Novocure Reports Second Quarter 2019 Financial Results and Provides Company Update

Quarterly net revenues of $86.7 million, representing 41 percent growth versus the second quarter 2018

The NovoTTF-100L™ System FDA approved to treat malignant pleural mesothelioma in combination with standard chemotherapies, Novocure’s first FDA-approved torso indication

Medicare released final local coverage determination and fee schedule amount providing coverage and pricing of Optune® for newly diagnosed glioblastoma

Enrollment ongoing in four phase 3 pivotal trials, creating a significant market expansion opportunity in some of the most aggressive forms of cancer

ST. HELIER, Jersey–(BUSINESS WIRE)–Novocure (NASDAQ: NVCR) today reported financial results for the three and six months ended June 30, 2019, highlighting a track record of execution, strengthening financial performance and an advancing clinical pipeline. 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.

Second quarter 2019 highlights include:

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

 

2019

 

 

2018

 

% Change

 

 

2019

 

 

2018

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-financial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active patients at period end(1)

 

2,726

 

 

2,169

 

26%

 

 

2,726

 

 

2,169

 

26%

 

Prescriptions received in period(2)

 

1,362

 

 

1,244

 

9%

 

 

2,672

 

 

2,502

 

7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial, in millions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

86.7

 

$

61.5

 

41%

 

$

160.0

 

$

113.6

 

41%

 

Gross profit

$

65.6

 

$

41.7

 

57%

 

$

119.1

 

$

75.6

 

58%

 

Net loss

$

(1.3

)

$

(15.5

)

92%

 

$

(13.4

)

$

(36.2

)

63%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and

short-term investments at end of period

$

284.6

 

$

219.0

 

30%

 

$

284.6

 

$

219.0

 

30%

 

 

(1)

An “active patient” is a patient who is on Optune 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 that is received from a physician certified to treat patients with Optune for a patient not previously on Optune. Orders to renew or extend treatment are not included in this total.

“The second quarter was transformative for Novocure. We achieved our first ever quarter of positive operating income driven by record quarterly net revenues of $86.7 million with more than 2,700 patients on Optune at quarter end,” said Asaf Danziger, Novocure’s CEO. “Our torso device, NovoTTF-100L, was approved by the FDA to treat malignant pleural mesothelioma in combination with standard chemotherapies via the Humanitarian Device Exemption pathway. For the first time in over 15 years, there’s a new FDA-approved treatment for mesothelioma.”

“Our momentum continues into the third quarter. Last week, Medicare released a final local coverage determination and fee schedule amount which provides coverage and pricing of Optune for newly diagnosed GBM, effective September 1, 2019. In response to public comments, the final coverage criteria eliminated or revised many of the restrictions originally proposed,” stated Bill Doyle, Novocure’s Executive Chairman. “Our focus is unwavering on disciplined execution intended to deliver both sustainable near-term growth from existing indications and significant long-term shareholder value from our pipeline.”

Second quarter 2019 operating statistics and financial update

There were 2,726 active patients on Optune at June 30, 2019, representing 26 percent growth versus June 30, 2018, and four percent growth versus March 31, 2019. The increase in active patients was driven primarily by prescription growth in the United States and Japan and the ongoing benefit from continued growth in prescriptions for patients with newly diagnosed GBM globally.

  • In the United States, there were 1,846 active patients on Optune at June 30, 2019, representing 17 percent growth versus June 30, 2018.
  • In Germany and other EMEA markets, there were 737 active patients on Optune at June 30, 2019, representing 32 percent growth versus June 30, 2018.
  • In Japan, there were 143 active patients on Optune at June 30, 2019, representing 286 percent growth versus June 30, 2018.

Additionally, 1,362 prescriptions were received in the three months ended June 30, 2019, representing nine percent growth compared to the same period in 2018, and four percent growth compared to the three months ended March 31, 2019.

