Q1 2023 Novocure Ltd Earnings Call
Speaker 1: Good day and thank you for...
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Speaker 2: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ingrid Goldberg.
Speaker 2: Please go ahead.
Speaker 3: Good morning, everyone.
Speaker 3: Thank you for joining us to review Novacare's first quarter 2023 performance.
Speaker 3: I am on the phone this morning with our Executive Chairman, Bill Doyle, our CEO Asaf Donzader, and our CFO Ashley Cordova. Other members of our Executive Leadership team are also on the call and available for Q&A.
Speaker 3: For your reference, slides accompanying the earnings release can be found on our website, investrelations.novacure.com, on the investor relations page under quarterly reports.
Speaker 3: Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements, and actual results could differ materially from those projected in these statements.
Speaker 3: These statements involve a number of risks and uncertainties, some of which are beyond our control and are described from time to time in our FCC filings.
Speaker 3: We do not intend to update publicly any forward-looking statement except as required by law.
Speaker 3: Where appropriate, we will approach non-GAAP financial measures to evaluate our business, specifically adjust the BVITA, a measure of earnings before interest, taxes, depreciation, amortization, and share-based compensation.
Speaker 3: We believe that Justice Dibita is an important metric as it removes the impact of earnings attributed to our capital structure, tax rate, and material non-cash items and best reflects the financial value generated by our business.
Speaker 3: Reconciliations of non-gap-to- GAAP financial measures are included in our press release, learning slides, and the Reform 8K filed at the SEC today.
Speaker 3: These new shows can also be accessed from the investor relations page of our website.
Speaker 3: Following our prepared remarks today, we open the line for your questions. I will now turn the call over to our Executive Chairman, Bill Doyle.
Speaker 4: Thank you, Ingrid, and good morning.
Speaker 4: At Novikir, our mission is to extend the lives of patients diagnosed with aggressive forms of cancer.
Speaker 4: Over the last two decades, we have completed multiple successful clinical trials, expanded our international footprint to include 10 global markets.
Speaker 4: Published over 500 manuscripts, built a strong and sustainable business model, and most importantly, treated over 27,000 commercial patients.
Speaker 4: We are proud of the business we have built and people we have helped.
Speaker 4: Next month at the American Society of Clinical Oncology Annual Meeting in Chicago, we will present the results of our Phase 3 Pivotal Lunar Trial in Non-Small Cell Lung Cancer.
Speaker 4: Our ASCO presentation will begin of Novikir's next chapter.
Speaker 4: With the intention to help tens of thousands of additional patients diagnosed with deadly cancers in the coming years.
Speaker 4: I am grateful for the hard work of Novichar's employees as well as for the dedication and courage our patients and for describing physicians.
Speaker 4: I cannot wait for all that lies ahead in 2023.
Speaker 4: On today's call, we will begin with a discussion of our clinical catalyst.
Speaker 4: followed by a review of our core business in GBM.
Speaker 4: We will close today's call with a discussion of our first quarter financial results before opening the line for questions.
Speaker 4: Earlier this year, we announced the top line results of the Phase III Pivotal Moon or Clinical Trial, evaluating T.T. fields together with standard of care therapies in Stage 4 Non-Small Cell Lone Cancer.
Speaker 4: Looter met its primary endpoint, providing the first advance in stage 4 refractory non-small cell lung cancer in more than 7 years.
Speaker 4: With our demonstrated a profound benefit when cheeky field therapy was combined with a unicorn therapy.
Speaker 4: meeting powered secondary employee, evaluating overall survival of patients treated with the TTC field and a checkpoint inhibitor versus a checkpoint inhibitor alone.
Speaker 4: Lunar also demonstrated a positive trend in overall survival for patients treated with CT fields and dose-of-taxful versus dose-of-taxful alone.
Speaker 4: We are pleased to share that the lunar data will be presented next month at the ASCO Annual Meeting in Chicago.
Speaker 4: Tuesday June 6th.
Speaker 4: Lead investigator, Dr. Tixiana Lille of Emory University will present the Lunar Trial Leilikar?UTclears.com
Speaker 4: during the metastatic non-small cell lung cancer session.
