NovoCure Ltd 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We encourage you to read this MD&A in conjunction with our unaudited consolidated financial statements and the notes thereto for the period ended March 31, 2025 included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Please refer to the information under the heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this report. References to the words “we,” “our,” “us,” and the “Company” in this report refer to NovoCure Limited, including its consolidated subsidiaries. Critical Accounting Policies and Estimates In accordance with U.S. generally accepted accounting principles (“GAAP”), in preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We develop and periodically change these estimates and assumptions based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates. The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 10-K"). For additional information, see Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. There were no other material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2024 10-K. Overview We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields that exert physical forces to kill cancer cells via a variety of mechanisms. Our key priorities are to drive commercial adoption of Optune 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. 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. 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 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 PMA pathway for the treatment of adult patients with metastatic non-small cell lung cancer ("NSCLC") concurrent with PD-1/PD-L1 inhibitors or docetaxel following progression on or after a platinum-based regimen. Optune Lua is also approved under the Humanitarian Device Exemption ("HDE") pathway for the treatment of adult patients with malignant pleural mesothelioma or 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 for the treatment of MPM. We have also received CE certification for the use of Optune Lua for the treatment of adult patients with metastatic NSCLC concurrently with immune checkpoint inhibitors or docetaxel who have progressed on or after a platinum-based regimen. We have initiated the local registration requirements for Optune Lua for NSCLC in Germany and are preparing for launch. 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, France and Japan. We are actively evaluating opportunities to expand our international footprint. We are actively pursuing contracts with payers to expand access to Optune Lua for patients with NSCLC and MPM and in the meantime we will bill and seek reimbursement from payers on an individual case basis, as applicable. In June 2024, we presented results from the Phase 3 METIS clinical trial evaluating the use of TTFields therapy and best supportive care for the treatment of adult patients with 1-10 brain metastases from NSCLC following 17 Table of Contents stereotactic radiosurgery ("METIS"). The METIS trial met its primary endpoint, demonstrating a statistically significant improvement in time to intracranial progression for patients treated with TTFields therapy and supportive care compared to patients treated with supportive care alone. In December 2024, we announced the top-line results from the Phase 3 PANOVA-3 clinical trial evaluating the use of TTFields therapy together with gemcitabine and nab-paclitaxel for the treatment of adult patients with unresectable, locally advanced pancreatic cancer ("PANOVA-3"). The PANOVA-3 trial met its primary endpoint, demonstrating a statistically significant improvement in overall survival for patients treated with TTFields therapy, gemcitabine and nab-paclitaxel compared to patients treated with gemcitabine and nab-paclitaxel alone. In April 2025, we announced that the results of the PANOVA-3 trial will be presented for the first time at the 2025 American Society of Clinical Oncology Annual Meeting in May 2025. We intend to submit marketing applications to regulators in our key markets based on the results of the METIS and PANOVA-3 trials. We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers. We have several ongoing clinical trials which further explore the use of TTFields therapy in these solid tumor cancers, including the Phase 3 TRIDENT and KEYNOTE D58 trials in GBM, Phase 3 LUNAR-2 and Phase 2 LUNAR-4 trials in NSCLC, and Phase 2 PANOVA-4 trial in pancreatic cancer. We anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields therapy for additional solid tumor indications and for use together 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. 