure, if any? And then the second question, for Jakob, in the comment on your slide in China in terms of increasing competition, I was wondering if you could add a little bit of color on what it is that you’re seeing. Thank you.

Thank you very much. Let me just try to clarify on the pricing picture. If we look entirely on insulin, we have had a slight negative influence on price in the first half of this year. If we look at the total portfolio we have flat pricing. And that is, of course a reflection of the strong performance of Victoza, which -- where we have a pricing power because we are the gold standard in that market. When we look at insulin going forward, we are looking at full year expectations from flat to slight positive pricing and as we now have entered into contract for the remaining of ‘15 and into ‘16, without having had impact on the remaining of the year, we know the price picture, we don’t know the channel mix, of course, but we know the price picture, so that would be our guidance for the full year and with the numbers we know today from -- for 2016 it will also indicate to us flat pricing for our insulin portfolio next year. And the expenses which Victoza continues to outperform there might be a slight positive impact from Victoza if you add the mix. Thank you.

And then if I just may add to be certain that it is clear that on top of that when you look at the gross margin there is a positive impact on our gross margin to the magnitude of 50 basis points the first half of this year, basically coming from a overall higher sales of Victoza and the modern insulin its [audio gap] at the expense of the older version product like for example human insulin that’s overall giving us a slight positive impact on gross margin from selling the higher value for us. And that trend is also expected to continue into second half and potentially also to 2016. And then over to Jakob.

Yes, and then we will ask Jakob for a comment on the competitive situation in China, which has been one of the hot topics today, I would say.

Yes and the question specific to some of the -- to the more intense competition there is from local producers, and it's more competitive bidding in the biddings that go on around China in the region. So that's that impact. But I may also need to underline that that's one of the effects, and there are a number of effects at play that either has influenced the Q2, ranging from our own internal that has to do also with shifts in inventories, but also trends we've observed over longer periods of time with some cooling off of the healthcare market in China. But we're specifically talking about the aggressive bidding in the human insulin category in the provincial bidding.

Thank you very much, Jakob. Next question, please.

We will now take the next question from Michael Novod from Nordea. Please go ahead.

Yes. Hello. It's Michael Novod from Nordea. One question to oral semaglutide. I think there were some expectations that you might already have completed dialogues now and were able to announce some plans. Maybe you could just add a bit of comments to what kind of dialogues you are in with the authorities, what are, say, the most notable outstanding issues or challenges, to be able to give us an update later this year? And then, with Saxenda entering the CVS Caremark preferred list, even though it's with the highest branded copay, should we -- is there any way we could, say, try to calculate what kind of impact this should have? Do you still feel or do you still see persistence from doctors to prescribe at all patients? Maybe we could get some flavor on that from your side.

Thank you very much, Michael. First of all, Mads Krogsgaard, there are expectations that you will give color to the regulatory process, with some caution, I would suggest.

Yes. So, Michael, we have indeed been in a dialogue with the various regulatory agencies, as you by definition have to be between the end of Phase 2 and the decision to make a Phase 3 go decision. But as you can imagine, there are numerous things coming into play here, including investments and getting the Phase 3 program totally planned and approved, etc., etc. So we will get back to you as soon as possible, and unfortunately I won't be more specific on that. But it will be as soon as we can.

Thank you very much. Then, Jakob, will you perhaps talk a little bit about the more qualitative impact of the CVS listing and what you're expecting from that in the US?

Yes. There's no doubt the CVS listing is a positive in the sense that it's a prerequisite for the continued development of the Saxenda sales in the obesity market, that we see payers that are willing to make agreements. You would say that brings us in a situation where we are largely on par with some of the other branded anti-obesity medications. But with that said, you could say that we're still faced with a market that has a very limited universe of prescribers and so on. So market access is only one of multiple, you could say, developments that we need to work on the coming years. So I wouldn't be as concrete as saying that specific deal would have a measurable impact. I think we're still looking at a very immature market and we're still looking towards a long and steady development of this market.

Thank you, Jakob. Michael, did you have a follow-up question?

