Q4 2019 Earnings Call
Good morning, everyone and thank you for joining us to review nobody cares fourth quarter and full year 2019 performing I.
Unknown Executive: Good morning, everyone, and thank you for joining us to review Novocure's fourth quarter and full year 2019 performance. I am joined today by our Executive Chairman, William Doyle, our CEO, Asaf Danziger, and our CFO, Wilco Gronheisen. Pritesh Shah, our Chief Commercial Officer, and Ellie Benaim, our Chief Medical Officer, are also on the call.
I'm joined today by our executive Chairman William Doyle, our CEO soft on thinker and our CFO will cover on <unk>.
Protest Shah our Chief commercial officer, and we've been aim our chief Medical Officer are also on the call.
Unknown Executive: The slides presented today can be viewed on our website, www.novacure.com, by clicking on the link for fourth quarter and full year 2019 financial results, located in the events section on our investor relations page. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements, and actual results could differ materially from those projected in these statements. These statements involve a number of risks and uncertainties, some of which are beyond our control, including those risks and uncertainties described from time to time in our SEC filings. We do not intend to update publicly any forward-looking statement, except as required by law. Following our prepared remarks today, we will open the line for questions. Financials for the 3 and 12 months ending December 31, 2019 are available in our press release and in our 10K, both of which we released earlier this morning. Where appropriate, we will refer to non-GAAP financial measures to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are also included in our press release, in the appendix of the supplemental slides accompanying this presentation, and in our Form 8K filed with the SEC today. With that, I will now turn the call over to Bill Doyle.
The flights presented today can be viewed on our website www dot another cure dotcom by clicking on the link for fourth quarter and for year 2019 financial result, located in the event section on our Investor Relations page.
Before we start I would like to remind you that our discussions during this conference call will include forward looking statements and actual results could differ materially from those projected any statement.
These statements involve a number of risks and uncertainties some of which are beyond our control, including those risks and uncertainties described from time to time in RCC filings, we do not intend to update publicly any forward looking statements except as required by law.
Following our prepared remarks today, we will open the line for question.
Financials for the three in 12 months ended December 31st 2019 are available in our press release and in our 10-K, both of which we released earlier this morning.
Where appropriate we will refer to non-GAAP financial measures to evaluate our business reconciliations of non-GAAP financial measures to GAAP financial measures are also included in our press release and the appendix on the supplemental slides accompanying presentation and in our form 8-K filed with the FCC today.
With that I will now turn the call over to Bill Boyle.
William F. Doyle: Thank you, Ashley, and good morning, everyone. We started Novocure with the fundamental insight that electric fields can be harnessed to disrupt cancer cell division and cause cancer cell death. Over the last 20 years, we have built an organization of more than 750 colleagues dedicated to delivering tumor-treating fields, our life-extending therapy, to patients with glioblastoma or mesothelioma and dedicated to advancing clinical and product development programs intended to extend survival in some of the most difficult forms of cancer. We believe we are in a virtuous cycle of execution and innovation supporting the future growth of our company. In 2019, our global commercial oncology business generated $351 million in net revenue and provided $27 million in cash flow from operations. With this financial strength, We funded significant investments in preclinical and clinical development programs intended to expand the addressable market for tumor treating fields therapies. Additionally, a growing body of evidence informed product development programs intended to improve efficacy and patient usability for current and future indications and ultimately propel further growth. We start 2020 with substantial momentum from an extraordinary 2019.
Thank you Ashley and good morning, everyone.
We started know which are with the fundamental insight that electric fields can be harness to disrupt cancer cell division and cause cancer cell death.
Over the last 20 years, we don't know organization of more than 750 colleagues dedicated to delivering tumor treating field, our liked extending therapy to patients with glioblastoma immediately OMA and dedicated to advancing clinical in product development programs intended to extend survival in some of the most difficult forms of cancer.
We believe we were in a virtuous cycle of execution in innovation supporting future growth of our company.
In 2019, our global commercial oncology business generated $351 million and net revenue and provided $27 million and cash flow from operations.
With this financial strength.
We funded significant investments in preclinical and clinical development programs intended to expand the addressable market for tumor treating field therapy.
Additionally, a growing body of evidence informed product development program intended to improve advocacy and patient usability for current and future indications and ultimately to propel further growth.
We start 2020 with substantial momentum from an extraordinary 2019.
Asaf Danziger: In 2019, we initiated our Innovate III trial in recurrent ovarian cancer and are now enrolling patients in four Phase III pivotal trials. In 2019, we received FDA approval via the HDE pathway for malignant pleuromethicelioma, our first FDA-approved torso indication. Medicare established coverage of Optune for newly diagnosed GBM. We took initial steps into China through our partnership with Xilab. There were more than 250 presentations on tumor treating fields at key medical congresses, the majority by independent researchers. We made significant advancements in radiation oncology with a Red Journal publication detailing the dose efficacy dependence of tumor treating fields and with ongoing investments to enhance our treatment planning software. Notably, we accomplished all of this while growing our net revenue by more than 40% and adding $80 million to our balance sheet. I will expand on our clinical and product development programs later this morning, but first, I want to turn the call over to Asaf, who will speak about our commercial progress in the quarter.
In 2019, we initiated our innovate three trial in recurrent ovarian cancer and are now enrolling patients in for phase three pivotal trials.
We received FDA approval via the H.D. pathway for malignant pleural me that Sealy Alma our first Sta approved torso indication.
Medicare establish coverage of Optune for newly diagnosed GBM.
We took initial steps into China through our partnership with I left.
There were more than 250 presentations on tumor treating field the key medical Congresses, the majority by independent researchers.
We made significant advancements into radiation oncology with a red journal publication detailing the dose efficacy dependence of tumor treating field and with ongoing investments to enhance our treatment planning software.
Notably we accomplished all of this while growing our net revenue by more than 40% and adding $80 million to our balance sheet.
I will expand on our clinical in product development programs. Later this morning, but first I want to turn the call over to a saw will speak about our commercial progress in the quarter.
Thank you Bill noble delivered another strong quarter topline growth in the fourth quarter with a record $99 million in global net revenues up 42% versus Q4 2018.
Asaf Danziger: Thank you, Bill. Novocure delivered another strong quarter of top-line growth in the fourth quarter with a record $99 million in global net revenues at 42% versus Q4 2018. We ended the quarter with more than 2,900 patients on therapy, our 20th consecutive quarter of active patient growth since the initial presentation of our year 14 data. Leading indicators were also strong.
We ended the quarter with more than 2900 patients on therapy, our twentyth consecutive quarter axes patient growth since the initial presentation AFFO year 14 data.
Leading indicators were also strong top of prescription in Q4 grew 5% that's excuse me and the amicus descriptions received for newly diagnosed GBM remained nearly 80%.
