What changed in this filing

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Item 1. Financial Statements

2020-10-29 compared with 2020-07-30 · 62 added, 30 removed, 297 unchanged (24% of the section changed)

3 unchanged sentences

dollars in thousands (except share data)

September 30,

2020 December 31, 2019

19 unchanged sentences

dollars in thousands (except share data)

September 30,

2020 December 31, 2019

18 unchanged sentences

issued and outstanding:

101,020,721 shares and 99,528,435 shares at June 30, 2020 (unaudited) and December 31, 2019, respectively

101,728,327 shares and 99,528,435 shares at September 30, 2020 (unaudited) and December 31, 2019, respectively

Additional paid-in capital 946,267 871,442

7 unchanged sentences

dollars in thousands (except share and per share data)

Three months ended June 30, Six months ended June 30, Year ended December 31,

Three months ended September 30, Nine months ended September 30, Year ended December 31,

2020 2019 2020 2019 2019

15 unchanged sentences

Weighted average number of ordinary shares used in computing basic net income (loss) per share 101,234,306 98,485,519 100,601,427 96,551,041 97,237,549

100,718,893 96,356,317 100,298,230 95,583,802 97,237,549

Diluted net income (loss) per ordinary share $ 0.09 $ 0.02 $ 0.14 $ ( 0.12 ) $ ( 0.07 )

3 unchanged sentences

dollars in thousands

Three months ended June 30, Six months ended June 30, Year ended December 31,

Three months ended September 30, Nine months ended September 30, Year ended December 31,

2020 2019 2020 2019 2019

26 unchanged sentences

Balance as of June 30, 2020 (Unaudited) 101,020,721 $ 916,632 $ ( 3,532 ) $ ( 645,278 ) $ 267,822

Share-based compensation to employees — 20,121 — — 20,121

Exercise of options and vested RSUs 707,606 9,514 — — 9,514

Other comprehensive income (loss), net of tax benefit of $ 0

— — 296 — 296

Net income (loss) — — — 9,284 9,284

Balance as of September 30, 2020 (Unaudited) 101,728,327 $ 946,267 $ ( 3,236 ) $ ( 635,994 ) $ 307,037

Ordinary shares Additional

17 unchanged sentences

Balance as of June 30, 2019 (Unaudited) 97,858,876 $ 818,338 $ ( 2,357 ) $ ( 657,075 ) $ 158,906

Share-based compensation to employees — 14,338 — — 14,338

Exercise of options and warrants and vested RSUs 1,090,059 15,475 — — 15,475

Other comprehensive income (loss), net of tax benefit of $ 11

— — ( 284 ) — ( 284 )

Net income (loss) — — — 1,930 1,930

Balance as of September 30, 2019 (Unaudited) 98,948,935 $ 848,151 $ ( 2,641 ) $ ( 655,145 ) $ 190,365

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

dollars in thousands

Three months ended June 30, Six months ended June 30, Year ended December 31,

Three months ended September 30, Nine months ended September 30, Year ended December 31,

2020 2019 2020 2019 2019

28 unchanged sentences

Cash, cash equivalents and restricted cash at the end of the period $ 235,381 $ 210,168 $ 235,381 $ 210,168 $ 179,416

Three months ended June 30, Six months ended June 30, Year ended December 31,

Three months ended September 30, Nine months ended September 30, Year ended December 31,

2020 2019 2020 2019 2019

2 unchanged sentences

Cash paid during the period for:

Income taxes $ 4,728 $ 4,358 $ 6,937 $ 7,391 $ 11,241

Income taxes, net of refunds $ 4,382 $ 3,040 $ 11,319 $ 10,431 $ 11,241

Interest $ 1,840 $ 3,453 $ 8,671 $ 10,247 $ 13,699

23 unchanged sentences

ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses.

ASU 2016-13 also applies to employee benefit plan accounting, with an effective date of the first quarter of fiscal 2020.

ASU 2016-13 also applies to employee benefit plan accounting, effective date for the first quarter of fiscal year 2020.

The Company adopted the standard effective as of January 1, 2020, and the adoption of this standard did not have an impact on the Company's consolidated financial statements.

6 unchanged sentences

Cash equivalents include items almost as liquid as cash, such as certificates of deposit and time deposits with maturity periods of three months or less when purchased.

As of September 30, 2020 and December 31, 2019, the Company’s cash and cash equivalents were composed of:

September 30,

2020 December 31,

3 unchanged sentences

Total cash and cash equivalents $ 234,461 $ 177,321

The Company invests in marketable U.S.

