DocumentNovocure Reports Third Quarter 2022 Financial Results
Quarterly net revenues of $131 million with $52 million invested in research & development initiatives
Entering a transformational period with multiple pivotal trial readouts anticipated in coming quarters
Root, Switzerland – Novocure (NASDAQ: NVCR) today reported financial results for the quarter ended September 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).
“In the third quarter, we showed consistent execution in service of our mission to extend survival in some of the most aggressive forms of cancer,” said William Doyle, Novocure’s Executive Chairman. “We are diligently working to reach additional patients in our current markets, expand into new markets, enhance our products and treat patients in new indications throughout the body. We are investing aggressively to prepare Novocure for the future and are eager to treat many more patients in the coming years.”
“Novocure is approaching a period that should be transformational for our company and patients,” said Asaf Danziger, Novocure’s Chief Executive Officer. “January marks the beginning of a two-year period of multiple data releases from our pivotal studies exploring the use of TTFields in a variety of solid tumor cancers and combinations. These data catalysts could enable us to treat tens of thousands more patients in the future, and we look forward to sharing these results with physicians, patients, and the investor community in the coming quarters.”
Financial updates for the third quarter ended September 30, 2022:
•Total net revenues for the quarter were $131.0 million, a decrease of 2% compared to the same period in 2021.
•The United States, EMEA and Japan contributed $102.7 million, $14.3 million, and $7.9 million in quarterly net revenues, respectively.
•Net revenues were impacted by the volume of cash collections from aged claims in the U.S., the ongoing impact of German coverage updates and foreign exchange pressure.
•Revenue in Greater China from Novocure’s partnership with Zai Lab totaled $6.2 million.
•Gross margin for the quarter was 77%.
•Research, development and clinical studies expenses for the quarter were $52.0 million, an increase of 8% from the same period in 2021.
•Sales and marketing expenses for the quarter were $41.4 million, an increase of 27% 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 $32.5 million, an increase of 4% compared to the same period in 2021.
•Net loss for the quarter was $26.6 million with loss per share of $0.25.
•Adjusted EBITDA* for the quarter was $4.4 million.
•Cash, cash equivalents and short-term investments were $970.3 million as of September 30, 2022.
Operational updates for the third quarter ended September 30, 2022:
•As of September 30, 2022, there were 3,420 active patients on therapy. Active patients from North America, EMEA and Japan contributed 2,181, 885 and 354 active patients, respectively.
•1,389 prescriptions were received in the quarter. Prescriptions from North America, EMEA and Japan contributed 978, 332 and 79 prescriptions, respectively.
Quarterly updates and achievements:
•Today, we are announcing preliminary data from the phase 2 EF-33 pilot study evaluating the safety and efficacy of high density arrays in 25 patients with recurrent glioblastoma (GBM). Among those who used Optune® as directed for at least one month, median progression-free survival was 4.5 months compared to 2.2 months in the historical control, Novocure’s pivotal EF-11 study. Further, notwithstanding the increased TTFields intensity, EF-33 patients reported no TTFields-related toxicity.
•Our phase 3 pivotal METIS study for the treatment of brain metastases from non-small cell lung cancer (NSCLC) continues to enroll well, and we have visibility to final patient enrollment; however, we now expect to complete enrollment in the first quarter of 2023 versus the fourth quarter of 2022. This will begin the final patient’s 12-month follow-up period, and we anticipate top-line data in the first quarter of 2024.
•In September 2022, we announced the creation of our U.S. CNS (central nervous system) Cancers Franchise, intended to strengthen focus on growth in our U.S. GBM business by streamlining decision-making and improving coordination.
Anticipated clinical milestones:
•Top-line readout from phase 3 pivotal LUNAR study in NSCLC (Q1 2023)
•Data from phase 3 pivotal INNOVATE-3 study in recurrent ovarian cancer (2023)
•Data from phase 3 pivotal METIS study in brain metastases (2024)
•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 third quarter 2022 financial results at 8 a.m. EDT today, Thursday, October 27, 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, 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 September 30, | | Nine months ended September 30, | | Year ended December 31, |
| 2022 | | 2021 | | 2022 | | 2021 | | 2021 |
| Unaudited | | Unaudited | | Audited |
| Net revenues | $ | 130,998 | | | $ | 133,606 | | | $ | 409,411 | | | $ | 401,818 | | | $ | 535,031 | |
| Cost of revenues | 29,749 | | | 30,206 | | | 85,979 | | | 85,190 | | | 114,877 | |
| Gross profit | 101,249 | | | 103,400 | | | 323,432 | | | 316,628 | | | 420,154 | |
