Novocure Reports First Quarter 2020 Financial Results and Provides Company Update

Quarterly net revenues of $101.8 million, representing 39 percent growth versus the first quarter 2019 and 3 percent growth versus the fourth quarter 2019

Balance sheet strength allows continued investments in innovation and the advancement of commercial and development priorities

ST. HELIER, Jersey–(BUSINESS WIRE)–Novocure (NASDAQ: NVCR) today reported financial results for the quarter ended March 31, 2020, highlighting revenue growth and financial strength, clinical pipeline developments and the company’s response to COVID-19. 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.

First quarter 2020 highlights include:

 

Three months ended

March 31,

 

2020

 

2019

% Change

 

 

 

 

 

 

 

 

Financial, in millions

 

 

 

 

 

 

 

 

Net revenues

$

101.8

 

$

73.3

 

39

%

 

Gross profit

$

77.3

 

$

53.5

 

45

%

 

Net income (loss)

$

4.0

 

$

(12.2

)

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and short-term investments at end of period

$

331.3

 

$

256.6

 

29

%

 

 

 

 

 

 

 

 

 

 

Non-financial

 

 

 

 

 

 

 

Active patients at end of period(1)

3,095

2,631

18

%

Prescriptions received in period(2)

 

1,409

 

1,310

8

%

(1)

An “active patient” is a patient who is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days.

(2)

A “prescription received” is a commercial order for Optune or Optune Lua that is received from a physician certified to treat patients for a patient not previously on Optune or Optune Lua. Orders to renew or extend treatment are not included in this total.

“The need to treat patients with aggressive cancers does not lessen with COVID-19,” said William Doyle, Novocure’s Executive Chairman. “We remain confident in the role Tumor Treating Fields can play across oncology, in the resiliency of our direct-to-patient business model, and in the long-term potential of our business.”

“We are focused on our mission and continue to advance our commercial and development priorities,” added Asaf Danziger, Novocure’s Chief Executive Officer. “With more than 3,000 patients on therapy at March 31, 2020, we delivered another strong quarter of financial performance. We ended the first quarter with $102 million in net revenues, $4 million in net income and $331 million cash on hand. Our financial strength allows us to continue investing in innovation, and we believe we are well positioned to navigate the substantial uncertainty affecting our industry.”

First quarter 2020 operating statistics and financial update

For the quarter ended March 31, 2020, net revenues were $101.8 million, representing 39% growth compared to the first quarter 2019.

  • In the United States, net revenues totaled $69.3 million in the quarter ended March 31, 2020, representing 49% growth compared to the same period in 2019.
  • In Germany and other EMEA markets, net revenues totaled $24.5 million in the quarter ended March 31, 2020, representing 9% growth compared to the same period in 2019.
  • In Japan, net revenues totaled $6.5 million in the quarter ended March 31, 2020, representing 91% growth compared to the same period in 2019.
  • In Greater China, net revenues totaled $1.6 million in the quarter ended March 31, 2020, representing 101% growth compared to the same period in 2019.

There were 3,095 active patients at March 31, 2020, representing 18% growth compared to March 31, 2019, and six percent growth compared to December 31, 2019.

  • In the United States, there were 2,023 active patients at March 31, 2020, representing 14% growth compared to March 31, 2019.
  • In Germany and other EMEA markets, there were 850 active patients at March 31, 2020, representing 16% growth compared to March 31, 2019.
  • In Japan, there were 222 active patients at March 31, 2020, representing 88% growth compared to March 31, 2019.

Additionally, 1,409 prescriptions were received in the quarter ended March 31, 2020, representing eight percent growth compared to the same period in 2019, and two percent growth compared to the quarter ended December 31, 2019. In the quarter ended March 31, 2020, 1,120 Optune prescriptions were written for patients with newly diagnosed glioblastoma.

  • In the United States, 986 prescriptions were received in the quarter ended March 31, 2020, representing seven percent growth compared to the same period in 2019.
  • In Germany and other EMEA markets, 329 prescriptions were received in the quarter ended March 31, 2020, representing no change compared to the same period in 2019.
  • In Japan, 94 prescriptions were received in the quarter ended March 31, 2020, representing 71% growth compared to the same period in 2019.