The Company also invests in marketable U.S.

Treasury Bills (“T-bills”) that are classified as held-to-maturity securities.

The amortized cost and recorded basis of the T-bills are presented as short-term investments.

In August 2020, all outstanding short-term investments matured and were used to prepay the Company's outstanding term loan.

Long Term Loan below.

As of September 30, 2020 and December 31, 2019, the Company’s short-term investments were:

September 30,

2020 December 31,

1 unchanged sentence

Short-term investments $ — $ 148,769

Quoted market prices were applied to determine the fair value of cash equivalents and short-term investments, therefore they are categorized as Level 1 in accordance with Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” The fair value of the Company’s short-term investments as of June 30, 2020 and December 31, 2019 was $ 149,992 and $ 148,738 , respectively.

Quoted market prices were applied to determine the fair value of cash equivalents and short-term investments, therefore they were categorized as Level 1 in accordance with Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” The estimated fair value of the Company’s short-term investments as of September 30, 2020 and December 31, 2019 was $ 0 and $ 148,738 , respectively.

Inventories are stated at the lower of cost or net realizable value.

The weighted average methodology is applied to determine cost.

As of June 30, 2020 and December 31, 2019, the Company’s inventories were composed of:

As of September 30, 2020 and December 31, 2019, the Company’s inventories were composed of:

September 30,

2020 December 31,

9 unchanged sentences

Pledged deposits and bank guarantees.

As of June 30, 2020 and December 31, 2019, the Company pledged bank deposits of $ 1,394 and $ 1,390 , respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $ 1,625 and $ 1,557 , respectively .

As of September 30, 2020 and December 31, 2019, the Company pledged bank deposits of $ 1,420 and $ 1,390 , respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $ 1,652 and $ 1,557 , respectively .

LONG TERM LOAN

On August 18, 2020, the Company terminated its outstanding term loan, which bore interest at 9.0 % per annum.

The prepayment included $ 150,000 in principal repayment and $ 3,000 in prepayment premium, plus accrued and unpaid interest and expenses payable through the payoff date.

The un-amortized issuance costs in the amount of $ 478 that were fully amortized upon the repayment and the prepayment premium were included in the Company’s third quarter finance expenses.

EQUITY INCENTIVE PLANS AND ESPP

6 unchanged sentences

RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants.

As of June 30, 2020, 11,477,884 ordinary shares were available for grant under the 2015 Plan.

A summary of the status of the Company’s option plans as of June 30, 2020 and changes during the period then ended is presented below:

Six months ended June 30, 2020

As of September 30, 2020, 11,263,270 ordinary shares were available for grant under the 2015 Plan.

A summary of the status of the Company’s option plans as of September 30, 2020 and changes during the period then ended is presented below:

Nine months ended September 30, 2020

of options Weighted

3 unchanged sentences

Forfeited and canceled ( 183,758 ) 19.26

Outstanding as of June 30, 2020 10,342,391 $ 24.30

Outstanding as of September 30, 2020 9,767,894 $ 25.65

Exercisable options 4,858,926 $ 16.84

For the six months ended June 30, 2020, options to purchase 583,753 ordinary shares were exercised, resulting in the issuance of 583,753 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of June 30, 2020 and changes during the period then ended is presented below.

Six months ended June 30, 2020

For the nine months ended September 30, 2020, options to purchase 1,260,709 ordinary shares were exercised, resulting in the issuance of 1,260,709 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of September 30, 2020 and changes during the period then ended is presented below.

Nine months ended September 30, 2020

of RSU/PSUs Weighted

4 unchanged sentences

Forfeited and cancelled ( 24,394 ) 48.49

Unvested as of June 30, 2020 4,385,961 52.55

Unvested as of September 30, 2020 4,467,466 53.76

(1) Includes RSUs and PSUs granted on March 3, 2020 as follows:

2 unchanged sentences

(c) 108,113 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that will begin to be expensed at $ 69.37 per PSU when it becomes probable that the milestones will be achieved, and (d) 2,703,852 PSUs that have a mix of service, market and other milestone performance vesting conditions (including but not limited to new FDA approved indications), cliff-vest in pre-determined increments, and have a compensation cost of $ 48.16 per PSU that will not be recognized until the performance condition becomes probable.