Speaker 4: Later on Tuesday, Novarture will host the presentation in question and answer session with Dr. Leal, fellow Lunar Investigator Dr. Cory Langer of the University of Pennsylvania, and Novarture Leadership.
Speaker 4: I will remind you the improvements in overall survival demonstrated by Luna follow a period with no clinical improvement in the treatment of non-small cell lung cancer following platinum failure since 2016.
Speaker 4: Lunar is the first of multiple phase 3 pivotal trials set to read out over the next year and a half. Each focused on a population with high unmet need. Later this year, we expect to announce top line results from the phase 3 pivotal innovate 3 trial in platinum resistant ovarian cancer.
Speaker 4: In early 2024, we anticipate the top-line results from the Phase III pivotal metastrial evaluating the use of T.T. fields for the treatment of brain metastases from non-small-cell lung cancer. And following the completion of the 18-month follow-up of the last patient in the role, we expect top-line readouts of the Phase III pivotal Penova III trial in locally-advanced pancreatic cancer in 2024.
Speaker 4: These pivotal clinical trials will provide the foundation for the next stage of Novita's growth.
Speaker 4: In the U.S. alone, the number of diagnoses of the cancers treated in these trials is nearly 14 times the annual diagnoses of glioblastoma, an indication in which we have a strong and sustainable commercial business.
Speaker 4: The outcomes of these PIVIL trials could enable tens of thousands of patients to benefit from cheeky-fills therapy. That promise.
Speaker 4: to extend the lives of patients diagnosed with aggressive forms of cancer continues to drive us every day.
Speaker 4: With the potential to treat many thousands more patients soon, we believe we are one step closer.
Speaker 4: to achieving our mission. I look forward to seeing many of you in Chicago next month and to updating you throughout this exciting time. With that, I will turn the call over to Asas to discuss our commercial business.
Speaker 4: I look forward to seeing many of you in Chicago next month and to updating you throughout this exciting time. With that, I will turn the call over to a staff to discuss our commercial business. Thank you, Bo.
Speaker 5: Before turning to GBM, I would also like to share my excitement and commitment to what is coming in the next two years. With multiple people to study, said to read out, it is an amazing time to be at Novokiu. We have a lot of rewarding work ahead of us to bring out a therapy to many new patients. One of our key areas of focus this year is to return to active patients
Speaker 5: more GBM patients that could benefit from TITI field therapy. We are determined to increase penetration in our current markets, reach patients in new markets and help patients remain on therapy longer through education and product innovation.
Speaker 5: Increasing market penetration in our current markets where we have captured approximately 40% market share is essential to the growth of our GBM business. In recent months we have structured our commercial organization to better leverage resources and improved our digital footprint to engage more healthcare providers and patients.
Speaker 5: In the US we received 1551 transcriptions in Q1. The most we have ever received in a single quarter.
Speaker 5: While we recognize and appreciate that in healthcare systemic changes not occur overnight, we are encouraged by the US results. Further, we are seeing steady recovery in Germany in both new patient starts and reimbursement approvals. While these are early indicators, we believe they show progress that will contribute to
Speaker 5: Entering funds represents a key execution milestone in our effort to reach patients in new markets.
Speaker 5: We have received our first prescriptions in France and have begun treating patients.
Speaker 5: France is our second new market opening in less than four months, following the approval of Optune in Canada in November . Our market access teams are engaged with healthcare authorities in a number of additional potential markets, with the goal of reaching more GBM patients in it.
Speaker 5: Finally, we continue to focus on improving our technology to better surf patients. Clinical research shows that small time on Titi Phil's therapy leads to better outcomes and we want to enable patients to wear optune for as many hours per day as possible.
Speaker 5: To this end, one of our most important initiatives is the loans of a new generation of arrays.
Speaker 5: Our new arrays are thinner, lighter and more flexible than those in current use.
Speaker 5: Following a successful pilot launch in Austria last year, we are now rolling out in Sweden and we are very pleased with the results to date. Patients have reported a materially improved treatment experience, both during daily activity and during sleep. The neural rays are proving to be much more comfortable and we are seeing high patient usage rates.
