Q1 2020 Earnings Call

[music].

Ladies and gentlemen, thank you for standing by and welcome to the know the care first quarter 2020 earnings conference call. At this time, all participants I know listen only mode. After the speaker presentation, there will be a question and answer session.

Good question, Dan recession, you will need to press star one.

Please be advised that today's conference is being recorded.

You acquire any further shift and please press star zero I would now like in the confidence to actually get your day actually Cordova Senior Vice President of Finance and Investor Relations. Please go ahead ma'am.

Good morning, everyone and thank you for joining us to review nobody cares first quarter Twentytwenty performance.

I'll be happy with the entire another Turkey, we would like to begin by wishing wells as we collectively face the challenges of the cobot 19 pandemic.

We hope that you and your loved ones are staying healthy and chase during this unprecedented.

With safety in mind, we are conducting today's call virtually.

I am joined on the phone by our executive Chairman Bill Doyle, our CEO, a soft on singer and our CFO will Cobra I didn't catch all our chief commercial officer and only been named our Chief Medical Officer are also on the call and available for acuity.

This morning first we will focus on a response to kind of at night team and then we will provide our standard updates on our first quarter performance.

Flights presented today can be viewed on our website www dot nobody cared dot com by clicking on the link for first quarter Twentytwenty financial results 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 ending 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 FCC filing.

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 question financials for the three months ended March 31st Twentytwenty are available on our press release and in our 10-Q, 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 presentation and on our form 8-K filed with the FCC today.

Materials can be accessed from the Investor Relations page of our website www dot nobody cared dot com.

With that I will now turn the call over to Bill Doyle.

Thank you Ashley and good morning, everyone.

Well the last two months had been unprecedent as we adapt to the realities of the global Coke 19 pandemic, we believe the fundamental prospects for our business are unchanged that said, we have had to adjust the way we conduct business to adapt to the evolving coal good 19 situation.

We have implemented measures across our organization to continue delivering tumor treating fields therapy to patients while protecting the no but no but your community around the world.

In an effort to minimize the spread of the virus.

Instituted work at home policies for employees, who are not directly involved in operations for patient support.

Our global operation centers remain open we have segregated these centers into zones to minimize person to person contact.

We are monitoring the elements of our global supply chain in an effort to ensure we maintain adequate inventories of all key products.

Our field based patient support teams continued to conduct in person visits when appropriate.

And to leverage technology to serve our patients virtually.

Our award winning encompass team continues to provide on coal phone and email support 24 hours a day seven days a week.

We continue to treat current clinical trial patients and twin roll new patients at existing clinical trial sites and our six ongoing clinical trial.

Notwithstanding these efforts clinical trial enrollment has been adversely impacted by coated Nike.

Specifically clinical trial site expansion has been and we believe we'll continue to be materially delayed.

As sites devote significant resources to cope with Nike.

We believe the value of that tumor treating fields platform. The resiliency of our direct to patient business model and the long term potential of our business remain intact.

Over the last 20 years, we have built organization of 850 colleagues dedicated to delivering tumor treating fields I liked extending therapy to patients with glioblastoma means a field.

And dedicated to performing clinical in product development programs intended to extend survival and some with the most aggressive forms of cancer.

Despite the challenges presented by Cobot 19, we continue to advance our programs to achieve these calls.

The company past the number of important milestones in the first quarter with more than 100 million net revenues more than 3000 active patients on therapy and more than 500 million covered lives globally, our financial strength allows us to continue investing in innovation and we believe it does this positions us well.

To navigate through the substantial uncertainty affecting our industry.

The need to treat patients with aggressive cancers does not lessen coated Nike.

And we're confident in our team our strategy and the fundamental value proposition of the tumor treating fields platform.

I'll share more details on our clinical pipeline later on in this morning's call, but first I'll turn the call over it was soft share his perspective on the quarter and recent events.

Uh huh.

Thank you Bill.

Q1, 2020, Novocure delivered another strong quarter topline growth with a record $102 million in global net revenue up 39% versus Q1 29 team I wouldn't that's revenue growth was driven by continued axes patient growth and by expanding reimbursement.

Okay.

We ended the first quarter with 3095 active patients on therapy, representing an 18% year over year increase and 6% sequential quarterly increase.

Subscription volume also grew we received 1400 to nine total prescriptions in Q1 and the mix of newly diagnosed GBM prescriptions remained near 80%.

We believe our Q1 performance highlights I will it seems ingenuity and commitment to serving our patients and their families.

Over 19 is changing how we interact with health care providers, but our customer engagement teams remain focused and in execution mode.

We are respecting all institutional restrictions on external visitors are the cancer centers hospitals and research institutions. We so why is this has resulted in decreased impose some connection in many instances it is creating new opportunities to engage customers. We work weeks to develop move.

<unk> mutual engagement tool to connect with healthcare professionals and to enable information sharing.

To give some examples where we simply launched a full Paul TT fields webcast serious on utilizing telemedicine delivering treatment in an outpatient setting and managing optum treatments are mostly we just going back to the second part of the C is on Tuesday evening to connect with the ball GBM and MPM fuzzy.

And many of whom freeze competing for your these limiting the availability.

We continue to was visual speaker program and highlight the benefits of home based treatments, particularly for vulnerable patient population Oh Medical affairs team will leave Iran. Terrible discussion plans to define new clinical guidelines for managing patient care in these challenging times.

We have also said that veterans traps capabilities for patient ambassadors, who are available resource to patients caregivers and physicians maintaining access to this program is an important way to waive the opt in patient experience into the dialogue between healthcare provider teams and patients diagnosed.

With GBM or MPM.

Beyond those says in marketing efforts, we continue to advance our product development program intended to improve efficacy and patient visibility in response to social distancing related to cope with 19, we are constantly evaluating accelerated regulatory approve an open to launch our my link them more downloads.

The abilities sooner than originally planned these technology will allow us to download data remotely from a patients TD fields generate though without the need for it in person visit we believe our ongoing product development program have the potential to significantly improve patient outcomes as well.

We want to extend survival in some of the most aggressive form of Wisconsin.

Our senior management team continues to wanting to the development of covered my team and to ensure a coordinated response across our global sites. The situation is challenging for us all but I can assure you we are as focused as ever on driving into commercialization and development Oh.

The fields.

With that I will turn the call back over to be is to show some detail on our clinical trials.

Thank you Uh huh.

We believe the tumor treating fields mechanism of action is broadly applicable to solid tumor cancers.

Our scientific research stance two decades, and then all of our preclinical and clinical research to date. So we're treating field has demonstrated a consistent anti cancer effect.

Results for me up 19, our latest clinical trial data were presented earlier this week at the American Association for Cancer Research 2020 virtual annual meeting one.

Yes, 19 study was mandated by the FDA to confirm the efficacy of tumor treating fields versus best standard of care for recurrent GBM in the post approval real life side.

Yes, 19 studies Optune as monotherapy for the treatment of recurrent GBM in 192 patients compared to the hundred 17, recurrent GBM patients who received that standard of care chemotherapy in Nova curious you up 11 registration trial.

And he has 19 optune monotherapy reduce the risk of death with fewer adverse events compared to best standard of care chemotherapy.

Patients who received at least one course of therapy Optune prolong survival by immediate 1.7 months no new safety signals were noted.

Yes, 19 data confirm the effectiveness and safety of auction and further strengthen options clinical profile in the GBM indication.

Our extensive preclinical and clinical evidence provides the foundation upon which we are executing a strategy to advance tumor treating field through additional clinical research studies across multiple solid tumor types.

We're currently conducting six clinical programs evaluating the use of tumor treating fields, including four randomized phase three pivotal trials.

That is trial in brain metastasis, the lunar trial in non small cell lung cancer and over three trial pancreatic cancer I mean in a phase three trial in ovarian cancer.

Entering the quarter, our patient enrollment projections for lunar and to know the sthree relied on increases and the number of clinical trial sites to accelerate enrollment.

As we engage medicine investigators throughout the quarter. We also initiated plans to expand study footprint into additional countries to accelerate role.

Or clinical trial site expansion had been materially delayed a sites devote significant resources to cope with Nike.

While we continue to evaluate initiation of new clinical trial sites using a risk based framework in accordance with local regulations site policies.

We were able to onboard only two new sites for these trials in March.

We continue to work closely with institutions local authorities and contract research organizations to maintain engagement and to refine our processes in order to advance our clinical research studies, we have implemented virtual site initiation visits and have developed remote monitoring capabilities.

Notwithstanding these efforts, we expect challenges with clinical site initiation and patient enrollment to continue at least through the second quarter.

As a result of these delays we now project final data from that is in 2022. Additionally, we now anticipate final data from both the lunar and over three trials will be available 2023 with planned enrollment driven interim analyses in 2021.

These projections are based on our current taste of enrollment as well as the anticipated impacted the coping 19 pandemic on global health care system.

