What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-02-23 · 114 added, 110 removed, 269 unchanged (45% of the section changed)

5 unchanged sentences

References to the words "we," "our," "us," and the "Company" in this report refer to NovoCure Limited, including its consolidated subsidiaries .

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 and Optune Lua, our commercial TTFields devices, 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.

We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers.

We recently completed patient follow-up and announced top line results from our pivotal LUNAR study evaluating the use of TTFields in the treatment of non-small cell lung cancer ("NSCLC") together with standard therapies.

Patients treated with TTFields and standard therapies demonstrated a statistically significant and clinically meaningful improvement in overall survival over standard therapies alone.

The LUNAR study also showed a statistically significant and clinically meaningful improvement in overall survival when patients were treated with TTFields and immune checkpoint inhibitors, as compared to those treated with immune checkpoint inhibitors alone, and a positive trend in overall survival when patients were treated with TTFields and docetaxel versus docetaxel alone.

We expect to present full results of the LUNAR study at a future medical conference.

In addition to the LUNAR study, we are conducting pivotal 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 pivotal study testing the potential survival benefit of initiating Optune concurrent with radiation therapy versus following radiation therapy in patients with newly diagnosed GBM.

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.

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.

Impact of COVID-19

In March 2020, the World Health Organization (“WHO”) declared COVID-19 a global pandemic.

Since the pandemic began, we have been following 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 we have adjusted the way we conduct business to adapt to the evolving situation.

The COVID-19 pandemic did not have a material impact on our financial results throughout 2022.

The pandemic has had and is having an impact on our day-to-day operations, which varies by region based on factors such as geographical spread, stage of containment and recurrence of the pandemic in each region.

We believe the prolonged disruption caused by COVID-19 is resulting in increased volatility across global health care systems, such as fluctuations in patient volumes and changes in patterns of care in certain regions, which is currently impacting and might continue to impact our business and clinical studies in the future.

For example, outside the U.S., localized lockdowns are causing disruptions in the ability to monitor clinical studies.

TTFields is an emerging modality in cancer care and requires significant educational effort to drive awareness and acceptance of our therapy.

We have relied heavily on virtual engagement to manage these educational efforts since the onset of the pandemic, which poses challenges to our ability to effectively communicate and engage with our customers and partners around the world.

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 COVID-19 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 heighten many of the other risks described in our risk factors disclosed in this Annual Report.

We view our operations and manage our business in one operating segment.

Our net revenues were $537.8 million for the year ended December 31, 2022, $535.0 million for the year ended December 31, 2021 and $494.4 million for the year ended December 31, 2020.

Our net loss was $92.5 million for the year ended December 31, 2022, net loss was $58.4 million for the year ended December 31, 2021 and net income was $19.8 million for the year ended December 31, 2020.

As of December 31, 2022, we had an accumulated deficit of $778.5 million.

Commentary on Results of Operations

15 unchanged sentences

Research, development and clinical studies

Our research, development and clinical studies activity is focused on advancing TTFields through clinical studies across multiple solid tumor types and improving the efficacy and usability of our devices.

Our research, development and clinical studies activity is focused on advancing TTFields therapy through clinical studies across multiple solid tumor types and improving the efficacy and usability of our devices.

Research, development and clinical studies costs, including direct and allocated expenses, are expensed as incurred and consist primarily of the following:

2 unchanged sentences

• manufacturing expenses associated with our Products, including durable components and disposable arrays, utilized in clinical studies and other research;

• costs associated with medical grants, publications, presentations and investigator-sponsored trials;

• costs associated with publications, presentations and investigator-sponsored trials;

• professional fees related to regulatory approvals and conformity assessment procedures;

18 unchanged sentences

(1) Other research, development and clinical study costs include regulatory affairs, quality assurance, intellectual property, product safety, allocated facilities and other overhead costs.

We are committed to investing strategically to maximize the growth potential of the TTFields platform.