Our next steps are to launch in Germany and submit a PMA supplement to the FDA for approval to market in the US.
We expect to submit a PMA supplement in the second half of the year. We remain committed to improving the TTC field's experience for patients and expect to loan further product enhancements in the years ahead. We wish to submit a PMA supplement in the second half of the year.
Before I hand the call to Ashley, I would like to thank our colleagues for their hard work over the first three months of the year. This is an exciting time to be a part of NovoQ, and I know you are all ready to continue driving to help as many patients as possible.
I will now hand the call to Ashley to discuss our financial results.
I will now hand the call to Ashley to discuss our financial results. Thank you, Asaf.
We began the year with a quarter of solid execution and a focus on investing our time and resources strategically to spur growth in GVM to progress and expand clinical and product development programs and to lay a solid foundation for potential future launches across multiple indications.
In the first quarter, we generated $122 million in net revenues and ended the quarter with 3467 active patients on therapy.
As expected, the impact of slowing collections from previously denied an age U.S. claim caused a $5 million headwind in the quarter.
While active patients were down year over year, we are seeing promising green shoots from our restructured US CNS franchise.
In Q1, we established a high water mark in quarterly prescriptions, and we remained focused on a return to growth in our GBM business. In Germany, as expected, we saw a $2 million decrease in year-over-year net revenues following 2022 payer negotiations. We continue to see signs of recovery in Germany.
as active patients grow and as patient mix shifts towards approved coverage.
Gross margin for the first quarter was 76 percent. Margin was impacted by a planned increase in patient support capacity and preparation for potential future launches, as well as the ongoing launch of our new array.
SG&A expenses for the quarter were $93 million. We have increased sales and marketing activities intended to increase awareness of tumor-treating fields as we enter new geographies.
We have also expanded our supply chain and increased spend on information technology enhancements to enable future growth.
Research and development expenses for the first quarter totaled $60 million. And the past three months, we completed enrollment of both our Penova 3 and Metis Phase 3 Pivotal Trials. As these and our other Phase 3 Trials near completion, we expect to replenish our clinical pipeline with new trials across the world.
as a March 31st, 2023.
Our net loss for the first quarter was 50 cents per share, or $53 million, and adjusted EBITDA was a negative $18 million. We are investing strategically in growth initiatives to expand our capacity to treat larger patient populations, enhance our commercial capabilities, and enhance our capacity to treat larger patient populations.
and to increase awareness of tumor treating fields in anticipation of future approval.
All of these investments are supported by the Strong Foundation provided by our stable commercial business in GBM.
The future is bright for Novakir and we look forward to updating you on our progress throughout the year. I'd like to close today by highlighting one of our opt-to users, Mike Hugo of Wellington, Florida.
Like it's 38-year-old, it happens to be a medical device sales manager in the CNS industry. He was diagnosed with GDM about a year ago.
Mike and his wife Vanessa, a clinical researcher, goes into the literature to explore his treatment option.
Together, they determined that tumor-treating field therapy could extend Mike's life and needed to be an essential part of his treatment.
Last summer, Mike started using uptoot. After Mike's diagnosis, he posted a video on Facebook asking country singer Tim McGrill to record a duet of the song My Little Girl Within.
Mike's goal is to have the song played at the teacher weddings of his two daughters Bridget and Brooke.
It turned out McGraw had also been impacted by GBM. His father, legendary baseball player Tug McGraw, had died of GBM in 2004. When Tim heard Mike's message, he arranged for the entire Fugal family to fly the Nashville and meet him at the Grand Old Opera. There, with the cameras rolling, Mike danced with his daughters and sang a duet with the country icon. We are honored to be a part of Mike's journey.
and those of thousands of patients like him. We will continue to work tirelessly to drive our innovative therapy forward with the goal of making a meaningful impact in the lives of many more patients and their families. With that, I will turn it back to the operator for questions.
Five.
Hi everyone. I think we have any technological problems. D.D. operator, are you there please? Yes.