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 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 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 Consolidated Financial Statements. Effective January 1, 2025, Ashley Cordova became our Chief Executive Officer (CEO), succeeding Asaf Danziger who retired at year-end 2024. Prior to becoming our CEO, Ms. Cordova served as our Chief Financial Officer (CFO) since 2020. Mr. Danziger now serves as Senior Advisor through 2026, and continues to serve on Novocure’s Board of Directors. Also effective January 1, 2025, Christoph Brackmann became our CFO. Mr. Brackmann joined us in October 2024 as a Senior Finance Advisor. Prior to joining Novocure, Mr. Brackmann served as Senior Vice President, Finance at Moderna Inc. from October 2019 to June 2024. 18 Table of Contents We view our operations and manage our business in one operating segment. For the three months ended March 31, 2025, our net revenues were $155.0 million. Our net loss for the three months ended March 31, 2025 was $34.3 million. As of March 31, 2025, we had an accumulated deficit of $1,188.4 million. Impact of Current Events Conflict in Israel On October 7, 2023, the State of Israel was attacked and is in a state of war. 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 have increased stock levels to mitigate distribution and service risks from our suppliers in Israel. Recent Changes to U.S. Tariff Rates The manufacturing of our Products and associated accessories are fully outsourced to third parties across multiple countries. In recent years, in anticipation of active patient growth and new indication launches, we began onboarding additional suppliers and/or supply nodes to increase the resilience of our network. As an example, we are in the process of adding production capacity in Mexico and Ireland. This also helps us now to provide optionality around supply routes to optimize our cost structure, including the emerging tariff landscape. In March and April 2025, the U.S. increased tariff rates on imported goods from numerous countries. At that time, our most significant tariff exposure resulted from the import of arrays into the U.S. from Israel, which was subject to a 17% tariff rate. This is compared to zero percent tariff rate prior to April 2025. On April 9, the U.S. temporarily delayed implementation of all new tariffs by 90 days, resulting in a 10% tariff for most countries. If the tariffs return to the pre-April 9 rates after the pause expires, our current analysis of the global tariff environment leads us to estimate that import duties could increase by as much as $11 million in 2025. If the pause continues through the end of 2025, we estimate an $8 million impact. The global tariff environment is changing rapidly, and we cannot be assured that we will not ultimately be negatively impacted further by these changes. We continue to focus on opportunities to mitigate negative impacts and increase efficiencies and scale within our supply chain. Commentary on Results of Operations Net revenues . Our revenues are primarily derived from patients using our Products in our active markets. We charge for treatment with our Products on a monthly basis. Our potential net revenues per patient are determined by our ability to secure payment, the monthly fee we collect and the number of months that the patient remains on therapy. In the case of a new indication launch such as Optune Lua, it can take time for us to generate the claims history needed for a reasonable estimate of collections that will enable us to recognize revenues upon billing without waiting for a final collection of the claim. Until that time, our revenue from NSCLC claims will be recognized in the period of cash collection. We also recognize revenues pursuant to the Zai Agreement. For additional information regarding the Zai Agreement, see Note 13 to the annual Consolidated Financial Statements in our 2024 10-K. Cost of revenues. We contract with third parties to manufacture our Products. Our cost of revenues is primarily comprised of the following: • disposable arrays; • depreciation expense for the field equipment, including the electric field generator used by patients; • patient support and other personnel costs; and • overhead costs, such as facilities, freight and depreciation of property, plant and equipment associated with managing our inventory, warehousing and order fulfillment functions. Operating expenses. Our operating expenses consist of research, development and clinical studies, sales and marketing and general and administrative expenses. Personnel costs are a significant component for each category of operating expenses and consist of wages, benefits and bonuses. Personnel costs also include share-based compensation. Financial income (expenses), net . Financial income (expenses), net primarily consists of interest income from cash balances and short-term investments, credit facility interest expense and related debt issuance costs, and 19 Table of Contents gains (losses) from foreign currency transactions. Our reporting currency is the U.S. dollar. We have historically held substantially all of our cash balances in U.S. dollar denominated accounts to minimize the