Novocure Reports Third Quarter 2021 Financial Results and Provides Company Update

Quarterly net revenues of $133.6 million with 77% gross margin

Last patient enrolled in phase 3 pivotal INNOVATE-3 trial for recurrent ovarian cancer

ST. HELIER, Jersey–(BUSINESS WIRE)–Novocure (NASDAQ: NVCR) today reported financial results for the quarter ended September 30, 2021, highlighting commercial strength and strategic investment across clinical, product development and commercial initiatives intended to fuel future growth. 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). TTFields are electric fields that disrupt cancer cell division.

Third quarter 2021 highlights include:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2021

 

2020

 

%
Change

 

2021

 

2020

 

%
Change

 

 

 

 

 

 

 

 

 

 

 

 

Financial, in millions

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

133.6

 

 

$

132.7

 

 

1

%

 

$

401.8

 

 

$

350.4

 

 

15

%

Gross Profit

$

103.4

 

 

$

104.3

 

 

(1)

%

 

$

316.6

 

 

$

272.0

 

 

16

%

Net income (loss)

$

(13.1)

 

 

$

9.3

 

 

(241)

%

 

$

(31.9)

 

 

$

14.9

 

 

(314)

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

$

19.9

 

 

$

37.3

 

 

(47)

%

 

$

59.2

 

 

$

80.4

 

 

(26)

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-financial

 

 

 

 

 

 

 

 

 

 

 

Active patients at period end(2)

3,502

 

 

3,361

 

 

4

%

 

3,502

 

 

3,361

 

 

4

%

Prescriptions received in period(3)

1,380

 

 

1,371

 

 

1

%

 

4,232

 

 

4,202

 

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Adjusted EBITDA is a non-U.S. GAAP measurement of earnings before interest, taxes, depreciation, amortization and share-based compensation.

(2) 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.

(3) 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 third quarter was another period of solid execution at Novocure,” said William Doyle, Novocure’s Executive Chairman. “We generated $134 million in net revenues and invested $48 million across our research, clinical and product development initiatives. We recently completed enrollment in our phase 3 INNOVATE-3 trial and our phase 2 EF-31 trial, and announced a new collaboration with global oncology leader, Roche. The fundamentals of our business are strong, and we are energized by the opportunities before us to help many more cancer patients and to drive the growth of our company.”

“As we look ahead, we are nearing a key inflection point for patients and our organization as several of our late-stage clinical trials approach full enrollment,” added Asaf Danziger, Novocure’s Chief Executive Officer. “We have completed enrollment in our INNOVATE-3 trial studying recurrent ovarian cancer, and our LUNAR trial studying non-small cell lung cancer is expected to enroll the final patient by year-end. As this cycle of late-stage trials nears conclusion, we are eager to further explore the efficacy of TTFields in new indications, together with other treatment modalities, and in partnerships with global oncology leaders.”

Third quarter 2021 financial update

For the quarter ended September 30, 2021, net revenues were $133.6 million, representing 1% growth compared to the third quarter 2020.

  • In the United States, net revenues totaled $88.0 million in the quarter ended September 30, 2021, representing a 5% decrease compared to the same period in 2020.
  • In EMEA markets, net revenues totaled $30.3 million in the quarter ended September 30, 2021, representing 7% growth compared to the same period in 2020.
  • In Japan, net revenues totaled $8.8 million in the quarter ended September 30, 2021, representing 17% growth compared to the same period in 2020.
  • In Greater China, net revenues totaled $6.5 million in the quarter ended September 30, 2021, representing 52% growth compared to the same period in 2020.

For the three months ended September 30, 2021, the increase in net revenues from the third quarter of 2020 resulted primarily from an increase of 141 active patients in our currently active markets and the launch of Optune® in China.

We recorded $10.6 million in revenues from Medicare fee-for-service beneficiaries in the third quarter 2021, an increase of 9% from the $9.7 million recognized in the same period in 2020. We believe we have completed the administrative ramp-up associated with processing Medicare claims and efficiently pursuing appeals. In the third quarter of 2021, we did not record a material amount of incremental net revenue resulting from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries billed prior to established coverage.

Cost of revenues for the three months ended September 30, 2021 was $30.2 million compared to $28.4 million for the same period in 2020, representing an increase of 6%. The increase in cost of revenues was primarily due to the cost of shipping transducer arrays to a higher volume of commercial patients and increasing shipments of equipment to Zai Lab. Gross margin was 77% for the three months ended September 30, 2021 compared to 79% for the three months ended September 30, 2020.

Research, development and clinical trials expenses for the three months ended September 30, 2021 were $48.1 million compared to $32.8 million for the same period in 2020, representing an increase of 47%. This was primarily due to an increase in clinical trial and personnel expenses for our phase 3 pivotal and label expansion trials, an increase in development and personnel expenses to support our product development programs, and increased investments in preclinical research and the expansion of our medical affairs activities.

