Q3 2020 Novocure Ltd Earnings Call

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Novocure third quarter earnings conference call. At this time, all participants are in a listen-only mode.

Ladies and gentlemen, thank you for standing by and welcome to the Noble Cure third quarter earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentations will be a question answer session asking question during the session you'll need to press star one on your telephone. Please be advised that todays conference is being recorded if you require any.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Gabrielle Fernandez, Director of Investor Relations. Please go ahead, ma'am.

Further assistance, please press star zero.

Now ill hand, the conference over to your Speaker today, Gabrielle Fernando's director of Investor Relations. Please go ahead ma'am.

Gabrielle Fernandez: Good morning, everyone, and thank you for joining us to review Novocure's third quarter 2020 performance. With the management team largely working remotely, we are again conducting today's call virtually. I am joined on the phone by our Executive Chairman, Bill Doyle, our CEO, Asaf Danziger, and our CFO, Ashley Cordova. Other members of our executive leadership team are also on the call and available for Q&A. The slides presented today can be viewed on our website, www.novocure.com, by clicking on the link for third quarter 2020 financial results, located in the events section of our investor relations section. 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 forward-looking statements. These statements involve a number of risks and uncertainties, some of which are beyond our control, including those risks and uncertainties described from time to time in our SEC filings.

Good morning, everyone and thank you for joining us to review <unk> third quarter 2020 performance.

With the management team largely working remotely we are again conducting today's call virtually.

I'm joined on the phone by our executive Chairman Bill Doyle, our CEO stock Donziger and our CFO Ashley Cordova.

Other members of our executive leadership team are so on the call and available for Q1.

The slides presented today can be viewed on our website www dot novacare dotcom by clicking on the link for third quarter 2020 financial result.

Located in the events section of our Investor Relations page.

Before we start I would like to remind you that our discussion. During this conference call will include forward looking statements.

Actual results could differ materially from those projected in these statements.

These statements involve a number of risks and uncertainties some of which are beyond our control, including those risks and uncertainties described from time to time in our SEC filings.

Gabrielle Fernandez: 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 and nine months ended September 30th, 2020, are available in 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.

We do not intend to update publicly any forward looking statements, except as required by law.

Following our prepared remarks today, we will open the line for questions.

Financials for the three and nine months ended September Thirtyth 2020 are available in 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.

Gabrielle Fernandez: Reconciliations of non-GAAP financial measures to GAAP financial measures are also included in our press release, in the appendix of the supplemental slides accompanying this presentation, and in our Form 8K filed with the SEC today. These materials can be accessed from our investor relations page on our website, www.novocure.com. With that, I will now turn the call over to Bill Doyle. Thank you, Gabby, and good morning, everyone

Reconciliations of non-GAAP financial measures to GAAP financial measures are also included in our press release.

In the appendix of the supplemental slides accompanying this presentation and in our form 8-K filed with the FCC today.

These materials can be accessed from our Investor Relations page of our website Www Dot Novacare dotcom.

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

William F. Doyle: We remain focused on three overarching priorities at NOVA. First, to further strengthen our established commercial business treating patients diagnosed with glioblastoma or mesothelioma. Second, to advance our clinical pipeline across multiple solid tumor indications. And third, to improve our tumor treating fields delivery system, all with the goal of extending survival in some of the most aggressive forms of cancer.

We remain focused on three overarching priorities at no mature.

First to further strengthen our establish commercial business treating patients diagnosed with Glioblastoma Promesa thielman.

Second to advance our clinical pipeline across multiple solid tumor indications and third to improve our tumor treating fields delivery system, all with the goal to extend survival in some of the most aggressive forms of cancer.

William F. Doyle: We made important progress across our organization in the third quarter, despite the prolonged industry-wide complexities and uncertainty posed by COVID-19. Driven by our team's solid execution, we delivered another record quarter of financial performance with $133 million in net revenue and $0.09 in earnings per share. Our financial strength demonstrates the resilience of our business model and enables increasing investments to accomplish our priorities. We believe our investments in our commercial, clinical, and engineering capabilities are instrumental to unlocking the long-term value of the tumor-treating field's platform. With readouts from key clinical trials in multiple indications anticipated over the next few years, we are actively working to ensure organizational readiness for the company's next chapter. Novocure's track record of innovation and financial performance is a testament to the strengths of our organization. In August, we further solidified our executive leadership team with the appointment of Wilco Grundhausen to an expanded Chief Operating Officer role.

We made important progress across our organization and the third quarter, despite the prolonged industry wide complexities and uncertainty posed by COVID-19.

Driven by our team's solid execution, we delivered another record quarter of financial performance.

133 million in net revenue and nine cents in earnings per share.

Our financial strength demonstrates the resilience of our business model and enables increasing investments to accomplish our priorities.

We believe our investments in our commercial clinical and engineering capabilities are instrumental to unlocking the long term value the tumor treating fields platform.

With read outs from key clinical trials in multiple indications anticipated over the next few years, we are actively working to ensure organizational readiness for the company's next chapter.

No cure his track record of innovation and financial performance is a testament to the strength of our organization.

In August we further solidified our executive leadership team with the appointment of Wilco, Brian Howson to an expanded chief operating officer will the promotion of the actually quarter to Chief Financial Officer, and the promotional Frank Leonard to the newly created position of Chief Development Officer.

William F. Doyle: The promotion of Ashley Cordova to Chief Financial Officer and the promotion of Frank Leonard to the newly created position of Chief Development Officer. Wilco, Ashley, and Frank's extensive experience and many contributions to Novocure's successes to date instill confidence that our expanded leadership team is well equipped to advance the company's priorities during the period of significant innovation and growth anticipated in the coming year. Our belief that the tumor treating field's mechanism of action is broadly applicable to solid tumor cancers is supported by a scientific rationale grounded in 20 years of preclinical research.

Wilco, Ashley and Franks extensive experience and many contributions to novocure successes to date instill confidence that our expanded leadership team is well equipped to advance the companys priorities during the period of significant innovation and growth anticipated in the coming years.

Our belief that the tumor treating fields mechanism of action is broadly applicable for solid tumor cancers is supported by scientific rationale grounded in 20 years of preclinical research.

William F. Doyle: Building upon this compelling body of scientific evidence, we continue to invest in translational research to deepen our understanding of tumor-treating fields' effects on cancer and to fuel the development of new treatment strategies. Just this month, we entered into a strategic alliance with NYU Grossman School of Medicine's Department of Radiation Oncology, that provides a framework for preclinical and clinical development projects studying tumor-treating fields. The research to be conducted is geared to further the understanding of the interaction between tumor treating fields and radiation therapy and to identify new indications for you. We are excited to partner with a leading U.S. academic and look forward to working with NYU's top researchers. We believe that collaborations with leading academic research centers signifies growing interest in tumor-treating fields across the scientific community and advances our mission to extend survival in the aggressive cancers we treat. Now, shifting to our clinical pipeline. We continue to progress trials to generate data on the safety and efficacy of tumor treating fields therapy and new indications.

Building upon this compelling body of scientific evidence, we continue to invest in translational research to deepen our understanding of tumor treating fields effects on cancer and to fuel development of new treatment strategies.

Just this month, we entered into a strategic alliance with the and why you Grossman School of Medicine Department of radiation oncology approach.

It provides a framework for preclinical and clinical development projects studying tumor treating fields.

The research to be conducted is geared to further the understanding of the interaction between tumor treating fields and radiation therapy.

The study tumor treating fields in combination with various pharmacological agents.

And to identify new indications for use.

We're excited to partner with a leading U.S. academic institutions and look forward to working with end why youve talked researchers.

We believe the collaborations with leading academic research centers signifies growing interest in tumor treating fields across the scientific community and.

And advances our mission to extend survival and the aggressive cancers retreat.

Shifting to our clinical pipeline, we continue to progress trials to generate data on the safety and efficacy of tumor treating fields therapy in new indications.

William F. Doyle: Our teams are diligently enrolling randomized phase 3 pivotal trials in brain metastases, lung cancer, pancreatic cancer, and ovarian cancer. We also have ongoing Phase II pilot studies in gastric cancer and in recurrent GBM testing a new high-intensity eraser, which we launched last quarter. We made considerable progress towards opening our TRIDENT trial, a randomized post-marketing study in newly diagnosed GBM to study the potential survival benefit of initiating tumor-treating fields therapy concurrent with radiation therapy. We have secured all necessary regulatory approvals for Trident and conducted our first site initiation visit in the United States. We anticipate first patient enrollment in Trident prior to year-end. We are seeing early signs of stabilization in the clinical trial environment in certain geographies, despite persisting pressure and uncertainty caused by COVID-19.

Our teams are diligently enrolling randomized phase three pivotal trials in brain metastasis lung cancer pancreatic cancer and ovarian cancer.

We have ongoing phase two pilot studies in gastric cancer and in recurrent GBM testing, a new high intensity erased system, which we launched last quarter.

