What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-10-26 compared with 2023-07-27 · 88 added, 73 removed, 224 unchanged (42% of the section changed)

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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.

We encourage you to read this MD&A in conjunction with our unaudited consolidated financial statements and the notes thereto for the period ended September 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.

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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.

Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treat 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.

In March 2023, we announced the availability and reimbursement of Optune together with temozolomide for the treatment of adult patients with newly diagnosed GBM in France and we are now treating patients.

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.

We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers and are conducting a number of phase 2 and phase 3 trials exploring application in cancers of the brain, torso and abdomen.

We are designing several additional phase 2 and phase 3 trials 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.

Thoracic Cancer Program Updates

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 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;

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

systemic toxicities and few grade 3 (no grade 4 or 5) device-related adverse events.

TTFields therapy was well-tolerated with no added systemic toxicities and few grade 3 (no grade 4 or 5) device-related adverse events.

In August 2023, the data from the LUNAR study were published in The Lancet Oncology , and additional data detailing the LUNAR study have since been presented at multiple medical congresses.

These data are expected to serve as the basis for a PMA submission to the FDA in the second half of 2023.

In March 2023, we announced the final patient enrolled in the phase 3 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 top-line data anticipated in the first quarter of 2024.

We are planning to launch several additional trials intended to further explore the use of TTFields therapy in the treatment of NSCLC.

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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.

Abdominal Cancer Program Updates

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.

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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.

In August 2023, the first patient was enrolled in the phase 2 PANOVA-4 study evaluating the safety and efficacy of TTFields therapy together with atezolizumab, gemcitabine and nab-paclitaxel in the treatment of metastatic pancreatic cancer.

The PANOVA-4 study is designed to enroll 76 patients with a 12-month follow-up following the enrollment of the last patient.

This study is the result of a clinical study collaboration with Roche.

In August 2023, we announced that the phase 3 INNOVATE-3 study for the treatment of platinum-resistant ovarian cancer did not meet its primary endpoint of overall survival at the final analysis.

Consistent with previously reported studies, TTFields therapy was well-tolerated with no added systemic toxicities.

An exploratory subgroup analysis suggested a potential survival benefit in patients who received only one prior line of therapy.

Full evaluation of the data from the INNOVATE-3 trial, including subgroup analyses, is ongoing and we will work with trial investigators to share the full results with the scientific community in the future.

The table below presents the current status of the ongoing clinical studies in our pipeline and anticipated timing of data.

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One of these initiatives is the launch of new arrays, which are thinner, lighter and more flexible.

We have obtained a CE Mark and have begun rolling out our new arrays in multiple European countries.

We plan to submit for regulatory approval in the U.S.

via PMA supplement in the second half of this year.

via a PMA supplement by year-end 2023.

Our intellectual property portfolio contains hundreds of issued patents and numerous patent applications pending worldwide.

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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.

For the three and nine months ended September 30, 2023, our net revenues were $127.3 million and $375.6 million, respectively.

Our net loss for the three and nine months ended September 30, 2023 was $49.5 million and $160.0 million, respectively.

As of September 30, 2023, we had an accumulated deficit of $938.4 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.

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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 COVID-19 pandemic did not have a material impact on our financial results through the third quarter of 2023.

The pandemic is not having a direct impact on our day-to-day operations;

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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 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.

Impact of Current Events

On September 30, 2023, President Biden signed into law a continuing resolution that allowed the U.S.

government to continue to be funded and operating through November 17, 2023.

If full appropriations or continuing resolutions are not enacted, it is likely that some U.S.

Food and Drug Administration functions would be required to stop working until they are funded.

As a result, the review process for new products and clinical trials could be delayed.

On October 7, 2023, the State of Israel was attacked by and subsequently declared war on Hamas.

As of the date of this filing, we believe that there is no immediate risk to our business facilities or operations.

Our supply chain teams are working to increase stock levels to mitigate distribution and service risks from our suppliers in Israel.