For the three months ended March 31, 2020, cost of revenues was $24.5 million compared to $19.8 million for the same period in 2019, representing an increase of 24%. The increase was primarily due to the cost of shipping transducer arrays to a higher volume of commercial patients. Gross margin was 76% for the three months ended March 31, 2020 and 73% for the three months ended March 31, 2019.

Research, development and clinical trials expenses for the three months ended March 31, 2020, were $25.3 million compared to $17.0 million for the same period in 2019, representing an increase of 48%. This was primarily due to an increase in clinical trial and personnel expenses for our phase 3 pivotal and phase 4 post-marketing trials and an increase in costs associated with medical affairs, basic research and engineering.

Sales and marketing expenses for the three months ended March 31, 2020, were $28.8 million compared to $22.3 million for the same period in 2019, representing an increase of 29%. This was primarily due to increased marketing expenses related to the launch of Optune Lua and an increase in personnel costs to support our growing commercial business.

General and administrative expenses for the three months ended March 31, 2020 were $26.6 million compared to $20.2 million for the same period in 2019, representing an increase of 31%. This was primarily due to an increase in personnel costs and an increase in professional services.

Net income for the three months ended March 31, 2020, was $4.0 million compared to a net loss of $12.2 million for the same period in 2019.

At March 31, 2020, we had $181.9 million in cash and cash equivalents and $149.3 million in short-term investments, for a total balance of $331.3 million in cash, cash equivalents and short-term investments. This represents an increase of $5.2 million in cash and investments since December 31, 2019.

First quarter 2020 non-U.S. GAAP measures

We also 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.

Adjusted EBITDA increased by $9.6 million, or 176%, to $15.1 million for the three months ended March 31, 2020 from $5.5 million for the three months ended March 31, 2019. This improvement in fundamental financial performance was driven by top-line growth and disciplined execution.

Anticipated clinical milestones

  • Data from phase 2 pilot HEPANOVA trial in advanced liver cancer (2021)
  • Data from phase 2 pilot EF-31 trial in gastric cancer (2021)
  • Interim analysis of phase 3 pivotal LUNAR trial in non-small cell lung cancer (2021)
  • Interim analysis of phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2021)
  • Interim analysis of phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2021)
  • Data from phase 3 pivotal METIS trial in brain metastases (2022)
  • Final data from phase 3 pivotal LUNAR trial in non-small cell lung cancer (2023)
  • Final data from phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2023)
  • Final data from phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2023)

Conference call details

Novocure will host a conference call and webcast to discuss first quarter 2020 financial results at 8 a.m. EDT today, Thursday, April 30, 2020. Analysts and investors can participate in the conference call by dialing 855-442-6895 for domestic callers and 509-960-9037 for international callers, using the conference ID 4193569.

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 and in the U.S. for the treatment of adult patients with malignant pleural mesothelioma. Novocure has ongoing or completed clinical trials investigating Tumor Treating Fields in brain metastases, non-small cell lung cancer, pancreatic cancer, ovarian cancer, liver cancer and gastric cancer.

Headquartered in Jersey, Novocure has U.S. operations in Portsmouth, New Hampshire, Malvern, Pennsylvania and New York City. Additionally, the company has offices in Germany, Switzerland, Japan and Israel. For additional information about the company, please visit www.novocure.com or follow us at www.twitter.com/novocure.

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, 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 27, 2020 and its Quarterly Report on Form 10-Q filed on April 30, 2020 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 March 31,

 

Year ended
December 31,

 

2020

 

2019

 

2019

 

Unaudited

 

Audited

Net revenues

$

 

101,828

 

 

 

$

 

73,309

 

 

 

$

 

351,318

 

 

Cost of revenues

 

24,496

 

 

 

 

19,814

 

 

 

 

88,606

 

 

Gross profit

 

77,332

 

 

 

 

53,495

 

 

 

 

262,712

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

Research, development and clinical trials

 

25,271

 

 

 

 

17,042

 

 

 

 

79,003

 

 

Sales and marketing

 

28,834

 

 

 

 

22,333

 

 

 

 

96,675

 

 

General and administrative

 

26,608

 

 

 

 

20,238

 

 

 

 

87,948

 

 

Total operating costs and expenses

 

80,713

 

 

 

 

59,613

 

 

 

 

263,626

 

 

 

 

 

 

 

 

Operating income (loss)

 

(3,381

)

 

 

 

(6,118

)

