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 June 30, 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 concurrent with PD-1/PD-L1 inhibitors or docetaxel following progression on or after a platinum-based regimen, and have launched Optune Lua for the treatment of NSCLC in Germany. 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 coverage policies 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. 19 Table of Contents In May, we presented positive results from the phase 3 PANOVA-3 clinical trial ("PANOVA-3") evaluating the use of TTFields therapy with gemcitabine and nab-paclitaxel ("GnP") for locally advanced, unresectable pancreatic adenocarcinoma at the 2025 American Society of Clinical Oncology Annual Meeting. Patients treated with TTFields therapy concomitantly with GnP exhibited a median overall survival of 16.2 months compared to 14.2 months in the control arm. Patients treated with TTFields therapy concomitantly with GnP also demonstrated greater median pain-free survival of 15.2 months compared to 9.1 months in the control arm. In July, we presented additional quality of life data at the 2025 European Society for Medical Oncology Gastrointestinal Cancers Congress. Patients treated with TTFields therapy concomitantly with GnP exhibited statistically significant improvements across numerous quality of life measures including, but not limited to, time to deterioration in global health status, delay in time to deterioration due to pain and delay in time to deterioration due to pancreatic pain. In May, the full results of the PANOVA-3 trial were published in the Journal of Clinical Oncology. In 2024, we presented data from the Phase 3 METIS clinical trial evaluating the use of TTFields therapy and best supportive care for the treatment of adult patients (n=298) 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 patients treated with TTFields therapy and supportive care compared to patients treated with supportive care alone. Subsequent to that presentation, the routine process of cleaning and qualification of the database was concluded. The final analysis on the fully cleaned and qualified dataset confirmed that METIS met its primary endpoint, demonstrating a statistically significant improvement in time to intracranial progression in patients randomized to receive TTFields therapy. Patients treated with TTFields therapy and supportive care exhibited a risk reduction of 28% (HR 0.724, p=0.044), with median time to intracranial progression of 15.0 months compared to 7.5 months in patients treated with supportive care alone. Intracranial progression rates at months 2, 6, 12, and 24 were 13.6% vs 22.1% (p=0.034), 33.7% vs 46.4% (p=0.018), 46.9% vs 59.4% (p=0.023), and 53.6% vs. 65.2% (p=0.031; post hoc), respectively. We are in the process of preparing FDA PMA applications for pancreatic cancer and brain metastases from NSCLC indications based on the PANOVA-3 and METIS trials, respectively. Following pre-submission engagement with the FDA, we expect to file our PANOVA-3 application in the third quarter of 2025. Our modular PMA shell for the METIS application has been approved by the FDA and we have filed the first 2 of 3 modules. We expect to complete the METIS full submission by the end of 2025. 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 20 Table of Contents 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. We view our operations and manage our business in one operating segment. For the three and six months ended June 30, 2025, our net revenues were $158.8 million and $313.8 million. Our net loss for the three and six months ended June 30, 2025 was $40.1 million and $74.5 million. As of June 30, 2025, we had an accumulated deficit of $1,228.6 million. Impact of Current Events Conflict in Israel Since October 2023, the State of Israel has been 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, some of whom are single-source suppliers. Pursuant to our policy to seek and maintain second-source suppliers wherever possible, we are in the process of obtaining second-source suppliers outside of Israel; however we can provide no assurance that we will secure or maintain such suppliers on a timely basis. 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 final steps 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, 2025, the U.S. temporarily delayed implementation of the new tariffs with respect to most countries until August 1, 2025, resulting in a 10% tariff for most countries. On July 12, 2025, President Trump announced that tariffs on certain goods from Mexico and the European Union would be subject to 30% tariffs beginning on August 1, 2025, subject to ongoing negotiations with the U.S. We continue to focus on opportunities to mitigate negative impacts and increase efficiencies and scale within our supply chain. Following these efforts to date, if the tariffs return to the pre-April 9 rates after the pause expires and the July 12 announced tariffs go into effect, our current analysis of the global tariff environment leads us to estimate that import duties could increase by up to approximately $7 million in 2025. For the three months ended June 30, 2025, we expensed an additional $1.3 million in duties as a result of the higher tariff rates. The global tariff environment is changing rapidly, and we cannot be assured that we will not ultimately be negatively impacted further by these changes. 