NovoCure Ltd 10-Q

Item 1. Financial Statements NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share data) September 30, 2024 December 31, 2023 Unaudited Audited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 185,422 $ 240,821 Short-term investments 774,476 669,795 Restricted cash 3,777 1,743 Trade receivables, net 67,060 61,221 Receivables and prepaid expenses 25,437 22,677 Inventories 39,096 38,152 Total current assets 1,095,268 1,034,409 LONG-TERM ASSETS: Property and equipment, net 73,251 51,479 Field equipment, net 12,913 11,384 Right-of-use assets 28,330 34,835 Other long-term assets 12,224 14,022 Total long-term assets 126,718 111,720 TOTAL ASSETS $ 1,221,986 $ 1,146,129 The accompanying notes are an integral part of these unaudited consolidated financial statements. 2 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share data) September 30, 2024 December 31, 2023 Unaudited Audited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Convertible note $ 557,333 $ — Trade payables 91,319 94,391 Other payables, lease liabilities and accrued expenses 86,350 84,724 Total current liabilities 735,002 179,115 LONG-TERM LIABILITIES: Convertible note — 568,822 Senior secured credit facility, net 97,149 — Long-term leases 21,144 27,420 Employee benefit liabilities 7,892 8,258 Other long-term liabilities 18 18 Total long-term liabilities 126,203 604,518 TOTAL LIABILITIES 861,205 783,633 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Share capital - Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 108,100,392 shares and 107,075,754 shares at September 30, 2024 (unaudited) and December 31, 2023, respectively — — Additional paid-in capital 1,454,367 1,353,468 Accumulated other comprehensive income (loss) ( 5,378 ) ( 5,469 ) Retained earnings (accumulated deficit) ( 1,088,208 ) ( 985,503 ) TOTAL SHAREHOLDERS' EQUITY 360,781 362,496 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,221,986 $ 1,146,129 The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share and per share data) Three months ended September 30, Nine months ended September 30, Year ended December 31, 2024 2023 2024 2023 2023 Unaudited Unaudited Audited Net revenues $ 155,095 $ 127,321 $ 443,954 $ 375,554 $ 509,338 Cost of revenues 35,372 32,092 103,715 95,724 128,280 Gross profit 119,723 95,229 340,239 279,830 381,058 Operating costs and expenses: Research, development and clinical studies 51,882 53,623 158,435 168,754 223,062 Sales and marketing 59,830 57,964 171,652 167,621 226,809 General and administrative 40,103 41,887 117,344 124,609 164,057 Total operating costs and expenses 151,815 153,474 447,431 460,984 613,928 Operating income (loss) ( 32,092 ) ( 58,245 ) ( 107,192 ) ( 181,154 ) ( 232,870 ) Financial income (expenses), net 10,507 10,023 31,236 27,948 41,130 Income (loss) before income tax ( 21,585 ) ( 48,222 ) ( 75,956 ) ( 153,206 ) ( 191,740 ) Income tax 8,985 1,263 26,749 6,758 15,303 Net income (loss) $ ( 30,570 ) $ ( 49,485 ) $ ( 102,705 ) $ ( 159,964 ) $ ( 207,043 ) Basic and diluted net income (loss) per ordinary share $ ( 0.28 ) $ ( 0.46 ) $ ( 0.95 ) $ ( 1.51 ) $ ( 1.95 ) Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 108,247,716 106,772,814 107,679,501 106,219,194 106,391,178 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) U.S. dollars in thousands Three months ended September 30, Nine months ended September 30, Year ended December 31, 2024 2023 2024 2023 2023 Unaudited Unaudited Audited Net income (loss) $ ( 30,570 ) $ ( 49,485 ) $ ( 102,705 ) $ ( 159,964 ) $ ( 207,043 ) Other comprehensive income (loss), net of tax: Change in foreign currency translation adjustments 64 826 ( 161 ) 1,655 1,473 Unrealized gain (loss) from debt securities 15 — 440 445 Pension benefit plan ( 1,927 ) ( 852 ) 252 ( 1,654 ) ( 4,954 ) Total comprehensive income (loss) $ ( 32,433 ) $ ( 49,496 ) $ ( 102,614 ) $ ( 159,523 ) $ ( 210,079 ) NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY U.S. dollars in thousands (except share data) Ordinary shares Additional paid-in capital Accumulated other comprehensive loss Retained earnings (accumulated deficit) Total shareholders' equity