What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-02 compared with 2023-10-26 · 132 added, 151 removed, 161 unchanged (64% 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 September 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 March 31, 2024 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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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.

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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.

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.

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 treat malignant pleural mesothelioma ("MPM") together with standard chemotherapies.

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 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 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 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 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.

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.

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.

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.

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 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.

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 completed the Day 100 meeting with the U.S.

FDA regarding the PMA

application submission for Optune Lua in NSCLC based off of the LUNAR phase 3 clinical study.

The FDA Day 100 meeting conversation was productive with no indication that the LUNAR PMA is tracking for an advisory panel.

We anticipate the PMA decision in the second half of 2024.

We have also filed applications for use to the necessary regulatory bodies in Europe and Japan.

In March 2024, we announced the topline results of the phase 3 METIS trial, evaluating the use of TTFields therapy and supportive care for the treatment of patients with 1-10 brain metastases from NSCLC following stereotactic radiosurgery (“METIS”).

The METIS trial met its primary endpoint, demonstrating a statistically significant improvement in time to intracranial progression for adult patients treated with Tumor Treating Fields (TTFields) therapy and supportive care compared to patients treated with supportive care alone.

Patients treated with TTFields therapy and supportive care exhibited a median time to intracranial progression of 21.9 months compared to 11.3 months in patients treated with supportive care alone for brain metastasis (n=298;

hazard ratio=0.67;

Consistent with previous studies, TTFields therapy was well-tolerated with sustained quality of life and neurocognitive function.

Baseline characteristics were well balanced between arms.

Preliminary analyses of key secondary endpoints (time to neurocognitive failure, overall survival, and radiological response rate) did not demonstrate statistical significance.

We plan to share the full analysis of the METIS trial data at the upcoming American Society of Clinical Oncology scientific congress in June.

In March 2024, an exploratory subgroup analysis of the phase 3 INNOVATE-3 clinical trial was presented at the European Society of Gynaecological Oncology 2024 Congress.

The randomized, phase 3 INNOVATE-3 trial evaluated the use of TTFields therapy together with paclitaxel in platinum-resistant ovarian cancer in patients with a maximum of five total prior lines of systemic therapy.

While the INNOVATE-3 trial did not meet its primary overall survival endpoint in the intent-to-treat population, the exploratory subgroup analysis found that pegylated liposomal doxorubicin (PLD) -naïve patients randomized to receive TTFields therapy and paclitaxel demonstrated significant improvement in median overall survival compared to PLD-naïve patients treated with paclitaxel alone.

These data provide valuable insights into the use of TTFields therapy in the treatment of solid tumors and will be informative in the design of future clinical trials.

Novocure and investigators will continue to analyze the data from the INNOVATE-3 trial.

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 LUNAR-2 trial, as well as the phase 2 KEYNOTE B36 and LUNAR-4 trials.

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

In March 2024, the FDA approved the Investigational New Drug application for the randomized, phase 3 KEYNOTE D58 clinical trial.

This trial will evaluate the use of TTFields therapy together with temozolomide and pembrolizumab for the treatment of newly diagnosed GBM.

We anticipate launching this trial in 2024.

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.

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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 a PMA supplement by year-end 2023.

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.

We submitted the new arrays for regulatory approval in the U.S.

via a PMA supplement in 2023 and are awaiting a regulatory decision.

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").

("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 13 to the 2023 10-K.

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

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.

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 third 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.

For the three months ended March 31, 2024, our net revenues were $138.5 million.

Our net loss for the three months ended March 31, 2024 was $38.8 million.

As of March 31, 2024, we had an accumulated deficit of $1,024.3 million.

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.

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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 nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022.

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

Unaudited Unaudited

Three months ended March 31,

Net revenues $ 138,503 $ 122,182

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

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

2023 2022 2023 2022

Unaudited Unaudited

Three months ended March 31,

Cost of revenues $ 1,747 $ 2,006

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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.

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.

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

September 30,

Operating statistics 2024 2023

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United States 2,137 2,168

International markets:

Germany 540 477

Japan 379 382

Others 615 417

Other international 789 440

International markets - Total 1,708 1,299

Total 3,845 3,467

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

2023 2022 2023 2022

Three months ended March 31,

Prescriptions received in period

United States 990 1,051

International markets:

Germany 206 208

Japan 85 79 249 276

Others 299 118 743 363

Other international 356 165

International markets - Total 653 445

Total 1,643 1,496

(1) United States includes data for Canada for 2022.

For 2023, Canada is included in "Others".

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

Three months ended March 31, 2024 compared to three months ended March 31, 2023

Three months ended March 31,

2024 2023 % Change

Net revenues $ 138,503 $ 122,182 13 %

Net revenues.

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.

