What changed in this filing

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Item 1. Financial Statements

2023-07-27 compared with 2023-05-04 · 83 added, 74 removed, 297 unchanged (35% of the section changed)

44 unchanged sentences

issued and outstanding:

106,187,162 shares and 105,049,411 shares at March 31, 2023 (unaudited) and December 31, 2022, respectively

106,605,331 shares and 105,049,411 shares at June 30, 2023 (unaudited) and December 31, 2022, respectively

Additional paid-in capital 1,306,603 1,222,063

7 unchanged sentences

dollars in thousands (except share and per share data)

Three months ended March 31, Year ended December 31,

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

2023 2022 2023 2022 2022

Unaudited Audited

Unaudited Unaudited Audited

Net revenues $ 126,051 $ 140,866 $ 248,233 $ 278,413 $ 537,840

11 unchanged sentences

Net income (loss) $ ( 57,418 ) $ ( 24,008 ) $ ( 110,479 ) $ ( 28,655 ) $ ( 92,534 )

Basic net income (loss) per ordinary share $ ( 0.50 ) $ ( 0.04 ) $ ( 0.88 )

Weighted average number of ordinary shares used in computing basic net income (loss) per share 105,667,072 104,186,120 104,660,476

Diluted net income (loss) per ordinary share $ ( 0.50 ) $ ( 0.04 ) $ ( 0.88 )

Weighted average number of ordinary shares used in computing diluted net income (loss) per share 105,667,072 104,186,120 104,660,476

Basic and diluted net income (loss) per ordinary share $ ( 0.54 ) $ ( 0.23 ) $ ( 1.04 ) $ ( 0.27 ) $ ( 0.88 )

Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 106,289,073 104,627,789 105,979,791 104,408,164 104,660,476

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

1 unchanged sentence

dollars in thousands

Three months ended March 31, Year ended December 31,

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

2023 2022 2023 2022 2022

Unaudited Audited

Unaudited Unaudited Audited

Net income (loss) $ ( 57,418 ) $ ( 24,008 ) $ ( 110,479 ) $ ( 28,655 ) $ ( 92,534 )

19 unchanged sentences

Balance as of March 31, 2023 (Unaudited) 106,187,162 $ 1,266,358 $ ( 2,691 ) $ ( 831,521 ) $ 432,146

Share-based compensation to employees — 32,740 — — 32,740

Proceeds from issuance of shares 81,730 2,883 — — 2,883

Exercise of options and vested RSUs 336,439 4,622 — 4,622

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

— — 710 — 710

Net income (loss) — — — ( 57,418 ) ( 57,418 )

Balance as of June 30, 2023 (Unaudited) 106,605,331 $ 1,306,603 $ ( 1,981 ) $ ( 888,939 ) $ 415,683

Ordinary shares Additional

10 unchanged sentences

Balance as of March 31, 2022 (Unaudited) 104,559,088 $ 1,127,782 $ ( 1,328 ) $ ( 690,573 ) $ 435,881

Share-based compensation to employees — 25,823 — — 25,823

Proceeds from issuance of shares 46,709 2,759 — — 2,759

Exercise of options and vested RSUs 121,888 1,984 — — 1,984

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

— — ( 767 ) — ( 767 )

Net income (loss) — — — ( 24,008 ) ( 24,008 )

Balance as of June 30, 2022 (Unaudited) 104,727,685 $ 1,158,348 $ ( 2,095 ) $ ( 714,581 ) $ 441,672

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

2 unchanged sentences

dollars in thousands

Three months ended March 31, Year ended December 31,

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

2023 2022 2023 2022 2022

Unaudited Audited

Unaudited Unaudited Audited

Cash flows from operating activities:

27 unchanged sentences

Cash, cash equivalents and restricted cash at the end of the period $ 157,494 $ 367,763 $ 157,494 $ 367,763 $ 115,834

NOVOCURE LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

dollars in thousands

Supplemental cash flow activities:

11 unchanged sentences

NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") devices, including Optune and Optune Lua (collectively, our "Products"), for the treatment of solid tumor cancers.