No, no, that's fine. Thank you.

Okay. Good, good. Thanks. So the next question, please.

We will now take the next question from Richard Vosser from JPMorgan. Please go ahead.

Hi. Thanks for taking my question. Just returning to China, I think your branded competitor, Sanofi, is doing pretty well with Lantus in China at the expense of mix. So could you talk about what you can do short term around that, and maybe longer term, in terms of the timelines for a Ryzodeg launch in China, where we are with that, just remind us on that? And then second question, just on Victoza in type-1 diabetes. At what point can you file based on this data? Do you need obviously both trials? Does the data suggest that you will be starting, or will you be starting Xultophy trials to become a new standard of care for type-1 diabetics? And then maybe finally, can the benefits Victoza are seeing be replicated with other GLP-1s? Just some of your thoughts there would be useful. Thanks very much.

Thank you very much, Richard. That was quite a complex set of questions. If I may comment on the competition in China, and then I would kindly ask Mads Krogsgaard to talk about the potential for filing Ryzodeg and thereby supporting our mixed market in China, and then also give some color on what the regulatory process and timelines for filing are of Victoza in type-1 diabetes and then whether or not we intend to further develop Xultophy as the gold standard for type-1 diabetes. So, Mads, you've got a handful there. In terms of China, yes, it's correct that we're sort of getting slapped from two sides, in the sense that Sanofi is doing well with the gold standard so far in the basal market with Lantus. Then we have a local competitor with a generic version of Lantus, which obviously, with a slight more aggressive pricing, has impact in the market. And then we're getting slapped also by the local manufacturers on human insulins, as was alluded to by Jakob, because the bidding and the use of human insulins are more extensive in the rural areas, and that is where the local manufacturers have more clout and are able to outcompete us. So that's the current situation and one of the remedies is, of course, longer term getting Tresiba approved in China and then also support the mixed market with the Ryzodeg. Mads, so where are we with that, and then on to Victoza type-1.

Yes. So very briefly, as Lars mentioned, Tresiba is of course also important in China, as it is all over the world, and we are making inroads into getting towards a filing situation. And to that end, you will recall we did a Chinese Phase 3 study that actually completed more than a year ago, but you need a lot of administrative things to happen before you can submit. But we are making progress in that regard. And only thereafter, actually, can you progress the combination products, because the Chinese rules from the CFDA, they mandate that you first have the mono components into the system and then you can file a dual component system like Ryzodeg. But we are making progress. It just takes longer time than in the western world, so to speak.

That is just like the US, by the way.

You can say so, Lars, yes, absolutely. But when we then move into the other thing, type-1 diabetes and liraglutide, well, the ADJUNCT pivotal program consists of two trials, ONE and TWO. What you hear today is the number TWO trial, and that is a regulatory trial where they mandate us to show and document superiority. So we have to prove statistically significant improved A1c control by capping the insulin dose so that it's apples to apples and similar insulin dosing in both arms. In fact, we actually had an insulin dose lower in the liraglutide arms, but that's a different story. And we did meet the statistical hierarchy of testing in that trial. But ADJUNCT ONE is the big one. That's a full-year trial, unlike this one that was a half-year trial. It's also a trial with 1,400 patients where this one was only with 800 patients, and it is a treat-to-target trial. So that is to be perceived as the pivotal trial. And if that data comes out in the way that we hope, but we don't know, then that will be getting for a submission of the dossier in the first half of next year. The reason being that we have five dossiers I hope to submit in the US this year, and it's simply not feasible to get the filing done before the first half of next year. But let's hope we get there. Then when the question becomes Xultophy, obviously Xultophy could be a candidate to make the multiple daily injections fewer. It's less obvious to use Xultophy type-1 than in type-2 diabetes, because they're used to MDI regimens anyhow. But, of course, it could be an option and we'll look at that as so many other things. Whether this could be replicated with other GLP-1s, I would say yes and no. The ones that are short acting, like lixisenatide and exenatide, they would interfere, in my view, with the prandial bonus element of basal bonus and not be ideal. So it would have to be long acting GLP-1s, and they typically command less weight control than does liraglutide. So, some of it could be replicated with some of it, but probably not all of it with any of them.