We made considerable progress towards opening our Triton trial, our randomized post marketing study in newly diagnosed GBM study potential survival benefit of initiating tumor treating fields therapy concurrent with radiation therapy.

We have secured all necessary regulatory approvals for Triton and conducted our first site initiation visits in the United States.

We anticipate first patient enrollment trial prior to year end.

We are seeing early signs of stabilization in the clinical trial environment in certain geographies, despite persistent pressure and uncertainty caused by cold at 19.

William F. Doyle: In our ongoing clinical trials, we remain focused on opening additional sites and increasing site engagement. Through our partnership with Xylabs, we expect to begin opening new trial sites in China to drive enrollment in some of our Phase 3 trials beginning in 2021. In the third quarter, we added a total of 29 new clinical trial sites in the U.S. and Europe across our Phase III program. Notwithstanding this progress, we continue to work closely with institutions, local authorities, and contract research organizations to monitor the dynamic COVID-19 environment and to refine our processes as needed to advance our clinical research studies. In July, we completed enrollment at the Hapanova Trust.

In our ongoing clinical trials, we remain focused on opening additional sites and increasing site engagement.

Through our partnership with Dai lab, we expect to begin opening new trial sites in China to drive enrollment in some of our phase three trials beginning in 2021.

In the third quarter, we added a total of 29, new clinical trial sites in the U.S. in Europe across our phase three programs.

Notwithstanding this progress we continue to work closely with institutions local authorities and contract research organizations to monitor the dynamic COVID-19 environment and to refine our processes as needed to advance our clinical research studies.

In July we completed enrollment up it happened over trial.

William F. Doyle: Phase II pilot trial in Liverpool, and we expect final data from this study in the first quarter of 2021. The HEPA-NOVA data will mark the first multiple data readouts we anticipate during the next few years, creating the Potential for Significant Market Expansion into Multiple Solid Tumor Indications with High Adoption

Phase two pilot trial in liver cancer, and we expect final data from this study in the first quarter of 2021.

Epanova data will Mark first of multiple data Readouts, we anticipate during the next few years, creating the potential for significant market expansion into multiple solid tumor indications with high unmet needs.

William F. Doyle: Beyond Our Clinical Development Program. We continue to expand our programs to deliver technology in a way intended to improve our therapy's epic and our product season. Guided by Scientific Evidence of Tumor Treating Field's Optimal Application, in his new role as Chief Development Officer, Frank Leonard is charged with leading the overall strategic and operational development of Novocure's innovation platform, including product development and business development.

Beyond our clinical development programs, we continue to expand our programs to deliver technology innovations intended to improve our therapies efficacy and our products ease of use guided by scientific evidence of tumor treating fields optimal application.

In his new role as Chief Development Officer, Frank Leonard is charged with leading the overall strategic and operational development of no victors innovation platform, including product development and business development.

William F. Doyle: Under Frank, we have strengthened our innovation capabilities with teams dedicated to tumor treating fields generators, transducer arrays, and software applications. As with radiation therapy, treatment planning is an essential process to optimize the tumor-treating field's energy delivered to the region of a patient's tumor. Guided by research that demonstrated improved survival in newly diagnosed GBM patients who received higher doses of tumor treating field therapy.

Under Frank we have strengthened our innovation capabilities with teams dedicated to tumor treating fields generators transducer arrays and software applications.

As with radiation therapy.

Treatment planning is an essential process to optimize the tumor treating fields energy delivered to the region of a patients tumor.

Guided by research that demonstrated improved survival in newly diagnosed GBM patients who received higher doses of tumor treating fields therapy.

Asaf Danziger: Last quarter, our Software Applications team completed the initial development of a new treatment planning software package we call Max-Q. We have commenced beta testing of MaxPoint with a select number of radiation oncology partners. Research and development are central priorities at NOAA, and we are excited to highlight our programs as they progress. We believe we are in the early stages of our therapy's evolution, and our confidence in the potential of tumor-treating fields to make a difference in the lives of cancer patients continues to build. We invite you to join us for a virtual R&D day on November 12. During the session, we plan to highlight progress in the development pipeline. Review Areas of Internal and External Focus in our Translational Research. With that, I'll turn the call over to Asaf to share his perspective on the third quarter.

Last quarter, our software applications team completed initial development of a new treatment planning software package, we call Maxpoint.

Weve commenced beta testing of Bax point with a select number of radiation oncology partners.

Research and development, our central priorities that Doctor and we're excited to highlight our programs as they progress.

We believe we are in the early stages of our therapies evolution and our confidence in the potential of tumor treating fields to make a difference in the lives of cancer patients continues to build.

We invite you to join us for virtual R&D day on November 12.

During this session we plan to highlight development pipeline progress and review areas of internal and external focus and our translational research.

With that I'll turn the call over to assess the share his perspective on the third quarter.

Asaf Danziger: Thank you, Bill. The Novocure team delivered another strong performance in the third quarter. We reported a record $133 million in global net revenues, up 14% versus Q2 2020. Our net revenue growth was driven primarily by active patient growth and spending reimbursement for opt-in. Active patient growth grew 3% quarter over quarter with 3,361 active patients on therapy at the end of Q3, adding to the more than 17,000 patients treated to date globally. This represents our 23rd consecutive quarter of consecutive active patient growth since the presentation of our EF14 data in newly diagnosed GBM. Nine months into COVID-19, we continue to gain new insights into patterns of care in the treatment of GBM. As noted in the past, the aggressive cancers we treat do not slow down with COVID-19.

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Thank you Bill the Nokia team delivered another strong performance in the third quarter, we reported a record $133 million in global net revenues up 14% versus Q2, 2000 twin aisle and that's revenue growth was driven primarily by active patient growth and Expo.

Pending reimbursement for Optune active patient grew 3% quarter over quarter, we have 3003 on within 61 active patients on therapy at the end of Q3, adding to the more than 17000 patients treated to date globally.

This represents our 27th quarter of consecutive active patient growth since the presentation of our F 14 data in newly diagnosed GBM.

Nine months into call. It 19, we continue to gain new insights into patterns of care in the treatment of GBM.

As noted in the past the aggressive cancers, we treat do not flow we COVID-19.

Asaf Danziger: We have seen fluctuations in the timing of surgeries and radiation therapy in certain regions, which had some influence on option prescription flow. Despite these absent flows, we sustained commercial momentum in the third quarter and remain confident in our ability to adapt to this dynamic situation with minimal disruption to our business. We believe our proven execution to date in 2020 highlights our team's focus and commitment to innovation that enables us to serve our patients and partners. Throughout the year, we have continued to adapt how we interact with patients and healthcare providers by adding virtual capabilities and programs. For example, we rolled out remote download technology that allows us to download data from a patient's device without the need for an in-person visit.

We have seen fluctuations in the timing of surgeries and litigation to be in certain regions, which had some influence on optune prescriptions flow. Despite these apps inflows, we sustained commercial momentum in the third quarter and remain confident in our ability to adapt to these dynamic situation with minimal disruption.

So a business.

We believe a proven execution to date in 2020 highlights our teams focus and commitment to innovation that enables us to serve our patients and positive throughout the year. We have continued to adapt how we interact with patients and healthcare providers by adding vitro capabilities and probe.

From.

For example, we rolled out to the mode download technology that allows us to download data from a patient's device without the need for an impressive visit.

Asaf Danziger: To maintain engagement with healthcare providers, we increased our peer-to-peer programming and created new engagement tools to highlight the unique benefits of Optune and Optune Lua. The multiple virtual engagement capabilities we have developed help to minimize the impact of COVID-19 on our commercial business. We believe these innovations also provide a foundation for scaling our business to serve many more patients in the future. As Bill mentioned, we are actively working on organizational readiness in anticipation of future growth. We are expanding access to our approved indications into additional markets. In EMEA, we currently market Optium for GBM in Austria, Germany, Israel, Sweden, and Switzerland.

To maintain engagement with health care providers, we increased our peer to peer programming and created new engagement tools to highlight the unique benefits.

June and opportunity for them.

The multiples mutual engagement capabilities, we have developed helped to minimize the impact of Kobe 19 on our commercial business.

We believe these innovations also provide a foundation for scaling our business to says many more patients in the future.

As Bill mentioned, we are actively working on organizational readiness in anticipation of future growth.

Strengthening our commercial footprint by expanding access to our approved indications into additional markets.

In EMEA, we colicky market opportune for GBM in Austria, Germany, Israel, Sweden, and Switzerland, we.

Asaf Danziger: We have secured national reimbursement for Optune and GBM in nearly all of our active EMEA markets, with the exception of Switzerland, where we continue to have ongoing productive coverage discussions with the Federal Office of Public Health. We believe we have identified a pathway to reimbursement in France and plan to submit a full reimbursement package to establish coverage for Optune in GBM to the French Ministry of Health in the upcoming quarters. We are evaluating market access pathways to enter additional major European markets for our currently marketed indications prior to the expected launch of future indications. Moving beyond GBM, we continue to gain viable market insights about the treatment landscape in MPM. Based on our early experience with GBM, we know that acceptance of new technology requires a significant amount of effort to educate patients and healthcare providers.

