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Novocure Reports Second Quarter 2023 Financial Results

Quarterly net revenues of $126 million with 3,571 active patients on therapy as of June 30, 2023

Phase 3 LUNAR trial in non-small cell lung cancer met primary and key secondary survival endpoints, the first of four phase 3 trials to readout by year-end 2024

Interim analysis for fully enrolled phase 3 PANOVA-3 trial in pancreatic cancer concluded with recommendation to proceed to final analysis

Novocure (NASDAQ: NVCR) today reported financial results for the quarter ended June 30, 2023. Novocure is a global oncology company working to extend survival in some of the most aggressive forms of cancer by developing and commercializing its innovative therapy, Tumor Treating Fields (TTFields).

“The second quarter was a period of sound execution and expansion at Novocure,” said Asaf Danziger, Novocure’s Chief Executive Officer. “Our restructured commercial organization has begun driving greater penetration in key markets, the launch of Optune® in France has been a resounding success, and we are preparing to introduce our next generation arrays in more markets later this year. We believe there are many more patients who can benefit from TTFields therapy and we are determined to reach them.”

“The positive results from the LUNAR trial in non-small cell lung cancer mark the beginning of the next chapter at Novocure, as we strive to extend survival for patients diagnosed with difficult-to-treat tumors,” said William Doyle, Novocure’s Executive Chairman. “With three more phase 3 trials set to read out by the end of 2024 and a new generation of trials slated to launch, our determination and commitment are strengthened by the prospect of potentially treating many more patients across a number of new indications in the coming years.”

Financial updates for the second quarter ended June 30, 2023:

  • Total net revenues for the quarter were $126.1 million, a decrease of 11% compared to the same period in 2022. The decrease resulted primarily from $13.4 million in reduced collections from previously denied or appealed claims in the U.S.
    • The United States, Germany and Japan contributed $87.0 million, $15.7 million and $7.9 million in quarterly net revenues, respectively, with our other active markets contributing $8.7 million.
    • Revenue in Greater China from Novocure’s partnership with Zai Lab totaled $6.8 million.
  • Gross margin for the quarter was 73%.
  • Research, development and clinical studies expenses for the quarter were $55.4 million, a decrease of 3% from the same period in 2022. This primarily reflects reduced costs associated with recently completed trials in the quarter. Total clinical trial expenses can fluctuate quarter-to-quarter dependent upon the amount of clinical research organization services delivered, clinical materials procured and number of trials actively underway. As our current phase 3 clinical trials near completion, we expect to backfill our clinical trial pipeline with new phase 2 and 3 trials.
  • Sales and marketing expenses for the quarter were $58.5 million, an increase of 31% compared to the same period in 2022. This increase reflects increased investments associated with geographic expansion and pre-launch activities intended to increase awareness of TTFields therapy in anticipation of future approvals in new indications.
  • General and administrative expenses for the quarter were $40.8 million, an increase of 29% compared to the same period in 2022. This reflects increased personnel and project costs to support larger patient populations, new geographic launches, supply chain expansion and information technology enhancements.
  • Net loss for the quarter was $57.4 million with loss per share of $0.54.
  • Adjusted EBITDA* for the quarter was $(27.2) million.
  • Cash, cash equivalents and short-term investments were $940.8 million as of June 30, 2023.

Operational updates for the second quarter ended June 30, 2023:

  • 1,556 prescriptions were received in the quarter, an increase of 13% compared to the same period in 2022. Prescriptions from the United States, Germany and Japan contributed 981, 204 and 92 prescriptions, respectively, with our other active markets contributing 279 prescriptions.
  • As of June 30, 2023, there were 3,571 active patients on therapy. Active patients from the United States, Germany and Japan contributed 2,200, 499 and 352 active patients, respectively, with the remaining 520 active patients contributed by our other active markets.

Quarterly updates and achievements:

  • In June, we presented positive results from the phase 3 LUNAR trial evaluating the use of TTFields therapy together with standard therapies for the treatment of metastatic non-small cell lung cancer (NSCLC) following platinum-failure. The LUNAR trial met its primary endpoint with a statistically significant and clinically meaningful 3-month improvement in median overall survival (OS) with TTFields therapy added to standard therapies (HR=0.74, P=0.035). Patients randomized to receive TTFields therapy together with standard therapies demonstrated median OS of 13.2 months compared to 9.9 months in patients treated with standard therapies alone. Patients randomized to receive TTFields therapy and physician’s choice immune checkpoint inhibitor (ICI) demonstrated a median OS of 18.5 months, a profound extension compared to the median OS of 10.8 months demonstrated by patients that received ICI alone (HR=0.63; P=0.03). Patients randomized to receive TTFields therapy and docetaxel had a positive survival trend with a median OS of 11.1 months vs 8.7 months. TTFields therapy was well-tolerated with no added systemic toxicities and few grade 3 (no grade 4 or 5) device-related adverse events. These data are expected to serve as the basis for a PMA submission to the FDA in the second half of 2023.
  • In July, we announced that an independent data monitoring committee (DMC) reviewed the safety and efficacy data for all patients in the fully enrolled PANOVA-3 clinical trial. The interim analysis resulted in a DMC recommendation that the clinical trial proceed to final analysis. The PANOVA-3 study accrued 556 patients as of February 2023 and data will be reviewed in 2024, following an 18-month follow-up period.
  • In July, the U.S. Food and Drug Administration accepted the investigation device exemption for the LUNAR-2 clinical trial, a randomized, phase 3 study testing the safety and effectiveness of TTFields therapy concomitant with pembrolizumab and platinum-based chemotherapy in patients with metastatic NSCLC. The two primary endpoints of LUNAR-2 are overall survival and progression-free survival. LUNAR-2 is designed to accrue 734 patients with a 21-month follow-up following the enrollment of the last patient.