Balance as of December 31, 2023 (audited) 107,075,754 $ 1,353,468 $ ( 5,469 ) $ ( 985,503 ) $ 362,496 Share-based compensation to employees — 34,084 — — 34,084 Exercise of options and vested RSUs 528,020 213 — — 213 Other comprehensive income (loss), net of tax benefit of $ 0 — — 1,322 — 1,322 Net income (loss) — — — ( 38,760 ) ( 38,760 ) Balance as of March 31, 2024 (Unaudited) 107,603,774 $ 1,387,765 $ ( 4,147 ) $ ( 1,024,263 ) $ 359,355 Share-based compensation to employees — 31,830 — — 31,830 Proceeds from issuance of shares 178,668 2,187 — — 2,187 Exercise of options and vested RSUs 231,388 1,121 — 1,121 Other comprehensive income (loss), net of tax benefit of $ 0 — — 632 — 632 Net income (loss) — — — ( 33,375 ) ( 33,375 ) Balance as of June 30, 2024 (Unaudited) 108,013,830 $ 1,422,903 $ ( 3,515 ) $ ( 1,057,638 ) $ 361,750 Share-based compensation to employees — 31,364 — — 31,364 Exercise of options and vested RSUs 86,562 100 — — 100 Other comprehensive income (loss), net of tax benefit of $ 0 — — ( 1,863 ) — ( 1,863 ) Net income (loss) — — — ( 30,570 ) ( 30,570 ) Balance as of September 30, 2024 (Unaudited) 108,100,392 $ 1,454,367 $ ( 5,378 ) $ ( 1,088,208 ) $ 360,781 5 Table of Contents Ordinary shares Additional paid-in capital Accumulated other comprehensive loss Retained earnings (accumulated deficit) Total shareholders' equity Balance as of December 31, 2022 (audited) 105,049,411 $ 1,222,063 $ ( 2,433 ) $ ( 778,460 ) $ 441,170 Share-based compensation to employees — 39,084 — — 39,084 Exercise of options and vested RSUs 1,137,751 5,211 — — 5,211 Other comprehensive income (loss), net of tax benefit of $ 0 — — ( 258 ) — ( 258 ) Net income (loss) — — — ( 53,061 ) ( 53,061 ) Balance as of March 31, 2023 (Unaudited) 106,187,162 $ 1,266,358 $ ( 2,691 ) $ ( 831,521 ) $ 432,146 Share-based compensation to employees — 32,740 — — 32,740 Proceeds from issuance of shares 81,730 2,883 — — 2,883 Exercise of options and vested RSUs 336,439 4,622 — — 4,622 Other comprehensive income (loss), net of tax benefit of $ 0 — — 710 — 710 Net income (loss) — — — ( 57,418 ) ( 57,418 ) Balance as of June 30, 2023 (Unaudited) 106,605,331 $ 1,306,603 $ ( 1,981 ) $ ( 888,939 ) $ 415,683 Share-based compensation to employees — 26,346 — — 26,346 Exercise of options and vested RSUs 142,939 1,171 — — 1,171 Other comprehensive income (loss), net of tax benefit of $ 0 — — ( 11 ) — ( 11 ) Net income (loss) — — — ( 49,485 ) ( 49,485 ) Balance as of September 30, 2023 (Unaudited) 106,748,270 $ 1,334,120 $ ( 1,992 ) $ ( 938,424 ) $ 393,704 The accompanying notes are an integral part of these unaudited consolidated financial statements. 6 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Three months ended September 30, Nine months ended September 30, Year ended December 31, 2024 2023 2024 2023 2023 Unaudited Unaudited Audited Cash flows from operating activities: Net income (loss) $ ( 30,570 ) $ ( 49,485 ) $ ( 102,705 ) $ ( 159,964 ) $ ( 207,043 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,458 2,803 8,131 8,246 10,969 Accrued Interest ( 1,213 ) 480 60 530 ( 95 ) Asset write-downs and impairment of field equipment 450 112 784 374 493 Share-based compensation 31,364 26,346 97,278 98,170 115,608 Foreign currency remeasurement loss (gain) ( 503 ) 1,398 763 2,185 161 Decrease (increase) in accounts receivables and prepaid expenses 5,411 2,642 ( 8,983 ) 24,094 29,414 Amortization of discount (premium) ( 6,737 ) ( 6,691 ) ( 18,972 ) ( 15,822 ) ( 23,084 ) Decrease (increase) in inventories 1,895 ( 4,080 ) ( 867 ) ( 8,250 ) ( 8,919 ) Decrease (increase) in other long-term assets 1,906 3,971 7,969 3,585 4,072 Increase (decrease) in accounts payables and accrued expenses 7,452 6,265 ( 1,245 ) ( 3,992 ) 14,869 Increase (decrease) in other long-term liabilities ( 1,537 ) ( 3,075 ) ( 5,131 ) ( 7,934 ) ( 9,781 ) Net cash provided by (used in) operating activities $ 10,376 $ ( 19,314 ) ( 22,918 ) ( 58,778 ) ( 73,336 ) Cash flows from investing activities: Purchase of property, equipment and field equipment $ ( 10,683 ) $ ( 7,253 ) ( 33,913 ) ( 20,272 ) ( 27,093 ) Proceeds from maturity of short-term investments 