We expect growth in our research and development investments to continue into 2023 as we work to advance our pipeline programs and increase acceptance of Tumor Treating Fields across the global oncology community.

We are committed to investing strategically to maximize the growth potential of the TTFields therapy platform.

As such, we are prioritizing clinical programs which have the greatest value potential in solid tumors where TTFields therapy has established efficacy, including glioblastoma, non-small cell lung cancer and pancreatic cancer.

Sales and marketing

Sales and marketing expenses consist primarily of personnel costs, travel, marketing and promotional activities, medical education, commercial shipping and facilities costs.

Sales and marketing expenses consist primarily of personnel costs, travel, marketing and promotional activities, medical education, market access, commercial shipping and facilities costs.

Over the next few years, we expect to continue to make significant expenditures associated with selling and marketing our Products, primarily in connection with continued commercialization in North America, the EU and Japan for the treatment of our approved indications.

We are prioritizing launch readiness, including field-based commercial and field-based medical team hiring, for the anticipated approval of TTFields therapy for the treatment of metastatic non-small cell lung cancer following progression on or after platinum-based therapies.

General and administrative

6 unchanged sentences

Financial expenses, net

Financial expenses, net primarily consists of credit facility interest expense and related debt issuance costs, interest income from cash balances and short-term investments and gains (losses) from foreign currency transactions.

Financial expenses, net, primarily consists of bank fees, credit facility interest expense and related debt issuance costs, interest income from cash balances and short-term investments and gains (losses) from foreign currency

transactions.

Our reporting currency is the U.S.

81 unchanged sentences

Net income (loss) $ (207,043) $ (92,534) $ (58,351)

Basic net income (loss) per ordinary share $ (0.88) $ (0.56) $ 0.20

Weighted average number of ordinary shares used in computing basic net income (loss) per share 104,660,476 103,433,274 100,930,866

Diluted net income (loss) per ordinary share $ (0.88) $ (0.56) $ 0.18

Weighted average number of ordinary shares used in computing diluted net income (loss) per share 104,660,476 103,433,274 108,877,648

Basic and diluted net income (loss) per ordinary share

$ (1.95) $ (0.88) $ (0.56)

Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share

106,391,178 104,660,476 103,433,274

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

10 unchanged sentences

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

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.

Prescriptions are a leading indicator of demand.

A "prescription received" is a commercial order for Optune Gio or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune Gio or Optune Lua.

Orders to renew or extend treatment are not included in this total.

2 unchanged sentences

Active patients at period end

North America (1) 2,191 2,272 2,193

United States 2,162 2,164 2,259

International markets:

Germany 525 467 563

Other EMEA 403 445 391

Japan 375 369 307

Other international 693 430 458

International markets - Total 1,593 1,266 1,328

Total 3,755 3,430 3,587

2 unchanged sentences

Prescriptions received in period

North America (1) 3,823 3,781 3,871

United States 3,912 3,790 3,770

International markets:

Germany 792 830 924

Other EMEA 495 521 467

Japan 354 381 436

Other international 1,025 528 532

International markets - Total 2,171 1,739 1,892

Total 6,083 5,529 5,662

(1) North America includes data for the United States and Canada for the second half of 2021 and all of 2022, and the United States only for the first half of 2021 and 2020.

Worldwide, there were 7 active MPM patients on therapy as of December 31, 2022 and 33 MPM prescriptions were received in the year ended December 31, 2022.

Year ended December 31, 2023 compared to year ended December 31, 2022

3 unchanged sentences

Net revenues.

Net revenues increased by $2.8 million, or 1%, to $537.8 million for the year ended December 31, 2022 from $535.0 million for the year ended December 31, 2021.

This was primarily due to an increase in collections from previously denied and appealed claims in the U.S.

offset by a reduction in German approval rates as a result of updated coverage criteria, and the impact of foreign exchange rate fluctuations.

In 2022, we recorded $32 million in revenue from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries billed prior to established coverage.

We continue to actively appeal and pursue previously denied claims for beneficiaries billed prior to established coverage, but the cadence and amount of these Medicare payments are impossible to predict.