We have secured national reimbursement for Optune in GBM in nearly all of our active EMEA markets with the exception of Switzerland, where we continue to have ongoing put back Steve covers discussions with the federal office of public have we'd.

We believe we have identified a pathway to reimbursement in France and plan to submit a full reimbursement packet to establish coverage for opteon in GBM to the French Ministry of health in the upcoming quarters, we are evaluating market access pathways to enter additional major European markets.

Currently marketed indications prior to the expected launch of future indications.

Moving beyond GBM, we continued to gain valuable market insights about the treatment landscape in MPM.

Based on our early experience with GBM, we know that acceptance of a new technology requires a significant amount of effort to educate patients and healthcare providers and we believe that the benefits of these efforts will extend beyond MPM to future Towsley indications currently in.

Asaf Danziger: And we believe that the benefit of these efforts will extend beyond MPM to future torso indications currently in development. I want to reiterate how proud I am of our performance this quarter and this year, a testament to the commitment of all Novocure colleagues. To those colleagues listening on the call today, thank you for all that you do in support of our patient forward mission. With that, I will turn the call over to Ashley to discuss our financial results. Thank you, Asaf. Novocure further strengthened its financial position in the third quarter as we continue to see the disciplined execution of our team drive sustained revenue growth.

Developing.

I want to reiterate how proud I am hopeful outperformance this quarter and this year a testament to the commitment of all Novocure colleagues to those colleagues listening on the call today. Thank you for all that you do in support of all patients will admission.

With that I will turn the call over to Ashley to discuss our financial results.

Thank you our thoughts.

Further strengthen its financial position in the third quarter as we continue to see the disciplined execution of our team drive sustained revenue growth.

Ashley Cordova: We delivered 44% year-over-year revenue growth, reported $0.09 in earnings per share, and generated a record $31 million in cash flow from operations. In addition to our efforts to solidify our foundation for long-term, sustainable growth, our financial strengths enabled the repayment of $150 million of long-term debt, which we are in the process of replacing with a new three-year secured revolving credit facility at a significantly lower carrying cost. We ended the quarter with $235 million in cash and cash equivalents.

We delivered 44% year over year revenue growth reported nine cents in earnings per share and generated a record $31 million in cash flow from operations.

In addition to our efforts to deliver to solidify our foundation for long term sustainable growth our financial strength enable the repayment of a $150 million long term debt, which we are in the process of replacing with a new three year secured revolving credit facility at a significantly lower carrying costs.

We ended the quarter with $235 million in cash and cash equivalents.

Ashley Cordova: The capital structure we are implementing, along with our improved profitability profile, positions us well for a period of significant innovation and growth anticipated over the next few years. Turning to our quarterly performance, our GBM business delivered third-quarter net revenues of $133 million, representing 44% growth versus Q3 2019. Our year-over-year revenue growth was driven by active patient growth and a durable improvement in the net revenues booked per active patient, as well as an increase in collaboration revenues from our partnership with ZyWab. We recorded $10 million in third-quarter net revenues from Medicare fee-for-service beneficiaries billed under the Positive Coverage Policy for Newly Diagnosed GBM.

The capital structure, we are implementing along with our improved profitability profile positions us well for a period of significant innovation and growth anticipated over the next few years.

Turning to our quarterly performance, our GBM business delivered third quarter net revenues of $133 million, representing 44% growth versus Q3 2019.

Our year over year revenue growth was driven by active patient growth and a durable improvement in the net revenues booked per activation as well as an increase in collaboration revenues from our partnership with Dai lab.

We recorded $10 million and third quarter net revenue from Medicare fee for service beneficiaries built under the positive coverage policy for newly diagnosed GBM.

Over the last year, we have gained a good understanding of how to ensure a timely processing of Medicare claims and have sufficient experience to recognize approximately two thirds of the expected contribution from Medicare beneficiaries.

In Q3, we also recognized approximately $8 million in incremental net revenues compared to the first two quarters of Twentytwenty, resulting from the successful appeal of previously denied claims for Medicare fee for service beneficiary sales prior to the established coverage.

Ashley Cordova: Over the last year, we have gained a good understanding of how to ensure timely processing of Medicare claims and have sufficient experience to recognize approximately two-thirds of the expected contribution for Medicare beneficiaries. In Q3, we also recognized approximately $8 million in incremental net revenues compared to the first two quarters of 2020, resulting from the successful appeal of previously denied claims for Medicare Fee-for-Service beneficiaries built prior to established coverage. Moving down the P&L, growth profit in the third quarter was $104 million, reflecting a 79% growth margin.

Moving down the piano gross profit in the third quarter was $104 million, reflecting a 79% gross margin growth.

Gross margin continues to benefit from ongoing efficiency initiatives and increasing scale.

Our capital allocation priorities are unchanged and we continue to invest in innovation as a part of our long term value creation strategy.

We invested $33 million in R&D to support the continued advancement of tumor treating fields science and technology in the third quarter up 75% versus the third quarter of 2019.

Ashley Cordova: Growth Margin continues to benefit from ongoing efficiency initiatives and increasing scale. Our capital allocation priorities are unchanged, and we continue to invest in innovation as a part of our long-term value creation strategy. We invested $33 million in R&D to support the continued advancement of tumor treating field science and technology in the third quarter, up 75% versus the third quarter of 2019. This was primarily due to an increase in clinical trial and personnel expenses for our Phase 3 pivotal and post-marketing trials. An increase in development and personnel expenses to support our product development program.

This was primarily due to an increase in clinical trial on personnel expenses for our phase three pivotal and post marketing trial.

An increase in development and personnel expenses to support our product development program increased investments in preclinical research and the expansion of our medical affairs activities.

We expect R&D expenses will continue to increase in future quarters, as we advance our preclinical clinical and product development program and our efforts to increase acceptance of tumor treating fields across the global scientific community.

Our third quarter, EXINI expenses were $56 million up 21% versus the third quarter of 2019.

In parallel we achieved 44% year over year revenue growth, reflecting an ongoing commitment to maintain a disciplined approach to spending as we support commercial growth in GBM and MPN and organizational readiness efforts in anticipation of future growth.

Ashley Cordova: Increasing investments in preclinical research and the expansion of our medical affairs activities. We expect R&D expenses will continue to increase in future quarters as we advance our preclinical, clinical, and product development programs and our efforts to increase acceptance of tumor treating fields across the global scientific community. Our third quarter SG&A expenses were $56 million, up 21% versus the third quarter of 2019. In parallel, we achieved 44% year-over-year revenue growth, reflecting an ongoing commitment to maintain a disciplined approach to spending as we support commercial growth in GVM and NPM and organizational readiness efforts in anticipation of future growth. Our net income was $9 million, with $0.09 in earnings per share, representing our fifth consecutive quarter of profitability. We also evaluate our operating performance based on adjusted EBITDA, a non-debt measure of earnings before interest, taxes, depreciation, amortization, and share-based compensation.

Our net income was $9 million with nine cents in earnings per share, representing our fifth consecutive quarter of profitability.

We also evaluate our operating performance based on adjusted EBITDA, a non-GAAP measure of earnings before interest taxes, depreciation amortization and share based compensation. We believe this is an important metric as it removes the impact of earnings attributable to our capital structure tax rate and material non cash items.

Typically share based compensation and at best reflects the financial value generated by our business.

In the third quarter, adjusted EBITDA increased by 85% to $37 million from $20 million for the same period in 2019. This.

This improvement in fundamental financial performance was driven by top line growth and by the disciplined management of expenses.

Before I hand, the call over to the operator for today I would like to thank everyone on the phone for their continued interest in Novacare art.

Our teams track record of execution delivered another strong quarter of financial performance.

This morning, as well to invest in the advancement of our clinical and product development program and an organizational readiness efforts designed to sustain long term growth and maximize shareholder value.

We believe that the fundamental prospects of our business are strong and we remain confident in our team our strategy and the long term potential of the tumor treating fields platform to extend survival in some of the most aggressive form of cancer.

Ashley Cordova: We believe this is an important metric as it removes the impact of earnings attributable to our capital structure, tax rate, and material non-cash items, specifically share-based compensation, and it best reflects the financial value generated by our business. In the third quarter, adjusted EBITDA increased by 85% to $37 million from $20 million for the same period in 2019. This improvement in fundamental financial performance was driven by top-line growth and by the disciplined management of expenses. 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. Our team's track record of execution delivered another strong quarter of financial performance, positioning us well to invest in the advancement of our clinical and product development programs and in organizational readiness efforts designed to sustain long-term growth and maximize shareholder value.

Thank you as a reminder to ask a question you need to press Star woman and telephone to withdraw your question press the pound key please stand by we compiled tuning roster.

Our first question comes from.

Jason Bednar Shannon you May proceed with your question.