| | | | | | | | | |
| Operating costs and expenses: | | | | | | | | | |
| Research, development and clinical studies | 51,956 | | | 48,141 | | | 151,265 | | | 144,372 | | | 201,303 | |
| Sales and marketing | 41,395 | | | 32,580 | | | 124,029 | | | 98,075 | | | 137,057 | |
| General and administrative | 32,509 | | | 31,231 | | | 94,683 | | | 95,116 | | | 126,127 | |
| Total operating costs and expenses | 125,860 | | | 111,952 | | | 369,977 | | | 337,563 | | | 464,487 | |
| | | | | | | | | |
| Operating income (loss) | (24,611) | | | (8,552) | | | (46,545) | | | (20,935) | | | (44,333) | |
| Financial expenses (income), net | (1,194) | | | 1,981 | | | 2,743 | | | 5,567 | | | 7,742 | |
| | | | | | | | | |
| Income (loss) before income taxes | (23,417) | | | (10,533) | | | (49,288) | | | (26,502) | | | (52,075) | |
| Income taxes | 3,159 | | | 2,591 | | | 5,943 | | | 5,391 | | | 6,276 | |
| Net income (loss) | $ | (26,576) | | | $ | (13,124) | | | $ | (55,231) | | | $ | (31,893) | | | $ | (58,351) | |
| | | | | | | | | |
| Basic net income (loss) per ordinary share | $ | (0.25) | | | $ | (0.13) | | | $ | (0.53) | | | $ | (0.31) | | | $ | (0.56) | |
| Weighted average number of ordinary shares used in computing basic net income (loss) per share | 104,884,583 | | | 103,731,147 | | | 104,552,803 | | | 103,281,380 | | | 103,433,274 | |
| Diluted net income (loss) per ordinary share | $ | (0.25) | | | $ | (0.13) | | | $ | (0.53) | | | $ | (0.31) | | | $ | (0.56) | |
| Weighted average number of ordinary shares used in computing diluted net income (loss) per share | 104,884,583 | | | 103,731,147 | | | 104,552,803 | | | 103,281,380 | | | 103,433,274 | |
Consolidated Balance Sheets
USD in thousands (except share data)
| | | | | | | | | | | |
| September 30,
2022 | | December 31, 2021 |
| Unaudited | | Audited |
| ASSETS | | | |
| CURRENT ASSETS: | | | |
| Cash and cash equivalents | $ | 243,805 | | | $ | 208,802 | |
| Short-term investments | 726,515 | | | 728,898 | |
| Restricted cash | 231 | | | 807 | |
| Trade receivables, net | 87,552 | | | 93,567 | |
| Receivables and prepaid expenses | 17,478 | | | 17,025 | |
| Inventories | 26,792 | | | 24,427 | |
| Total current assets | 1,102,373 | | | 1,073,526 | |
| LONG-TERM ASSETS: | | | |
| Property and equipment, net | 29,745 | | | 22,693 | |
| Field equipment, net | 11,985 | | | 12,923 | |
| Right-of-use assets | 19,405 | | | 18,267 | |
| Other long-term assets | 10,707 | | | 12,086 | |
| Total long-term assets | 71,842 | | | 65,969 | |
| TOTAL ASSETS | $ | 1,174,215 | | | $ | 1,139,495 | |
| | | |
Consolidated Balance Sheets
USD in thousands (except share data)
| | | | | | | | | | | |
| September 30,
2022 | | December 31, 2021 |
| Unaudited | | Audited |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| CURRENT LIABILITIES: | | | |
| Trade payables | $ | 77,026 | | | $ | 72,600 | |
| Other payables, lease liabilities and accrued expenses | 64,050 | | | 70,002 | |
| Total current liabilities | 141,076 | | | 142,602 | |
| LONG-TERM LIABILITIES: | | | |
| Long-term debt, net | 564,677 | | | 562,216 | |
| Deferred revenue | 3,924 | | | 6,477 | |
| Long-term leases | 14,827 | | | 12,997 | |
| Employee benefit liabilities | 4,088 | | | 4,543 | |
| Other long-term liabilities | 222 | | | 166 | |
| Total long-term liabilities | 587,738 | | | 586,399 | |
| TOTAL LIABILITIES | 728,814 | | | 729,001 | |
| | | |
| COMMITMENTS AND CONTINGENCIES | | | |
| | | |
| SHAREHOLDERS' EQUITY: | | | |
| Share capital - | | | |
Ordinary shares no par value, unlimited shares authorized; issued and outstanding:
104,942,941 shares and 103,971,263 shares at September 30, 2022 (unaudited) and December 31, 2021, respectively | — | | | — | |
| Additional paid-in capital | 1,188,864 | | | 1,099,589 | |
| Accumulated other comprehensive income (loss) | (2,306) | | | (3,169) | |
| Retained earnings (accumulated deficit) | (741,157) | | | (685,926) | |
| TOTAL SHAREHOLDERS' EQUITY | 445,401 | | | 410,494 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,174,215 | | | $ | 1,139,495 | |
Non-U.S. GAAP financial measures reconciliation
USD in thousands
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2022 | | 2021 | | % Change | | 2022 | | 2021 | | % Change |
| Net income (loss) | $ | (26,576) | | | $ | (13,124) | | | 102 | % | | $ | (55,231) | | | $ | (31,893) | | | 73 | % |
| Add: Income tax | 3,159 | | | 2,591 | | | 22 | % | | 5,943 | | | 5,391 | | | 10 | % |
| Add: Financial expenses (income), net | (1,194) | | | 1,981 | | | (160) | % | | 2,743 | | | 5,567 | | | (51) | % |
| Add: Depreciation and amortization | 2,659 | | | 2,734 | | | (3) | % | | 7,924 | | | 7,584 | | | 4 | % |
| EBITDA | $ | (21,952) | | | $ | (5,818) | | | 277 | % | | $ | (38,621) | | | $ | (13,351) | | | 189 | % |
| Add: Share-based compensation | 26,305 | | | 25,758 | | | 2 | % | | 77,173 | | | 72,502 | | | 6 | % |
| Adjusted EBITDA | $ | 4,353 | | | $ | 19,940 | | | (78) | % | | $ | 38,552 | | | $ | 59,151 | | | (35) | % |
Investors:
Ingrid Goldberg
investorinfo@novocure.com
610-723-7427
Media:
Leigh Labrie
media@novocure.com
610-723-7428