Asaf Danziger: Total prescriptions in Q4 grew 5% versus Q3, and the mix of prescriptions received for newly diagnosed GBM remained near 80%. With more than 14,000 GBM patients treated to date, opium has established its central role in the treatment of GBM. As proud as we are of our progress to date, we believe multiple levers remain to drive near-term growth in GBM. We plan to penetrate further into our active markets and are laying the groundwork for access in new markets. Also, we are working to extend treatment duration through patient and physician education and through product innovation. Optium has been proven to provide long-term quality survival to patients with newly diagnosed GBM, and I remain as confident as ever that we are making a difference in this disease.
With more than 14000 GBM patients treated to date Optune has established its since world War in the treatment of GBM.
As proud as we all of our progress to date, we believe multiple levels remain to drive new pen growth in GBM.
We plan to penetrate further into our active markets and other laying the groundwork for access in new markets also we're walking to extend treatment duration through patient and physician education and through product innovation.
Okay and has been proven to provide long term quality survival to patients with newly diagnosed GBM and I remain as confident as everything that we are making a difference in this disease.
Moving to MPM I will launch in the U.S. continues to progress with reactive MPM patients on therapy at quarter end.
Asaf Danziger: Moving to NPM, our launch in the U.S. continues to progress, with three active NPM patients on therapy at quarter ends. We have fully onboarded our SELS team, and they remain focused on certifying and training radiation oncologists, supporting the required IRB approval processes, and educating the multidisciplinary care teams that treat MPM patients. We are encouraged by the initial response from the MPM physician community. In 2020, we will broaden our target treatment centers to include community centers that see a high volume of MPM cases. We will continue to support the required IRB approval processes and have developed tools we believe will help centers accelerate this process. We are educating the physician community at key medical congresses and are building patient awareness in partnership with patient advocacy groups. We continue to believe that there are many more patients who can benefit from tumor-treating fields than are currently on therapy, and we will not be satisfied until all eligible patients are offered a greater opportunity for long-term quality survival. With that, I will turn the call back to Bill to discuss our clinical and product development programs.
We have fully onboarded, our sales team and they remain focused on satisfying and training radiation oncologist supporting the required I O <unk> approval processes and educating the multidisciplinary kill teams that Threed MPM patients. We are encouraged by the initial response from the MPS.
Fishing community.
In 2020, we would have broadened our target treatment centers to include community Center, that's see a high volume of MPM cases.
We will continue to support the required itll be approval processes and have developed tools. We believe will help centers accelerated this process.
We are educating the physician community at key medical Congresses, and a building patient awareness in partnership with patient advocacy groups.
We continue to believe that there are many more patients who can benefit from tumor treating field then I'll currently on therapy, and we will not be satisfied until all eligible patients often a greater opportunity for lumped them quality survival.
With that I will turn the call back to bill to discuss our clinical and product development programs.
Thank you Melissa.
William F. Doyle: Thank you, Asaf.
We believe the tumor treating fields mechanism of action is broadly applicable to solid tumor cancers.
William F. Doyle: We believe the tumor-treating field's mechanism of action is broadly applicable to solid tumor cancer. Our fundamental scientific research spans two decades, and in all of our preclinical research to date, tumor treating fields have demonstrated a consistent antimyotic effect.
Our fundamental scientific research spans two decades, and then all of our preclinical research to date tumor treating fields has demonstrated a consistent any mitotic effect.
Our extensive preclinical evidence provides the foundation upon which we are executing a strategy to advance tumor treating fields through phase two pilot trial.
William F. Doyle: Our extensive preclinical evidence provides the foundation upon which we are executing a strategy to advance tumor treating fields through phase 2 pilot trials, phase 3 pivotal trials, and phase 4 post-marketing studies across multiple solid tumor types. We are optimistic about where tumor-treating fields may go in oncology, and our teams are working hard to enroll patients in six clinical programs, including four randomized Phase III pivotal trials. We're excited about the potential to significantly expand the addressable market for tumor treating fields with readouts of key data sets anticipated over the next three years. Our MEDIS trial is testing the effectiveness of stereotactic radius surgery plus tumor treating fields in patients with brain metastases from non-small cell lung cancer. Today, there are limited treatment options available for patients with brain mets. While certain second-line systemic agents can be effective in treating metastatic disease outside of the brain, the blood-brain barrier limits the effectiveness of these agents within the brain.
Phase three pivotal trial and fees for post marketing studies across multiple solid tumor type.
We are optimistic about where tumor treating fields may going in college and our teams are working hard to enroll patients and six clinical programs, including four randomized phase three pivotal trials.
We're excited about the potential to significantly expand the addressable market for tumor treating field with read out a key datasets anticipated over the next three years.
[noise] are met its trial is testing the effectiveness of stereotactic radio surgery, plus tumor treating fields in patients with brain metastasis from non small cell lung cancer. Today. There are limited treatment options available for patients with brain Mets well certain second line systemic agents can be effective in treating metastatic.
Disease outside of the bring the blood brain barrier limits the effectiveness of these agents within the brain.
William F. Doyle: Patients typically experience intracranial progression within about eight months. MEDIS is designed to extend this time to intracranial progression by approximately six months, equating to a hazard ratio of 0.57. MEDIS is designed to accrue 270 patients with data analyzed 12 months after the last patient. The majority of clinical trial sites were on board leading into 2019, and we are now focused on accelerating enrollment at each clinical site and are working closely with investigators to ensure they have the tools and resources needed to effectively communicate the trial protocol to as many eligible patients as possible. Moving to the torso, our lunar trial is testing the effectiveness of tumor-treating fields with physician's choice of an immune checkpoint inhibitor or docetaxel for the second-line treatment of patients with non-small cell lung cancer. Lunar is designed to enroll 534 patients, with data analyzed 18 months after the last patient in. Lunar aims to extend overall survival by approximately five months, equating to a hazard ratio of 0.75.
Patients typically experienced intracranial progression within about eight months met it. It's designed to extend this time to intercranial progression by approximately six months equating to a hazard ratio of 0.57.
Now this is designed to accrue 270 patients with data analyzed 12 months after the last patient it.
The majority of clinical trial sites run board leading into 2019.
We're now focused on accelerating enrollment at each clinical site and are working closely with investigators to ensure they have the tools and resources needed to effectively communicate the trial protocol to as many eligible patients as possible.
Moving to the torso, our lunar trial is testing the effectiveness of tumor treating fields with physicians choice of immune checkpoint inhibitor or ddos attacks. So for the second line treatment in patients with non small cell lung cancer.
Sooner is designed to enroll 534 patients with data analyzed 18 month after the last patient in.
Lunar aims to extend overall survival by approximately five months equating to a hazard ratio of 0.75.
William F. Doyle: We have more than 80 trial sites in North America and Europe, and we intend to increase the footprint of this study by more than 50% to include additional clinical sites and additional countries across Eastern Europe and Asia to accelerate enrollment. LUNR allows physicians to choose between an immune checkpoint inhibitor or docetaxel in combination with tumor-treating fields. We expect this choice to vary based on geography, contraindications, and first-line treatment.
We have more than 80 trial sites in North America in Europe, and we intend to increase the footprint of this study by more than 50% to include additional clinical sites and it and additional countries across eastern Europe, and Asia to accelerate enrollment.
