Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
(b) Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d- 15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, it used the criteria established in Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such assessment, management has concluded that, as of December 31, 2022, our internal control over financial reporting is effective based on those criteria.
(c) Attestation Report of the Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2022, has been audited by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, an independent registered public accounting firm, as stated in their attestation report, which is included herein.
(d) Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Election of New Director.
On February 22, 2023, the Board of Directors (the “Board”) of the Company elected Allyson J. Ocean, M.D., effective immediately, to fill an existing vacancy on the Board. Dr. Ocean will receive compensation for her service on the Board as a non-employee member of the Board in the same manner as other non-employee members of the Board. For a description of the Company’s director compensation programs, see “Director Compensation” in the definitive proxy statement filed by the Company on April 25, 2022 in connection with its 2022 Annual Meeting of Shareholders.
Allyson J. Ocean
Dr. Ocean, 51, is is an internationally recognized academic gastrointestinal medical oncologist specializing in translational and clinical research, development of novel therapeutics, and patient advocacy. Dr. Ocean is currently an Associate Professor of Clinical Medicine at the Weill Medical College of Cornell University, a position she has held since 2004. Dr. Ocean also currently serves as a medical oncologist and attending physician in gastrointestinal
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oncology at NewYork-Presbyterian Hospital/Weill Cornell Medical Center, as well as a medical oncologist at The Jay Monahan Center for Gastrointestinal Health. Dr. Ocean is co-founder and Scientific Advisory Board Chair of Let’s Win Pancreatic Cancer, an award-winning non-profit organization missioned to increase access to treatment options and clinical trials for patients with pancreatic cancer. Additionally, Dr. Ocean serves on several scientific advisory boards. Dr. Ocean graduated cum laude from Tufts University and received her M.D. with honors from the Tufts University School of Medicine.
Dr. Ocean will be appointed to a Board committee at a later date.
Upon her election to the Board, and pursuant to the Company’s Non-Employee Director Plan, Dr. Ocean will be awarded an option under the Company's 2015 Omnibus Incentive Plan as of February 28, 2023 ("Grant Date") to purchase ordinary shares of the Company with an aggregate Grant Date fair value of $667,000 (subject to rounding of shares to the nearest whole number) using the Black-Scholes pricing model and the valuation assumptions used by the Company in accounting for options as of the Grant Date at an exercise price per share equal to the closing price of the Company’s ordinary shares on the Grant Date (the “Options”). The Options shall vest in equal amounts on the first, second and third anniversary of the Grant Date.
There is no arrangement or understanding between Dr. Ocean and any other persons pursuant to which Dr. Ocean was elected to serve on the Board.
Dr. Ocean does not have any direct or indirect material interest in any transaction or proposed transaction required to be reported under Item 404(a) of Regulation S-K or Item 5.02(d) of Form 8-K.
Termination of a Material Definitive Agreement.
On February 17, 2023, the Company gave irrevocable notice under the Company’s Credit Agreement, dated as of November 6, 2020, by and among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent and the financial institutions party thereto, (“Lenders”) (as amended, restated, supplemented or otherwise modified, the “Credit Agreement”) to terminate all commitments, effective February 22, 2023. This effectively terminated the Credit Facility, as the Company’s ability to borrow and its obligations to comply with all covenants ended on such date. The liens and guaranties in favor of the Lenders are released. As of the date of termination, the Company had no outstanding balance borrowed under the Credit Agreement. No early termination fees or penalties were payable in connection with the termination.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 is incorporated herein by reference to the information contained under the captions "Proposal 1 — Election of Directors,” “Corporate Governance,” “Delinquent Section 16(A) Reports” and “Proposal 2 – Approval and Ratification of Appointment of Independent Registered Public Accounting Firm” in our definitive proxy statement related to the 2023 annual meeting of shareholders.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated by reference to the information contained under the caption "2022 Director Compensation," "Compensation Discussion and Analysis — Executive Compensation" and "Compensation Committee Report" in our definitive proxy statement related to the 2023 annual meeting of shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 regarding the ownership of our ordinary shares is incorporated by reference to the information contained under the caption "Information About Stock Ownership — Security Ownership of Certain Beneficial Owners And Management" in our definitive proxy statement related to the 2023 annual meeting of shareholders.
The information required by Item 12 with respect to securities authorized for issuance under our equity compensation plans is provided under the caption "Equity Compensation Plan Information" in Part II, Item 5 hereof.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 is incorporated by reference to the information contained under the captions "Proposal 1 – Election of Directors," "Corporate Governance," and "Certain Relationships and Related Party Transactions" in our definitive proxy statement related to the 2023 annual meeting of shareholders.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 14 is incorporated by reference to the information contained under the caption "Proposal 2 – Approval and Ratification of Appointment of Independent Registered Public Accounting Firm" in our definitive proxy statement related to the 2023 annual meeting of shareholders.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) DOCUMENTS FILED AS PART OF THIS REPORT
The following is a list of our consolidated financial statements and our subsidiaries and supplementary data included in this Annual Report on Form 10-K under Item 8 of Part II hereof:
1. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Report of Independent Registered Public Accounting Firm.