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 September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

Net revenues increased 13% to $138.5 million for the three months ending March 31, 2024 from $122.2 million for the same period in 2023.

For the three months ended March 31, 2024, the increase primarily resulted from $10.5 million of revenues from the successful launch in France and $5.3 million of revenues in the US due to improved approval rates.

The improved approval rates in the U.S.

resulted in $4.2 million of increased revenue from prior period claims, primarily from 2023.

Three months ended March 31,

2024 2023 % Change

Cost of revenues $ 33,689 $ 29,614 14 %

Cost of revenues.

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.

Our cost of revenues for the three months ended March 31, 2024 was $33.7 million, an increase of 14% from $29.6 million for the same period in 2023.

For the three months ended March 31, 2024, the increase in cost of revenues was primarily due to 11% growth in active patients and increased costs related to the ongoing launch of our next generation array.

Excluding sales to Zai, cost of revenues per active patient per month was $2,715 for the three months ended March 31, 2024, an increase of 4% from $2,608 for the same period in 2023, primarily due to 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.

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 $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.

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 $2.7 million for the three months ended March 31, 2024 compared to $2.6 million million for the three months ended March 31, 2023.

Gross margin was 76% for the three months ended March 31, 2024 compared to 76% for the three months ended March 31, 2023.

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 in the U.S.

and our potential launch in NSCLC.

We continue to focus on opportunities to increase efficiencies and scale within our supply chain.

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Operating Expenses.

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

2023 2022 % Change 2023 2022 % Change

Three months ended March 31,

2024 2023 % Change

Research, development and clinical studies $ 51,598 $ 59,704 (14) %

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Research, development and clinical study 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.

Research, development and clinical study expenses decreased 14% to $51.6 million for the three months ended March 31, 2024 from $59.7 million for the same period in 2023.

For the three months ended March 31, 2024, the change resulted primarily from $5.5 million in decreased personnel expenses and $1.0 million in reduced direct clinical trial expenses driven by the timing of activities within the ongoing clinical trial portfolio.

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 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.

Sales and marketing expenses increased 8% to $55.2 million for the three months ended March 31, 2024 from $51.2 million for the same period in 2023.

For the three months ended March 31, 2024, these changes were primarily driven by $1.7 million in sales force expansion and $1.7 million in increased marketing activities in anticipation of a potential launch in NSCLC.

General and administrative expenses.

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

General and administrative expenses decreased 6% to $39.5 million for the three-month period ended March 31, 2024 from $41.9 million for the same period in 2023.

For the three months ended March 31, 2024, these changes were primarily due to lower personnel expenses.

Three months ended March 31,

2024 2023 % Change

Financial income (expenses), net $ 9,878 $ 9,169 8 %

Financial income (expenses), net.

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,

2023 2022 % Change 2023 2022 % Change

Financial income increased $0.7 million or 8%, to $9.9 million for the three months ended March 31, 2024 from $9.2 million in income for the same period in 2023.

For the three-month period ending March 31, 2024, the change from 2023 was primarily due to $2.1 million in increased interest income offset by a $1.3 million negative impact from foreign exchange.

Three months ended March 31,

2024 2023 % Change

Income taxes $ 7,118 $ 1,981 259 %

Income taxes .

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.

Income taxes increased 259% to $7.1 million for the three months ended March 31, 2024 from $2.0 million for the same period in 2023.

The change is driven by a decrease in tax benefits from share-based compensation and the utilization of tax credits in 2023 related to prior years.

The increase also 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 September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

Three months ended March 31,

2024 2023 % Change

Net income (loss) $ (38,760) $ (53,061) (27) %

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Adjusted EBITDA $ (4,621) $ (18,443) (75) %

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.

Adjusted EBITDA increased by $13.8 million to $(4.6) million for the three months ended March 31, 2024 from $(18.4) million for the same period in 2023.

This increase was primarily driven by revenue growth and an associated $12.2 million increase in gross margin.

Actions taken during the November 2023 restructuring and a heightened focus on driving operational efficiencies reduced total operating expenses, excluding share-based compensation, by $2.1 million year-over-year.

We intend to take actions that prioritize growth and maintain financial health and flexibility as we position our company for future profitability.

Liquidity and Capital Resources

We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000.

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

As of March 31, 2024, we had an accumulated deficit of $1,024.3 million.

To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans.

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.

At March 31, 2024, we had $870.1 million in cash, cash equivalents and short-term investments, a decrease of $40.5 million compared to $910.6 million at December 31, 2023.

We believe our cash, cash equivalents and short-term investments as of March 31, 2024 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:

Nine months ended September 30,

Three months ended March 31,

2024 2023 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 $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.

Net cash used in operating activities increased by $14.8 million from $16.7 million net cash used in operating activities for the three months ended March 31, 2023 to $31.6 million net cash used in operating activities for the three months ended March 31, 2024.