Lunar allows physicians to choose between an immune checkpoint inhibitor. We're docetaxel in combination with tumor treating field. We expect this choice to vary based on geography Contra indications in first line treatment. The data that will be generated from this trial contemplates multiple out.
William F. Doyle: The data that will be generated from this trial contemplates multiple outcomes, all of which we believe will be clinically meaningful for patients whose disease progresses while on or after platinum-based therapy. Moving to pancreatic cancer, our PANOVA 3 trial is testing the effectiveness of tumor treating fields with gemcitabine and nabpaclitaxel as a first-line treatment for patients with locally advanced pancreatic adenocarcinoma. Pancreatic cancer is one of the most lethal cancers and is the third most frequent cause of cancer-related death in the U.S., with a median overall survival of approximately 15 months and a five-year survival rate of only 9%. PNOVA 3 is designed to extend overall survival by approximately 5 months, equating to a hazard ratio of 0.75. Panova 3 is designed to accrue 556 patients, with data analyzed 18 months after the last patient in. At the end of 2019, we had 85 clinical trial sites on board. We anticipate international expansion of study sites in 2020, bringing the total number of sites to approximately 135 by year end.
All of which we believe will be clinically meaningful for patients, whose disease progresses, well on or after platinum based therapy.
Moving to pancreatic cancer, our PANOVA three trial is testing the effectiveness of tumor treating field with Jim side have been and Nab Paclitaxel. That's the first line treatment for patients with locally advanced pancreatic adenocarcinoma.
Pancreatic cancer is one of the most LIFO cancers and is the third most frequent cause of cancer related death in the U.S. with a median overall survival of approximately 15 month and a five year survival rate of only 9%.
But over three is designed to extend overall survival by approximately five month equating to a hazard ratio of 0.75.
Then over three is designed to accrue 556 patients with data analyzed 18 months after the last patient it.
At the end of 2019, we had 85 clinical trial sites on board, we anticipate international expansion of study sites in 2020, bringing the total number of sites to approximately 135 by year end.
William F. Doyle: We are optimistic about the potential to significantly extend survival of patients with this terrible disease for which there is still such a high unmet medical need. Our Innovate III trial is testing the effectiveness of tumor-treating fields with weakly packed plaque cells in patients with platinum-resistant ovarian cancer. Ovarian cancer ranks fifth in cancer deaths among women in the U.S.
We are optimistic about the potential to significantly extend survival. So patients with this terrible disease for which there are still such a high unmet medical need.
Our innovate three trial is testing the effectiveness of tumor treating fields with weekly paclitaxel in patients with platinum resistant ovarian cancer.
Ovarian cancer ranked fifth in cancer deaths among women in the U.S. nearly all patients with recurrent ovarian cancer developed platinum resistance.
William F. Doyle: Current Ovarian Cancer
William F. Doyle: Developed Platinum Resist, and the prognosis for this population remains poor. Innovate 3 aims to detect an overall survival benefit of approximately four months, equating to a hazard ratio of 0.75. Innovate3 is designed to accrue 540 patients with data analyzed 18 months after the last patient in. The European Network for Gynecological Oncological Trial Group is collaborating with us on this trial to facilitate enrollment of Innovate3 at leading cancer centers in Europe. We are encouraged by the initial speed of enrollment, which we view as a sign of enthusiasm from the investigator community.
And the prognosis for this population remains poor.
Innovate three aims to detect and overall survival benefit of approximately four month.
Equating to a hazard ratio of 0.75.
Innovate three is designed to accrue 540 patients with data analyzed 18 months after the last patient in.
The European network for Gynecological uncle logical trial group is collaborating with US on this trial to facilitate enrollment of innovate three at leading cancer centers in Europe. We're encouraged by the initial speed of enrollment, which we view as a sign of enthusiasm from the investigator community.
Beyond our focus on clinical development, we believe we have a considerable opportunity to improve our tumor treating fields delivery systems through product innovation.
William F. Doyle: Beyond our focus on clinical development, we believe we have a considerable opportunity to improve our tumor-treating field's delivery systems through product innovation. The dose response for tumor-treating fields is driven by total energy delivered, which is a function of time on therapy and electric field intensity. Supported by our financial strength, we are increasing investments in engineering programs intended both to improve time on therapy and to maximize the energy delivered to each patient's tumor bed. We believe these enhancements have the potential to significantly improve patient outcomes as we work to extend survival in some of the most aggressive forms of cancer. With more than 180 issued patents, we believe we own 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. Our commitment to innovation resulted in 33 new patent applications in 2019 alone. With that development update, I'll turn the call over to Wilco to discuss our financial progress.
Dose response for tumor treating field is driven by total energy delivered which is a function of time on therapy and electric field intensity.
Supported by our financial strength, we are increasing investments in engineering programs intended both to improve time on therapy and to maximize the energy delivered to each patient's tumor bet.
We believe these enhancements have the potential to significantly improve patient outcomes as we work to extend survival in some of the most aggressive forms of cancer.
With more than 180 issue pass, we believe we own 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 our commitment to innovation resulted in 33, new patent applications in 2002.
Thousand 19 alone.
With that development update I'll turn the call over to Wilco to discuss our financial progress.
Thank you Bill.
Wilco Gronheisen: Thank you, Bill. Novocure's continued commercial execution drove strengthening financial performance in 2019. Annual net revenues were $351 million, an increase of 42% versus the prior year. This is the 6th consecutive year that we have reported at least double-digit revenue growth. We generated $27 million in cash flow from operations during the year compared to $2 million in cash flow used in operations in 2018.
No for Qs continued commercial execution drove strengthening financial performance in 2019.
Annual net revenues for $351 million, an increase of 42% versus prior year.
This is the sixth consecutive here that we have reported at least double digit revenue growth.
We generated $27 million in cash flow from operations during the year compared to $2 million in cash flow used in operations in 2018.
Wilco Gronheisen: We added $80 million in cash to our balance sheet, ending 2019 with $326 million cash on hand, providing financial and strategic flexibility. Specific to the fourth quarter, net revenues were $99 million, growing 42% year-over-year and 8% sequentially. Our year-over-year revenue growth was driven both by a 22% increase in active patients and by an increased average duration of therapy due to patient shifts towards newly diagnosed GBM. We also drove a significant improvement in average revenue per patient from the initial impact of Medicare revenue in the U.S. and increased reimbursement rates in Germany and Sweden. For the three months ended December 31st, 2019, we recognized $5 million in net revenues for Medicare beneficiaries built under the newly defined coverage policy, which became effective on September 1st, 2019. We are working through the typical administrative ramp-up with Medicare and expect our net revenues from Medicare beneficiaries to further improve as we gain experience processing claims. Our track record of execution continues into 2020 with another national coverage decision. Last month, the Ministry of Health in Israel established reimbursement for obtuse for patients with newly diagnosed GBM.
We added $80 million in cash to our balance sheet, ending 2019, with three and a $26 million cash on hand, providing financial and strategic flexibility.