  • In the United States, 989 prescriptions were received in the three months ended June 30, 2019, representing four percent growth to the same period in 2018.
  • In Germany and other EMEA markets, 299 prescriptions were received in the three months ended June 30, 2019, representing 13 percent growth compared to the same period in 2018.
  • In Japan, 74 prescriptions were received in the three months ended June 30, 2019, representing 131 percent growth compared to the same period in 2018.

For the three months ended June 30, 2019, net revenues were $86.7 million, representing 41 percent growth versus the same period in 2018. Revenue growth was primarily driven by an increase of 557 active patients in our currently active markets, representing 26 percent growth, and an increase in net revenues per active patient. The increase in net revenues per active patient was primarily driven by improved reimbursement rates, which we believe are sustainable. The improved reimbursement rates also resulted in an additional benefit of approximately $5 million to second quarter net revenues that we do not expect to be as significant in future quarters.

Cost of revenues was $21.1 million compared to $19.8 million for the same period in 2018, representing an increase of 6 percent. The increase in cost of revenues was primarily due to the cost of shipping transducer arrays to a higher volume of active patients partially offset by a reduction in the cost of goods per active patient driven by ongoing efficiency initiatives and scale. Gross margin was 76% compared to 68% for the same period in 2018.

Research, development and clinical trials expenses were $19.5 million compared to $11.4 million for the same period in 2018, representing an increase of 71 percent. This was primarily due to an increase in clinical trial and personnel expenses for our phase 3 pivotal trials and an increase in costs associated with medical affairs, regulatory and engineering.

Sales and marketing expenses were $23.7 million compared to $19.2 million for the same period in 2018, representing an increase of 24 percent. This was primarily due to increased marketing expenses related to the launch of NovoTTF-100L for malignant pleural mesothelioma and increased personnel costs.

General and administrative expenses were $21.2 million compared to $18.2 million for the same period in 2018, representing an increase of 17 percent. This was primarily due to an increase in personnel costs and an increase in professional services.

Net loss was $1.3 million, or $0.01 per share, compared to net loss of $15.5 million for the same period in 2018, or $0.17 per share, representing an improvement of 94 percent.

At June 30, 2019, we had $180.1 million in cash and cash equivalents and $104.5 million in short-term investments, for a total balance of $284.6 million in cash, cash equivalents and short-term investments.

Anticipated clinical and regulatory milestones

  • Zai Lab initiation of phase 2 pilot trial in gastric cancer (2019)
  • Data from phase 2 pilot HEPANOVA trial in advanced liver cancer (H2 2020)
  • Interim analysis of phase 3 pivotal LUNAR trial in non-small cell lung cancer (H2 2020)
  • Data from phase 3 pivotal METIS trial in brain metastases (2021)
  • Interim analysis of phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2021)
  • Final data from phase 3 pivotal LUNAR trial in non-small cell lung cancer (2022)
  • Interim analysis of phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2022)
  • Final data from phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2022)
  • Final data from phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2024)

Conference call details

Novocure will host a conference call and webcast to discuss second quarter 2019 financial results today, Thursday, July 25, 2019, at 8 a.m. EDT. 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 1438824.

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.

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. Tumor Treating Fields is a cancer therapy that uses electric fields tuned to specific frequencies to disrupt solid tumor cancer cell division. Novocure’s commercialized products are approved for the treatment of adult patients with glioblastoma and 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 and liver 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 more specific risks and uncertainties facing Novocure such as those set forth in its Report on Form 10-Q filed on July 25, 2019, 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,

 

2019

 

2018

 

2019

 

2018

 

 

2018

 

Unaudited

 

Unaudited

 

 

Audited

Net revenues

 

$

86,713

 

 

$

61,514

 

 

$

160,022

 

 

$

113,639

 

 

$

248,069

 

Cost of revenues

 

 

21,106

 

 

 

19,833

 

 

 

40,920

 

 

 

38,071

 

 

 

80,048

 

Gross profit

 

 

65,607

 

 

 

41,681

 

 

 

119,102

 

 

 

75,568

 