We believe collections from those claims which were most accessible were largely exhausted in 2022 and the remaining outstanding claims will take time to collect.

Net revenues decreased by $28.5 million, or 5%, to $509.3 million for the year ended December 31, 2023 from $537.8 million for the year ended December 31, 2022.

The decrease resulted primarily from $48.4 million in reduced collections from denied or appealed claims in the U.S., partially offset by an increase of $14.1 million resulting from improved reimbursement approval rates in Germany and $11.7 million from our launch in France.

Following regulatory approval and prior to the establishment of coverage criteria, we have treated on-label patients in the U.S.

at risk and appealed denied claims for commercial and Medicare fee-for-service beneficiaries on a case-by-case basis.

For the year ended December 31, 2023, we recorded $5 million in revenue from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries billed prior to established coverage, a decrease of $27 million from $32 million recorded for the year ended December 31, 2022.

We believe collections from these 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 of net revenue:

4 unchanged sentences

Cost of revenues.

Our cost of revenues were $114.9 million for the year ended December 31, 2022, virtually unchanged from $114.9 million for the year ended December 31, 2021.

Excluding sales to Zai, cost of revenues per

active patient per month were $2,481 for the year ended December 31, 2022 compared to $2,474 for the year ended December 31, 2021.

Cost of revenues per active patient is calculated by dividing the cost of revenues for the year less product sales to Zai for the year by the average of the active patients at the end of the each quarter in the current year and the end of the year active patients from the prior year.

Our cost of revenues were $128.3 million for the year ended December 31, 2023, an increase of $13.4 million, or 12%, from $114.9 million for the year ended December 31, 2022.

Excluding sales to Zai, cost of revenues per active patient per month were $2,714 for the year ended December 31, 2023 compared to $2,481 for the year ended December 31, 2022 driven by higher costs of arrays from our initial roll out of a next generation array and an increase in capacity of patient support services in anticipation of new indications.

of the year active patients from the prior year.

This annual figure is then divided by twelve to estimate the monthly cost of revenues per active patient.

2 unchanged sentences

Gross margin was 75% for the year ended December 31, 2023 and 79% for the year ended December 31, 2022.

Our gross margins are affected by our ability to achieve efficiencies of scale, the number of active patients and array usage within a given period, product mix, and product modifications.

Increased product sales to Zai have the effect of tempering gross margin, as those products are sold at cost.

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 cost.

Year ended December 31,

7 unchanged sentences

Research, development and clinical studies expenses increased by $17.0 million, or 8%, to $223.1 million for the year ended December 31, 2023 from $206.1 million for the year ended December 31, 2022.

The change is driven by an increase of $4.8 million in product development and regulatory affairs expenses.

We expect growth in our research and development investments to continue into 2023 as we work to advance our pipeline programs and increase acceptance of TTFields across the global oncology community.

We balance our investments in research and development with our organizational capacity to effectively execute our strategic initiatives.

The change is primarily due to an increase of $11.0 million in costs incurred in support of ongoing and anticipated clinical trial launches and regulatory filings.

Total research and development expenses can fluctuate period-to-period dependent upon the amount of clinical research organization services delivered, clinical materials procured and the number of trials actively underway within a given period.

Sales and marketing expenses.

Sales and marketing expenses increased by $53.2 million, or 31%, to $226.8 million for the year ended December 31, 2023 from $173.7 million for the year ended December 31, 2022.

The change primarily was due to increases of $22.7 million, $2.9 million and $2.9 million in marketing, health policy, and sales expenses, respectively, which are intended to increase awareness and acceptance of TTFields in our approved indications and enhance our commercial capabilities in anticipation of potential future approvals in new indications.

Additionally, we are investing in market access capabilities in order to evaluate opportunities, identify optimal access pathways, and successfully gain reimbursement in new geographies.