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. 21 Table of Contents 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 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 and six months ended June 30, 2025 as compared to the three and six months ended June 30, 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: 22 Table of Contents Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Unaudited Unaudited Net revenues $ 158,805 $ 150,356 $ 313,799 $ 288,859 Cost of revenues 41,472 34,654 79,993 68,343 Gross profit 117,333 115,702 233,806 220,516 Operating costs and expenses: Research, development and clinical studies 55,833 54,955 109,610 106,553 Sales and marketing 57,066 56,616 112,858 111,822 General and administrative 43,955 37,711 88,724 77,241 Total operating costs and expenses 156,854 149,282 311,192 295,616 Operating income (loss) (39,521) (33,580) (77,386) (75,100) Financial income (expenses), net 4,542 10,851 12,112 20,729 Income (loss) before income taxes (34,979) (22,729) (65,274) (54,371) Income taxes 5,160 10,646 9,184 17,764 Net income (loss) $ (40,139) $ (33,375) $ (74,458) $ (72,135) Basic and diluted net income (loss) per ordinary share $ (0.36) $ (0.31) $ (0.67) $ (0.67) Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 111,572,191 107,700,284 110,930,576 107,483,241 The following table details the share-based compensation expense included in costs and expenses: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Unaudited Unaudited Cost of revenues $ 973 $ 1,698 $ 2,075 $ 3,446 Research, development and clinical studies 5,787 9,517 11,988 18,127 Sales and marketing 5,358 9,896 13,875 20,944 General and administrative 14,025 10,719 27,757 23,397 Total share-based compensation expense $ 26,143 $ 31,830 $ 55,695 $ 65,914 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. 23 Table of Contents June 30, 2025 2024 Optune Gio Optune Lua Total Optune Gio Optune Lua Total Active patients at period end (1) United States 2,177 98 2,275 2,163 12 2,175 International markets: Germany 581 33 614 527 520 11 538 France 453 — 453 369 — 369 Japan 451 — 451 403 — 403 Other international 532 6 538 475 3 478 International markets - Total 2,017 39 2,056 1,774 14 1,788 4,194 137 4,331 3,937 26 3,963 Three months ended June 30, 2025 2024 Optune Gio Optune Lua Total Optune Gio Optune Lua Total Prescriptions received in period (2) United States 963 113 1,076 948 9 957 International markets: Germany 199 30 229 193 13 206 France 179 — 179 176 — 176 Japan 101 — 101 108 — 108 Other international 156 — 156 183 4 187 International markets - Total 635 30 665 660 17 677 1,598 143 1,741 1,608 26 1,634 24 Table of Contents Six months ended June 30, 2025 2024 Optune GIo Optune Lua Total Optune Gio Optune Lua Total Prescriptions received in period (2) United States 1,871 207 2,078 1,933 14 1,947 International markets: Germany 397 58 455 388 24 412 France 386 — 386 362 — 362 Japan 219 — 219 199 — 199 Other international 333 5 338 350 7 357 International markets - Total 1,335 63 1,398 1,299 31 1,330 3,206 270 3,476 3,232 45 3,277 (1) Optune Lua includes both active patients in NSCLC and MPM. Worldwide, there were 43 and 25 active MPM patients on therapy as of as of June 30, 2025 and 2024 and 94 and 1 active NSCLC patient(s) on therapy as of as of June 30, 2025 and 2024. (2) Optune Lua includes both prescriptions for NSCLC and MPM. Worldwide, 22 , 57 , 24 and 43 MPM prescriptions were received in the three and six months ended June 30, 2025 and 2024 and 121 , 213 , 2 and 2 NSCLC prescriptions were received in the three and six months ended June 30, 2025 and 2024. Three and six months ended June 30, 2025 compared to three and six months ended June 30, 2024 Three months ended June 30, Six months ended June 30, 2025 2024 % Change 2025 2024 % Change Net revenues $ 158,805 $ 150,356 6 % $ 313,799 $ 288,859 9 % Net revenues. Net revenues increased 6% to $158.8 million for the three months ending June 30, 2025 from $150.4 million for the same period in 2024. For the three months ended June 30, 2025 the net revenue increase primarily resulted from a $4.2 million increase from continued growth in France, a $4.0 million increase in Germany from active patient growth and reimbursement improvements, and a $3.0 million increase from the remaining international markets. Included in these gains is $3.8 million of exchange rate benefits. This increase was partially offset by $1.5 million less revenue in the United States related to a reduction in one-time benefits for prior period claims. In addition, net revenues from Greater China were $1.3 million less than prior year. Recognized revenue from Optune Lua in the quarter was $2.4 million, including $1.3 million from MPM, and $1.1 million from NSCLC. For the six months ended June 30, 2025, the increase primarily resulted from an $11.5 million increase from continued growth in France, a $6.9 million increase in Germany from active patient growth and reimbursement improvements, and a $6.9 million increase from the remaining international markets driven by active patient growth. Three months ended June 30, Six months ended June 30, 2025 2024 % Change 2025 2024 % Change Cost of revenues $ 41,472 $ 