Jason We don't hear you.

Oh, I'm, sorry, sorry was on mute there congrats on nice quarter. There Bill just wanted to start maybe with your trial progress.

I think we all appreciate nobody has a crystal ball here with respect to co bid, but just curious if you could speak to what you're seeing and hearing from your research Center partners is we're seeing outbreaks grow across the globe and really be great. If you're able to contrast that with what you're seeing maybe or real time today with you know the trial site Onboarding and enrollment.

We saw earlier this year when countries are gone into lockdown.

Sure. So I'll, just remind everybody and first of all could Hello. Good morning afternoon evening, depending on where you are I'm joined today by a soft Ashley and.

The management team, but we are all in different parts of the world So I'm going to.

Act a little bit of them see this morning on the question.

Let me I'm going to turn this over to Ellie to comment specifically on the question, but I do want to.

Ashley Cordova: We believe that the fundamental prospects of our business are strong, and we remain confident in our team, our strategy, and the long-term potential of the tumor-treating field platform to extend survival in some of the most aggressive forms of cancer. Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key.

Just.

Congratulate if that's the right word.

The novick your team because you're it's clear that this is an unprecedented time, there's different difficulties that ebb and flow in the different regions and our teams have been able to maintain.

The patient care of our commercial patients.

And our clinical trial patients.

In.

Bite of the challenges in the in the all the different regions that we serve but with that maybe you can comment specifically on that question.

Operator: Please stand by while we compile the Q&A roster. Our first question comes from... Jason Bednar with Piper Salmon. You may proceed with your questions. Jason, we don't hear you. I'm sorry, I'm really sorry. I was on mute there.

Hi, Hello, everybody and thank you Jason for your call.

Your question the just to supplement what Bill has done we one of the things I first want to say said we.

Jason M. Bednar: Congratulations on the next quarter there, Bill. Yeah, I just wanted to start maybe with your trial progress. I think we all appreciate that nobody has a crystal ball here with respect to COVID. But I was just curious if you could speak to what you're seeing and hearing from your research center partners as we're seeing outbreaks grow across the globe. And really, it'd be great if you were able to contrast that with what you're seeing, you know, maybe real time today with, you know, the trial site onboarding and enrollment we saw earlier this year when countries went into lockdown. I'll just remind everybody, and first of all, good morning, afternoon, evening, depending on where you are.

I wouldn't be submitted to the timing of our data.

Our goal in 20 countries. This in change from where we updated in.

In Q1.

We continue to treat current trials patients. So we haven't stopped that we have enrolled you patients and the clinical trials.

On probably 19 that we started to see some early.

Our lease WD station at these sites are they tend to be patients into clinical training environment.

In certain geographies that.

She said that's you know this is a volatile so one one opened in one area close to some of the others in but I can assure you that we are being.

We are prepared in each one of these geographies to kids.

Which in the clinical trials.

So I would say that advance into clinical pipeline is among our highest priorities in the company and we are continuing monitoring the cobi.

William F. Doyle: I'm joined today by Asaf, Ashley, and the management team, but we're all in different parts of the world, so I'm going to act a little bit like an emcee this morning with the question. Let me turn this over to Ellie to comment specifically on the question, but I do want to just congratulate, if that's the right word, the Novocure team, because it's clear that this is an unprecedented time. There are different difficulties that ebb and flow in the different regions, and our teams have been able to maintain patient care for our commercial patients and our clinical trial patients in spite of the challenges in all the different regions that we serve. But with that said, Ellie, maybe you can comment specifically on the question. Hi,

Situation.

Great. That's helpful and then maybe specifically I focus on.

Innovate per second your the trial in recurrent ovarian cancer I mean site.

Site on boarding there has been real impressive.

To the point, where this is now the trial will be most patient recruitment sites of any of your phase three studies I mean as I know you I know Bill you talked to in the past now. This is in part kind of the partnership that you've got there and kind of the trial site Onboarding and recruitment of the efforts that are going on but no.

What you've done there and that seems like it's helped accelerate the timeline on that study in the past and does that influence how you think about similar trial development partnerships in the future. Thanks, so much.

Ellie: Hello, everybody, and thank you, Jason, for your call and your question. Just to supplement what Bill has done, one of the things I first want to say is that we anticipated that the timing of our data for our ongoing clinical trials hasn't changed from what we updated in Q1. We continue to treat current trial patients, so we haven't stopped that, and we have enrolled new patients in the clinical trials. With COVID-19, we started to see some early stabilization and signs of stabilization in the clinical trial environment in certain geographies, but as you know, this is volatile, so one is open in one area, closest to the others, but I can assure you that we are prepared in each one of these geographies to keep So I would say that advancing the clinical pipeline is among our highest priorities in the company, and we are continuing to monitor the COVID-19 situation. All right, great. That's helpful.

Yeah, so so absolutely.

As Lee said.

Progressing our clinical trials is among the highest priorities in the company and and while Elie has the principal responsibility, a thoughts and I and the entire management team.

Is engaged in ensuring the successful completion of these trials.

And you're absolutely right, we learned something in one trial when we apply it to to another and the various successes that we've seen.

In the ovarian cancer trial were absolutely looking to see how those may be applicable in the other trials.

All right. Thanks, so much congrats on nice quarter guys.

Thank you.

Thank you. Our next question comes from Larry Biegelsen with Wells Fargo.

Yeah, Good morning, guys.

Good morning, guys. Thanks for taking the questions can you hear me Bill yes.

Yes, Larry Good morning, how are you great great great one on China, one on the end why you collaboration.

So in China, you know you've seen very good uptake there could you talk about the patients treated at Hong Kong versus mainland China.

Jason M. Bednar: And then maybe specifically, I focus on, you know, Innovate for a Second, the trial on recurring ovarian cancer. I mean, the site onboarding there has been really impressive. I mean, to the point where this is now the trial with the most patient recruitment sites of any of your Phase 3 studies. I mean, Bill, you've talked about in the past, this is in part kind of the partnership that you've got there on kind of the trial site onboarding and recruitment, the efforts that are going on. But, you know, what you've done there, and that seems like it helped accelerate the timeline for that study in the past. And does that influence how you think about similar trial development partnerships in the future? Thanks so much.

Die labs, commercial rollout and pricing and how do we think about reimbursement.

In China.

Going forward and I'll just ask a second question upfront Bill on the end why you collaboration can you provide any additional color when might you start doing.

Doing some studies any any additional color what the focus will be there. Thanks for taking the questions guys.

Yes, sure. So first of all with respect to China.

Of course, our we have this wonderful partnership was I'm glad that I think for any.

Company, that's first entering the Chinese market there is a.

A lot of uncertainty a lot of unknowns.

But we couldn't be more pleased with.

The way that our teams have been able to collaborate with the teams at site lab.

William F. Doyle: Yeah, absolutely. As Ellie said, progressing our clinical trials is among the highest priorities in the company, and while Ellie has the principal responsibility, Asaf and I, and the entire management team are engaged in ensuring the successful completion of these trials. And you're absolutely right; we learn something in one trial, and we apply it to another, and the various successes that we've seen in the ovarian cancer trial, we're absolutely looking to see how those may be applicable in other trials. All right. Thanks so much.

It's been sort of a a text book.

Example of a great partnership to enter the China market now with that value of course as the principal reporting responsibility.

For the the progress in China, So I am not going to comment on the numbers, but we have been.

Very pleased with.

The launch they have adopted our.

Patient support model and we are great students of what we have learned in the rest of the world. So.

Jason M. Bednar: Congratulations on the next quarter, guys. Thank you. Thank you. Our next question comes from Larry Biegelsen with Wells Fargo. Good morning, guys.

They also have device support specialists that.

Bring the therapy to the patients and and train them.

In the inappropriate use.

Lawrence H. Biegelsen: Thank you. Thank you. Good morning, guys. Thanks for taking the questions. Can you hear me, Bill? Yeah, Larry. Good morning. How are you?

That model has worked extremely effectively in Hong Kong and is now as you can see in our numbers beginning to work extremely effectively.

In China.

When we launched we anticipated that the.

William F. Doyle: Great, great, great. One on China, one on the NYU collaboration. So in China, you know, you've seen very good uptake there. Could you talk about, you know, patients treated in Hong Kong versus mainland China? You know, the dye labs, the commercial rollout and pricing? And how do we think about, you know, reimbursement in China going forward? And I'll just ask the second question up front, Bill. On the NYU collaboration, can you provide any additional color? You know, when might you start, you know, doing some studies? Any additional color?

The early growth would be.

Largely self pay.

And again I'll remind you we do have a global pricing strategy. So the pricing strategy is.

It's not special and in China.

We'll say value is also on the forefront of the new emerging insurance models.

That are coming in China. This was one of the reasons why we were so determined to.

Enter the China market, because we saw.

But in the long term.

The the payment models would.

Clearly evolved and the insurance would become part of the mix in China.