Specific to the fourth quarter net revenues were $99 million growing 42% year over year and 8% sequentially.
Our year over year revenue growth was driven both by a 22% increase in expectations as by an increase every duration of therapy due to the patient mix shifts towards newly diagnosed GBM.
We also drove a significant improvement in average revenue per patient from the initial impact of Medicare revenue in the U.S. and increased reimbursement rates in Germany in Sweden.
For the three months ended December 31st 2019, we recognized $5 million in net revenues for Medicare beneficiaries built on a newly defined coverage policy, which became effective on September for 2019.
We are working through difficult administrative ramp up with Medicare and expect our net revenues for Medicare beneficiaries to further improve as we gain experience processing claims.
Our track record of execution continues into the Twentytwenty with another national coverage decision.
Last month, the Ministry of Health in Israel separatist reimbursement for options for patients with newly diagnosed GBM.
Access to a therapy contiguous to grow not active markets, which we believe demonstrates an increasing recognition by health insurers of the value of tumor treating fields.
Wilco Gronheisen: Access to our therapy continues to grow in our active markets, which we believe demonstrates an increasing recognition by health insurers of the value of tumor-treating fields. We believe that our global pricing is sustainable and that further expansion of reimbursement in our currently active markets is an important lever for continued revenue growth. Moving down to P&L, gross profit in the fourth quarter was $74 million, reflecting a 75% gross margin.
Believes that our global pricing is sustainable and a further expansion of reimbursement and are currently active markets is an important lever for continued revenue growth.
Moving down if you know gross profit into fourth quarter was $74 million, reflecting a 75% gross margin.
Efficiency initiatives and scale drove a 12% decrease in the cost of revenues per active patients to approximately $2900 for the fourth quarter of 2019.
Innovation remains core to our long term value creation strategy R&D expense in the quarter totaled 24 million up 58% versus the fourth quarter of 2018, reflecting ongoing commitment to investments in clinical and product development intended to extend survival in multiple solid tumor cancers.
Wilco Gronheisen: Efficiency initiatives and scale drove a 12% decrease in the cost of revenues per active patient to approximately $2,900 in the fourth quarter of 2019. Innovation remains core to our long-term value creation strategy. R&D expenses in the quarter totaled $24 million, up 58% versus the fourth quarter of 2018, reflecting an ongoing commitment to investment in clinical and product development intended to extend survival in multiple solid tumor cancers. We anticipate R&D expenses will continue to increase in future quarters as we advance clinical programs and meaningful product innovations intended to propel further growth. Our fourth quarter's SG&A expenses were $51 million, up 26% versus the fourth quarter of 2018. This was driven primarily by increased marketing expenses and personnel costs to support our growing commercial business.
We anticipate R&D expenses will continue to increase in future quarters, as we advance clinical programs and meaningful product innovations incentive to propel further growth.
Our fourth quarters as DNA expenses were $51 million up 26% versus the fourth quarter of 2018, driven primarily by increased marketing expenses and personnel costs to support our growing commercial business.
As DNA expenses as a percentage of net revenues were 51% in the fourth quarter of 2019 compared to 58% into fourth quarter of 2018, reflecting an ongoing commitment to maintain a disciplined approach the spending as we support commercial growth in GBM and MPM.
Our net income was $4 million with four cents in earnings per share in the quarter, our second quarter of positive net income.
Wilco Gronheisen: SG&A expenses as a percentage of net revenues were 51% in the fourth quarter of 2019 compared to 58% in the fourth quarter of 2018, reflecting an ongoing commitment to maintain a disciplined approach to spending as we support commercial growth in GBM and MBM. Our net income was $4 million, with 4 cents in earnings per share in the quarter, our second quarter of positive net income. You will note that, for the first time, we are including an adjusted EBITDA calculation in our investor communication. Adjusted EBITDA is a non-gap measurement of earnings before interest, taxes, depreciation, amortization, and share-based compensation. We believe Adjusted EBITDA is useful in evaluating our operating performance as it removes the impact of earnings attributable to capital structure, tax rate, and material non-cash items, specifically share-based compensation.
You will note that for the first time, we're including an adjusted EBITDA calculation, our Investor Communications.
Adjusted EBITDA is a non-GAAP measure mother earnings before interest taxes, depreciation amortization and share based compensation.
We believe adjusted EBITDA is useful in evaluating our operating performance as it removes the impact of earnings attributable to capital structure tax rate immaterial noncash items, specifically share based compensation.
Adjusted EBITDA increased by 30 million or 314% to 17 million for the three months ended December 31st 2000 94 million for three months ended December 31st 2018.
This improvement in fundamental financial performance was driven by topline growth and disciplined execution.
We ended the quarter with $326 million in cash cash equivalents short term investments an increase of 30 million from the prior quarter, we remain committed to improving financial operational and capital efficiency by maintaining a balanced focused across growth profitability and liquidity.
Wilco Gronheisen: Adjusted EBITDA increased by 13 million, or 314%, to 17 million for the three months ended December 31st, 2019, from 4 million for the three months ended December 31st, 2018. The improvement in fundamental financial performance was driven by top-line growth and disciplined execution. We ended the quarter with $326 million in cash, cash equivalents, and short-term investments, an increase of $13 million from the prior quarter.
Our core business is stronger than ever and 2019 performance reinforces our confidence in the long term potential of the tumor treating fields platform.
With a compelling growth proposition disciplined operational execution and financial strength, our focus is unwavering strengthening our existing foundation and executing on our strategic objectives to deliver value through our patients employees and our shareholders.
Operator: We remain committed to improving financial, operational, and capital efficiency by maintaining a balanced focus across growth, profitability, and liquidity. Our core business is stronger than ever, and our 2019 performance reinforces our confidence in the long-term potential of the tumor-treating fields platform. With a compelling growth proposition, disciplined operational execution, and financial strength, our focus is unwavering on strengthening our existing foundation and executing on our strategic objectives to deliver value to our patients, employees, and our shareholders. Thank you for your time this morning. With that, I will turn the call over to the operator for questions.
Thank you for your time this morning with that I will turn the call over to the operator for questions.
Thank you to ask a question you need the press star one on your Touchtone telephone.
If you would like to withdraw your question press the pound <unk>.
And our first question comes from Vijay Kumar with Evercore ISI. Your line is open.
Hey, guys, John Entre VJ today I'm, just a couple of quick ones. So for the last couple of years, you guys had revenues around the 40% level, but the streets modeling.
Just a little bit sub 30% growth and I know you just don't give guidance, but how are you thinking about the trajectory in are you comfortable with where the street is.
So we'll go to take the question John Good morning.
Operator: Thank you. To ask a question, you need to press star 1 on your touchtone telephone. If you would like to withdraw your question, press the pound. And our first question comes from Vijay Kumar with Evercore ISI. Your line is open. Hey guys, it's Jon on for VJ Today. Just a couple quick ones. So for the last couple of years, you guys had revenues around the 40% level, but the streets are modeling, just a little bit sub-30% growth, and I know you guys don't give guidance, but how are you thinking about the trajectory, and are you comfortable with where the street is?