The change primarily was due to an increase of $37.6 million in costs associated with geographic expansion and pre-launch activities intended to increase awareness of TTFields therapy in anticipation of our launch in NSCLC, as well as an increase in non-cash personnel costs of $7.1 million.

General and administrative expenses.

General and administrative expenses increased by $31.3 million, or 24%, to $164.1 million for the year ended December 31, 2023 from $132.8 million for the year ended December 31, 2022.

The change primarily was due to increases of $5.0 million and $2.5 million in information technology infrastructure and supply chain optimization, respectively, and offset by a decrease in expenses associated with personnel costs and professional services.

The change was due to increases of $20.2 million in costs associated with increased personnel and services to support our anticipated launch in NSCLC and new geographies, as well as $11.1 million in costs associated with information technology services and personnel.

Year ended December 31,

2 unchanged sentences

Financial (expenses) income, net.

Financial expenses, net, decreased by $15.4 million, or 199%, to $7.7 million income for the year ended December 31, 2022 from $7.7 million expense for the year ended December 31, 2021.

In 2022, financial income was primary driven by interest income and amortization of investment premiums on our cash, cash equivalents and short term investments.

In 2021, financial expenses were primarily driven by foreign exchange expenses.

Financial income, net, increased by $33.5 million, or 436%, to $41.1 million income for the year ended December 31, 2023 from $7.7 million income for the year ended December 31, 2022.

The increase was primarily driven by an increase in interest income of $30.4 million and a decrease of foreign exchange expenses of $3.1 million.

Year ended December 31,

3 unchanged sentences

Income tax expenses increased by $4.6 million, or 43%, resulting in a tax expense of $15.3 million for the year ended December 31, 2023 compared to a tax expense of $10.7 million for the year ended December 31, 2022.

The increase was primarily due to an increase in income before taxes in the U.S.

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

Non-GAAP financial measures

15 unchanged sentences

Adjusted EBITDA decreased by $134.3 million, or 479%, to $(106.3) million for the year ended December 31, 2023 from $28.1 million for the year ended December 31, 2022.

This decrease was primarily driven by an increase in sales and marketing expenses intended to increase awareness and acceptance of TTFields in our approved indications, enhance our commercial capabilities in anticipation of potential future approvals in new indications, and expand our international footprint.

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

3 unchanged sentences

At December 31, 2023, we had $240.8 million in cash and cash equivalents and $669.8 million in short-term investments.

At December 31, 2022, our cash, cash equivalents and short-term investments totaled $969.4 million, an increase of $31.7 million compared to $937.7 million at December 31, 2021.

The increase was primarily due to net cash generated by operating activities and the exercise of options.

At December 31, 2023, our cash, cash equivalents and short-term investments totaled $910.6 million, a decrease of $58.8 million compared to $969.4 million at December 31, 2022.

The decrease was primarily due to net cash used in operating activities partially offset by the net cash provided by the exercise of options.

We believe our cash, cash equivalents and short-term investments as of December 31, 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.

10 unchanged sentences

Operating activities

Net cash provided by operating activities primarily represents our net income for the periods presented.

Adjustments to net income for non-cash items include share-based compensation, depreciation, amortization and asset write-downs.

Net cash used in operating activities primarily represents our net loss for the periods presented.

Adjustments to net loss for non-cash items include share-based compensation, depreciation, amortization and asset write-downs.

Operating cash flows are also impacted by changes in operating assets and liabilities, principally trade payables, deferred revenues, other payables, prepaid expenses, inventory and trade receivables.

Net cash provided by operating activities was $30.8 million for the year ended December 31, 2022 compared to $82.8 million for the year ended December 31, 2021 a decrease of $ 52.0 million.

The decrease in net cash provided by operating activities was primarily driven by a $43.2 million increase in sales, marketing, general and administrative expenses to enhance our capabilities in anticipation of potential future approvals of new indications and entry into potential new markets, and a $4.8 million increase in research and development expenses.

In addition, finance income increased by $15.4 million and tax expenses increased by $ 4.4 million, offsetting a $2.8 million increase in gross profit and a $17.0 million change in working capital.