Anticipated clinical milestones:

  • Data from phase 3 INNOVATE-3 clinical trial in recurrent ovarian cancer (2H 2023)
  • Top-line data from phase 3 METIS clinical trial in brain metastases (Q1 2024)
  • Data from phase 3 PANOVA-3 clinical trial in locally advanced pancreatic cancer (2H 2024)

Conference call details

Novocure will host a conference call and webcast to discuss second quarter 2023 financial results at 8 a.m. EDT today, Thursday, July 27, 2023. To access the conference call by phone, use the following conference call registration link and dial-in details will be provided. To access the webcast, use the following webcast registration link.

The webcast, earnings slides presented during the webcast and the corporate presentation can be accessed live from the Investor Relations page of Novocure’s website, www.novocure.com/investor-relations, and will be available for at least 14 days following the call. Novocure has used, and intends to continue to use, its investor relations website, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About Novocure

Novocure is a global oncology company working to extend survival in some of the most aggressive forms of cancer through the development and commercialization of its innovative therapy, Tumor Treating Fields. Novocure’s commercialized products are approved in certain countries for the treatment of adult patients with glioblastoma, malignant pleural mesothelioma and pleural mesothelioma. Novocure has ongoing or completed clinical trials investigating Tumor Treating Fields in brain metastases, gastric cancer, glioblastoma, liver cancer, non-small cell lung cancer, pancreatic cancer and ovarian cancer.

Headquartered in Root, Switzerland and with a growing global footprint, Novocure has regional operating centers in Portsmouth, New Hampshire and Tokyo, as well as a research center in Haifa, Israel. For additional information about the company, please visit Novocure.com and follow @Novocure on LinkedIn and Twitter.

*Non-GAAP Financial Measurements

We measure our performance based upon a non-U.S. GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation ("Adjusted EBITDA"). We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because it helps investors compare the results of our operations from period to period by removing the impact of earnings attributable to our capital structure, tax rate and material non-cash items, specifically share-based compensation.

Forward-Looking Statements

In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Novocure’s current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs, clinical trial progress, development of potential products, interpretation of clinical results, prospects for regulatory approval, manufacturing development and capabilities, market prospects for its products, coverage, collections from third-party payers and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or other words and terms of similar meaning. Novocure’s performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, environmental, regulatory and political conditions as well as issues arising from the COVID-19 pandemic and other more specific risks and uncertainties facing Novocure such as those set forth in its Annual Report on Form 10-K filed on February 23, 2023, and subsequent filings with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Novocure does not intend to update publicly any forward-looking statement, except as required by law. Any forward-looking statements herein speak only as of the date hereof. The Private Securities Litigation Reform Act of 1995 permits this discussion.

 

Consolidated Statements of Operations

USD in thousands (except share and per share data)

 

 

Three months ended June 30,

 

Six months ended June 30,

 

Year ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2022

 

 

Unaudited

 

Unaudited

 

Audited

Net revenues

$

126,051

 

 

$

140,866

 

 

$

248,233

 

 

$

278,413

 

 

$

537,840

 

Cost of revenues

 

34,018

 

 

 

28,503

 

 

 

63,632

 

 

 

56,230

 

 

 

114,867

 

Gross profit

 

92,033

 

 

 

112,363

 

 

 

184,601

 

 

 

222,183

 

 

 

422,973

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Research, development and clinical studies

 

55,427

 

 

 

57,075

 

 

 

115,131

 

 

 

99,309

 

 

 

206,085

 

Sales and marketing

 

58,488

 

 

 

44,750

 

 

 

109,657

 

 

 

82,634

 

 

 

173,658

 

General and administrative

 

40,778

 

 

 

31,666

 

 

 

82,722

 

 

 

62,174

 

 

 

132,753

 

Total operating costs and expenses

 

154,693

 

 

 

133,491

 

 

 

307,510

 

 

 

244,117

 

 

 

512,496

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(62,660

)

 

 

(21,128

)

 

 

(122,909

)

 

 

(21,934

)

 

 

(89,523

)

Financial income (expenses), net

 

8,756

 

 

 

(2,228

)

 

 

17,925

 

 

 

(3,937

)

 

 