risk of translational currency exposure. Results of Operations The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The tables contained in this section report U.S. dollars in thousands (except share, patient, and prescription data). The following table sets forth our consolidated statements of operations data: Three months ended March 31, 2025 2024 Unaudited Net revenues $ 154,994 $ 138,503 Cost of revenues 38,521 33,689 Gross profit 116,473 104,814 Operating costs and expenses: Research, development and clinical studies 53,777 51,598 Sales and marketing 55,792 55,206 General and administrative 44,769 39,530 Total operating costs and expenses 154,338 146,334 Operating income (loss) (37,865) (41,520) Financial income (expenses), net 7,570 9,878 Income (loss) before income taxes (30,295) (31,642) Income taxes 4,024 7,118 Net income (loss) $ (34,319) $ (38,760) Basic and diluted net income (loss) per ordinary share $ (0.31) $ (0.36) Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 110,281,832 107,266,198 The following table details the share-based compensation expense included in costs and expenses: Three months ended March 31, 2025 2024 Unaudited Cost of revenues $ 1,102 $ 1,747 Research, development and clinical studies 6,201 8,610 Sales and marketing 8,517 11,048 General and administrative 13,732 12,679 Total share-based compensation expense $ 29,552 $ 34,084 20 Table of Contents Key performance indicators We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. An "active patient" is a patient who is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days. Prescriptions are a leading indicator of demand. A "prescription received" is a commercial order for Optune 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. March 31, 2025 2024 CNS Lung Total CNS Lung Total Active patients at period end (1) United States 2,157 74 2,231 2,122 15 2,137 International markets: Germany 573 21 594 531 520 9 540 France 463 — 463 318 — 318 Japan 445 — 445 379 — 379 Other international 524 11 535 469 2 471 International markets - Total 2,005 32 2,037 1,697 11 1,708 4,162 106 4,268 3,819 26 3,845 Three months ended March 31, 2025 2024 CNS Lung Total CNS Lung Total Prescriptions received in period (2) United States 908 94 1,002 985 5 990 International markets: Germany 198 28 226 195 11 206 France 207 — 207 186 — 186 Japan 118 — 118 91 — 91 Other international 177 5 182 167 3 170 International markets - Total 700 33 733 639 14 653 1,608 127 1,735 1,624 19 1,643 (1) Lung includes both active patients in NSCLC and MPM. Worldwide, there were 44 and 26 active MPM patients on therapy as of as of March 31, 2025 and 2024 and 62 active NSCLC patients on therapy as of as of March 31, 2025. 21 Table of Contents (2) Lung includes both prescriptions for NSCLC and MPM. Worldwide, 35 and 19 MPM prescriptions were received in the three months ended March 31, 2025 and 2024 and 92 NSCLC prescriptions were received in the three months ended March 31, 2025. Three months ended March 31, 2025 compared to three months ended March 31, 2024 Three months ended March 31, 2025 2024 % Change Net revenues $ 154,994 $ 138,503 12 % Net revenues. Net revenues increased 12% to $155.0 million for the three months ending March 31, 2025 from $138.5 million for the same period in 2024. For the three months ended March 31, 2025, the increase resulted from active patient growth of 11% and reimbursement improvements across geographic markets. In EMEA, the increase primarily resulted from $7.4 million from continued growth in France, a $3.0 million increase in Germany due to active patient and approval rate increases, and a $3.0 million increase from other European active markets due to active patient growth and receipt of aged collections. In the U.S., net revenues for the period increased $2.6 million from the same period in 2024. Recognized revenue from Optune Lua in the quarter was $1.5 million, including $0.8 million from MPM, and $0.7 million from NSCLC. Three months ended March 31, 2025 2024 % Change Cost of revenues $ 38,521 $ 33,689 14 % Cost of revenues. For the three months ended March 31, 2025, the increase in cost of revenues was primarily due to 11% growth in active patients and higher average array costs driven by the new array roll-out and the NSCLC launch. Excluding sales to Zai, cost of revenues per active patient per month was $2,794 for the three months ended March 31, 2025, an increase of 3% from $2,715 for the same period in 2024, primarily due to higher average array costs driven by the new array roll-out and the NSCLC launch. 