Right.
I think our growth rate and when you make when you look at it and make the patients that's what we've been talking about Florida for quite a number of.
Consecutive quarters remains.
Uninterrupted, we should be you've shown a number of quarters of consecutive growth. We expect it to have to continue we show 5% year over year growth.
Prescriptions, we had our first quarter off.
Above thousand scripts should the U.S. as I'm sure you for you've noticed so we think that.
With the data the unprecedented big I'd like to say in terms of long term survival with NCCN category. One designation the local number of things that basically its best including publications all local independent ice. These studies et cetera, et cetera, we think a substantial growth opportunity.
Wilco Gronheisen: So we'll ask Wilco to take the question. John, good morning.
Wilco Gronheisen: I think our growth rate, and when you look at it in active patients, that's what we've been talking about for quite a number of consecutive quarters, remains uninterrupted. We have shown a number of consecutive quarters of consecutive growth. We expect it to continue. We show 5% year-over-year growth in prescriptions. We had our first quarter of above 1,000 scripts in the U.S., as I'm sure you've noticed, with the data, the unprecedented data, I'd like to say, in terms of long-term survival within CCN Category 1 designations, a number of things that basically attest, including publications of independent IST studies, et cetera, et cetera.
In front of as we think we have multiple levers remaining to drive topline growth.
Glued in realizing that we talked a little bit about that into pre recorded the statements with with.
National Reimbursements Medicare Israel. This stuff, we're working on coming up which we see substantial potential for improvements continued improvement in our topline growth.
Okay. That's helpful. Thank you on the other one that I had for you guys was about long.
Do you have any update on how you're feeling about the timelines there and regarding kind of what we can expect for the interim readout.
Is there any information that you're willing to kind of blessed for us going forward as to what we can really expect to see is going to be a headline or will it be something a little bit more in depth.
Wilco Gronheisen: We think there's a substantial growth opportunity in front of us. We think we have multiple levers remaining to drive top-line growth, including realizing, and we talked a little bit about that in the pre-recorded statements, with National Reimbursements, Medicare, Israel, others that we're working on coming up. We see substantial potential for improvement, continued improvement in our top line growth.
Yes, so just to remind everybody lunar is our study investigating tumor treating fields with PD, one inhibitors or ER docs attacks. So for second line treatment of non small cell lung cancer you.
You'll recall that tumor treating fields of courses of therapy that we add to whatever the best standard of care pharmacology is than we see in our preclinical work significant.
Benefit the adding tumor treating fields to both chemotherapy and immune checkpoint inhibitors.
William F. Doyle: Okay, that's helpful. Thank you. The other one that I had for you guys was about the lung cancer. Do you have any update on how you're feeling about the timelines there, and regarding kind of what we can expect for the interim readout, is there any information that you're willing to kind of bless for us going forward as to what we can really expect to see, is it going to be a headline, or will it be something a little bit more in depth?
We are enrolling.
503 for patients with.
With 18 month.
Minimum follow up.
With respect to the specific timelines Oh, we have not updated those there they're mentioned in the press release.
We continue to work very hard.
With our existing centers here.
William F. Doyle: Yeah, so just to remind everybody, LUNAR is our study investigating tumor-treating fields with PD-1 inhibitors or doxotaxel for second-line treatment of non-small cell lung cancer. You all recall that tumor-treating fields, of course, is a therapy that we add to whatever the best standard of care pharmacology is, and we see in our preclinical work significant benefits to adding tumor-treating fields to both chemotherapy and immune checkpoint inhibitors.
Two.
Increased enrollment and we intend as we mentioned in the script to continue to expand the number of centers.
In terms of the interim.
We do expect the interim to to occur towards the end of this year and just to be specific here. The there's three outcomes in an interim trial.
There's the possibility theoretical possibility that you have to spot.
William F. Doyle: We are enrolling 534 patients with 18 months of minimum follow-up. With respect to the specific timelines, we have not updated those. They're mentioned in the press release.
Due to a futility or due to some.
Safety negative safety signal, we don't expect that with this trial number one we never seen a safety issue of course in 20 years of have worked with this therapy.
William F. Doyle: We continue to work very hard with our existing centers here to increase enrollment, and we intend, as we mentioned in the script, to continue to expand the number of centers. In terms of the interim, we do expect the interim to occur toward the end of this year. Just to be specific here, there are three outcomes in an interim trial. There is the possibility, theoretical possibility, that you have to stop the study due to futility or due to some safety, negative safety signal. We don't expect that with this trial. Number one, we've never seen a safety issue, of course, in 20 years of work with this therapy, and this is supported by very strong preclinical and phase two work. It's the same mechanism of action, of course, throughout all of our work, including our successful work in mesothelioma.
And this is supported by very strong preclinical and and phase to work at the same mechanism of action of course.
Throughout all of our work, including our successful work immediately OMA.
And the most likely outcome is it sort of the Greenlight continue the trial as is and I think thats, where we'd like to set expectations. There is a small probability that the study can be stopped for success.
Course that is what happened with our GBM trial that is Oh at extremely high bar and so I think it's important not to anticipate.
Necessarily a or an early stoppage on success.
William F. Doyle: The most likely outcome is sort of the green light, continuing the trial as is, and I think that's where we'd like to set expectations. There is a small probability that the study can be stopped for success. Of course, that happened with our GBM trial. That is an extremely high bar, and so I think it's important not to anticipate an early stoppage on success.
Got it so any event of a continuation can we just expect a headline or what we got a deeper look good.
No we don't get a look under the hood, so you'll get a headline.
Okay. Thank you that's all.
Thank you. Our next question comes from Larry Biegelsen with Wells Fargo. Your line is open.
Hey, guys. Thanks for taking the questions.
Hey, Bill on the lunar have you guys disclosed at what point the interim analysis occurs in other words, how many patients.
William F. Doyle: Got it. So in the event of a continuation, can we just expect a headline, or will we get a deeper look under the hood?
Have kinda reached 18 months.
A follow up.
Yes, so we have lowered the protocol specified an event driven interim analysis that 432 patients.
William F. Doyle: No, we don't get a look under the hood, so you'll get a headline. Okay, thank you.
Again, we expect it towards the end of this year.
Got it and we'll go at this point in the year in the past few you pointed out potential disconnects between your thinking and consensus I know you're asked about it on topline earlier is there anything else you would highlight today and any color on kind of the.
Operator: Thank you. That's all. Thank you. Our next question comes from Larry Biegelsen with Wells Fargo. Your line is open.
Operator: Hey, guys, thanks for taking the question. Hey, Bill, on Lunar, have you guys disclosed at what point the interim analysis occurs? In other words, how many patients have reached 18 months follow-up?
Gross to net billing expectation for 2020, and I had a follow up.
William F. Doyle: Yes, so we have where the protocol specifies an event-driven interim analysis at 432 patients, and again, we expect it toward the end of this year.
Yes, I'm wondering Larry.