34,654 20 % $ 79,993 $ 68,343 17 % Cost of revenues. For the three and six months ended June 30, 2025, the increase in cost of revenues was primarily due to 9% growth in active patients, higher average array costs driven by the new array roll-out, the NSCLC launch and increased tariffs. Excluding sales to Zai, cost of revenues per active patient per month was $2,970 for the three months ended June 30, 2025, an increase of 10% from $2,692 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 25 Table of Contents 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 $3.2 million and $6.5 million for the three and six months ended June 30, 2025 compared to $3.1 million and $5.9 million for the three and six months ended June 30, 2024. Gross margin was 74% for the three months ended June 30, 2025 compared to 77% for the three months ended June 30, 2024. The reduction in gross margin is primarily due to the aforementioned increase in cost of revenues. 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. Operating Expenses. Three months ended June 30, Six months ended June 30, 2025 2024 % Change 2025 2024 % Change Research, development and clinical studies $ 55,833 $ 54,955 2 % $ 109,610 $ 106,553 3 % Sales and marketing 57,066 56,616 1 % 112,858 111,822 1 % General and administrative 43,955 37,711 17 % 88,724 77,241 15 % Total operating expenses $ 156,854 $ 149,282 5 % $ 311,192 $ 295,616 5 % Research, development and clinical study expenses. Research, development and clinical study expenses increased 2% to $55.8 million for the three months ended June 30, 2025 from $55.0 million for the same period in 2024. For the three and six months ended June 30, 2025, the change was primarily due to a $1.9 and $2.6 million increase in engineering costs and a $1.8 million and $4.3 million increase in direct clinical trial expenses related to the ramp up of the LUNAR-2 and KEYNOTE D58 trials, partially offset by $3.7 and $6.1 million lower share-based compensation expenses in the three and six periods. 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 $57.1 million for the three months ended June 30, 2025 from $56.6 million for the same period in 2024. For the three months ended June 30, 2025, the change was primarily driven by $3.0 million higher costs associated with the expansion of the sales force for NSCLC and $1.7 million of higher marketing and market access expenses mostly attributable to the NSCLC launches, partially offset by $4.5 million in lower share-based compensation expenses. For the six months ended June 30, 2025, the change was primarily driven by $7.3 million higher costs associated with the expansion of the sales force for NSCLC, partially offset by $7.1 million lower share-based compensation expenses. General and administrative expenses. General and administrative expenses increased 17% to $44.0 million for the three-month period ended June 30, 2025 from $37.7 million for the same period in 2024. For the three months ended June 30, 2025, these changes were primarily due to $3.3 million higher share-based compensation expenses and higher personnel and professional service expenses to support the NSCLC launch and preparations for potential future indications. For the six-month period ended June 30, 2025, the change was primarily due to $4.4 million of higher share-based compensation expenses, 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 NSCLC launches and potential future indications. 26 Table of Contents Three months ended June 30, Six months ended June 30, 2025 2024 % Change 2025 2024 % Change Financial income (expenses), net $ 4,542 $ 10,851 (58) % $ 12,112 $ 20,729 (42) % Financial income (expenses), net. Financial income decreased $ 6.3 million or 58%, to $4.5 million for the three months ended June 30, 2025 from $10.9 million in income for the same period in 2024, primarily due to a $2.9 million decrease in interest income on our investments, an increase of $1.5 million of foreign exchange expenses and a non-recurring gain of $1.1 million from the early redemption of our convertible note in the same period in 2024. Financial income decreased $8.6 million or 42%, to $12.1 million for the six months ended June 30, 2025 from $20.7 million in income for the same period in 2024, primarily due to $3.3 million in higher interest expenses related to our senior secured credit facility, a reduction of $3.2 million in interest income received from our investments and the non-recurring gain of $1.1 million from the early redemption of our convertible note described above. Three months ended June 30, Six months ended June 30, 2025 2024 % Change 2025 2024 % Change Income taxes $ 5,160 $ 10,646 (52) % $ 9,184 $ 17,764 (48) % Income taxes . Income taxes decreased 52% to $5.2 million for the three months ended June 30, 2025 from $10.6 million for the same period in 2024, and decreased 48% to $9.2 million for the six months ended June 30, 2025 from $17.8 million for the same period in 2024. The changes are driven primarily by an increase in tax benefits from share-based compensation deductions in the periods. In July 2025, the United States tax code was amended, including significant changes primarily focused on the permanent extension of certain business and international tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act. Except for certain provisions, the amendments are effective for tax years beginning on or after January 1, 2025 and include, among other things: (i) bonus depreciation that will allow for full expensing of qualified property; and (ii) immediate deductibility of domestic research or experimental expenditures. We are evaluating the impact of the tax law changes and currently estimate a decrease in tax expense of approximately $1.7 million related to the six months ended June 30, 2025. 