Consolidated Balance Sheets as of December 31, 2022, 2021 and 2020.
Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020.
Consolidated Statement of Comprehensive Loss for the years ended December 31, 2022, 2021 and 2020.
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020.
Notes to Consolidated Financial Statements.
2. FINANCIAL STATEMENT SCHEDULES
Schedules are omitted because they are not applicable or are not required, or because the required information is included in the consolidated financial statements or notes thereto.
(b) EXHIBITS
The following is a list of exhibits filed as part of this Annual Report on Form 10-K. Where so indicated by footnote, exhibits that were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated.
EXHIBIT INDEX
Exhibit
Number Exhibit Description Incorporated by Reference Filed
Herewith
Form Date Number
3.1 Memorandum of Association
S-1/A 9/21/15 3.3
3.2 Amended and Restated Articles of Association
8-K 6/6/18 3.2
4.1 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
X
4.2 Eleventh Amended and Restated Investors Rights Agreement, dated June 1, 2015
DRS 6/24/15 4.2
4.3 Tenth Amended and Restated Registration Rights Agreement, dated June 1, 2015
DRS 6/24/15 4.3
4.4 Indenture, dated November 5, 2020, between NovoCure Limited. and U.S. Bank National Association
8-K 11/5/20 4.1
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Exhibit
Number Exhibit Description Incorporated by Reference Filed
Herewith
Form Date Number
4.5 Form of 0% Convertible Senior Note due 2025 (included in Exhibit 4.4)
8-K 11/5/20 4.2
10.1 Credit Agreement dated November 6, 2020 among NovoCure Limited, the subsidiary borrowers party thereto, the lenders party thereto and J.P. Morgan Chase Bank, N.A., as administrative agent
8-K 11/9/20 10.1
10.2 License and Collaboration Agreement, dated as of September 10, 2018, between NovoCure Limited and Zai Lab (Shanghai) Co., Ltd.
10-Q 10/25/18 10.2
10.3 Settlement Agreement with the Technion, dated February 10, 2015
DRS/A 8/11/15 10.13
10.4 2003 Share Option Plan#
DRS 6/24/15 10.3
10.5 2013 Share Option Plan#
DRS 6/24/15 10.4
10.6 2015 Omnibus Incentive Plan#
S-1/A 9/21/15 10.5
10.7 Director Compensation Plan#
S-1/A 9/21/15 10.14
10.8 Employee Share Purchase Plan#
S-1/A 9/21/15 10.15
10.9 Form of Non-Qualified Stock Option Agreement pursuant to the 2015 Omnibus Incentive Plan (U.S. individuals)#
S-1/A 9/21/15 10.17
10.10 Form of Incentive Stock Option Agreement pursuant to the 2015 Omnibus Incentive Plan (U.S. individuals)#
S-1/A 9/21/15 10.18
10.11 2015 Omnibus Incentive Plan, including 2015 Omnibus Incentive Plan Sub-Plan for Grantees Subject to Israeli Taxation and 2015 Omnibus Incentive Plan Sub-Plan for Switzerland#
8-K 12/22/15 10.1
10.12 Form of Incentive Stock Option Agreement pursuant to the 2015 Omnibus Incentive Plan for use in connection with the 2015 Omnibus Incentive Plan Sub-Plan for Grantees Subject to Israeli Taxation (non-102(b) grants)#
8-K 12/22/15 10.2
10.13 Form of Incentive Stock Option Agreement pursuant to the 2015 Omnibus Incentive Plan for use in connection with the 2015 Omnibus Incentive Plan Sub-Plan for Grantees Subject to Israeli Taxation (102(b) grants)#
8-K 12/22/15 10.3
10.14 Form of Stock Option Award Agreement based on the 2015 Omnibus Incentive Plan for use in connection with the 2015 Omnibus Incentive Plan Sub-Plan for Switzerland#
8-K 12/22/15 10.4
10.15 Form of Incentive Stock Option Agreement pursuant to the 2015 Omnibus Incentive Plan for use in Japan#
8-K 12/22/15 10.5
10.16 Form of Stock Option Award Agreement based on the 2015 Omnibus Incentive Plan for use in Germany#
10-K 3/1/16 10.25
10.17 Form of Incentive Stock Option Agreement pursuant to the 2015 Omnibus Incentive Plan #
8-K 5/12/17 10.1
10.18 Form of Non-Qualified Stock Option Agreement pursuant to the 2015 Omnibus Incentive Plan #
8-K 5/12/17 10.2
10.19 Form of Incentive Stock Option Agreement pursuant to the NovoCure Limited 2015 Omnibus Incentive Plan – Form of Performance Option Agreement for Israel #
8-K 4/4/18 10.1
10.20 NovoCure Limited Policy on Recoupment of Incentive Compensation #
8-K 8/1/17 99.1
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Exhibit
Number Exhibit Description Incorporated by Reference Filed
Herewith
Form Date Number
10.21 Form of Indemnification Agreement
8-K 3/22/16 10.1
10.22 Employment Agreement, dated as of May 11, 2016, by and between Novocure USA LLC and William F. Doyle #
8-K 5/13/16 10.1
10.23 Amendment #1 to Employment Agreement between Novocure USA LLC and William F. Doyle dated February 24, 2021 #
10-K 2/25/21 10.23
10.24 Israeli SubPlan to the NovoCure Limited Employee Share Purchase Plan #
8-K 6/30/16 10.1
10.25 Non-Employee Director Compensation Program #