190,000 275,549 608,000 916,433 1,214,982 Purchase of short-term investments ( 169,124 ) ( 251,038 ) ( 692,118 ) ( 810,513 ) ( 1,003,741 ) Net cash provided by (used in) investing activities $ 10,193 $ 17,258 ( 118,031 ) 85,648 184,148 Cash flows from financing activities: Proceeds from issuance of shares, net $ — $ — 2,187 2,883 4,416 Proceeds from senior secured credit facility, net — — 96,922 — — Repayment and redemption of long-term debt — — ( 12,913 ) ( 10 ) ( 10 ) Exercise of options 100 1,171 1,434 11,004 11,381 Net cash provided by (used in) financing activities $ 100 $ 1,171 87,630 13,877 15,787 Effect of exchange rate changes on cash, cash equivalents and restricted cash $ 87 $ ( 97 ) ( 46 ) ( 69 ) 131 Increase (decrease) in cash, cash equivalents and restricted cash 20,756 ( 982 ) ( 53,365 ) 40,678 126,730 Cash, cash equivalents and restricted cash at the beginning of the period 168,443 157,494 242,564 115,834 115,834 7 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Cash, cash equivalents and restricted cash at the end of the period $ 189,199 $ 156,512 $ 189,199 $ 156,512 $ 242,564 Supplemental cash flow activities: Cash paid during the period for: Income taxes paid (refunded), net $ 6,637 $ 1,202 $ 17,053 $ 8,745 $ 13,665 Interest paid $ 2,964 $ — $ 4,934 $ 1 $ 6 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 185,422 $ 154,860 $ 185,422 $ 154,860 $ 240,821 Restricted cash 3,777 1,652 3,777 1,652 1,743 Total cash, cash equivalents and restricted cash $ 189,199 $ 156,512 $ 189,199 $ 156,512 $ 242,564 Non-cash activities: Right-of-use assets obtained (disposed) in exchange for lease liabilities $ 757 $ 4,693 $ ( 610 ) $ 10,477 $ 18,063 Purchase of property incurred but unpaid at period end $ 201 $ — $ 201 $ — $ 1,714 The accompanying notes are an integral part of these unaudited consolidated financial statements. 8 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data) NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Organization . NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") devices, including Optune Gio and Optune Lua (collectively, our "Products"), for the treatment of solid tumor cancers. The Company markets Optune Gio and Optune Lua in multiple countries around the globe with the majority of revenues coming from the use of Optune Gio in the U.S., Germany, France and Japan. The Company also has a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd. ("Zai") to market Optune in China, Hong Kong, Macau and Taiwan ("Greater China"). Financial statement preparation . The accompanying unaudited consolidated financial statements include the accounts of the Company and intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented. The preparation of these unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These unaudited consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 10-K") filed with the Securities and Exchange Commission on February 22, 2024. The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2023 10-K are applied consistently in these unaudited interim consolidated financial statements. Concentration Risks. The Company's cash, cash equivalents, short-term investments and trade receivables are potentially subject to a concentration of risk. Cash, cash equivalents and short-term investments are invested at top tier financial institutions globally and the total value invested at any one institution is limited pursuant to the Company's investment policy. These investments may be in excess of insured limitations or not insured in certain jurisdictions. Generally, these investments may be redeemed upon demand according to the terms of the securities. The Company's trade receivables are due from numerous governments and federal and state agencies that are paid from their respective budgets, and from hundreds of health insurance companies. The Company does not believe that there are significant default risks associated with these governments, agencies and health insurance companies based upon the Company's historical experience. The Company has no off-balance sheet concentrations of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Recently announced accounting pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09 . 