The Company currently markets Optune in the United States ("U.S."), Germany, Japan and certain other countries.

The Company currently markets Optune Lua in the U.S.

and European Union.

The Company markets Optune and Optune Lua in multiple countries around the globe with the majority of revenues coming from the use of Optune in the U.S., Germany and Japan.

The Company also has a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd.

2 unchanged sentences

The accompanying unaudited consolidated financial statements include the accounts of the Company and intercompany accounts and transactions have been eliminated.

In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented.

The preparation of these consolidated financial statements in conformity with U.S.

generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes.

In the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented.

The preparation of these unaudited consolidated financial statements in conformity with U.S.

generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these unaudited consolidated financial statements and accompanying notes.

Actual results could differ materially from those estimates.

These consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 10-K") filed with the Securities and Exchange Commission on February 23, 2023.

These unaudited consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 10-K") filed with the Securities and Exchange Commission on February 23, 2023.

The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2022 10-K are applied consistently in these unaudited interim consolidated financial statements.

1 unchanged sentence

Cash equivalents include items almost as liquid as cash, with maturity periods of three months or less when purchased, and short-term investments include items with maturity dates between three months and one year when purchased.

As of March 31, 2023 and December 31, 2022, the Company’s cash and cash equivalents and short-term investments were composed of:

March 31, 2023

As of June 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents and short-term investments were composed of:

June 30, 2023

Fair value level Adjusted cost basis Unrealized gains Unrealized losses Fair market value Recorded basis Cash and cash equivalents Short-term investments

19 unchanged sentences

Total $ 969,425 $ 1,086 $ ( 1,139 ) $ 969,372 $ 969,425 $ 115,326 $ 854,099

(1) Changes in fair value of held-to-maturity ("HTM") securities are presented for disclosure purposes as required by ASC 320 and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.

(1) Changes in fair value of held-to-maturity ("HTM") securities are presented for disclosure purposes as required by ASC 320 "Investments — Debt Securities" and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.

In November 2022, the Company transferred all of its available-for-sale portfolio to HTM as part of the Company's investment strategy.

2 unchanged sentences

These securities continue to be reported in accumulated comprehensive income (loss) and are amortized over the remaining lives of the securities as an adjustment to the yield.

As of March 31, 2023 and December 31, 2022, the unamortized unrealized loss balances were $ 88 and $ 445 , respectively, and are reported in accumulated other comprehensive income (loss).

In accordance with ASC No.

820, the Company measures its money market funds at fair value.

The fair value of the money market funds and HTM securities, which is presented for disclosure purposes, are classified within Level 1 or Level 2.

As of June 30, 2023 and December 31, 2022, the unamortized unrealized loss balances were $ 20 and $ 445 , respectively, and are reported in accumulated other comprehensive income (loss).

In accordance with ASC 820, "Fair Value Measurements and Disclosures," the Company measures its money market funds at fair value.

The fair value of the money market funds and HTM securities, which is presented for disclosure purposes, is classified within Level 1 or Level 2.

This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

As of March 31, 2023 and December 31, 2022, all investments mature in one year or less.

As of June 30, 2023 and December 31, 2022, all investments mature in one year or less.

Unrealized losses from debt securities are primarily attributable to changes in interest rates.

The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence.

Debt securities with continuous unrealized losses for less than 12 months and their related fair values were as follows:

March 31, 2023 December 31, 2022

Unaudited Audited

Less than 12 months Less than 12 months

Fair value Unrealized loss Fair value Unrealized loss

Treasury bills 116,323 ( 272 ) 162,813 ( 540 )

Government and governmental agencies 1,597 ( 9 ) 38,477 ( 12 )

Corporate debt securities 224,483 ( 1,186 ) 162,085 ( 587 )

Total 342,403 ( 1,467 ) 363,375 ( 1,139 )

As of March 31, 2023, no continuous unrealized losses for 12 months or greater was identified.

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

The weighted average methodology is applied to determine cost.