The European network for Gynecological Oncological trial groups and the G.O.G. Foundation third party clinical trial networks are collaborating with us on our innovate three phase three pivotal trial and facilitating enrollment as leading cancer centers.

Notwithstanding delays and clinical trial sites expansion related to the Coke at 19 global pandemic.

Innovate three patient enrollment trends continue to outpace our expectations in the first quarter driving an acceleration in our anticipated enrollment timelines.

We now expect final data from innovate three in 2023 within enrollment driven interim analysis and 2021.

We remain optimistic about the potential to significantly expand the addressable market for tumor treating field with readouts of T. datasets anticipated over the next three years, we will continue to provide updates in the future as we gain clarity regarding the duration of Coca 19th impact on the clinical trial environment.

With that I'll turn the call over to will come to discuss our financial results.

Thank you Bill no cure ended the first quarter and a strong financial position, we continue to make progress developing a commercial business delivering first quarter net revenues of $102 million, representing 39% growth first the first quarter of 2019.

Year over year revenue growth was driven both by 18% increase in expectations and by 15% improved average net revenues booked for extra space.

The increase in revenue per patient benefited from improved think reimbursement rates, particularly in the United States.

Excess to work therapy continues to grow in our active market, which we believe demonstrates an increasing recognition by health insurers organ failure of tumor treating fields.

In March the German Federal Joint Committee or GBA established national reimbursement for Optune in newly diagnosed GBM following a comprehensive benefit assessment.

We consider further expansion of reimbursement and are currently active markets an important lever for continued revenue growth.

Specifically, we recognize several million dollars in first quarter net revenues for Medicare beneficiaries built another positive coverage policy.

We are working for the typical administrative ramp up with Medicare and expect our net revenues from Medicare beneficiaries to further improve as we get an experienced processing claims.

At the end up the quarter Agriphar Medicare expectation started treatment. After September 1st it sounds exciting effective date of the Medicare coverage policy.

Moving down to BNL gross profit in the first quarter was $77 million, reflecting a 76% gross margin.

Our capital allocation priorities are unchanged.

Continue to invest in innovation as part of our long term value creation strategy.

R&D expenses in the quarter totaled $25 million, 48% first is the first quarter of 2019, reflecting our ongoing commitment to investments and clinical in product development intend to some extent survival multiple solid tumor cancers.

We anticipate R&D expense will continue to increase in future quarters as we advance these development programs.

Our first quarter as <unk> expenses were $55 million up 30% first the first quarter 2019, driven primarily by an increase in marketing expenses related to the launch it off to Lula, an increased personnel costs to support our growing commercial business.

In the first quarter record an income tax benefit of $11 million as a result of net operating loss carry backs in the U.S. pursuant to changes in the U.S. Exco, an exit in response to the economic impact of called at 19.

Our net income was $4 million with four cents in earnings per share.

Third consecutive quarter positive net income.

We also evaluate or operating performance based on adjusted EBITDA non-GAAP measurement of earnings before interest taxes, depreciation amortization and share based compensation.

Adjusted EBITDA increased by $10 million, a 176% to $15 million for the three months ended March 31st 2000 $25 million for the three months and at March 31st 2019.

This improvement in fundamental financial performance was driven by topline growth and disciplined execution.

We ended the quarter with 331 million cash cash equivalents, a short term investments an increase of $5 million from the prior quarter.

We remain committed to improving financial operational and capital efficiency by maintaining a bell, let's focus across growth profitability and liquidity.

Before I hand, the call over to the operated for Q1 day I would like to thank everyone on the phone for their continued interest in over to your.

Yeah aggressive cancers definitely threed do not slow because of corporate 19, evergreen Magnus focus this ever on delivering a therapy to the patients who rely on us.

Innovation is one of noble Houston finding values.

This innovation is tangible as we had that's in real time to ensure patients have access to therapy and support they need.

We continue to monitor the potential impacts of covert 19, nimble adapt our plants as need mitigate potential risks as we get new knowledge.

Our first quarter performance highlights a threat record of execution with progress across the commercial business continued financial strength.

We believe that the fundamental prospects over our business are unchanged and a focus is unwavering on strengthening our existing foundation and advancing clinical in product development programs intended to unlock future value.

Thank you for your time this morning, but that I will turn the call over to the operator for questions.

Thank you actually on lender to ask a question you will need to press star one on your telephone.

Withdraw your question best apparently please standby will become parity turned a roster.

My first question comes from Larry Biegelsen with Wells Fargo. Your line is open.

Hi, everyone. Thanks for taking the question. This is Kevin on for Larry. This morning on my first one is just looking at the total trx. It came in better than expected in Q1, and now understanding the fundamental need to treat aggressive cancers does not less than with co that 19 as you mentioned I'm just curious if you could par.

So how the growth was trending in January February versus the last two weeks of marches exit growth rate. If you could provide any color by geography to it'd be helpful. I'm also curious if you could just frame up your thoughts on Rx growth you're seeing in April thus far if you can share it is it roughly the same.

Same or is it fair to assume it's worse than the March right and then I just had one follow up thank you.

Yeah. Good morning, Kevin. This is bill has actually mentioned at the top of the call. We are all remote literally in a different spots around the world. So I'm going to be a little more directive in the Q when a then.

Than typical because we're not on the same world protests, maybe it makes sense for you to comment on.

Kevin's questions related to what you're actually and trends.

Sure Kevin. Thank you for the question so the in the first quarter.

One thing that was.

Important from a milestone standpoint is that we passed in Q1 more than $100 million in net revenues over 3000 active patients and more than 500 million lives covered this further strengthens our core capabilities as a commercial organization to continue to treat more patients with GBM and M. P M.

With that we also received more than 1400 prescriptions in Q1, 2020, I, representing a 2% sequential growth and 8% year over year growth.

We don't parse out sort of what's happening kind of month by month, we shared in aggregate and one other things that that we shared with you in the opening comments that we saw no material change in our commercial business in Q1 and based on what we know today, we do not anticipate immaterial impact on or commercial business moving forward now that real.

Rising where do we just finished the third of the of the second quarter. So that's based on what we're seeing today.

This is what we can share with you.

Perfect. That's helpful. And then just my follow up is on the on the clinical update you have three interim analyses that phase three trials coming in 2021 do you have the sense of the cadence from a timing standpoint as Len each of those make it next year.

Hi, Thanks, so much.

Yes so.

I think one of the things it's important to understand is that when we initiated trials.

We project.

Hey.

Crewmen a goal we have a number of levers that we pull during the trial, including site engagement and site expansion.

We don't today project the specific order of those trials.

We will provide additional detail as we enter 2021 and the situation with cold in the situation that the trial sites becomes clear.

Okay. Thank you that's helpful. It actually if I could sneak one more and I was just curious on it.

We're seeing coded impact new patient starts as you had mentioned does it impact active patients as well in other words should we expect to death in active patients in Q2. In addition to new patient starts any trends that behavior is different in the U.S. by geography. There. Thanks. So much yeah. So does that Kevin This is a very important.

Point to make which is you know when we talk to some of our other colleagues in the Med Tech Arena.

They there's clearly been dramatic impacts because even you unbelievably heart surgeries or are being considered optional surgery and being postponed at this point.

Our patience with these extremely aggressive cancers are remaining on therapy, and we remain weak we've made.

Unknown Executive: BF-WATCH TV 2021 Ladies and gentlemen, thank you for standing by. And welcome to the Novocure First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference to our speaker today, Ashley Cordova, Senior Vice President of Finance and Investor Relations. Please go ahead, ma'am.

Real time adjustments and the way that we interact with our patients and caregivers and so we don't see any interruption in our ability to.

Treat our patients on therapy and that includes our commercial patients in our clinical trial patients.

Ashley Cordova: Good morning, everyone, and thank you for joining us to review Novocure's first quarter 2020 performance. On behalf of the entire Novocure team, we would like to begin by wishing you well as we collectively face the challenges of the COVID-19 pandemic. We hope that you and your loved ones are staying healthy and safe during this unprecedented time.

Ashley Cordova: With safety in mind, we are conducting today's call virtually. I am joined on the phone by our Executive Chairman, Bill Doyle, our CEO, Asaf Danziger, and our CFO, Wilco Gronheim. Ingrid Cash Shah, our Chief Commercial Officer, and Ellie Benane, our Chief Medical Officer, are also on the call and available for Q&A. This morning, we will focus on a response to COVID-19, and then we will provide our standard updates on our first quarter performance. The slides presented today can be viewed on our website, www.novacare.com, by clicking on the link for First Quarter 2020 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.

Ashley Cordova: 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 three months ended March 31st, 2020 are available in our press release and in our 10Q, 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 on our Form 8K filed with the SEC today. These materials can be accessed from the Investor Relations page of our website, www.novocure.com.

We are maintaining patient starts so I think that's an important point.

William F. Doyle: With that, I will now turn the call over to Bill Doyle.

To mention too, so just complementing or or or building on what for tests that we don't expect.

To see a change in our commercial business as result of covert 19.