This increase was a result of net loss decreasing by $14.3 million, offset by a $27.5 million increase in working capital, a decrease of $2.7 million in cash to non-cash based expenses primarily consisting of shared-based compensation, and an increase of $1.1 million in other long term assets and liabilities.

The $27.5 million increase in working capital includes a $17.8 million increase in accounts receivable, a decrease of $7.8 million in accounts payable and accrued expenses as well as an increase of $ 1.9 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 $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.

Net cash provided by investing activities was $246.2 million for the three months ended March 31, 2024, compared to $82.3 million used in investing activities for the three months ended March 31, 2023.

The $246.2 million net cash provided by investing activities for the three months ended March 31, 2024 was primarily attributable to $258.0 million of net proceeds from the maturity of short-term investments and the purchase of $11.8 million of property and equipment.

The $82.3 million net cash provided by investing activities for the three months ended March 31, 2023 was primarily attributable to $88.4 million of net proceeds in short-term investments and by the purchase of $6.1 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 $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.

Net cash provided by financing activities was $0.2 million for the three months ended March 31, 2024, as compared to $5.2 million provided by financing activities for the three months ended March 31, 2023.

The net cash provided by financing activities for the three months ended March 31, 2024 and March 31, 2023 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.

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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.

On May 1, 2024 Novocure Luxembourg S.a.r.l.

("Borrower"), our wholly-owned subsidiary, entered into a new five-year senior secured credit facility of up to $400.0 million (the "Facility") with BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP (collectively, the "Lenders"), BioPharma Credit PLC, as collateral agent for the Lenders, and the guarantors party to such agreement (the "Loan Agreement").

The Facility may be drawn in up to four drawings.

The Loan Agreement provides for an initial term loan in the principal amount of $100.0 million (the "Tranche A Loan"), which was funded to the Borrower on May 1, 2024 (the "Tranche A Funding Date").

Under the Loan Agreement, the Borrower is required to draw $100.0 million on the Facility on or before June 30, 2025 (the "Tranche B Loan"), subject to customary conditions precedent as set forth in the Loan Agreement.

Not later than December 31, 2025, the Borrower has the option to draw an additional $100.0 million of the Facility (the "Tranche C Loan") if (i) (A) we have received positive results from our PANOVA-3 phase 3 clinical trial or (B) our trailing net revenues for the most recently completed four quarters as reported in our financial statements filed with the U.S.

Securities and Exchange Commission ("Trailing Four Quarters of Net Revenue") are greater than $575.0 million and (ii) our Convertible Notes due 2025 are extinguished in full and are no longer outstanding.

Not later than March 31, 2026, the Borrower has the option to draw an additional $100.0 million of the Facility (the "Tranche D Loan") if (i) we receive an approval or clearance from the U.S.

Food and Drug Administration for our Tumor Treating Fields device for a pancreatic cancer indication or (ii) Trailing Four Quarters of Net Revenue is greater than $625.0 million.

The obligations under the Loan Agreement are guaranteed by certain of our subsidiaries and secured by a first lien on the Borrower's and certain of our other subsidiaries’ assets.

Outstanding term loans under the Loan Agreement will bear interest at an annual rate equal to 6.25% plus the three-month SOFR (subject to a 3.25% floor), payable quarterly in arrears and calculated on the basis of actual days elapsed in a 360-day year.

The Borrower must pay 2.5% of additional consideration on each principal draw, with payment for the Tranche A Loan and the Tranche B Loan paid on the Tranche A Funding Date, and payments for the Tranche C Loan and the Tranche D Loan on their respective funding dates.

Principal under the Facility will be repaid in eight equal quarterly repayments commencing with the third quarter of 2027 and continuing each quarter thereafter, with the final payment of outstanding principal due on the fifth anniversary of the Tranche A Funding Date.

Voluntary prepayment of all, but not less than all, of the term loans outstanding is permitted at any time, subject to make-whole and prepayment premiums as set forth in the Loan Agreement.

Prepayment of all term loans outstanding, subject to make-whole and prepayment premiums, is due and payable upon a change-in-control as defined in the Loan Agreement.

Make-whole and prepayment premiums are due and payable for the Tranche B Loans for any voluntary prepayment of the term loans outstanding, upon a change-in-control (as defined in the Loan Agreement), and upon any acceleration of the maturity date, in each case regardless of whether the Tranche B Loan is drawn.

The Loan Agreement contains a financial covenant only if the Tranche C Loan and/or Tranche D Loan are funded, in which case we are required to maintain at least Trailing Four Quarters of Net Revenue of at least $500.0 million, calculated on a trailing twelve-month basis as of the end of each fiscal quarter, beginning with the first quarter of 2027 based on year-end 2026 audited financial statements.

Contractual Obligations and Commitments

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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