As of March 31, 2023 and December 31, 2022, the Company’s inventories were composed of:

As of June 30, 2023 and December 31, 2022, the Company’s inventories were composed of:

2023 December 31,

9 unchanged sentences

Pledged deposits and bank guarantees.

As of March 31, 2023 and December 31, 2022, the Company pledged bank deposits of $ 2,341 and $ 2,296 , 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 $ 2,700 and $ 2,459 , respectively .

As of June 30, 2023 and December 31, 2022, the Company pledged bank deposits of $ 2,346 and $ 2,296 , 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 $ 2,700 and $ 2,459 , respectively .

Senior secured revolving credit facility.

5 unchanged sentences

The commitments under the 2020 Credit Facility were guaranteed by certain of the Company's subsidiaries and secured by a first lien on the Company's and certain of its subsidiaries’ assets.

Outstanding loans bore interest per annum at a sliding scale based on the our secured leverage ratio from 2.75 % to 3.25 % above the applicable interbank borrowing reference rate for the currency in which the loan is denominated.

Outstanding loans bore interest per annum at a sliding scale based on the our secured leverage ratio from 2.75 % to 3.25 % above the applicable

interbank borrowing reference rate for the currency in which the loan is denominated.

Additionally, the 2020 Credit Facility contained a fee for the unused revolving credit commitments at a sliding scale based on our secured leverage ratio from 0.35 % to 0.45 %.

The 2020 Credit Facility contained financial covenants requiring maintenance of a minimum fixed charge coverage ratio and specifying a maximum senior secured net leverage ratio, as well as customary events of default which include a change of control, which are no longer applicable.

Legal Proceedings.

In June 2023, a putative class action lawsuit was filed against the Company, its Executive Chairman and its Chief Executive Officer.

The complaint, which purports to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company from January 5, 2023 through June 5, 2023, allege material misstatements and/or omissions in the Company’s public statements with respect to the results from its phase 3 LUNAR clinical trial.

The Company believes that the action is without merit and plans to defend the lawsuit vigorously.

As of June 30, 2023, the Company has not accrued any amounts in respect of this claim, as it believes liability is not probable and the amount of any potential liability cannot be reasonably estimated.

CONVERTIBLE NOTE

1 unchanged sentence

The Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted as set forth in the Notes.

As of March 31, 2023, the conditions allowing holders of the Notes to convert were not met.

The Notes are therefore not convertible as of March 31, 2023 and are classified as long-term liability.

The net carrying amount of the liability of the Notes as of March 31, 2023 and December 31, 2022 are as follows:

As of June 30, 2023, the conditions allowing holders of the Notes to convert were not met.

The Notes are therefore not convertible as of June 30, 2023 and are classified as long-term liability.

The net carrying amount of the liability of the Notes as of June 30, 2023 and December 31, 2022 are as follows:

2023 December 31,

4 unchanged sentences

Net carrying amount of liability component (1) $ 567,150 $ 565,509

(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820, "Fair Value Measurements and Disclosures." The estimated fair value of the net carrying amount of liability component of the Notes as of March 31, 2023 and December 31, 2022 were $ 468,271 and $ 455,091 , respectively.

(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820.

The estimated fair value of the net carrying amount of liability component of the Notes as of June 30, 2023 and December 31, 2022 were $ 473,001 and $ 455,091 , respectively.

Finance expense related to the Notes was as follows:

Three months ended March 31, Year ended December 31,

Unaudited Audited

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

2023 2022 2023 2022

Unaudited Unaudited Audited

Amortization of debt issuance costs

4 unchanged sentences

In September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”).

Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted

shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards.

Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards.

Options granted under the 2015 Plan generally have a two-year or four-year vesting period and expire ten years after the date of grant.

1 unchanged sentence

RSUs granted under the 2015 Plan generally vest over a three year period.

PSUs granted under the 2015 Plan generally vest between a three - and six-year period as performance targets are attained.

PSUs granted under the 2015 Plan generally vest between a three - and six-year period as performance targets are

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

As of March 31, 2023, 19,010,778 ordinary shares were available for grant under the 2015 Plan.