William F. Doyle: I want the focus to be there. Thanks for taking the questions, guys. Yes, sure. First of all, with respect to China, of course, we have this wonderful partnership with Xilab. And I think for any company that's first entering the Chinese market, there's a lot of uncertainty, a lot of unknowns. But we couldn't be more pleased with the way that our teams have been able to collaborate with the teams at Xilab. It's been sort of a textbook example of a great partnership to enter the Chinese market. Now, with that, Xi, of course, has the principal reporting responsibility for the progress in China.

We're seeing that.

Which is.

Good for patients there.

I'd say all in all we're works.

We're extremely pleased and the final thing I'll note and we mentioned this in the.

The opening remarks.

We chose is our partner because we thought they would be a great partner to commercialize our GBM and hopefully soon our MPM.

Therapies in China, but we also wanted to work with them.

To bring leading Chinese centers.

Into our global clinical trial.

And Weve made without lease organization, great progress on that front.

William F. Doyle: So I'm not going to comment on the numbers, but we have been very pleased with the launch. They have adopted our patient support model and have been great students of what we have learned from the rest of the world. So they also have device support specialists that bring the therapy to the patients and train them in its appropriate use. That model has worked extremely effectively in Hong Kong and is now, as you can see in our numbers, beginning to work extremely effectively in China. When we launched, we anticipated that early growth would be largely self-pay. And again, I'll remind you, we do have a global pricing strategy. So the pricing strategy is not special in China.

And we anticipate that.

Leading Chinese sites will join our global.

Trial footprint in the early part of next year and.

Of course this provides access to a large pool of a patients for our clinical trials. So great progress now with respect to and why you we are joined by.

Re Weinberg Dr. Weinberg, our Chief Science Officer.

Or are you maybe you can give a couple of comments on the DM why you partnership.

Absolutely.

But in every morning.

I'm very happy to shed more light on our strategic alliance with and why you know this is going to provide a framework for preclinical as well as clinical development project studying fuel more treating sales.

William F. Doyle: I will say Xi is also on the forefront of the new emerging insurance models that are coming in China. This was one of the reasons why we were so determined to enter the Chinese market, because we saw that, in the long term, payment models would clearly evolve, and then insurance would become part of the mix in China. We're seeing that, which is good for patients there. So I'd say, all in all, we're extremely pleased. And the final thing I'll note, and we mentioned this in the opening remarks, we chose Xi because we thought they would be a great partner to commercialize our GBM and, hopefully, soon our NPM therapies in China. But we also wanted to work with them to bring leading Chinese centers into our global clinical trials. And we made, with Ellie's organization, great progress on that front, and we anticipate that leading Chinese sites will join our global trial footprint in the early part of next year.

The research that you'd like to be designed as part of this alliance is going to end cough, and cold and Columbus, sorry, and topics such as that the combination of TD field with radiation therapy study as the new combinations identifying new indications for use for TV field, we're very excited about the Saf.

Gary with the leading us academic Institute.

And look forward to sharing results of research conducted through these partnerships sales so in the future and we believe that collaborations like these that signify growing interestingly the field.

Ross said, the scientific community and we look forward to expand that research project to an additional academic centers.

Thanks Laurie.

Thanks, so much Phil.

Thank you. Our next question comes from DJ Kumar with Evercore.

Hey, guys can that.

Uri Weinberg: And of course, this provides access to a large pool of patients for our clinical trials. So, great progress. Now, with respect to NYU, we are joined by Uri Weinberg, Dr. Weinberg, our Chief Science Officer. And Uri, maybe you can give a couple of comments on the NYU part. Absolutely. Hello, everybody, and good morning.

Congrats on a solid frontier and in.

I I guess out it you know Bill My question as you look at that year to date trends on revenues close to 40% growth in a pandemic environment really impressive.

But if you look at Threeq numbers for next year Street's modeling some 20% revenue growth.

Uri Weinberg: I'm very happy to shed more light on our strategic alliance with NYU. This is going to provide a framework for preclinical as well as clinical development projects studying tumor-treating fields. The research that is going to be designed as part of this alliance is going to encompass topics such as the combination of TT fields with radiation therapy, studying TT fields in new combinations, and identifying new indications for use for TT fields. We're very excited about this partnership with a leading U.S. academic institute and look forward to sharing results of research conducted through this partnership also in the future. And we believe that collaborations like this signify growing interest in TT fields across the scientific community, and we look forward to expanding the research project to an additional academic center. Thanks, Uri.

And part of I guess, so when we look at the revenue dynamics the stack to patients it's been growing at a pretty healthy clip up till now can you maybe just comment on the actual patients second a sustaining to grow plus 20%.

Is that something that we could expect for the for the medium term and is that a key driver of our revenue growth when we look at 2021.

Sure. So a good morning, DJ I'm going to turn this question over to protest.

To comment a little bit about the.

What he's seeing in the field in an active patients and then I'll follow up.

Great. Thank you Bill good morning, everyone and thank you for that question Vijay.

William F. Doyle: Thanks so much, Bill. Thank you. Our next question comes from Vijay Kumar with Evercore. Hey guys, congratulations. Congratulations on a solid fringe here. And I guess, you know, Bill, my question is, you look at year-to-date trends on revenues, close to, you know, 40% growth in a pandemic environment. Really impressive.

What I would start with is our patient support model. What we are what we have built with regards to our patient support model is to ensure that good education and good follow through leads to patients benefiting and time on treatment. We know that that Optune has a dose response relationship and our.

Vijay Kumar: When you look at street numbers for next year, streets are modeling for 20% revenue growth. And part of, I guess, when we look at the revenue dynamics of these active patients, it's been growing at a pretty healthy clip. So, you know, can you maybe just comment on these active patients that, you know, are sustaining to grow plus 20%. Is that something that we could, you know, expect for the medium term? And is that a key driver of revenue growth when we look at 2021? Sure, so good morning, DJ.

William F. Doyle: I'm going to turn this question over to Pritesh to comment a little bit about what he's seeing in the field with inactive patients, and then I'll follow up. Great. Thank you, Bill. Good morning, everyone.

Pritesh Shah: And thank you for that question, Vijay. What I would start with is our patient support model. What we have built with regard to our patient support model is to ensure that good education and good follow-through lead to patients benefiting from time on treatment. We know that Optune has a dose-response relationship, and our goal is to make sure that we can optimize that dose-response relationship because of the outcome.

Pritesh Shah: So what we have been doing to date is making sure that our patient support system, so this is primarily our DSSs, as they initiate patients on treatment, we look to understand how we can ensure the best support for those patients from our early experience with them. For the first month that they're on treatment, we provide enhanced support, and this is touching base with them more frequently. All these parameters lead to a greater number of active patients in any given horizon. Thank you for tuning in. I guess maybe one for Ashley, to follow up on that Ashley, if you look at that 21 number of street modeling and the deceleration here in revenues, from 40 to sub 20%, are you comfortable with where street numbers are? Does it make sense for revenues to decelerate to this extent?

81% of our total prescriptions in quarter three of our newly diagnosed all these parameters lead to greater number of active patients in any given horizon.

Thank you for testing.

I guess, maybe one for assay to follow up on that asset.

If you look at that 21 number suite.

Modeling a deceleration here in seven years.

Clue from 40 to sub 20%.

One.

Are you comfortable with that works with numbers are does make sense asps were up in revenues would be celebrate today to this action and when you think about CMS.

Vijay Kumar: And when you think about CMS, the one-time catch-up payments, were those for claims filed in the first half, or was this perhaps for prior years? I guess where I'm trying to go with this is, should we be expecting future catch-up payments perhaps because of your success against prior denials? So Ashley, I just want to say, you all know Ashley Cordova, but I want to welcome her to her first earnings call in her new role as CFO of Novocure. We couldn't be more pleased to place the financial operations of the company in her hands. You know, with that, Ashley, please.

The onetime catch up payments is that down.

With that for like claims filed.

Filed in first half or was this perhaps for prior years, I guess, where I'm trying to go with this is should we be expecting future.

Future.

In a catch up payments out perhaps vicki.

Successful.

A successful a bit because of your success against our prior denials.

Yeah, So Ashley.

I guess, one for everyone you all know Ashley Cordova.

I want to welcome her to her first earnings call in her new role as CFO of Nokia, we couldn't be more pleased to place the financial.

Ashley Cordova: Thanks, Bill, and Vijay, thanks for the question. To answer directly, we do think there's still an opportunity to increase the net revenues booked for activation over time. So clearly, beyond the activation growth that Kesh alluded to earlier, there is still an opportunity, both with Medicare and just with ongoing improvements in our revenue operations globally to drive that net revenue growth through increasing reimbursement. As you know, we don't guide, so I can't speak specifically to next year, but we have alluded to the fact that we're currently booking approximately two-thirds of the benefit from our Medicare coverage established on September 1s

Operations of the company and her and her hands so.

With that Ashley please.