9 Table of Contents NOTE 2: CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Cash equivalents include items almost as liquid as cash, with maturity periods of three months or less when purchased, and short-term investments include items with maturity dates between three months and one year when purchased. As of September 30, 2024 and December 31, 2023, the Company’s cash and cash equivalents and short-term investments were composed of: September 30, 2024 Unaudited Fair value level Adjusted cost basis Unrealized gains Unrealized losses Fair market value Recorded basis Cash and cash equivalents Short-term investments (2) Cash $ 13,765 $ — $ — $ 13,765 $ 13,765 $ 13,765 $ — Money market funds Level 1 171,657 — — 171,657 171,657 171,657 — Certificate of deposits and term deposits Level 2 199,410 — — 199,410 199,410 199,410 HTM securities (1) U.S. Treasury bills Level 1 $ 118,319 $ 194 $ — 118,513 118,319 $ — $ 118,319 Corporate debt securities Level 2 $ 456,747 $ 1,942 $ ( 1 ) 458,688 456,747 $ — $ 456,747 $ 575,066 $ 2,136 $ ( 1 ) $ 577,201 $ 575,066 $ — $ 575,066 Total $ 959,898 $ 2,136 $ ( 1 ) $ 962,033 $ 959,898 $ 185,422 $ 774,476 December 31, 2023 Audited Fair value level Adjusted cost basis Unrealized gains Unrealized losses Fair market value Recorded basis Cash and cash equivalents Short-term investments (2) Cash $ 9,955 $ — $ — $ 9,955 $ 9,955 $ 9,955 $ — Money market funds Level 1 227,166 — — 227,166 227,166 227,166 — Certificate of deposits and term deposits Level 2 153,169 — — 153,169 153,169 3,700 149,469 HTM securities (1) U.S. Treasury bills Level 1 $ 78,844 $ 55 $ ( 110 ) 78,789 78,844 $ — $ 78,844 Government and governmental agencies Level 2 $ 24,940 $ 13 $ — 24,953 24,940 $ — $ 24,940 Corporate debt securities Level 2 $ 416,542 $ 486 $ ( 149 ) 416,879 416,542 $ — $ 416,542 $ 520,326 $ 554 $ ( 259 ) $ 520,621 $ 520,326 $ — $ 520,326 Total $ 910,616 $ 554 $ ( 259 ) $ 910,911 $ 910,616 $ 240,821 $ 669,795 (1) Changes in fair value of held-to-maturity ("HTM") securities are presented for disclosure purposes as required by ASC 320 "Investments — Debt Securities" and are recorded as finance expenses only if the unrealized loss is identified as a credit loss. 10 Table of Contents (2) Pursuant to a bank guaranty agreement,$ 16,741 of short-term investments are pledged. See Note 4. In accordance with ASC 820, "Fair Value Measurements and Disclosures," the Company measures its money market funds at fair value. The fair value of the money market funds and HTM securities, which is presented for disclosure purposes, is classified within Level 1 or Level 2. This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. As of September 30, 2024 and December 31, 2023, all investments mature in one year or less. Unrealized losses from debt securities are primarily attributable to changes in interest rates. The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence. NOTE 3: INVENTORIES Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of September 30, 2024 and December 31, 2023, the Company’s inventories were composed of: September 30, 2024 December 31, 2023 Unaudited Audited Raw materials $ 8,869 $ 10,265 Work in progress 10,342 9,796 Finished products 19,885 18,091 Total $ 39,096 $ 38,152 NOTE 4: COMMITMENTS AND CONTINGENT LIABILITIES Operating Leases. The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than 2044. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2027. Pledged deposits and bank guarantees. As of September 30, 2024 and December 31, 2023, the Company pledged bank deposits of $ 2,350 and $ 2,848 , respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $ 2,720 and $ 3,216 , respectively. In addition, € 15,000 ($ 16,741 ) of the Company's short term investments are pledged to a bank as guarantee for the Company's due execution of cash concentration agreements. Legal Proceedings. In June 2023, a putative class action lawsuit was filed against the Company, its Executive Chairman and its Chief Executive Officer. The complaint, later amended to add our Chief