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. 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 June 30, Six months ended June 30, 2025 2024 % Change 2025 2024 % Change Net income (loss) $ (40,139) $ (33,375) 20 % $ (74,458) $ (72,135) 3 % Add: Income tax 5,160 10,646 (52) % 9,184 17,764 (48) % Add: Financial expenses (income), net (4,542) (10,851) (58) % (12,112) (20,729) (42) % Add: Depreciation and amortization 3,444 2,858 21 % 6,769 5,673 19 % EBITDA $ (36,077) $ (30,722) 17 % $ (70,617) $ (69,427) 2 % Add: Share-based compensation 26,143 31,830 (18) % 55,695 65,914 (16) % Adjusted EBITDA $ (9,934) $ 1,108 (997) % $ (14,922) $ (3,513) 325 % Adjusted EBITDA decreased to a loss of $9.9 million for the three months ended June 30, 2025 from profit of $1.1 million for the same period in 2024. For three months ended June 30, 2025, the change in adjusted EBITDA was 27 Table of Contents primarily driven by revenue growth from increasing active patients. The revenue increase drove a $1.6 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 June 30, 2025, we had an accumulated deficit of $1,228.6 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 June 30, 2025, we had $911.5 million in cash, cash equivalents and short-term investments, a decrease of $48.3 million compared to $959.9 million at December 31, 2024, primarily caused by net cash used in operations. We believe our cash, cash equivalents and short-term investments as of June 30, 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: Six months ended June 30, 2025 2024 Change % Change Net cash provided by (used in) operating activities $ (51,601) $ (33,294) $ (18,307) 55 % Net cash provided by (used in) investing activities 29,514 (128,224) 157,738 (123) % Net cash provided by financing activities 7,634 87,530 (79,896) (91) % Effect of exchange rate changes on cash and cash equivalents 492 (133) 625 (470) % Net increase (decrease) in cash, cash equivalents and restricted cash $ (13,961) $ (74,121) $ 60,160 (81) % 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. Net cash used in operating activities increased by $18.3 million from $33.3 million net cash used in operating activities for the six months ended June 30, 2024 to $51.6 million net cash used in operating activities for the six months ended June 30, 2025. This was a result of a $2.3 million increase in net loss, a $10.2 million decrease of share-based compensation, a $2.4 million increase of accrued interest, a $2.3 million increase in asset write downs and impairment of field equipment, a $12.1 million increase in working capital primarily driven by a $5.6 million decrease in accounts payable and accrued expenses, a $4.7 million increase in accounts receivable, a $1.8 million increase in inventories, and an increase of $2.1 million in other long term assets offset by an increase of $3.4 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 provided by investing activities was $29.5 million for the six months ended June 30, 2025, compared to $128.2 million used in investing activities for the six months ended June 30, 2024. The $29.5 million net cash provided by investing activities for the six months ended June 30, 2025 was primarily attributable to $45.6 million of net proceeds of short term investments and the purchase of $16.1 million of property and equipment. The $128.2 million net cash used in investing activities for the six months ended June 30, 2024 was primarily attributable to $105.0 million of net purchase of short-term investments and by the purchase of $23.2 million of property and equipment. 28 Table of Contents Financing activities. Net cash provided by financing activities was $7.6 million for the six months ended June 30, 2025, as compared to $87.5 million provided by financing activities for the six months ended June 30, 2024, attributable for $97.2 million to the proceeds of senior secured debt, offset for $12.9 million for the partial repayment of the convertible loan and to the 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 give notice of its intent 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 give notice of its intent 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 give notice of its intent to 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 closing date of each of the Tranche B Loan, Tranche C Loan and Tranche D Loan is ninety (90) days after we give the respective notice of our intent to draw. 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 29 Table of Contents 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. As of June 30, 2025 we have borrowed the Tranche A Loan in the principal amount of $100,000 and on that date we gave notice of intent to draw the Tranche B Loan, which will close on September 26, 2025. 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.