Also includes RSUs and PSUs granted on September 1, 2020 as follows:

(a) 25,090 RSUs that are expensed based on their grant date fair value of $ 84.68 per RSU over the service period of three years ;

(b) 17,712 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that have been deemed probable to vest and are therefore expensed beginning in the third quarter of 2020 based on their grant date fair value of $ 84.68 per PSU;

and (c) 17,712 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that will begin to be expensed at $ 84.68 per PSU when it becomes probable that the milestones will be achieved.

The PSUs vest no earlier than three years from the date of grant and no later than six years from the date of grant.

The grant date fair value of PSUs with market vesting conditions were obtained by using Monte Carlo simulations.

The Company accounts for stock-based compensation in accordance with ASC 718.

The Company accounts for share-based compensation in accordance with ASC 718.

In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll deductions on an after-tax basis.

In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section.

As of June 30, 2020, 4,017,014 ordinary shares were available to be purchased by eligible employees under the ESPP and 447,634 shares had been issued under the ESPP.

As of September 30, 2020, 4,017,014 ordinary shares were available to be purchased by eligible employees under the ESPP and 447,634 shares had been issued under the ESPP.

The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants.

1 unchanged sentence

We assessed fair value using the following underlying assumptions:

Six months ended June 30, Year ended December 31,

Nine months ended September 30, Year ended December 31,

Unaudited Audited

9 unchanged sentences

Risk-free interest rate 0.17 %- 1.57 %

2.10 %- 2.51 %

Dividend yield 0.00 % 0.00 % 0.00 %

The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three and six months ended June 30, 2020 and 2019 and the year ended December 31, 2019 was:

Three months ended June 30, Six months ended June 30, Year ended December 31,

The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three and nine months ended September 30, 2020 and 2019 and the year ended December 31, 2019 was:

Three months ended September 30, Nine months ended September 30, Year ended December 31,

2020 2019 2020 2019

8 unchanged sentences

Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares considered outstanding during the period, in accordance with ASC 260-10, as determined under the treasury stock method.

Basic and diluted net income per ordinary share was the same for each period presented, except for the three months ended June 30, 2020, as the inclusion of all potential dilutive shares (deriving from options, RSUs and the ESPP) outstanding would be anti-dilutive.

Basic and diluted net income per ordinary share was the same for each period presented, except for the three months ended September 30, 2020, as the inclusion of all potential dilutive shares (deriving from options, RSUs and the ESPP) outstanding would be anti-dilutive.

The calculation of diluted earnings per share includes the weighted average of potentially dilutive securities, which consists of ordinary shares underlying outstanding share options, RSUs, performance share units and the ESPP.

The effect of these dilutive securities under the treasury stock method was approximately 6,928,909 and 7,599,677 shares for the three and six months ended June 30, 2020, respectively.

The Company excluded 1,148,420 and 598,533 share options under the treasury stock method from the computation of dilutive net income per share for the three and six months ended June 30, 2020 because including them would had have an anti-dilutive effect.

The effect of these dilutive securities under the treasury stock method was approximately 7,409,508 and 7,511,989 shares for the three and nine months ended September 30, 2020, respectively.

The Company excluded 952,823 and 717,492 share options under the treasury stock method from the computation of dilutive net income per share for the three and nine months ended September 30, 2020 because including them would have had an anti-dilutive effect.

SUPPLEMENTAL INFORMATION

1 unchanged sentence

The following table presents long-lived assets by location:

September 30,

2020 December 31,

3 unchanged sentences

Israel 3,998 2,753

Japan 1,237 999

Germany 895 729

2 unchanged sentences

The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows:

Three months ended June 30, Six months ended June 30, Year ended December 31,

Three months ended September 30, Nine months ended September 30, Year ended December 31,

2020 2019 2020 2019

8 unchanged sentences

(“Zai”), dated September 10, 2018, pursuant to which Zai is commercializing Optune in China, Hong Kong, Macau and Taiwan (referred to in this table as “Greater China”).

In the three months ended June 30, 2020, the Company triggered a $ 8,000 milestone related to the approval of Optune for the treatment of GBM in China and in the six months ended June 30, 2020, the Company also triggered a $ 2,000 clinical trial milestone, each of which are being recognized over the remainder of the Zai performance period ending in September 2024.

During the nine month period ended September 30, 2020, the Company triggered an $ 8,000 milestone related to the approval of Optune for the treatment of GBM in China and a $ 2,000 clinical trial milestone, each of which are being recognized over the remainder of the Zai performance period ending in September 2024.

For additional information, see Note 12 to the Consolidated Financial Statements in the 2019 10-K.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements