NovoCure Ltd 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We encourage you to read this MD&A in conjunction with our unaudited consolidated financial statements and the notes thereto for the period ended June 30, 2023 included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Please refer to the information under the heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this report. References to the words “we,” “our,” “us,” and the “Company” in this report refer to NovoCure Limited, including its consolidated subsidiaries. Critical Accounting Policies and Estimates In accordance with U.S. generally accepted accounting principles (“GAAP”), in preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We develop and periodically change these estimates and assumptions based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates. The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements can be found in our 2022 10-K. For additional information, see Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. There were no other material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2022 10-K. Overview We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields that exert physical forces to kill cancer cells via a variety of mechanisms. Our key priorities are to drive commercial adoption of Optune, our commercial TTFields device, and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer. Optune is approved by the U.S. Food and Drug Administration ("FDA") under the Premarket Approval ("PMA") pathway for the treatment of adult patients with newly diagnosed glioblastoma ("GBM") together with temozolomide, a chemotherapy drug, and for adult patients with GBM following confirmed recurrence after chemotherapy as monotherapy treatment. We also have a CE certificate to market Optune for the treatment of GBM in the European Union ("EU"), as well as approval or local registration in the United Kingdom ("UK"), Japan, Canada and certain other countries. Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treatment malignant pleural mesothelioma ("MPM") together with standard chemotherapies. We have also received CE certification in the EU and approval or local registration to market Optune Lua in certain other countries. We market Optune and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune in the U.S., Germany and Japan. We are actively evaluating opportunities to expand our international footprint. In March 2023, we announced the reimbursement and availability of Optune together with temozolomide for the treatment of adult patients with newly diagnosed GBM in France. The order registering Optune on the List of Reimbursable Product and Services became effective March 15, 2023 and we are now treating patients. We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers. In June 2023, we presented positive results from the phase 3 LUNAR study evaluating the use of TTFields together with standard therapies for the treatment of metastatic NSCLC following platinum-failure. The LUNAR study met its primary endpoint with a statistically significant and clinically meaningful 3-month improvement in median overall survival ("OS") with TTFields therapy added to standard therapies (HR=0.74, P=0.035). Patients randomized to receive TTFields together with standard therapies demonstrated median OS of 13.2 months compared to 9.9 months in patients treated with standard therapies alone. Patients randomized to receive TTFields and physician’s choice immune checkpoint inhibitor ("ICI") (n=66) demonstrated a median OS of 18.5 months, a profound extension compared to the median OS of 10.8 months demonstrated by patients that received ICI alone (n=68; HR=0.63; P=0.03). Patients randomized to receive TTFields and docetaxel (n=71) had a positive survival trend with a median OS of 11.1 months vs 8.7 months (n=71). TTFields therapy was well-tolerated with no added 17 Table of Contents systemic toxicities and few grade 3 (no grade 4 or 5) device-related adverse events. These data are expected to serve as the basis for a PMA submission to the FDA in the second half of 2023. We are planning to launch several additional trials intended to further explore the use of TTFields therapy in the treatment of NSCLC. In July 2023, the FDA accepted the investigation device exemption for the LUNAR-2 clinical trial ("LUNAR-2"), a randomized, phase 3 study testing the safety and effectiveness of TTFields concomitant with pembrolizumab and platinum-based chemotherapy in patients with metastatic NSCLC. The two primary endpoints of LUNAR-2 are overall survival and progression-free survival. LUNAR-2 is designed to accrue 734 patients with a 21-month follow-up following the enrollment of the last patient. In addition to our NSCLC studies, we are conducting phase 3 studies evaluating the use of TTFields in the treatment of ovarian cancer, brain metastases from NSCLC ("brain metastases") and pancreatic cancer. We are also conducting a global phase 3 study testing the potential survival benefit of initiating Optune concurrent with radiation therapy versus following radiation therapy in patients with newly diagnosed GBM. In July 2023, we announced that an independent data monitoring committee ("DMC") conducted a pre-specified interim analysis for the phase 3 PANOVA-3 study for the treatment of unresectable, locally advanced pancreatic cancer. As part of the interim analysis, the DMC reviewed the safety and efficacy data for all locally advanced pancreatic cancer patients enrolled in the study. The interim analysis resulted in a DMC recommendation that the study should continue to final analysis. The PANOVA-3 study accrued 556 patients as of February 2023 and data will be reviewed in 2024, following an 18-month follow-up period. In March 2023, we announced the final patient enrolled in the pivotal METIS study evaluating the efficacy of TTFields therapy following stereotactic radiosurgery for the treatment of patients with brain metastases from NSCLC. Following the completion of enrollment, patients will be followed for a minimum of 12 months with final data anticipated in 2024. We have one ongoing pilot study evaluating the use of TTFields in the treatment of stage 3 NSCLC and are designing several additional pilot and pivotal studies in partnership with oncology leaders to further explore the capabilities of TTFields. We anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields for additional solid tumor indications and combinations with other cancer treatment modalities. The table below presents the current status of the ongoing clinical studies in our pipeline and anticipated timing of data. Our therapy is delivered through a medical device and we continue to advance our Products with the intention to extend survival and maintain quality of life for patients. We have several product development programs underway that are designed to optimize TTFields delivery to the target tumor and enhance patient ease of use. One of these initiatives is the launch of new arrays, which are thinner, lighter and more flexible. We plan to submit for regulatory approval in the U.S. via PMA supplement in the second half of this year. 18 Table of Contents Our intellectual property portfolio contains hundreds of issued patents and numerous patent applications pending worldwide. We believe we possess global commercialization rights to our Products in oncology and are well-positioned to extend those rights into the future as we continue to find innovative ways to improve our Products. In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to commercialize Optune in China, Hong Kong, Macau and Taiwan ("Greater China") under a License and Collaboration Agreement (the "Zai Agreement"). The Zai Agreement also establishes a development partnership intended to accelerate the development of TTFields in multiple solid tumor cancer indications. For additional information, see Note 12 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 10-K"). We view our operations and manage our business in one operating segment. For the three and six months ended June 30, 2023, our net revenues were $126.1 million and $248.2 million, respectively. Our net loss for the three and six months ended June 30, 2023 was $57.4 million and $110.5 million, respectively. As of June 30, 2023, we had an accumulated deficit of $888.9 million. Our net loss resulted primarily from increasing investments designed to support our commercial business, geographic expansion and pre-commercial activities associated with potential future indication launches. Impact of COVID-19 On May 5, 2023, the World Health Organization (“WHO”) declared the end of the COVID-19 pandemic as a public health emergency of international concern, however the WHO maintains that the virus remains a global health threat. Since the pandemic began, we have followed the guidance of the WHO, the U.S. Centers for Disease Control and Prevention, and local health authorities in all of our active markets and will continue to do so. The COVID-19 pandemic did not have a material impact on our financial results through the second quarter of 2023. The pandemic is not having a direct impact on our day-to-day operations; however, we are still observing lingering impacts that might continue to impact our business and clinical studies in the future. For example, in many locations staffing levels at clinical trial sites have not returned to pre-pandemic levels, and our ability to conduct and monitor clinical studies may be impacted. Given the aggressive nature of the cancers that we treat, we believe that the fundamental value proposition of the TTFields platform remains unchanged. We continue to evaluate and plan for the potential effects of a possible COVID-19 resurgence on our business moving forward. The extent to which the COVID-19 pandemic may impact our business and clinical studies in the future will depend on further developments, which are highly uncertain and cannot be predicted with confidence. The COVID-19 pandemic may also have the effect of heightening many of the other risks described in our risk factors disclosed in our 2022 10-K. Commentary on Results of Operations Net revenues . Our revenues are primarily derived from patients using our Products in our active markets. We charge for treatment with our Products on a monthly basis. Our potential net revenues per patient are determined by our ability to secure payment, the monthly fee we collect and the number of months that the patient remains on therapy. We also receive revenues pursuant to the Zai Agreement. For additional information regarding the Zai Agreement, see Note 12 to the Consolidated Financial Statements in our 2022 10-K. Cost of revenues. We contract with third parties to manufacture our Products. Our cost of revenues is primarily comprised of the following: • disposable arrays; • depreciation expense for the field equipment, including the electric field generator used by patients; • patient support and other personnel costs; and • overhead costs, such as facilities, freight and depreciation of property, plant and equipment associated with managing our inventory, warehousing and order fulfillment functions. Operating expenses. Our operating expenses consist of research, development and clinical studies, sales and marketing and general and administrative expenses. Personnel costs are a significant component for each category 19 Table of Contents of operating expenses and consist of wages, benefits and bonuses. Personnel costs also include share-based compensation. Financial income (expenses), net . Financial income (expenses), net primarily consists of interest income from cash balances and short-term investments, credit facility interest expense and related debt issuance costs, and gains (losses) from foreign currency transactions. Our reporting currency is the U.S. dollar. We have historically held substantially all of our cash balances in U.S. dollar denominated accounts to minimize the risk of translational currency exposure. Results of Operations The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022. The tables contained in this section report U.S. dollars in thousands (except share, patient, and prescription data). The following table sets forth our consolidated statements of operations data: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Unaudited Unaudited Net revenues $ 126,051 $ 140,866 $ 248,233 $ 278,413 Cost of revenues 34,018 28,503 63,632 56,230 Gross profit 92,033 112,363 184,601 222,183 Operating costs and expenses: Research, development and clinical studies 55,427 57,075 115,131 99,309 Sales and marketing 58,488 44,750 109,657 82,634 General and administrative 40,778 31,666 82,722 62,174 Total operating costs and expenses 154,693 133,491 307,510 244,117 Operating income (loss) (62,660) (21,128) (122,909) (21,934) Financial income (expenses), net 8,756 (2,228) 17,925 (3,937) Income (loss) before income taxes (53,904) (23,356) (104,984) (25,871) Income taxes 3,514 652 5,495 2,784 Net income (loss) $ (57,418) $ (24,008) $ (110,479) $ (28,655) Basic and diluted net income (loss) per ordinary share $ (0.54) $ (0.23) $ (1.04) $ (0.27) 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 20 Table of Contents The following table details the share-based compensation expense included in costs and expenses: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Unaudited Unaudited Cost of revenues $ 2,023 $ 1,029 $ 4,029 $ 1,981 Research, development and clinical studies 8,537 7,624 20,316 14,425 Sales and marketing 10,213 6,802 21,857 13,457 General and administrative 11,967 10,368 25,622 21,005 Total share-based compensation expense $ 32,740 $ 25,823 $ 71,824 $ 50,868 Key performance indicators We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. An "active patient" is a patient who is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days. Prescriptions are a leading indicator of demand. A "prescription received" is a commercial order for Optune or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune or Optune Lua. Orders to renew or extend treatment are not included in this total. The following table includes certain commercial operating statistics for and as of the end of the periods presented. June 30, Operating statistics 2023 2022 Active patients at period end United States (1) 2,200 2,229 Germany 499 458 Japan 352 346 Others 520 421 Total 3,571 3,454 Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Prescriptions received in period United States (1) 981 954 2,032 1,889 Germany 204 216 412 436 Japan 92 95 164 197 Others 279 118 444 245 Total 1,556 1,383 3,052 2,767 (1) United States includes data for Canada for 2022. For 2023, Canada is included in "Others". There were 16 active MPM patients on therapy as of June 30, 2023 and 25 MPM prescriptions were received in the three months ended June 30, 2023. 21 Table of Contents Three and six months ended June 30, 2023 compared to three and six months ended June 30, 2022 Three months ended June 30, Six months ended June 30, 2023 2022 % Change 2023 2022 % Change Net revenues $ 126,051 $ 140,866 (11) % $ 248,233 $ 278,413 (11) % Net revenues. Net revenues decreased 11% to $126.1 million for the three months ending June 30, 2023 from $140.9 million for the same period in 2022, and decreased 11% to $248.2 million for the six-month period ended June 30, 2023 from $278.4 million for the same period in 2022. For the three and six months ended June 30, 2023, the decrease resulted primarily from $13.4 million and $18.8 million, respectively, in reduced collections from previously denied or appealed claims in the U.S. Net revenues for the three-month period ended June 30, 2023 were also impacted by a reduction of $5.5 million resulting from variations in approval patterns in the U.S. compared to the same period in 2022, offset by a $5.4 million increase resulting from variations in approval rates in Germany as more patients are meeting coverage criteria in the market. We believe the outstanding denied and appealed claims that were most accessible were largely exhausted in 2022 and the remaining outstanding claims will take time to collect. As a result, we expect future net revenue to more closely reflect core drivers: number of active patients on therapy, duration of therapy, and net realized price per month. We continue to actively appeal and pursue the remaining previously denied claims, but the cadence and size of these collections are difficult to predict. Three months ended June 30, Six months ended June 30, 2023 2022 % Change 2023 2022 % Change Cost of revenues $ 34,018 $ 28,503 19 % $ 63,632 $ 56,230 13 % Cost of revenues. Our cost of revenues for the three months ended June 30, 2023 was $34.0 million, an increase of 19% from $28.5 million for the same period in 2022, and $63.6 million for the six months ended June 30, 2023, an increase of 13% from $56.2 million for the same period in 2022. For the three and six months ended June 30, 2023, the increase in cost of revenues was primarily due to increased costs of $3.5 million and $6.5 million, respectively, in patient support capacity in anticipation of treating larger patient populations in new cancer indications and new geographic regions. Gross margin was 73% for the three months ended June 30, 2023 compared to 80% for the three months ended June 30, 2022. Gross margin was 74% for the six months ended June 30, 2023 and 80% for the six months ended June 30, 2022. Excluding sales to Zai, cost of revenues per active patient per month was $2,878 for the three months ended June 30, 2023, an increase of 20% from $2,391 for the same period in 2022, primarily due to increased patient support capacity. Cost of revenues per active patient is calculated by dividing the cost of revenues for the quarter less equipment sales to Zai for the quarter by the average of the active patients at the end of the prior quarter and the ending active patients in the current quarter. This quarterly figure is then divided by three to estimate the monthly cost of revenues per active patient. Sales to Zai are deducted because they are sold at cost and in anticipation of future royalties from Zai, and Zai patient counts are not included in our active patient population. Product sales to Zai totaled $3.6 million and $6.3 million for the three and six months ended June 30, 2023 compared to $3.4 million and $5.3 million for the three and six months ended June 30, 2022. We expect that our gross margins will continue to be impacted by current and future product enhancements, such as the ongoing launch of next generation arrays. We continue to focus on opportunities to increase efficiencies and scale within our supply chain. This includes evaluating new materials, manufacturers, and processes that could lead to lower costs. 22 Table of Contents Operating Expenses. Three months ended June 30, Six months ended June 30, 2023 2022 % Change 2023 2022 % Change Research, development and clinical studies $ 55,427 $ 57,075 (3) % $ 115,131 $ 99,309 16 % Sales and marketing 58,488 44,750 31 % 109,657 82,634 33 % General and administrative 40,778 31,666 29 % 82,722 62,174 33 % Total operating expenses $ 154,693 $ 133,491 16 % $ 307,510 $ 244,117 26 % Research, development and clinical study expenses. Research, development and clinical study expenses decreased 3% to $55.4 million for the three months ended June 30, 2023 from $57.1 million for the same period in 2022, and increased 16% to $115.1 million for the six-month period ended June 30, 2023 from $99.3 million in the same period in 2022. For the three months ended June 30, 2023, the change resulted primarily from reduced costs associated with recently completed clinical studies. For the six months ended June 30, 2023, the increase was primarily driven by an $6.9 million increase in engineering, regulatory affairs and preclinical costs, a $3.5 million increase in pre-launch activities related to new clinical trials, and an increase of $5.3 million in other personnel expenses. Total research and development expenses can fluctuate quarter-to-quarter dependent upon the amount of clinical research organization services delivered, clinical materials procured and the number of trials actively underway within a given quarter. Sales and marketing expenses. Sales and marketing expenses increased 31% to $58.5 million for the three months ended June 30, 2023 from $44.7 million for the same period in 2022, and increased 33% to $109.7 million for the six-month period ended June 30, 2023 from $82.6 million for the same period in 2022. For the three and six months ended June 30, 2023, these changes were primarily due to increase of $7.0 million and $12.0 million, respectively, in costs associated with geographic expansion and pre-launch activities intended to increase awareness in TTFields in anticipation of future approvals in new indications, as well as increased personnel costs of $3.4 million and $8.4 million, respectively. Additionally, we are investing in market access capabilities in order to evaluate opportunities, identify optimal access pathways, and successfully gain reimbursement in new geographies. General and administrative expenses. General and administrative expenses increased 29% to $40.8 million for the three-month period ended June 30, 2023 from $31.7 million for the same period in 2022, and increased 33% to $82.7 million for the six months ended June 30, 2023 from $62.2 million for the same period in 2022. For the three and six months ended June 30, 2023, these changes were primarily due increases in personnel and project expenses to support potential new indication launches, new geographic launches, supply chain expansion and information technology enhancements of $9.1 million and $20.5 million, respectively. Three months ended June 30, Six months ended June 30, 2023 2022 % Change 2023 2022 % Change Financial income (expenses), net $ 8,756 $ (2,228) (493) % $ 17,925 $ (3,937) (555) % Financial income (expenses), net. Financial income increased 493% to $8.7 million in income for the three months ended June 30, 2023 from $2.2 million of expenses for the same period in 2022 and financial income increased 555% to $17.9 million in income for the six months ended June 30, 2023 from $3.9 million in expenses for the same period in 2022. For the three-month period ending June 30, 2023, the change from 2022 was primarily due to $8.6 million in increased interest income and $2.3 million in reduced foreign exchange rate expenses. For the six-month period ending June 30, 2023, the change from 2022 was primarily due to $17.9 million in increased interest income and $3.8 million in reduced foreign exchange expenses. Three months ended June 30, Six months ended June 30, 2023 2022 % Change 2023 2022 % Change Income taxes $ 3,514 $ 652 439 % $ 5,495 $ 2,784 97 % Income taxes . Income taxes increased $2.9 million, or 439% to $3.5 million for the three months ended June 30, 2023 from $0.7 million for the same period in 2022, and income taxes increased $2.7 million, or 97% to $5.5 million 23 Table of Contents for the six months ended June 30, 2023 from $2.8 million for the same period in 2022. The increases reflect a change in the mix of applicable statutory tax rates in active jurisdictions. Non-GAAP financial measures We also measure our performance using a non-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 evaluate and 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. We calculate Adjusted EBITDA as operating income before financial expenses and income taxes, net of depreciation, amortization and share-based compensation. The following table reconciles net income (loss), which is the most directly comparable GAAP operating performance measure, to Adjusted EBITDA. Three months ended June 30, Six months ended June 30, 2023 2022 % Change 2023 2022 % Change Net income (loss) $ (57,418) $ (24,008) 139 % $ (110,479) $ (28,655) 286 % Add: Income tax 3,514 652 439 % 5,495 2,784 97 % Add: Financial expenses (income), net (8,756) 2,228 (493) % (17,925) 3,937 (555) % Add: Depreciation and amortization 2,721 2,654 3 % 5,443 5,264 3 % EBITDA $ (59,939) $ (18,474) 224 % $ (117,466) $ (16,670) 605 % Add: Share-based compensation 32,740 25,823 27 % 71,824 50,868 41 % Adjusted EBITDA $ (27,199) $ 7,349 (470) % $ (45,642) $ 34,198 (233) % Adjusted EBITDA decreased by $34.5 million, or 470%, to a loss of $27.2 million for the three months ended June 30, 2023 from income of $7.3 million for the same period in 2022, and decreased by 233%, to a loss of $45.6 million for the six months ended June 30, 2023 from income of $34.2 million for the same period in 2022. This decrease was primarily attributable to increased growth investments intended to expand our capacity to treat larger patient populations, to enhance commercial capabilities and to increase awareness of TTFields in anticipation of potential future approvals in new indications, and a reduction in revenue as described above. Liquidity and Capital Resources We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As of June 30, 2023, we had an accumulated deficit of $888.9 million. To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans. At June 30, 2023, we had $940.8 million in cash, cash equivalents and short-term investments, a decrease of $28.6 million compared to $969.4 million at December 31, 2022. We believe our cash, cash equivalents and short-term investments as of June 30, 2023 are sufficient for our operations for at least the next 12 months based on our existing business plan and our ability to control the timing of significant expense commitments. We expect that our operating expenses will continue to increase over the next several years and may outpace our gross profit as we prepare to expand into additional indications beyond GBM. As a result, we may need to raise additional capital to fund our operations. 