Perfect. Thanks for taking the questions guys.

William F. Doyle: Thank you, Ashley, and good morning, everyone. While the last two months have been unprecedented, as we adjust to the realities of the global COVID-19 pandemic, we believe the fundamental prospects for our business are unchanged.

Thank you. Our next question comes from BJ Kumar with Evercore ISI. Your line is open.

Hey, guys. Thanks for taking my question. So built maybe one on the clinical trial timelines Hoaxers interestingly. It. So we had some push outs, but you also had some oh pull forward.

William F. Doyle: That's said,

You know feet dig into it I think are the press release.

William F. Doyle: We have had to adjust the way we conduct business to adapt to the evolving COVID-19 situation. We have implemented measures across our organization to continue delivering tumor treating fields therapy to patients while protecting the Novocure community around the world. In an effort to minimize the spread of the virus, we have instituted work-at-home policies for employees who are not directly involved in operations or patient support. However, our global operations centers remain open. But we have segregated these centers into zones to minimize person-to-person contact.

And.

Had lunar us number cleaning a bullet point I don't know that's an indication of timeline first half was the second half of 21.

William F. Doyle: We are monitoring the elements of our global supply chain in an effort to ensure we maintain adequate inventories of all key products. Our field-based patient support teams continue to conduct in-person visits when appropriate and to leverage technology to serve our patients first. Our award-winning Encompass team continues to provide on-call phone and email support 24 hours a day, seven days a week. We continue to treat current clinical trial patients and to enroll new patients at existing clinical trial sites in our six ongoing clinical trials. Notwithstanding these efforts, clinical trial enrollment has been adversely impacted by COVID-19. Specifically, clinical trial site expansion has, and we believe will continue to be, materially delayed, as sites devote significant resources to COVID-19. We believe the value of the Tumor Treating Fields Platform, the resiliency of our direct-to-patient business model, and the long-term potential of our business remain intact.

And on the aware inside the pull forward.

William F. Doyle: Over the last 20 years, we have built an organization of 850 colleagues dedicated to delivering tumor-treating fields or life-extending therapy to patients with glioblastoma or mesothelioma and to performing clinical and product development programs intended to extend survival in some of the most aggressive forms of cancer. Despite the challenges presented by COVID-19, we continue to advance our programs to achieve these goals. The company passed a number of important milestones in the first quarter, with more than $100 million in net revenue, more than 3,000 active patients on therapy, and more than 500 million covered lives globally. Our financial strength allows us to continue investing in innovation, and we believe it positions us well to navigate the substantial uncertainty affecting our industry.

You know why do you think the enrollment is going faster is this a perhaps because it's a more global trial versus.

You know.

Lunar so any comments I think would be helpful.

Yeah. Good morning, VJ. So first of all let me be clear the order in the press release has no bearing on projected timeline and as I said.

Previously when we when we start these trials.

We make certain assumptions certain projections and we have certain levers that we pulled during the trial. So you're you highlight.

A perfect example of sometimes or projections.

Our overestimate some sometimes they're underestimate as the trials progress we began to get more clarity on so that the details of the timing.

We in normal times I help things that we adjust and again, we mentioned site engagement and and number of sites and that is what we have.

Clearly thrown the curve ball with with with covert 19, but in this case as you stated innovate.

He is in fact moving ahead of the initial projections.

Gotcha and not one on not script volumes. If I may is that fair statement to assume that April.

You know there is some impact just given your patience ability to you know, but you know.

There are physicians treating physicians.

And if that's the case so you know one so the lock down for lift.

Is there.

Is there any lag and now you know one that referral channel you know kicks in I would assume just given this is cans for.

William F. Doyle: The need to treat patients with aggressive cancers does not lessen with COVID-19, and we are confident in our team, our strategy, and the fundamental value proposition of the tumor treating fields platform. I'll share more details on our clinical pipeline later in this morning's call, but first, I'll turn the call over to Asaf to share his perspective on the quarter and recent events.

The come back should do really really well thank you.

Asaf Danziger: Thank you, Bill. In Q1 2020, Novocure delivered another strong quarter of top-line growth with a record $102 million in global net revenues, up 39% versus Q1 2019. Our net revenue growth was driven by continued active patient growth and by expanding reimbursement for opium. We ended the first quarter with 3,095 active patients on therapy, representing an 18% year-over-year increase and 6% sequential quarterly increase. Prescription volume also grew. We received 1,409 total prescriptions in Q1, and the mix of newly-diagnosed GBM prescriptions remained near 80%.

You have EG I'll, just repeat what protests said earlier just to emphasize this unlike many or most med tech businesses.

Asaf Danziger: We believe our Q1 performance highlights our team's ingenuity and commitment to serving our patients and their families. COVID-19 is changing how we interact with healthcare providers, but our customer engagement teams remain focused and in execution mode. We are respecting all institutional restrictions on external visitors at the cancer centers, hospitals, and research institutions we serve.

The need to treat patients with aggressive cancers has not been affected with with Kobin 19, and based on what we know today.

Asaf Danziger: While this has resulted in decreased in-person connections, in many instances, it is creating new opportunities to engage customers. We were quick to develop multiple virtual engagement tools to connect with healthcare professionals and enable information sharing. To give some examples, we recently launched a four-part T.T. Fields webcast series on utilizing telemedicine, delivering treatment in an outpatient setting, and managing alternative treatment remotely. We just conducted the second part of the series on Tuesday evening to connect with both GBM and MPM physicians, many of whom face competing priorities limiting their availability. We continue to host virtual speaker programs and highlight the benefits of home-based treatments, particularly for vulnerable patient populations. Our medical affairs team will lead a roundtable discussion planned to define new clinical guidelines for managing patient care in these challenging times.

We don't anticipate a material impact to our commercial business going forward.

Asaf Danziger: We have also set up virtual chat capabilities for our patient ambassadors, who are a valuable resource to patients, caregivers, and physicians. Maintaining access to this program is an important way to integrate the opt-in patient experience into the dialogue between healthcare provider teams and patients diagnosed with GBM or MPM. Beyond our sales and marketing efforts, we continue to advance our product development programs intended to improve efficacy and patient usability. In response to social distancing related to COVID-19, we are currently evaluating accelerated regulatory approval options to launch our MyLink remote download capabilities sooner than originally planned. This technology will allow us to download data remotely from a patient's TT fields generator without the need for an in-person visit. We believe that our ongoing product development programs have the potential to significantly improve patient outcomes as we work to extend survival in some of the most aggressive forms of cancer.

That's extremely helpful. Thanks, guys.

Thank you.

Our next question comes Fenty by Ingrid Mizuho. Your line is now open.

Asaf Danziger: Our senior management team continues to monitor the developments of COVID-19 and to ensure a coordinated response across our global sites. The situation is challenging for us all, but I can assure you we are as focused as ever on driving the commercialization and development of TT Field. With that, I will turn the call back over to Bill to share some details on our clinical trials.

Hi, good morning.

Thanks for taking my question Greg.

On the great first quarter. So a couple questions would you give me a little bit more information with regard to what are you doing differently poke holes that to get patients started such that Oh custom new patient starts is.

Phenomenon, it's very impressive I'm just curious what what are the sequence of events you did to keep that and then secondarily. If you could see very thorough update on what's happening with the TPN approval I know they back to work.

Sure. So good morning, Difei and thanks for the congratulations and thanks for your questions I'm going to turn the call to protest to answer the questions about what we're doing differently, but I do want to.

Congratulate our teams for moving extremely quickly to implement changes in protest maybe you can.

Describe some of the specific things that we're doing.

Sure. Thank you Bill and thank you for the question, Matt actually extremely proud of how quickly we've adapted and in our adaptation a few things were leading us to take the steps that we've taken first and foremost we went to insurance safety and second we wanted to ensure continuity of care as patients were being treated fourg.

William F. Doyle: Thank you, Asaf. We believe the tumor-treating field's mechanism of action is broadly applicable to solid tumor cancer. Our scientific research spans two decades, and in all of our preclinical and clinical research to date, tumor treating fields have demonstrated a consistent anti-cancer effect. Results from EF-19, our latest clinical trial data set, were presented earlier this week at the American Association for Cancer Research 2020 virtual annual meeting one. The EF-19 study was mandated by the FDA to confirm the efficacy of tumor-treating fields versus best standard of care for recurrent GBM in the post-approval real-life setting. EF-19 studied Optune as monotherapy for the treatment of recurrent GBM in 192 patients compared to the 117 recurrent GBM patients who received best standard of care chemotherapy in Novocure's EF-11 registration trial. In EF-19, Optune Monotherapy reduced the risk of death with fewer adverse events compared to best standard of care chemotherapy. For patients who received at least one course of therapy, Optune monotherapy prolonged survival by a median 1.7 months. No new safety signals were noted.