Thanks, Andy Thanks for the question I can't answer directly we do think there is still an opportunity to increase the net revenues mccracken taking over time, so clearly beyond the active patient growth that cash alluded to earlier there is still an opportunity both with Medicare, but just with ongoing improvements in our revenue operations globally.

Ashley Cordova: So we still have a ways to go there, and that will continue to drive incremental reimbursement. We're still working to receive the full benefit of the reimbursement we received in Israel earlier this year, as well as ongoing discussions with the authorities in Switzerland to hopefully establish reimbursement in the future for that important patient population. With regard to the $8 million incremental payment that we received in the third quarter, that was the result of the successful appeal of denied claims filed prior to September 1, 2019.

Ashley Cordova: We've always talked about there being a backlog of claims out here. We are not walking away from them. We're taking them through a very long-dated appeal process. There is no ability to predict this.

Ashley Cordova: This does not have a rhyme or a reason, but we have treated these patients. We are not walking away from these claims, and we will continue to book revenue as we receive cash on the back of those appeals. Again, it's simply too soon to comment as to what the pace and cadence of that looks like in the future, but I can tell you we're doing everything we can to make sure that we realize that revenue. That's extremely helpful, Ashley. I would be remiss if I didn't add my congratulations as well. Is there any way to assess what the backlog opportunity is for prior claims? Unfortunately, not at all.

We are doing everything we can to make sure that we realize that revenue.

That's extremely helpful and actually I would be remiss, if I didnt add my congratulations as well I guess is there any.

Any way to size what that backlog opportunity is for four.

Prior claims.

Okay.

Unfortunately, not I mean again from the beginning what we have said that Medicare beneficiaries of a 20% to 25% of our active patient time in active patient population in the USA launch.

Vijay Kumar: I mean, again, from the beginning, what we have said that Medicare beneficiaries have been 20 to 25% of our active patient time and active patient population in the US since launch, and we are fighting every one of those claims that we can. Thanks guys. Thanks, Ash. Thank you. Our next question comes from Greg Gilbert with Truist. You may proceed with your question. Sure, thanks. A couple of pipeline ones.

And we are fighting every one of those things that we can.

Okay. Thanks, guys.

Thanks Ashley.

Thank you. Our next question comes from Gregg Gilbert with Truest proceed with your question.

Sure. Thanks, a couple of pipeline first don't happen overnight it looks like you've been more granular on it being a Q1 event versus this next year in terms of that data.

What can you do to frame that for us and let us know.

With what speed you could move to the next phase if warranted.

So hi, Greg. This is bill I think well, we've always said as we as we get closer to read outs and we you know.

Gregory Daniel Fraser: First on HEPA-NOVA, it looks like you've been more granular on it being a Q1 event versus just next year in terms of that data. What can you do to frame that for us and let us know at what speed you could move to the next phase if warranted?

And can predict better when the.

The data will be available, we we pass that on and we now feel that we can update the timing of the of the happened over read out I think that.

William F. Doyle: Hi Greg, this is Bill. I think we've always said as we get closer to readouts, and we know and can predict better when the data will be available, we pass that on, and we now feel that we can update the timing of the HEPANOVA readout. I think that we've always been very, you know, our overall goal is to get our therapy to patients who can benefit. And so we will move as quickly and deliberately as possible to get to the next stage, which would clearly be a phase three trial. But it takes a while to get a protocol written. We're already thinking about that and getting centers lined up, but we would move immediately into the process of the next step.

We've always been very.

Our overall goal is to get our therapy.

Two patients who can benefit.

And so we will move as.

As quickly and deliberately as possible.

To get to the next stage would clearly be a phase three trial so.

It takes a while to get a protocol.

Right and of course, we're we're on we're already thinking about that.

To get centers lined up but we would move immediately.

Into the process of of the next steps.

Gregory Daniel Fraser: Great, and then moving on to the Merck collaboration, I was very intrigued and encouraged by that last summer that you signed that, but it looks like in the 10Q that the start of the pilot study has been delayed. Due to a quote, a modification in regulatory strategy. Can you flush that out a little bit? Was that your change?

Great.

And then moving on to the Merck collaboration I was very intrigued encouraged by that last summer that you signed that.

But it looks like in the 10-Q, that's the start of the pilots that has been delayed.

Due to a quota modification regulatory strategy can you flush that out a little bit was that your change their change maybe any other background on the Merck collaboration you can share.

Ellie: Any other background on Merck? Yeah, so I'm going to pass this over to Ellie to maybe comment on the specifics of the regulatory work that we did during the quarter. This is clearly a very important collaboration, and I think it's the first of the types of collaborations that we are interested in conducting with pharmaceutical company partners. You saw the collaboration with NYU, which is a great prototype for collaboration with academic institutions. The Merck partnership is a prototype for collaboration with Big Pharma. Ellie, any comments on the work during the quarter? Hi, great.

So I'm going to pass this over to lead to maybe.

Maybe comment on the specifics of the of the regulatory.

Work that we did during the quarter this.

This is clearly a very important collaboration and I think it's a first of a.

Of of the types of collaborations that we are interested in.

Conducting with pharmaceutical.

Pharmaceutical company partners you saw the collaboration within why you, which is a great pro.

Prototype for collaboration with academic institutions.

The Merck partnership is a is a prototype of a collaboration with the big pharma.

Any comments on the on the work during the quarter.

Hi, great. Thank you for your call you know we were really excited about this this collaboration.

Ellie: Thank you for your call. You know, we're really excited about this, this collaboration, but we need to make sure that we have all our things lined up.

But we need to make sure that we have or things lined up and I want to make sure that we.

Asaf Danziger: And I want to make sure that, you know, we haven't delayed really anything; we just want to make sure that we align with the FDA. So we're having conversations with the FDA before the launch to confirm our regulatory strategy and design. So that's why we expect them to begin in the first half of next year. I just want to confirm that that has nothing to do with you or Merck or the agency wanting to see more data in the long setting from other trials. No, we haven't. So that has nothing to do with it.

We we havent delayed the anything we just want to make sure that we are aligned with the FDA. So we are having conversations with the FDA before the end of the year too.

To confirm our regulatory strategy and design. So that's why we expect them to begin.

The first half of next year.

I just want to confirm that that has nothing to do with you or Merck for the agency wanting to see more data in the lung setting from other trials.

No we havent so that's nothing to do with it it's all about having a.

William F. Doyle: It's all about having a basically talk to the FDA. And then from there, we'll move on. So there's nothing stopping or delaying this development of the program. [inaudible] I do want to add, it's Asaf. I think the collaboration with Merck is extremely important for us, and nothing has changed in our timeline, and this is part of the regulatory process that American Act is working together on it, and we are very happy with their collaboration and response from all the agencies so far. Yeah, so Larry, just to underline, these are the discussions in the normal course with the FDA upon starting a trial. Interactions with the FDA are affected a little bit by COVID, but this is all normal stuff. Okay, sorry, I was thrown off by the language in the queue about the modification, but I'll move on. My last question, Bill, is about R&D day. I'll allow you to set expectations if you want to.

Basically talk to the FDA.

And then from there, but we'll move on so there's nothing.

Stopping or delaying this development of the program.

Yes.

Yes, I do want to add it's a fast I think it's going.

Integration with NEC, it's extremely important for us and nothing changing in our timeline and leases.

Out of the regulatory process.

Meg cannot.

Looking to get on it and we are very happy with that kind of duration and response from what they can see so far.

Yes. So let me just underline. These are these are the discussions in the normal course with the FDA upon starting a trial as you know.

Interactions with the FDA are affected.

A little bit by co that but.

But it's all normal course stuff.

Okay, sorry, I've thrown off by the language in the Q about a modification.

Regulatory strategy wording, but I'll move on last question is still about the R&D day, a lot I'll allow you to set expectations. If you will if you want to but I'm curious if the goal here is more to provide sort of a background or in one on one session on the technology for those that may have not had it or understand it or.

Gregory Daniel Fraser: But I'm curious if the goal here is more to provide sort of a background or a 101 session on the technology for those who may not have it or understand it, or is it more of a forum to provide new information? The Bulletproof Executive 2013, Thank you. Yeah.

More of a form to provide new information.

Is it a mix of those things. Thank you.

Yes. So the primary focus is not a one on one we are.

William F. Doyle: So the primary focus is not a 101. We are performing, and our collaborators and independent scientists are performing a tremendous amount of research and development on tumor-treating fields. It's one of the things that's been very gratifying to those of us who have been involved with this project for 20 years, to see the expansion of development activities in the community and our ability to expand our research and development as a result of our funding. We don't think that a lot of this work has been very visible to the financial community, notwithstanding the fact that, you know, literally hundreds of papers and projects have been published that are quite So it's not really meant to be a 101, it's meant to be a distillation of some of the important work in the field that we use to build our confidence and that I think will be very useful for the financial community. And I have to sneak one in: is it all about oncology? You'll have to come and see for yourself.

Our performing.

And our collaborators and independent.

Scientists are performing a tremendous amount of research and development on tumor treating fields. It's one of the things that's been very gratifying.