What we are gross to nets as we said in the past when you do you expect it to continue to improve we talked a little bit about that in the script, we're going through the administrative ramp up Medicare we as we talked about that in advance is probably going to take a few quarters into 2020 to come to fruition as well so that will help into gross to net as we have three.
Wilco Gronheisen: Will, at this point in the year, you know, in the past, you've pointed out potential disconnects between your thinking and consensus. I know you were asked about it on the top line earlier. Is there anything else you would highlight today? And any color on kind of the gross net billing expectation for 2020?
The Medicare patients, while we were all going back to the dialogue with CMS CMS towards the with reimbursement.
Things actually applicable for.
Wilco Gronheisen: Well, our growth through NET, as we have said in the past, we expect it to continue to improve. And we talked a little bit about that in the script.
For Israel, but we know national reimbursement them get reimbursed for patients that's been already on therapy. So that's close.
To gross margin that flows through the bottom line.
We've also seen this continued improvement in crops development for instance, and we talked in the call a little about $2900 per active patients in terms per month for port football switches from the top of my mind about $300 below where it was just you'll see is a year ago and with all ongoing volume ongoing.
Wilco Gronheisen: We're going through the administrative ramp-up for Medicare. As we talked about in the past, it's probably going to take a few quarters into 2020 to come to full fruition as well. So that will help in growth through NET as we have been treating Medicare patients while we were in ongoing dialogue with CMS towards reimbursement. For Israel, where we now have national reimbursement and get reimbursed for patients that are already on therapy. So that flows. [inaudible] And to cut it a little bit shorter than I just did than I have done so far, we are very committed to continued improvement in growth margins.
Utilization you would expect further improvements in cautioned that helps in gross margin improvement as well so.
If you've got a little bit shorter than I. Just then they have done so far we we get very committed to compete with continued improvement of gross margin.
William F. Doyle: Thanks, Wilcox. Just lastly for me, what's the status of approval in China? Are you still optimistic you won't need a clinical trial there, Bill? Thanks for taking the questions.
Thanks will go and just lastly for me.
What's the status of approval in China are you still optimistic you won't need a clinical trial there bill. Thanks for taking my questions. So we are still optimistic, but we will not require a clinical trial.
William F. Doyle: So, we are still optimistic that we will not require a clinical trial. We have seen a, I'll call it, a slowdown, but not a stop, in terms of our interaction due to the obvious situation there. So, we think there will be a minor delay, but we are still anticipating approval. Thanks for taking the questions, guys.
We have seen a.
Coldest slowed down, but not a stop in terms of our interaction due to the obvious.
Situation there.
So we think there'll be a.
Minor delay, but we are still anticipating approval.
Thanks for taking the questions guys.
[noise]. Thank you. Our next question comes from Corey Cosmos.
Operator: Thank you for taking the questions, guys. Thank you. Our next question comes from Corey Cosmit. Kazimov, Richie P. Morgan, your line is open.
Some of what J.P. Morgan your line is open.
Hi, this is going on for car. Thanks for taking my questions.
Operator: Hi, this is Gavin speaking on behalf of Corey. Thanks for taking our questions. We just had one on lunar as well. Maybe you could discuss what's driving the increased recruitment in Asia and Eastern Europe? Is this more of a function of just a low accrual in North America and the EU? Are you trying to get a broader geographic footprint?
We just had one on Mona as well maybe can you discuss what's driving the increase recruitment and in Asia and Eastern Europe is this more of a function of just a low accrual in North America and you are you trying to get a broader geographic footprint and then I had one follow up yes.
William F. Doyle: And then I had one follow-up.
William F. Doyle: Yeah, this is fairly simple. So, you know, really our focus this year is to add additional trial sites in those regions, and that'll help us. You know, those are areas where there's less competition, and there are areas where we can.
This is fairly simple. So this is really our focus this year is to add additional trials by from those.
Region and that'll help us.
Those are those are areas, where there is less competition.
And there are areas, where we can drive the overall.
William F. Doyle: to drive the overall recruitment
Great. Thank you and then just on Opexa is it seems like came in a little higher than we were expecting.
Wilco Gronheisen: Great, thank you. And then just on OPEX, it seems like it came in a little higher than we were expecting, but you benefited from a tax item this quarter. Can you just provide additional context around that?
But you benefited from a tax item. This quarter can you just provided additional context around that.
Wilco Gronheisen: Yeah, this is Wilco. Good morning.
Yeah. This is also good morning.
Wilco Gronheisen: I think there are two questions wrapped in one sentence. So, when we look at OPEX, R&D expenses are increasing as we would like them to. I think that's an investment in the future. We've talked about that in past quarters as well, and we expect R&D expenses to grow and meet our expectations. When you look at SG&A expenses, this probably is the first quarter where we don't see a decrease in SG&A expenses as a percentage of revenue. And I'd like to think that that's for a good reason as well.
I think I've two questions wrapped in one sense and so when we look at Opex.
R&D expenses are increasing as we would like them to I think that's that's the investment into future we've talked about that in past quarters as well do we expect R&D expenses too, but just to grow and that's still our expectation we look at as DNA expenses.
This probably to first quarter, where we don't see decreasing as DNA expense as a percentage of revenue and I'd like to think that Thats for good reason as well when you when you split as DNA up in its two main components sales and marketing and DNA than NGL. She continued improvement in leverage continued improvement in.
Wilco Gronheisen: When you split SG&A up into its two main components, sales and marketing, and G&A, then in G&A, we see continued improvement in leverage, continued improvement in G&A expenses growing at a substantially lower pace than revenue. Sales and marketing was growing, especially a little bit in the fourth quarter, and that's mostly related to an investment in the future. It's related to the NPM launch where we spent, of course, launch-related expenses and put an organization in place without having revenue yet for NPM in the fourth quarter. So I think overall, we're making the investments where we need to make investments where we expect a substantial future return and are still very much focused on disciplined execution. A little bit on tax. There were two questions. Sorry, I answered the first one, and I should answer the second one as well.
DNA expenses growing at a substantially lower base then.
Then revenue.
Sales and marketing was growing especially little bit in into fourth quarter, and that's mostly related to also an investment into future. It's related to the MPM launch that's why we spent the.
Of course launch related expenses and have had an organization that put in place that was outside happening and revenue yet for for MPM into fourth quarter. So I think overall, we're making the investments where we need to make investments, where we expect substantial future return and are still very much focused on a disciplined execution.
A little bit contracts with two questions sorry, I answered the one and I should answer the second one as well I think that decks expenses, we benefited similar as the third quarter, where we had some R&D credit benefits that that helped us in reducing that tax expense line and the third quarter, we so something similar in the fourth quarter.
Wilco Gronheisen: I think tax expenses benefited similarly in the third quarter, where we had some R&D credit benefits that helped us in reducing the tax expense line in the third quarter. We saw something similar in the fourth quarter. We also saw some amortization of intellectual property rights that we benefited from, and there were some share exercises of share-based compensation that is basically deductible in the United States. There was a beneficial tax effect on those as well, so that led to an overall approximately $6 million tax benefit for this fourth quarter. Great, thank you.