Financial Officer as a defendant, which purports to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company from January 5, 2023 through June 5, 2023, alleges material misstatements and/or omissions in the Company’s public statements with respect to the results from its phase 3 LUNAR clinical trial. The Company believes that the action is without merit and plans to defend the lawsuit vigorously. As of September 30, 2024, the Company has not accrued any amounts in respect of this claim, as it believes liability is not probable and the amount of any potential liability cannot be reasonably estimated. NOTE 5: LONG-TERM DEBT, NET a. Convertible notes On November 5, 2020, the Company issued $ 575,000 aggregate principal amount of 0 % Convertible Senior Notes due 2025 (the “Notes”). The Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted as set forth in the Notes. As of September 30, 2024, the conditions allowing holders of the Notes to convert were not met. In June 2024 the Company redeemed $ 14,055 of Notes in consideration of $ 12,913 . The gain from redemption was reported as finance income in accordance with ASC 470 "Debt with Conversion and Other Options". 11 Table of Contents The net carrying amount of the liability of the Notes as of September 30, 2024 and December 31, 2023 are as follows: September 30, 2024 December 31, 2023 Unaudited Audited Liability component, net: Principal amount $ 560,945 $ 575,000 Unamortized issuance costs ( 3,612 ) ( 6,178 ) Net carrying amount of liability component (1) $ 557,333 $ 568,822 Presented as: Short-term liability (2) $ 557,333 $ — Long-term liability $ — $ 568,822 (1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820. The estimated fair value of the net carrying amount of liability component of the Notes as of September 30, 2024 and December 31, 2023 were $ 523,068 and $ 515,962 , respectively. The net carrying amount of the liability is represented by the principal amount of the Notes, less total issuance costs plus any amortization of issuance costs. The total issuance costs upon issuance of the Notes were $ 16,561 and are amortized to interest expense using the effective interest rate method over the contractual term of the Notes. Interest expense is recognized at an annual effective interest rate of 0.59 % over the contractual term of the Notes. (2) In January 2021, the Company elected to settle all conversions of Notes by a combination of cash and its ordinary shares and the cash portion per $ 1,000 principal amount of Notes for all conversion settlements shall be $ 1,000 . Holders have the right to convert Notes beginning in August 2025. Since any conversion will result in the payment of cash as described above, the liability has been reclassified as current. Finance expense related to the Notes was as follows: Three months ended September 30, Nine months ended September 30, Year ended December 31, 2023 2024 2023 2024 2023 Unaudited Unaudited Audited Gain from redemption of Notes — — ( 1,142 ) — — Amortization of debt issuance costs 825 836 2,566 2,477 3,313 Total finance expenses (income) recognized $ 825 $ 836 $ 1,424 $ 2,477 $ 3,313 b. Senior secured credit facility, net On May 1, 2024 Novocure Luxembourg S.a.r.l. ("Borrower"), a wholly-owned subsidiary of the Company, 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) the Company has received positive results from its PANOVA-3 phase 3 clinical trial or (B) the Company's trailing net revenues for the most recently completed four quarters as reported by the Company in its 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) the Notes 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) the Company receives an approval or clearance from the U.S. Food and Drug Administration for the Company's Tumor Treating Fields device for a pancreatic cancer indication or (ii) Trailing 12 Table of Contents Four Quarters of Net Revenue is greater than $ 625.0 million. The obligations under the Loan Agreement are guaranteed by certain of the Company's subsidiaries and secured by a first lien on the Borrower's and certain of the Company's 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 