Those of US who have been involved with this project now for 20.

20 years to see the expansion of development activities in the community and our ability to expand our research and development.

As a result of our financial strength.

We don't think that a lot of this work.

Is has been very visible.

To the financial community notwithstanding the fact that literally hundreds of papers.

In projects have been.

Published.

That are quite important to.

Our internal development efforts as well as the understanding and the clinical community.

So it's not really meant to be a one on one it's.

It's meant to be a distillation of some of the important work in the field that.

We used to and to build our confidence.

And that I think will be very useful for the financial community.

And I have to stick one in is it all about oncology.

[laughter], you'll have to commit seats are seeing there. Thanks.

Gregory Daniel Fraser: All right. See you there. Thanks. Thank you, our next question comes from Jason Weitz with Northland. You may proceed with your question. Great, thanks for the questions. There are some follow-ups here. First off, the $8 million catch-up, I assume there's more in the queue that may come at some other quarter, could you just provide some color in terms of... Is that it, or are there more petitions to be had, and I don't know if you have any. An indication of the timing of when they might be petitioned. Yeah, Ashley mentioned this before, but actually, maybe you can underline your comments.

Okay.

Thank you. Our next question comes from Jason Lights with Northland You May proceed with your question.

Great. Thanks for taking my questions.

Some follow ups here first off the 8 million dollar catch up.

I assume there is more in the queue that may come at some other quarter that.

Could you just provide some color on terms of.

Is that it or is there more petitions to be had and I don't know if you have any indicate.

Indication on timing and when they might be partitioned yes.

Yes, Ashley mentioned this before but actually maybe you can underline your comments yeah.

Jason Weitz: Yeah, so I'll just remind everybody again that Medicare has been 20 to 25% of our patient population in the U.S. since we launched, and we received coverage for which we began to recognize revenue in the normal course of business in September 2019. So there is certainly a backlog prior to that time.

Yeah. So I'll just I'll, just remind everybody again that Medicare has been 20% to 25% of our patient population and the last thing we want to add.

We received coverage for basically began to recognize revenue in the normal course of business September 29. He said there is a certainly a backlog prior to that time. This 8 million quarterly for that backlog, but we have no ability to predict.

Ashley Cordova: This eight million correlates to that backlog, but we have no ability to predict the pace of receipt of those claims. As I mentioned before, we are not walking away from any of them. So we are actively doing everything we can to take these claims through the appeals process and ensure that we do receive revenue for them. But it is an extremely backlogged, long-dated, and unpredictable process.

Hey.

We see those claims as I mentioned before we are not walking away from any of them that we are actively doing everything we can to take these claims are detailed profit and ensure that we do we see revenue for them, but it is an extremely high backlog long dated and unpredictable appeal.

Ashley Cordova: We'll share more as we scan in the... Okay, that's helpful. Thanks for the clarification. And then, you know, on the NYU announcement, it appears to be focused on radiation oncologists. What do we think about that?

Well sure I could stand on its own.

Okay. That's helpful. Thanks for clarification and.

And then on the N.Y. you announcement it appears to be focused on radiation oncologist.

How do we think about that I mean is it in terms of.

Jason Weitz: I mean, is it in terms of them possibly becoming one of the main prescribers of TTF, or are you looking at how it might work in conjunction with radiation dosing? Yes, I think this is a great question for both Pritesh and Uri. Pritesh, maybe you can start with our...

They may become one of the main prescribers of TTF or are you looking at how it might work in conjunction with radiation dosing.

Yes. So I think this is a great question for both per cash and 40 for cash maybe you can start with.

Our.

Pritesh Shah: Working Relationship with the Radiation Oncology Community, and then Uri, maybe you can talk specifically about some of the early goals of the partnership. Sure. Thank you for the question. What I would comment on is how we built our business in GBM and mesothelioma. What we realize is that both of those diseases and some of the other diseases that we are investigating are multidisciplinary diseases where many specialties play a key role. Our experience specifically with radiation oncologists and the radiation oncology community is that based on how the mechanism of action of tumor treating fields, the delivery aspect of it, the dosing aspect of it that Bill referred to in his remarks, all those things lend themselves very well to how radiation oncologists think about delivering treatment. So many aspects are akin to radiation planning, radiation delivery, and the regional aspect of how our therapy is delivered. So because of that, we see a great deal of interest from the radiation oncology community. We see it in the glioblastoma space, we see it in the mesothelioma space, and particularly with our study Trident in glioblastoma, which is combined with radiation.

Working relationship with the radiation oncology community and then Ori, maybe you can talk specifically about the some of the early goals of the partnership.

Sure. Thank you for the question.

What I would comment on is how we built our.

Business in GBM and mesothelioma, what we realize is that both of those diseases and some of the other diseases that we are investigating in our multi disciplinary diseases, where many specialties play a key role our experience specifically with the radiation oncologist and the radiation oncology community is that.

Based on how the mechanism of action of tumor treating fields the delivery aspect of it the dosing aspect of it that bill referred to in his remarks, all those things lend themselves very well to how radiation oncologist think about delivering treatment. So many aspects are.

Ken to radiation planning radiation delivery to regional aspect of how our therapies delivered so because of that we see a great deal of interest with the radiation oncology community.

We see that in the Glioblastoma space, we see that in the music really on the space and particularly with our our study Trident in Glioblastoma, which is combining with radiation. So this this particular group will continue to be an important partner to us as we think about our treatment today and all.

Uri Weinberg: So this particular group will continue to be an important partner to us as we think about our treatment today and also the future of that. And this particular relationship, which I'll ask Ori to comment on the specifics of it, but is evidence of our commitment to ensuring that we continue to build evidence both in the lab as well as what might then lead to clinical decision making on this front. Corey, I'm going to turn it over to you for specific comments on the NYU collaboration.

So the future of that and this particular relationship, which I'll ask or you could comment on the specifics of it but is evidence to our commitment to ensuring that we continue to build evidence both in the in the lab space as well as what might then lead to clinical decision, making on this front.

Well I'm going to turn it over to you for specific comments on on the and why you collaboration.

Uri Weinberg: So I would say that the collaboration has been primarily led by the radiation oncologists at NYU from their side. Nevertheless, other departments have already been involved in discussing the different aspects of this research collaboration and intend to be involved in the preclinical as well as in the clinical studies that are going to be conducted as part of this new alliance. When it comes to radiation, there is a very strong rationale for combining TTCLs with this modality since, from a scientific perspective, we have definitely seen preclinical evidence of the synergy between the two treatments, TTCLs and radiation. And as the population of physicians who are becoming more and more significant in prescribing TTCLs and working with the modality, this naturally happened this way.

Thank you for this.

So I would say that the collaboration has been primarily led by the radiation oncologists and why you from their side. Nevertheless, the other departments have already been involved in discussing the different aspects. The fed beef research collaboration and intend to be involved in.

Preclinical as well as in the clinical studies.

Studies that are going to be conducted as part of the family.

[music] Alliance when it comes to radiation there is very strong rationale for combining the sales with DSME modality since that from a scientific perspective, we have definitely seen a preclinical evidence of the synergy between the two treatments DTC sales and radiation and as that.

Relation of physicians, who.

Become more and more as significant in that prescribing TP fields, and working with the modality and the San naturally happen be say away. Nevertheless, we anticipate.

Jason Weitz: Nevertheless, we anticipate oncologists and other departments to be involved in the research as part of this overall agreement. [inaudible] Thank you, that's helpful. One last question, just on, it's a little bit ahead, it's not till 2022, but you are studying high-intensity rays in global stoma.

The oncologists and other departments to be involved in the research as part of the South.

Overall agreement.

Okay. Thank.

Thank you that was helpful.

One last question just on its a little bit ahead, it's not till 2022, but you are starting high intensity raising in global or stoma.

William F. Doyle: Assuming that ends up being a positive trial, what would be the regulatory pathway for global stoma? But also, I think the assumption would be that if it works for GBM, it probably is also going to work for other indications. So I'm curious if you guys have thought about whether you have to rerun phase threes or if there's a shorter pathway to getting high intensity on the market. Sure, so as Pritesh mentioned earlier, and as we've discussed in prior calls, we see an absolute dose response with tumor treating fields, which is encouraging, of course, for all sorts of reasons. Pritesh talked about things that we're actively involved in doing to ensure that patients have the maximum time on therapy, but the other big driver of dose is the intensity of the fields that we can deliver. And today, our intensity is determined principally by the array design.

Assuming that ends up to be a positive trial, what would be the regulatory pathway for global Westower, but also I think the assumption would be that if it works for GBM. It probably also it's going to work for other indications. So I'm curious if you guys have thought about.

Whether you have to re run rerun phase threes or if there is a shorter pathway to getting high intensity.

On the market.

Sure so.

As for cash mentioned earlier.

And as we've discussed on prior calls we.

We see an absolute dose response.

Tumor treating fields.