William F. Doyle: The EF-19 data confirm the effectiveness and safety of Optune and further strengthen Optune's clinical profile in the GBM indication. Our extensive preclinical and clinical evidence provide the foundation upon which we are executing a strategy to advance tumor treating fields through additional clinical research studies across multiple solid tumors. We are currently conducting six clinical programs evaluating the use of tumor treating fields, including four randomized phase three pivotal trials, the MEDIS trial in brain metastases, the LUNAR trial in non-small cell lung cancer, the PANOVA 3 trial in pancreatic cancer, and the INNOVATE 3 trial in ovarian cancer. Entering the quarter, our patient enrollment projections for Lunar and Panova 3 relied on increases in the number of clinical trial As we engaged MEDIS investigators throughout the quarter, we also initiated plans to expand the study footprint into additional countries to accelerate enrollment.

Yeah, Matt MPM. So in the very early days of Cobot exposure, we wanted to make sure that we had options for clinicians who wanted to treat patients with Optune and one of those options included virtual starts and this required our teams to leverage technology to support patients.

William F. Doyle: Our clinical trial site expansions have been materially delayed as sites devote significant resources to COVID-19. While we continue to evaluate the initiation of new clinical trial sites using a risk-based framework in accordance with local regulations and site policy, we were able to onboard only two new sites for these trials in March. We continue to work closely with institutions, local authorities, and contract research organizations to maintain engagement and to refine our process.

Wilco Gronheim: In order to advance our clinical research studies, we have implemented virtual site initiation visits and have developed remote monitoring capabilities. Notwithstanding these efforts, we expect challenges with clinical site initiation and patient enrollment to continue, at least through the second quarter. As a result of these delays, we now project final data from MEDIS in 2022. Additionally, we now anticipate final data from both the Lunar and PANOVA-3 trials will be available in 2023, with planned enrollment-driven interim analyses in 2021. These projections are based on our current pace of enrollment, as well as the anticipated impact of the COVID-19 pandemic on global health care systems. The European Network for Gynecological-Oncological Trial Groups and the GOG Foundation Third Party Clinical Trial Network are collaborating with us on our Innovate3 Phase 3 Pivotal Trial and facilitating enrollment as the leading cancer

Cross are active markets in accordance with local regulations, because we were also up against different regions and different provinces, having different sets of regulation.

So.

One way that we were able to achieve this for example is using the go to meeting platform with patients. We had her first virtual start in Hawaii for example, where it's not quite remote but definitely isolated from from mainland in the U.S.. So that gave us some experience, which allowed us to then adapt to others starts that we.

We've conducted in the virtual setting so we continue to offer today to opportunities where patients to start treatment. One is to ensure that they can I leverages virtual platform. The second is we're still conducting live starts with full personal protective equipment. So these.

Wilco Gronheim: Notwithstanding delays in clinical trial site expansion related to the COVID-19 global pandemic, Innovate 3 patient enrollment trends continue to outpace our expectations in the first quarter, driving an acceleration in our anticipated enrollment time. We now expect final data from Innovate3 in 2023 with an enrollment-driven interim analysis in 2021. We remain optimistic 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. We will continue to provide updates in the future as we gain clarity regarding the duration of COVID-19's impact on the clinical trial environment. With that, I'll turn the call over to Wilco to discuss our financial results.

Sort of two options are allowing us to pivot to the needs of the care team as well as patients on the health care provider front. We're also making sure that they have the education that they need and the resources and the tools they need to support patients on this front, we're also engaging virtually.

Wilco Gronheim: Thank you, Bill. Novocure entered the first quarter in a strong financial position. We continue to make progress in developing our commercial business, delivering first quarter net revenues of $102 million, representing 39% growth versus the first quarter of 2019. Our year-over-year revenue growth was driven both by an 18% increase in active patients and by a 15% improvement in average net revenues booked per active patient. The increase in revenue per patient benefited from higher reimbursement rates, particularly in the United States. Access to our therapy continues to grow in our active market, which we believe demonstrates an increase in recognition by health insurers of the value of tumor-treating fields. In March, the German Federal Joint Committee, or GBA, established national reimbursement for opt-in and newly diagnosed GBM following a comprehensive benefit assessment.

Wilco Gronheim: We consider further expansion of reimbursement in our currently active markets an important lever for continued revenue growth. Specifically, we recognize $7 million in first quarter net revenues for Medicare beneficiaries built under the Positive Coverage Policy. 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. At the end of the quarter, half of our Medicare active patients started treatment after September 1st, 2019, the effective date of Medicare coverage.

Wilco Gronheim: Moving down to P&L, gross profit in the first quarter was $77 million, reflecting a 76% gross margin. Our capital allocation priorities are unchanged, and we continue to invest in innovation as part of our long-term value creation strategy. R&D expenses in the quarter totaled $25 million, up 48% versus the first quarter of 2019, reflecting our ongoing commitment to investments 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 these development programs.

And making sure that that were offering them opportunities to see and field to support that were providing and then finally, our encompass team remains available.

Wilco Gronheim: Our first quarter SG&A expenses were $55 million, up 30% versus the first quarter of 2019, driven primarily by an increase in marketing expenses related to the launch of OptumLua and increased personnel costs to support our growing commercial business. In the first quarter, we recorded an income tax benefit of $11 million as a result of net operating loss carrybacks in the U.S., pursuant to changes in the U.S. tax code enacted in response to the economic impacts of COVID-19. Our net income was $4 million, with $0.04 in earnings per share, our third consecutive quarter of positive net income. We also evaluate our operating performance based on adjusted EBITDA, a non-gap measurement of earnings before interest, taxes, depreciation, amortization, and share-based compounding. Adjusted EBITDA increased by $10 million, or 176%, to $15 million for the three months ended March 31, 2020, from $5 million for the three months ended March 31, 2019. This improvement in fundamental financial performance was driven by top-line growth and disciplined execution. We ended the quarter with $331 million in cash, cash equivalents, and short-term investments, an increase of $5 million from the prior quarter. We remain committed to improving financial, operational, and capital efficiency by maintaining a balanced focus. Growth, Profitability, and Liquidity.

For the providers as well as for patients and this is our our team of individuals who are supporting patients and providers over the phone virtually as well as live over the telephone. So these are some way that we've adapted and ensured that that were ensuring continuity of care for patients, who really need or treatment.

Wilco Gronheim: Before I hand the call over to the operator for Q&A, I would like to thank everyone on the phone for their continued interest in Novocure. The aggressive cancers that we treat do not slow down because of COVID-19, and we will remain as focused as ever on delivering a therapy to the patients who rely on it. Innovation is one of Novocure's defining values, and this innovation is tangible as we adapt in real time to ensure patients have access to the therapy and support they need. We continue to monitor the potential impacts of COVID-19 and will adapt our plans as needed to mitigate potential risks as we gain new knowledge. Our first quarter performance highlights a track record of execution with progress across the commercial business and continued financial strength. We believe that the fundamental prospects of our business are unchanged, and our focus is unwavering on strengthening our existing foundation and advancing clinical and product development programs intended to unlock future value. Thank you for your time this morning. With that, I will turn the call over to the operator for questions.

Hi, Thanks for cash and Difei with respect to die I'll say, our partnership as I is.

Unknown Executive: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key.

Unknown Executive: Please stand by while we compile the Q&A roster. Our first question comes from Larry Biegelsen with Wells Fargo. Your line is now open. Hi, everyone. Thanks for taking the questions. This is Kevin on for Larry this morning.

Unknown Executive: My first one is just looking at the total TRX that came in better than expected in Q1. And now understanding that the fundamental need to treat aggressive cancers does not decrease with COVID-19, as you mentioned. I'm just curious if you could parse out how the growth was trending in January and February versus the last two weeks of March's exit growth rate. If you could provide any color by geography, too, it would be helpful. I'm also curious if you could just frame up your thoughts on RX growth you're seeing in April thus far, if you can share it. Is it roughly the same, or is it fair to assume it's worse than the March rate? And then I just have one follow-up question.

William F. Doyle: Yeah, good morning, Kevin.

Stronger than ever.

Pritesh Shah: Thanks, Bill. As Ashley mentioned at the top of the call, we are all remote, literally in different spots around the world. So I'm going to be a little more directive in the Q&A than usual because we're not all in the same room. Pritesh, maybe it makes sense for you to comment on Kevin's questions related to TRXs and trends.

Pritesh Shah: Sure. Kevin. Thank you for the question. So, in the first quarter, something that was important from a milestone standpoint was that we passed in Q1 more than $100 million in net revenues, over 3,000 active patients, and more than 500 million lives covered. Now, this further strengthens our core capabilities as a commercial organization to continue to treat more patients with GBM and MTM. With that, we also received more than 1,400 prescriptions in Q1 2020, representing 2% sequential growth and 8% year-over-year growth.

And Ah in addition to the work in GBM or they are I'll remind everyone. They are clinical partners and that we have an open.