We also saw some amortization of intellectually intellectual property rights that we benefited from.
And there were some nice share exercise and Japan of share based compensation, that's basically our deductible in the United States. There was it thanks beneficial tax effect from those as well so that led to an overall approximately $6 million tax benefit for this fourth quarter.
Great. Thank you.
Thank you. Our next question comes from <unk>, Gregg Gilbert with Suntrust. Your line is open.
Thank you have a few questions. My first one bills about your commentary around accelerating enrollment at sites.
Is that to accelerate enrollment versus for timelines versus previously communicated ones or do you need to do this to meet those objectives. Yes. So again, great. This is the the developing the clinical.
Operator: Thank you. Our next question comes from Greg Gilbert with SunTrust. Your line is open.
Operator: Q&A
William F. Doyle: My first question, Bill, is about your commentary around accelerating enrollment at sites.
Pipeline.
It's one of the principal focus areas of the company and we haven't changed the timeline.
William F. Doyle: Is that to accelerate enrollment versus...
William F. Doyle: Timelines versus previously communicated ones, or do you need to do this to meet those objectives?
What we wanted to communicate Theres, obviously tremendous interest in the pipeline is really the extent of the efforts in activities.
William F. Doyle: Yeah, so, you know, again, great. This is one of the principal focus areas of the company, and we haven't changed the timelines, but what we wanted to communicate since there's obviously tremendous interest in the pipeline is really the extent of the efforts and activities across, across our clinical trial program.
Across a cross the our clinical trial program.
Okay.
And then bill I'm intrigued by the concept of enhancing the efficacy the technology. It seems like it's an engineering and material science issue first and then later needs to be proven out and from clinical setting can you walk us through over what sort of period of years and just you know paint a picture for us as to what the path forward would be there that seems pretty exciting.
Yes, so thanks, Greg so.
Everyone.
William F. Doyle: Okay. And then, Bill, I'm intrigued by the concept of enhancing the efficacy of the technology. Seems like it's an engineering and material science issue first and then later needs to be proven out in some clinical setting. Can you walk us through over what sort of period of years and just, you know, paint a picture for us as to what the path forward would be there? That seems pretty exciting.
We've seen consistently that the effective tumor treating fields and by effect I mean, the efficacy how long the patients live.
It's a function of the total energy that we deliver to the tumor.
Total energy is equal to the time on therapy.
The number of hours per day time, the intensity of the fields at the tumor.
We showed some time ago and our.
William F. Doyle: Yeah, so thanks, Greg. So, for everyone, we've seen consistently that the effect of tumor treating fields, and by effect, I mean the efficacy, how long the patients live, is a function of the total energy that we deliver to the tumor. That total energy is equal to the time on therapy, the number of hours per day, times the intensity of the fields at the tumor. We showed some time ago in our EF-14 trial data that those patients who used the therapy longer had significantly longer survivals. What we showed last year, and these were independent authors in what I think is really a seminal publication in the Red Journal, this is the journal for radiation oncologists, that there was also a strong correlation with the intensity of the electric fields. And I get asked, well, why don't you just turn it up then?
14 trial data that those patients who use the therapy longer had significantly longer.
Survivals, what we showed last year needs were independent authors and what I think there's really a seminal publication in the Red Journal. This is the journal for radiation oncologist that there was also.
Strong correlation with the intensity of the electric fields.
I get asked well why don't you just turn it off that.
The reason, we can't just turn it up with the existing system is because as we increased the power.
To the tumor.
We generate heat at the skin, which is the point of maximum resistance.
And so we limit the power based on the temperature if it's Ken.
Greg your 100% right, but that is a engineering problem not a science problem and now with the financial strength.
William F. Doyle: The reason we can't just turn it up with the existing system is that as we increase the power to the tumor, we generate heat on the skin, which is the point of maximum resistance. And so we limit the power based on the temperature of the skin. Greg, you're 100% right that that is an engineering problem, not a science problem. And now, with the financial strength that's been built from our GBM business, and I mentioned in my prepared remarks, what we really view now is this virtuous cycle where we grow the existing businesses, we provide significant cash, and that enables us, one, to be profitable, but I think even more important for investors to make really significant engineering investments. The specific investments that you asked about relate to the arrays and further investments actually in the TT Fields delivery system itself to deliver higher intensities. I anticipate not one big bang here but a series of innovations that will unfold over the next number of years, some of which may require. Thank you very much.
That's been built.
From our GBM business that I mentioned in the yield on the prepared remarks, what we what we really view now with this virtuous cycle that we grow the existing businesses, we provide significant cash and that enables us want to be profitable, but I think even more important for investors to make really significant.
Engineering investments.
The specific investments.
That you asked about relate to.
The rave.
And further investments actually on the a and the TG feel delivery system itself to deliver a higher intensity I envision not one big Bang here, but a series of innovations that will unfold over the next.
Numbered years.
We think some of which may require.
Essentially lab or development and a submission and others will and will require a clinical submission. So I really see this is something that that were fully engaged in today and you'll see rolled out over a period of years.
William F. Doyle: And lastly, at the risk of going too early, Bill, are your scientists or others outside the company looking at TTF outside of oncology at this point?
Great. Thanks, and then lastly at the risk of going to early bill or your scientists or others outside the company looking at U.T.F. outside of oncology at this point.
William F. Doyle: So our focus, and I've said we have an extremely full plate with oncology and all of the solid tumors. Again, we've shown efficacy in over 20 different tumor types. We've talked extensively about the four phase three programs. We also have phase two programs in liver cancer. We've just started one in gastric cancer, and we have a list to go from there. That said, we do have hints that electric fields, as we deliver them, these medium-frequency alternating electric fields may, I emphasize may, have efficacy in other areas, and we've begun early stage thinking about that.
So our focus.
And I've said, we have an extremely full plate with that with oncology and and all of the solid tumors again, we've shown efficacy in over 20 different tumor types.
We've talked extensively about before.
Phase three programs. We also have faced two programs in liver cancer. We just started wanting gastric cancer and we have a and weve a lift to go from there that said, we do have hint that this is a that electric fields.
As we deliver them these medium.
Frequency.
Alternating electric bills may I underline may have efficacy and other areas and we began early stage thinking about those.
William F. Doyle: Thanks a lot.
Thanks, a lot.
Operator: Our next question comes from Esther Rajavalu with Oppenheimer. Your line is open. Hey, good morning. Just following up on Greg's question, would any of these tech enhancements require regulatory updates, like a bridging study, or do you just update the technology and just switch patients?
Thank you.
Our next question comes from Esther Rush of alone with Oppenheimer. Your line is open.
Hey, good morning, just following up on Greg's question, what any of these tech enhancements to apply a regulatory updates like a bridging study or do you just update the technology and just switch patients.