A summary of the status of the Company’s option plans as of March 31, 2023 and changes during the period then ended is presented below:

Three months ended March 31, 2023

As of June 30, 2023, 18,945,024 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, 2023 and changes during the period then ended is presented below:

Six months ended June 30, 2023

of options Weighted

3 unchanged sentences

Forfeited and canceled ( 239,866 ) 75.47

Outstanding as of March 31, 2023 8,921,229 $ 40.86

Outstanding as of June 30, 2023 8,621,859 $ 41.44

Exercisable options 6,862,376 $ 30.57

For the three months ended March 31, 2023, options to purchase 429,752 ordinary shares were exercised, resulting in the issuance of 429,752 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of March 31, 2023 and changes during the period then ended is presented below.

Three months ended March 31, 2023

For the six months ended June 30, 2023, options to purchase 704,027 ordinary shares were exercised, resulting in the issuance of 704,027 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of June 30, 2023 and changes during the period then ended is presented below.

Six months ended June 30, 2023

of RSU/PSUs Weighted

4 unchanged sentences

Forfeited and cancelled ( 121,741 ) 92.59

Unvested as of March 31, 2023 (1) 5,724,831 66.21

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones which are not probable, as of March 31, 2023, in accordance with ASC 718 as follows:

March 31, 2023

Unvested as of June 30, 2023 (1) 5,753,313 65.95

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones that are not probable as of June 30, 2023, in accordance with ASC 718 "Compensation — Stock Compensation" as follows:

June 30, 2023

PSUs Fair value at grant date per PSU Total fair value at grant date

9 unchanged sentences

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 March 31, 2023, 4,868,733 ordinary shares were available to be purchased by eligible employees under the ESPP.

As of June 30, 2023, 4,787,003 ordinary shares were available to be purchased by eligible employees under the ESPP.

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

For market condition awards, the Company also applied the Monte-Carlo simulation model.

We assessed fair value using the following underlying assumptions:

Three months ended March 31, Year ended December 31,

The Company assessed fair value using the following underlying assumptions:

Six months ended June 30, Year ended December 31,

Unaudited Audited

10 unchanged sentences

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 months ended March 31, 2023 and 2022 and the year ended December 31, 2022 was:

Three months ended March 31, Year ended December 31,

Unaudited Audited

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, 2023 and 2022, and the year ended December 31, 2022 was:

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

2023 2022 2023 2022

Unaudited Unaudited Audited

Cost of revenues $ 2,023 $ 1,029 $ 4,029 $ 1,981 $ 4,690

5 unchanged sentences

Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period.

Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs, convertible notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10, as determined under the if-converted method.

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:

Three months ended March 31, Year ended December 31,

Unaudited Audited

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

2023 2022 2023 2022

Unaudited Unaudited Audited

Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share $ ( 57,418 ) $ ( 24,008 ) $ ( 110,479 ) $ ( 28,655 ) $ ( 92,534 )

Weighted average number of ordinary shares used in computing basic net income (loss) per share 105,667,072 104,186,120 104,660,476

Weighted average number of ordinary shares used in computing diluted net income (loss) per share 105,667,072 104,186,120 104,660,476

Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 106,289,073 104,627,789 105,979,791 104,408,164 104,660,476

Weighted anti-dilutive shares outstanding which were not included in the diluted calculation 8,483,336 7,746,398 7,733,239 7,790,467 7,272,606

Basic net income (loss) per ordinary share $ ( 0.50 ) $ ( 0.04 ) $ ( 0.88 )

Diluted net income (loss) per ordinary share $ ( 0.50 ) $ ( 0.04 ) $ ( 0.88 )

Basic and diluted net income (loss) per ordinary share $ ( 0.54 ) $ ( 0.23 ) $ ( 1.04 ) $ ( 0.27 ) $ ( 0.88 )

SUPPLEMENTAL INFORMATION

11 unchanged sentences

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

Three months ended March 31, Year ended December 31,

Unaudited Audited

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

2023 2022 2023 2022

Unaudited Unaudited Audited

United States $ 86,958 $ 108,203 $ 172,186 $ 205,619 $ 406,894

6 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