Pritesh Shah: We don't parse out sort of what's happening kind of month by month; we share it in aggregate. And one of the things that we shared with you in the opening comments is that we saw no material change in our commercial business in Q1. And based on what we know today, we do not anticipate a material impact on our commercial business moving forward. Now, that realization that we just finished a third of the second quarter. So, that's based on what we're seeing today. This is what we can share with you.

William F. Doyle: Perfect, that's helpful. And then just my follow-up question is on the clinical updates. You have three interim analyses of phase three trials coming in 2021. Do you have a sense of the cadence from a timing standpoint of when each of those may hit next year? Thanks so much.

William F. Doyle: Yeah, so... I think one of the things that's important to understand is that when we initiate a trial, we project the recruitment goal, and we have a number of levers that we pull during the trial, including site engagement and site expansion. We don't today project the specific order of those trials, but we will provide additional detail as we enter 2021 and the situation with COVID and the situation at the trial sites becomes clearer.

Trialing gastric cancer now open in Hong Kong.

With respect to the potential GBM approval in mainland China Zeiss sentiment has not changed.

And there are actively preparing for commercial operations for a for a launch in China.

William F. Doyle: Okay, thank you. That's helpful. Actually, if I could sneak one more in,

The near term.

William F. Doyle: I was just curious if you're seeing COVID impact new patient starts, as you mentioned, does it impact active patients as well? In other words, should we expect a dip in active patients in Q2 in addition to new patient starts? Are there any trends and behaviors different in the US by geography there?

Thank you.

A question just a follow on I believe that guard you.

William F. Doyle: Thanks so much.

William F. Doyle: Kevin, this is a very important point to make, which is, you know, when we talk to some of our other colleagues in the medtech arena, there's clearly been dramatic impacts because even... Unbelievably, heart surgeries are being considered optional surgeries and are being postponed at this point. Our patients with these are remaining on therapy, and we remain... Real-time adjustments in the way that we interact with our patients and caregivers, and so we don't see any interruption in our ability to treat our patients on therapy, and that includes our commercial patients and our clinical trial patients. And we are maintaining patient starts, so I think that's an important point to mention too. So, you know, just complimenting or building on what Pritesh said, we don't expect to see a change in our commercial business as a result of COVID-19.

William F. Doyle: Perfect. Thanks for taking the questions, guys. Thank you. Our next question comes from BJ Kunwar with Evercore ISI. Your line is now open.

The U.S. 19 study.

How would you tend to leverage the outcome of that study.

In addition to just in compliance with the revenue between the carbon.

So thanks for the question. So this was a trial when our when are we received our first PMDA approval.

Based on our E 11.

A trial results in recurrent GBM I'll remind everyone. Since it was a long time ago that was it trial, but compared.

Optune monotherapy to best standard of care chemotherapy. So it was not optune was not used in combination with the with chemotherapy. It was used as a monotherapy.

And those.

When those data were presented and and approved.

The first time that the FDA had had dealt with optune and so they requested or I should say requested a mandate.

We do a post approval trial.

That post approval trial.

As described in the press release earlier this week.

Read out at a CR annual meeting and we were very pleased because in this case. The you know the data showed a superiority and the real life setting to the so the clinical trial controls in general we think this data confirms the effectiveness and say gearbox soon and strengthens our our clinical.

Profile overall force our focus has moved now to newly diagnosed GBM. We think that's in combination with chemotherapy, we think that's for patients.

You're right the most benefit but this is just yet another confirmation of the of the value of of oxygen therapy for GBM patients.

Yeah, if I'm thinking deal.

If I may just the last question do you use that to do a similar study for newly diagnosed GBM.

The FDA did not mandate a follow up study.

In newly diagnosed GBM.

The next study that we have planned in newly diagnosed GBM is the Trident study, which we've described which.

Unknown Executive: Hey guys, thanks for taking my question. So Bill, maybe one on the clinical trial timelines out here. It's interesting, right?

We'll evaluate using optune with radiation compared to using optune after radiation and we expect that a trial to begin enrollment shortly and will press release, the first patient in on that study.

William F. Doyle: So we had some push-ups, but we also had some pull-forwards. You know, if we dig into it, I think the press release had Lunar as number three in your bullet point. I don't know if that's an indication of timeline, but the first half was the second half of 21. And on the Ovarian side, the pull-forward, you know, why do you think the enrollment is going faster? Is this perhaps because it's a more global trial versus, you know, Lunar? So any comments, I think, would be helpful.

William F. Doyle: Yeah, good morning, Vijay. So first of all, let me be clear, the order in the press release has no bearing on the projected timeline. And as I said previously, when we start these trials, we make certain assumptions, certain projections, and we have certain levers that we pull during the trial. So you highlight a perfect example of sometimes our projections are overestimates, and sometimes they're underestimates. But as the trials progress, we begin to get more clarity on the details of the timing. We, in normal times, have things that we adjust. And again, we mentioned site engagement and number of sites. And that is what we have, you know, been clearly thrown a curveball with COVID-19. In this case, as you stated, Innovate is, in fact, moving ahead of the initial projections.

William F. Doyle: Gotcha. And now one on script volumes, if I may.

William F. Doyle: Is it a fair statement to assume that April, you know, there is some impact just given your, you know, patient's ability to communicate with, you know, their physicians, treating physicians? And if that's the case, once the lockdowns were lifted, right, is there any lag in, you know, when the referral channel, you know, kicks in? I would assume, just given this is cancer, the comeback should be really, really quick. Thank you. Yeah, Vijay, I'll just...

William F. Doyle: Just to repeat what Pritesh said earlier, just to emphasize this, unlike many or most medtech businesses, the need to treat patients with aggressive cancers has not been affected by COVID-19, and based on what we know today, we don't anticipate a material impact on our commercial business going forward. That's extremely helpful. Thanks, guys.

Unknown Executive: Thank you. Our next question comes from Dizai Yang with Mizzou Health. Your line is now open.

Unknown Executive: Hi, good morning. Thanks for taking my questions. Congratulations on a great first quarter. So, I have a couple of questions. Would you give us a little bit more information with regard to what you are doing differently post-COVID to get patients started, because the new patient start is phenomenal. It's very impressive. I'm just curious what the sequence of events was that you kept that. And then, secondarily, if you could give us an update on what's happening with the GBM approval in China. Are they back to work?

William F. Doyle: Sure. So, good morning, D-Fay, and thanks for the congratulations and thanks for your questions. I'm going to turn the call over to Pritesh to answer the questions about what we're doing differently, but I do want to congratulate our teams for moving extremely quickly to implement changes. And Pritesh, maybe you can describe some of the specific things that we're doing.

Pritesh Shah: Sure, thank you Bill, and thank you for the question. I'm actually extremely proud of how quickly we've adapted, and in our adaptation, a few things were leading us to take the steps that we've taken. First and foremost, we wanted to ensure safety, and second, we wanted to ensure continuity of care as patients were being treated for GBM and MPM. So in the very early days of COVID exposure, we wanted to make sure that we had options for clinicians who wanted to treat patients with Optune, and one of those options included virtual starts, and this required our teams to leverage technology to support patients across our active markets in accordance with local regulations, because we were also up against different regions and different provinces having different sets of regulations.

Pritesh Shah: So one way that we were able to achieve this, for example, using the GoToMeeting platform with patients. We had our first virtual start in Hawaii, for example, where it's not quite remote but definitely isolated from the mainland in the US, so that gave us some experience which allowed us to then adapt to other starts that we conducted in the virtual setting. So we continue to offer two opportunities for patients to start treatment today. One is to ensure that they can leverage this virtual platform. The second is that we are still conducting live starts with full personal protective equipment. So these two options are allowing us to pivot to the needs of the care team as well as patients. On the healthcare provider front, we're also making sure that they have the education that they need and the resources and the tools they need to support patients.

Pritesh Shah: On this front, we're also engaging virtually and making sure that we're offering them opportunities to see and feel the support that we're providing. And then, finally, our Encompass team remains available for providers as well as for patients. And this is our team of individuals who are supporting patients and providers over the phone virtually as well as live over the telephone. So, these are some ways that we've adapted and ensured that we're ensuring continuity of care for patients who really need our treatment.

William F. Doyle: Thanks, Pritesh. And Dife, with respect to Xi, I'll say our partnership with Xi is stronger than ever. And in addition to the work in GBM, they are, I'll remind everyone, they are our clinical partners and that we have an open trial in gastric cancer now open in Hong Kong. With respect to the potential approval of GBM in mainland China, Xi's sentiment has not changed, and they're actively preparing for commercial operations for a launch in China in the near term.

Thank you Bill.

William F. Doyle: Thank you, Bill. My question is just a follow-up with regard to the EF-19 study. So, how would you plan to leverage the outcome of that study in addition to just complying with regulatory requirements?

Thank you.

Your next question comes from S. their version of other with Oppenheimer. Your line is now open.

Hi, Good morning, and thank you for taking my questions I just a couple from me first for the U.S. market can you give us some color on the.

The Medicare patients late in your active patients and Youre <unk> and in your script numbers.