7,677

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(53,904

)

 

 

(23,356

)

 

 

(104,984

)

 

 

(25,871

)

 

 

(81,846

)

Income taxes

 

3,514

 

 

 

652

 

 

 

5,495

 

 

 

2,784

 

 

 

10,688

 

Net income (loss)

 

(57,418

)

 

 

(24,008

)

 

 

(110,479

)

 

 

(28,655

)

 

 

(92,534

)

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per ordinary share

$

(0.54

)

 

$

(0.23

)

 

$

(1.04

)

 

$

(0.27

)

 

$

(0.88

)

Weighted average number of ordinary shares used in computing basic net income (loss) per share

 

106,289,073

 

 

 

104,627,789

 

 

 

105,979,791

 

 

 

104,408,164

 

 

 

104,660,476

 

Diluted net income (loss) per ordinary share

$

(0.54

)

 

$

(0.23

)

 

$

(1.04

)

 

$

(0.27

)

 

$

(0.88

)

Weighted average number of ordinary shares used in computing diluted net income (loss) per share

 

106,289,073

 

 

 

104,627,789

 

 

 

105,979,791

 

 

 

104,408,164

 

 

 

104,660,476

 

 

Consolidated Balance Sheets

USD in thousands (except share data)

 

 

June 30,

2023

 

December 31,

2022

 

Unaudited

 

Audited

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

156,978

 

$

115,326

Short-term investments

 

783,837

 

 

854,099

Restricted cash

 

516

 

 

508

Trade receivables, net

 

70,988

 

 

86,261

Receivables and prepaid expenses

 

20,148

 

 

25,959

Inventories

 

33,023

 

 

29,376

Total current assets

 

1,065,490

 

 

1,111,529

LONG-TERM ASSETS:

 

 

 

Property and equipment, net

 

41,156

 

 

32,678

Field equipment, net

 

11,519

 

 

12,684

Right-of-use assets

 

26,278

 

 

23,596

Other long-term assets

 

14,572

 

 

11,161

Total long-term assets

 

93,525

 

 

80,119

TOTAL ASSETS

$

1,159,015

 

$

1,191,648

 

 

 

 

 

Consolidated Balance Sheets

USD in thousands (except share data)

 

 

June 30,

2023

 

December 31,

2022

 

Unaudited

 

Audited

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Trade payables

$

82,536

 

 

$

85,197

 

Other payables, lease liabilities and accrued expenses

 

67,551

 

 

 

73,580

 

Total current liabilities

 

150,087

 

 

 

158,777

 

LONG-TERM LIABILITIES:

 

 

 

Long-term debt, net

 

567,150

 

 

 

565,509

 

Deferred revenues

 

807

 

 

 

2,878

 

Long-term leases

 

20,329

 

 

 

18,762

 

Employee benefit liabilities

 

4,840

 

 

 

4,404

 

Other long-term liabilities

 

119

 

 

 

148

 

Total long-term liabilities

 

593,245

 

 

 

591,701

 

TOTAL LIABILITIES

 

743,332

 

 

 

750,478

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

Share capital -

 

 

 

Ordinary shares no par value, unlimited shares authorized; issued and outstanding:

106,605,331 shares and 105,049,411 shares at June 30, 2023 (unaudited) and December 31, 2022, respectively

 

 

 

 

 

Additional paid-in capital

 

1,306,603

 

 

 

1,222,063

 

Accumulated other comprehensive income (loss)

 

(1,981

)

 

 

(2,433

)

Retained earnings (accumulated deficit)

 

(888,939

)

 

 

(778,460

)

TOTAL SHAREHOLDERS' EQUITY

 

415,683

 

 

 

441,170

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,159,015

 

 

$

1,191,648

 

 

Non-U.S. GAAP financial measures reconciliation

USD in thousands

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2023

 

 

 

2022

 

 

%Change

 

 

2023

 

 

 

2022

 

 

%Change

Net income (loss)

$

(57,418

)

 

$

(24,008

)

 

139

%

 

$

(110,479

)

 

$

(28,655

)

 

286

%

Add: Income tax

 

3,514

 

 

 

652

 

 

439

%

 

 

5,495

 

 

 

2,784

 

 

97

%

Add: Financial expenses (income), net

 

(8,756

)

 

 

2,228

 

 

(493

)%

 

 

(17,925

)

 

 

3,937

 

 

(555

)%

Add: Depreciation and amortization

 

2,721

 

 

 

2,654

 

 

3

%

 

 

5,443

 

 

 

5,264

 

 

3

%

EBITDA

$

(59,939

)

 

$

(18,474

)

 

224

%

 

$

(117,466

)

 

$

(16,670

)

 

605

%

Add: Share-based compensation

 

32,740

 

 

 

25,823

 

 

27

%

 

 

71,824

 

 

 

50,868

 

 

41

%

Adjusted EBITDA

$

(27,199

)

 

$

7,349

 

 

(470

)%

 

$

(45,642

)

 

$

34,198

 

 

(233

)%

 

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