As a reminder to ask questions, please press Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 1-1 again. Please stand by while we compile the Q&A roster. And our first question is from Greg Fraser of Truest Securities.
Good morning, folks. Thanks for taking the questions. On the U.S. market for GBM, you had double-digit growth in prescriptions while occupations declined. Can you talk a bit more about that strong prescription growth? Is the base of opt-in prescribers in the U.S. growing, and should investors expect the prescription growth in the first quarter to drive the adaptations growth in the near term?
Hi, Greg. Thank you for the question. This is Frank Leonard speaking. Yes, you know, we are, first I will say that we're very encouraged by seeing the Q1 prescription results in the U.S. where we hit this record high as Ashley noted in her.
In her remarks, you know, prescriptions are the leading indicator. There are a component of the overall metrics that we have to drive in order to ultimately pull through on revenue growth.
But just looking at prescriptions and demand indicators, we do see we are encouraged by the first quarter results. We think it reflects in part activities in Q4 and Q1. First, the investments in the upgrades that we've made to the US commercial organization where we focused on putting the right people in the right place in front of our customers.
with the right incentive and tools to pull through to prescription. Second, we've seen the dynamic where the overall macro environment in oncology has come back to in-person events. So we had an incredibly strong presence at Snow in the fourth quarter, which is our main conference with Neuroancologist.
Same with Astro, our main engagement point with radiation oncologist, and then again in the first quarter at AACR where our scientific team had an incredible presence. So overall, I think the message that we're sending is that we're encouraged by the first quarter results. We think they reflect actual changes. We wouldn't go to the point of noting any specific.
mixes or dynamics other than to say that we think we've got the right team now that we can keep, you know, we can continue to make progress.
Great, that's very helpful. And then the question on the lunar presentation, some of the questions are unknown to related to PDO 1st data clearly, whether you have data on PDO 1st data for a large percentage of the patients, whether there was no endouts. Do you expect that the presentation will address these questions such that there won't be
session at ASCO. So first and foremost we're looking forward to seeing everybody in June . Following the presentation we will also have an investor meeting that will include KOL investigators as well as Novichor personnel and we would expect to address all the issues.
with respect to balance and PDL-1 status at that time.
Great. Just one more quick one. I'll jump back in the queue. The average time on therapy is a very important determined of efficacy with TT fields. Should investors expect to see that on time on therapy at the ASCO presentation? Thanks so much.
Great. Just one more quick one, I'll jump back into the queue. That average time on therapy is a very important determined at FACI with TT fields. Should investors expect to see that on time on therapy at the ASCO presentation? Thanks so much. Board, Looner.
Yes, I would expect that the data set this is actually will include average time on therapy and I'll remind everybody that you know until you get that data we ask you to inquire to the DSS and the SAIDS to trial.
Thank you. Thank you one moment for our first next question.
Thank you. Thank you one moment for our next question.
And our next question comes from Emily Bobner of 8C Wainwright, you're lying as open.
Hi there, thanks for taking the questions. Maybe to follow up on the first question, do you have a view of first quarter sales in the US as kind of a base and should we expect increases in sales from here on now for the rest of the year? And maybe can you expand a bit on what kind of clinical trials we plan to initiate this year or whether?
the early stage or late stage. And are there any other indications where you think combining with immunotherapy can make sense besides lung cancer and GBM? Thanks. And this is actually all start because Frank was able to give color on the prescriptions and the leading indicators. When we look at revenue, which is ultimately what we need to deliver on the GBM business, I would say.
And so Q1 performance reflects that as we no longer had the tailwind from age claims and it is not our expectation that those would continue at the pace that we've seen in prior years in 2023. So I do think, you know, Q1 reflects that core map and we would like you to anchor to that core map. That's an important base. Now we do have puts and takes against this.
