Financial News

Novocure Reports Second Quarter 2022 Financial Results

Quarterly net revenues of $140.9 million, a 6% increase year-over-year

Novocure (NASDAQ: NVCR) today reported financial results for the quarter ended June 30, 2022. 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 solid progress, further solidifying the fundamentals of our business,” said William Doyle, Novocure’s Executive Chairman. “We generated $141 million in net revenues in the quarter, released promising data from our gastric cancer pilot study, announced a new pivotal trial collaboration with Merck, and advanced our late-stage clinical studies. The future is bright for Novocure, and we are hopeful our progress will enable us to treat many more cancer patients in the near future.”

“Novocure is entering a transformational period,” said Asaf Danziger, Novocure’s Chief Executive Officer. “In the next 18 months, we expect to reach a number of clinical and product development milestones, including data releases from multiple pivotal trials and the limited release of our new flex arrays. We are eager to continue exploring the potential of our platform therapy, and I would like to thank my Novocure colleagues for their passion and determination in advancing the science and adoption of Tumor Treating Fields.”

Financial updates for the second quarter ended June 30, 2022:

  • Total net revenues for the quarter were $140.9 million, an increase of 6% compared to the same period in 2021.
  • The United States, EMEA and Japan contributed $108.2 million, $18.5 million, and $8.3 million in quarterly net revenues, respectively.
  • German revenue was impacted by a reduction in German active patient numbers and approval rates as a result of updated coverage criteria.
  • Revenue in Greater China from Novocure’s partnership with Zai Lab totaled $5.9 million.
  • Gross margin for the quarter was 80%.
  • Research, development and clinical studies expenses for the quarter were $57.1 million, an increase of 13% from the same period in 2021.
  • Sales and marketing expenses for the quarter were $44.7 million, an increase of 31% compared to the same period in 2021. This reflects increased investments in early commercial and market access capabilities.
  • General and administrative expenses for the quarter were $31.7 million, a decrease of 3% compared to the same period in 2021.
  • Net loss for the quarter was $24.0 million with loss per share of $0.23.
  • Adjusted EBITDA* for the quarter was $7.3 million.
  • Cash, cash equivalents and short-term investments were $948.5 million as of June 30, 2022.

Operational updates for the second quarter ended June 30, 2022:

  • As of June 30, 2022, there were 3,454 active patients on therapy. Active patients from North America, EMEA and Japan contributed 2,229, 879 and 346 active patients, respectively.
  • 1,383 prescriptions were received in the quarter. Prescriptions from North America, EMEA and Japan contributed 954, 334 and 95 prescriptions, respectively.

Quarterly updates and achievements:

  • Today, we are announcing that top-line data from the LUNAR pivotal study will be distributed in early Q1 2023 versus the final week of 2022 to ensure optimal visibility and timing for all audiences. Our clinical operations and data collection efforts remain on track.
  • In May 2022, we entered into a clinical trial collaboration agreement with MSD, a tradename of Merck & Co., Inc., ("MSD") to conduct a double-blind, placebo-controlled study of TTFields concomitant with pembrolizumab and maintenance temozolomide for the treatment of newly diagnosed GBM. We intend to engage the FDA in pre-submission discussions in the near-term regarding the parameters of the KEYNOTE D58 trial protocol design.
  • In June 2022, we announced results of the phase 2 pilot EF-31 study evaluating the use of TTFields together with standard-of-care (chemotherapy alone or in combination with trastuzumab for HER2-positive patients) as first-line treatment for gastric cancer. Initial analysis was conducted with a median follow-up period of 8.6 months. The primary endpoint, confirmed objective response rate, was 50%. Median progression-free survival was 7.8 months. Duration of response was 10.3 months. Median overall survival had not yet been reached with a one-year survival rate of 72%. We look forward to further exploration of these potential benefits as we look ahead to a randomized phase 3 clinical study.
  • In June 2022, we announced the first patient has been enrolled in the phase 2 pilot KEYNOTE B36 study, conducted in collaboration with MSD. KEYNOTE B36 is designed to evaluate the safety and effectiveness of TTFields together with pembrolizumab for the treatment of locally advanced or metastatic intrathoracic NSCLC that expresses PD-L1.

Anticipated clinical milestones:

  • Data from phase 2 pilot EF-33 study with high-intensity arrays in recurrent GBM (2022)
  • Last patient enrollment in phase 3 pivotal METIS study in brain metastases (2022)
  • Data from phase 3 pivotal LUNAR study in NSCLC (early Q1 2023)
  • Last patient enrollment in phase 3 pivotal PANOVA-3 study in locally advanced pancreatic cancer (2023)
  • Data from phase 3 pivotal INNOVATE-3 study in recurrent ovarian cancer (2023)
  • Data from phase 3 pivotal METIS study in brain metastases (2023)
  • Data from phase 3 pivotal PANOVA-3 study in locally advanced pancreatic cancer (2024)

Conference call details

Novocure will host a conference call and webcast to discuss second quarter 2022 financial results at 8 a.m. EDT today, Thursday, July 28, 2022. Analysts and investors can participate in the conference call by using the following registration link, and dial-in details will be provided.