Sales and marketing expenses for the three months ended September 30, 2021 were $32.6 million compared to $29.4 million for the same period in 2020, representing an increase of 11%. This was primarily due to an increase in personnel and professional services costs as we continue to enhance our commercial capabilities in anticipation of potential future approvals in new indications.

General and administrative expenses for the three months ended September 30, 2021 were $31.2 million compared to $27.1 million for the same period in 2020, representing an increase of 15%. This was primarily due to an increase in personnel costs and professional services.

Net loss for the three months ended September 30, 2021 was $13.1 million compared to net income of $9.3 million for the same period in 2020.

At September 30, 2021, we had $933.8 million in cash, cash equivalents and short-term investments, an increase of $91.2 million compared to $842.6 million at December 31, 2020. The increase in our cash, cash equivalents and short-term investments was primarily due to the cash flow from operations and the exercise of options.

Third quarter 2021 operating statistics

There were 3,502 active patients at September 30, 2021, representing 4% growth compared to September 30, 2020.

  • In North America, there were 2,223 active patients at September 30, 2021, representing no change compared to September 30, 2020.
  • In EMEA markets, there were 987 active patients at September 30, 2021, representing 9% growth compared to September 30, 2020.
  • In Japan, there were 292 active patients at September 30, 2021, representing 21% growth compared to September 30, 2020.

Additionally, 1,380 prescriptions were received in the quarter ended September 30, 2021, representing 1% growth compared to the same period in 2020.

  • In North America, 931 prescriptions were received in the quarter ended September 30, 2021, representing a 3% decrease compared to the same period in 2020.
  • In EMEA markets, 339 prescriptions were received in the quarter ended September 30, 2021, representing 3% growth compared to the same period in 2020.
  • In Japan, 110 prescriptions were received in the quarter ended September 30, 2021, representing 28% growth compared to the same period in 2020.

Third quarter 2021 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 was $19.9 million for the three months ended September 30, 2021, a decrease of $17.4 million, or 47%, from $37.3 million for the three months ended September 30, 2020. The decrease was driven by increased investments in research and development activities intended to further our exploration of TTFields therapy, and in sales and marketing readiness initiatives in anticipation of future potential launches in new indications. Adjusted EBITDA as a percentage of net revenues reached 15% in the quarter, despite research and development investment reaching 36% of third quarter net revenues. We believe these focused investments are critical to our efforts to realize the long-term potential of the TTFields platform.

Recent achievements

  • In September, the FDA granted breakthrough device designation to the NovoTTF-200T™ system for the treatment of advanced liver cancer, in part based on clinical data from Novocure’s phase 2 HEPANOVA trial. Our team, along with trial investigators, are actively designing a phase 3 pivotal trial studying the efficacy of TTFields together with atezolizumab and bevacizumab for the first-line treatment of patients with unresectable or metastatic liver cancer.
  • In September, we announced a clinical trial collaboration with Roche to evaluate the use of TTFields together with atezolizumab for the treatment of metastatic pancreatic cancer.
  • In October, we announced the last patient had been enrolled in our phase 2 pilot EF-31 trial for the treatment of gastric cancer.
  • Today, we announced that the last patient was enrolled in our phase 3 pivotal INNOVATE-3 trial for the treatment of recurrent ovarian cancer.

Anticipated clinical milestones

  • Data from phase 2 pilot EF-31 trial in gastric cancer (2022)
  • Data from phase 2 pilot EF-33 trial with high-intensity arrays in recurrent glioblastoma (2022)
  • Final data from phase 3 pivotal LUNAR trial in NSCLC (2022)
  • Last patient enrollment in phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2023)
  • Data from phase 3 pivotal METIS trial in brain metastases (2023)
  • Final data from phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2023)
  • Final data from phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2024)

Conference call details

Novocure will host a conference call and webcast to discuss second quarter 2021 financial results at 8 a.m. EDT today, Thursday, October 28, 2021. 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 6394785.

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 (TTFields). TTFields are electric fields that disrupt 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, gastric cancer, glioblastoma, liver cancer, non-small cell lung cancer, pancreatic cancer and ovarian 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 us, visit Novocure.com and follow @Novocure on LinkedIn and Twitter.

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 25, 2021 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 September 30,

 

Nine months ended September 30,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

 

2020

 

Unaudited

 

Unaudited

 

Audited

Net revenues

$

133,606

 

 

$

132,660

 

 

$

401,818

 

 

$

350,413

 

 

$

494,366

 

Cost of revenues

30,206

 

 

28,395

 

 

85,190

 

 

78,365

 

 

106,501

 

Gross profit

103,400

 

 

104,265

 

 

316,628

 

 

272,048

 

 

387,865

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Research, development and clinical trials

48,141

 

 

32,818

 

 

144,372

 

 

88,008

 

 

132,010

 

Sales and marketing

32,580

 

 

29,364

 

 

98,075

 

 

86,658

 

 

118,017

 

General and administrative

31,231

 

 

27,061

 

 

95,116

 

 