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. Cost of products sold to Zai totaled $3.3 million for the three months ended March 31, 2025 compared to $2.7 million for the three months ended March 31, 2024. Gross margin was 75% for the three months ended March 31, 2025 compared to 76% for the three months ended March 31, 2024. The reduction in gross margin is due to the aforementioned cost of revenue increase and the completion of the Zai up front license and milestone fees recognition. We expect that our gross margins will continue to be impacted by current and future product enhancements, such as the launch of our new arrays in the U.S. and our launch in NSCLC, as well as by the changing tariff landscape. We continue to focus on opportunities to increase efficiencies and scale within our supply chain. This includes evaluating new materials, manufacturers, and processes that could lead to lower costs. 22 Table of Contents Operating Expenses. Three months ended March 31, 2025 2024 % Change Research, development and clinical studies $ 53,777 $ 51,598 4 % Sales and marketing 55,792 55,206 1 % General and administrative 44,769 39,530 13 % Total operating expenses $ 154,338 $ 146,334 5 % Research, development and clinical study expenses. Research, development and clinical study expenses increased 4% to $53.8 million for the three months ended March 31, 2025 from $51.6 million for the same period in 2024. For the three months ended March 31, 2025, the change was primarily due to a $2.5 million increase in direct clinical trial expenses related to the ramp up of the LUNAR-2, LUNAR-4, and KEYNOTE D58 trials. 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 1% to $55.8 million for the three months ended March 31, 2025 from $55.2 million for the same period in 2024. For the three months ended March 31, 2025, the change was primarily driven by higher costs associated with the expansion of the sales force for NSCLC, General and administrative expenses. General and administrative expenses increased 13% to $44.8 million for the three-month period ended March 31, 2025 from $39.5 million for the same period in 2024. For the three months ended March 31, 2025, these changes were primarily due to a $2.3 million one-time expense to retire a production line related to supply chain optimization efforts and higher personnel and professional service expenses to support the NSCLC launch and preparations for potential future indications. Three months ended March 31, 2025 2024 % Change Financial income (expenses), net $ 7,570 $ 9,878 (23) % Financial income (expenses), net. Financial income decreased $2.3 million or 23%, to $7.6 million for the three months ended March 31, 2025 from $9.9 million in income for the same period in 2024, primarily due to $2.6 million in higher interest expenses related to our senior secured credit facility, Three months ended March 31, 2025 2024 % Change Income taxes $ 4,024 $ 7,118 (43) % Income taxes . Income taxes decreased 43% to $4.0 million for the three months ended March 31, 2025 from $7.1 million for the same period in 2024. The change is driven primarily by an increase in tax benefits from share-based compensation deductions in the period. Non-GAAP financial measures We also measure our performance using a non-GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation (“Adjusted EBITDA”). We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of earnings attributable to our capital structure, tax rate and material non-cash items, specifically share-based compensation. 23 Table of Contents We calculate Adjusted EBITDA as operating income before financial expenses and income taxes, net of depreciation, amortization and share-based compensation. The following table reconciles net income (loss), which is the most directly comparable GAAP operating performance measure, to Adjusted EBITDA. Three months ended March 31, 2025 2024 % Change Net income (loss) $ (34,319) $ (38,760) (11) % Add: Income tax 4,024 7,118 (43) % Add: Financial expenses (income), net (7,570) (9,878) (23) % Add: Depreciation and amortization 3,325 2,815 18 % EBITDA $ (34,540) $ (38,705) (11) % Add: Share-based compensation 29,552 34,084 (13) % Adjusted EBITDA $ (4,988) $ (4,621) 8 % Adjusted EBITDA decreased by 8% to $(5.0) million for the three months ended March 31, 2025 from $(4.6) million for the same period in 2024. For three months ended March 31, 2025, the change in adjusted EBITDA was primarily driven by revenue growth from increasing active patients and reimbursement improvements globally. The revenue increase drove a $11.7 million increase in gross profit. The gross profit increase was offset by increased operating expenses, primarily due to our launch in NSCLC and ramp up of clinical trials. 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 March 31, 2025, we had an accumulated deficit of $1,188.4 million. To date, we have primarily financed our operations through the exercise of options, issuance and sale of equity and the proceeds from long-term loans. At March 31, 2025, we had $929.1 million in cash, cash equivalents and short-term investments, a decrease of $30.7 million compared to $959.9 million at December 31, 2024, primarily caused by by net cash used in operations and used in investing activities. We believe our cash, cash equivalents and short-term investments as of March 31, 2025 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 CNS and Lung. As a result, we may need to raise additional capital to fund our operations. 