William F. Doyle: Hi Esther. The answer is probably both. And what I mean by that, as I said, all of them will require regulatory submissions. We can't just cut in a new product. In fact, you know, even when we change the color of our arrays, they require regulatory submissions. The big differentiator is, are the regulatory submissions based on laboratory work, or do they require clinical trials? Anytime we want to change our claims, so in other words, the claims of efficacy, those will require some sort of bridging work. But there may, and again we're early days in terms of the regulatory investigations here, and it may vary by region, there may also be opportunities to bring improvements into the field based on laboratory submissions. So it's kind of a default setting.
Yes, the answer is probably both and what I mean by that as I said, they're made all of them will require regulatory submissions, we can't just cutting on a new product.
Product in fact.
Even when we change the color of our arrays they require regulatory submissions.
The big differentiator.
To the regulatory submissions are they based on laboratory work or do they require clinical trial anytime we want to change our claims so in other words the claims of efficacy those will require some sort of bridging work up but there may and again were early days in terms of the.
Regulatory investigations here at a knee vary by region.
There may also be opportunities to.
Bring improvements into the field based on laboratory submission.
It's going to people.
Pritesh Shah: And then a couple of quick housekeeping questions. Can you share with us the proportion of scripts written by RAD ONCs versus neural ONCs in this quarter versus prior quarters?
Thank you and then a couple of quick housekeeping questions can you share with us the proportion of scripts written by rattling suppresses near along this quarter versus prior quarters.
Pritesh Shah: Pritesh, can you comment on this?
Can you comment on.
Pritesh Shah: Sure. Thank you, Bill. Thank you for that question, Esther.
Sure. Thank you Bill. Thank you for that question yesterday, so we we'd like to think about our business in multiple segments of physicians. So in the U.S. as you know multiple positions are able to prescribe primarily the neuro oncologist in PDN and radiation oncology is being your second segment.
Pritesh Shah: So we'd like to think about our business in multiple segments of physicians. So in the U.S., as you know, multiple physicians are able to prescribe, primarily the neuro-oncologist in GDM and radiation oncologist being your second segment. In MPM, as you heard, our focus is primarily on radiation oncologists, so we're building that book of business. We don't split out in percentages because they ebb and flow, and it really matters when that patient is being seen and, in that lifecycle of their treatment, who's going to prescribe. So we don't break out the radiation oncology number in specifics. Thank you. And then lastly, on China, you reported, you know, about $2 million in revenues. I assume most of that is from royalties. But could you talk a little bit about how your partner has priced the product in China?
In NPL as you heard our focus is primarily on radiation oncologist. So we're building that book of business, we don't split out in percentages, because they ebb and flow and that really matters on when that patient is being seen and in that lifecycle of their treatment, who is going to prescribe. So we don't break out the relocation.
The number in specific.
Thank you and then lastly on China, you you to put it. So you know about 2 million in revenues I assume most of that is some royalties, but can you talk a little bit about how your partner has priced products in China.
William F. Doyle: Sure. So, you know, first of all...
Sure So first of all.
The product has been launched in Hong Kong. It has not been launched yet in mainland China.
William F. Doyle: The product has been launched in Hong Kong; it has not been launched yet in Mainland China. And Xilab is our partner, and they're principally responsible for pricing, so they will report pricing. But the one thing I will say is that it is initially a self-pay market in China, and as a philosophy, we have a global price throughout all the regions in the world.
As a and xylem is our partner and there are principally responsible for pricing. So they were report pricing.
But the one thing I will say as it is that initially a self pay market in China.
And as a philosophy, we have a global price throughout all the regions in the world.
William F. Doyle: And your partner is sort of in line with your global pricing. Correct? Okay, thank you. Thank you. Our next question comes from Defy Yang with Zoho Securities. Your line is open. Hi, this is Dan Clark on behalf of DFA. Thanks for taking our question. I guess to start, is there any carryover for the legwork you're doing in terms of opening new centers in Eastern Europe, Asia, and just globally into recruitment for future trials?
And your partner is is if inline with your global pricing.
Correct, Okay. Thank you.
Thank you. Our next question comes from Difei Yang with Mizuho Securities. Your line is open.
Hi, This is Dan Clark on for <unk>. Thanks for taking my questions. I guess just start is there any carryover for the leg work you're doing in terms of opening new centers and Eastern Europe, Asia, and just globally into recruitment for future trials.
William F. Doyle: Yeah, you know, again, one of the things that we're investing in, and this goes to some of Wilco's comments about investments in R&D, are significant investments in our clinical organization and footprint, and every time we develop a relationship with a center, it becomes a Novocure center, if you will. We support our clinical trials with our DSS network, and so, yes, this creates and adds to our global footprint.
Yes, you know again.
One of the thing that were then we're investing in and discuss the sum of will coasts comments about.
Investments in R&D.
Our significant investments.
Our clinical organization and footprint.
And every time, we develop a relationship with a center.
It becomes a I know what your center if you will it's a sense, we support our clinical trials with our DSS.
At work and so yes. This creates an adds to our global footprint.
William F. Doyle: Thanks. And then, just as a follow-up, is there any update on the second-gen torso device? Are you still planning on launching that this year?
Thanks mentioned the as a follow up is there any update on the second Gen torso device or you still planning on launching that this year and then any color.
William F. Doyle: And then any color on how this might lead to patients maybe staying on therapy or adhering to therapy more closely would be helpful.
On how this might lead to patients maybe staying on therapy or a bad hearing to therapy more closely it would be helpful.
So with respect to Gen.
William F. Doyle: So with respect to the second-gen torso device, and I will say the MyLink remote download capability, we are still expecting a commercial launch later this year.
Torso device and I will save them I linked remote download capability.
We are still expecting the the commercial launch later this year.
Thanks.
Operator: Thank you, and I'm showing no further questions at this time. I'd like to turn the call back to Mr. Bill Doyle for any closing remarks.
Okay.
Thank you and I'm showing no further questions at this time I'd like to turn the call back to Mr. Bill Doyle for any closing remarks sure you could just brief remarks first of all I want to thank everyone for their continued interest in novocure.
William F. Doyle: Sure, just a few brief remarks. First of all, I want to thank everyone for their continued interest in Novocure. This is an extremely exciting time for all of us at the company. We've grown from 20 years ago, a group of a handful of people working with Professor Palti on his, you know, really groundbreaking idea to treat cancer with electric fields, to an organization today of over 750 colleagues globally. We're now fully into 2020, but really with exceptional momentum from 2019, which was just a year to remember in terms of a company like ours. So we're going to end the call and get back to work, but thank you for your interest and attention.
This is an extremely exciting time for all of us at the company.
We have grown from 20 years ago, a group of a handful of people are working with professor pulpy on his.
Really groundbreaking idea to treat cancer with electric fields to an organization today of over 750 colleagues globally.
We're now fall into 2020.
But really odd with with exceptional momentum from.
2019, which was just the year to remember in terms of of the company like ours.
So we're going to end the call and get back to work, but thank you for your your interest in attention.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.
Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
Operator: Thank you for watching! Copyright 2021 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. BF-WATCH TV 2021
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