Commentary on Results of Operations

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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

of operating expenses and consist of wages, benefits and bonuses.

Personnel costs are a significant component for each category of operating expenses and consist of wages, benefits and bonuses.

Personnel costs also include share-based compensation.

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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 following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022.

The tables contained in this section report U.S.

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The following table sets forth our consolidated statements of operations data:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

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The following table details the share-based compensation expense included in costs and expenses:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

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The following table includes certain commercial operating statistics for and as of the end of the periods presented.

September 30,

Operating statistics 2023 2022

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Total 3,639 3,420

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

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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.

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,

There were 17 active MPM patients on therapy as of September 30, 2023 and 18 MPM prescriptions were received in the three months ended September 30, 2023.

Three and nine months ended September 30, 2023 compared to three and nine months ended September 30, 2022

Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

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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.

Net revenues decreased 3% to $127.3 million for the three months ending September 30, 2023 from $131.0 million for the same period in 2022, and decreased 8% to $375.6 million for the nine-month period ended September 30, 2023 from $409.4 million for the same period in 2022.

For the three months ended September 30, 2023, the decrease primarily resulted from $14.5 million in reduced collections from denied or appealed claims in the U.S., partially offset by an increase of $7.9 million resulting from improved reimbursement approval rates in Germany and $4.2 million from our launch in France.

For the nine month period ended September 30, 2023, the decrease resulted primarily from $41.9 million in reduced collections from denied or appealed claims in the U.S., partially offset by an increase of $9.2 million resulting from improved reimbursement approval rates in Germany and $4.2 million from our launch in France.

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.

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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,

Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

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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.

Our cost of revenues for the three months ended September 30, 2023 was $32.1 million, an increase of 8% from $29.7 million for the same period in 2022, and $95.7 million for the nine months ended September 30, 2023, an increase of 11% from $86.0 million for the same period in 2022.

For the three and nine

months ended September 30, 2023, the increase in cost of revenues was primarily due to increased costs of $2.1 million and $8.6 million, respectively, in patient support capacity in anticipation of treating larger patient populations in new cancer indications and expansion into new geographic regions.

Excluding sales to Zai, cost of revenues per active patient per month was $2,599 for the three months ended September 30, 2023, an increase of 2% from $2,543 for the same period in 2022, primarily due to increased patient support capacity and the ongoing launch of next generation arrays.

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.

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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.

Product sales to Zai totaled $4.0 million and $10.3 million for the three and nine months ended September 30, 2023 compared to $3.5 million and $8.8 million for the three and nine months ended September 30, 2022.

Gross margin was 75% for the three months ended September 30, 2023 compared to 77% for the three months ended September 30, 2022.

Gross margin was 75% for the nine months ended September 30, 2023 and 79% for the nine months ended September 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.

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Operating Expenses.

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

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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.

Research, development and clinical study expenses increased 3% to $53.6 million for the three months ended September 30, 2023 from $52.0 million for the same period in 2022, and increased 12% to $168.8 million for the nine-month period ended September 30, 2023 from $151.3 million in the same period in 2022.

For the three months ended September 30, 2023, the change resulted primarily from an increase in quality assurance, regulatory affairs, product development, and safety costs in anticipation of clinical trial launches and regulatory filings.

For the nine months ended September 30, 2023, the increase was primarily driven by a $12.2 million increase in quality assurance, regulatory affairs, product development, and safety costs and an increase of $5.1 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.

Sales and marketing expenses increased 40% to $58.0 million for the three months ended September 30, 2023 from $41.4 million for the same period in 2022, and increased 35% to $167.6 million for the nine-month period ended September 30, 2023 from $124.0 million for the same period in 2022.

For the three and nine months ended September 30, 2023, these changes were primarily due to increases of $11.7 million and $24.4 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 $1.3 million and $9.7 million, respectively.