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: Three months ended March 31, 2025 2024 Change % Change Net cash provided by (used in) operating activities $ (35,665) $ (31,574) $ (4,091) 13 % Net cash provided by (used in) investing activities (6,472) 246,216 (252,688) (103) % Net cash provided by financing activities 5,247 213 5,034 2363 % Effect of exchange rate changes on cash and cash equivalents 227 (56) 283 (505) % Net increase (decrease) in cash, cash equivalents and restricted cash $ (36,663) $ 214,799 $ (251,462) (117) % Operating activities. Net cash used in or provided by operating activities represents our net income (loss) for the periods presented, share-based compensation and depreciation and amortization. Operating cash flows are also impacted by changes in working capital as a result of collections from trade receivables and payments of accounts payables. 24 Table of Contents Net cash used in operating activities increased by $4.1 million from $31.6 million net cash used in operating activities for the three months ended March 31, 2024 to $35.7 million net cash used in operating activities for the three months ended March 31, 2025. This was a result of a $4.4 million reduction in net loss, offset by an $8.0 million decrease in expenses consisting of $4.5 million of shared-based compensation and $3.9 million of accrued interest, a $2.8 million increase in working capital primarily driven by a $5.3 million increase in accounts receivable offset by an $1.8 million increase in accounts payable and accrued expenses, and a decrease of $1.4 million in other long term assets and an increase of $0.6 million in other long-term liabilities. 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 used in investing activities was $6.5 million for the three months ended March 31, 2025, compared to $246.2 million provided by investing activities for the three months ended March 31, 2024. The $6.5 million net cash used in investing activities for the three months ended March 31, 2025 was primarily attributable to $4.1 million of net proceeds of short term investments and the purchase of $10.6 million of property and equipment. 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 maturity of short term investments and by the purchase of $11.8 million of property and equipment. Financing activities. Net cash provided by financing activities was $5.2 million for the three months ended March 31, 2025, as compared to $0.2 million provided by financing activities for the three months ended March 31, 2024, attributable to the exercise of options under the Company's share option plan. Convertible Notes On November 5, 2020, we issued $575.0 million aggregate principal amount of Notes. The Notes are senior unsecured obligations. The Notes do not bear regular interest, and the principal amount of the Notes will not accrete. The Notes are convertible at an initial conversion rate of 5.9439 ordinary shares per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $168.24 per ordinary share. The Notes are convertible at the option of the holders upon the satisfaction of certain other conditions and during certain periods, and if the Company exercises its right to redeem the Notes as permitted or required by the indenture. On or after August 1, 2025 until the close of the business on the business day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time irrespective of the foregoing conditions. In January 2021, we irrevocably elected to settle all conversions of Notes by a combination of cash and our ordinary shares and that the cash portion per $1,000 principal amount of Notes for all conversion settlements shall be $1,000. Accordingly, from and after the date of the election, upon conversion of any Notes, holders of Notes will receive, with respect to each $1,000 principal amount of Notes converted, cash in an amount up to $1,000 and the balance of the conversion value, if any, in our ordinary shares. For more information, see Note 10a. to the Consolidated Financial Statements in the 2024 10-K. Senior Secured Term Loan Credit Facility 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) 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) we receive an approval or clearance from the U.S. Food and Drug Administration for our Tumor Treating Fields device 25 Table of Contents 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 There have been no material changes from the information disclosed in our 2024 10-K. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under U.S. Securities and Exchange Commission (“SEC”) rules. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes from the information disclosed in our 2024 10-K.