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 malignant pleural mesothelioma. Novocure has ongoing or completed clinical studies 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 study 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 24, 2022, as amended to date, 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,

 

2022

 

2021

 

2022

 

2021

 

2021

 

Unaudited

 

Unaudited

 

Audited

Net revenues

$

140,866

 

$

133,517

 

$

278,413

 

$

268,212

 

$

535,031

Cost of revenues

 

28,503

 

 

28,599

 

 

56,230

 

 

54,984

 

 

114,877

Gross profit

 

112,363

 

 

104,918

 

 

222,183

 

 

213,228

 

 

420,154

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Research, development and clinical studies

 

57,075

 

 

50,315

 

 

99,309

 

 

96,231

 

 

201,303

Sales and marketing

 

44,750

 

 

34,138

 

 

82,634

 

 

65,495

 

 

137,057

General and administrative

 

31,666

 

 

32,760

 

 

62,174

 

 

63,885

 

 

126,127

Total operating costs and expenses

 

133,491

 

 

117,213

 

 

244,117

 

 

225,611

 

 

464,487

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(21,128)

 

 

(12,295)

 

 

(21,934)

 

 

(12,383)

 

 

(44,333)

Financial expenses (income), net

 

2,228

 

 

940

 

 

3,937

 

 

3,586

 

 

7,742

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(23,356)

 

 

(13,235)

 

 

(25,871)

 

 

(15,969)

 

 

(52,075)

Income taxes

 

652

 

 

1,406

 

 

2,784

 

 

2,800

 

 

6,276

Net income (loss)

$

(24,008)

 

$

(14,641)

 

$

(28,655)

 

$

(18,769)

 

$

(58,351)

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per ordinary share

$

(0.23)

 

$

(0.14)

 

$

(0.27)

 

$

(0.18)

 

$

(0.56)

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

 

104,627,789

 

 

103,484,866

 

 

104,408,164

 

 

103,061,557

 

 

 

 

103,433,274

Diluted net income (loss) per ordinary share

$

(0.23)

 

$

(0.14)

 

$

(0.27)

 

$

(0.18)

 

$

(0.56)

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

 

104,627,789

 

 

103,484,866

 

 

104,408,164

 

 

103,061,557

 

 

 

 

103,433,274

Consolidated Balance Sheets

USD in thousands (except share data)

 

 

June 30,

2022

 

December 31, 2021

 

Unaudited

 

Audited

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

367,014

 

$

208,802

Short-term investments

 

581,503

 

 

728,898

Restricted cash

 

749

 

 

807

Trade receivables, net

 

97,563

 

 

93,567

Receivables and prepaid expenses

 

18,195

 

 

17,025

Inventories

 

29,531

 

 

24,427

Total current assets

 

1,094,555

 

 

1,073,526

LONG-TERM ASSETS:

 

 

 

Property and equipment, net

 

26,561

 

 

22,693

Field equipment, net

 

12,377

 

 

12,923

Right-of-use assets

 

18,281

 

 

18,267

Other long-term assets

 

10,898

 

 

12,086

Total long-term assets

 

68,117

 

 

65,969

TOTAL ASSETS

$

1,162,672

 

$

1,139,495

Consolidated Balance Sheets

USD in thousands (except share data)

 

 

June 30,

2022

 

December 31, 2021

 

Unaudited

 

Audited

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Trade payables

$

79,910

 

$

72,600

Other payables, lease liabilities and accrued expenses

 

55,489

 

 

70,002

Total current liabilities

 

135,399

 

 

142,602

LONG-TERM LIABILITIES:

 

 

 

Long-term debt, net

 

563,846

 

 

562,216

Deferred revenue

 

4,541

 

 

6,477

Long-term leases

 

13,377

 

 

12,997

Employee benefit liabilities

 

3,598

 

 

4,543

Other long-term liabilities

 

239

 

 

166

Total long-term liabilities

 

585,601

 

 

586,399

TOTAL LIABILITIES

 

721,000

 

 

729,001

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

Share capital -

 

 

 

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

104,727,685 shares and 103,971,263 shares at June 30, 2022 (unaudited) and December 31, 2021, respectively

 

 

 

Additional paid-in capital

 

1,158,348

 

 

1,099,589

Accumulated other comprehensive income (loss)

 

(2,095)

 

 

(3,169)

Retained earnings (accumulated deficit)

 

(714,581)

 

 

(685,926)

TOTAL SHAREHOLDERS' EQUITY

 

441,672

 

 

410,494

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,162,672

 

$

1,139,495

Non-U.S. GAAP financial measures reconciliation

USD in thousands

 

 

Three months ended June 30,

 

Six months ended June 30,

 

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

Net income (loss)

$

(24,008)

 

$

(14,641)

 

64 %

 

$

(28,655)

 

$

(18,769)

 

53 %

Add: Income tax

 

652

 

 

1,406

 

(54) %

 

 

2,784

 

 

2,800

 

(1) %

Add: Financial expenses (income), net

 

2,228

 

 

940

 

137 %

 

 

3,937

 

 

3,586

 

10 %

Add: Depreciation and amortization

 

2,654

 

 

2,480

 

7 %

 

 

5,264

 

 

4,850

 

9 %

EBITDA

$

(18,474)

 

$

(9,815)

 

88 %

 

$

(16,670)

 

$

(7,533)

 

121 %

Add: Share-based compensation

 

25,823

 

 

27,881

 

(7) %

 

 

50,868

 

 

46,744

 

9 %

Adjusted EBITDA

$

7,349

 

$

18,066

 

(59) %

 

$

34,198

 

$

39,211

 

(13) %

 

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