We've talked about the green shoots for prescriptions in the US. I will also note that the recovery in Germany is progressing as expected, and so we expect to continue to see some benefit in the net price at a global level over time on that. But it is important to anchor to that core math, and that's what we would like you to do in your model.
the electrical properties of cancer cells rather than their chemical properties. And there are just so many exciting aspects to the platform therapy here. We can use our therapy with all other therapies. So we see either synergy or...
with radiation, chemotherapy. And one of the most exciting advancements has been what we're seeing now when we combine tumor treating fields with IOs. We see that, for instance, the two-the-toss trial in GBM, where we've combined width combines?to leave patient.
tumor treating fields with pemberlizumab in a cold, you know, quote unquote cold tumor, and we see great results. And of course what we've alluded to and what we'll present at ASCO when we've combined tumor treating fields with IOs in...
in non-small cell lung cancer, a cancer where IOs are used routinely, and we see a profound improvement. We know we can deliver tumor-treating fields for the head, neck, torso, and abdomen, and all of the, you know, these difficult cancers in those regions are our targets.
And so the answer is yes. You should expect to see additional trials in the indications in which we're already working. So for instance, non-small cell lung cancer, I would say would just be gone. And you'll expect to see additional trials there, as well as trials in areas like gastric and...
and hepatocellular carcinoma, where we've disclosed very promising phase 2 data. Great, thank you. Thank you one moment for our next question.
So when panel of three was completed enrollment, there was a mention of an interim look. Can you say if that interim has happened yet and what, if anything, the outcome was? And then in terms of innovate three, are we still on track to anticipate a top line data?
quarter and the other active markets contributing nearly 8 million. Is this to say that the overall EMEA markets did 23 million in the quarter? And was there any incremental revenue from France in the quarter? Thank you.
So hi, if I was talking to Pan over, so we are on track. We are still planning to do the interim as soon.
And I think the rest of the question is asked me first. No, I mean, I'll just reiterate that we are also on track with the innovate enrollment, and we're in that patient follow-up period, and that should end, you know.
In the back half of this year, mid this year, I would expect data to come out. No change in those expectations, to be very clear. Things are progressing as expected. When we talk about revenue, that has also no change. This was simply an internal adjustment to our international market franchise structure. It has always been broken out.
and its own line item under AMIA. It's now broken out and its own line item standalone. There are no non-AMIA markets in other Japan as our only active market, currently outside of AMIA and the US. So that you can tie others.
to other AMIA in prior cues. So I appreciate that question. I will note that we do not yet have revenue in France. We are treating patients, so we have active patients in the market, but it will take us a couple of quarters before you see the material revenue come through as we just go through this administrative ramp up and look to see a successful conclusion of our collection cycle.
Thank you.
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get to learn P1 expression status of patients then and second on optics and the quarter specifically on there seem to be a large increase how much of this increase.
Or say new hires focused on new markets and new indications versus current existing markets like GBM. Thanks so good morning and thanks for your question and I'm just going to. Underline for everybody that the lunar data presentation will be Tuesday, June 6.
at 11.09 in the metastatic non-small cell lung cancer. And yes, I'll repeat, we will provide the PD-L1 data from the trial during that presentation and take Q&A with respect to all of the parameters.
in our session to be held later that afternoon. And then Ashley. Yeah, and on the SG&A, we'll say it is, if we look at growth in SG&A, it is almost exclusively related to growth in our markets, whether that's geographic expansion for our existing GBM business.
like they are adequately resourced and so increments there are focused on opening up France and opening up early commercial opportunities in Long and beyond.
Thanks.
Thank you. I would now like to turn the conference back to Bill Doyle for closing remarks.
So I want to thank everyone for joining us this morning and your continued support of Novikure. It's hard to convey over the phone what an exciting time it is to be at Novikure. We are really thrilled with the way our efforts in the market are beginning to bear fruit.
both in terms of geographic expansion, increases in scripts. We didn't talk about it much on this call, but we are thrilled with what we're seeing with our launch of our next generation arrays. We think this is very important and the early read from Austria and Sweden is that this is a great product.
And we're focused on rolling this out now across Europe and getting the PMA supplement in the US so we can roll out here following regulatory approval. And then of course, the new indications. We're pioneering this new modality. We have been talking about the broad application based on our...
23 years of R&D, and we're really now on the threshold of bringing it to patients. So thank you all.
Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect. This concludes theck Thursday Trump is in office today, at 6 a.m. extent I will give