79,073

 

 

107,437

 

Total operating costs and expenses

111,952

 

 

89,243

 

 

337,563

 

 

253,739

 

 

357,464

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

(8,552)

 

 

15,022

 

 

(20,935)

 

 

18,309

 

 

30,401

 

Financial expenses (income), net

1,981

 

 

3,983

 

 

5,567

 

 

9,032

 

 

12,299

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

(10,533)

 

 

11,039

 

 

(26,502)

 

 

9,277

 

 

18,102

 

Income taxes

2,591

 

 

1,755

 

 

5,391

 

 

(5,614)

 

 

(1,706)

 

Net income (loss)

$

(13,124)

 

 

$

9,284

 

 

$

(31,893)

 

 

$

14,891

 

 

$

19,808

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per ordinary share

$

(0.13)

 

 

$

0.09

 

 

$

(0.31)

 

 

$

0.15

 

 

$

0.20

 

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

103,731,147

 

 

101,234,306

 

 

103,281,380

 

 

100,601,427

 

 

100,930,866

 

Diluted net income (loss) per ordinary share

$

(0.13)

 

 

$

0.09

 

 

$

(0.31)

 

 

$

0.14

 

 

$

0.18

 

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

103,731,147

 

 

108,643,814

 

 

103,281,380

 

 

108,113,416

 

 

108,877,648

 

Consolidated Balance Sheets

USD in thousands (except share data)

 

 

September 30,
2021

 

December 31,
2020

 

Unaudited

 

Audited

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

689,837

 

 

$

234,674

 

Short-term investments

243,948

 

 

607,902

 

Restricted cash

855

 

 

11,499

 

Trade receivables, net

94,129

 

 

96,699

 

Receivables and prepaid expenses

17,595

 

 

21,245

 

Inventories

22,642

 

 

27,422

 

Total current assets

1,069,006

 

 

999,441

 

LONG-TERM ASSETS:

 

 

 

Property and equipment, net

11,699

 

 

11,395

 

Field equipment, net

12,553

 

 

11,230

 

Right-of-use assets

16,460

 

 

19,009

 

Other long-term assets

10,735

 

 

10,908

 

Total long-term assets

51,447

 

 

52,542

 

TOTAL ASSETS

$

1,120,453

 

 

$

1,051,983

 

 

 

 

 

Consolidated Balance Sheets

USD in thousands (except share data)

 

 

September 30,
2021

 

December 31,
2020

 

Unaudited

 

Audited

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Trade payables

$

60,005

 

 

$

53,647

 

Other payables, lease liabilities and accrued expenses

64,544

 

 

59,965

 

Total current liabilities

124,549

 

 

113,612

 

LONG-TERM LIABILITIES:

 

 

 

Long-term debt, net

561,388

 

 

429,905

 

Deferred revenue

7,464

 

 

12,139

 

Long-term leases

11,478

 

 

14,293

 

Employee benefits

2,031

 

 

5,171

 

Other long-term liabilities

379

 

 

337

 

Total long-term liabilities

582,740

 

 

461,845

 

TOTAL LIABILITIES

707,289

 

 

575,457

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

Share capital –

 

 

 

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

103,817,566 shares and 102,334,276 shares at September 30, 2021 (unaudited)
and December 31, 2020, respectively

 

 

 

Additional paid-in capital

1,073,532

 

 

1,111,435

 

Accumulated other comprehensive income (loss)

(900)

 

 

(3,832)

 

Retained earnings (accumulated deficit)

(659,468)

 

 

(631,077)

 

TOTAL SHAREHOLDERS’ EQUITY

413,164

 

 

476,526

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,120,453

 

 

$

1,051,983

 

Non-U.S. GAAP financial measures reconciliation

USD in thousands

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Net income (loss)

$

(13,124)

 

 

$

9,284

 

 

(241)

%

 

$

(31,893)

 

 

$

14,891

 

 

(314)

%

Add: Income tax

2,591

 

 

1,755

 

 

48

%

 

5,391

 

 

(5,614)

 

 

(196)

%

Add: Financial income (expenses), net

1,981

 

 

3,983

 

 

(50)

%

 

5,567

 

 

9,032

 

 

(38)

%

Add: Depreciation and amortization

2,734

 

 

2,188

 

 

25

%

 

7,584

 

 

6,677

 

 

14

%

EBITDA

$

(5,818)

 

 

$

17,210

 

 

(134)

%

 

$

(13,351)

 

 

$

24,986

 

 

(153)

%

Add: Share-based compensation

25,758

 

 

20,121

 

 

28

%

 

72,502

 

 

55,448

 

 

31

%

Adjusted EBITDA

$

19,940

 

 

$

37,331

 

 

(47)

%

 

$

59,151

 

 

$

80,434

 

 

(26)

%

 

Investors:
Ingrid Goldberg
investorinfo@novocure.com
610-723-7427

Media:
Leigh Labrie
media@novocure.com
610-723-7428

Source: Novocure