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,

General and administrative expenses increased 29% to $41.9 million for the three-month period ended September 30, 2023 from $32.5 million for the same period in 2022, and increased 32% to $124.6 million for the nine months ended September 30, 2023 from $94.7 million for the same period in 2022.

For the three and nine months ended September 30, 2023, these changes were primarily due to increases in personnel and project expenses to support potential new indication launches, new geographic launches, supply chain expansion and information technology enhancements of $9.4 million and $29.9 million, respectively.

Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

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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,

Financial income increased 739% to $10 million in income for the three months ended September 30, 2023 from $1.2 million of income for the same period in 2022 and financial income increased 1,119% to $27.9 million in income for the nine months ended September 30, 2023 from $2.7 million in expenses for the same period in 2022.

For the three-month period ending September 30, 2023, the change from 2022 was primarily due to $8.0 million in increased interest income and $0.8 million in reduced foreign exchange rate expenses.

For the nine-month period ending September 30, 2023, the change from 2022 was primarily due to $26.5 million in increased interest income and $4.6 million in reduced foreign exchange expenses.

Three months ended September 30, Nine months ended September 30,

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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

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.

Income taxes decreased $1.9 million, or 60%, to $1.3 million for the three months ended September 30, 2023 from $3.2 million for the same period in 2022, and income taxes increased $0.8 million, or 14% to $6.8 million for the nine months ended September 30, 2023 from $5.9 million for the same period in 2022.

The increase reflects a change in the mix of applicable statutory tax rates in active jurisdictions.

Non-GAAP financial measures

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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,

Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

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Adjusted EBITDA $ (29,096) $ 4,353 (768) % $ (74,738) $ 38,552 (294) %

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.

Adjusted EBITDA decreased by $33.4 million, or 768%, to a loss of $29.1 million for the three months ended September 30, 2023 from income of $4.4 million for the same period in 2022, and decreased by $113.3 million, or 294%, to a loss of $74.7 million for the nine months ended September 30, 2023 from income of $38.6 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.

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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.

As of September 30, 2023, we had an accumulated deficit of $938.4 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.

At September 30, 2023, we had $921.2 million in cash, cash equivalents and short-term investments, a decrease of $48.2 million compared to $969.4 million at December 31, 2022.

We believe our cash, cash equivalents and short-term investments as of September 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.

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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,

Nine months ended September 30,

2023 2022 Change % Change

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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.

Net cash used in operating activities increased by $93.3 million from $34.5 million net cash provided by operating activities for the nine months ended September 30, 2022 to $58.8 million net cash used in operating activities for the nine months ended September 30, 2023.

This increase was a result of net income decreasing $104.7 million, offset by a $9.5 million decrease in working capital, an increase of $6.2 million in cash to non-cash based expenses primarily consisting of shared-based compensation, and an increase of $4.3 million in other long term assets and liabilities.

The $9.5 million decrease in working capital includes a $17.8 million decrease in accounts receivable offset by an increase of $6.2 million in inventories.

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.

Net cash provided by investing activities was $85.6 million for the nine months ended September 30, 2023, compared to $11.9 million used in investing activities for the nine months ended September 30, 2022.

The $85.6 million net cash provided by investing activities for the nine months ended September 30, 2023 was primarily attributable to $105.9 million of net proceeds from the maturity of short-term investments and the purchase of $20.3 million of property and equipment.

The $11.9 million net cash used in investing activities for the nine months ended September 30, 2022 was primarily attributable to $3.0 million of net proceeds in short-term investments and by the purchase of $14.9 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.

Net cash provided by financing activities was $13.9 million for the nine months ended September 30, 2023, as compared to $12.1 million provided by financing activities for the nine months ended September 30, 2022.

The net cash provided by financing activities for the nine months ended September 30, 2023 and September 30, 2022 included proceeds from the exercise of options under the Company's stock option plan.

Convertible Notes

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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

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.

Accordingly, from and after the date of the election, upon conversion of any Notes, holders of Notes will 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.

18 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 2. Management’s Discussion and Analysis