 

 

168,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research, development and clinical trials

 

 

19,454

 

 

 

11,362

 

 

 

36,496

 

 

 

22,466

 

 

 

50,574

 

Sales and marketing

 

 

23,708

 

 

 

19,196

 

 

 

46,041

 

 

 

37,331

 

 

 

77,663

 

General and administrative

 

 

21,249

 

 

 

18,208

 

 

 

41,487

 

 

 

35,533

 

 

 

73,456

 

Total operating costs and expenses

 

 

64,411

 

 

 

48,766

 

 

 

124,024

 

 

 

95,330

 

 

 

201,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

1,196

 

 

 

(7,085

)

 

 

(4,922

)

 

 

(19,762

)

 

 

(33,672

)

Financial expenses (income), net

 

 

1,239

 

 

 

2,860

 

 

 

3,610

 

 

 

7,713

 

 

 

12,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(43

)

 

 

(9,945

)

 

 

(8,532

)

 

 

(27,475

)

 

 

(45,942

)

Income taxes

 

 

1,227

 

 

 

5,565

 

 

 

4,888

 

 

 

8,759

 

 

 

17,617

 

Net income (loss)

 

$

(1,270

)

 

$

(15,510

)

 

$

(13,420

)

 

$

(36,234

)

 

$

(63,559

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income (loss) per ordinary share

 

$

(0.01

)

 

$

(0.17

)

 

$

(0.14

)

 

$

(0.40

)

 

$

(0.69

)

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

 

 

96,356,317

 

 

 

91,331,862

 

 

 

95,583,802

 

 

 

90,658,735

 

 

 

91,828,043

 

Consolidated Balance Sheets
USD in thousands (except share data)

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

180,073

 

 

$

140,622

 

Short-term investments

 

 

104,511

 

 

 

105,256

 

Restricted cash

 

 

2,110

 

 

 

2,134

 

Trade receivables

 

 

42,533

 

 

 

36,523

 

Receivables and prepaid expenses

 

 

15,302

 

 

 

14,279

 

Inventories

 

 

25,454

 

 

 

22,555

 

Total current assets

 

 

369,983

 

 

 

321,369

 

 

 

 

 

 

 

 

 

 

LONG-TERM ASSETS:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

8,399

 

 

 

8,442

 

Field equipment, net

 

 

7,466

 

 

 

6,924

 

Right-of-use assets, net

 

 

14,659

 

 

 

 

Other long-term assets

 

 

5,682

 

 

 

3,058

 

Total long-term assets

 

 

36,206

 

 

 

18,424

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

406,189

 

 

$

339,793

 

Consolidated Balance Sheets
USD in thousands (except share data)

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Trade payables

 

$

30,069

 

 

$

26,708

 

Other payables, lease liabilities and accrued expenses

 

 

43,498

 

 

 

37,852

 

Total current liabilities

 

 

73,567

 

 

 

64,560

 

 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

 

Long-term loan, net of discount and issuance costs

 

 

149,344

 

 

 

149,268

 

Deferred revenue

 

 

8,874

 

 

 

9,929

 

Employee benefit liabilities

 

 

3,610

 

 

 

2,683

 

Long-term lease liabilities

 

 

11,582

 

 

 

 

Other long-term liabilities

 

 

306

 

 

 

1,094

 

Total long-term liabilities

 

 

173,716

 

 

 

162,974

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

247,283

 

 

 

227,534

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Share capital –

 

 

 

 

 

 

 

 

Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 97,858,876 shares and 93,254,185 shares at June 30, 2019 (unaudited) and December 31, 2018, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

818,338

 

 

 

757,314

 

Accumulated other comprehensive income (loss)

 

 

(2,357

)

 

 

(1,400

)

Retained earnings (accumulated deficit)

 

 

(657,075

)

 

 

(643,655

)

Total shareholders’ equity

 

 

158,906

 

 

 

112,259

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

406,189

 

 

$

339,793

 

 

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

Source: Novocure