That was a very, very astute final comment. Thank you very much, Mads. Next question, please.

We will now take the next question from Sachin Jain from Bank of America, Merrill Lynch. Please go ahead.

Hi. Thanks for taking my questions. Firstly, on pricing into 2016, I just wonder if you can comment at this stage whether you've had any negotiations around Tresiba positioning on formularies ahead of approval, and any risk that as you head into those you might have to give up some price on Levemir to get Tresiba listed, as was the case with the key competitor. And then secondly, just a high level question around your long-term insulin growth rate expectations, which have been 7 plus 3 get to 10, is there any change so that given the lower pricing coming out from the US that I guess was contributing to the three and the kind of macro outlook that’s slowing down China, which I guess was a significant contributor to the volume outlook? Thank you.

Thank you very much and first of all -- this is Lars Rebien here. Pricing 2016, speculation on Tresiba, we cannot go into go into a dialogue with the PBMs before the product is approved. And we can only speculate of course whether or not it will have any implications. It obviously had implications for Sanofi when they wanted to get access with Toujeo. They seemed to be in a hurry and got good access, but also at a price as we can see on the numbers. So, I think all of that will have to be the word till we get an approval and we see the label and that will depend -- that will determine how strong we are in the negotiations and how strong we are in that competitive marketplace which in the future will comprise of Levemir, Lantus, Lantus biosimilar and Toujeo and Tresiba. So, it’s going to be quite complex marketplace. But so far, we have -- we are seeing the price levels that I indicated before for 2016 and the same access in 2016 as we’ve seen in 2015. Then with regard to our long-term growth outlook, our long-term growth outlook does depend on Tresiba approval and therefore also subsequently our ability to launch Xultophy and get Xultophy approved and also in United States. But our long-term aspiration is still holding on to the sort of 7 plus 3, this is of course all assuming that what we are seeing currently in China is an aberration and a more short-term deterioration of growth. So let’s see when we get to the end of the year whether we have a different perspective on China, but that would still be my aspiration, 7 plus 3, 7 being volume and 3 being value and value coming from new products primarily. Okay.

Can I just take a follow-on on the Tresiba formulary commentary? As you think about the speed of access, are you more interested in getting quick access as a competitor or protecting pricing? And do you see the Tresiba negotiation process therefore as a risk or an opportunity as you head into ‘16?

Well, of course, this would be nice to sort of flag our negotiation strategy, but if you take the perspective from what we have historically done, you can say that we are a player that is going to be an insulin and diabetes therapy 20 years from now and we have an innovative portfolio. So, it is at least in our individual interest to retain value in the marketplace and rather go for a long-term strategy as oppose to a short-term conversion strategy, having said that, we will determine that, at this time of launch depending on the competitive situation and the label.

Thank you.

Thank you very much, Sachin. Next question please?

We will now take the next question from Tim Race from Deutsche Bank. Please go ahead.

Hi, gentlemen. Thanks for taking my call. So, starting off on R&D, just in terms of expectations going forward, obviously you’re running at a very low rate at the moment relative to peers, but you obviously also have a very different longevity of your asset mix. So, could you just help us understand how R&D may pick up in the short-term or not, and also just where you think a sustainable level is going forward? And then just another question on the costs, sales and distribution, you had the adjustment for legal provisions; could you just explain what that was? Was that Victoza legal cases and how much? Thank you.

Thank you very much. Jesper, I guess. Even though Mads would love to comment on the level of R&D expenses, I think this is more something for you to comment both on the expectations for R&D level it’s a part of the P&L going forward and then the legal provisions.