William F. Doyle: So thanks for the question. So, you know, this was a trial when we received our first PMA approval based on our EF11 trial results in recurrent GBM. I'll remind everyone, since it was a long time ago, that was a trial that compared Octoon Monotherapy to best standard of care chemotherapy. So it was not used in combination with chemotherapy; it was used as monotherapy. When those...

Sure. So thanks Esther.

William F. Doyle: But when those data were presented and approved, it was the first time that the FDA had dealt with Optune, and so they requested, or I shouldn't say requested, they mandated that we do a post-approval trial. That post-approval trial, as described in the press release earlier this week, will be read out at the AACR annual meeting.

Turning to Wilco, who maybe we'll comment on the the mix of Medicare versus versus commercial patients in the U.S.

Yeah. Thanks, Bill good morning asked there.

The because effectively unchanged as we've talked about 25% of the population into fast and that's what we're seeing today.

Nobody diagnosed versus recurrent GBM, but it's the general population. So it's also somewhat comparable to the overall trend I would I would say I think worth noting that we mentioned it all the script is that we are making considerable progress in recognizing revenue for the Medicare population that is.

William F. Doyle: And we were very pleased because, in this case, the data showed superiority in the real-life setting to the clinical trial controls. In general, we think this data confirms the effectiveness and safety of Optune and strengthens our clinical profile overall. Of course, our focus has now moved to newly diagnosed GBM, and we think that's in combination with chemotherapy. We think that's where patients derive the most benefit. But this is just yet another confirmation of the value of Optune therapy for GBM patients.

Related with the number of excess space as it has started therapy. After September 1st when the garbage policy became effective and we're now at approximately 50% that rate and of course expect that to go up further in the into their future.

Thank you and then in terms of that add to Koby 19 impact can you maybe share any insights on.

Got oncology trials in their life index situation. So can you maybe compare the impact on in your trial enrolled <unk> generally in your timeline basis. Some of the other oncology trials that may be ongoing.

But again, we don't comment on others trials I mean, we read them and followed them is you do when we see that some have stopped completely or others have had difficulty.

With their follow ups of patients et cetera, as we said we are are continuing to treat.

Our current clinical trial patients.

And we continue to enroll new patients that existing clinical trial sites that are six trials.

That said our trial sites are clearly distracted or many of them are clearly distracted for cobot 19, and and that's why we Oh, we changed the projections as we did this morning.

Okay, and so it so I guess would it be accurate CIS or would it be bar I care to assume that I talked to sites that are already open.

Enrolled but the enrollment rate there is fine it's more of that it's more that delayed onboarding new site, that's affecting the timeline.

It's the delay in Onboarding new sites is the principal.

Reason for the delay, but as you can imagine but the centers.

Very all over the place depending on where they are in the world and where they're regions are a with respect to the.

Specifics of the of the pandemic. So it's not a question that has a blanket answered.

Got it and my last question in terms of some of the changes that you're doing to your infrastructure with where the sales and marketing and potentially shipping product are those changes you think or those do you view those this temporary or with some of those essentially the permanent changes that you think about many.

Views on driving efficiencies.

Yes. So you know so first of all again I'm going to.

Start by.

Congratulating the the organization and it's not just the commercial organization.

It's our clinical organization, our operations organization, our financial our legal all of our various.

Departments have had to make dramatic.

Changes.

Those that are not required to be in the office or are all working from home is I know many of you are as well even within our operation centers, we've changed the way that we package and ship and received materials to minimize exposure of of employees.

Two to one another and we're leveraging technology across the organization.

William F. Doyle: Yeah, thank you, Bill. And if I may, just one last question, do you expect to do a similar study for newly diagnosed TBM?

The simple answer to your question is I think there are many of the things that we're doing.

William F. Doyle: The FDA did not mandate a follow-up study in newly diagnosed GBM. The next study that we have planned in newly diagnosed GBM is the Trident study, which we've described, which will evaluate using Optune with radiation compared to using Optune after radiation. And we expect that trial to begin enrollment shortly, and we'll make a press release about that.

I have improved the efficiency of the organization or have accelerated our ability to scale across very large populations.

William F. Doyle: Enrollment will shortly be underway, and we'll press release the first patient in on that. Thank you, Bill. Thank you. Our next question comes from Esther Rajovalu with Oppenheimer. Your line is now open. Good morning, and thank you for taking my questions. Just a couple from me. First, for the U.S. market, can you give us some color on the Medicare patient split between your active patients and your new script members?

And these are things that we will maintain and and continued to build on as we go forward post pandemic.

Great. Thank you so much congrats.

Thank you. Our next question comes from quite catch them off with JP. Morgan. Your line is now open hey, good morning, guys. Thanks for taking my questions I guess first of all on lunar given how this treatment landscape continues to evolve curious to get your take on the possibility potential breakdown of patients.

Enrolling that are actually in the third line plus studying for second line are you still expecting predominantly second line or more of a mix now and I follow.

Yes. So lunar is studying as you know tumor treating fields with PD. One inhibitors are just attacks. So for second line treatment of non small cell lung cancer.

We absolutely understand that the the landscape for non small cell lung cancer is changing and and its competitive that being said you know Korea I'll remind everyone with what you know is that a tumor treating fields.

He is designed to be used with the best standard of care pharmacology, we've never seen a cumulative toxicity and we've always seen additivity or synergism.

So we expect that this will be used with whatever emerges as the best standard of care.

Study was designed to generate data that that contemplates multiple outcomes.

We believe all of them or are clinically meaningful for patients.

Regardless of the ultimate line.

Okay, and then I wanted to follow up on somebody earlier questions on on your patient interactions Optune TTS, obviously different type of product offering in many ways one of which is how company trains of patients at home rather than a physician or nurse doing it in office. So is that approach resonating in this environment I guess.

Are you finding this to be an advantage in kind of what we're all of inter now are adding another layer of complexity of to work around.

Yes, so so far I'm going to turn it over to to attach to for further comment, but I, but I do want to underline the point that from.

The very beginning of our commercial strategy development.

We did not want to be in a position, where we were selling through hospitals.

So we have a direct to patient model, where we received scripts the hospital or the or the Doctor's office doesn't have to maintain inventory. So you can imagine in the endemic world where.

Inventories have to be shipped received disinfected, we bypass all about with our direct to patient a business model.

Which I think clearly at the time, we instituted for other reasons.

But it's clearly served us very well and maybe what that protests you can talk a little bit more about.

What we're doing in the field.

Sure. According thank you for that question one of the core strengths that Optune has is that it's a patient administered therapy and it fits well into the virtual clinic and we're hearing this this sentiment resonate back to us or express back to us from a physician advisers and advisory board meetings as.

Were helping them understand how we have pivoted the patient support model continuing to lie, but also adding a virtual option.

We're asking for their feedback in their feedback has been hey, what you're doing is resonating with patients. It's working for patients. We're not hearing from patients a disruption in the support that novacare provide so that gives us more confidence that the plans that we put in place or the right plan and as Bill mentioned earlier, we're going to continue to learn from that.

Unknown Executive: Sure. So, thanks, Esther. I'm going to turn it to Wilco, who might be able to comment on the mix of Medicare versus commercial patients in the U.S.

Wilco Gronheim: Yeah, thanks, Bill. Good morning, Esther. The mix is effectively unchanged, Esther. We talked about 25% of the population in the past, and that's what we're seeing today. We don't know the diagnosis versus the recurrent GBM, but it's the general population, so it's also somewhat comparable to the overall trend, I would say. It's worth noting, and we do.

These processes and already we made some adaptations is we're learning on what works more effectively versus what our initial thoughts may have been so we're making minor tweaks along the way.

But I do think that as more and more physicians are practicing tele medicine their needs are such that they would like products that fit into the way that their practicing medicine, and we believe that we fit well into that model. So on that front, we're learning more but our early experience.

Wilco Gronheim: We are making considerable progress in recognizing revenue for the Medicare population, and it's directly correlated with the number of active patients that have started therapy after September 1st, when the coverage policy became effective. And we're now at approximately 50% of the rate, and of course, we expect that to go up further in the near future.

Suggest that that what we've done to date allows physicians to continue thinking about opportunity and a positive manner for their patients.

Okay, and then I guess since people are asking so many questions. This morning, I will I'll ask a third so it back to the clinical trial front in certainly recognizing the disruption of the pandemic I'm. So I'm wondering if you can just talk about the level of physician enthusiasm to enroll patients in your ongoing non GBM trials are you.

Unknown Executive: Thank you. And then, in terms of the COVID-19 impact, can you maybe share any insights on, you know, these are oncology trials and they're life-and-death situations, so can you maybe compare the impact on your trial enrollment and generally in your timelines versus some of the other oncology trials that may be?

Finding broad based interest off the bat as you open a center or is there a lot of of heavy lifting trying to educate as it was in the early days of GBM I guess at the bottom line is I'm trying to understand if you know the delays that we're still seem to the clinical trials are purely a function of the disruption of cove it or if there was just other elements to the trial.