10-Q 7/28/22 10.2
10.26 Employment Agreement, dated as of October 10, 2016, by and between NovoCure (Israel) Ltd. and Asaf Danziger #
8-K 10/14/16 10.1
10.27 Employment Agreement, dated as of October 10, 2016, by and between Novocure USA LLC and Wilhelmus Groenhuysen #
8-K 10/14/16 10.2
10.28 Amended and Restated Employment Agreement dated as of September 1, 2020 by and between Novocure USA LLC and Wilhelmus Groenhuysen #
8-K 8/13/20 10.1
10.29 Employment Agreement, dated as of October 10, 2016, by and between NovoCure USA LLC and Michael J. Ambrogi #
8-K 10/14/16 10.3
10.30 Amended and Restated Employment Agreement, dated as of September 1, 2002, by and between NovoCure USA LLC and Michael J. Ambrogi #
8-K 8/13/20 10.30
10.31 Employment Agreement, dated as of September 1, 2020, by and between NovoCure USA LLC and Ashley Cordova #
8-K 8/13/20 10.2
10.32 Employment Agreement, dated as of July 25, 2018, between Novocure USA LLC and Pritesh Shah #
10-Q 10/25/18 10.1
10.33 Form of Restricted Share Unit Award Notice pursuant to the 2015 Omnibus Incentive Plan – Form of Agreement for USA #
10-K 2/23/17 10.28
10.34 Form of Restricted Share Unit Award Notice pursuant to the 2015 Omnibus Incentive Plan – Form of Agreement for Israel #
10-K 2/23/17 10.29
10.35 Form of Restricted Share Unit Award Notice pursuant to the 2015 Omnibus Incentive Plan – Form of Agreement for Switzerland #
10-K 2/23/17 10.30
10.36 Form of Restricted Share Unit Award Notice pursuant to the 2015 Omnibus Incentive Plan – Form of Agreement for Japan #
10-K 2/23/17 10.31
10.37 Form of Restricted Share Unit Award Notice pursuant to the 2015 Omnibus Incentive Plan – Form of Agreement for Germany #
8-K 4/4/18 10.2
10.38 Form of Performance-Based Share Unit Award for Executive Chairman and Chief Executive Officer #
8-K 3/6/20 10.1
10.39 Form of Performance-Based Share Unit Award for Certain Executive Officers #
8-K 3/6/20 10.2
10.40 First Addendum dated June 9, 2020 to License and Collaboration Agreement, dated as of September 10, 2018, between NovoCure Limited and Zai Lab (Shanghai) Co., Ltd. **
10-K 2/25/21 10.40
10.41 Purchase and Sale Agreement dated December 1, 2021 by and between 64 Vaughan Mall, LLC and Novocure Inc.
10-K 2/24/22 10.41
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Exhibit
Number Exhibit Description Incorporated by Reference Filed
Herewith
Form Date Number
10.42 Construction Agreement dated December 30, 2021 by and between Hanover Development Corporation and Novocure Inc. **
10-K 2/24/22 10.42
10.43 Amendment No. 1 dated as of December 6, 2021 to Credit Agreement dated as of November 6, 2020
10-K 2/24/22 10.43
21 Subsidiaries
X
23.1 Consent of Independent Registered Public Accounting Firm
X
31.1 Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
X
31.2 Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
X
32.1* Certification of Principal Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350
X
32.2* Certification of Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350
X
101.INS Inline XBRL Instance Document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X
* The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of NovoCure Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.
† Confidential treatment has been granted for certain information set forth in this exhibit. Such information has been omitted and filed separately with the Securities and Exchange Commission.
# Compensation plans and arrangements for executive officers and others.
** Portions of the referenced exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K
This Annual Report on Form 10-K includes trademarks of NovoCure Limited and other persons. All trademarks or trade names referred to herein are the property of their respective owners.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 23, 2023
NovoCure Limited
By: /s/ Asaf Danziger
Asaf Danziger
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: Signature Title
February 23, 2023 /s/ Asaf Danziger Chief Executive Officer and Director (Principal Executive Officer)
Asaf Danziger
February 23, 2023 /s/ Ashley Cordova Chief Financial Officer (Principal Financial and Accounting Officer)
Ashley Cordova
February 23, 2023 /s/ William F. Doyle Executive Chairman and Director
William F. Doyle
February 23, 2023 /s/ Jeryl L. Hilleman Director
Jeryl L. Hilleman
February 23, 2023 /s/ David T. Hung Director
David T. Hung
February 23, 2023 /s/ Kinyip Gabriel Leung Director
Kinyip Gabriel Leung
February 23, 2023 /s/ Martin J. Madden Director
Martin J. Madden
February 23, 2023 /s/ Timothy J. Scannell Director
Timothy J. Scannell
February 23, 2023 /s/ William A. Vernon Director
William A. Vernon
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