Yes, and maybe I can give the first chip and then Mads may want to add something. But, I think it is a little bit an unusual picture you look at for the first six months of this year, because you have two impacting forces, one is, the discontinuation of inflammation, and on top of that we have a very substantial currency impact that hits especially our R&D line when you look at it in reported numbers as the predominant part of our R&D costs is undertaken within the Eurozone including Denmark. What we really look at, when we look at it on an underlying trend is more what is a meaningful growth level and we believe that we successfully can continue to invest more within the R&D area and especially within diabetes and I would presume that we would at least see a growth levels of around 10% in investments in that area. This will be slightly volatile, of course be very dependent on the level of Phase 2 and especially Phase 3 compounds we are dealing with. I also would note that I see a trend towards us investing additional resources within 3b programs as you could allude to like LATIN as a label expansion for Victoza. But also more generally needed in the portfolio of our next generation insulin and also taking us to Phase 4 trials basically enabling better market access. And I see more requirements hitting us there which will have indications for the R&D ratio. If you look at -- if adjust for the inflammatory discontinuation and back that out, the growth in the first half of this year was 6% and that’s not deviating a lot from the 10% and I see us being in that vicinity. I don’t know, Mads, if you have more comments.

No, I totally agree. I’ll just add the comment that all the molecules you see right now in the pipeline are patented by our researchers mostly [indiscernible] in Denmark and that means that R&D to sales ratio sometimes can seem less than competition because we don’t has many milestone payments and other more expensive elements associated with licensing deals. Not that we will not license, but it is so that many of our fruits will be home grown and sometimes that can be cheaper if you are decent at it.

Legal provision….

In terms of legal provisions, the second -- the first of this year in comparison to last year is little bit impacted by a reversal of a legal provision last year and a charge this year relating to ongoing investigations and trials in the US that basically gives a slight impact on the S&D costs. On a full year basis, it’s not going to be very significant. But, in individual quarter and first half it is notable with a couple of percentage points because of the swing.

Yes. But we are then also continuing to invest in sales and distribution. We saw also it being slightly higher than the sales development, because of the continued expanding launch of Saxenda and expansion in China still, believing the long-term business case in China and expansion in emerging markets on the IO. Thank you very much for those questions. Next question, please.

We will now take the next question from Peter Verdult from Citi. Please go ahead.

Yes. Good afternoon. Peter Verdult, Citi. Two questions, Jakob, could we come back to China? Just start off by just quantifying what the impact from shipments was and then go straight into the strategy here. Because you’re heavily reliant on the old portfolio, reimbursement for the newer portfolio is years off, as we’re seeing with Victoza, and sales and marketing efforts are being curbed by government intervention. So I’m just trying to better understand how you can try and change the dynamics that you’re having -- you are facing in China. And then secondly, for Mads on LEADER, at ADA this year when ELIXA and TECOS were presented, it was highlighted that the duration of follow-up was pretty small at 20 to 30 months. Now, with LEADER you’ve got 9,000 patients being followed for at least two or three times longer. So, just given the A1c weight and blood pressure profile of Victoza, I’m just wondering how you internally are thinking about the potential for LEADER to be actually a positive outcome study, or is it very much that your upside expectation is that it just shows no harm? So I would just be interested in your thoughts there as we head towards the data. Thanks.

Yes, thank you very much Peter. Jakob if you want to cover China and your expectations where how we might be able to turn that deadlock we are facing?

Yes, I think the first part of the question was also shorter term to the implication of these movements in inventories. And I think in general terms we would say the impact as the three contributions more or less equal contributions between the slowing of the market, the increased competition the impact of that and then the shipments. But I think the point you alluded to the interesting part, that is as we look ahead because we firmly so believe in -- obviously in the growth case in China. And I will say NovoMix 30, we still grew more than double-digit and the focus going forward will be to leverage the current portfolio. It is correct that the newer products, they come with more delay and we’ve seen in the past and also with slower uptake in terms of national reimbursement listings and so on. So, growth will have to come from largely the current portfolio as we move ahead. And the strategy remains the same, and as Lars indicated we have followed through on an expansion of the field force to go yet again into the smaller community hospitals, where also Chinese Government intend to move some of the treatment of diabetes. And with 100 million people with diabetes in China we need to be firmly positioned in all areas of the China and in all regions and all the institutions and that’s the strategy we are pursuing and then with the current portfolio. But, we just have to get used to that the market will operate with the growth rates that are lower than we seen historically, but growth for sure.