the Company is 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. As of September 30, 2024 the Company had borrowed the Tranche A Loan in the principal amount of $ 100,000 . September 30, 2024 December 31, 2023 Unaudited Audited Liability component, net: Principal amount $ 100,000 $ — Unamortized issuance costs ( 2,851 ) — Net carrying amount of liability component (1) $ 97,149 $ — (1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820. The estimated fair value of the net carrying amount of liability component of the Notes as of September 30, 2024 and December 31, 2023 were $ 115,011 and $ 0 , respectively. The net carrying amount of the liability is represented by the principal amount of the Notes, less total issuance costs plus any amortization of issuance costs. The total issuance costs upon issuance of the Notes were $ 3,078 and are amortized to interest expense using the effective interest rate method over the contractual term of the Notes. For purposes of calculating the net carrying amount, the annual effective interest rate is assumed to be 13.3 % over the remaining contractual term of the Notes. Finance expense related to the Facility was as follows: Three months ended September 30, Nine months ended September 30, Year ended December 31, 2023 2024 2023 2024 2023 Unaudited Unaudited Audited Interest 2,960 — 4,922 — — Amortization of debt issuance costs 187 — 227 — — Total finance expense recognized $ 3,147 $ — $ 5,149 $ — $ — 13 Table of Contents NOTE 6: REVENUE RECOGNITION a. Net revenues The Company’s net revenues by geographic region, based on the patient’s location are summarized as follows: Three months ended September 30, Nine months ended September 30, Year ended December 31, 2024 0 2023 2024 2023 2023 United States $ 98,345 $ 86,243 $ 284,599 $ 258,429 $ 349,743 International markets: Germany 16,990 14,683 47,834 45,547 60,210 France 15,243 4,157 39,998 4,157 11,736 Japan 8,581 7,588 24,062 24,118 31,668 Other international markets 11,311 7,894 32,053 24,481 32,757 International markets - Total 52,125 34,322 143,947 98,303 136,371 Greater China (1) 4,625 6,756 15,408 18,822 23,224 Total net revenues $ 155,095 $ 127,321 $ 443,954 $ 375,554 $ 509,338 (1) For additional information, see Notes 12 and 13 to the Consolidated Financial Statements in the 2023 10-K. The Company's net revenues by performance period are as follows: Three months ended September 30, Nine months ended September 30, Year ended December 31, 2024 0 2023 2024 2023 2023 Net revenues recognized in the reporting period from performance obligations satisfied in: Reporting period $ 142,960 $ 125,704 $ 417,023 $ 362,636 $ 492,089 Previous periods 12,135 1,617 26,931 12,918 17,249 Total net revenues $ 155,095 $ 127,321 $ 443,954 $ 375,554 $ 509,338 b. Contract balances The following table provides information about trade receivables, unbilled receivables and contract liabilities from contracts with customers: September 30, 2024 December 31, 2023 Unaudited Audited Trade receivables $ 61,316 $ 56,970 Unbilled receivables $ 5,744 $ 4,251 Deferred revenues (short-term contract liabilities) ( 14,866 ) ( 16,224 ) During the nine months ended September 30, 2024 and 2023 and the year ended December 31, 2023 the Company recognized $ 16,224 , $ 18,028 and $ 18,028 , respectively, which were included in the deferred revenues (short-term contract liability) balance at January 1, 2024 and 2023. NOTE 7: SHARE OPTION PLANS AND ESPP In September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted 14 Table of Contents shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards. Options granted under the 2015 Plan generally have a two-year or four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are canceled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest over a three-year period. PSUs granted under the 2015 Plan generally vest between a three - and six-year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants. As of September 30, 2024, no ordinary shares were available for grant under the 2015 Plan (see below). In April 2024, the Company adopted the 2024 Omnibus Incentive Plan (the "2024 Plan"), which replaced the 2015 Plan, effective June 5, 2024 (the "Effective Date") following approval from the Company's shareholders. Under the 2024 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards. The total number of shares of the Company’s ordinary shares that may be granted under the 2024 Plan consists of (i) up to 9,000,000 ordinary shares (reduced by 433,018 shares subject to awards granted under the 2015 Plan after April 2, 2024), all of which were available under the 2015 Plan and which ceased to be available for future awards under the 2015 Plan as of the Effective Date and (ii) the number of undelivered shares subject to outstanding awards under the 2015 Plan that become available for future awards under the 2024 Plan as provided for in the 2024 Plan. Options granted under the 2024 Plan generally will have a two-year or four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan and 2024 Plan that are canceled or forfeited before expiration become available for future grants under the 2024 Plan. RSUs granted under the 2024 Plan generally will vest over a three -year period. PSUs granted under the 2024 Plan generally will vest between a three - and six-year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan and 2024 Plan that are canceled before expiration become available for future grants under the 2024 Plan. As of September 30, 2024, 9,581,731 ordinary shares were available for grant under the 2024 Plan. A summary of the status of the Company’s option plans as of September 30, 2024 and changes during the period then ended is presented below: Nine months ended September 30, 2024 Unaudited Number of options Weighted average exercise price Outstanding at beginning of year 8,539,507 $ 40.07 Granted 3,797,704 15.88 Exercised ( 184,633 ) 7.77 Forfeited and canceled ( 719,823 ) 50.14 Outstanding as of September 30, 2024 11,432,755 $ 31.92 Exercisable options 6,804,138 $ 35.14 15 Table of Contents A summary of the status of the Company’s RSUs and PSUs as of September 30, 2024 and changes during the period then ended is presented below. Nine months ended September 30, 2024 Unaudited Number of RSU/PSUs Weighted average grant date fair value Unvested at beginning of year 5,813,066 $ 60.52 Granted 9,454,291 15.40 Vested ( 661,337 ) 84.17 Forfeited and cancelled ( 1,252,395 ) 39.97 Unvested as of September 30, 2024 (1) 13,353,625 29.33 (1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones that are not probable as of September 30, 2024, in accordance with ASC 718 "Compensation — Stock Compensation" as follows: September 30, 2024 Number of PSUs Fair value at grant date per PSU Total fair value at grant date 541,918 $ 16.30 $ 8,833 37,893 19.44 737 2,703,852 48.16 130,218 161,422 76.97 12,425 234,512 80.59 18,899 15,210 87.66 1,333 3,694,807 $ 172,445 These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718. In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll deductions on an after-tax basis. In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section. As of September 30, 2024, 5,557,123 ordinary shares were available to be purchased by eligible employees under the ESPP. The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. The Company assessed fair value using the following underlying assumptions: 16 Table of Contents Nine months ended September 30, Year ended December 31, 2023 2024 2023 Unaudited Audited Stock Option Plans Expected term (years) 5.50 - 5.73 5.50 - 6.00 5.50 - 6.00 Expected volatility 71 %- 73 % 63 %- 67 % 63 %- 70 % Risk-free interest rate 3.88 %- 4.43 % 3.48 %- 4.16 % 3.48 %- 4.79 % Dividend yield 0.00 % 0.00 % 0.00 % ESPP Expected term (years) 0.50 0.50 0.50 Expected volatility 73 %- 90 % 56 %- 122 % 56 %- 122 % Risk-free interest rate 5.13 %- 5.23 % 4.76 %- 5.38 % 4.76 %- 5.38 % Dividend yield 0.00 % 0.00 % 0.00 % The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three and nine months ended September 30, 2024 and 2023, and the year ended December 31, 2023 was: Three months ended September 30, Nine months ended September 30, Year ended December 31, 2023 2024 2023 2024 2023 Unaudited Unaudited Audited Cost of revenues $ 1,834 $ 1,511 $ 5,280 $ 5,540 $ 6,587 Research, development and clinical studies 7,294 6,683 25,421 26,999 31,827 Sales and marketing 10,276 8,973 31,220 30,830 35,968 General and administrative 11,960 9,179 35,357 34,801 41,226 Total share-based compensation expense $ 31,364 $ 26,346 $ 97,278 $ 98,170 $ 115,608 NOTE 8: Basic and diluted net income (loss) per ordinary share Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs, Notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10 "Earnings Per Share", as determined under the treasury stock or if-converted method, as applicable. 