Net cash used in operating activities was $73.3 million for the year ended December 31, 2023 compared to $30.8 million provided by operating activities for the year ended December 31, 2022 a decrease of $ 104.1 million.

The decrease in net cash from operating activities was driven by a decrease in gross profits of $41.9 million driven by a revenue decrease of $28.5 million and an increase in costs of revenue of $13.4 million.

In addition, the decrease in net cash from operating activities was driven by increased expenses, primarily driven by a $84.5 million increase in sales, marketing, general and administrative expenses to enhance our capabilities in anticipation of potential future approvals of new indications and entry into potential new markets, and a $17.0 million increase in research and development expenses.

In addition, finance income increased by $33.5 million driven by higher interest returns on our investments, tax expenses increased by $ 4.6 million and share based compensation increased by $8.7 million.

Upcoming use of cash in operations will include payments in the normal course of business of $43.1 million in purchase obligations with certain of our suppliers, primarily for the purchase of Product components along with other commitments to purchase goods or services.

6 unchanged sentences

Our investing activities primarily consist of capital expenditures to purchase property and equipment and field equipment, as well as investments in and redemptions of our short-term investments.

Net cash used in investing activities was $140.0 million for the year ended December 31, 2022 compared to net cash used in investing activities of $144.8 million for the year ended December 31, 2021.

The net cash used in investing activities for 2022 was primarily attributable to $21.4 million in property and equipment and the net purchase of $118.6 million in short-term investments.

Net cash provided by investing activities was $184.1 million for the year ended December 31, 2023 compared to net cash used in investing activities of $140.0 million for the year ended December 31, 2022.

The net cash provided by investing activities for 2023 was primarily attributable to net proceeds of $211.2 million from short-term investments, offset by $27.1 million invested in property and equipment.

The net cash used in investing activities for 2022 was primary attributable to $21.4 million in property and equipment and the net purchase of $118.6 million in short-term investments.

3 unchanged sentences

The net cash provided by financing activities for 2023 was primarily attributable to $11.4 million in proceeds from the exercise of options and $4.4 million in proceeds from the issuance of shares pursuant to the ESPP.

The net cash provided by financing activities for 2021 was primarily attributable to $21.2 million in proceeds from the exercise of options and $4.5 million in proceeds from the issuance of shares pursuant to the ESPP.

The net cash provided by financing activities for 2022 was primarily

attributable to $10.3 million in proceeds from the exercise of options and $5.2 million in proceeds from the issuance of shares pursuant to the ESPP.

Convertible Notes

8 unchanged sentences

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

The Notes are not redeemable prior to November 6, 2023, except in the event of certain tax law changes.

The Notes were not redeemable prior to November 6, 2023, except in the event of certain tax law changes.

We may redeem for cash all or any portion of the Notes, at our option, on or after November 6, 2023 if the last reported sale price of our ordinary shares has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date.

4 unchanged sentences

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").

We may, subject to certain conditions and limitations, increase the revolving credit commitments outstanding under the 2020 Credit Facility or incur new incremental term loans in an aggregate principal amount not to exceed $250.0 million in total.

The commitments under the 2020 Credit Facility are guaranteed by certain of our subsidiaries and secured by a first lien on our and certain of our subsidiaries’ assets.

Outstanding loans will bear 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 contains 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 contains 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.

As of December 31, 2022, we had no outstanding balance borrowed under 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.

1 unchanged sentence

The liens and guaranties in favor of the lenders are released.

There are no early termination fees payable and as of February 22, 2023 we had no outstanding balance borrowed under the 2020 Credit Facility.

2020 Prepayment of 2018 term loan

In 2018, we entered into a Loan and Security Agreement ("2018 Loan Agreement") pursuant to which we borrowed a term loan in the aggregate principal amount of $150 million (the "2018 Credit Facility").

The term loan, which was drawn in full upon execution of the 2018 Loan Agreement, bore interest at 9.0% per annum, payable quarterly in arrears.