And it’s a market that requires a full portfolio. We need to be available and get access to -- with human insulin does that’s where we build the loyalty. And then people, once they get income, they can upgrade and then we can capture the more affluent part of the market. So, I think we got the right approach to this and we still believe in the long-term growth and we will of course continue to reassess this. Mads, you are an optimistic man. You here being asked about something which I know that you are very optimistic about, but in reality then what is the powering and what is your realistic expectation that what we can achieve with the LEADER study?

Okay so with that intro, Lars, I think the LEADER study is…

That was a yellow card.

The LEADER study is, as per regulatory request, designed as a non-inferiority study. That means like 611 strict MACEs, that kind of stuff. And it’s double-blinded, it’s 9,300 patients and so on and so forth. Now, the difference to the existing trials is the individual patient exposure. We have exceeded now 30,000 patient years of exposure, and that is because in the trial there is a minimum exposure of 3.5 years per patient. This is because it’s a time and event driven trial. If only it were an event driven trial, we could have closed the shop after 611 MACEs, which we passed a long time ago. But the European regulators also had some very reasonable requests for long-term safety that was unrelated to the cardiovascular system, which is why it is event and time driven. That then means that we will end up with a total number of MACE events that is reminiscent of what you have in the superiority, you can say, designed trials such as the TECOS. But the distribution of patients is different in that we have fewer patients but they have more exposure, and that should ideally be beneficial for the discrimination of any difference in CV outcomes. As you will recall, when we look at both the VADT, ADVANCE, and in particularly the UK PDS and the DCCT, it is only the crocodile’s feet that start spreading out after several years of exposure, not after two years as we see in many of these trials. Henceforth, it is partly non-inferiority, but statistically speaking the next step in the statistical hierarchy is to test for superiority. And with more than 1,000 MACE events, if there is a discernible difference, that then becomes an option.

This was as conservative a comment you can get from Mads Krogsgaard on LEADER. Thank you very much, Peter.

Thanks guys. Thank you.

We will move on and take the next question.

We will now take the next question from Vincent Meunier from Morgan Stanley. Please go ahead.

Hello, gentlemen. Thank you for taking my questions. The first one is another one on Tresiba. With the final results of the DEVOTE trial getting closer and closer, is there a chance that the FDA may want to wait for the final completion of the trial before approving Tresiba, or at least influence the decision of the agency? And the second question is with regard to your long-term targets. Do you still anticipate to update your targets at the full year 2015 results? And what could be the pros and cons not to do it? Thank you.

Thank you very much. Two very concrete questions, one is the difficult to answer because this is whether or not we speculate what FDA might do and that is quite hazardous, as we’ve seen in the past. But, Mads, perhaps you want to just at least give whatever thoughts you have and then, Jesper, a little bit about the process of how we develop the long-term targets, why they are the way they are and what we will do and when.

So I think the Food and Drug Administration is a science based agency, and that means at the point in time when they see the interim results that none of us know about, then the agency officers and regulators have looked at that and decided whether to accept an interim submission or not. Then you can say what they see when they get those raw data or early data to the full submission, including all the analysis that we have co-submitted from the BEGIN program and from the extensions and so on, until their action after six months, which we expect to be around October 1, should not be influenced by things outside of the regulatory dossier. It should be influenced by whether they are comfortable with approving it as it stands or not. But to be honest, like Lars is saying, I cannot really speculate and should not speculate at all on regulatory bodies and how they think.

But of course, then we can say on a positive note that we’ve just announced that we will be completing the trial faster, so mid-year 2016. So should the worst happen, then that’s the timeline you are looking at, and then of course the data would need to be compiled and added as a different submission again at that point in time. But this is not our general expectation. And then, Jesper, the process, long-term financial targets, how we are going to deal with that?