24 Table of Contents The following summary of our cash flows for the periods indicated has been derived from our unaudited consolidated financial statements, which are included elsewhere in this Quarterly Report: Six months ended June 30, 2023 2022 Change % Change Net cash provided by (used in) operating activities $ (39,464) $ 12,075 $ (51,539) (427) % Net cash provided by (used in) investing activities 68,390 138,347 (69,957) (51) % Net cash provided by financing activities 12,706 7,877 4,829 61 % Effect of exchange rate changes on cash and cash equivalents 28 (145) 173 (119) % Net increase (decrease) in cash, cash equivalents and restricted cash $ 41,660 $ 158,154 $ (116,494) (74) % Operating activities. Net cash used in or provided by operating activities represents our net income (loss) for the periods presented, share-based compensation and depreciation and amortization. Operating cash flows are also impacted by changes in working capital. Net cash used in operating activities increased by $51.5 million from $12.1 million net cash provided by operating activities for the six months ended June 30, 2022 to $39.5 million net cash used in operating activities for the six months ended June 30, 2023. This increase was a result of net income decreasing $81.8 million, offset by a $24.4 million decrease in working capital, an increase of $11.0 million in cash to non-cash based expenses primarily consisting of shared-based compensation and an increase of $4.6 million in other long term assets. The decrease in working capital includes a $26.7 million decrease in accounts receivable offset by a decrease of $3.1 million in accounts payable. Investing activities. Our investing activities consist primarily of investments in and redemptions of our short-term investments as well as investments in property and equipment. Net cash provided by investing activities was $68.4 million for the six months ended June 30, 2023, compared to $138.3 million provided by investing activities for the six months ended June 30, 2022. The $68.4 million net cash provided by investing activities for the six months ended June 30, 2023 was primarily attributable to $81.4 million of net proceeds from the maturity of short-term investments and the purchase of $13.0 million of property and equipment. The $138.3 million net cash provided by investing activities for the six months ended June 30, 2022 was primarily attributable to $147.6 million of net proceeds in short-term investments and by the purchase of $9.2 million of property and equipment. Financing activities. To date, our primary financing activities have been the sale of equity and the proceeds from long-term loans. Net cash provided by financing activities was $12.7 million for the six months ended June 30, 2023, as compared to $7.9 million provided by financing activities for the six months ended June 30, 2022. The net cash provided by financing activities for the six months ended June 30, 2023 and June 30, 2022 included proceeds from the exercise of options under the Company's stock option plan. Convertible Notes On November 5, 2020, we issued $575.0 million aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”). The Notes are senior unsecured obligations. The Notes do not bear regular interest, and the principal amount of the Notes will not accrete. The Notes are convertible at an initial conversion rate of 5.9439 ordinary shares per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $168.24 per ordinary share. The Notes are convertible at the option of the holders upon the satisfaction of certain other conditions and during certain periods, and if the Company exercises its right to redeem the Notes as permitted or required by the indenture. On or after August 1, 2025 until the close of the business on the business day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time irrespective of the foregoing conditions. In January 2021, we irrevocably elected to settle all conversions of Notes by a combination of cash and our ordinary shares and that the cash portion per $1,000 principal amount of Notes for all conversion settlements shall be $1,000. Accordingly, from and after the date of the election, upon conversion of any Notes, holders of Notes will 25 Table of Contents receive, with respect to each $1,000 principal amount of Notes converted, cash in an amount up to $1,000 and the balance of the conversion value, if any, in our ordinary shares. For more information, see Note 10a. to the Consolidated Financial Statements in the 2022 10-K. Term loan credit facility On November 6, 2020, we entered into a new three-year $150.0 million senior secured revolving credit facility with a syndicate of relationship banks (the "2020 Credit Facility"). On February 17, 2023, we gave irrevocable notice to the administrative agent under the 2020 Credit Facility that we terminated all commitments, effective February 22, 2023. This effectively terminated the 2020 Credit Facility, as our ability to borrow and our obligations to comply with all covenants ended on such date. The liens and guaranties in favor of the lenders are released. There was no early termination fee payable. The commitments under the 2020 Credit Facility were guaranteed by certain of our subsidiaries and secured by a first lien on our and certain of our 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. 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. Contractual Obligations and Commitments There have been no material changes from the information disclosed in our 2022 10-K. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under U.S. Securities and Exchange Commission (“SEC”) rules. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes from the information disclosed in our 2022 10-K.