In 2020, we terminated the 2018 Credit Facility and prepaid the principal amount in full.

The prepayment

included $150 million in principal repayment and $3.0 million in prepayment premium, plus accrued and unpaid interest and expenses payable through the payoff date.

There were no early termination fees payable and as of February 22, 2023 we had no outstanding balance borrowed under the 2020 Credit Facility.

On November 6, 2023, the 2020 Credit Facility expired pursuant to its terms.

As of December 31, 2023, we had no outstanding balance borrowed or any other liability outstanding under the 2020 Credit Facility.

Our key priorities are to drive commercial adoption of Optune Gio ® and Optune Lua ® , our commercial TTFields therapy devices, and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer.

Optune Gio is approved by the U.S.

We also have a CE certificate to market Optune Gio 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 treat malignant pleural mesothelioma and pleural mesothelioma (together, "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 Gio and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune Gio in the U.S., Germany and Japan.

We are actively evaluating opportunities to expand our international footprint.

We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers.

We are focusing our research and development activities in areas of greatest anticipated value creation.

This includes non-small cell lung cancer, brain cancers, and pancreatic cancer.

In 2023, we announced results from our phase 3 LUNAR study evaluating the use of TTFields together with standard therapies following platinum-based treatment failure in the treatment of patients with metastatic non-small cell lung cancer ("NSCLC").

Patients treated with TTFields therapy and standard therapies demonstrated a statistically significant and clinically meaningful improvement in overall survival over standard therapies alone.

The LUNAR study also showed a statistically significant and clinically meaningful improvement in overall survival when patients were treated with TTFields therapy and immune checkpoint inhibitors, as compared to those treated with immune checkpoint inhibitors alone, and a positive trend in overall survival when patients were treated with TTFields therapy and docetaxel versus docetaxel alone.

In December 2023, we filed a PMA application with the FDA seeking approval for the use of TTFields therapy together with standard systemic therapies for the treatment of NSCLC following progression on or after platinum-based therapy.

In January 2024, we announced the FDA had accepted this submission for filing.

We are investing in pre-commercial launch activities and anticipate a decision in the second half of 2024.

We have several ongoing or planned trials which will further explore the use of TTFields therapy in the treatment of NSCLC, including the phase 3 METIS and LUNAR-2 trials, as well as the phase 2 KEYNOTE B36 and LUNAR-4 trials.

In addition to our trials in NSCLC, we have multiple ongoing or planned trials in our brain and pancreatic cancer programs, including the phase 3 TRIDENT, KEYNOTE D58 and PANOVA-3 trials, and the phase 2 PANOVA-4 trial.

We anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields therapy for additional solid tumor indications and combinations with other cancer treatment modalities.

The table below presents the current status of the ongoing clinical trials 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 the delivery of TTFields to the target tumor and enhance patient ease of use.

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

In 2018, we granted Zai Lab (Shanghai) Co., Ltd.

("Zai") a license to commercialize our Products 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 therapy in multiple solid tumor cancer indications.

For additional information, see Note 12 to the Consolidated Financial Statements.

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 fourth 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 or other similar outbreak on our business moving forward.

The extent to which the COVID-19 pandemic or other outbreak 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.

Impact of Current Events

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.

On January 19, 2024, President Biden signed into law a continuing resolution that allowed the U.S.

government to continue to be funded and operating through March 1, 2024 (some government departments can continue operating through March 8, 2024).

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.

We view our operations and manage our business in one operating segment.

Our net revenues were $509.3 million for the year ended December 31, 2023, $537.8 million for the year ended December 31, 2022 and $535.0 million for the year ended December 31, 2021.

Our net loss was $207.0 million for the year ended December 31, 2023, net loss was $92.5 million for the year ended December 31, 2022 and net loss was $58.4 million for the year ended December 31, 2021.

As of December 31, 2023, we had an accumulated deficit of $985.5 million.

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-K

Item 7. Management’s Discussion and Analysis