Well, long-term financial targets have been an integral part of how Novo Nordisk is managed since 1996. We generally have set the long-term targets without a very specific time horizon for the individual targets. Just basically also here recognizing that both developments in markets and also developments in currencies can have very substantial impact on our ability to achieve what we have set out to do. If we look at the current environment, we have a very substantial impact from currencies which are very positive to Novo Nordisk in the operating model and the risk model we have currently, with an overweight of a cost base in euro and a continuation of expansion of income based in US dollar. So with that fundamental, if you forecast to end of 2015, it looks currently likely that we will achieve the long-term financial targets. What we have done in each occasion since 1996, when we have reached the long-term financial targets, is that we've had a thorough debate with the Board of Directors, we have concluded in the annual report for the actual year having it been audited by auditors when they're reached, and then we've come out with what are the new targets. So assuming that this will hold true for 2015, then I would assume that you will find an update on long-term financial targets in connection with the annual report for 2016. What is then the key drivers in terms of the individual targets in there, I think it's management's conviction that the current targets that we operate with in terms of ratios have been very, very useful for shareholder value generation, and I wouldn't expect radical changes in terms of what ratios we work with. The actual targets, we'll have to take the market situation into consideration, the pricing environment, and then set what we believe is realistic but ambitious targets for Novo Nordisk. And that will -- you should expect us to reveal then in the annual report for 2015 to be released around February 1, 2016. So that's the clarity we can give as per now. And of course it is -- as Lars also alluded to, will be dependent on the approval of Tresiba as the degludec portfolio and having access for that portfolio of products to the US markets will be very, very substantial for the long-term growth of Novo Nordisk.

Ladies and gentlemen, time flies when you're in good company. We unfortunately have to call for the last question, please.

We will now take our final question from Florent Cespedes, Societe Generale. Please go ahead.

Good afternoon, gentlemen. Thank you for taking my questions. Two quick ones. To come back on China, beyond the local competition and also Sanofi, could you tell us if there is any fundamental changes on this market? And my second question is on Xultophy. What could be the scenario in Germany in your view, given the fact that you withdrew Tresiba a couple of months ago? Thank you.

Yes. Thank you very much. Jakob again.

Yes, I think…

Do you see any fundamental changes?

Fundamental changes, well, it depends on at what level you want to look at it, you could say. As I said, we still believe in the fundamental growth case in China but we have seen changes, also some that we haven't yet discussed here. So part of the efforts from the central government in China to control costs, some of the things that have been implemented in the first part of the year was, amongst others, to ban the institutions' ability to mark up with 15% and thereby derive an income from selling the pharmaceutical products to the patients. I wouldn't call it a fundamental change, but it changes some of the dynamics in how we interact with institutions. Government has opened up for the possibility that after the provincial biddings there could potentially be a second round of negotiation with the institutions, not a fundamental change but still one that will further increase the competitiveness also from a pricing point of view. And there's also some new rules around the whole way that prices are governed. So I would say if you add it all up, we've come out of a decade of very high growth in China. I think we're looking at a market now where it's more similar to others, where you have to work hard for the growth but growth is still going to be there. So that fundamental part is not unchanged.

And then as the final question on Xultophy Germany, yes, I think I have to state that we are disappointed about the evaluation of Tresiba in Germany and we're disappointed that we were forced hence to withdraw this product to the dis-convenience of 40,000 people using this product. Could we be in the same situation with Xultophy? Maybe, we don't know. We have got an initial assessment from it which is not positive. We will, of course, be putting our best foot forward in our compiling of our dossiers and our negotiations, and then we shall see. I would say, though, that if we cannot get a positive resolution with Xultophy with the German insurance agencies, then I don't look very positive on the German market going forward because Xultophy is seen [indiscernible] the best type-2 product available on the market. Of course, the question will be about the price. So we shall see, but the same thing might happen. I actually have to admit that. It's very frustrating for us. It must be very frustrating for the patients and for the medical community, because they have been very productive in assisting us in the clinical development of these new drugs, but that's the situation we face. We have a little bit of a similar situation in Denmark and in the UK. So that's the nature of our business these days.

We thank you all and we shall be back when we have news. Otherwise, it will be in connection with the Q3 release later this year. Thank you.