That you guys out of work right. Thanks.

Yes, so thanks, where I'm going to turn it over to Elie, Our Chief Medical Officer, and maybe he can talk a little bit about the the.

Clinician.

Questions that you you asked.

Hi, Good morning, and thank you card for your call I'd say that I'll to answer your question, it's really depends on the trial.

See you know, there's a lot of enthusiasm and and ovarian cancer and I think this came it was ramping up right before the call. The 19 and just continue a but also I think I know, but we also had seen a lot of interest on the.

William F. Doyle: Again, we don't comment on others' trials. I mean, we read them and follow them as you do, and we see that some have stopped completely.

Oh no. These trials I you know remember that we believe the acceptance of a novel technology. It requires really a significant physician education and behavioral changes and we have seen this play out very well in both the.

The commercial and clinical setting so I would say, there's a lot of moving parts and when you read investing significant resources to enroll the oil and all the ongoing trials I do think that the decisions in general.

It depends a geographically where they are situated how the cobi. The 19 has affected and he is not even by countries. Even reagents. Greg do you can see some difference in large academic centers are very busy.

But it didnt seem city, they maybe more of a community hospitals that also sees is that the patients that have continue putting patients in trials. So I think I would say that pads, but the enthusiasm is there and it depends so how busy. This investigators are you know we are.

Continue doing a virtual and say beats and we're doing a you know this then monitoring of the data. So we have a continue pushing our clinical trials and I think this will if any this all will get even better for us once this path.

William F. Doyle: Others have had difficulty with their follow-ups of patients, et cetera. As we said, we are continuing to treat our current clinical trial patients, and we continue to enroll new patients at existing clinical trial sites in our six trials. That said, our trial sites are clearly distracted, or many of them are clearly distracted for COVID-19, and that's why we changed the projections as we did this morning.

Okay, great. Thanks for taking my questions.

Thank you.

Our next question comes from Greg Fraser with Suntrust. Your line is how open.

Thanks, Good morning, Thanks for taking the questions as Greg Fraser odd for Gregg Gilbert.

I'm not tune in the U.S. can speak to the number that the prescribers that you haven't whether that number is still growing or anything spanning the base of prescribers are priority.

Yeah. So you know we don't.

Give information about a specific providers.

William F. Doyle: Okay, so I guess it would be accurate or would it be more accurate to assume that the sites that are already open, the enrollment rate there is fine, it's more the delay in onboarding new sites that's affecting the timelines?

William F. Doyle: The delay in onboarding new sites is the principal reason for the delay. But, as you can imagine, the centers vary all over the place, depending on where they are in the world, and where their regions are with respect to the specifics of the pandemic, so it's not a

What we do say and what we do know is that Oh, if you want to think of this in terms of market penetration.

We think that we're receiving scripts for about 40% is the round number up the patients in the U.S.

And that there is a significant.

Continued opportunity.

For us to help patients and that's really our goal.

Is to.

Continue to.

Educate worked with all potential prescribers.

We also believe at this point in the U.S. in Germany and are in our key markets, Japan that we are complete geographic coverage. So it's no longer an issue of.

Oh, no greater penetration of clinicians in one part of the country versus another.

Got it and then sort of following up on the last question I'm curious if the clinical trial sites are generally aligned the centers that have adopted TTF for GBM and.

On a leaner study how many sites are you looking to add and can you comment on where patient enrollment Stan.

Yes so.

Just quick answers.

These are different clinician groups, then in large part with the exception Medis trial.

Compare to our.

Our GBM sites again, our GBM sites are virtually every site that the that sees GBM patients now in a in the U.S.

So there's not a big correlation there I will say that the enthusiasm in the in the new communities does is certainly benefited by all the progress that we made GBM and.

As we described the enthusiasm of the of the new indications. They clearly don't know much about TTF just like when we started in GBM.

This is completely new to these clinician groups. So we do have to do all the activity education.

And.

In answering your questions specifically.

We expect to add about 130.

Active additional sites for this trial.

Great. Thank you.

Pardon me not additional sites I misspoke.

Having 130 total sites.

To to meet our timelines.

Thank you for 130 total sites.

Sorry, Greg.

Our next question comes from Jason Bodnar with Piper Stanley.

I was hoping.

Thanks, Good morning, everyone. Thanks for taking the questions and probably up its this morning.

Bill maybe going back briefly to the post approval newly diagnosed GBM study you mentioned in response deep his question earlier.

You know I know, we'll see that the details when you posted but is there anything can talk about today with respect to maybe study size or expect to blanks and.

And then is there anything we should be mindful of with respect to the piano once that trial launches.

Okay. So I I think there two things so with respect to the 19 clinical study. This was 192 patients in the active group compared to 117.

Who received the best standard of care so.

This was not a launch of a study this was.

The completion of a study and and you know this was kind of a low profile study because it was there a confirmation study, but it was nonetheless excited about you know exciting once again for us to see.

[music].

Our ability to have yet another dataset and maybe.

Potentially I didn't know if you want to make a comment about the you know the commercial impact of the study.

Hey, Bill sorry, just and I mean, I don't mean in are up but the the the question was more about the newly diagnosed study that's going to be launching here in combination with radio therapy.

Oh, Okay private study yeah. So again. This this study has been a design. It is a site sets a or have been signed up.

We're currently just awaiting the the first patient it.

Okay.

Then just I guess one other one for me maybe on a couple of your product pipeline items to be high intensity array in the new treatment planning to symmetry software is there anything into skus, there with respect to launch rollout timing and maybe has cobot impacted your launch plans for either of those items.

Maybe I'll, let a soft comment on the the new products and and where we stand I know that Youre Mylink product is Ah you know, it's very much front of mind, but also the work that we're doing with the the novel arrays.

Thank you off I think you may be muted.

William F. Doyle: In my last question, in terms of some of the changes that you're doing to your infrastructure with the sales and marketing and potentially shipping products, do you view those as temporary, or would some of those essentially be permanent changes as you think about maybe views on driving efficiencies?

Thank you for the question.

From being used.

I thought we do believe that he has significant opportunity to improve often if you could see and we are working on it.

Oh engineering, well you any for many years and we'll continue to opening.

We are not.

Any delay in our own you development, Oh, new loan to Florida.

Tony the other around where we are planning to.

Two.

Basically to long term a mining sooner than we expected as though only known engineering pent up affected.

Bye bye already in any way of shape.

There are other engineering project that you know probably doing now they're involved that actually we fund launch earlier.

William F. Doyle: Yeah, so first of all, again, I'm going to start by congratulating the organization. And it's not just the commercial organization, it's our clinical organization, our operations organization, our financial, our legal, all of our various departments have had to make dramatic changes. Those that are not required to be in the office are all working from home, as I know many of you are as well.

Thank you.

William F. Doyle: Even within our operations centers, we've changed the way that we package and ship and receive materials to minimize exposure of employees to one another, and we're leveraging technology across the organization. But the simple answer to your question is that I think there are many of the things that we're doing that have improved the efficiency of the organization and accelerated our ability to scale across very large populations. And these are things that we will maintain and continue to build on as we go forward post-pandemic.

I'm not showing any further questions at this time I would now that they tend to call back over to Bill Doyle for closing remarks.

William F. Doyle: Thank you so much. Thank you. Our next question comes from Corey Casimov with JP Morgan. Your line is now open.

Unknown Executive: Hey, good morning guys. Thanks for taking my questions. I guess, first of all, on Lunar, given how this treatment landscape continues to evolve, curious to get your take on the possibility of potential breakdown of patients enrolling that are actually in the third line plus setting versus second line. Are you still expecting predominantly second line or more of a mix now? And I'll follow up.

William F. Doyle: Yes, so, you know, Lunar is studying, as you know, tumor-treating fields with PD-1 inhibitors or Duffet-Taxel for second-line treatment of non-small cell lung cancer. We absolutely understand that the landscape for non-small cell lung cancer is changing and is competitive. That being said, you know, Corey, I'll remind everyone what you know is that tumor-treating fields are designed to be used with the best standard of care pharmacology. We've never seen an accumulative toxicity, and we've always seen additivity or synergism. So we expect that this will be used with whatever emerges as the best standard of care. The study was designed to generate data that contemplates multiple outcomes, and we believe all of them are clinically meaningful for patients, regardless of the ultimate line.

Unknown Executive: Okay, and then I wanted to follow up on some of the earlier questions on your patient interactions. I mean, Optune TTF is obviously a different type of product offering in many ways, one of which is how the company trains the patients at home rather than a physician or nurse doing it in the office. So, you know, is that approach responding in this environment? I guess, are you finding this to be an advantage in kind of what we're all living through now or adding another layer of complexity you have to work around?

So.

William F. Doyle: I'm going to turn it over to Tash for further comment, but I do want to underline the point that from the very beginning of our commercial strategy development, we did not want to be in a position where we were selling through hospitals. And so we have a direct-to-patient model where we receive scripts; the hospital or the doctor's office doesn't.