17 Table of Contents The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share: Three months ended September 30, Nine months ended September 30, Year ended December 31, 2023 2024 2023 2024 2023 Unaudited Unaudited Audited Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share $ ( 30,570 ) $ ( 49,485 ) $ ( 102,705 ) $ ( 159,964 ) $ ( 207,043 ) Weighted average number of ordinary shares used in computing diluted net income (loss) per share 108,247,716 106,772,814 107,679,501 106,219,194 106,391,178 Potentially anti-dilutive shares that were excluded from the computation of basic net income (loss) per share: Options 9,887,237 6,250,189 9,392,376 6,354,627 6,950,781 RSUs and PSUs 4,651,689 2,590,322 3,880,895 1,470,542 1,423,377 ESPP 79,887 96,444 198,999 150,930 161,627 Weighted anti-dilutive shares outstanding which were not included in the diluted calculation 14,618,813 8,936,955 13,472,270 7,976,099 8,535,785 Basic and diluted net income (loss) per ordinary share $ ( 0.28 ) $ ( 0.46 ) $ ( 0.95 ) $ ( 1.51 ) $ ( 1.95 ) NOTE 9: SUPPLEMENTAL INFORMATION The Company operates in a single reportable segment. The following table presents long-lived assets by location: September 30, 2024 December 31, 2023 Unaudited Audited United States $ 53,533 $ 41,634 Israel 8,464 8,317 Switzerland 17,070 7,733 Others 7,097 5,179 Total long lived assets $ 86,164 $ 62,863 Restructuring In November 2023, the Company announced a series of actions to strengthen and optimize its business operations to support near-term growth drivers and long-term value creation. The plan included a reduction in headcount of approximately 200 employees or 13 % of the Company's then current workforce. The Company incurred restructuring costs (including severance pay, garden leave payments, etc.) for the three and nine months ended September 30, 2024 and the year ended December 31, 2023, as follows: 18 Table of Contents Three months ended September 30, Nine months ended September 30, Year ended December 31, 2023 2024 2023 2024 2023 Unaudited Unaudited Audited Cost of revenues $ — $ — $ 52 $ — $ 262 Research, development and clinical studies — — 275 — 2,070 Sales and marketing — — 1,512 — 2,404 General and administrative — — 164 — 1,495 Total restructuring cost $ — $ — $ 2,003 $ — $ 6,231 Restructuring costs paid during the period $ — $ — $ 5,455 $ — $ 2,753 These restructuring costs were offset by accrual reversals for the three and nine months ended September 30, 2024 and the year ended December 31, 2023 in the amount of $ 0 , $ 369 and $ 3,041 , respectively, which relate to the terminated employees' exits from the Company’s cash incentive plans. These restructuring costs were further offset by forfeited equity-based compensation expense reversals for the three and nine months ended September 30, 2024 and the year ended December 31, 2023 in the amount of $ 0 , $ 1,991 and $ 9,313 , respectively, which relate to the terminated employees' exits from the Company’s equity incentive plan. NOTE 10: SUBSEQUENT EVENT On October 15, 2024, the Company issued a press release announcing that that the U.S. Food and Drug Administration (FDA) has approved Optune Lua® for concurrent use with PD-1/PD-L1 inhibitors or docetaxel, for the treatment of adult patients with metastatic non-small cell lung cancer who have progressed on or after a platinum-based regimen. As a result of this approval, the Company expects to expense approximately $ 33,157 related to the vesting of PSUs granted to an executive officer. See Note 7 above. 19 Table of Contents