Which is encouraging course for all sorts of of reasons protest talked about things that were actively involved in doing to ensure that patients have the maximum.

Time on therapy, but the other big driver of dose is the intensity.

Of the fields that we can deliver.

And today, our intensity is determined principally by the rate design.

William F. Doyle: And as we mentioned in our previous remarks, with our new financial strength, we're able to increase our investments in improving the technology. We think we're in the very early stages of what we can deliver to patients with our technology both in terms of dose and in terms of patient comfort and needs during use, and we're really focused on this as one of our core priorities. With respect to the specific regulatory strategy, it's a little early to talk about that, but we're obviously engaged in it. There may be multiple approaches to regulatory strategy, and we'll also depend a little bit on the region.

And as we mentioned in our.

Previous remarks.

With our.

New financial strength, we're able to increase our investments in improving the technology. We think we're in the very early stages of what we can deliver to.

Patients with our technology, both in terms of dose and in terms of patient comfort needs of use and we're really focused on this as one of our core priorities.

With respect to the specific regulatory strategy, it's a little early to.

Talk about that we're obviously.

Engaged in it there may be multiple approaches to the regulatory strategy will also depend a little bit on the on the region.

William F. Doyle: Our goal would be to bring these innovations to patients as early as possible. They may need to be followed by longer trials in order to make specific claims about life extension, but I wouldn't expect that we would have to wait for those trials in order to get these improvements to patients.

Our goal would be to clearly bring these innovations to patients as early as possible. They may need to be followed by longer trials in order to make specific claims about life extension, but.

But I wouldn't expect in that we would have to wait.

For those trials in order to get these.

Proof points to patients.

Got it thanks a lot.

Jason Weitz: Thanks a lot. Thank you, and as a reminder to ask a question, you'll need to press star 1 on your telephone. Our next question comes from Defy Yang with Mozilla Securities. You may proceed with your questions. Hi, good morning, and thanks for taking my questions. So I have two questions, one on mesothelioma and one on finance-related.

Thank you and as a reminder to ask a question you'll need to press star one on in some phone. Our next question comes from Duffy Yang with Mizuho Securities.

You know proceed with your question.

Hi, good morning, and good we could see my practice. So I had two questions one on assisting in mesothelioma and one finance related so for mesothelioma would you share your thoughts on how.

Defy Yang: So, for Cecilia Omer, would you share your thoughts? OptumLua will fit into the evolving treatment paradigm now that we see Optivo plus Uvoid getting approved as a first-line therapy. And because of the precedent that was set by GBN, do you think for the mesothelioma indication, there may be a shorter pathway for reimbursement, CMS reimbursement? So, let me ask Pritesh to start the comment on NPM, and then Ashley, you may want to follow up with a comment on reimbursement. Great

Kim will fit into the or your bobbing treatment paradigm now that we see a opdivo plus yervoy getting approved as a first line therapy.

And and because of the precedent that was set by can be and do you think.

For the mesothelioma and indication there may be a show like a pathway for green beret CMS I mean there.

So let me ask for.

Protests to start the comment on NPM and then Ashley you may want to follow up with the comment on reimbursement.

Great. Thank you. Thank you for this question.

Pritesh Shah: Given the significant unmet need for patients with mesothelioma, we view the introduction of the dual IO combination as a treatment win for all patients that are suffering from this disease.

Given the significant unmet need for patients with me that Deeley OMA, we view the introduction of the dual Io combination isn't as a treatment win for all patients that are suffering from this disease.

Pritesh Shah: Having said that, we believe that our therapy is still relevant for MPM patients across all histologies. The efficacy profile of OptumLua and the safety profile of OptumLua, there are many patients who can benefit from that, and our efforts right now are focused on making sure that our education and our support for both patient populations as well as physician populations remain, and we are moving forward on making that possible. I think with this introduction now, it opens up doors for further studies, so studying TT fields in combinations with IOs. This has been our strategy in non-small cell lung cancer with our lunar study, and also we will be evaluating potential investigator-sponsored studies and other bridging studies of many types that allow us to then continue exploring the benefit of OptumLua in this setting with different combinations.

Having said that we believe that our therapy is still relevant for me NPM patients across all histologies.

The efficacy profile of Optune, new eye and the safety profile of up to.

There are many patients who can benefit from that and our efforts right now are focused on making sure that our educational and our for both patient populations as well as physician populations remain.

And we are moving forward on making that possible I think with this introduction now it opens up doors for a further studies so studying TP fields in combinations with iOS. This has been our strategy in non small cell lung cancer with their lunar study and also we will be evaluating.

Financial investigator sponsored studies and other bridging studies of.

And many types that allow us to then continue on.

Exploring the benefit of Optune Lou in this setting with different combinations.

Pritesh Shah: Perfect. And Jessica, to follow up on your reimbursement question, you know, similar to GVM, we'll go through a process with private payers first to gain access, and then upon the conclusion of that, begin to work with Medicare. I certainly would anticipate it would be quicker, everything's a little easier the second or third time around, but it's simply too soon at this point to point towards the timing of material revenue from it.

Perfectly ingesting data follow up on your reimbursement question similar to GBM will go through a profit with private payers efforts to gain access and then upon conclusion of that begin to work with Medicare I, certainly would anticipate it would be quicker everything's a little easier the second or third time around but it's simply too soon.

Good point to point towards timing I mean, three revenue yes.

Ashley Cordova: Thank you, Ashley. So I'll just ask you my second question related to finance, of those backlogged, previously denied Medicare claims, and so you were able to book $8 million.

Thank you Ashley I'm still I would just ask you my.

Second question related to finance Oh.

Oh, no I'm back log previously denied the Medicare claims.

So you were able to book is maybe there are you able would you.

Defy Yang: Are you able to tell us whether these reimbursements are at the same rate as your current CMS reimbursement, or is it at a reduced rate? Yeah, again, I'm not going to be able to provide that level of detail because it is somewhat case-dependent as it goes through. But I will tell you that the LCD coverage effective September 1 and the fee schedule put in place is the relevant benchmark for claims post September 1. And then we are still, you know; we build at list price for our prior invoices.

Kelly, whether it be Threem base now are at the same rate as your current CMS Greenberg.

Green base metal or use it and then we do it right.

Yeah, again, I'm not going to be able to provide that lever on detail because it is somewhat case dependent as it goes through but I will tell you that LCD coverage effective secular wind in the schedule put in place is the relevant benchmark for clean post September one and then we are still we build at list price for our prior invoices in there.

Ashley Cordova: And there is an ongoing negotiation as we go through appeals, but we're not going to be able to provide any additional information other than to say that we continue to work those claims as we build them. And we're working to get as much as we can out of that patient population. Thank you. Very helpful.

As an ongoing negotiation as we get through the appeals that were not going to be able to provide.

On any additional information other than to say that we continue to work that claim as we build them and we're working to get as much as we can out of that basin.

Thank you very helpful.

William F. Doyle: Thank you, and I'm not showing any further questions at this time. I would now like to turn the call back over to Bill Doyle for any further remarks. So first of all, I'd like to thank you all again for participating in our earnings call. Novocure has three overarching priorities. Our strategy is quite simple.

Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to bill going for any further remarks.

So first of all I'd like to thank you all again for participating on our earnings call.

Novocure has three overarching priorities our strategy is quite simple we are working to.

William F. Doyle: We're working to extend our therapies that are approved to all the patients globally who can benefit from them. Secondly, we're working to expand the cancers that we can treat with our, what we believe to be, broadly applicable mechanism of action. And third, we're working to improve our tumor treating fields delivery platform, which we think is in the very early stages of our ability to deliver efficacy and patient comfort. These are clearly difficult. We see in the news that they're difficult, they're complex, and they're volatile.

Extend our therapies that are approved all the patients globally, who can benefit from them.

Secondly, we're working to expand the cancers that we can treat with our.

We believe to be broadly applicable mechanism of action and third we're working to improve our term we're treating fields delivery platform, which we think is in the very early stages of our ability to deliver efficacy and patient comfort.

These are clearly difficult times.

We see in the news that.

They are difficult to complex and they're volatile but.

William F. Doyle: But I want to thank the Novocure team for continuing to deliver therapy to all of our patients notwithstanding these difficulties, for continuing to recruit patients for our clinical trials notwithstanding all these difficulties, and for opening new trials, both to expand our ability to treat patients and to demonstrate the improved benefits of our R&D. So I really have to appreciate and thank the team for their dedication and their hard work during this time. And with that, we'll see you again next quarter. Thank you. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.

But I want to thank novick your team for continuing to deliver therapy to all of our patients.

Notwithstanding these difficulties to continuing to recruit our clinical trials.

Withstanding all these difficulties and to open new trials.

To expand our ability to treat patients and to demonstrate the improved.

The benefits and the.

Of our R&D efforts.

So I really have to appreciate to thank.

Thank the team for their dedication and their hard work during this time.

And with that we will see you again.

Next quarter.

Thank you.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participation you may now disconnect.

[music].