First of all.

I want to thank everyone for their continued interest in Inova cure.

And our therapy or our thoughts so I'll start we're actually started at the beginning our our thoughts are with all of you. We know that everyone in almost every corner of the world is oh facing a significant disruptions to their lives now.

And we.

We are.

With you during this time, our focus has been on the continuity of care for our patients and the safety and health of our employees.

Very proud that our team has made all of the progress that we've made and that we were able to announce today that we don't expect any.

Significant disruption in our business continuity.

It's really a tremendous achievement on the part of the team.

And we don't expect any.

Change in the fundamental value proposition of the company.

I think I'm going to leave it there are and again. Thank you all for your interest.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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Pritesh Shah: Sure. Corey. Thank you for that question. One of the core strengths that Optune has is that it's a patient-administered therapy, and it fits well into the virtual clinic. And we're hearing this sentiment resonate back to us or express itself back to us from physician advisors at advisory board meetings as we're helping them understand how we have pivoted the patient support model, continuing the live support, but also adding a virtual option. We're asking for their feedback, and their feedback has been, hey, what you're doing is responding with patients. It's working for patients. We're not hearing from patients about a disruption in the support that Novocure provides.

Pritesh Shah: So that gives us more confidence that the plans that we put in place are the right plans. And, as Bill mentioned earlier, we're going to continue to learn from these processes. And we've already made some adaptations as we're learning what works more effectively versus what our initial thoughts may have been. So we're making minor tweaks along the way. But I do think that as more and more physicians are practicing telemedicine, their needs are such that they would like products that fit into the way that they're practicing medicine. And we believe that we fit well into that model. So on that front, we're learning more, but our early experience suggests that what we've done to date allows physicians to continue thinking about this option in a positive manner for their patients. Okay, and then I guess since people are asking so many questions this morning, I'll ask a third.

Unknown Executive: So back to the clinical trial front, and certainly recognizing the disruption of the pandemic, I'm still, I'm wondering if you can just talk about the level of physician enthusiasm to enroll patients in your ongoing non-GBM trials. Are you finding broad-based interest off the bat as you open a center, or is there a lot of heavy lifting trying to educate as it was in the early days of GBM? I guess the bottom line here is I'm trying to understand if, you know, the delays that we're still seeing in the clinical trials are purely a function of the disruption of COVID, or if there's just other elements in the trial that you guys Thanks.

Unknown Executive: I'm going to turn it over to Ellie, our Chief Medical Officer, and maybe he can talk a little bit about the clinician questions that you asked.

Emily Claudia Bodnar: Hi, good morning, and thank you, Corey, for your call. I'll say that I'll, to answer your question, this really depends on the trial. As you see, you know, there's a lot of enthusiasm and in the ovarian cancer, and I think this came, it was ramping up right before the COVID-19, and just continue. But also, I think PANOVA, we also have seen a lot of interest on the, on all these trials. Remember that, you know, we believe that the acceptance of

Emily Claudia Bodnar: Novel technology, it requires really...

Emily Claudia Bodnar: We have seen this play out very well in both the commercial and clinical settings. I would say there are a lot of moving parts, and we really invest significant resources to enroll patients in ongoing trials. I do think that physicians in general, it depends geographically where they are situated, how COVID-19 has affected them. It's not even by countries, even regions; you can see some difference in large academic centers that are very busy, but in the same city, there may be more of a community hospital that also sees this type of patient and has continued putting patients in trials.

Emily Claudia Bodnar: So I think I would say it depends, but the enthusiasm is there, and it depends on how busy these investigators are. We are continuing to do virtual SIVs, and we're doing distant monitoring of the data. So we have continued pushing our clinical trials, and I think this will, if anything, will get even better for us once this happens. Okay, great. Thanks for taking the question.

Unknown Executive: Thank you. The next question comes from Greg Fraser with SunTrust.

Unknown Executive: Your line is now open. Thanks. Good morning.

Unknown Executive: Thank you for taking the question; this is Greg Fraser on for Greg Gilbert.

Unknown Executive: I'm out of tune with the U.S. Can you speak to the number of active prescribers?

Unknown Executive: This slide is a summary of the current number of active prescribers that you have and whether that number is still growing. And is expanding the base of prescribers a priority?

William F. Doyle: Yeah, so, you know, we don't give information about specific providers. But what we do say, and what we do know, is that, if you want to think of this in terms of market penetration, we think that we're receiving scripts for about 40%, which is the round number of patients in the US, and that there is a significant continued opportunity for us to help patients. And that's really our goal, to continue to educate and work with all potential prescribers. We also believe, at this point, in the US and Germany and our key markets, Japan, that we have complete geographic coverage. So it's no longer an issue of whether or not

William F. Doyle: Greater penetration of clinicians in one part of the country versus another

William F. Doyle: Got it. And then sort of following up on the last question, I'm curious if the clinical trial sites are generally aligned with centers that have adopted PTF for GBM. And then on a lunar study, how many sites are you looking to add? And can you comment on where patient enrollment stands?

William F. Doyle: Yeah, so, you know, just quick answers. These are different clinician groups than, in large part, with the exception of the MEDIS trial, compared to our GBM sites. Again, our GBM sites are virtually every site that sees GBM patients now in the U.S. So there's not a big correlation there.

William F. Doyle: I will say that the enthusiasm in the new communities is certainly benefited by all the progress that we have made in GBM, and Ellie described the excitement of the new indications. They clearly don't know much about TTF, just like when we started in GBM. This is completely new to these clinician groups, so we do have to do all the active education. And, in answering your questions specifically, we expect to add about 130 additional sites for this trial.

William F. Doyle: Great, thank you.

Unknown Executive: Pardon me, not additional sites; I misspoke, having 130 total sites to meet our time.

William F. Doyle: Thank you. So it's 130 total sites.

William F. Doyle: Sorry, Greg.

Unknown Executive: Our next question comes from Jason Bednar with Piper Sandler. Your line is now open. Thanks.

William F. Doyle: Good morning, everyone. Thanks for taking the questions and for all the updates this morning. Bill, maybe going back briefly to the post-approval newly diagnosed GBM study you mentioned in response to Deepha's question earlier. You know, I know we'll see the details when you post it, but is there anything you can talk about today with respect to maybe study size or expected length? And then, is there anything we should be mindful of with respect to the P&L once that trial launches?

William F. Doyle: Okay, so I think there are two things. So with respect to the EF-19 clinical study, this was 192 patients in the active group compared to 117 who received the best standard of care. So this was not the launch of a study. This was the completion of a study, and, you know, this was kind of a low-profile study because it was a confirmation study. But it was nonetheless exciting once again for us to see, you know, what was going on with our ability to have yet another data set, and maybe I don't know if you want to make a comment about the commercial impact of this study.

William F. Doyle: Bill, sorry, I don't mean to interrupt, but the question was more about the newly diagnosed study that's going to be launching here in combination with radiotherapy.

William F. Doyle: Okay, Pride and Study. Yeah.

William F. Doyle: Again, this study has been designed, it is, and sites have,

William F. Doyle: have been signed up, and we're currently just awaiting the first patient in.

William F. Doyle: And then just, I guess, one more one for me.

Unknown Executive: For me, maybe on a couple of your product pipeline items, the high-intensity array and the new treatment planning dosimetry software, is there anything you can discuss there with respect to launch and rollout timing, and maybe COVID has impacted your launch plans for either of those items?

Asaf Danziger: Maybe I'll let Asaf comment on the new products and where we stand. I know that our MyLink product is very much front of mind, but also the work that we're doing with the novel array. Thank you.

Asaf Danziger: So thank you for the questions, and sorry for being late. We do believe that this is a significant opportunity to improve option efficacy, and we are working on it. Our engineering team has been working on it for many years, and we'll continue to work on it. We are not expecting any delay in our new development or the new launch of products. If at all it's the other way around, we are planning to... basically launch our MyLink sooner than we expected. So all in all, engineering is not affected by COVID in any way or shape. There are other engineering projects that, you know, COVID is doing around the world that we're going to launch earlier.

William F. Doyle: Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Bill Doyle for closing remarks.

William F. Doyle: So, first of all, I want to thank everyone for their continued interest in Novocure and our therapy. Our thoughts, I'll start where Ashley started at the beginning, are with all of you. We know that everyone in almost every corner of the world is facing significant disruptions to their lives now, and we, you know, we are with you during this time. Our focus has been on the continuity of care for our patients and the safety and health of our employees. I'm very proud that our team has made all of the progress that we have made and that we were able to announce today that we don't expect any significant disruption to our business continuity. That's really a tremendous achievement on the part of the team, and we don't expect any change in the fundamental value proposition of the company.

William F. Doyle: Again, thank you all for your interest in Novocure.

Unknown Executive: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. BF-WATCH TV 2021 The Bulletproof Executive, 2013