 

 

 

(914

)

 

Financial expenses (income), net

 

2,432

 

 

 

 

2,371

 

 

 

 

7,910

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(5,813

)

 

 

 

(8,489

)

 

 

 

(8,824

)

 

Income taxes

 

(9,765

)

 

 

 

3,661

 

 

 

 

(1,594

)

 

Net income (loss)

$

 

3,952

 

 

 

$

 

(12,150

)

 

 

$

 

(7,230

)

 

 

 

 

 

 

 

Basic net income (loss) per ordinary share

$

 

0.04

 

 

 

$

 

(0.13

)

 

 

$

 

(0.07

)

 

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

 

99,877,567

 

 

 

 

94,811,282

 

 

 

 

97,237,549

 

 

 

 

 

 

 

 

Diluted net income (loss) per ordinary share

$

 

0.04

 

 

 

$

 

(0.13

)

 

 

$

 

(0.07

)

 

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

 

108,100,623

 

 

 

 

94,811,282

 

 

 

 

97,237,549

 

 

 

Consolidated Balance Sheets

USD in thousands (except share data)

 

 

March 31,
2020

 

December 31,
2019

 

Unaudited

 

Audited

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

181,919

 

 

$

177,321

Short-term investments

149,349

 

 

148,769

Restricted cash

786

 

 

2,095

Trade receivables

65,139

 

 

58,859

Receivables and prepaid expenses

42,483

 

 

29,202

Inventories

22,502

 

 

23,701

Total current assets

462,178

 

 

439,947

LONG-TERM ASSETS:

 

 

 

Property and equipment, net

9,778

 

 

9,342

Field equipment, net

8,467

 

 

7,684

Right-of-use assets, net

17,201

 

 

17,571

Other long-term assets

4,824

 

 

4,904

Total long-term assets

40,270

 

 

39,501

TOTAL ASSETS

$

502,448

 

 

$

479,448

 

Consolidated Balance Sheets

USD in thousands (except share data)

 

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

 

Unaudited

 

 

Audited

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Trade payables

 

$

40,408

 

 

 

$

36,925

 

Other payables, lease liabilities and accrued expenses

 

 

43,795

 

 

 

 

49,386

 

Total current liabilities

 

 

84,203

 

 

 

 

86,311

 

 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

 

Long-term loan, net of discount and issuance costs

 

 

149,465

 

 

 

 

149,424

 

Deferred revenue

 

 

8,772

 

 

 

 

7,807

 

Long-term leases

 

 

13,274

 

 

 

 

14,140

 

Employee benefits

 

 

4,519

 

 

 

 

3,754

 

Other long-term liabilities

 

 

267

 

 

 

 

222

 

Total long-term liabilities

 

 

176,297

 

 

 

 

175,347

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

260,500

 

 

 

 

261,658

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Share capital –

 

 

 

 

 

 

 

 

Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 100,362,973 shares and 99,528,435 shares at March 31, 2020 (unaudited) and December 31, 2019, respectively

 

 

 

 

 

 

 

Additional paid-in capital

 

 

892,510

 

 

 

 

871,442

 

Accumulated other comprehensive income (loss)

 

 

(3,629

)

 

 

 

(2,767

)

Retained earnings (accumulated deficit)

 

 

(646,933

)

 

 

 

(650,885

)

Total shareholders’ equity

 

 

241,948

 

 

 

 

217,790

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

502,448

 

 

 

$

479,448

 

Non-U.S. GAAP financial measures reconciliation

USD in thousands

 

 

Three months ended
March 31,

Adjusted EBITDA

 

2020

 

2019

Net income (loss)

 

$

 

3,952

 

 

$

 

(12,150

)

Add: Income tax

 

$

 

(9,765

)

 

$

 

3,661

 

Add: Financial expenses (income), net

 

$

 

2,432

 

 

$

 

2,371

Add: Depreciation and amortization

 

$

 

1,888

 

 

$

 

1,929

 

EBITDA

 

$

 

(1,493

)

 

$

 

(4,189

)

Add: Share-based compensation

 

$

 

16,557

 

 

$

 

9,649

 

Adjusted EBITDA

 

$

 

15,064

 

 

$

 

5,460

 

 

Media and Investor Contact:
Ashley Cordova
acordova@novocure.com
212-767-7558

Source: Novocure